# Presentation: 210722

## AAR State Relations Policy Committee

- September 16, 2005
**Surface Transportation Board**
**Roger Nober, Chairman**

**Notes:**
Thank the RR’s for participating, etc.....

## Public Issues Affecting Railroads

## As Commercial Entities
As Operating Companies
As Legacy Quasi-Public Utilities

- As Operating Companies
- As Legacy Quasi-Public Utilities

- Public Perception of Railroads

## Service levels that cause customers to raise issues publicly 
Rates that are perceived to effect the competitiveness of industries or regions

- Rates that are perceived to effect the competitiveness of industries or regions

- Impact of Commercial Practices

## Operations that must coexist with communities
Preemption leaves operations beyond control of state and local authorities
Safety
Accidents/derailments

- Preemption leaves operations beyond control of state and local authorities
- Safety
- Accidents/derailments

- Impact of Operations

## Railroads have “common carrier obligation” and have responsibilities similar to utilities
Public opposition to abandonments
Favorable regulatory regime
Beneficiaries of preemption

- Public opposition to abandonments
- Favorable regulatory regime
- Beneficiaries of preemption

- Impact of History

## 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

## Railroads and Communities

- 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.

## 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

## 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

## Capacity

## 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

## Capacity Constraints – Causes of Increased Demand

- 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

## Capacity Constraints – Long-term Causes

- Capacity Constraints – Long-term Causes

- Constraints on capital investment for private companies
- Railroads inability to achieve revenue adequacy
- Need to cut expenses to maximum extent
- Demands of investors
- Under 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

## SAFETEA-LU

## 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).

## 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.

## 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

## Rail Service Issues

## 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 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

## 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

- 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**

## Slide 22