2009 Outlook: A new political paradigm

“Amtrak, freight rail, and commuter rail are absolutely vital to America’s transportation systems, and we need to strengthen them now, not starve them. Metro Chicago is a central rail hub for North America, and Joe has been riding Amtrak to work throughout his career, so we know how important rail is to our country. That’s why we support substantial investment—investment in infrastructure and investment in the rail workforce. . . . We cannot afford to wait on funding for updated infrastructure and technology to meet increasing passenger and freight demand. . . . We must invest in rail projects for economic and environmental reasons.”

Encouraging words. But a deteriorating economy and status-quo forces may dampen expectations. As 2009 brings a new Administration and larger Democratic Congressional majorities, what can the rail industry expect?

Before recessing to campaign this fall, Congress passed the Rail Safety Improvement Act of 2008, combined with the first Amtrak reauthorization since 1997. Signed by President Bush on Oct. 16, 2008 as Public Law No. 110-432, the new safety law mandates Positive Train Control by 2015 on intercity, commuter, and select freight hazmat routes; rewrites hours of service; requires new safety risk reduction plans; and imposes numerous other regulatory standards, reports, and initiatives. Rail stakeholders will shape the law’s implementation through the regulatory process and especially the Federal Railroad Administration Rail Safety Advisory Committee, the agency’s chartered negotiated-rulemaking committee. The law also set in motion a unique public/private partnership exploration of high speed rail in the 11 federally designated corridors that could bolster the case for new federal investment.

The Amtrak provisions of the law authorize $13 billion over five years for federal passenger rail programs, including Amtrak expansion. Amtrak will pursue appropriations at the higher authorized levels amidst leadership concerns in the wake of President Alex Kummant’s departure Nov. 14.

Mortimer Downey, former Deputy Secretary of Transportation during the Clinton Administration, heads President-elect Obama’s DOT transition team. While shifts at DOT and the Administration will take time, Congressional transportation oversight is already evolving. Rep. Joe Knollenberg, ranking member of the House Transportation/HUD Appropriations Subcommittee, lost his re-election bid. His successor as ranking member is unclear. In the Senate, 90-year-old Sen. Robert Byrd decided to relinquish his gavel as Chairman of the Senate Appropriations Committee, effective in 2009. If current Commerce chair Sen. Daniel Inouye succeeds Byrd at Appropriations, Sen. John (Jay) Rockefeller may become chairman of the Senate Commerce Committee.

Rockefeller’s ascension to chair of Senate Commerce would add new challenges for freight railroads. Rockefeller, along with Rep. James Oberstar, chairman of the House Transportation and Infrastructure Committee, supports modifying the Staggers Act, which successfully partially deregulated the rail industry, altering the economic regulatory foundation between railroads and shippers.

Leadership moves will cause secondary shifts. Senate Commerce Committee Democratic staff, for example, may transition with a new chairman. Republican staff could turn over too, since Sen. Ted Stevens voluntarily stepped down as Commerce ranking member in the wake of his conviction for false financial disclosures, and then lost his re-election bid. Sen. Kay Bailey Hutchison became ranking member and could potentially bring on new committee staff as well—just at the point when in-depth understanding of the railroad industry may mean a great deal.

Legislative authorization for highway and mass transit funding (SAFETEA-LU) expires Sept. 30, 2009. The primary challenge of reauthorization will be meeting the nation’s escalating infrastructure needs in the face of a deteriorating Highway Trust Fund. Reauthorization will also test whether rail will be included in the surface transportation funding picture. The reauthorization process will unfold against a broader backdrop of whether a major infrastructure stimulus package should be enacted to boost the economy just as the federal budget deficit approaches $1 trillion annually.

Rail stakeholders approach this debate with new arguments and new incentive. The early 2008 report of the National Surface Transportation Policy and Revenue Study Commission affirmed that substantial new investment is needed in freight rail capacity. Freight railroads have endorsed an infrastructure tax credit as one way to secure investment, and the reauthorization/infrastructure stimulus debate offers a path to advance these and other proposals.

From a passenger rail perspective, the passage in California of Proposition 1A approving $9.95 billion in bonding authority for a long-anticipated state high speed rail project and other improvements will energize the California Congressional delegation’s pursuit of the needed federal funding share of $10 billion or more. A request that size will boost attention to high speed rail and highlight proposals by other regional corridor and intercity projects for funds. Amtrak advocates can be counted on to support expanded appropriations to meet the promise of newly enacted higher authorizations.

The potential inclusion of rail as a solution to climate change and energy independence adds a further dimension. These debates will likely blend with discussions on economic stimulus, surface transportation reauthorization, and infrastructure revitalization.

In sum, expect change—and that’s before a new Administration promising just that takes office Jan. 20.

Donald M. Itzkoff is a partner with Nossaman LLP/O’Connor & Hannan in Washington, D.C. He was Deputy Administrator of the Federal Railroad Administration during the Clinton Administration and also previously served as Senior Counsel to the Senate Commerce Committee.

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