Implemention of the Conrail "Final System Plan," as formulated by the United States Railway Association, and which specified the rail lines that Conrail would receive
Provision of operating funds for Conrail, which had not received direct federal funds under the 3R Act. Initial funding for 1976 was $484 million
Amtrak could acquire rights of way, tracks, and related facilities for the Northeast Corridor rail line between Washington, D.C. and Boston
Initial funds were provided to Amtrak of approximately $85.2 million for the NEC acquisition.
The "Declaration of policy" in the Act, was as follows: The financial assistance provisions of the Act were largely palliative and transitional. They were extended on the condition that changes in the regulatory system governing railroads be enacted, with the hope that a regulatory system which gave railroads more freedom in pricing and service arrangements, subject to greater competitive constraints, would yield a more viable industry and better service for its users. Studies of the legislative history of the Act indicate that the Gerald Ford administration secured the regulatory provisions only by threatening a veto of any act containing financial assistance for railroads but no reform of the regulatory system. The changes in regulation provided for were as follows:
Section 202 provided that rail rates would not be considered ‘unjust and unreasonable’ if they exceeded long run marginal costs and applied to traffic as to which the railroads did not have ‘market dominance’. The railroads were to be allowed to explore this ‘zone of reasonableness’, with presumptions against suspension or challenge of proposed rates, at a rate of 7% per year.
Section 206 provided for, in substance, contract rates for transactions involving an investment of more than $1 million.
Section 207 provided the Commission with authority to exempt from regulation entirely categories of traffic, upon making findings in substance that regulation was unnecessary.
Section 208 prohibited collective rate making on movements which a rail carrier could handle entirely on its own system, and buttressed the right of ‘independent action’ by rail carriers.
Many members of the ICC strongly opposed the Act. The regulatory provisions had been enacted over several commissioners' objections, and the Commission's implementation of the Act initially had little impact on the way the rail industry functioned. When President Jimmy Carter nominated A. Daniel O'Neal, originally appointed by President Richard Nixon, to chair the ICC, O’Neal began to develop the possibilities for opening up the rail market to competition and innovation. Also, in 1978 a group of major railroads formed an organization called TRAIN to support further deregulation of the industry. The carriers' perception was that with collective rate making limited, and a Commission apparently more interested in letting their rates go down than go up, the regulatory system, as a whole, in the net, no longer favored them. Large shippers of goods by rail also wished to have more flexibility in the rail market. The net result of compromise between the carriers and the shippers, and the Carter administration’s push for a more competitive transport was the Staggers Act of 1980. The Staggers Act worked from the 4R Act template but extended its provisions. One of the key changes from the 1976 Act was allowance of secret contracts between carriers and shippers, not limited to large-investment situations and not effectively subject to regulatory review. According to former Congressional Budget Office analyst Christopher Barnekov, such contracts allowed the rail carriers and their shippers much more opportunity readily to develop more efficient transport arrangements, which lowered costs for the carriers, yielding better returns for the carriers and lower rates for the shippers. Thus, railroad "deregulation" was a two step process, starting with the 4R Act and concluding with the Staggers Act. In substance, the railroad regulatory reform legislation, from 1970 to 1980, turned toward greater use of market systems to deal with the problems of the rail industry in the US rather than resorting to nationalization, which had been considered from time to time.
