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Guest: Railroads in Utah and beyond under threat from Biden administration

By Matthew Kandrach - Special to the Daily Herald | Dec 15, 2021

Courtesy photo

Matthew Kandrach

Senator Mike Lee, R-Utah, continues to be a leader in fighting for quality professionals to lead federal regulatory agencies. This includes the under-the-radar U.S. Surface Transportation Board, which maintains oversight of the nation’s freight railroads — like Union Pacific in Utah.

Beehive State voters should take notice because railroads and other transportation modes are key to economic prosperity. This has become especially evident amid America’s supply chain crunch, a dynamic that recently caused cargo companies to make Utah’s inland port a “relief valve” for crowded California seaports. The primary mode of transport to get those goods East? Rail.

This is why we need smart federal policies that do not saddle railroads with unneeded market interventions their competitors, namely trucks, don’t face. Such intrusions include widespread rate regulation, like in electric markets, or even efforts being considered today in Washington that would empower bureaucrats to route trains in ways that benefit preferred lobbying interests.

The threat to re-regulate railroads stems from a recent head-scratching executive order. “This for us in the Biden administration is a core element of our view of what economic policy in post-pandemic America needs to be,” President Biden’s top economic advisor said this month, believing firmly government knows better than business.

The order advises the aforementioned STB to mandate so-called competitive switching or reciprocal switching. Under the order, private rail operators are compelled by the government to open their tracks and facilities to competitors at rates set by government.

In short, competitors who have invested nothing into building or maintaining a rival’s rail infrastructure are given access and allowed to profit from it.

It’s akin to the government mandating that BYU let Boise State play football games in their stadium for free. Not only is it patently unfair and anti-competitive, but it punishes the companies doing the bulwark of building and maintaining vital transportation infrastructure.

Aside from being a striking government overreach, the Biden proposal skews the market for railroad transportation by playing favorites, in the end hurting both industry and consumers.

“[Regulators argue] that an expansion of reciprocal switching would increase competition among the railroads,” says the Heritage Foundation. “But, in reality, such forced access only adds inefficiencies and imposes needless costs on rail networks.”

What’s behind the executive order is a small set of giant, powerful and highly profitable railroad customers who are seeking major policy changes that would hinder railroads from serving customers and the large contingent of other shippers such as UPS. These companies are motivated to improve their bottom line — because increased rate regulation would increase their profitability.

Republicans and Democrats rarely agree on anything these days, but they have long major changes in this well-functioning freight market. A large swath of organizations and individuals across the political spectrum, including six Utahns, wrote to federal policymakers encouraging a continuation of the current regulatory framework that has proven so successful.

Consumers and voters are left in the dark amid the proceedings of unelected bureaucrats, yet they are the ones who face the consequences. Because there is virtually no part of the economy the transportation sector, including rail, does not ultimately touch, the increased costs would inevitably be passed on to consumers.

Further, as government intervention into rail pricing and routing takes hold, railroads would undoubtedly become less efficient and be less suited to invest in its capital intensive network, resulting in greater reliance on taxpayer-subsidized trucks on our roads and highways.

With potential consequences impacting America’s economy, transportation infrastructure and ultimately consumers’ wallets, we should hope that regulators at the STB reject the Biden administration’s malarkey and leave freight rail alone to do what it does best. Thanks to Sen. Lee for providing continued oversight of the STB.

Matthew Kandrach is president of CASE — Consumer Action for a Strong Economy, a free-market oriented consumer advocacy group.

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