HIGHLIGHTS FROM THE DECEMBER 2008 ISSUE
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Commentary
Regulation, not legislation, could drive change
My most confident prediction is that whatever change occurs, it will not be as transforming as its proponents hope for and not as damaging as its opponents fear. President Obama and his congressional majority will engage in a flurry of initiatives in the first six months of 2009. Some of those initiatives will be enacted immediately, but most will be subjected to the long, slow grind of the legislative process. Compromises will be made on some. Many will languish indefinitely.
Moving individual pieces of legislation is all about finding the legislative vehicle that can make it through the process. The primary vehicle for transportation policy in 2009 is the reauthorization of SAFETEA-LU. This is a natural vehicle for such good transportation policies as the short line tax credit extension, the proposed Class I tax credit, RRIF reform, increased grade crossing funding, and other infrastructure funding programs. It is also the obvious vehicle for such damaging policies as increasing truck sizes and weights and railroad reregulation. A majority in Congress feel that Highway Trust Fund resources are well below our infrastructure needs. But few in Congress will want to increase the gas tax to make up the difference. Working out that problem will take all of 2009 and maybe longer, and associated transportation policies are likely tied to that delay.
The most significant changes for the railroad industry in general and the short lines in particular are likely to come from the regulators, not the legislators. The recently passed rail safety legislation left a huge number of decisions up to the Federal Railroad Administration. One of the most critical of these is Positive Train Control implementation. While short lines are not covered generally by the PTC mandate, the FRA must decide what requirements will be imposed when a short line is involved with passenger service, the transportation of hazardous materials, or interchange with a Class I that has PTC. The wrong decision could put some short lines out of business.
Likewise, the Surface Transportation Board is likely to be the source of significant regulatory decisions affecting short lines. President Obama will appoint a second Democrat to the STB and name a new chairman. The STB has considerable authority with regard to the criteria for and timing of transactions, rates, abandonments, and service issues. As those who support reregulation become frustrated with the pace of legislative action, they will turn to the STB for action.
Extending the short line tax credit will be, as always, a chore. The original three-year credit expired at the end of 2007, and we did not secure an extension until the very last week of the 2008 Congressional session. While the extension goes through 2009, we will be making every effort to secure an extension before the end of the year so our railroads can adequately plan their capital expenditures for 2010. In this year’s election, we lost five of our 44 Senate co-sponsors, including our original chief sponsor, Senator Gordon Smith of Oregon. We lost 37 of our 247 House co-sponsors. The tax credit has allowed short lines to significantly increase track rehabilitation, and I predict that if we can effectively communicate that progress to Congress, the credit will be extended again.
Finally, 2009’s Railroad Day on the Hill will be one of the most important the industry has ever held, and our legislative success is dependent on a large and aggressive turnout. There are 62 brand new Senators and Representatives in Congress who have never heard our message and probably know next to nothing about railroads. Our Feb. 26 Railroad Day banquet will likely be the first rail industry event attended by the new FRA Administrator and the new STB member, and I believe first impressions count mightily. In 2008 330 rail industry representatives participated in over 250 individual Congressional meetings. If you are concerned about the impact of change on the railroad industry, you need to help us make our 2009 Railroad Day even bigger and louder than ever before.
Copyright © 2007. Simmons-Boardman Publishing Corp.