Interstate Commerce Act

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Interstate Commerce Act

The Interstate Commerce Act of 1887 (24 Stat. 379 [49 U.S.C.A. § 1 et seq.]) stands as a watershed in the history of the federal regulation of business. Originally designed to prevent unfair business practices in the railroad industry, the statute shifted responsibility for the regulation of economic affairs from the states to the federal government. It has been amended over the years to embrace new and different forms of interstate transportation, including pipelines, water transportation, and motor vehicle transportation. Among its many provisions, it established the Interstate Commerce Commission (ICC).

As part of its mission, the ICC heard complaints against the railroads and issued cease- and-desist orders to combat unfair practices. It later regulated many other forms of surface transportation, including motor vehicle and water transportation. The ICC was abolished in 1995, and many of its remaining functions were transferred to the Transportation Department.

The Interstate Commerce Act was passed as a result of public concern with the growing power and wealth of corporations, particularly railroads, during the late nineteenth century. Railroads had become the principal form of transportation for people and goods, and the prices they charged and the practices they adopted greatly influenced individuals and businesses. In some cases, the railroads abused their power as a result of too little competition, as when they charged scandalously high fares in places where they exerted Monopoly control. Railroads also grouped together to form trusts that fixed rates at artificially high levels.

Too much competition also caused problems, as when railroads granted rebates to large businesses in order to secure exclusive access to their patronage. The rebates prevented other railroads from serving those businesses. Larger railroads sometimes lowered prices so much that they drove other carriers out of business, after which they raised prices dramatically. Railroads often charged more for short hauls than for long hauls, a scheme that effectively discriminated against smaller businesses. These schemes resulted in Bankruptcy for many rail carriers and their customers.

Responding to a widespread public outcry, states passed laws that were designed to curb railroad abuses. However, in an 1886 decision, Wabash, St. Louis, & Pacific Railway Co. v. Illinois, 118 U.S. 557, 7 S. Ct. 4, 30 L. Ed. 244, the U.S. Supreme Court ruled that state laws regulating interstate railroads were unconstitutional because they violated the Commerce Clause, which gives Congress the exclusive power "to regulate Commerce with foreign nations, and among the several States, and with the Indian Tribes" (art. I, § 8). Wabash left a regulatory void that was soon filled by Congress. The followingyear, it passed the Interstate Commerce Act, which President grover cleveland signed into law on February 4, 1887.

The law required that railroad rates be "reasonable and just," but it did not empower the federal government to fix specific rates. It prohibited trusts, rebates, and discriminatory fares. It also required carriers to publish their fares, and allowed them to change fares only after giving the public ten days' notice.

Now referred to as the Revised Interstate Commerce Act of 1978 (P.L. 95–473), the act was again revised in 1983 (P.L. 97–449) and 1994 (P.L.103–272). The latter revisions and recodifications simplified the language of the act and reorganized certain sections; no major substantive changes were made. The statute remains the bastion of regulatory guidance for the transportation and freight industries and for any other entity acting as a Broker, shipper or shipper's exclusive agent, or carrier.

Further readings

Interstate Commerce Commission. 1979. Interstate Commerce Commission … in the Public Interest.

Transportation Consumer Protection Council, Inc. 1996. "Freight Claims in Plain English." 3d ed. Available online at (cited May 18, 2003)


Railroad; Shipping Law.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Apparently, this decision spurred Congress to pass what became known as the Interstate Commerce Act the next year.
The Interstate Commerce Act was intended primarily to regulate the railroad industry.
Unlike the Interstate Commerce Act, the Civil Aeronautics Act of 1938 (56)--another statute regulating air transportation--does not confer the power to grant monetary damages or reparations for past misconduct of the carrier upon an administrative agency.
Picker, The Interstate Commerce Act and the Sherman Act: Playing Railroad Tycoon, 95 Marq.
184, 196 (1896) (concluding that the Interstate Commerce Act did not expressly or impliedly give the Interstate Commerce Commission the power to set railroad rates), superseded by statute, Mann-Elkins Act, ch.
The filed-rate doctrine in the intervening years has been applied in countless cases to require strict adherence to a common carrier's rates filed pursuant to the Interstate Commerce Act,(13) as well as other regulatory statutes.(14)
Indeed, the railroads were among the first of the alleged violators to have been successfully prosecuted under Sherman Act, approved only a few years after the enactment of the Interstate Commerce Act.(37) The railroads' broad claim of immunity flowing from their economic regulation would seem to be meritless.(38)
Ironically, this transformation of the judicial function facilitated the triumph of bureaucratic regulation identified with the Illinois Railroad Commission and the Interstate Commerce Act.
Stickney believed the Interstate Commerce Act would fail to prevent unjust discrimination because it tried to preserve competition, which was in his view the source of discrimination.
The original act prohibited the procurement of dual operating rights by a single motor carrier and the co-mingling of common and contract property in the same vehicle.(3) In 1937, the ICC enacted the first of three regulations which governed ICC-regulated motor contract carriage under authority of the Interstate Commerce Act.(4) The decision of "Contracts of Contract Carriers," 1 M.C.C.
The filed rate doctrine can be traced back to the ICC's regulation of railroads under the original Interstate Commerce Act.(5) Railroads were the first major land-based transportation system in this country.

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