The STB should look to the future while recognizing the complex and competitive nature of the market. Freight railroads face intense competition from trucks, barges and other market forces. To respond to a changing and competitive marketplace — and better serve emerging customers — railroads continually transform through investments in infrastructure, equipment, operations and technology. In fact, railroads are much more capital intensive than most industries, spending, on average, six times more as a percentage of revenue than the average U.S. manufacturer.
Enacting regulations like FORR would expand the STB’s oversight of rates and routing, which would limit rail investment. Railroads need a regulatory framework that allows them to continue investing back into their private network as they adapt to technological, regulatory, market and competition changes over time. Railroads — unlike other freight transportation modes — cover the vast majority of costs required to maintain and modernize their privately-owned infrastructure. STB policies should encourage investment, as Congress directs, not deter it. To ensure railroads continue providing safe and efficient service, the STB should:
- Conduct cost-benefit analysis for any proposed regulation (as advocated by the industry in a petition for rulemaking), which the OMB has guided other agencies to do.
- Update the rate case process and root it in sound economic principles to lessen the time and expenses railroads and shippers expend to adjudicate.
- Develop a modern regulatory system that relies on free markets, recognizes the capital-intensive nature of railroads, and supports the continued evolution of rail carriers and the market.