Narrow Rules on Rail Will Produce Unintended Consequences in Transportation

Congress is contemplating imposing new requirements on the rail industry aimed at improving safety in the wake of recent derailments. The legislation, titled the Railway Safety Act (RSA), would feature several key changes including mandatory usage of hotbox detectors (HBDs), minimum crew requirements for trains, accelerated phase-in of newer rail cars for flammable liquids and more. While much of the discourse on this topic has focused exclusively on rail, what has been missing has been a more holistic approach to heavy transportation issues, including rail safety. When considering the industry as a whole, we see that the RSA may have unintended consequences for both the environment and safety. What is needed instead is a policy focus on outcomes and policies that are targeted at specific outcomes—such as hazardous materials transportation safety—rather than at specific industries.

Background on Freight Transportation

Every year, goods are shipped across the United States at a rate of four trillion domestic ton-miles (a metric of how many miles each ton of goods travels). This is an increase of 20 percent compared to 1990 and averages an increase of 2 percent per year. The need for the transportation of goods is obvious—food and goods from areas that have supply have to be shipped to areas that have demand—and there is no one-size-fits-all solution to heavy-duty transportation.

Currently, 30 percent of freight ton-miles are handled by trucks, which are ideal for delivering goods that have high value and may need rapid, direct delivery in smaller loads. Thirty-nine percent of freight ton-miles are handled by rail, which is ideal for heavier cargo that may be too energy-intensive for trucks to haul. Metals, chemicals and building materials are commonly transported by rail.

And 16 percent of U.S. freight ton-miles are transported by water, 15 percent by pipeline and less than 1 percent by air.

Each mode of transportation has its role to play, though there is some substitutability among them. The modes are also heterogeneous in their environmental and safety impacts. For example, despite recent controversy surrounding hazardous materials handling on freight rail transportation, rail is considerably safer for transporting such materials. One analysis found that hazardous materials transported by truck caused over 16 times as many fatalities from 1975 to 2021 than materials transported by rail, despite only carrying twice as much hazardous material.

There are also differing dynamics between trucks and trains in terms of environmental impact. Transporting goods by rail is, per ton of cargo, considerably more energy efficient than by truck, with an energy-efficiency ratio ranging from 1.4 times more efficient as trucks to 5.6 times. This also translates to lower greenhouse gas emissions, which have been estimated to be about one-tenth of the emission intensity as trucks. Trucks also cause considerably more air pollution than trains, and it is estimated that trucking freight increases air pollution of criteria pollutants (carbon monoxide, particulate matter, nitrogen oxides, etc.) by 1.2 to 8.5 times compared to hauling the same freight by rail.

It is also generally cheaper to transport by rail, which costs roughly one-third as much as shipping by truck, due to the larger carrying capacity of rail cars.

While all this information might make it seem like all cargo should be transported by rail, the market demands are such that differing products and customers have different needs. Rail may not be an option for many customers, and sometimes goods are so valuable that expediency of delivery carries more value to the customer than the cost difference of one mode of transportation over another (hence the rise of air delivery). As such, it is important for policymakers to ensure that consumer preferences can be expressed in the market. Further, it is also important that policymakers appreciate how policies designed to affect heavy transportation can induce changes in the market that may run counter to their objectives, which will be outlined here.

Potential Implications of the Railway Safety Act

The RSA, if implemented in its current form, would introduce significant new requirements on the rail industry aimed at lowering the risks of transporting hazardous materials. One of these requirements would be for regular and frequent utilization of HBDs along rail routes to detect overheated rail car components, and this is the only policy that the R Street Institute (RSI) noted would have prevented the consequences of the derailment in East Palestine, Ohio. Other requirements include minimum crew requirements and an accelerated phase-out schedule of older rail cars for flammable liquids, neither of which would have prevented the derailment at East Palestine.

But policymakers should consider the effects of this legislation on shipping. For one, because the RSA is focused on rail-transported hazardous materials, there should be consideration that introducing these requirements absent companion legislation for improving the safety of transporting hazardous materials by truck would lead to a shift in the freight hauling of hazardous materials from rail to trucks. Should this occur, given the significantly higher fatality rates for hazardous materials shipped by truck, the legislation could produce the opposite of the intended effect and worsen the frequency and severity of incidents related to transporting hazardous materials.

Additionally, the RSA’s minimum crew requirement may increase the costs of shipping by rail without any safety benefit. When the Obama administration proposed a minimum crew requirement in 2016, the rule conceded that the Federal Railroad Administration could not “provide reliable or conclusive statistical data to suggest whether one-person crew operations are generally safer or less safe than multiple-person crew operations.” Past RSI work has also noted that, despite a substantial history of train operation at varying crew sizes, there is no evidence to suggest that larger crews result in improved safety.

Minimum crew requirements have been a priority of labor unions that seek to protect unionized jobs, but this will come at a cost to rail operation, which would incentivize more goods being transported by truck. Past RSI work on this issue has noted that another major problem with the rule would be how it might inhibit innovation, especially opportunities that come from automation.

Additionally, the RSA could result in a negative environmental impact if its proposals induce a shift in favor of trucks for freight hauling. One analysis estimated that 4.1 percent of truck freight hauling could be replaced with rail and would reduce freight transportation emissions by 4.9 percent. Policies that either prevent additional utilization of rail, or incentivize a shift away from rail, will result in higher greenhouse gas emissions.

The extent to which the RSA would impact the rail industry is, at this point, unclear. Without knowing how significant personnel costs are to the rail industry, or if labor shortages could delay shipments as was seen with flight cancellations due to staff shortages during COVID-19, it is difficult to determine the extent of impact the new policies may have. Similarly, this also makes it difficult to determine what the change in environmental impact may be if it is uncertain how much shipping may transition to trucking. But it is possible to say that the RSA will raise transportation costs, and, except for the HBD requirement, some of its provisions would not improve safety.

Policy Recommendation and Conclusion

A focus on transportation safety, especially for hazardous materials, is important for policymakers, but proposed policies need to be aligned to clear objectives. A requirement for HBD expansion would improve safety because HBDs have a proven track record of reducing derailments, and, in the case of the notable East Palestine derailment, an HBD would have prevented it.

But policies that diminish innovation, such as crew requirements, should not be part of the policy consideration—especially when there is no evidence at all to show that the policy would have the desired effect.

Additionally, policymakers need to better consider how their proposals may shift behavior in the market. The safety considerations of transporting hazardous materials are not an issue that is isolated to the rail industry, and, in fact, the data suggests that safety is far worse for trucking. A proposal that raises the costs for transporting hazardous material by rail may result in those shipments moving to truck transportation, which would result in reduced safety than if the changes had not gone into effect. As such, Congress should focus on hazardous materials transportation safety generally, rather than only on one mode of transportation.

In its current form, the RSA only partially addresses safety issues and does so in a poorly designed fashion. Congress should consider introducing new legislation that looks at hazardous materials transportation across all industries and proposes requirements that are supported by data. Otherwise, the outcomes that legislators are ostensibly seeking will remain out of reach.