INTERSTATE COMMERCE COMMISSION

President Grover Cleveland signed the Interstate Commerce Act of 1887 and created the Interstate Commerce Commission (ICC), the U.S. government's first regulatory agency. The initial purpose of the ICC was to control railroads and their unfair business practices. The U.S. government's assumption of the role of regulator resulted from the U.S. Supreme Court's 1886 ruling in the case of Wabash Railroad v. Illinois, which prohibited states from controlling interstate commerce.

Railroads presented some special problems because they were capital-intensive, had high maintenance costs, and had two types of rail lines. This situation led to unfair pricing practices. For major trunk lines, where there was competition, the railroads charged lower rates and even gave rebates. For spur lines, where there was a monopoly, the railroad charged higher rates for the same type of cargo.

Even with the federal government taking charge of regulating railroads, the ICC still began with a rocky start. In its first sixteen court actions, the ICC won only one case; and the Supreme Court made several power-limiting judgments against the ICC. Later legislation, however, provided strength for ICC rulings. The 1903 Elkins Act addressed unfair competitive methods. The 1906 Hepburn Act eliminated the mandated court order to make ICC rulings binding and gave the ICC control of gas and water pipelines. The milestone Transportation Act of 1920 resulted in the ICC's moving from approving to actually setting railroad rates, being empowered to organize mergers, and to determining appropriate profit levels.

The Motor Carrier Act of 1935 placed the emerging trucking industry under ICC jurisdiction. Typical ICC duties included holding hearings to investigate complaints, approving transportation mergers, and overseeing consumer-protection programs.

By the 1960s the ICC had grown into a massive bureaucracy, peaking at 2,400 employees. Shortly thereafter, the agency came under severe criticism. Some groups argued that, because of regulation, the country's transportation was inefficient and perhaps corrupt. The major criticism—that regulation created artificially high rates—led to pressure for deregulation and signaled the beginning of the demise of the ICC. First, the Railroad Revitalization and Regulatory Reform Act of 1976 curtailed the ICC power to regulate rates unless the railroad had a monopoly on certain routes. In 1977 air cargo deregulation and the reforms taking place in the trucking industry further eroded the power of the ICC. After the early rocky years of deregulation, the transportation industry had become more efficient thanks to innovative technology, thereby reducing costs. The final act of deregulation came in 1994, when the ICC lost most of its control over the trucking industry.

By this time the number of ICC employees had dropped to 300 and the ICC constrained by a severely reduced budget. The Republicans, who had wanted to eliminate the ICC for a number of years, took control of Congress in 1995. As a first step, the fiscal 1996 spending bill gave the ICC no budget. Then the House Transportation and Infrastructure Committee approved a bill to dismantle the ICC, and the debate began. The major objection from the Democratic side was centered on protection for railroad workers who might lose their jobs because of mergers. After ironing out their differences, Congress sent President Bill Clinton legislation to terminate the ICC. On December 29, 1995, the 108-year-old ICC was disbanded.

SEE ALSO Interstate Commerce

BIBLIOGRAPHY

End of the line for ICC. (1996). Nation's Business, 84(3), 32.

ICC elimination. (1995–1996). Congress and the Nation, 9, 381–383.

President signs bill terminating ICC. (1996, January 6). Congressional Quarterly Weekly Report, 54(1), 58.

R.I.P., ICC. (1996, May/June). American Heritage, 47(3), 22.

Stone, R. D. (1991). Interstate Commerce Commission and the railroad industry: A history of regulatory policy. New York: Praeger.