FEDERAL RAILROAD ADMINISTRATION

For many years the economic practices of the transportation system in the U.S. were unregulated. In 1887, railroads came under federal regulation to curtail abuse of railroad monopolies. The U.S. railroads were the first large monopolies in the U.S., and society was not certain how to protect itself from them. Regulation of the railroads, first enforced by the Interstate Commerce Commission, controlled rates, and provided that railroads could not charge more for a short haul than for a long haul over the same route. Regulators tried to make railroads set rates that were "fair" to all users, communities, and industries served by the railroads. After World War II (1939–1945), it was clear that federal regulation of railroads was not working well. Trucking and airline industries took much business away from the railroads. Most of the railroads in the Northeast were bankrupt. One of those bankruptcies, Penn Central, was the nation's largest bankruptcy to date. Circa 1970, many of the regulatory shackles were removed from the nation's carriers, including the railroads. In 1966, the Department of Transportation created the Federal Railroad Administration (FRA). The FRA, operating within the U.S. Dept. of Transportation, sets train regulations, including transportation safety, and movements of hazardous materials. The FRA has also moved in the direction of creating partnerships among rail labor, rail management, rail suppliers, passenger and freight railroads, and state and local governments, and the federal government.

See also: Free Trade, Monopolies, Railroad Industry