“A railroad is like a lie, you have to keep building it to make it stand.”
- Mark Twain
Sustainability, the ability to create an enduring system, is a critical factor in the evaluation of an industry. The health of the transportation industry and specifically the railroad industry depends on the industry’s ability to sustain its business model in the face of resource challenges. A key driver of rail sustainability is the infrastructure, the rails, switches, yards and turnouts that the railroad industry uses when moving goods from source to destination. Both the government and the individual railroads are investing heavily in infrastructure projects, and have chosen different targets for improving the health of the railroad system. In this paper, each of their methods is examined, and policy recommendations for railroad infrastructure are made to ensure the long-term health of the transportation industry.
From the establishment of the first rail systems in the middle of the 19th century to today, there has been some form of government regulation over the operation of freight and passenger rail in the United States. However, in the past 40 years, significant steps have been taken to reduce the amount and type of regulatory oversight that the government provides over railroads.
During the 1950s and 1960s, railroads experienced increasing difficulty with their freight business as well as with their passenger service. Just as the Interstate Highway System made travel by private automobile increasingly attractive, it also improved the viability of long-distance trucking. At the same time, strict regulation by the Interstate Commerce Commission of rail rates, routes, and service hampered the railroads’ ability to respond nimbly to competition from other modes of transportation.
The unprofitable passenger service was seen by railroad executives as the cause of the problem, and a means to withdraw from that market was sought. The passage of the Rail Passenger Service Act in 1970 led to the formation of the National Railroad Passenger Corporation (Amtrak), and the railroads were given the opportunity to divest their passenger rail service and focus on freight service.
A second boon to the railroad industry occurred in 1980 with the passage of the Staggers Act. The Staggers Act significantly reduced the ability of the Interstate Commerce Commission to regulate shipping rates, allowed the railroads to divest unprofitable lines, and legalized railroad-shipper contracts. The combined results of these two major legislative policy actions
were to revive what was a failing railroad industry. In fact, the Government Accountability Office (GAO) has twice been asked by shippers to investigate freight railroad shipping rates since the passage of the Staggers Act, in 1999 and 2002. Both times, the GAO found that rates “generally had decreased to a greater extent than rates for shipments without such alternatives.” In these...