Industry groups, free-market advocates and organized labor have all expressed opposition to a proposed regulation that could force private railroads to open their tracks to competitors.
The Surface Transportation Board (STB) is looking to make it easier for a company to gain access to a private railroad. The move, however, has prompted an unlikely alliance between industry groups, free-market advocates and labor. The Association of American Railroads (AAR) notes the opposition underscores the problem.
“It is perhaps most interesting to see free market organizations…and major railroad labor organizations independently opposing the same regulation, albeit for different reasons,” a spokesman for AAR told InsideSources. “It underscores that the measure is misguided and would have far-reaching effects.”
AAR is an industry trade group representing major freight railroads. Private railroads own and maintain their own tracks but those investments could be reduced under the proposal. The Competitive Enterprise Institute (CEI) led a coalition letter of other free-market groups expressing similar concerns Thursday.
“Rail carriers, their unions, and some customers are concerned about the direct impact this proposed rule would have on railroad industry investment, employment, and quality of service,” CEI scholar Marc Scribner told InsideSources. “Railroad deregulation remains one of America’s greatest economic liberalization success stories.”
Railroad companies invest billions of dollars into maintaining their privately owned tracks. Allowing competitors to use the tracks at a low rate could result in reduced investments, degraded service quality and higher prices for consumer goods. The United Parcel Service (UPS) has also expressed similar concern when filing a comment with the STB.
“UPS’s experience in other contexts leads us to conclude the implementation of a new reciprocal switching scheme will lead to decreased network velocity, diminished capital investments into the freight network, and deteriorating rail intermodal service levels,” UPS stated.
The International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART) represents workers in the railway industry. The union has warned that the regulation could hurt wages and benefits. The union notes the proposal could also undermine regulations already in place.
“The proposed regulations would further undermine the existing regulatory framework and could have a chilling ripple effect on areas affecting labor, including the wages, rules and working conditions,” SMART said in a brief submitted to the STB. “Any reduction to railroads’ revenue will directly impact employees’ wages and benefits.”
The federal government already has the authority to require railroads to open up their tracks at a discounted rate. Under the previous standard, however, the railroad had to have shown anticompetitive behavior. STB seeks to remove the requirement to further promote competition among railroads.
Those opposed argue it will not promote competition and instead would undermine private ownership. The Staggers Rail Act of 1980 was enacted as a reform that deregulated the railroad industry significantly. CEI detailed in its letter that the deregulation push helped save the railroad industry and that the new rule would undermine that success.
STB did not respond to a request for comment by InsideSources.
