Interstate Commerce Commission ICC

Farmers and shippers in the late nineteenth century complained that railroads charged discriminatory rates, gave secret rebates to favored customers, and used their monopoly power on local routes. After the Supreme Court ruled in 1886 that states could not regulate interstate rail rates, President Grover Cleveland signed the Interstate Commerce Act on February 4, 1887, creating the Interstate Commerce Commission. It was the first independent federal regulatory commission, with members serving fixed terms and drawn from both parties, and it became the model for the regulatory agencies that followed.

At first the ICC had little power, but the Hepburn Act of 1906 and later laws let it set maximum rail rates, and Congress extended its authority to oil pipelines, trucking in 1935, and water carriers in 1940. At its height it controlled which companies could operate on which routes and at what prices across much of the transportation economy. In 1961, after the Freedom Rides, it issued rules ordering the end of racial segregation in interstate bus terminals, which took effect that November.

By the 1970s economists across the political spectrum argued that ICC regulation had protected incumbent companies, raised prices, and contributed to the near collapse of the railroads, an example often cited as regulatory capture. The Staggers Rail Act and the Motor Carrier Act of 1980 largely deregulated rail and trucking, and the ICC Termination Act, signed on December 29, 1995, abolished the commission effective January 1, 1996, moving its remaining duties to the new Surface Transportation Board. Supporters of deregulation credit it with lower freight costs and a revived rail industry, while some shippers say the remaining railroads gained too much pricing power.