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WASHINGTON, D.C. – The Association of American Railroads (AAR), leaders from its member railroads and economic experts today urged federal regulators to beware of upending numerous national economic goals if they choose to pursue re-instituting revenue caps on freight rail companies.

Speaking before a Surface Transportation Board (STB) hearing on railroad revenue adequacy, AAR President and CEO Edward R. Hamberger told the Board that misapplying regulations would have far-reaching impacts on the freight rail industry’s ability to sustain the billions of private funds spent by railroads each year to build, maintain and upgrade the nation’s 140,000-mile rail network.

“As you take up the issue of revenue adequacy, you are painting on a much, much larger canvas than just the inside of this room,” Hamberger said. “What you are considering and may decide here in this hearing room a stone’s throw from the U.S. Capitol will ripple across the economy and ultimately impact most every American.”

Hamberger, and others testifying before the Board, ran through many examples of how earning sufficient revenues has allowed railroads to make massive private investments in rail infrastructure – nearly $29 billion in 2015, and $575 billion since 1980. This is in contrast to other modes of transportation, such as highways, which are funded by taxpayers.

Regulation of railroads’ overall revenue levels would run counter to Congress’s goals in the Staggers Act of 1980 that partially deregulated the freight rail industry to allow railroads to earn sufficient revenue to meet their long-term needs without having to rely on the federal government.

As Dr. Roger Brinner, chief economist with SandPointe, LLC testified, the concept of revenue adequacy should be a goal, and not a directive to constrain revenues; railroads should not be penalized for improved financial performance.

“Now comes a handful of interest groups that want you to cut their transportation costs by direct government intervention at the expense of the greater good. Let’s call it what it is: they want you to institute a regime of wide ranging price controls on freight railroads,” Hamberger testified.

Hamberger outlined the many national goals that would be at risk, should the STB decide to relapse into 1970s-era regulatory policies. Doing so, he noted would undermine the industry’s ability to: continue to improve rail safety, efficiency and reliability; increase U.S. exports; support U.S. energy independence, and effectively provide a healthy rail network relied upon by millions of daily Amtrak and commuter rail passengers.

“Freight rail success today is due to the foresight of the government leaders in 1980 who unleashed the transformational power of the market place through partial deregulation,” Hamberger said. “Subsequent federal involvement in rail economics both in the legislative and regulatory arenas honored the belief that a developed nation requires a top-notch freight rail system and that system is best provided by private companies in control of their resources rather than through the government.”

Tags AAR, Edward R. Hamberger, STB, Surface Transportation Board

Daniel R. Elliott III was sworn in June 26, 2015, as the Chairman of the Surface Transportation Board (STB), pledging to continue to promote transparency and to improve and streamline regulation of the Nation’s freight railroads.

He was nominated to the STB by President Barack Obama on January 13, 2015 for a four year term expiring Dec. 31, 2018. He was confirmed by the U.S. Senate on June 22, 2015. This is Chairman Elliott’s second term on the STB. He previously served as Chairman of the agency from Aug. 13, 2009 to Dec. 31, 2014.

At his confirmation hearing before the Senate Commerce, Science and Transportation Committee in May 2015, Elliott stated that he would continue the reforms that he had begun during his first term to increase STB transparency and efficiency; to promote a reliable rail network; and to bring more accessibility to the STB’s processes.

“I would like to thank President Obama for honoring me with this second appointment,”Chairman Elliott said. “I am so pleased to return to the STB to continue work to make sure the STB’s processes are fair, efficient and accessible for all stakeholders. I look forward to working with my fellow board members and board staff to continue the progress that we have made.”

Prior to Chairman Elliott’s first term at the STB, he served for 16 years as associate general counsel to the United Transportation Union. Earlier, he practiced at law firms in Washington and Cleveland. He graduated from the University of Michigan with a degree in political science in 1985 and earned a law degree from Ohio State College of Law in 1989.

Tags Dan Elliot, Daniel R. Elliott III, STB, Surface Transportation Board

Elliott, Dan; Dan Elliott; Elliott; STB; STB Chairman — Elliott

The Senate on June 22 easily confirmed the nomination of Daniel Elliott for a reappointment on the Surface Transportation Board.

Elliott’s nomination was confirmed by voice vote. During his confirmation hearing, Elliott said he would ensure the board continues “to facilitate the resolution of service issues so that interstate commerce flows as smoothly and efficiently as possible in support of the U.S. economy.”

Elliott was a lawyer with the United Transportation Union. He was the board’s chairman from 2009 until December, when his term expired.

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Tags Dan Elliott, Daniel Elliott, Elliott, STB, Surface Transportation Board

capitol U.S. Sen. John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science, and Transportation, today held his second hearing as chairman entitled, “Freight Rail Transportation: Enhancing Safety, Efficiency, and Commerce.” The hearing focused on challenges facing our nation’s freight rail network created by higher demand, pending and proposed rules and regulations, and infrastructure needs. Today’s hearing continued Thune’s work to improve freight rail service for ag producers and shippers and prevent future rail service disruptions from occurring.

Thune also invited Dave Brown, Chief Operating Officer of Genesee and Wyoming, parent company to South Dakota’s Rapid City, Pierre, and Eastern line (RCP&E), to testify before the hearing. Dave spoke about the opportunities and challenges that RCP&E and other shortline railroads face.

