Smart, Balanced Economic Regulation
America’s thriving freight rail network is proof that smart and balanced government regulation can work—both for the regulated industry and the public. The performance of U.S. freight railroads in the years prior to 1980 and following passage that year of the landmark Staggers Rail Act presents a stark “before and after” portrait showing just how important smart public policy is to our economy.
By 1980, decades of stifling federal over-regulation had devastated the rail industry, driving many railroads out of business or into bankruptcy. Railroads and the companies and communities they served all suffered under a convoluted system of economic regulation that made it impossible for railroads to earn enough revenue to attract sufficient capital to reinvest back into the rail network.
The Staggers Act changed all that by allowing railroads to operate like other businesses in a free market—and to grow revenues and thus the ability to make needed improvements in track, technology and equipment. Today’s smart and balanced economic regulation has enabled railroads to churn nearly $740 billion back into the rail system since 1980 and given America the safest, most productive and efficient freight rail network on earth.
Download the GoRail Issue Brief on how smart, balanced rail regulation is working.
Modern, Forward-looking Operational Regulation
As America’s first high-tech industry, railroads connected a growing nation and helped build the country we know today, all the while adapting to meet new challenges and a changing economy. Today’s freight railroads are high-tech, high-horsepower deployers of new technologies like ground-penetrating radar, ultrasonic inspection systems and remote-control technologies, which have made recent years among the safest on record and allowed the industry to double the amount of freight moved on a single gallon of diesel since 1980.
To support continued innovation, regulators need to recognize the reality and value of technological advancement in the rail sector. Overly prescriptive regulations should be replaced with a performance-based approach that holds railroads accountable for safety performance while allowing them to use new technologies and innovation to meet benchmarks.
The government should also avoid adding new backward-looking regulations. Mandating the number of crew members on a given train, for example, ignores safety data and would discourage innovation. Historically, railroads have decided the proper number of crew members on a train according to the needs of the shipment and collective bargaining agreements with rail employee unions. Some smaller freight railroads in the U.S., along with many passenger trains and railroads across the world, use fewer crew members to operate the train and their safety records are equal to two-crew operations.
Freight railroads have spent billions of dollars deploying Positive Train Control (PTC), a system of technologies that can remotely stop a train before certain human-error accidents occur. Mandating a specific railroad crew is a disincentive to research new technologies that will be necessary for railroads to compete with other modes of transportation, many of which receive government subsidies to encourage autonomous technology that can reduce human error.
Fairness Among Freight Modes
Every few years, the American Society of civil Engineers (ASCE) produces a ‘report card’ on U.S. infrastructure. In 2017, ASCE gave U.S. roads a “D” grade and bridges a “C+” in their report card. Nearly half of the nation’s bridges are at least 40 years old and nearly 10 percent are structurally deficient, according to the U.S. Department of Transportation (USDOT). Traffic delays cost the American economy $160 billion per year in wasted time and fuel. Despite these challenges, certain freight shippers ask Congress every year to allow trucks that are longer or heavier or that pull more trailers.
Compounding the problem is the fact that the most common truck on the road today only pays for about 80 percent of the damage it inflicts on roads and bridges, according to the USDOT. Longer and heavier trucks would cover even less of their costs.
U.S. freight railroads use their own private dollars to maintain their networks. But the government subsidy for heavy trucks and other freight modes incentivizes putting even more trucks on the road. Allowing longer and heavier trucks without requiring them to pay for the full cost of the infrastructure they use would only increase this subsidy, costing taxpayers even more money and diverting freight from rails to highways.
Given the state of American roads and bridges, the lack of sufficient funding to maintain them and the fact that moving freight by truck rather than rail exacerbates those problems while also consuming more fuel and emitting more pollutants, policymakers should maintain commonsense limits on truck size and weight and require all trucks to pay for the full cost of their infrastructure damage.
Download the GoRail Issue Brief on modal equity.
Free and Fair Trade
Much of American life is facilitated by employment and consumption, which is made possible by domestic and international trade. Railroads facilitate trade, connecting companies and communities to towns and markets across the nation and the world.
In fact, 42% of rail carloads and intermodal units and 35% of annual rail revenue are directly associated with international trade. About 50,000 rail jobs, worth over $5.5 billion in annual wages and benefits depend directly on international trade.
Free and fair trade laws strengthen ties between trading partners, grow the economy and help expand economic opportunity for American companies, consumers and employees. Government leaders should support agreements that expand free and fair trade and they should oppose policies that restrict access to global markets.
Download the GoRail Issue Brief on international trade.