The 'R' Word

The 'R' Word

Was it just a coincidence last week that while much of Washington was overtaken by a headlong rush toward regulation of battered financial markets, the most comprehensive railroad industry regulatory legislation in many years gained new life in Congress?

On the surface, at least, the real jumpstart for the rail safety legislation wasn't the financial market meltdown but the Sept. 12 collision of a Los Angeles-area commuter train and a Union Pacific freight train that killed 26 people. And certainly the legislation is aimed at fixing the gaps that may have contributed to the deadly crash, including imposing a new mandate for positive train control by 2015.

But the deadly crash in California and the meltdown on what Fed Chairman Paul Bernanke calls the "abstraction" of Wall Street have both created strikingly similar echoes across Washington.

Both prompted new demands for regulations that would repair too many years of negligence. As Federal Railroad Administrator Joseph H. Boardman bluntly told a U.S. Senate committee hearing Sept. 23 on the train crash: "Positive train control would have prevented this collision."

By that night, the House and Senate had agreed on what industry observers call the first comprehensive change in rail safety laws the mid-1990s, including changes the railroads had opposed but now will live with rather than face the potential for even tougher requirements.

In the financial arena, lawmakers and presidential candidates battled over regulation, with the debate largely over who's for it and who's for even more of it. In what seemed to be little more than a day, Sen. John McCain went from being "fundamentally, a deregulator" to making vigorous calls for "comprehensive regulations." Sen. Barack Obama has called directly for greater "regulatory oversight."

The logistics business isn't a key player in the financial market meltdown, but anyone with an interest in shipping should be concerned that transportation could get in the line of fire under a government rescue. That's because the recent rescue of financial companies on the brink of collapse as well as the broader bailout debated in Washington last week had behind them the clear outlines of new regulatory oversight.

Greater regulation, in other words, is back in play. Whether it is with PTC or mortgage-backed securities, it's clear that more attention from regulators is desperately needed. But the risks for transportation operators and shippers also are growing amid stronger moves to rein in years of regulatory neglect.

Deregulation in the transportation industry has proceeded on an almost unbroken path since President Carter deregulated, in order, the aviation, trucking and railroad industries between 1978 and 1980. That deregulation has only been built on since then, and although that's inarguably created an upheaval across many industries, deregulation has been overwhelmingly positive for shippers and the American economy.

It would terrible for that economy if, while restoring important restraints and imposing needed direction for industries that reached too far, lawmakers also reach too far in the other direction. Shippers should be prepared to show them where that reach should end.