Congress must stop the assault on taxpayer-friendly freight railroads
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If Congress and the Trump administration are going to make good on a sweeping legislative package to rehabilitate public U.S. infrastructure, namely the roads we use, taxpayers should hope lawmakers maximize private investment and do not exacerbate matters by over-regulating private infrastructure.

This is especially true for the under-the-radar freight railroad industry, which like the internet sector, pays its own way entirely and is working quite well in serving the U.S. economy. Unlike trucks that use roadways consistently funded by taxpayers through transfers from the general fund to the Highway Trust Fund — more than $140 billion in recent years — freight railroads operate on private infrastructure that they build and repair themselves. This includes spending $26 billion annually in recent years and nearly $650 billion since 1980.

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It is therefore especially paramount that the Surface Transportation Board (STB), which regulates railroad economics and is meeting this week to discuss regulatory reform under the current admiration, scrap a proposed “access” rule that would mark a significant change in direction from the industry-saving partial deregulation in 1980. After all, driving cargo from private railroads to taxpayer-funded roads runs counter the restoration of our roads, bridges and the like.

 

Currently, railroads provide access to competitors for a fee or if cargo can only reach its final destination using multiple railroads. Forced access, which the STB is considering, would require one railroad to give a competitor access to its private infrastructure and equipment. The complexity of this process — which could require more than 60 steps for a single switch and take days to complete — causes railroads to lose crucial time as they move goods across the country. Networked industries require efficiency.

But a small cadre of rail customers are throwing their support behind forced access, and want to see more of it. They misleadingly claim it would reduce prices to ship goods by increasing competition. Shippers are already allowed to request this type of traffic switching, however, if they can prove anticompetitive behavior by railroads. This policy has been around for decades, but anticompetitive behavior has not.

These rail customers miss the fact that forced access would kill the network efficiency that has made freight rail a trusted shipping option — with shipping rates reduced 45 percent since deregulation. In fact, in comments filed with the Surface Transportation Board opposing forced access, the world’s largest shipper, UPS, said the rule would decrease the efficiency of the rail network to the extent that it could be forced to move containers back onto highways.

Similarly, the Taxpayers Protection Alliance argued alongside the Competitive Enterprise Institute and other free market organizations last year that the measure is nothing more than a backdoor price control, on the table only because rent-seeking rail shippers continue to lobby for government intervention. The Phoenix Center, an economic think tank, said forced access is “regulatory activism, not competition policy.”

This should raise an alarm bell for all Americans, considering the fact that our country’s road and highway system is already struggling and in need of money. Moving more freight on our roads would lead to further deterioration of this system — as well as more funding gaps — and taxpayers could be left to foot the bill.

In today’s deregulatory political climate, we should be considering options to improve and lessen onerous regulations, such as Sen. Deb FischerDebra (Deb) Strobel FischerUS trade deficit rises on record imports from China Flake, GOP senators to meet with Trump on trade Senate nixes provision boosting conservative college after uproar MORE’s (R-Neb.) recently introduced Railroad Advancement of Innovation and Leadership with Safety (RAILS) Act, rather than imposing new ones. As rail industry commentator Frank Wilner has said, “Innovative and customized approaches to safety improvements especially benefit small railroads burdened by meticulous regulatory prescriptions intended primarily for railroads employing tens of thousands.”

With healthcare, trade, tax reform and the lofty infrastructure goals of leaders in Washington looming, expending political capital on narrow regulations like forced access is foolhardy. And it is a perfect example of an unnecessary regulation that has little benefit for Americans. Taxpayers deserve better.

David Williams is president of the Taxpayers Protection Alliance.


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