Motor Carrier Act of 1980
From Wikipedia, the free encyclopedia
The Motor Carrier Regulatory Reform and Modernization Act, more commonly known as the Motor Carrier Act of 1980 (MCA) is a federal law of the United States which deregulated the trucking industry.
Motor carrier deregulation was a part of a sweeping reduction in price controls, entry controls, and collective vendor price setting in United States transportation, begun in 1970-71 with initiatives in the Richard Nixon Administration, carried out through the Gerald Ford and Jimmy Carter Administrations, and followed up on in the 1980s, collectively seen as a part of deregulation in the United States.
The United States government regulated transportation modes until the deregulation wave swept into a series of federal legislative acts beginning in 1976 with the Railroad Revitalization and Regulatory Reform Act. The deregulation of the trucking industry was kicked off with the Motor Carrier Act of 1980 (S.2245), which was signed into law by President Jimmy Carter on July 1, 1980.
Studies of the legislative process leading up to passage of the MCA indicate that the Act resulted from a concert of action by the Carter Administration, Congressional leaders, including Sen. Ted Kennedy, an extensive coalition of 'civil society' organizations which was a follow-on to coalitions created for rail and air transport regulatory reforms, and Interstate Commerce Commissioners appointed by Presidents Nixon and Carter who supported the pro-competition objectives of the legislative initiatives of 1971-1980 (notably A. Daniel O'Neal and Darius Gaskins).
The MCA was envisioned to be a sweeping de-regulation of the trucking industry. When President Carter signed the bill, he proclaimed: "I have today signed into law S. 2245, the Motor Carrier Act of 1980. This is historic legislation. It will remove 45 years of excessive and inflationary Government restrictions and redtape. It will have a powerful anti-inflationary effect, reducing consumer costs by as much as $8 billion each year. And by ending wasteful practices, it will conserve annually hundreds of millions of gallons of precious fuel. All the citizens of our Nation will benefit from this legislation. Consumers will benefit, because almost every product we purchase has been shipped by truck, and outmoded regulations have inflated the prices that each one of us must pay. The shippers who use trucking will benefit as new service and price options appear. Labor will benefit from increased job opportunities. And the trucking industry itself will benefit from greater flexibility and new opportunities for innovation."
The Act prohibited rate bureaus from interfering with any carrier's rights to publish its own rates, and, as implemented, removed most rate making from the rate bureaus, eliminated most restrictions on commodities that could be carried, and deregulated the routes that motor carriers could use and the geographic regions they could serve. The law authorized truckers to price freely within a "zone of reasonableness," meaning that truckers could increase or decrease rates from current levels by 15 percent without challenge, and encouraged them to make independent rate filings with even larger price changes.
A particularly interesting aspect of this legislation is that it was implemented more aggressively (in a pro-competitive direction) than it was written. Promoting independent pricing and open entry were critical to achieving a level of competition made possible by the characteristics of the trucking industry. Under Darius Gaskins, the Chair of the Interstate Commerce Commission in the period immediately following passage of this Act, entry controls were dramatically reduced. In addition, the Commission interpreted the Act to allow contract rate making without regulatory review, and opened the field for transport brokers who could manage better match ups between the demand for transport services and the availability of carriers.
Before this law was passed, the industry had simply passed along higher wages and operating costs to shippers. The law had far-reaching consequences, causing price competition and lower profit margins.
A result of the law was that the number of new firms has increased dramatically, especially low-cost, non-union carriers. By 1990 the number of licensed carriers exceeded forty thousand, more than double the number in 1980. Combined with the Staggers Act (1980), intermodal carriage surged, expanding 70 percent between 1981 and 1986.
'Deregulation' -- freeing up the trucking market to permit much more flexible pricing and service arrangements, disciplined by competition -- allowed manufacturers to reduce inventories, move their products more quickly, and be more responsive to customers. Consumers indirectly benefited from the more efficient, lower-cost transport of goods. (See From Economic Deregulation to Safety Regulation Department of Transportation comprehensive study on deregulation effects.)
[edit] References
- Derthick and Quirk, The Politics of Deregulation, Brookings Institution, 1985.
- Moore, Thomas Gale. "Rail and Truck Reform: The Record So Far." Regulation. November/December 1988.
- Organization for Economic Cooperation and Development. International Conference. Road Transport Deregulation: Experience, Evaluation, Research. November 1988.
- Robyn, Dorothy, Braking the Special Interests, University of Chicago Press, 1987.
