Thursday, November 06, 2014

Post-election: Railroads look OK; rail labor, Amtrak not so good

Written by 
Post-election: Railroads look OK; rail labor, Amtrak not so good
What does Senate Republican control and the largest House Republican majority since the 1940s mean for railroad reregulation, Amtrak’s future, high- and higher-speed rail, transit funding, Positive Train Control (PTC), corporate tax reform, short line tax credits, the future of coal, and a minimum crew-consist mandate?

Rereg legislation was kaput well before this election. Amtrak, on the other hand, best find a secure hideaway that is “posted” against hunting, because come January, it will be open season on passenger train subsidies. The Republican-controlled House already has closed the books on high- and higher-speed rail funding; and Republicans, as a rule, aren’t too generous with transit. Legislative attempts to mandate two-person train crews? Fuggetaboutit.

As for the other rail-related issues, including highway funding, the forecast is more clouded.

Note that before the seating of the 114th Congress in January, we must endure a lame duck session of the dysfunctional 113th. Putative Senate Majority Leader Mitch McConnell (R-Ky.) said, however, that he would defer to the 114th Congress most major legislation, preferring that the remainder of the current Congress—in lame duck session—concentrate only on so-called continuing resolutions that keep existing programs funded, as well as moving some tax bills such as tax credits (Section 45G of the Tax Code) for short line railroad capital spending programs. Until January, Harry Reid (D-Nev.) remains in control of the Senate docket.

Rail labor most certainly is the biggest Election Day loser. With a new round of national contract negotiations about to commence, the increased number of anti-labor conservatives in both chambers portends treacherous shoals should an impasse lead to a threatened work stoppage and congressional intervention.

Especially alarming to the operating crafts representing conductors is the ennui among Democrats attending legislation to mandate two-person train crews. Most Republicans will have nothing to do with such mandates.

Separately, the departure of FRA chief Joe Szabo (http://www.railwayage.com/index.php/regulatory/fras-szabo-headed-back-to-chicago.html?channel=40) places in even greater jeopardy his personal cabal with rail labor to mandate, via an FRA rulemaking, two crew members on every train absent supporting data, or recognition of the purpose and capabilities of soon-to-be implemented PTC (http://www.railwayage.com/index.php/blogs/frank-n-wilner/data-phobic-fras-book-of-mormon%E2%80%9D.html). While not yet consigned to the dust bin of history, such an FRA initiative is likely now to disappear with Szabo’s departure.

Railroads properly lament the Election Day loss of Rep. Nick Rahall (D-W.Va.), the senior Democrat on the House Transportation & Infrastructure Committee. Although not always a fellow traveler with railroads, Rahall fully understood the negative implications of reregulation legislation and the convolutions attending too-hastily-mandated implementation of PTC.

Rahall’s sudden and unexpected availability is propagating speculation he could be Szabo’s successor at the FRA, or be headed to the lobbying shops of the Association of American Railroads, CSX, or Norfolk Southern. Informed supposition also has Rahall headed to the STB should Chairman Dan Elliott depart that Democratic seat. Elliott has been awaiting renomination to a second term for more than a year, and must depart, by statute, Dec. 31 if not renominated and confirmed by the Senate. (http://www.railwayage.com/index.php/blogs/frank-n-wilner/sen-durbin-emerging-as-stb-chairmans-nemesis.html?channel=62)

Succeeding Rahall as the ranking Democrat on the House Transportation & Infrastructure Committee will be Peter DeFazio (D-Ore.), known to relish, unlike Rahall, the occasional partisan quarrel. Committee Chairman Bill Shuster (R-Pa.), and Rail Subcommittee Chairman Jeff Denham (R-Calif.), gain greater strength owing to the Republican pick-up of at least 14 House seats. Florida’s Corrine Brown is likely to remain ranking Democrat on the rail subcommittee.

Most freight railroad concerns are not at great risk within the T&I Committee, although Republicans there—and on the Ways and Means Committee that considers tax policy—are chary to upset long-standing policy that funds highway construction through a per-gallon fuels tax. Economic efficiency augurs, instead, for a user fee based on axle weight and distance traveled, which would more properly match pavement damage responsibility, yet increase trucker costs. Railroad intermodal market share and intermodal pricing are sensitive to shifts in motor-freight fuel costs. DeFazio has expressed a third approach to highway funding: taxing crude oil at the refinery and linking the tax to inflation.

Often ignored is the House Appropriations Committee—specifically, its Transportation Subcommittee. Although guided by T&I authorizations, the Appropriations Committee effectively controls transportation funding. Subcommittee chairman Tom Latham (R-Iowa) is retiring at year-end, as is the second senior Republican, Frank Wolf (R-Va.). Who will move up or over (from another committee) as chairman is not clear. The Democrats’ ranking member, Ed Pastore of Arizona, is retiring.

Senate changes

On the Senate side, railroads silently welcome the retirement of Commerce Committee Chairman Jay Rockefeller (D-W.Va.), who has spent three decades mocking railroad deregulation. Republican control will move Sen. John Thune (R-S.D.) into the chairmanship—another railroad baiter, but not nearly as caustic and shrill as Rockefeller. Sen. Bill Nelson (D-Fla.) will be the ranking Democrat. Attempts at intimidating the allegedly independent Surface Transportation Board to bend to shippers will likely will ebb with Rockefeller gone.

