American Conservatives Are Working on the Railroads

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 ten 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 bearings went undetected until too late. Residents in two states had to evacuate their homes.

In response, Ohio’s senators, Republican J.D. Vance and Democrat Sherrod Brown, led the bipartisan introduction of the Railway Safety Act (RSA) 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, former President Donald Trump and Senator Mitt Romney announced their support just hours apart. The Heritage Foundation has offered its encouragement.

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-center’s typical pro-business position would be that federal mandates imposed upon industry will raise costs and stifle innovation, while market forces can more effectively protect the public interest. A letter opposing the RSA from more than a dozen libertarian organizations made the generic case against “gross inefficiencies,” granting a federal agency “unimaginable authority,” and “divert[ing] resources away from critical research.” 

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 all 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 (how much would you pay to avoid evacuating your home as a vinyl-chloride fire rages?), the court system can adjudicate the claims (because everyone loves a good billion-dollar tort lawsuit), and corporate managers can optimize their safety investments accordingly (at a cost to quarterly profit, for a usually unrealized benefit).

Conservatives have become increasingly cognizant in recent years of what the market will not do on its own, in contexts ranging from global trade and industrial investment to wage-setting and family formation. Here, acceptance that market forces do not provide for public safety has led them to move beyond the question of why government should do anything, and to focus instead on what it should do. Regulation can be far from perfect and yet still far better than the status quo.

That shift has produced two notable developments. First, because conservatives had a seat at the table crafting the legislation, the final bill is modest, sensitive to cost, and focused on a narrow set of serious concerns. Second, as a result, the standard libertarian playbook for objecting to regulation regardless of its substance is falling flat.

For instance, the bill would mandate placement of defect detectors at 10-to-20-mile intervals along tracks, of the kind that could have provided early warning to the crew prior to the East Palestine derailment. Opponents say this is classic overreaction in an accident’s immediate aftermath. But the industry has acknowledged that its own standard for detectors every 40 miles was insufficient and just announced adoption of a 15-mile standard. Clearly the railroads were not adequately protecting safety, they have admitted as much. Of course, had legislators proposed a 15-mile standard prior to the accident, both industry and anti-government activists would predictably have derided the intervention as unwarranted.

Indeed, we know that would have happened, because it is happening, with another key provision: a requirement that all major freight lines maintain two-man crews. This is unnecessary, opponents say, because it was not the cause of this particular accident. Though if understaffing is the cause of the next accident, as it was in a 2013 Quebec disaster that destroyed a town and killed almost 50 people, regulation in its aftermath would surely be resisted just the same. 

The railroads, incidentally, agree that two-man crews are necessary and currently maintain them, but they want flexibility to depart from that standard 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 slashing costs by any means possible—reducing staff by 30% in the past six years, harming the reliability and resilience of the freight system, and the well-being of remaining workers. And thanks to raising prices ten times faster than costs increased, the industry has found itself flush with cash, which it has promptly returned to shareholders—nearly $200 billion in dividends and stock buybacks over the past decade. From 2019 to 2022, Norfolk Southern reduced its headcount by 23%, returned more than $14 billion to shareholders while investing less than $7 billion back in its network, and saw its accident rate climb every year—by 25% in total.

Thus far, seven Republican senators have endorsed the RSA; at least nine are needed for its passage. Washington will be watching closely in the coming weeks to see how many conservatives are yet 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.

Note: A version of this commentary was published in the Financial Times on May 21.