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Regulations of Transportation Industries

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Regulations of Transportation Industries

In 1821, Englishman, Julius Griffiths was the first person to patent a passenger road locomotive.
In September, 1825, the Stockton & Darlington Railroad Company began as the first railroad to carry both goods and passengers on regular schedules using locomotives designed by English inventor, George Stephenson. Stephenson's locomotive pulled six loaded coal cars and 21 passenger cars with 450 passengers over 9 miles in about one hour.
George Stephenson is considered to be the inventor of the first steam locomotive engine for railways. Richard Trevithick's invention is considered the first tramway locomotive, however, it was a road locomotive, designed for a road and not for a railroad. In 1812, he became a colliery engine builder, and in 1814 he built his first locomotive for the Stockton and Darlington Railway Line. Stephenson was hired as the company engineer and soon convinced the owners to use steam motive power and built the line's first locomotive, the Locomotion. In 1825, Stephenson moved to the Liverpool and Manchester Railway, where together with his son Robert built (1826-29) the Rocket.
Colonel John Stevens is considered to be the father of American railroads. In 1826 Stevens demonstrated the feasibility of steam locomotion on a circular experimental track constructed on his estate in Hoboken, New Jersey, three years before George Stephenson perfected a practical steam locomotive in England. The first railroad charter in North America was granted to John Stevens in 1815. Grants to others followed, and work soon began on the first operational railroads.

Regulation/ Deregulation: More than 80 years of expanding federal regulation of railroads began to unravel in the 1970s. Beginning May 1, 1971, the National Railroad Passenger Corporation (Amtrak), established by Congress the previous year, took over operation of most intercity passenger trains. To give government-subsidized Amtrak more flexibility, Congress granted it freedom to raise and lower rates without ICC approval and removed ICC authority to review proposed discontinuation of trains.
The ICC's power over abandonment of lines was suspended briefly during the mid-1970s, when seven bankrupt railroads in the Northeast and Midwest were combined into a new company, Consolidated Rail Corporation (Conrail). To plan and set up this new railroad, Congress created the U.S. Railway Association, with authority to decide which parts of the seven railroads would be included in Conrail and which parts would be offered for sale or abandoned.
In the Railroad Revitalization and Regulatory Reform Act (1976), Congress sought to give railroads more freedom to set rates. The ICC was not to deny any rate equal to or exceeding variable costs unless the railroad was found to have “market dominance,” which was left to the commission to define. Railroads were allowed to raise or lower their rates by as much as 7 percent a year for two years without ICC sanction. The commission was empowered to deregulate hauling of commodities if it found that regulation was no longer in the public interest; for example, the ICC deregulated the hauling of fresh fruits and vegetables in 1979. The act also banned discriminatory state taxation of railroads and mandated that all proposed rail mergers be approved or denied by the commission within two years' time.
Unhappy at what it considered over restrictive interpretations by the ICC of the 1976 law, Congress enacted sweeping regulatory changes in the Staggers Rail Act (1980). This law curtailed activities of the industry's regional rate bureaus and provided for the phasing out of general rate increases by 1984. It empowered the ICC to establish a railroad cost index and allow carriers to raise rates every three months by the same percentage amount that the index raised. Also, through 1984, rates could be raised an added 6 percent a year above the index (to a maximum of 18 percent). As for rate decreases to meet truck or barge competition, Congress declared that any rate that contributes to the “going concern value” shall be considered reasonable. Contract rates were specifically permitted; surcharges on unprofitable traffic allowed; and existing provisions against rate discrimination withdrawn in the case of contracts, surcharges, separate rates for distinct services, rail rates applicable to different routes, or business entertainment expenses. The ICC's authority to issue car-service orders to railroads was greatly restricted, and time limits of from 75 to 330 days were set for decisions on route-abandonment cases.

Increased Governmental regulations: Prior to 1980, excessive regulation made it impossible for America’s freight railroads to provide safe, efficient, and reliable service. Recognizing the harm this was inflicting on the economy, Congress passed the Staggers Rail Act of 1980. The Staggers Act created a reasonable regulatory system that still exists today: shippers are protected against anticompetitive railroad conduct, while railroads can largely decide for themselves (rather than have the government decide for them) how to best meet their customers’ needs. Today, 30 years later, the Staggers Act has proven to be a tremendous success. America now has the safest, the most productive, and the most affordable freight railroads in the world, saving American firms and consumers billions of dollars each year. Returning to an era of excessive regulation would be a colossal mistake. It would prevent railroads from making the massive private investments required to meet our nation’s growing freight transportation needs.

Legislation passed by Congress in 2008 mandates that “positive train control” (PTC) be installed by the end of 2015 on rail lines used to transport passengers or toxic-by-inhalation (TIH) materials. Railroads are committed to meeting this deadline and are working hard to make it happen. That said, according to the Federal Railroad Administration (FRA), it will cost up to $13.2 billion to install and maintain PTC over the next 20 years, making PTC the most costly federal mandate in history for America’s railroads. PTC will yield just $1 in benefits for every $20 spent on it, and money spent on PTC means less money will be available for other critical infrastructure and safety-enhancing projects. FRA regulations for implementing PTC make the cost-benefit imbalance worse by requiring railroads to base PTC implementation on 2008 traffic patterns. Railroads urge passage of S. 301 in the 112th Congress, which corrects this FRA overreach by clarifying that 2015 should be the base year. Railroads also urge policymakers to create a meaningful exception to the PTC mandate for cases where only a few trains containing TIH utilize a rail line. To help railroads fund the huge costs associated with PTC, Congress should pass legislation that provides tax incentives for rail revitalization that could be applied to the cost of installing PTC.

Post 9/11 Funding will allow FRA to enhance its current safety inspector staff, giving it the ability to meet the increasingly complex needs of the railroad industry.
Funding will also support the ongoing human resource management that will assist FRA in reducing the safety problems that have plagued the railroad industry in the past. Funding will also support research efforts in the areas of rail systems safety, track structures, train occupant protection, human factors in train operations, rolling stock and components, track and train interaction, track control, grade crossings, and hazardous materials.
Funding will also support high-speed train control systems, track and structures technology, corridor planning, and grade crossing hazard mitigation and high-speed non-electric locomotives.


Today, the self-sustaining freight rail industry has weathered the recession and emerged prepared to help deliver America's economic recovery. This success is largely made possible because of a balanced regulatory frame-work that supports railroads and customers alike. Ultimately, today's regulatory system has given rise to a rail network that is the envy of the world, with rates roughly half of what they were before the legislation passed and safer and more efficient than ever before. Freight rail is a true American success story. Once on the brink of bankruptcy, this private industry is helping power our nation's economic recovery by investing record sums of capital into the country's rail system, providing high paying American jobs and connecting businesses to the global marketplace.


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