The Surface Transportation Board, a federal agency with broad authority over the nation’s railroads, is currently weighing a petition that could undo most of the progress made since railroad deregulation in the early 80s. That makes it particularly crucial that the Senate think long and hard about two pending appointments to the STB, which are set to come before the Committee on Commerce, Science and Transportation in the near future.
Formed in 1996 as a successor to the Interstate Commerce Commission, the STB interprets laws, promulgates rules and settles disputes related to railroads. It’s crucial that it be run by people who understand the need for a light regulatory touch, because the industry that it oversees has been a poster child of the power of deregulation.
Congress was able to achieve that substantial railroad deregulation with the Staggers Rail Act of 1980, which eliminated costly rate controls and regulatory review processes that needlessly drove prices upward. The law was an important step to ensure that privately operated railroads could sustain themselves in a competitive manner. In fact, in the decade following the passage the law’s passage, the rail industry was able to cut its costs and prices by half. By some estimates, shipping rates have dropped 51 percent since reforms went into effect.
But that all could change. Shipping interests who are reliant on moving their goods by rail are seeking a rule that would force railroads to lend their tracks to other railroads. This so-called “reciprocal switching” rule is based on a pair of faulty assumptions.
The first incorrect assumption is that rail lines are public property and should be treated the same as roads; they aren’t, and they shouldn’t be. For the most part, rail lines are owned by private firms. The second bad assumption is that railroads can’t coordinate use of each other’s rail lines on their own, even though they do it all the time.
President Donald Trump hasn’t yet made public his choices for the two STB seats that are set to be filled. It is vital that new members of the STB, whoever they may ultimately be, understand that a reciprocal switching rule would effectively re-regulate our nation’s rails. It is up to the Senate to ensure the nominees understand not only the details of the Staggers Act, but also its intent: to keep U.S. rails free and competitive.
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