Last Congress, the Commerce Committee held various rail related hearings, including a hearing on the rail service challenges facing shippers across the country, which included agriculture producers in South Dakota who struggled with access to reliable freight rail service during a record harvest. In addition, on September 17, 2014, the Commerce Committee passed the bipartisan Surface Transportation Board (STB) reform bill that Senator Thune and former Commerce Committee Chairman Jay Rockefeller (D-W.V.) introduced to institute common-sense reforms regarding how the STB works and to address rate disputes and service complaints.

“As 2013 and 2014’s freight rail delays and service challenges highlighted, rail service is absolutely critical to our nation’s economy. South Dakota farmers scrambled to find rail cars and watched as rail turn times worsened, delaying shipments and creating grain storage challenges for the record breaking wheat, corn, and soybean crops.

“However, those delays were not just limited to the north central United States, they also extended across the country and impacted every shipping sector and industry.

“Thankfully, this winter’s relatively mild weather and better service have provided some improvements, but there’s still work to be done.

“I am pleased that Genesee and Wyoming, the parent company of South Dakota’s Rapid City, Pierre, and Eastern Railroad (RCP&E) has joined us for today’s hearing. I look forward to hearing from Dave Brown, the Chief Operating Officer of Genesee and Wyoming, which is the largest Class II railroad in the country with over 100 shortline and regional railroads, about the opportunities and challenges the RCP&E and other shortline railroads face.

“From automobiles, to coal, to ethanol, to agriculture, rail service moves goods from farm and factory to consumer marketplaces across the country and across the globe. The U.S. Department of Transportation (DOT) notes that freight rail moves roughly 40 tons per person each year. As a nation, we rely on cost efficient, timely service to move food, consumer products, and energy resources on a daily basis.

“The private infrastructure that makes up our nation’s freight rail system is costly, as old tracks and equipment require ongoing maintenance and investment. Our nation’s railroads continue to invest in new track, sidings, locomotives, and car resources with the goal of serving their customers. Class I railroads and shortlines alike face increasing demands for prompt, reliable, and safe service.

“In 2014 freight traffic increased nearly five percent over 2013 levels, and we should seek solutions that foster an even stronger freight rail network to meet this increasing demand.

“The Federal Railroad Administration (FRA) has proposed or finalized over 15 new freight rail safety rules since the passage of the Rail Safety Improvement Act of 2008, and many of these regulations will take effect in 2015.

“Not only is the Positive Train Control (PTC) mandate looming, with its December 31st deadline, but the DOT has announced that it expects a crude-by-rail regulation to be published around May of this year.

“Although the PTC deadline is quickly approaching, it remains unattainable. Through the end of 2014, railroads have invested over $5 billion in PTC, and they expect to spend billions more in the coming years.

“They have begun installation of the radio towers, locomotive technology, and other PTC infrastructure, but full compliance with the statutory requirements cannot be achieved by the end of this year. The FRA and the Government Accountability Office have documented the immense technical and programmatic challenges with implementing PTC.

“As a result of these challenges, the DOT has reported that the deadline will not be met and has offered a proposal to ensure the benefits of PTC are realized. I look forward to working with my colleagues on a legislative fix to ensure that we can set a more realistic implementation timeline for this important safety improvement.

“I am also closely monitoring the proposed crude-by-rail requirements.

“I have expressed concerns to the Office of Management and Budget as well as the DOT about the unintended harms that could result from the proposed rule. The DOT estimates its proposed crude-by-rail rule could cost nearly $6 billion, and it acknowledges the rule would increase network delays and out-of-service time for rail equipment.

“Without question, we must improve the safety of our nation’s rail system, but I am concerned about the unattainable deadlines the rule proposes. Like the PTC mandate, there are very real impacts when federal agencies set unreasonable and, many times, unachievable deadlines.

“Among other things, the DOT issued this proposed rule without analyzing the potential tank car shop capacity needed to retrofit or replace over 100,000 DOT-111 tank cars. Shippers have raised concerns about a tank car shortage, with a disruption in energy supply transportation, if DOT finalizes this rule with an unattainable deadline. I look forward to working with my colleagues, stakeholders, and the Secretary of Transportation on a realistic timeline for such a phase-out.

“While safety can and should be improved, we certainly do not need to build in system-wide delays and congestion like we have witnessed during the past year and a half.

“Our transportation network connects port to rail to truck. Delays, burdensome regulations, and failing infrastructure disrupt our nation’s economy and cost jobs. So, we must work together to find workable solutions.

“In addition, we must ensure that the Surface Transportation Board, which is tasked with resolving railroad rate and service disputes and reviewing proposed railroad mergers, can provide effective and efficient oversight of the rail industry.

“This committee has a great deal of work to do in addressing freight rail service and safety in addition to passenger rail reauthorizations. I hope members will bring forward thoughtful solutions as we address these challenges.”

Tags and Transportation, Federal Railroad Administration, positive train control, PTC, Science, Senate Committee on Commerce, Surface Transportation Board

The U.S. Class I workforce continued to enlarge last month. As of mid-November, the large railroads employed 169,845 people, up 0.4 percent from October’s level and 4.1 percent from November 2013’s mark, according to Surface Transportation Board employment data.

Only the transportation (other than train and engine) workforce sector registered a month-over-month decline, dipping 0.3 percent to 6,699. The other five sectors grew less than 1 percent: transportation (train and engine), 0.5 percent to 71,089; maintenance of equipment and stores, 0.5 percent to 30,476; executives, officials and staff assistants, 0.3 percent to 9,999; professional and administrative, 0.25 percent to 14,249; and maintenance-of-way and structures, 0.15 percent to 37,333.