Washington Outlook: All Eyes on Infrastructure

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Prospects for a large-scale infrastructure and surface transportation bill in Washington is an increasingly salient topic.

House Transportation & Infrastructure Committee Chairman Bill Shuster (R-Pa.) announced he will retire at the end of 2018 – in part to focus fully on bipartisan infrastructure legislation – while the President reportedly favors action on this front in the first part of the year.

While NAFTA negotiations and possible Surface Transportation Board (STB) nominations are of the utmost importance to the freight rail industry (as I documented in my last Outlook), the potential for major infrastructure legislation forces relevant stakeholders like privately owned freight railroads to make policymakers aware of the most pressing matters.

The AAR believes the following issues are most important in possible legislation:

Making the Highway Trust Fund (HTF) solvent. The problems with the HTF, the primary means to directly fund surface transportation projects, are well documented. As the Congressional Budget Office (CBO) said in 2016, “Federal spending on highways does not correspond very well with how the roads are used.”

Due to increasingly fuel efficient cars that erode the effectiveness of the gas tax, as well as heavy trucks failing to pay for their full infrastructure impact, lawmakers have been forced to transfer $143 billion in general taxpayer funds to the HTF. “Using unrelated government revenue to fill deficits in the trust fund subverts fiscal discipline and undercuts the whole point of having a dedicated funding source,” the Concord Coalition rightly says.

The problem is even starker when considering the future, as CBO predicts that fund revenues generated via the gas tax – last indexed for inflation in 1993 – will fall short by at least $19 billion annually from 2021-2026. Clearly there is no magic bullet to addressing the shortfall, however, policymakers can start by putting all solutions on the table. This includes a rightsizing of the gas tax, as the ATA, for instance, embraces, a Vehicle Miles Traveled (VMT) tax for road and highway use, tolling highly trafficked roads and/or a weight distance fee to account for varying impacts on public infrastructure.

Policymakers should, as the 2018 budget specified, limit spending to generated revenue to avoid taxpayer subsidization. Ultimately, users of infrastructure must pay for the infrastructure they use, just as railroads do on their private infrastructure.

Putting transportation modes on equal footing. “A wide range of independent, scholarly studies clearly demonstrate that heavy trucks cause significant damage to the nation’s roads,” says Robert D. Atkinson, President of the Information Technology and Innovation and former chair of the National Surface Transportation Infrastructure Financing Commission. As Atkinson and other academics consistently note, while truckers pay far more than passenger cars in taxes, they do not fully account for the impact of heavy trucks.

This underpayment, at least 20 percent less than needed according to the Department of Transportation Highway Cost Allocation Study, allows truckers to artificially deflate costs to the detriment of competitors – namely railroads. Any infrastructure package must instill mechanisms to ensure truckers, who are not subject to any form of rate regulation like railroads, pay for their full use of public infrastructure.

Streamlining permitting to expedite project approvals and attract private investment. Even with smart policies written into law in 2015, railroads and other transportation modes still face duplicative and burdensome permitting delays largely unrelated to environmental factors. This of course drives up costs and, in some cases, deters private investment altogether.

BNSF, for example, has spent more than 10 years to construct an intermodal railroad yard located closely to the ports of Long Beach and Los Angeles – an area perhaps most in need of limiting truck congestion. In the East, CSX spent seven years before it could begin expanding a tunnel in Washington, D.C., dealing with a bevy of local and federal agencies individually.

Infrastructure legislation should improve upon past law and incorporate, where possible, proposals by the administration to centralize decision making.

Emphasizing Amtrak and commuter railroads as vital parts of the transportation mix. Amtrak requires a stable capital funding source to address its sizable infrastructure needs. Any infrastructure discussion must include Amtrak, which needs a reliable funding source outside of the annual appropriations process.

While Class I freight railroads will meet all statutory deadlines to install Positive Train Control (PTC), some passenger railroads face additional obstacles. Policymakers should place value in the movement of people railroads, providing the adequate amount of funding to ensure vibrant passenger operations – including in providing additional resources where needed for passenger railroads to install PTC.

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