Captive Regulators, Captive Shippers: The Legacy of Mccarty Farms

Abstract

Thirty years ago, Congress reoriented the Interstate Commerce Commission to protect railroads in addition to shippers. Part I of this article describes the circumstances behind this regulatory shift and the regime it produced. Part II explains both the development and failure of the new regime in a case brought by a group of Montana wheat and barley farmers, McCarty Farms, Inc. v. Burlington Northern, Inc. Part III describes the termination of the Commission and the attempts of the newly created Surface Transportation Board to correct the regulatory failure of McCarty Farms. Part IV explains the impact of the new regime on railroads and grain shippers, and discusses procedural lessons from McCarty Farms that may guide future reforms of the Surface Transportation Board and other regulatory institutions.

Keywords: Regulated Industries, Interstate Commerce Commission, Surface Transportation Board, Railroads, Agriculture

JEL Classification: K23, L92