Discuss the legislative reform which has occurred since 1973 . How did each new law impact the railroad industry. You need not include the legislation which started Amtrak

Answer 1

The Regional Rail Reorganization Act of 1973 (3R Act) attempted to maintain rail freight service in the Northeast by creating the Consolidated Rail Corporation (Conrail), which was formed from six bankrupt northeastern railroads. The act also created the United States Railroad Association (USRA) as the government agency responsible for planning and financing the restructuring. By 1980, the federal government had granted Conrail more than $3.3 billion in federal subsidies to cover its operating expenses. Conrail proved to be very successful and was "spun off" to the public with the sale of in 1992 . Conrail's management was able to rationalize the excess track while preserving and improving service. After a failed attempt by CSX to takeover Conrail, CSX and the Norfolk Southern Railroad agreed to split Conrail between them and paid collectively over $10 billion for the property.

The Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act) was the first attempt to deregulate the industry since the railroads came under regulation in 1887 . The goals of the 4R Act were to help the railroads obtain funds for capital investment and to allow the railroads more freedom concerning decisions on mergers, abandonments, and rate making.43 Although the 4R Act was an attempt to deal with regulatory problems, the ICC's interpretation of the act negated much of its positive aspects and in some cases actually increased rail regulation.

The Staggers Rail Act did a great deal to enable the railroads to help themselves and avoid further deterioration of the industry, although they still face financial challenges because their return on equity is very low (about three percent) compared to many other industries. However, many railroad managers are optimistic that the industry will be able to keep its profitability and financial health if the Staggers Rail Act is not altered to introduce more regulatory control and is allowed to continue working. Many railroads have continuously improved their financial situation during the 1980s.

The ICC Termination Act of 1995 eliminated the ICC and transferred economic rail regulation to the Surface Transportation Board (STB), which is part of the DOT. The STB has taken a relaxed posture on rail regulation, sometimes to the dismay of the shippers, so the railroads are now subject to market pressures more than economic regulations. It is interesting to observe that the STB faces some of the same challenges faced by the ICC (i.e., rail consolidation, larger shipper bargaining power, capitalization, etc.).