On America’s Broken Railroads, Republicans Concede Market Caps

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The writer is CEO of American Compass

The GOP’s knee-jerk opposition to regulation has collided head-on with the reality of lax safety standards on the nation’s railroads. American freight trains derail ten times more than their British counterparts, according to industry’s own data, and the February disaster in East Palestine, Ohio, demonstrated just how costly accidents can be. Tankers on a 149-car Norfolk Southern train carrying vinyl chloride caught fire and derailed after an overheated wheel bearing was not detected until it was too late. Residents in two states had to evacuate their homes.

In response, Ohio Senators Republican JD Vance and Democrat Sherrod Brown led the bipartisan introduction of the Railway Safety Law to address a number of shortcomings in existing rail regulation. The enthusiasm of Brown and his fellow Democrats is not surprising. But Vance and his Republican co-sponsors, Sens. Marco Rubio and Josh Hawley, have also been steadily garnering support: In an unlikely confluence last week, Donald Trump and Sen. Mitt Romney announced their support within hours of each other.

Rail safety is not usually a hot political issue, but the RSA has nailed the ideological debate going on between American conservatives and libertarians over the role of government regulation in the free market. The typical pro-business position of the center right would be that federal mandates imposed on the industry will increase costs and stifle innovation, while market forces can more effectively protect the public interest.

Unfortunately, the risks of mile-long trains carrying hazardous materials are not something the free market provides incentives to address. One could try to accurately measure the costs associated with each accident and hold the railways liable for those amounts, thus encouraging them to take all cost-effective safety measures. But this assumes that costs can be measured, claims can be adjudicated by the court system, and corporate managers can optimize their security investments accordingly.

Conservatives have become increasingly aware in recent years that regulation can be far from perfect and still be much better than the status quo. The RSA is a good example: modest, cost-sensitive, and focused on a narrow set of serious concerns.

For example, there is a requirement that all major cargo lines maintain two-man crews. This is unnecessary, say opponents, because it was not the cause of the Ohio accident. Although, of course, where the bill answers directly, by mandating more frequent use of devices to detect overheated bearings, opponents quibble on the opposite ground that this represents a knee-jerk overreaction.

The railroads, by the way, agree that both two-man crews and increased use of detectors are necessary, but want flexibility to deviate from standards if they feel the technology would allow it. Should regulators trust railways to prioritize safety when making the determination? The evidence suggests not.

Rather, the railroads have shown great enthusiasm for cutting costs by any means possible: They’ve cut staff by 30 percent in the past six years, hurting freight system reliability, and turning back almost $200 billion in the last decade to shareholders. From 2019 to 2022, Norfolk Southern reduced its workforce by 23%, returned more than $14 billion to shareholders and invested less than $7 billion in its network, and saw its accident rate increase each year, 25% overall.

So far, six Republican senators have endorsed the RSA; at least nine are needed for its passage. Washington will be watching closely to see how many conservatives are prepared to take responsibility for making decisions in the public interest that, however imperfect, enhance what the pursuit of profit will provide.