Railroad Accident Being Used as Unsupported Justification for Regulation

By SBE Council at 21 April, 2023, 2:51 pm

by Raymond J. Keating –

As chief of staff to then President-elect Barack Obama, Rahm Emanuel infamously declared, “You never want a serious crisis to go to waste. And what I mean by that, it’s an opportunity to do things that you think you could not do before.”

While cynical, this turns out to be an unfortunate rule in politics. Something terrible occurs – such as a tragic accident – and those who seek action, such as increased regulation and mandates, or benefits from government kick into high gear, linking the tragedy to their cause.

That apparently has been the case with railroad labor unions seeking to expand their reach and membership in the shadow of the Norfolk Southern derailment in East Palestine, Ohio. And they, of course, have found some willing Members of Congress, with a bill introduced in the Senate by Ohio Senators Sherrod Brown (D) and J.D. Vance (R).

Railroad unions have long been pushing for government to mandate crew sizes, and this legislation would do just that. This is being done in the name of “safety.” However, there’s no evidence to support this assertion.

A Review of the FACTS

It is worth highlighting, once again, some key points that SBE Council pointed out in an analysis this past January relating to what Federal Railroad Administration (FRA) has been considering in terms of dictating how U.S. railroads should operate in terms of the size of train crews, and where crewmembers should be located on moving trains. The same points raised in that piece apply to congressional legislation seeking to mandate crew size.

For example, the Small Business Administration’s Office of Advocacy sent a letter/comments to the FRA raising serious issues and concerns. Those included:

● “According to information presented by ASLRRA [American Short Line and Regional Railroad Association] at the roundtable and public hearing, there are some 696 short line freight railroads (Class II and III) in the United States, and all meet the SBA definition of a small business.”

● “There are currently no specific FRA regulations on crew size, but all Class I and many Class II and III railroads operate with a two-person crew. However, many short line railroads operate with one person in the locomotive cab and another in a truck or utility vehicle performing switching and other business and operational tasks, and who may be assigned to multiple trains. FRA has repeatedly acknowledged that it lacks safety data to determine whether one-person crews are less safe than multi-person crews.”

● “Based on information provided at the roundtable and public hearing, it appears that FRA has significantly understated the cost to and the number of small businesses that would be impacted by the proposed rule.” At another point, it is noted: “ASLRRA’s survey data indicates that there are actually some 420 railroads operating with one crew in the locomotive train operations. If several hundred petitions for special approval would have to be filed, this could dramatically increase the cost to both small entities and the agency to process these petitions.”

● “A number of small businesses who spoke at the roundtable and public hearing stated that they have been conducting one-person crew operations for long periods of time with few if any safety incidents. They said that small railroad operate at very small margins and that any increase in costs could lead customers to switch to trucks (i.e., modal shift) that are less safe.”

For good measure, “An April 2021 study – ‘Crew-Related Safety and Characteristic Comparison of European and US Railways by Oliver Wyman – reported the following: ‘We found no evidence that railroads operating with two-person crews are statistically safer than railroads operating with one-person crews. Furthermore, an analysis of this data broken into multiple accident categories found no significant differences in safety statistics based on crew size.’ It also was pointed out: ‘In sum, most European rail operations use single-person crews, even though Europe has higher train density, more passenger trains sharing the network with freight trains, and more control transactions per route-kilometer. But European one-person crew operations appear to suffer no reduction in crew-related safety, despite a high level of activity and a busy environment.’”

In addition, Marc Scribner, a senior transportation policy analyst at the Reason Foundation, wrote: “During the past decade, federal and state policymakers have pursued minimum crew-size rules for railroads operating in their jurisdictions. Despite the appeals to safety made by proponents of these regulations, the available evidence does not support these claims. In addition, imposing crew-size minimums on economic grounds is likely to backfire by reducing the competitiveness and long-term viability of rail in the broader transportation sector.”

The Wall Street Journal also noted: “The FRA’s studies have also shown no benefit from larger crews.”

By the way, the Journal pointed out, “Carriers say an extra man in the cab has little to add to the hardware systems that detect train and track issues. Take it from Norfolk Southern—its train that derailed in East Palestine had a three-man crew.”

The Columbus Dispatch also has reported: “The train that derailed in East Palestine had three crew members on board, and the National Transportation Safety Board has not identified problems with the crew’s response. Initial findings from the NTSB indicate that an overheated wheel bearing was responsible for the derailment.”

Finally, despite the Ohio derailment, the American Association of Railroads reports: “The last decade was the safest ever for U.S. railroads, with mainline and hazmat accident rates at an all-time low.”

Small Businesses Dominate the Railroad Industry

So, it’s important to understand that the federal government mandating crew member size and operation will achieve nothing in terms of safety, and the costs will fall heavily on small businesses within the industry, and among those served by freight rail who would face increased costs, fewer choices within the transportation sector, and further diminished supply chain performance given the additional burdens from government mandates.

The following chart, as SBE Council has noted before, shows a sample of sectors that would be affected by increased freight railroad costs tied to government mandates.

Data Source: U.S. Census Bureau, 2019 latest data. Calculations by SBE Council.

As noted, the Office of Advocacy has pointed out that Class II and Class III railroads are all small businesses. And the above table further clarifies the role that small business plays in the railroad sector and the importance of rail transport to small businesses more broadly.

In the end, government mandating crew sizes and operations isn’t about safety, but instead, it is about unions playing politics. Indeed, work and investments need to continue to build on the vast improvements achieved in rail safety. And as the industry has made clear in recent decades, investments in technology, infrastructure and operations improve both safety and performance. Government disincentivizing investment and innovation due to politics makes no sense whatsoever.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.