Special Interest Lobby Threatens Freight Rail Deregulation


WASHINGTON, March 24 – A new effort by special interest groups threatens much-needed freight-rail investment, according to a new report by Marc Scribner, a fellow at the Competitive Enterprise Institute (CEI), titled “Bait and Reciprocal Switch: Forced Access Regulation Threatens the Rail Renaissance.”

New rules proposed by a commercial shipper lobby, the National Industrial Transportation League, could reverse Congress’ efforts to partially deregulate the railroad industry, which has helped lower costs for consumers and allowed businesses to improve their operations. The federal government’s Surface Transportation Board will hold a hearing on the proposal this week, March 25-26, 2014.

“Although commercial shippers deny this claim, the proposed regulations would threaten to reduce railroad investment and long-run efficiency,” said Scribner. “That’s bad news for the businesses and consumers who currently benefit from market pricing and investment in the railroad industry. Since the Staggers Rail Act of 1980, deregulation of the railroad industry has resulted in much lower freight rates, fewer freight accidents and a massive increase in rail employee productivity. Before 1980, the railroad industry was on the verge of collapse and faced growing calls for nationalization. It would be very unfortunate if policymakers failed to learn from their predecessors’ mistakes.”

Today, railroads spend more than $20 billion annually to maintain and build out capacity. “The new rule would leave rail at a disadvantage compared to the heavily subsidized trucking industry. That means not only increased costs to consumers but more pollution, since railroads are on average four times as fuel efficient as trucks,” said Scribner.

>View the CEI OnPoint, Bait and Reciprocal Switch: Forced Access Regulation Threatens the Rail Renaissance