Legislative update - NRC News - rail-related legislative is moving through Congress - Brief Article

Railway Track and Structures, July, 2001

Rail-related legislation is moving slowly but steadily through the Halls of Congress.

H.R. 1020, The Railroad Track Modernization Act, and H.R. 1140, The Railroad Retirement and Survivors' Improvement Act of 2001, were both approved by the House Transportation and Infrastructure Committee before the Memorial Day break. The Committee hopes to secure a vote on the House floor before the summer recess. H.R. 1020 would put $350 million per year for three years directly into shortline track and bridge rehabilitation. H.R. 1140 would save the industry approximately $340 million per year, and it can be assumed that some portion of that will go toward increased capital improvements. Rail contractors will benefit from both.

Both bills have gained formidable support. Both are co-sponsored by the chairman and the ranking member of the T&I Committee (Congressman Don Young (R-AK) and Congressman James Oberstar (D-MN)) and both have attracted sponsorship from the majority of the full T&I Committee. H.R. 1140 has some 350 House co-sponsors and H.R. 1020 has almost 100 House co-sponsors. Prospects for passage in the House appear good for both bills.

Still, both bills face significant obstacles. H.R. 1020 is an authorization. Even if enacted, it needs to be funded by the appropriations committees. Spending an extra $350 million per year on a new railroad program is probably not in the Bush spending plans. The bill's lead sponsor, Congressman Jack Quinn (R-NY), is asking the rail industry to secure as many co-sponsors as possible, which will help him as he asks the leadership for an early vote on the House floor. The grassroots support from NRC members has been tremendous so far, but we will need a sustained effort to ensure safe passage through the appropriations process. Competition is fierce for pieces of the federal budget. In order to have a chance with 1020, our industry needs to continue to march in aggressive lockstep, maintaining the "iron triangle" of railroads, shippers and suppliers of goods and services that can stand up to the competition.

Railroad Retirement made it all the way to the end of the process last year before it was stopped by two determined Senators, Gramm of Texas and Domenici of New Mexico. They oppose it for budget reasons and because they believe the Railroad Retirement System already receives federal subsidies and should not benefit further from a tax cut. They will likely be in the same position this year. The new Administration also opposes the bill, ostensibly because they believe the government should not invest Social Security funds in the stock market. The bill does not provide for the investment of Tier I (the Social Security equivalent) money in the stock market, but only the Tier II money which is the equivalent of a private pension. It is hard to believe the Administration doesn't understand that, so there may be as yet undisclosed reasons for its opposition.

The attempt to repeal the 4.3-cent deficit reduction tax on railroad diesel fuel appears to be in trouble this year. NRC supports this repeal in solidarity with our customers, the freight railroads. We expect that the cost savings generated by this repeal will be plowed back into rail infrastructure investment. Rail unions have vowed to stall the repeal of the tax this session in retaliation for concessions wrung from the BMWE by the railroads in recent labor negotiations. However, the final shakeout is still uncertain, as negotiations continue.

On the FRA front, it's a race to see which will happen first, the confirmation of a new administrator or the approval of the first RRIF loan application. By the time this article is in print, we could have both. The FRA says it is on the verge of finally approving its first loan application. The RRIF program provides 25-year loans at cost of money to the government. While FRA has been very supportive of the program, it has had difficulty securing Office of Management Budget (0MB) approval of its methodology for establishing the credit risk associated with each loan. It appears that it will not have to fight that battle each time, but simply rely on the precedents established in the first loan. I&M Rail Link is expected to be the first loan out of the box. There are over a dozen loan applications lined up at FRA, and once the first one is approved the rest should move through the system more quickly. The loans can be used for track and equipment rehabilitation, equipment financing and refinancing of existing debt.

FRA Administrator-designate Allan Rutter is rumored to be in the building, but not yet at his desk. Mr. Rutter was a transportation policy advisor to Governor Bush in Texas. His Senate confirmation hearing is currently scheduled for early June. Hopefully, the change of party control in the Senate will not slow down the timetable on this appointment.