New Report: Increased Regulation of Railroads Would Mean Trouble for Small Businesses and the Economy

By at 23 May, 2019, 11:03 am


For Immediate Release

Washington, D.C. – Today, the Small Business & Entrepreneurship Council (SBE Council) released a report titled “Railroads and Small Business: Cull the Outdated Regulation and Embrace Greater Opportunity.” (pdf copy)

SBE Council chief economist Raymond J. Keating, author of the report, noted, “Freight railroad is critical to our economy, and to the well-being of small businesses. As is clear from the data in this report, small business plays a significant role in the freight railroad system, while small business also depends on the services provided by freight rail. Railroad investments and innovation have flourished thanks to sound measures that rolled back burdensome regulations some four decades ago. Unfortunately, today, there are special interests pushing for government to return to intrusive, costly regulation of railroads. Increased regulation must be resisted.”

Keating added, “While much of Washington seems enthralled by big, taxpayer-funded infrastructure spending, it should be noted that railroads have made massive private investments in their own infrastructure thanks to being incentivized by sound deregulatory measures. These policy changes resulted in railroads spurring investment, efficiencies and innovation; enhancing safety; and improving service and reducing costs for shippers and consumers.”

According to SBE Council’s analysis of U.S. Census Bureau data, the role of small business in key industry sectors directly or indirectly affected by freight railroads is substantial:

• In all but one of the 13 industries highlighted, the majority of employer firms were small businesses with fewer than 20 employees – ranging from 51.6 percent of firms in the warehousing and storage sector to 93.4 percent in the agricultural sector. The one sector falling short of a majority – railroad rolling stock manufacturing – still registered 46.8 percent of employer firms with fewer than 20 employees.

• In all 13 sectors, firms with fewer than 100 employees made up at least 69 percent of employer firms – ranging from 69.0 percent in railroad rolling stock manufacturing to 98.9 percent in construction.

• And among all 13 sectors, the percentage of firms with fewer than 500 workers ranged from 83.7 percent in warehousing and storage to 99.8 percent in construction.

In the report, Keating explains why increased government regulation would be counter-productive by undermining investment and innovation. Current, misguided efforts to impose additional regulations include “forced switching” (which would make it far easier for the government to require a railroad to open its privately-owned and operated rails to another railroad at rates set by the government); “revenue advocacy” (whereby government could establish price controls); and crew size dictates (with government undercutting investments in technology, operational decisions and competitiveness without any data and evidence to back its mandates).

Keating concludes: “Clearly, freight railroads, their customers, consumers in general, and the small business community – including small businesses in the railroad sector, serving railroads, and as customers of freight rail – have benefited from moving away from intrusive, unwarranted and costly regulation. Today’s policy objectives should have nothing to do with turning back the clock to destructive regulatory policies. Instead, policymaking should be focused on providing relief from unnecessary governmental burdens, such as via tax and regulatory relief, and free trade policies that reduce barriers like tariffs and quotas. That’s the kind of policymaking that will expand investment, innovation, and competition; enhance opportunities for entrepreneurs, small businesses, and their employees; and boost the overall economy.”

To access a PDF copy of the report, click here.


Raymond J. Keating

631-909-1122 or

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. For 25 years SBE Council has worked to successfully implement a range of policy and private sector initiatives to strengthen the ecosystem for startups and small business growth. To learn more, visit SBE Council’s website: Follow on Twitter: @SBECouncil


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