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Rail News Home High-Speed Rail

February 2015

Rail News: High-Speed Rail

Rail regulation, PTC, surface transportation reauthorization top rail industry's 2015 legislative agenda


— by Julie Sneider, senior associate editor

January brought the start of a new session of Congress — the 114th — which now is under Republican control after Democrats lost their Senate majority in the 2014 midterm elections.

One obvious question on the mind of rail lobbyists is how much this new Congress will actually accomplish, given that the 113th session went down as one of the least productive on record. Some rail industry analysts say they're hopeful that with one party in control of both the House and Senate, lawmakers will find more common ground on issues such as transportation.

For rail, the policy and legislative agenda includes topics that rail leaders have been concerned about for years. First up on this year's "To Do" list: surface transportation reauthorization legislation as well as an extension of the federal deadline for positive train control (PTC) implementation, rail reps say.

AAR: PTC, Balanced Regs

The American Association of Railroads (AAR) topped its 2015 policy and legislative priorities with a message that President and Chief Executive Officer Ed Hamberger has been reiterating for years: Congress and the Surface Transportation Board (STB) should maintain the nation's "balanced" economic regulations that pertain to the rail industry.

"We believe the current system is working well," Hamberger says, noting that railroads spent $26 billion in private capital in 2014 to expand and maintain their rail networks. "We need to put more in this year, and at a time when our customers are saying the economy is coming back and we need more capacity, we have to have policies in place that allow us to reinvest in that network. You don't want to take away [railroads'] ability to earn money and move the economy forward."

For example, the STB reauthorization bill introduced in the U.S. Senate Committee on Commerce, Science and Transportation last fall would have expanded STB's ability to pursue regulations that could cap rates and require railroads to turn over traffic to competitors, according to AAR's synopsis of the legislation. The bill also would have allowed the STB to prevent railroads from using an approach commonly used by both railroads and shippers to "bundle" offers. The proposal — which didn't pass the full Congress — was backed by rail shippers but opposed by the rail lobby. Hamberger expects the proposal to resurface, possibly in the first quarter.

Other recurring topics on AAR's policy platform: truck-size-and-weight restrictions (the trucking industry wants them loosened and AAR does not); two-person train-crew size requirements (AAR is opposed); a permanent extension of the short-line tax credit for small railroads' capital expenditures; and new safety standards and regulations for transporting crude oil by rail.

One new legislative focus for AAR this year will be an effort to reform the permitting process for railroad infrastructure projects. Although MAP-21 modified the process of obtaining environmental and other regulatory permits for highway and transit projects, railroads were not included in those changes. Railroads would like to see the process streamlined so that they can advance major projects more quickly.

Among the industry's ongoing policy concerns related to infrastructure is PTC. The federal mandate on railroads to install the train crash-prevention safety system has been a focus of the industry since Congress passed the law in 2008. But the matter takes on an even greater urgency this year, as railroads face the deadline to complete PTC implementation by Dec. 31. Although freight and commuter railroads have been working as fast as possible to acquire, equip, install and test the complex and still-evolving technology, they won't be ready to implement the system nationwide by year's end — a point that even the Federal Railroad Administration has acknowledged. AAR has in the past — without success — asked Congress for a three-year PTC deadline extension, and will ask for it again this year.

"It's 2015, the moment of judgment is upon us, and people are not ready for PTC," says Adam Nordstrom, a partner at the D.C. firm of Chambers Conlon & Hartwell LLC, which lobbies on behalf of the American Short Line and Regional Railroad Association and other railroad industry clients.

Nordstrom believes there's a chance Congress will take up the deadline- extension matter.

"The prospects for reasonably relaxing the PTC deadline are very real and something we'll spend a lot of time working on," he says.

American Public Transportation Association (APTA) officials will be on Capitol Hill to try to convince lawmakers of commuter railroads' need for a deadline extension, too, as well as help with the cost of implementing PTC, which APTA estimates at about $2.75 billion. Although the rail safety law that mandated PTC authorized $250 million in federal funding toward the cost of implementation, so far Congress has approved only $50 million, says Brian Tynan, APTA's director of government relations. Given that gap in federal funding, commuter railroads have had to shift resources to PTC installation that otherwise would be used for critical infrastructure work and state-of-good-repair projects, he says.

"We are fully committed to implementing this important safety system, but I think it will be quite difficult to meet this deadline given the complicated nature of this untested technology," Tynan adds.

In a broader sense, federal funding for transportation is APTA's legislative focus this year. For APTA, that means getting a long-term surface transportation bill passed to take effect after the MAP-21 extension expires May 31. APTA is seeking a six-year authorization bill that provides $100 billion to address transit agencies' $86 billion backlog of state-of-good repairs as well as future needs, according to Tynan.

