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Rail News Home Federal Legislation & Regulation

February 2009



Rail News: Federal Legislation & Regulation

What'll it Take for Rail to Gain 'Stimulus' Traction on Capitol Hill — Now and Over the Longer Haul?



By Pat Foran, editor

The word “infrastructure” has wended its way into the Washington vernacular to such an extent that it just might blend in with the policy-wonk woodwork. Consultants study the ins and outs of North America’s congested highways and (someday) crowded freight-rail mainlines, issuing reports and predictions with increasing frequency and noting, dutifully, that rail is three times more fuel efficient than truck transport. In Congress, lawmakers now line up to serve on committees that feature the “I” word as an adjective.

“They’re talking about infrastructure in a much broader scope, and with a much greater sense of urgency, than I’ve seen or heard — perhaps ever,” says National Industrial Transportation League (NITL) President Bruce Carlton, who has three dozen years of experience working on domestic and international freight transportation issues. “Transportation infrastructure seems to be on everybody’s ‘to-do’ list.”

Including the new president’s. In addition to welcoming the Obama Administration’s aim to boost the economy by rebuilding bridges, rethinking the electricity grid and perhaps reconsidering the way the country moves people and goods, rail proponents couldn’t help noting the 137-mile train trip President-Elect Barack Obama took to his inauguration last month as nothing short of symbolic.

“Maybe it’s a good sign,” mused Railway Supply Institute President Tom Simpson a couple days before the Obama Express left the station in Philadelphia.

But signs and symbols leave too much to the imagination, too much to interpretation. Today’s rail proponents want more. It’s no longer enough for rail to have a seat at the policy-shaping table.

“We’re not just happy to be here — we’ve got to eat,” says Chuck Baker, president of the National Railroad Construction & Maintenance Association Inc. (NRC).

A Lot of Dialogue

Not that they don’t still come away from the table hungry. The sausage-making that’s been the economic stimulus package is a case in point. While the passenger-rail contingent was likely to get a relatively decent meal, freight folks from Class Is to IIs and IIIs appeared to be facing a stimulus-related fast early this month: There was a good chance that the stimulus legislation President Obama would sign into law wouldn’t feature a freight-rail component.

But the rail lobby wasn’t fretting over it, at least not publicly.

One reason: They’ve still got some message-crafting to do. Another: They’re keenly aware that the promoting-rail-as-stimulus concept isn’t just about this particular piece of legislation.

It’s also about doing their best to ensure Congress passes legislation that ultimately helps expand rail capacity without limiting the rails’ ability to invest in infrastructure. It’s about demonstrating to lawmakers and the public that rail affords a solution for a variety of energy, environmental and economic development ills.

What’ll it take for rail to gain “stimulus” traction on the Hill during the near term as well as over the longer haul? A little unity and a lot more dialogue and understanding among transportation stakeholders could go a long way — whatever the economic weather and regardless of whether a stimulus package features freight and/or passenger rail in a prominent role, legislative aides, lobbyists, and other Hill dwellers and observers told us during December and January interviews, and via recently delivered congressional testimony.

“Beyond the stimulus, the NRC believes that Congress should use the opportunity of the next transportation reauthorization to revamp transportation law in this country,” as Baker put it during the “Freight and Passenger Rail: Present and Future Roles, Performance, Benefits and Needs” hearing held Jan. 28 by the Railroad Subcommittee of the House Transportation and Infrastructure Committee. “The next reauthorization should not be incremental — it should be transformational.”

Less than Stimulating

That said, rail advocates would’ve embraced an incremental funding bump in the stimulus package. For awhile there, it appeared as if they might get one.

On Jan. 7, House T&I Committee Chairman James Oberstar (D-Minn.) issued a stimulus proposal calling for $85 billion to fund “ready-to-go” infrastructure projects, including $12.5 billion for public transportation, $3.4 billion for high-speed rail and $1.5 billion for Amtrak. The funding included $7.5 billion for capital grants and $2 billion for transit energy grants to help agencies offset increased expenses related to fuel costs, add service and avoid fare increases.

Oberstar also proposed $2.5 billion in supplemental funding for New Start and Small Start projects, and $100 million over two years for capital grants for Class II and III roads, as authorized by the Energy Independence and Security Act of 2007.

“I was pleasantly surprised,” says Keith Hartwell, a partner in Chambers, Conlon & Hartwell L.L.C., which lobbies on behalf of the American Short Line and Regional Railroad Association (ASLRRA). “Private freight rail usually doesn’t fare well in measures like this.”

