In the offices of a small federal agency a stone's throw from the U.S. Capitol, regulators are considering rules that could ripple throughout the economy and undermine important national policies.
The U.S. Surface Transportation Board (STB) is weighing whether to cap freight railroad revenue, which could result in far less investment in the privately owned and maintained national freight rail system.
These private, and not taxpayer funded investments in things such as new track, technology, locomotives and equipment have helped power not only the freight rail industry, but also our economy and many of our nation's strategic goals. Here specifically is what is in danger should the STB cap the revenue that railroads can earn by misapplying the concept of "revenue adequacy":
The policy of increasing U.S. exports: Exports help drive job growth and sustain the economic recovery. U.S. producers rely on our effective and affordable freight system to get their goods to U.S. ports to compete on world markets.
The policy of achieving U.S. energy independence: Freight railroads are a key contributor in the effort to wean America off foreign sources of oil. They have played a key role in allowing domestic oil production to flourish and U.S. energy independence to become tantalizingly close. They have accomplished this by nimbly applying massive resources, such as adding new lines and facilities needed to meet the changing commodity demands.
The policy of enhancing the safety of freight rail networks and facilities: Safety investments by freight railroads in tracks, switching and signaling systems (including the $10 billion being invested in congressionally mandated Positive Train Control), bridges and tunnels, and equipment remain the most important measures to enhance rail safety. The accident rate has declined 80 percent since 1980. A well maintained railroad is a safer railroad. The other equally important factor to improve safety is recruiting and training the world's best rail work force. The combination of investments and a well-trained dedicated employee base led to 2014 being the safest year on record.
The policy of increasing freight railroad's share of freight traffic: In order to lessen highway congestion and to use a mode that is more energy efficient and reduces greenhouse gases, the U.S. Department of Transportation National Rail Plan proposes a goal of having rail move 50 percent of all freight traffic transported over 500 miles.
The policy of improving on-time performance for Amtrak and ensuring reliable service for commuters: Demand for freight and passenger service will increase in the next 20 years. Since freight railroads serve as the operational foundation for much of America's passenger service, investments in the network must keep pace or else service for Amtrak and commuter services hosted on our lines will deteriorate.
The policy of increasing the resiliency of the national freight network to counter the effects of severe weather events and of climate change: Two major hurricanes that struck the Gulf Coast in 2005 demonstrated that the costs would be extraordinarily high for strengthening freight rail facilities vulnerable to the threats of rising sea levels and severe weather events. This lesson was driven home when Hurricane Sandy devastated the East Coast.
The policy of improving the capacity, efficiency and productivity of freight railroads overall: Less money to invest means that railroads will have to make hard choices. They will not be able to invest in building capacity in as many locales as shippers demand, which could result in less reliable service. Demand for freight rail will only increase. That's because the U.S. population is projected to grow by 70 million by 2035, generating 2.8 billion more tons of freight, a 22 percent increase.
The common theme in meeting these bipartisan policy goals is adequate revenue to maintain and expand the 140,000 mile rail network. A direct correlation exists between what the STB decides concerning revenue adequacy and whether freight railroads will in fact have the necessary resources and, ultimately, whether these policy goals will be achieved.
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