The Hepburn Act is a piece of legislation passed by the United States Legislature in 1906 whose purpose was to regulate the railroad industry. At the time, monopolistic oil companies wielded their power over the railroads and the Hepburn Act was a measure to check those companies’ growing power. The law took several measures to prevent monopolistic behavior and expanded the power of the Interstate Commerce Commission (ICC) — the governmental body that was charged with the regulation of the railroads.
One of Theodore Roosevelt’s primary aims in entering the presidency was to better regulate the railroads. The Hepburn Act, coupled with the Elkins Act, which was passed by the United States Legislature just three years prior, served to do just that. The law was part of the line of legislation enacted during the Progressive Era, which lasted from the 1890s and into the 1920s, that was geared toward limiting the power of the growing number of industrial monopolies.
The biggest problem in the railroad industry at the time of the Hepburn Act was the amount of power the oil companies had over the various companies. Oil companies had invested so heavily in railroads that they were able to demand rebates on fees paid for transit of their oil. After the Elkins Act made such rebates illegal in 1903, the oil companies found their way around that particular regulation by demanding free transit in some circumstances. The Hepburn Act restricted the granting of these free passes, making it harder for the oil companies to use their leverage to avoid paying fees to the railroad companies.
The Hepburn Act also expanded the power of the Interstate Commerce Commission in several ways. After the law was passed, the ICC was able to dictate the maximum rates that the railroads could charge for their services. The ICC also began to require that the railroad companies adopt uniform accounting practices, which gave the ICC a better ability to oversee operations. Further, after the passage of the Hepburn Act, if a railroad company were to appeal an ICC decision, the burden of proof was now on the railroad rather than the ICC. In other words, the obligation was on the railroads to show why the ICC was wrong in the appeal, whereas prior to the Hepburn Act’s passage, the ICC had the obligation to show why the particular railroad was wrong.