While that bottom line may be clear, where Congress can — or will — find the money to meet it remains fuzzy. The federal 18.4-cent-per-gallon gas tax — which funds the Highway Trust Fund and its mass transit account — hasn't been increased since 1993. Because the tax revenue is no longer sufficient to cover the nation's transportation needs, a few people in Congress on both sides of the aisle are suggesting it might be time to consider a gas-tax hike. But the politics of a such an increase — especially in a GOP-controlled Congress — make that scenario unlikely.

Despite uncertainty over funding mechanisms, a growing number of voices from both parties are joining the pass-a-bill chorus. House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.) said in late January that "common ground" on transportation infrastructure exists in Congress and he's working to pass a surface transportation bill. Also, House Speaker John Boehner (R-Ohio) acknowledged in a recent interview with the CBS program "60 Minutes" that fixing the nation's crumbling infrastructure is "critically important" and that bipartisan interest exists in Congress to tackle it.

Looking For A Five-Year Bill

In the Senate, Sen. James Inhofe (R-Okla.), now the chairman of the Environment and Public Works Committee, said in a January interview with Transport Topics that he would ask senators this year to consider funding proposals that would help advance a five-year surface transportation bill. Among the revenue-raising ideas that Inhofe suggested Congress might consider are public-private partnerships and an increase in highway "user fees." Moreover, he told the publication he'd like to avoid a short-term funding bill, which is what Congress did when it extended MAP-21 through May 31.

Also in January, Sen. Bernie Sanders introduced legislation calling for a $1 trillion infrastructure plan, including billions for work on passenger- and freight-rail systems, high-speed rail projects, transit, and port improvements.

Chuck Baker, a partner at Chambers, Conlon & Hartwell and the president of the National Railroad Construction and Maintenance Association (NRC), is "slightly optimistic" that President Obama and a Republican-controlled Congress can compromise on finding a new revenue source for transportation investments.

"An actual user fee, gas tax or something similar — that's probably unlikely," says Baker. "More likely, it will be found in the context of a bigger budget deal that might include tax reform. But I think infrastructure investment has re-emerged as one of the few bipartisan areas of agreement."

Well aware that a presidential election is just a year away, Republicans on Capitol Hill in 2015 will want to show some "governing successes" and not just be the party of 'No,' " Baker says.

"Through the NRC [and other rail advocacy groups], we will be pushing hard to make increased infrastructure investment something that both sides can claim as a win and do something useful for the country," he adds.

Also likely to surface this session is passenger-rail legislation that would reauthorize funding for Amtrak. Baker believes a bill will be introduced early this year, even before a multi-year transportation bill emerges. Shuster, whose committee passed the Passenger Rail Reform and Investment Act last fall, has indicated getting the Amtrak measure passed this year is a high priority.

Such a bill could spell good news for Amtrak in the form of stable funding, say officials at the advocacy organization Transportation for America.

"After several years of House proposals that either made huge cuts ... or hearings that focused heavily on issues like privatization of the food vendors serving Amtrak, 2015 might just be the year we see a reasonable and responsible passenger-rail law," the group's website states.

Funding for high-speed passenger rail (HSR) service is another matter, however. HSR will remain a point of contention for Republicans such as U.S. Rep. Jeff Denham (R-Calif.), who chairs T&I's railroads subcommittee. Denham has fought to prohibit any more federal dollars for HSR line development, especially in his home state, where construction began in January on a new San Francisco-to-Los Angeles HSR line. Developing that project's first segment will cost $6 billion, with $3.3 billion in funds coming from federal sources.

All Eyes On California

The politics of the California HSR project won't die down any time soon, says Joshua Schank, president and CEO of the Eno Center for Transportation.

"Everyone will be watching that project pretty closely," he says. "It's an easy one for opponents to pick at because it's a huge amount of money that's all going to one state. ... In my mind, there is no question that the Republican Congress will use it to beat up on the president. They'll try to paint it as a potential waste of taxpayer money."

Historically, transportation has been a bipartisan issue in Congress. While that's not been the case lately, rail-industry reps hope 2015 will mark a return to cooperation — at least when it comes to all things rail. The pressure on Republicans to prove they can govern and on Democratic President Obama to show that he can work with the opposing party should provide the spark for both sides to get things done, says lobbyist Nordstrom.

"When the machinery of Congress starts to grind into action, it creates opportunities for the rail industry to implement desired policy changes," Nordstrom says. "From a railroad lobbyist's standpoint, that's an environment that I'm looking forward to."

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