On the heels of the first presidential debate in which Secretary Hillary Clinton and Donald J. Trump spared over the best path forward for the U.S. economy, freight railroads today illustrate how balanced economic regulations and overall smart public policy can revitalize an entire industry. But with multiple proposed rules threatening to upend this success against the backdrop of seismic changes in the market, our next president must recognize the intelligent regulatory framework that has allowed the rail sector to become an economic engine for our country.
America’s freight rail industry plays a significant role in driving the national economy, with a recent study showing that in 2014 the industry generated close to $274 billion in economic activity while supporting nearly 1.5 million jobs across the country.
While freight railroads are essential to our way of life and maintaining a strong economy – serving as an industry that connects other industries to the global marketplace – they have not always enjoyed such a prominent role. Several decades ago, over-involvement of the government in everyday business decisions such as determining routes or manipulating market rates forced railroads to operate inefficiently on deteriorating rail infrastructure with little or no money to reinvest or grow. This pushed railroads into bankruptcy and nearly led to a government takeover of the industry.
All this changed in 1980, shortly before a highly contested election in its own right, when President Carter signed into law the Staggers Act, a regulatory overhaul that largely removed these strict impediments. This balanced policy environment helped boost industry revenues, and railroads eagerly re-invested billions in private money toward growing and upgrading a national rail network that was once on the brink of ruin. Since Staggers, freight railroads – not American taxpayers – have poured more than $600 billion into what is considered the best freight rail system in the world.
The lesson for the business and policy communities alike is clear: Government serves an undeniable service to represent the public’s interest and oversee business, but when its bureaucracy begins to influence and regulate too many facets of a sector, it is a recipe for disaster for the industry, consumers and businesses. Smart policy requires a delicate balance between oversight and freedom in which industry is not vilified but valued for its contributions to the nation.
Today, the entire country benefits from privately owned and maintained freight railroads and its corresponding regulatory structure that allows the sector to offer highly efficient services safely and affordably.
As presidential candidates continue to discuss how to strengthen the nation’s economy for the future and how to tackle the long-too-ignored topic of infrastructure funding, they should look to learn from the lessons of the past and ensure when a policy works, it is preserved. They should squash senseless changes in policies being exhibited by government leadership today.
The Surface Transportation Board recently proposed a rule that would require railroads to open up their business to other rail competitors, introducing a radical approach that would force carriers to let other railroads use their tracks. They say this should be done without any proof of anticompetitive behavior, and want the public to believe that competition is somehow enhanced through regulation. This is an unnecessary regulation that would hinder railroads’ ability to move cargo quickly and efficiently, and is done in a vacuum without consideration for market realities or additional regulations.
Meanwhile, the Federal Railroad Administration has proposed a rule that would require trains to be operated by at least two crewmembers at all times, despite the fact that the FRA itself has acknowledged that there is no data to support how this would improve safety. In fact, the FRA has even said that single-person crews may have contributed to improving safety in the rail industry.
Taken together with several other equally unjustified proposals, the proposed regulations represent a sweeping reversal of the approach of the last three-plus decades, inject government-induced uncertainty and undermine Congressional intent. Allowing unnecessary regulations to stifle the industry once again will not only hurt freight railroads, but will also negatively impact the entire American economy.
Come January, a new president, along with a new Congress, will begin working together to get America’s economy running at its full potential. Facilitating a sensible regulatory environment attune to current market forces will help achieve this goal, including guarding the policies that have proven to be successful against bureaucratic overreach.
Edward R. Hamberger is president and CEO of the Association of American Railroads. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
