That the U.S. railway system is an interconnected national network is obvious (see, e.g., here), the natural infrastructure outcome of the response of market forces to the demand for heavy transportation services. That government policies have distorted the long-term investment process is beside the point: Rail lines must cross state lines, freight often must be moved between carriers and between modes (e.g., trucks to trains), and coordination of such movements so as to pursue efficiency is no small undertaking.
What is not beside the point are the efforts of various states to satisfy their own parochial political imperatives at the expense of other states and the U.S. economy in the aggregate. Such localized policy pursuits have the effect of balkanizing the system with constraints and mandates uncoordinated, inconsistent, and the causes of unnecessary costs and inefficiencies.
Consider for example the effort in 2024 by the California Air Resources Board to electrify the locomotives operating in California, and therefore across the entire country, because as a practical matter the California rail freight system cannot be separated from that in the remaining states. Formally, CARB requested from the U.S. Environmental Protection Agency a waiver under section 209(e) of the Clean Air Act for implementation of CARB’s “In-Use Locomotive Regulation,” a regulatory gambit preposterous in every possible dimension.
Ultimately, CARB withdrew its waiver request after fourteen months, just before the Trump administration and a new EPA administrator were to assume office. But why did the Biden administration fail to approve the requested waiver? After all, EPA in December 2024 granted the CARB waiver requests for its regulations affecting light-duty vehicles and heavy-duty vehicles and engines.
That outcome suggests that even the Biden EPA viewed the CARB locomotive rule as utterly destructive economically; it would have prohibited two-thirds of the national locomotive fleet from operating in California by 2030, and granting the requested waiver would have led some other states to adopt similar policies. It is easy to surmise that the Biden EPA wanted nothing to do with it — a massive upheaval of the national railroad system correctly would have been blamed on them — and informally told CARB to withdraw the waiver request.
And then is the law that then-New Jersey Governor Phil Murphy first vetoed “conditionally,” and then signed mere hours before he left office after the legislature made a few changes. It requires that certain freight trains operate with a two-person crew, that railroads regularly submit bridge inspection reports to state officials, that a state-administered “wayside detector system program” be created with mandatory design, installation, and maintenance standards, as well as reporting requirements and enforcement provisions. Another provision of the law bestows upon representatives of organized labor a statutory right to enter privately-owned railroad property to conduct “inspections.” Another section requires the New Jersey Department of Transportation to apply the federal emergency-response regulations for passenger trains to freight trains operating in the state.
So what’s the problem? Apart from the reality that this law is little more than a featherbedding sop to the labor unions, promoted as a series of “safety” measures, the Federal Railroad Safety Act prohibits states from issuing rail-safety regulations in areas already regulated by the Federal Railroad Administration. The FRA already has promulgated extensive regulations in those areas. Congress in the preemption provisions of the 1973 Regional Rail Reorganization Act specifically prohibited a number of states, including New Jersey, from mandating that freight trains use a specified number of crew members. The 1995 ICC Termination Act specifically preempts state laws that have the effect of managing, governing, interfering with, or discriminating against rail transportation, thus preempting all of the five provisions of the New Jersey law.
That proscription in the ICCTA on “discrimination” against rail transportation brings us to a tax promulgated by the District of Columbia Department of Energy and Environment late last year; it imposes a “fee” of $0.60 on each railroad car that enters DC, exits DC, or that travels through DC without stopping. This DC fee is imposed upon railroads but not on such competing transportation modes as trucks; it obviously is preempted by the ICCTA because it is discriminatory.
National policies — federal preemption of state-level laws and regulations — are a necessity for an efficient rail transport system. That pre-emption authority already exists in the law: “… the remedies provided under this part with respect to regulation of rail transportation are exclusive and preempt the remedies provided under Federal or State law.”
What is needed is a clear and consistent rulemaking from the Surface Transportation Board on how that statutory language is to be interpreted and applied. Any such rule should delineate clear principles with respect to the application of the statutory preemption language. It should provide examples of actions preempted under the law, and it should delineate when a state or federal law “unreasonably burdens” or interferes with interstate commerce. It should define when a state or federal law “discriminates” against transportation by rail.
The STB also should clarify how the preemption provisions in the ICCTA and other federal laws can be harmonized; and when they cannot STB should make it clear that “direct interference” with ICCTA and the uniform deregulatory nature of ICCTA override other federal laws. Again, the law provides explicitly that STB jurisdiction is “exclusive and preempt[s] the remedies provided under Federal or State law.”
Back to the CARB state regulatory effort: America might not be so lucky next time. Sooner or later it is likely that a truly “progressive” — that is, left-wing — administration will assume office and endorse state-level policies to address the purported climate crisis, or to suppress “excessive” rates, or to further “justice” for “disadvantaged communities,” or more generally to impose huge inefficiencies on the railroad system by forcing electrification mandates or other such requirements. Because the railroad system is an integrated national system, it is very unlikely that Congress acting collectively would ever enact such policies, due to the massive costs attendant upon them. That is why the STB must implement the federal preemption law more clearly and forcefully.
Benjamin Zycher is a senior fellow at the American Enterprise Institute.
