The Biden Administration’s Rail Regulation Efforts Make Little Sense

The Biden Administration should discard a recent proposal to impose reciprocal switching on U.S. railroads.

By Ike Brannon and Michael Gorman for The Regulatory Review

May 9, 2022 - The pandemic accelerated the amount of online shopping by U.S. residents, and a large proportion of the U.S. population has grown accustomed to eschewing stores and having most goods delivered to their homes.

This trend has increased the number of trucks on the road, which has created congestion, parking problems, and more emissions due to traffic across the country. The recently passed Infrastructure Investment and Jobs Act contains $8 billion to boost freight infrastructure and safety programs. The state of Georgia is spending $1.8 billion a year, following a state recommendation that Georgia reduce problems caused by the surfeit of trucks.

Rather than address the issue, the Biden Administration appears intent on making this problem worse by embracing several policies that would result in fewer goods traveling by rail and more being transported via highways.

The most egregious of these efforts is a 2021 Biden Administration executive order that asks the Surface Transportation Board to consider forcing railroads to engage in reciprocal switching, which would ultimately push goods off of railroads and onto trucks.

Reciprocal switching would allow shippers to choose railroads without tracks adjacent to their locales to transport their goods instead of railroads whose tracks connect directly to their facility. The railroad that owns the tracks that connect to the shipper’s facility would be forced to pick up goods for the shipper and deliver them to a competing railroad, which would carry them to the customer.

The Biden Administration avers that reciprocal switching will reduce inflation by constraining shipping prices, but the data do not show that rail prices increased more in 2021 than in previous years, so attributing any of the 2021 inflation spike to rail costs seems to be little more than dissembling.

The problem with reciprocal switching is that it effectively reduces the capacity of the rail networks. Switching trains is time and labor intensive and therefore costly. Requiring railroads to do so for competitors would impose more work in already congested networks, making it more difficult for the railroad doing the switch to optimize its train schedule.

Railroads boost capacity not only by adding or expanding tracks but also by adapting their schedules to carry more trains and fuller trains each year. Accomplishing this task is...

Read the complete article at: The Regulatory Review.