While Senate Republicans have never stood as firmly as House Republicans in opposition to railroad reregulation, a Republican-controlled Senate is considered less perilous than under Democratic control. Look for Ray Blunt (R-Missouri) to chair the Commerce Committee’s Surface Transportation Subcommittee.

As with the House, the Senate Appropriations Committee—again, its Transportation Subcommittee—controls transportation funding. Sen. Susan Collins (R-Maine) will move to the subcommittee chairmanship in place of Washington-state Democrat Patty Murray. Collins and Murray jointly have exhibited support for federal funding assistance of short line railroad safety initiatives.

In the Senate Finance Committee, where tax decisions are made, Sen. Orin Hatch (R-Utah), who opposes an increase in motor fuels taxes, and who might, of necessity, embrace a more economically efficient alternative, is in line for the chairmanship. Hatch could also support, as do other conservatives, shifting the highway tax burden from the federal government to the states, but that could adversely impact a seamless national highway network. The current chairman is Ron Wyden (D-Ore.).

The separate authorizing committee for a new highway bill is Environment & Public Works, which will be chaired by Sen. Jim Inhofe (R-Okla.), a rare conservative who advocates increased infrastructure spending. Sen. Barbara Boxer (D-Calif.) currently is chairman. The committee’s Transportation & Infrastructure Subcommittee will be chaired by John Barrasso (R-Wyo.). It currently is chaired by strong highway spending advocate Tom Carper (D-Del.).

The Senate Banking Committee’s Transportation Subcommittee, which authorizes transit programs, will be chaired by Jerry Moran (R-Kans.). The current chairman is Robert Menendez (D-N.J.), whose constituents are heavily dependent on public transportation.

The macro view is that, notwithstanding Republican Senate control, Republicans lack a super-majority of 60 votes needed to choke minority party opposition to proposed legislation. As a general rule, if a bill does not have a minimum of 60 supporters, it is not brought to a floor vote. Yet with an increased number of tea party conservatives having been elected, and expected to put pressure on moderates such as McConnell (R-Ky.), bare knuckles fighting may be in store.

Already, McConnell has threatened to take the nation to the brink of another government shutdown if Democrats interfere with a conservative Republican legislative agenda next year. Prior to the election, McConnell said, “Make me the majority leader … and we’ll put points on the board and take America in a different direction.” Post-election he promised a more conciliatory approach.

In fact, the politics of the upcoming 114th Congress things could get terribly brutal, but Republicans must weigh their tactics in light of the 2016 presidential election. Not to be ignored is that while a majority of Americans age 45 and older are more supportive of Republicans, Americans under age 44—and especially between the ages of 18 and 29—are more favorably disposed to Democrats, according to a Washington Post analysis. Such numbers have longer term political implications.

If history is a guide, George W. Bush, Bill Clinton, and Ronald Reagan spent their final two years in office—as will President Obama—with the opposition party in control of Congress.

A billion here, a billion there

By the way, did you know that, collectively, Democrats and Republicans spent $5.6 billion over this two-year election cycle supporting their candidates and lobbying for preferred legislative outcomes? The U.S. Chamber of Commerce alone spent $160 million. Furthermore, according to data compiled by the non-partisan Center for Responsive Politics:

BNSF and its officers and employees contributed $3.4 million to candidates, political parties, and an array of political action committees (PACs); and spent $3.9 million on congressional lobbying activities.

CSX contributed $2.7 million toward election outcomes and spent another $5.7 million in expenses related to lobbying Congress.

Norfolk Southern contributed $1.9 million toward election outcomes and spent another $5.1 million on lobbying.

Union Pacific contributed $2.5 million toward election outcomes and spent another $9.9 million on lobbying.

The Association of American Railroads spent $11.5 million on lobbying.

The American Short Line and Regional Railroad Association spent $800,000 on lobbying.

Among labor unions, the United Transportation Union (now the Transportation Division of SMART), spent $2.1 million on lobbying, while the Brotherhood of Locomotive Engineers and Trainmen (BLET) spent $1.1 million.

By contrast, Dow Chemical and the Edison Electric Institute—each advocating railroad reregulation—spent $23 million and $17 million, respectively, on lobbying activities.

Humorist and author P.J. O’Rourke termed Congress, in his best-selling book, “A Parliament of Whores.” We prefer the lifetime achievement of Nobel laureate economist James Buchanan, whose public choice theory explained that those in the public sector are driven by the same incentives as those in the private sector—rational self-interest. That’s what makes capitalism and democracy the very worst systems—except, of course, for all the others.

Frank N. Wilner, Contributing Editor

Frank N. Wilner is author of six books, including, Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and, Railroad Mergers: History, Analysis, Insight. He earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been assistant vice president, policy, for the Association of American Railroads; a White House appointed chief of staff at the Surface Transportation Board; and director of public relations for the United Transportation Union. He is a past president of the Association of Transportation Law Professionals. Wilner drafted the railroad section of the Heritage Foundation’s Mandate for Change (Volumes I and II), which were policy blueprints for the two Reagan Administrations; and was a guest columnist for the Cato Institute’s Regulation magazine.

Get the latest rail news

Rail news and analysis from Railway Age, IRJ and RT&S by email