On America’s ramshackle railroads, Republicans concede the limits of the market

The writer is executive director of American Compass

The Republican party’s instinctive opposition to regulation has collided head-on with the reality of lax safety standards on the nation’s railroads. American freight trains derail tens times as often as their British counterparts, according to the industry’s own data, and the February disaster in East Palestine, Ohio, demonstrated just how costly the accidents can be. Tankers in a 149-car Norfolk Southern train carrying vinyl chloride caught fire and derailed after an overheating wheel bearing went undetected until too late. Residents in two states had to evacuate their homes.

In response, Ohio’s senators, Republican JD Vance and Democrat Sherrod Brown, led the bipartisan introduction of the Railway Safety Act to address a range of shortcomings in existing railroad regulation. Enthusiasm from Brown and his fellow Democrats is no surprise. But Vance and his GOP co-sponsors, senators Marco Rubio and Josh Hawley, have been steadily building support as well: in an improbable confluence last week, Donald Trump and Senator Mitt Romney announced their support just hours apart.

Rail safety is not typically a hot-button political issue, but the RSA has made concrete the ideological debate raging between American conservatives and libertarians over the role of government regulation in the free market. The right-of-centre’s typical pro-business position would be that federal mandates imposed on industry will raise 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 that the free market will provide incentives to address. One might attempt to measure accurately the costs associated with each accident and hold the railroads liable for those amounts, thus encouraging them to take all cost-effective safety measures. But this assumes the costs can be measured, the court system can adjudicate the claims and corporate managers can optimise their safety investments accordingly.

Conservatives have become increasingly cognisant in recent years that regulation can be far from perfect and yet still far better than the status quo. The RSA is a case in point: modest, sensitive to cost, and focused on a narrow set of serious concerns.

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

The railroads, incidentally, agree that both two-man crews and increased use of detectors are necessary, but they want flexibility to depart from the standards if they deem that technology would allow it. Should regulators trust the railroads to put safety first in making the determination? The evidence suggests not.

Rather, the railroads have shown great enthusiasm for cutting costs by any means possible — reducing staff by 30 per cent in the past six years, harming the freight system’s reliability while returning nearly $200bn in the past decade to shareholders. From 2019 to 2022, Norfolk Southern reduced its headcount by 23 per cent, returned more than $14bn to shareholders while investing less than $7bn back in its network, and saw its accident rate climb every year — by 25 per cent in total.

Thus 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 determinations in the public interest that — imperfect though they may be — improve upon what the pursuit of profit will provide.