AAR State Relations Policy Committee September 16, 2005 Surface Transportation Board
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Transcript of AAR State Relations Policy Committee September 16, 2005 Surface Transportation Board
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AAR State Relations Policy Committee
September 16, 2005
Surface Transportation BoardRoger Nober, Chairman
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Public Issues Affecting Railroads
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• As Commercial Entities
• As Operating Companies
• As Legacy Quasi-Public Utilities
Public Perception of Railroads
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• Service levels that cause customers to raise issues publicly
• Rates that are perceived to effect the competitiveness of industries or regions
Impact of Commercial Practices
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• Operations that must coexist with communities
• Preemption leaves operations beyond control of state and local authorities
• Safety• Accidents/derailments
Impact of Operations
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• Railroads have “common carrier obligation” and have responsibilities similar to utilities
• Public opposition to abandonments
• Favorable regulatory regime
• Beneficiaries of preemption
Impact of History
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Preemption
• Under federal law, state and local governments cannot regulate “transportation” of rail carriers
• Intended to promote uniform national system
• Recent questions about application to solid waste facilities
• Board has procedures to catch problems
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Railroads and Communities
• Major carriers have rationalized their systems, so they now have more traffic on fewer lines.
• Communities now see a greater frequency of rail service on lines, and communities are struggling to co-exist with railroads.
• Communities are looking to partner with private carriers, states, and federal government to invest capital to increase rail fluidity, mobility for their citizens and livability.
• Will happen more and more, further straining carrier capital investment.
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Hazmat Traffic
• Communities are concerned about risks of moving hazardous materials
• Carriers have common-carrier obligation to carry hazmat materials
• Washington DC ordinance
• Other communities are looking to bar hazmat shipments as well.
• Significant public policy issue
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Rail Line Construction• Significant interest in constructing new or expanded
rail lines• Rail construction cases can be as controversial as
highway or airport projects• Significant recent cases:
• Bayport, Texas• DM&E• Tongue River
• New Matters:• Alaska Railroad• Yucca Mountain
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Capacity
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Insufficient Capacity – A New Kind of Regulatory Problem
• Current and future service issues largely demand and capacity driven
• Most commodities are deregulated by virtue of being modally-competitive or shipped by contract
• Regulatory powers intended for different type situation • Interstate Commerce Act laws and doctrine look at
reasonableness of regulated traffic• Customers want fairness for all movements
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Capacity Constraints – Causes of Increased Demand
• Expanding economy
• Large grain harvests in recent years
• Soaring demand for coal
• Double-digit increases in intermodal growth
• Shortness of crew and equipment
• Insufficient capital expenditures
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Capacity Constraints – Long-term Causes
• Constraints on capital investment for private companiesRailroads inability to achieve revenue adequacyNeed to cut expenses to maximum extentDemands of investorsUnder capacity and over capacity at the same time
• Demands of changing freight flows• Long-term nature of rail investment versus business-
cycle fluctuations in demand• Returns will have to justify further investment
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SAFETEA-LU
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SAFETEA-LU Legislation -- Overall
The Conference Report provides $244.1 billion in guaranteed spending and contract authority for highways, public transit, and highway-safety programs from FY 2005 to 2009 ($286.5 billion if 2004 totals are included).
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Freight Infrastructure Provisions
More than $4 billion will fund projects and improvements whose benefit primarily target goods movement, including:– $1.5 billion in the Projects of National and
Regional Significance;– $1.8 billion in the National Corridors program;– $833 million in the Borders program; and,– $140 million for the National Corridor planning
and development and Coordinated Border Infrastructure programs for fiscal year 2005.
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Significant Freight Rail Provisions
• Significant Freight Rail Infrastructure:– $100 Million for CREATE– $125 million for Alameda Corridor East– $370 for 6 other significant projects
• Increases RRIF Program to $35 billion• $6 million Freight Intermodal Distribution
pilot grant program• Increases grade-crossing program to $220
million annually
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Rail Service Issues
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• 2005 Letter to railroads asking them to submit Fall Peak plans, capacity bottlenecks and plans to alleviate those identified issues
• Industry-wide customer forum in September
• Individual carrier meetings where appropriate
2005 Service Actions
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2005 Service Complaints to the STB
• 90 customer complaints in 2005, YTD
• 12.5 percent y/y increase from 2004
• 123 total complaints in 2004, 19 percent increase over 2003
• 2005 Complaints Filed:
UP 19 CN 4
CSXT 15 KCS 1
BNSF 9 CP 0
NS 7
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