The Transportation Act of 1958 modified the jurisdiction of the ICC over interstate rail rates and expanded it with respect to the discontinuance or change of unprofitable services. In addition, it amended the rule of rate making to allow carriers greater freedom in making intermodal competitive rates and forbade the holding of rates at a particular level to protect the traffic of any other mode of transportation.
In 1968, however, in the American Commercial Lines, Inc. v. Louisville and Nashville Railroad Company case, known as the Ingot Molds decision, the Supreme Court upheld the ICC denial of a rail-rate reduction to meet barge-truck competition, where such rate was above the marginal costs of the railroads, but below both their own fully distributed costs and those of their competitors.
In 1966 the Department of Transportation Act created a cabinet-level federal transportation agency to oversee and develop national transportation policies and programs. The new Department of Transportation was officially activated on April 1, 1967. The Federal Railroad Administration was created as one of the operating units within the department and was given administrative authority over the federally owned Alaska Railroad, which was transferred from the Department of the Interior; the Bureau of Railroad Safety, transferred from the ICC; and the Office of High-Speed Ground Transportation, transferred from the Department of Commerce.
The act transferred the railroad, motor carrier, and pipeline safety functions of the ICC to the Department of Transportation. It also created an independent National Transportation Safety Board, the primary functions of which are to determine the causes and circumstances of transportation accidents and to recommend to the secretary of transportation steps that can be taken to improve transportation safety.