June 30, 2006 - Senate Commerce Rail Capacity Hearing

June 30, 2006 - Senate Commerce Rail Capacity Hearing, written statement for the record

Thank you for the opportunity to submit comments for the record in your June 21 hearing on “Economics, Service and Capacity in the Freight Railroad Industry.”  Thank you also for holding a hearing on such an important topic.

Beyond that, we appreciate your strong support for intercity passenger rail, particularly as reflected in S. 1516, and S.A. 1627. 

The National Association of Railroad Passengers has both a specific and a general interest in a healthy, reliable railroad network where average speeds are increasing, not decreasing, and where high profile customers like UPS are adding traffic to the network, not moving it from rails to trucks out of frustration over slow rail service. 

Our specific interest, of course, is to see that railroads do a good job of running Amtrak and commuter trains.  Amtrak’s current and recent experience is not good.  In addressing our Association’s board of directors on April 28, Amtrak Acting President & CEO David Hughes said that, where Amtrak uses freight railroads, on-time performance dropped over 50% from 1999 to 2005.  It appears that things have gotten still worse this year. 

Capacity problems are a major factor.  If an Amtrak train is delayed on a single-track railroad while a fleet of freight trains are allowed to run in the opposite direction, that likely is a reasonable decision by the dispatcher, though perhaps also an indication that the railroad should be double-tracked.

Another major factor, however, is bad dispatching, for example, when a slow freight is dispatched just ahead of Amtrak, or when a freight train is switching on the mainline in front of Amtrak.  On June 10 at Terrell, Texas, Amtrak’s northbound Texas Eagle (Train 22) was delayed over 30 minutes while a rock train switched on the mainline.  Some of these sorts of delays appear to reflect contempt for Amtrak higher up in railroad management.  We urge the Committee to take whatever action it can to improve Amtrak on-time performance in the near term.  The rest of this statement is devoted to longer term track capacity issues.

The Association’s general interest in rail reflects our belief that greater reliance on freight and passenger rail would serve the national interest.  This belief is widely shared by the general public, as reflected in a Harris poll conducted in December (before the more recent run-up in gasoline prices).  Rail is widely recognized as maximizing energy and economic efficiency, minimizing environmental damage, and increasing the safety of our overall transportation system. 

Regarding energy, the recently-published Transportation Energy Data Book: Edition 25 (2003 data) again shows the extent to which railroads are more energy efficient than both domestic water carriers and trucks.  Rail averaged 344 British Thermal Units (BTUs) per ton-mile compared with 417 for water carriers.  “Heavy single-unit and combination trucks” consumed 23,461 BTUs per mile, while railroads’ averaged 15,016 BTUs per freight car mile. 

Unfortunately, the U.S. faces a huge challenge just for rail to maintain its existing market share.  As Association of American Railroads (AAR) President & CEO Edward Hamberger explained at page 26 of his prepared statement:

“AASHTO [in its Freight Rail Bottom Line Report released in January, 2003] estimated that railroads will need to carry an additional 888 million tons of freight annually by 2020 just to maintain their current market share.  AASHTO also found that railroads will need $175 billion to $195 billion of infrastructure investment over this period to accommodate this traffic growth, and projected that the railroads will be able to fund the majority of this investment—$142 billion—from their own retained earnings and borrowing.  Unfortunately, according to the AASHTO analysis, the $142 billion will be enough to enable railroads to handle only half of their expected increase in traffic.  This funding shortfall means that many projects that would otherwise expand capacity and improve the ability of our nation’s farms, mines, and factories to move their goods to market; speed the flow of imports and exports; relieve highway congestion; reduce pollution; lower highway costs; save fuel; and enhance safety will be delayed—or never made at all.”

In other words, even if we can achieve the policy shifts needed to allow rail to maintain its market share, truck traffic would continue to increase in absolute terms as the economy grows.  [The AASHTO report was issued by its Standing Committee on Rail Transportation, which at the time was chaired by Joseph Boardman, the current Federal Railroad Administrator.]

AAR favors public-private partnerships and investment tax incentives.  As an example of the former, he cites the $1.5 billion Chicago “CREATE” project (Chicago Region Environmental and Transportation Efficiency Program) “involving the State of Illinois, the City of Chicago, and the major freight and passenger railroads serving Chicago.”  The difficulty CREATE has had getting adequate funding, especially the small share federal contribution to date, reminds us how tough the needed “policy shifts” will be.  If Chicago has this much trouble, what will come of a similar, badly needed project for New Orleans that is under development?

The AASHTO figures Hamberger cites suggest public funding needs for freight rail are between $33 billion and $53 billion through 2020.  Some of the legitimate, capacity-enhancing investments that will depend on public support may be not lend themselves so obviously to specific “publics” for the “public-private partnership” to work.  Indeed, there may not be enough “CREATEs,” that is, projects with benefits that draw in public partners, to yield public funding anywhere near $33-53 billion. 

Thus, there needs to be consideration of how to develop a federal program that identifies and addresses other projects.  Developing such a program potentially involves traversing a minefield of objections—from railroads that oppose any federal action with the slightest impact on the competitive positions of different railroads, and from shippers that want federal investment on railroads conditioned on provisions the railroads would consider unacceptable “re-regulation.”

The investment tax credit AAR supports presumably also would help close the big gap AASHTO identified, by stimulating more private sector investment than AASHTO projected.  NARP supports the investment tax credit, but believes that there should be an emphasis on capacity that also benefits intercity and commuter passenger trains or that improves the efficiency of publicly supported entities.  Continued tax benefits should be tied to reliable operation of passenger trains—at least 90% on-time performance.  The magnitude of the benefits could be increased where the investment speeds up scheduled running times and/or permits more frequent passenger train operation.

Obviously, we strongly support the on-time performance provisions in S.1516.

Finally, having cited AASHTO’s freight report and its spending recommendations, I need to highlight two items related to rail passenger investments.

AASHTO’s other January 2003 report, Intercity Passenger Rail Transportation, said about $17 billion needs to be invested in intercity passenger rail corridors over the next six years, and $43 billion over the next two decades. 
Amtrak’s Fiscal 2007 Grant Request recommends, as a “strategic investment option,” a $50 million capital matching program aimed at “chokepoints” on the freight network, and says the program could be administered by DOT, in cooperation with Amtrak, the freight railroads and the states. 

Both of the above would benefit freight operations, just as many passenger-inspired investments already have benefited freight—notably, in California, capacity improvements for the Los Angeles Metrolink (commuter rail) system and on BNSF’s San Joaquin Valley line, and restoration of double-track west of Sacramento on Union Pacific. 

Thank you, Mr. Chairman, for your yeoman efforts to create a funding mechanism that would let the nation begin to address these needs.

Thank you for considering our views.