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Interstate Commerce Commission

Technology Transfer Centers. In 2006 there were more Commission (ICC), the U.S. government’s first regula-
than fifty across the United States. tory agency. The initial purpose of the ICC was to control
railroads and their unfair business practices. The U.S. gov-
E-Commerce. The FCC has recently come to the forefront ernment’s assumption of the role of regulator resulted
because of its responsibility to regulate e-commerce. The from the U.S. Supreme Court’s 1886 ruling in the case of
FCC sought comment on two rule-making dockets in Wabash Railroad v. Illinois, which prohibited states from
2000: the Access Charge Reform rule-making docket and controlling interstate commerce.
the Complete Detariffing for Competitive Access Railroads presented some special problems because
Providers and Competitive Local Exchange Carriers rule- they were capital-intensive, had high maintenance costs,
making docket, which is involved with the regulatory or and had two types of rail lines. This situation led to unfair
market-based approaches that would ensure that competi- pricing practices. For major trunk lines, where there was
tive local exchange carriers (CLEC) rates for interstate competition, the railroads charged lower rates and even
access are reasonable. Many proposals are being discussed gave rebates. For spur lines, where there was a monopoly,
at these proceedings, and the FCC invites all interested the railroad charged higher rates for the same type of
parties to comment on whether mandatory detariffing of cargo.
CLEC interstate-access service rates would provide a mar- Even with the federal government taking charge of
ket-based deterrent to excessive terminating access charges. regulating railroads, the ICC still began with a rocky start.
In addition, the FTC has been sponsoring workshops In its first sixteen court actions, the ICC won only one
throughout the United States that are intended to educate case; and the Supreme Court made several power-limiting
people about how marketplaces work and to explore the judgments against the ICC. Later legislation, however,
anticompetitive scenarios. The FTC will be involved in provided strength for ICC rulings. The 1903 Elkins Act
scrutinizing virtual competition in e-marketplaces. In addressed unfair competitive methods. The 1906 Hep-
addition to challenges that e-marketing poses is the ten- burn Act eliminated the mandated court order to make
sion that exists between a state’s authority to tax and the ICC rulings binding and gave the ICC control of gas and
water pipelines. The milestone Transportation Act of
authority of Congress to regulate interstate commerce.
1920 resulted in the ICC’s moving from approving to
For example, foreign businesses are often shocked to learn
actually setting railroad rates, being empowered to organ-
that while treaties may segregate them from the federal
taxation, state taxation can still be imposed, thus putting ize mergers, and to determining appropriate profit levels.
a real damper on foreign investment. The Motor Carrier Act of 1935 placed the emerging
trucking industry under ICC jurisdiction. Typical ICC
SEE ALSO Interstate Commerce Commission duties included holding hearings to investigate com-
plaints, approving transportation mergers, and overseeing
BIBLIOGRAPHY consumer-protection programs.
Brierty, Edward, and Reeder, Robert (1991). Industrial market- By the 1960s the ICC had grown into a massive
ing, analysis planning and control. Englewood Cliffs, NJ: bureaucracy, peaking at 2,400 employees. Shortly there-
Prentice Hall.
after, the agency came under severe criticism. Some
Brown, W. (2005, January). Outside counsel: Federal Arbitration groups argued that, because of regulation, the country’s
Act. New York Law Journal, p. 4.
transportation was inefficient and perhaps corrupt. The
Gillis, William (1989). Profitability and mobility in rural Amer- major criticism—that regulation created artificially high
ica. University Park: Pennsylvania State University Press.
rates—led to pressure for deregulation and signaled the
Miller, Sidney (1953). Inland transportation. New York: beginning of the demise of the ICC. First, the Railroad
McGraw-Hill.
Revitalization and Regulatory Reform Act of 1976 cur-
tailed the ICC power to regulate rates unless the railroad
Patricia A. Spirou 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
INTERSTATE industry had become more efficient thanks to innovative
technology, thereby reducing costs. The final act of dereg-
COMMERCE
ulation came in 1994, when the ICC lost most of its con-
COMMISSION trol over the trucking industry.
President Grover Cleveland signed the Interstate Com- By this time the number of ICC employees had
merce Act of 1887 and created the Interstate Commerce dropped to 300 and the ICC constrained by a severely

432 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION