The Railway Safety Act Targets the Wrong Margin
Crew and process mandates would crowd out the capital investment and operational learning that actually reduce risk.
Since the East Palestine derailment, Washington has been following a familiar script: take a visible accident, add visible mandates, and call the result safety policy: the Railway Safety Act of 2026. That instinct is understandable, but it is not the same as diagnosis, let alone ameliorative intervention. Good intentions do not guarantee good results.
The key question is not whether Congress can add another requirement to railroads’ compliance stack. It is whether the policies it adopts will move investment toward the things that actually reduce risk in a modern freight network. Set aside the politics for the moment. The first question is whether the RSA would actually improve safety.
The RSA would tighten inspection requirements, broaden hazardous-material oversight, increase penalties, expand defect-detection requirements, and impose more prescriptive operating rules, including crew-size mandates. Some of those provisions address real failure modes. But the bill too often assumes that safety is produced mainly by visible labor and process inputs rather than by information, capital investment, and operational learning.
The strongest case in the bill is for provisions tied to identifiable failure modes, such as defect detection and hazardous-material information; the weakest is for blanket input mandates, such as minimum crew sizes rules and mandates around the number and timing of human-performed (and only human-performed) inspections. The mistake is to assume that safety is produced mainly by crew counts and mandated procedures when the more important margin is information, capital investment, maintenance targeting, and operational learning.
This seems obvious, but we should not assume that regulatory actions lead to the desired outcomes. In this case, let’s not assume that rail safety is produced mainly by labor inputs and procedural commands, but instead look at historical data. Start with the minimum crew size requirement contained in the bill, mandating that at least two people be in the crew of virtually every Class I freight train. This cannot be justified by data, as the Federal Railroad Administration itself admitted in 2016 when it could not “provide reliable or conclusive statistical data to suggest whether one-person crew operations are generally safer or less safe than multiple-person crew operations.” So it is not a given that more people on the train equals more safety, and the picture gets worse for safety when you consider the tradeoffs that railroads will face, as I explain below.
Improvements in safety are increasingly coming from earlier detection of equipment failure, better maintenance targeting, stronger track and equipment, and control systems that allow problems to be identified before they become accidents. On the other hand, the leading cause of accidents and incidents in rail is human error, and that has been the case for well over a decade.
Put differently, safety is increasingly being produced by information, capital, and operational learning, not by simply putting more people in the train crew or mandating a minimum amount of specific human activities.
This has a clear policy implication. Regulation is not just a rule. It is also a capital-allocation decision—there are second- and third-order effects to think about. A mandate to spend more on a staffing input, or on a rigid inspection process, is also a decision not to spend on something else. In rail, that opportunity cost is rarely trivial. It may mean fewer detectors, slower equipment renewal, delayed infrastructure investment, or slower adoption of predictive maintenance and other technologies that address risk more directly. Once that tradeoff is recognized, the usual Washington debate starts to look badly framed.
Safety and productivity rise together
The empirical evidence points in the same direction. In recent work with Bentley Coffey and Pietro Peretto, we examine how federal regulatory accumulation has affected freight transportation over the last half century. The accumulation point matters: firms respond not just to one new rule, but to the stock of restrictions they face and the way that stock shapes productivity, investment, and output over time. Train operations are a complicated system, and they are regulated by a complicated system of rules. It’s never one rule by itself. Using 50 years of industry-specific regulatory data matched to public freight data, we find that higher regulatory burdens are associated with lower labor productivity in all four major freight modes. In rail, the effects are broader: higher regulatory burdens are associated with lower labor, fuel, and capital productivity.
That last margin is the key one here. The technologies and operating improvements that make railroads safer—detectors, track renewal, equipment upgrades, predictive maintenance, and control systems—are capital-intensive. If regulation lowers capital productivity or diverts capital into lower-value uses, it slows the very process through which safety has historically improved. In our simulations, a 5 percent increase in rail regulatory restrictions raises rail unit costs by 2.3 percent and reduces rail output by 4.1 percent in the first year. That is not just a cost story. It is a safety story, because the margin being squeezed is capital formation. Because productivity growth also slows, the losses persist and compound. The system gets smaller, and a smaller, less productive system has less capacity to finance the fixed investments that improve safety.
That is exactly what we should expect once transportation is treated as part of the growth process rather than as a background condition. When freight moves more cheaply and reliably, markets widen, the return to innovation rises, and firms have stronger incentives to improve both production and distribution. Rail safety belongs in that same story because many of the same investments reduce cost and reduce risk at the same time.
History points the same way. In earlier work with Jerry Ellig on railroad safety after the Staggers Rail Act of 1980, we found that partial economic deregulation, not additional safety regulation, best explains the major improvement in railroad safety. Railroads with better incentives and stronger finances could invest more in track, equipment, maintenance, and new technologies. From 1978 to 2013, total accidents on the major Class I railroads and their predecessors fell from more than 11,000 to 1,867 even as revenue ton-miles roughly doubled. In rail, safety and productivity are complements.
What a serious safety agenda would look like
A serious agenda would do three things: target demonstrated failure modes, rely on performance standards where possible, and preserve flexibility in how railroads combine labor, capital, and technology. Provisions aimed at identifiable failure modes deserve serious attention. Measures that improve defect detection, for example, have a much stronger logic than measures that simply prescribe visible inputs. The same is true of better hazardous-material information and emergency response. If a proposal begins with a real mechanism of harm, it at least starts on solid ground.
But much of the current agenda is built around visible inputs rather than system performance. The blanket two-person crew requirement is the clearest example. The empirical basis for it has never been strong. More important, it asks the wrong question. Railroads do not make staffing decisions in isolation. They make them alongside decisions about route characteristics, control systems, monitoring technology, rolling stock, and operating procedures. Freezing one input by law is a poor substitute for understanding how the system actually produces safety.
The same concern applies to inspection mandates that prescribe process rather than outcomes. Of course inspections matter. But the relevant questions are which inspections, where, how often, and at what opportunity cost. In a technologically changing industry, Congress is often tempted to regulate what it can easily see and count. That is politically understandable. It is also often counterproductive. A process mandate can satisfy the demand for action while slowing the adoption of technologies that do the job better.
A more serious agenda would start from a different premise. Safety policy should target demonstrated failure modes, require accountability for results, and preserve room for firms to combine labor, capital, and technology in the least-cost way. That means more emphasis on performance standards and less on design standards and rigid mandates. It means a higher burden of proof for mandates with obvious costs and uncertain benefits. And it means remembering that the cost of moving freight does not stay in the freight sector. It works its way through supply chains and into the prices of ordinary goods, with the burden falling hardest on households least able to absorb it.
The larger point, though, is broader than any single bill. Rail safety is not mainly a staffing problem. It is about investment across all inputs of production. If Congress wants safer railroads, it should ask which policies increase the sector’s capacity to invest in detection, maintenance, infrastructure, and operational learning. If it keeps regulating the most visible inputs instead, it will keep regulating the wrong margin.