As the year comes to an end and I embark on my annual trip to New York to speak at the RailTrends Conference today, reflection on 2017 quickly becomes planning for the year ahead. The freight rail industry must now identify our charge for 2018 in the nation’s capital.
I believe the path is threefold and tracks closely with the federal government. We must first elevate the industry’s rapidly changing technological profile, including by articulating to the U.S. Department of Transportation (USDOT) and Federal Railroad Administration (FRA) why such dynamism requires a flexible regulatory environment free of archaic and overly prescriptive rules. We need to also set the record straight on economic regulation with the Surface Transportation Board (STB) and its Congressional oversight committees, rebutting unwarranted calls to unravel the successful framework created by the Staggers Act of 1980. And we must not turn our backs on free trade agreements that have greatly benefited the U.S. economy.
Regarding the former, the Association of American Railroads (AAR) has led a charge all year in calling for process reforms. We argue that policymakers should embrace non-prescriptive regulatory tools, like performance-based regulations, where appropriate. Two proposed regulations still pending today – the electronically controlled pneumatic (ECP) brake mandate and the train crew size order – exemplify the need for such a shift and for federal regulators to embrace common sense principles to create rules.
This chiefly includes the idea that new regulations should be based on a demonstrated need reflected by real evidence, current and complete data and sound science.
While we are optimistic the administration will repeal both proceedings noted above, we face a more fundamental challenge: educating relevant stakeholders on railroad innovation. In an era in which consumers expect autonomous vehicles and trucks to be operational in the near future, these same audiences must not overlook the potential of America’s freight railroads.
As documented by the AAR’s Ian Jefferies, freight railroads are not only on track to install Positive Train Control (PTC) technology, but are testing and deploying technologies such as drones, “big data,” and “machine vision” to improve safety and performance. This is not to mention the continuous work occurring at the Transportation Technology Center, or TTCI, every day.
Few industries can lay claim to such a marvel – 48 miles of railroad track where some of the world’s most talented engineers test new solutions everyday. We will therefore work tirelessly in the days and months to come to make more people, including the USDOT, FRA and Congress, aware of this positive technology and safety story.
At the same time, we assume there will soon be action in appointing and confirming members to the STB, which throughout the year has wisely avoided action on major proceedings. This means that current and future STB leaders and their staff will act on controversial proceedings advocated by powerful businesses, including the forced switching proposal widely opposed by the policy community. Forced switching favors a few shippers at the expense of the rest.
The hard truth remains that The Staggers Act, which created the current economic regulatory framework for railroads and shippers, continues to be a success. Among other things, today’s economic regulatory system allows railroads to base their rates on market demand; permits railroads and shippers to enter into confidential contracts; and explicitly recognizes railroads’ need to earn adequate dollars for investment.
This unquestioned success cannot be broken. While some groups want to again give the STB control over crucial areas of rail operations, including routing and pricing, the effort would be destructive. Even though the noise around railroad re-regulation will only grow louder, the rail industry will call the bluff of those wrapping themselves in rhetoric regarding “competition” and a “free market.”
Direct government intervention and manipulation of the marketplace is blatantly inconsistent with such principles, and with the true competition a healthy private enterprise system fosters.
And last, while we agree that NAFTA must be modernized, it should not be abandoned. Doing so would hinder the U.S. manufacturing sector this administration seeks to bolster – as I explained recently alongside the Auto Alliance – particularly freight railroads. Put simply, less trade means less revenues, which means less investment to serve customers and the economy.
Consider these issues our resolutions for 2018 and be on the lookout for more.