Over the course of the latter half of the 20th century, Congress took away many of the ICC's powers and reassigned them to other federal agencies. Congress eventually abolished the ICC in 1995 and transferred its remaining functions to a new agency, theSurface Transportation Board.
The ICC was established by the Interstate Commerce Act of 1887, which was signed into law by PresidentGrover Cleveland.[1] The creation of the commission was the result of widespread and longstanding anti-railroad agitation. Western farmers, specifically those of theGrange Movement, were the dominant force behind the unrest, but Westerners generally — especially those in rural areas — believed that the railroads possessed economic power that they systematically abused. A central issue was rate discrimination between similarly situated customers and communities.[2]: 42ff Other potent issues included alleged attempts by railroads to obtain influence overcity andstate governments and the widespread practice of granting free transportation in the form of yearly passes to opinion leaders (elected officials, newspaper editors, ministers, and so on) so as to dampen any opposition to railroad practices.
Various sections of the Interstate Commerce Act banned "personal discrimination" and required shipping rates to be "just and reasonable."
The Commission had a troubled start because the law that created it failed to give it adequate enforcement powers.
The Commission is, or can be made, of great use to the railroads. It satisfies the popular clamor for a government supervision of the railroads, while at the same time that supervision is almost entirely nominal.
Following the passage of the 1887 act, the ICC proceeded to set maximum shipping rates for railroads. However, in the late 1890s, several railroads challenged the agency's ratemaking authority inlitigation, and thecourts severely limited the ICC's powers.[2]: 90ff [5]
The ICC became the United States' investigation agency for railroad accidents.[6]
A 1914 cartoon shows railroad companies asking the ICC (depicted asUncle Sam) for permission to raise rates, while the ghost of a horrifiedWilliam Henry Vanderbilt looks on.
Congress expanded the commission's powers through subsequent legislation. The 1893Railroad Safety Appliance Act gave the ICC jurisdiction over railroad safety, removing this authority from the states, and this was followed with amendments in 1903 and 1910.[7] TheHepburn Act of 1906 authorized the ICC to set maximum railroad rates, and extended the agency's authority to cover bridges, terminals, ferries, sleeping cars, express companies and oil pipelines.[8]
A long-standing controversy was how to interpret language in the Act that banned long haul-short haul fare discrimination. TheMann-Elkins Act of 1910 addressed this question by strengthening ICC authority over railroad rates. This amendment also expanded the ICC's jurisdiction to include regulation oftelephone,telegraph andwireless companies.[9]
TheValuation Act of 1913 required the ICC to organize a Bureau of Valuation that would assess the value of railroad property. This information would be used to set rates.[10][11] TheEsch-Cummins Act of 1920 expanded the ICC's rate-setting responsibilities, and the agency in turn required updated valuation data from the railroads.[12] The enlarged process led to a major increase in ICC staff, and the valuations continued for almost 20 years.[13] The valuation process turned out to be of limited use in helping the ICC set rates fairly.[14][15]
TheTransportation Act of 1920 directed the Interstate Commerce Commission to prepare and adopt a plan for the consolidation of the railway properties of the United States into a limited number of systems. Between 1920 and 1923,William Z. Ripley, a professor of political economy at Harvard University, wrote up ICC's plan for the regional consolidation of the U.S. railways.[18][19][20] His plan became known as theRipley Plan. In 1929 the ICC published Ripley's Plan under the titleComplete Plan of Consolidation. Numerous hearings were held by ICC regarding the plan under the topic "In the Matter of Consolidation of the Railways of the United States into a Limited Number of Systems".[21]
The proposed 21 regional railroads were as follows:
Many small railroads failed during theGreat Depression of the 1930s. Of those lines that survived, the stronger ones were not interested in supporting the weaker ones.[21] Congress repudiated Ripley's Plan with theTransportation Act of 1940, and the consolidation idea was scrapped.[22]
April 28, 1941 - InMitchell v. United States, theUnited States Supreme Court ruled that discrimination in which a colored man who had paid a first class fare for an interstate journey was compelled to leave that car and ride in a second class car was essentially unjust, and violated the Interstate Commerce Act.[23] The court thus overturns an ICC order dismissing a complaint against an interstate carrier.
