trucking industry finally came under the oversight of the federal government.
The MCA 1935 regulated the rates charged by trucking companies, the
number of hours that truckers were allowed to drive, and trucking companies’
range and permissible types of freight. Of these, only the second and third
categories address, in any real sense, potential safety externalities. The first
was embodied in a grant of power to the Interstate Commerce Commission
(ICC) to provide oversight regarding standards of fairness and balancing the
interests of market participants28 and seems motivated, again, by a distrust of
market mechanisms, rather than any evidence of actual market failures. 29
Regulation of this nature—untethered to any identifiable market failure
and overly broad—should have inhibited growth in the trucking industry as
external distortions dampened the growth capacity of the market. Instead,
however, the industry grew during the early years of regulation and the
trucking industry’s reliability and safety also improved. One interpretation of
these results is that the regulation was successful in curbing market
imperfections, allowing the new industry to thrive. To the extent that safety
externalities dominated, this is likely correct. An alternative explanation is
that, given the rapid advances in the relevant technology, the industry
advanced in spite of, rather than because of, the regulations. 30
Fast-forwarding to the 1970s and 1980s, there was increasing political
pressure to deregulate. This pressure was bipartisan, 31 culminating in passage
of the Motor Carrier Act of 198032 (MCA 1980). 33 Opponents of deregulation
George, supra note 23, at 252.
28. If the ICC found a rate unreasonable or unjust, the ICC would prescribe minimum,
maximum, or actual rates. Veiko Paul Paramig, Productivity and Competition in the U.S.
Trucking Industry since Deregulation (2013) (M.S. thesis, Massachusetts Institute of
29. There is reason to believe that the MCA 1935’s rate regulation provisions were an
attempt to make trucking less profitable in order to benefit the primary substitute for trucking
services—railroads. Either way, there is no obvious market failure that would justify rate
30. There is some evidence that, rather than engaging in corrective regulation, the ICC
functioned as an arm of the trucking lobby. ROBERT FELLMETH, THE INTERSTATE COMMERCE
OMISSION (1970) (describing the ICC as “an Elephant’s graveyard of political hacks, who
enjoyed bribes in the form of a revolving door of subsequent employment in the industry.”).
31. Senator Edward Kennedy testified in favor of the regulation, arguing that existing
regulations imposed additional costs on trucking companies, costs which they passed on to
consumers. MARTHA DERTHICK & PAUL J. QUIRK, THE POLITICS OF DEREGULATION 41 (1985)
(“Regulators all too often encourage or approve unreasonably high prices, inadequate service,
and anti-competitive behavior. The cost of this regulation is always passed on to the consumer.
And that cost is astronomical.”). More traditional deregulation proponents agreed, such as
Alfred Kahn, who argued that deregulation would increase competition and, as a result, protect
consumers from excessively high prices and poor service. 95th Cong., 1st Sess. 231 (1977).
32. Motor Carrier Act of 1980, Pub. L. 96-296, 94 Stat. 793 (1980) (amended 1982).
33. Dempsey, supra note 17, at 330.