How a Misguided Mandate Threatens Freight Rail's Economic Viability

Requiring two-person crews raises railroads' costs unnecessarily and discourages investment in technologies that could make shipping safer.
May 7, 2019 AT 4:00 AM
Freight train on a sunny day
(Shutterstock)
By Nick Zaiac  |  Contributor
A fellow in commercial freedom at the R Street Institute

A hundred and fifty years ago this coming Friday, the Union Pacific and the Central Pacific met at Promontory Summit in Utah to complete the nation's first transcontinental rail line. With the driving of a golden spike, passengers and freight could for the first time travel on a continuous right of way between California and the rest of the nation.

More rail lines were built in the decades that followed, further knitting the nation's economy together. But progress in transportation infrastructure isn't always about building longer lines and larger networks; it also involves providing a regulatory climate that enables any given line to make enough money to cover the costs associated with maintaining it.

You can't take a train to Promontory Summit anymore; the track was torn up for scrap almost a century ago, rendered uneconomical with the construction of a more direct route. But today, it's regulatory efforts at the state and federal level that are threatening the economic viability of our nation's railways.

The most significant current threat involves mandating that freight locomotives carry at least two staff members. These regulations, which are backed by railway labor unions, raise the minimum cost of operating any given train line, potentially doubling the labor expense in the short term. Over the longer term, they risk discouraging research and investment in new technologies that could make railroads safer and help small and rural lines compete with trucks -- the fundamental factors that keep rail lines in operation.

Traditionally, the second crew member on most trains has been a conductor. Mandating a second crew member may have been sensible in the past, when railway accidents were far more common and locomotives required constant human supervision. But the need for this position has faded as railway technology has improved. With computers playing an increasing role in locomotive operation, the justification for government rules covering railway labor practices has grown antiquated. Even as the Federal Railroad Administration proposed requiring two crew members for most trains, the agency acknowledged that it couldn't provide "reliable or conclusive statistical data" that such a mandate would have an impact on safety.

The FRA's 2016 proposal is on hold, but that hasn't stopped some states from moving forward with rules that would make this unnecessary job a permanent part of the cost of running a railroad. California, Colorado and Wisconsin were the first to pass two-person-crew legislation, and other states are considering similar mandates. In Illinois, a measure that is expected to pass the state legislature may have the greatest national implications.

Every major freight railroad operates in Illinois. As poet Carl Sandburg famously put it a century ago, Chicago is the "Freight Handler to the Nation." Even today, the city remains a major hub -- as well as a choke point -- for railroad freight. Vast switching operations also operate downstate in East St. Louis, Ill., accompanied by a host of short lines such as the Indiana Rail Road and the Evansville Western.

Given Illinois' unique status in the nation's rail network, new mandates it imposes will cost the most to those who live elsewhere in the nation. For railroads, higher costs mean less money to invest in making shipping faster and more reliable, dragging down the competitiveness of the industry nationwide. Reductions in rail speed and reliability will encourage shippers to turn to trucks, pushing more loads onto interstate highways at a cost of more congestion and greater wear and tear on the roads - costs ultimately borne by motorists and taxpayers.

If, as seems likely, Illinois enacts a two-crew-member mandate, the state will miss out on the gains of single-operator and, eventually, remotely monitored autonomous trains. Other states can avoid this fate if they heed the cautionary tale Illinois stands to tell. Given that adequate safety regulations are already in place, lawmakers should allow railroads to determine the appropriate staffing levels for their trains, providing their states the opportunity to reap the fruits of lower highway costs and less traffic. This also will help avoid the abandonment of rural lines that keeps rail-reliant shippers up at night.

And who knows, maybe such a sensible, outcome-based regulatory strategy will cause the title of "Freight Handler to the Nation" to change hands by the time this century is out.