June 3, 1946 - InMorgan v. Virginia, the Supreme Court invalidates provisions of theVirginia Code which require the separation of white and colored passengers where applied to interstate bus transport. The state law is unconstitutional insofar as it is burdening interstate commerce, an area of federal jurisdiction.[24]
June 5, 1950 - InHenderson v. United States, the Supreme Court rules to abolishsegregation of reserved tables in railroaddining cars.[25] TheSouthern Railway had reserved tables in such a way as to allocate one table conditionally for blacks and multiple tables for whites; a black passenger traveling first-class was not served in the dining car as the one reserved table was in use. The ICC ruled the discrimination to be an error in judgement on the part of an individual dining car steward; both theUnited States District Court for the District of Maryland and the Supreme Court disagreed, finding the published policies of the railroad itself to be in violation of the Interstate Commerce Act.
September 1, 1953 - InSarah Keys v. Carolina Coach Company,Women's Army Corps private Sarah Keys, represented bycivil rights lawyerDovey Johnson Roundtree, becomes the first black person to challenge the "separate but equal" doctrine in bus segregation before the ICC. While the initial ICC reviewing commissioner declined to accept the case, claimingBrown v. Board of Education (1954) "did not preclude segregation in a private business such as a bus company," Roundtree ultimately prevailed in obtaining a review by the full eleven-person commission.[26]
November 7, 1955 – ICC bans bus segregation in interstate travel inSarah Keys v. Carolina Coach Company.[27] This extends the logic ofBrown v. Board of Education, a precedent ending the use of "separate but equal" as a defence against discrimination claims in education, to bus travel across state lines.
December 5, 1960 - InBoynton v. Virginia, the Supreme Court holds that racial segregation inbus terminals is illegal because such segregation violates the Interstate Commerce Act.[28] This ruling, in combination with the ICC's 1955 decision inKeys v. Carolina Coach, effectively outlaws segregation on interstate buses and at the terminals servicing such buses.
September 23, 1961 - The ICC, at Attorney GeneralRobert F. Kennedy's insistence, issues new rules ending discrimination in interstate travel. Effective November 1, 1961, six years after the commission's own ruling inKeys v. Carolina Coach Company, all interstate buses required to display a certificate that reads: "Seating aboard this vehicle is without regard to race, color, creed, or national origin, by order of the Interstate Commerce Commission."
APuck magazine cartoon from 1907 depicting two large bears named "Interstate Commerce Commission" and "Federal Courts" attackingWall Street.