Ultimately, it didn’t in this one, either. On Jan. 15, House Democrats veered from Oberstar’s proposal and unveiled the American Recovery and Reinvestment Act of 2009 (H.R. 1). The $825 billion package called for $550 billion in spending on a range of projects and state/local government aid, including $90 billion for infrastructure improvement. Of that, $30 billion would be allocated for highway projects; $10 billion for rail and mass transit projects; and $1.1 billion for Amtrak.

“I wasn’t surprised the short-line grants didn’t make it, but the whole rail piece was considerably smaller, so I was disappointed,” Hartwell says.

So were other rail transportation advocates, particularly the transit set, which vigorously urged House leaders to ratchet up the funding. On Jan. 28, the House approved an $819 billion package that included more funds for transit — $12 billion for public transit vs. the previously proposed $9 billion — but still nothing for freight rail.

An amendment introduced by Rep. Jerrold Nadler (D-N.Y.) last month and subsequently approved by the House increased transit agency formula funding by $1.5 billion and New Starts funding by $1.5 billion. The House also adopted an Oberstar amendment requiring that projects be under construction within three months after President Obama signs the bill into law.

“I’ve been assured by the transportation directors of all the states that they can meet that 90-day deadline,” Oberstar said in a Jan. 28 interview broadcast on YouTube. “Transit agencies have said they can have orders placed, and manufacturers have said they can increase 30 to 35 percent their production of transit vehicles within, in fact, a month.”

Regionals and short lines could get their respective projects started within 90 days — many within 30 — and create 30,000 “direct jobs” in the process, short-line holding company Watco Cos. Inc. CEO Rick Webb told the rail subcommittee during the Jan. 28 hearing. (“All the materials we would use would be made in America, as well,” Webb added.)

Some Flexing in Their Future?

Nevertheless, freight-rail advocates had little choice but to turn their attention to the Senate stimulus bill and continue to push ahead. Issued Jan. 27, it proposed $8.4 billion for transit formula spending and $5.5 billion for competitive surface transportation grants that could be allocated to states or local governments for public transit, new starts, passenger or freight rail, port infrastructure or highway projects. It also proposed $850 million for Amtrak, $250 million for intercity passenger-rail grants to states and $2 billion for high-speed rail corridors. And it included about $26 billion in highway funding that could be “flexed” to rail at the discretion of state DOTs.

“Based on the way [state officials] have been talking up rail, we believe that if they had that flexibility, they’d exercise it,” says Association of American Railroads (AAR) President and CEO Ed Hamberger.

Whether they’ll get the chance to do some flexing remained to be seen last month and into February, although a few rail advocates said there was a fair amount of opposition to giving states that kind of spending leeway. (“One of the fears is states would get that money and use it to balance budgets or in other areas,” RSI’s Simpson says.) The Senate was debating the bill as of press time.

Stimulus hopes aside, though, rail advocates have their eyes on a larger prize: the bigger transportation picture. And so do more and more state and federal lawmakers, rail advocates believe, citing the Jan. 28 rail subcommittee hearing as a case in point.

In welcoming the would-be testifiers to the hearing, Rep. Corrine Brown (D-Fla.), who chairs the subcommittee, said the group now is the T&I committee’s second largest subcommittee, in large part because of “the increasing interest in freight and passenger rail as a solution” to the country’s gridlock, environmental and economic problems.

“The future of ground transportation is on our rails, whether it is taking freight off congested highways or moving people on high-speed corridors,” she said. “New and creative ideas from the government and the private sector must be utilized to increase and improve both freight and passenger-rail capacity.”

The rail advocates on hand to testify urged subcommittee members to convince more of their House colleagues that the rail-as-stimulus idea was a good one. But they also began laying the foundation to develop a collective voice they plan to use during the surface transportation reauthorization conversations to come this congressional session. The Safe, Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users expires on Sept. 30, 2009.

“Enhancing our rail network would provide a framework for successful public-private partnerships,” Surface Transportation Policy Project (STPP) President Anne Canby told the subcommittee. “Because most rail infrastructure is privately operated and maintained, there can be significant public benefit in shifting a greater share of freight to rail through reduced costs for new highway capacity and ongoing maintenance, as well as reduced energy use and [greenhouse gas] emissions.”

Added Amtrak President and CEO Joseph Boardman: “This remarkable [rail] network provides surface connectivity for passengers and freight from coast to coast, and border to border. Congressional interest must make this investment a national priority for the next decade or beyond if we are to remain a competitive and healthy economic engine in the world.”

One(Rail) Voice

STPP and Amtrak are charter members of the OneRail Coalition, which “brings passenger and freight rail stakeholders together for the first time,” according to a Jan. 15 release announcing the coalition’s formation.

Specifically, the coalition seeks to expand intercity and commuter-rail options across the country, and ensure the capacity, safety and integrity of the nation’s freight-rail network. OneRail also aims to enact policies and implement programs that expand public and private investment in freight rail, and support state efforts to obtain an ongoing, dedicated funding source for intercity passenger-rail expansion.

