New red tape threatens freight rail’s impact in Nevada

The freight rail industry has a storied history in Nevada, from helping build the Hoover Dam to moving millions of tons of minerals across the state every year. Rail continues to play a central role in the state’s 21st century economy.

But a slew of burdensome federal rules threatens to jeopardize the industry’s impact in the Silver State.

Today, major investments made by freight operators can be seen across Nevada’s 1,200 miles of rail infrastructure. Around Las Vegas, Union Pacific has invested nearly $30 million in track upgrades to increase speeds, enhance efficiency and reduce wait times at rail crossings.

And just last month, the Regional Transportation Commission’s board of directors approved a project to connect the $1 billion Faraday Future electric car plant in North Las Vegas directly to railroad infrastructure.

Freight rail investments directly correlate with economic output and public benefits. In Nevada, rail employs roughly 700 residents who earn on average more than $110,000 in wages and benefits.

An efficient rail network is also essential for Nevada’s businesses, in particular for the state’s prolific mining industry. In total, more than 2 million tons of goods originating in the state are annually moved by freight rail.

These benefits are not possible without a regulatory environment that allows freight railroads to manage their businesses like other private entities. They need the freedom to respond to the marketplace, to set their own prices according to demand and to operate over their most efficient routes.

At its core, the current regulatory structure allows railroads to earn the revenues needed to make the private investments in their infrastructure and technology necessary to meet the freight demand. Railroads can act like other private businesses, competing vigorously with one another while managing their network and pricing their services.

This is why several rules under consideration by the Surface Transportation Board — most prominently a measure known as “forced access” — should be a concern for Nevada businesses and consumers.

This regulation would require railroads to open their lines to competitors and force operators to provide access at below-market rates. Under this framework, Railroad One gets access to Railroad Two’s infrastructure and customers because the government forces Railroad Two to provide it — not because it is the optimal route.

It is a radical approach that disregards property rights. It would undermine operational efficiencies as railroads deal with widespread orders to switch traffic. This, despite the clear correlation between partial deregulation in 1980, the $600 billion in investments since, and historic improvements in safety, service and pricing.

While these may seem like small measures, their cumulative effects could have far-reaching consequences. Operators could be forced to balance losses with higher costs elsewhere, and shipments of essential products from food to farm fertilizer to chlorine will take longer to reach their destinations.

For freight rail, which is already working to offset a significant decline in traditional revenue-generating commodities such as coal, these rules are especially perilous. As the United States continues to shift from a manufacturing-based to a service-based economy, robbing railroads of flexibility to compete and invest in their operations will only undermine the benefits they are providing to all Americans.

Congress, particularly the Senate Commerce Committee on which Sen. Dean Heller serves, has always maintained a key role in overseeing railroads. But it never mandated regulators to take these types of taxing and arbitrary steps.

For Nevada businesses, freight rail offers an important link to new markets and opportunities for growth. Sen. Heller has been critical in guiding smart policies that make these benefits possible for Nevada. And as freight railroads continue driving the economy amid new economic and bureaucratic challenges, Congress’ forward-thinking leadership is as important as ever.

Ian Jefferies is senior vice president of government affairs at the Association of American Railroads.