Faced with increasing unemployment and a stagnating economy, Senate Democrats have refused to pass a budget for over 800 days, content instead to distract with proposals that would throw the country’s fiscal health into further decline. Last week, Senator Herb Kohl (D-Wis.) called on Department of Transportation officials to throw the weight of the federal bureaucracy behind his legislation that would repeal current antitrust law and unfairly burden railroads with new regulatory regimes.  By going after one of America’s most productive and oldest industries, the Senator shows aggressive regulatory fiat seems to be a siren song few lawmakers in search of bigger government can resist.

While the current fiscal environment provides little appetite for yet another job-crushing regulation, it’s worth noting how off-base Kohl’s proposal is, especially with several transportation bills waiting in the wings once the debt limit debate expires.

The federal regulatory morass that governs most industries is both convoluted and barely navigable for companies attempting business. As detailed in our discussion of food safety oversight during the FDA Modernization Act debate, conflation amongst and between departments and agencies is common; to Senator Kohl, streamlining oversight of railroads by providing limited antitrust exemption represents a dearth of regulation, not a product of its excess.

Railroads are overseen by the Surface Transportation Board (STB) while still subject to nearly all antitrust laws. This, in effect, creates double-tiered regulation that maintains the same antitrust standards to which other industries are held backed by independent supervision by the STB. This sort of regulatory maze is not unique to railroads – many industries are subject to the same kind of duplicative oversight, and as a result are allotted their own exemptions from certain antitrust regulations that paint with too broad a stroke the guidelines for all commercial activity.

Worse, retracting railroads’ antitrust status would unravel the current state of play between regulators and legislative guidelines. This would leave varied interpretation between courts, regulators and policymakers of how railroads are allowed to proceed with doing business. With the current tax climate, unsustainable government spending and onerous regulatory regime already generating market uncertainty, passing a bill that would discourage economic productivity should be a nonstarter in this Congress. As Kohl’s time in the Senate dwindles, this latest regulatory overstep begs the question: if it ain’t broke, what exactly is the Senator trying to fix?

Posted by Mattie Duppler on Tuesday, July 12, 2011 4:48 PM EDT

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