Freight Rail Outlines Top Priorities for Policymakers

By The Association of American Railroads Public Affairs

Freight rail is a cornerstone of the United States economy, driving commerce by safely, efficiently and affordably connecting businesses, goods and people. Partly fueled by the deregulatory legacy of the 1980 Staggers Act, the industry generated nearly $274 billion in output, 1.5 million jobs and $33 billion taxes in 2014 alone. In addition to its economic impact, the industry plays a crucial role supporting the nation’s government during times of disaster and providing critical mobility to our military.

As the new Congress and Administration take their places in Washington, the freight rail industry sees opportunities for new policies, education and relationships to be made. Leading the conversation on behalf of the industry is The Association of American Railroads (AAR), whose members include the major Class I railroads of the United States, Canada and Mexico, as well as smaller non-Class I and passenger railroads including Amtrak, rail supply companies, rail car owners, engineering firms, and signal and communications firms.

On behalf of its members, AAR has laid out a list of macro policy recommendations for US elected officials that recognize that to spur significant economic growth, policymakers must advance macro-policies that extend beyond railroads. Additionally, AAR has identified two major industryspecific policy recommendations that will help to ensure the industry is able to continue safe and efficient operations for the benefit of all Americans.

MACRO POLICY RECOMMENDATIONS Tax Reform We need a simpler and fairer tax code, reducing the corporate rate—the highest in the industrialized world—to a globallycompetitive level to broaden the tax base, enhance US economic development, promote growth and reduce debt. Policymakers across the ideological spectrum should work together to simplify our tax code, close loopholes that pick winners and losers, increase transparency and put all expenditures on the table to create agreement and keep American companies at home. Tax reform was bipartisan in 1986 when it was last comprehensively tackled and it can be again in 2017.

Regulatory Improvement New rules should be empirically driven, supported by cost-benefit analysis and geared toward today’s innovation economy. Too often government makes rules in a vacuum and without an eye toward the future. As sessment of the cumulative impact of proposed regulation on industry must be part of every rulemaking. Rules can become quickly outdated when reacting to the issue of the day, which can sometimes compel overreaction. We must make the process more transparent and collaborative, and we must reduce the estimated $2 trillion compliance cost and hold decision makers accountable.

Infrastructure Investment Elected officials must institute a system that eliminates the practice of transferring money from the general fund to the Highway Trust Fund. Policies should require highway users, such as trucks and everyday drivers, to pay for their fair use of infrastructure and put in place sustainable and realistic plans that will improve transportation and create jobs. The gas tax as we know it is no longer sustainable and we should transition to a truly equitable system such as a weight distance fee. Policymakers should move forward with aggressively updating our crumbling infrastructure and seek to emulate privately owned freight rail, which understands that deferred maintenance is not an option.

Comprehensive Energy Plan We must embrace the innovation that led to the American energy revolution, helping our country move closer to energy independence. No single form of energy will deliver for any one community, so we must truly embrace an “all-of-the-above” strategy. Traditional resources such as coal, ethanol, crude and natural gas, as well as alternative sources like wind and solar, all can power communities, all can create jobs and all must be a part of the energy portfolio. Federal policies should not favor certain energy forms. We need an energy plan that enables local solutions that keep costs down and job gains up.

Fair and Open Trade Fair and open trade helps small businesses reach new markets, diversifies inventory of available goods and fosters the competition that undergirds American capitalism. Efficiencies and productivity gains have reduced the manufacturing work force. But still today, one in four manufacturing jobs depends on exporting goods, and according to the US Chamber of Commerce, factories have nearly doubled output over the last twenty years. Trade today supports 40 million qual

ity jobs. We must ensure that current and future agreements are fair and put American workers first, but we must not turn our backs on the free trade agreements that have brought prosperity to American workers.

INDUSTRY SPECIFIC POLICY RECOMMENDATIONS A Fully Functional Surface Transportation Board Respectful of Sound Economic Principles The United States Surface Transportation Board (STB) has recently proposed a series of regulations that would undermine the ability of our country’s freight railroads to operate in the manner upon which all Americans rely. For example, one proposed rule would force carriers to turn their traffic over to competitor railroads, which would significantly compromise network efficiency, and in turn reduce investments. In 2015, Congress reauthorized the STB for the first time since its creation in 1995, expanding the Board from three members to five, but generally maintaining the deregulatory mission of the agency: to regulate only where there is an absence of effective market competition. In light of the STB’s reregulation efforts, the freight rail industry believes the Trump Administration should nominate STB Board members who are committed to sound economic principles and understand that freight rail regulations impact the entire economy.

Further, the industry believes that STB members should be committed to weighing the costs and benefits of proposed rules and evaluating the cumulative impact of their proposals on the railroad industry and national economy.

Last, STB members should be mindful of their charge by Congress to make a continuing effort to assist railroads in earning enough revenue to build and maintain the infrastructure necessary to meet the current and future demand for rail transportation.

Forward-Thinking Safety Regulations Advances in technology are constantly making the transportation industry safer and more efficient. For example, the Department of Transportation (DOT) is promoting the development of autonomous vehicles to make our highways safer, and railroads are hard at work implementing Positive Train Control, which once installed

seamless

will automatically bring trains to a stop in the event of certain unsafe situations.

The federal government needs to ensure that no regulations are enacted that could prevent freight railroads from harnessing new technologies to make their network safer and more efficient. Rather than layering

Trade today supports 40 million quality jobs. We must ensure that current and future agreements are fair and put American workers first, but we must not turn our backs on the free trade agreements that have brought prosperity to American workers.

on prescriptive rules that lock the industry into 20th century (or older) practices and technologies, regulators must embrace performance-based approaches that incentivize industry to innovate in order to achieve policy goals. As former Transportation Secretary Norm Mineta recently articulated, “Let’s not let the innovation train leave the station without the United States on board.” DTJ

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