Deregulation

Deregulation was a politicoeconomic movement that began in the late 1960s in a drive to undo the regulatory controls on transporting of goods and people. The regulations had been imposed by popular demand to protect the public from rapacious shipping companies since the 1870s. Deregulation decommissioned the regulatory work of a century in order to eliminate its harmful effects. Regulation of shipping tariffs and other features of the transportation industry began in the United States in the 1870s in an effort to prevent overcharging from the public's point of view. The railroads were conducting business in an unregulated market economy, providing services to millions of customers. However, their pricing practices and other customer concerns were often viewed with hostility. In many cases they were charging high freight rates because only one railroad was available for shipping crops or livestock.

Customer complaints were often ignored in an era of ever-expanding trackage hauling ever-growing lots of goods. Politicians responded to the complaints of voters and interests dissatisfied with railroad services by creating the Interstate Commerce Commission (ICC) in 1887. The ICC was supposed to regulate railroad freight rates by fixing price ceilings in order to prevent the railroads from reaping what would be deemed excessive profits. However, the ICC had little in the way of enforcement power. It was also weakened in its regulatory powers by adverse Supreme Court decisions.

During the administration of President Theodore Roosevelt the Hepburn Act (1906; 34 Stat. 584) was adopted. This act began the expansion of the ICC's authority from regulating railroads to regulating all common carriers except airplanes. The regulatory controls were widened and extended in the period between 1920 and 1940 to other passenger common carriers and to the growing aviation industry. The Motor Carrier Act of 1935 (P.L. 74–255, 49 Stat. 543) was an amendment to the Interstate Commerce Act. It instituted federal regulation of interstate bus lines and airlines as a form of public utility monopoly.

The regulatory power of the ICC was based upon the expressly delegated power of Congress to regulate interstate commerce under Article I, section 8 of the U.S. Constitution. The ICC's regulation of motor carriers was modeled after its regulatory powers over railroads. The legal effect was that the ICC had major economic control of the motor carrier business because its control chose the companies that could be motor carriers, the kinds of services they could offer, and the rates they could charge.

Like the Motor Carrier Act of 1935 the Civil Aeronautics Act of 1938 (CAA; PL 75–706, 52 Stat. 973) was based upon Congress' power to regulate interstate commerce under Article I, section 8 of the Constitution. The CAA created the Civil Aeronautics Authority in order to centralize safety regulations but did so in a way that balanced commercial interests. Key provisions of the act were linked to the authority of the U.S. Post Office to carry the mail. Contracts to carry the mail with airlines were federal issues.