The limitation on railroad rates in 1906-07 depreciated the value of railroad securities, a factor in causing thepanic of 1907.[29]
Some economists and historians, such asMilton Friedman assert that existing railroad interests took advantage of ICC regulations to strengthen their control of the industry and prevent competition, constitutingregulatory capture.[30]
EconomistDavid D. Friedman argues that the ICC always served the railroads as acartelizing agent and used its authority over other forms of transportation to prevent them, where possible, from undercutting the railroads.[31]
In March 1920, the ICC had Eben Moody Boynton, the inventor of theBoynton Bicycle Railroad, committed as a lunatic to an institution in Washington, D.C.[32] Boynton's monorail electric light rail system, it was reported, had the potential to revolutionize transportation, superseding then-current train travel.[33] ICC officials said that they had Boynton committed because he was "worrying them to death" in his promotion of the bicycle railroad.[34] Based on his own testimony and that of a Massachusetts congressman,[34] Boynton won release on May 28, 1920, overcoming testimony of the ICC's chief clerk that Boynton was virtually a daily visitor at ICC offices, seeking Commission adoption of his proposal to revolutionize the railroad industry.[32]
ICC jurisdiction on rail safety (hours of service rules, equipment and inspection standards) was transferred to theFederal Railroad Administration pursuant to theFederal Railroad Safety Act of 1970.[37]
Before the ICC was abolished motor carriers (bus lines, trucking companies) had safety regulations enforced by the Office of Motor Carriers (OMC) under the Federal Highway Administration (FHWA). The OMC inherited many of the "Economic" regulations enforced by the ICC in addition to the safety regulations imposed on motor carriers. In January 2000 the OMC became theFederal Motor Carrier Safety Administration (FMCSA), within theU.S. Department of Transportation. Prior to its abolition, the ICC gave identification numbers to motor carriers for which it issued licenses. The identification numbers were generally in the form of "ICC MC-000000". When the ICC was dissolved, the function of licensing interstate motor carriers was transferred to FMCSA. All interstate motor carriers that transport freight moving across state lines have a USDOT number, such as "USDOT 000000." USDOT numbers serve as critical infrastructure that enables seamless interstate commerce by standardizing carrier identification, facilitating regulatory oversight, and supporting the coordination of freight movement across state lines.[38] There are private carriers, e.g. Walmart that move their own freight requiring only a USDOT number, and carriers with authority that haul freight for hire that are still required to have a USDOT number and a Motor Carrier (MC) number that replaced the ICC numbers.[39]
The ICC served as a model for later regulatory efforts. Unlike, for example, state medical boards (historically administered by the doctors themselves), the seven Interstate Commerce Commissioners and their staffs were full-time regulators who could have no economic ties to the industries they regulated. Since 1887, some state and other federal agencies adopted this structure. And, like the ICC, later agencies tended to be organized as multi-headed independent commissions with staggered terms for the commissioners. At the federal level, agencies patterned after the ICC included theFederal Trade Commission (1914), theFederal Communications Commission (1934), theSecurities and Exchange Commission (1934), theNational Labor Relations Board (1935), theCivil Aeronautics Board (1940),Postal Regulatory Commission (1970) and theConsumer Product Safety Commission (1975).
In recent decades, this regulatory structure of independent federal agencies has gone out of fashion. The agencies created after the 1970s generally have single heads appointed by the President and are divisions inside executive Cabinet Departments (e.g., theOccupational Safety and Health Administration (1970) or theTransportation Security Administration (2002)). The trend is the same at the state level, though it is probably less pronounced.
The Interstate Commerce Commission had a strong influence on the founders of Australia. TheConstitution of Australia provides (§§ 101-104; also§ 73) for the establishment of anInter-State Commission, modeled after the United States' Interstate Commerce Commission. However, these provisions have largely not been put into practice; the Commission existed between 1913–1920, and 1975–1989, but never assumed the role which Australia's founders had intended for it.
^Rose, Mark H.; Seely, Bruce E.; Barrett, Paul F. (2006).The Best Transportation System in the World: Railroads, Trucks, Airlines, and American Public Policy in the Twentieth Century.Ohio State University Press. pp. 7–8.ISBN978-0-8142-1036-9.
^abKolsrud, Gretchen S.; et al. (December 1975)."Appendix B. Review of Recent Railroad Merger History". A Review of National Railroad Issues (Report). Washington, D.C.: Office of Technology Assessment, United States Congress. OTA-T-14.NTIS order #PB-250622.
^United States. Transportation Act of 1940, Sept. 18, 1940, ch. 722, 54 Stat.898.
^Walker, Jesse (November 1, 2009)."Five Faces of Jerry Brown".The American Conservative (November 2009).Archived from the original on July 22, 2019. RetrievedJuly 22, 2019.
Stone, Richard D. (1991).The Interstate Commerce Commission and the railroad industry: a history of regulatory policy. New York:Praeger.ISBN978-0-275-93941-0.
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