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19 Jul 2017

Rail Growth and Government

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In July of 1776, the United States officially declared its independence. Over 50 years later, the first US railway, the Baltimore and Ohio Railroad, opened for commercial transportation of freight and passengers. Over the next several decades, rail lines grew from 23 to over 3000 miles of track, and by 1860, began connecting west beyond the Mississippi River. Meanwhile, on the west coast, the gold rush prompted rail lines such as the Sacramento Valley Railroad. In 1871, President Abraham Lincoln signed the Pacific Railroad Act, authorizing the construction of a new railroad line from Council Bluffs, Iowa to Sacramento, California, which connected the Central Pacific Railroad and the Union Pacific Railroad. During this same time period, the Civil War precipitated growth in the use of rail to move troops and supplies regularly.

Due to the boom in rail growth and its effects, the government began to regulate railway systems as they became more prevalent. The Interstate Commerce Act of 1887 was designed to prevent monopolistic practices, while the Federal Possession and Control Act allowed the government to take total control of the railroads during WWI. The Railroad Revitalization and Regulatory Reform Act of 1976 attempted to salvage some freight operations from bankruptcy in the Northeast, and thus, began the Conrail system. Finally, the Staggers Act of 1980 allowed for greater freedom in setting rates, contracts and decisions to move in and out of certain rail market lines. Although these are only a few historical reference points, they demonstrate that Congress has weaved in and out of rail legislation for decades.

Although rail operations today are largely deregulated, rail is still governed in part by the Code of Federal Regulations, as well as numerous other tariff publications and entities created to manage reporting and banking procedures. As history has shown, there is always opportunity for future regulation, so we should not get too comfortable with the current mindset. No matter what occurs with governmental regulation, AMTR is always watching for impacts to railroads and shippers.

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