In addition to STPP and Amtrak, coalition members include the AAR, ASLRRA, RSI, American Public Transportation Association (APTA), National Association of Railroad Passengers (NARP), States for Passenger Rail Coalition, Building America’s Future and Natural Resources Defense Council.

“For us, getting together with NARP and APTA is a big deal, although to folks outside the industry, it doesn’t seem like it,” AAR’s Hamberger says. “But organizations like the Natural Resource Defense Council and Building America’s Future are pretty interesting groups to be saying that we need more rail. And they’re not just talking about moving people. It gives the message a whole lot more resonance.”

That it does, a few legislative aides said. Their responses ranged from “Makes complete sense” to “It’s about time.”

It took a mind-set shift for some of the association leaders to join the coalition. It’ll take time and even more work to keep the group together, some observers believe.

“You have to remember the way Washington does business, and in the transportation arena, there’s air, there’s highways and there’s rail,” one rail association official says. “Old habits, especially parochial ones, die hard. Don’t be surprised if the old schisms and arguments rear their heads once we get past the stimulus period.”

Past the Parochial

OneRail officials are less concerned about parochialism ruling the roost, especially given the key players who say they’re committed to the cause. Among them: Pennsylvania Gov. Edward Rendell, California Gov. Arnold Schwarzenegger and New York City Mayor Michael Bloomberg, co-chairs of Building America’s Future; and BNSF Railway Chairman, President and CEO Matt Rose, who was a member of the 2008 National Surface Transportation Policy and Revenue Commission that recommended, among other things, increasing investment in surface transportation to the tune of $225 billion to $340 billion annually during the next 50 years.

More than anything, the challenge may be for OneRailers — all lobbyists and lawmakers, really — to resist short-term thinking, particularly during a recession and an uncertain regulatory climate. As Rendell, Schwarzenegger and Bloomberg put it in a Jan. 16 letter to President-Elect Obama regarding the House Appropriations Committee version of the economy recovery plan:

“It is vital that we don’t stop here but begin planning, almost immediately, a long-term infrastructure strategy that focuses on how we will meet funding goals and the best way to ensure that the spending decisions will be based on need, not politics.”

Again, that isn’t necessarily how Washington works — at least historically. But to hear some Hill vets tell it, the time may be right to start thinking “business as unusual” in the transportation infrastructure arena.

“I think we are aligned in lockstep with any number of other similar organizations in Washington in that we want, and are working toward, a coherent freight element in the next surface transportation bill,” NITL’s Carlton says. “I don’t think anybody knows what it’s going to look like, but there seems to be a broad buy-in by the community to get it done.”

Above the Partisan Fray

Not that there won’t be sticking points, particularly if the economy continues to lag and the post-financial-market-bailout anxiety levels continue to color the regulatory climate.

“I don’t think there’s any question that most of us expect regulation to play a bigger role, although there’s a real danger here of overreacting,” says National Grain and Feed Association President Kendell Keith.

Of course, defining words like “bigger,” “danger” and “overreacting” can be significant challenges in and of themselves. So can terms such as “re-regulation” and “abusive pricing,” which historically have fanned the flames of a long-simmering legislative battle between certain segments of the railroad and rail-shipper lobbies.

Both sides would do well to sharpen their arguments, staffers representing congressmen on both sides of the aisle say. That includes steering clear of loaded phrases such as “re-reg,” “anti-competition” and, at times, “captive” in a shipper context. And don’t presume anything about the regulatory climate in Washington just yet, they say.

“As always, the devils in the details,” adds a staffer. “Just because Congressman Oberstar has indicated he might not support the rails on the so-called ‘re-reg’ issue, he also understands that freight railroads must succeed in this country. The issues are anything but black and white.”

All the more reason for would-be adversaries to think before they throw words (and lobbying dollars) around — and, perhaps, to consider an alternative solution (i.e., compromise).

“‘You guys bring us a common solution, and we’ll enact it’— that’s pretty much the way Congress works,” says logistics consultant John Ficker, who’s served the transportation industry for nearly 40 years, including a stint as NITL president.

What’s more, Congress historically has had something of a vision problem: It “continues to see freight railroads as just another private-sector industry, when in fact, freight railroads, as an element of our infrastructure, make a major contribution to the overall well-being of our society,” says Michael Sussman, president of Strategic Rail Finance, a financial services firm. “And until we raise the level of dialogue above the partisan fray and stakeholder tussle, we won’t have a Congress that embraces freight railroads as an inherent good.”

Fostering such an embrace would represent quite a goal. It’s also a possible start. Buck up and buckle up. It’s a long road to the longer haul.



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