Remarks prepared for
Deputy Secretary of Transportation Mortimer Downey
for Delivery during the
National Corridors Initiative Conference 2000
Rail is Real
Sponsor: National Corridors Initiative Movement
Washington Marriott Hotel
Washington, DC
Monday, June 26, 2000, 9 am
Thank you Jim (Repass, President of NCI), and good morning everyone. It’s a pleasure to be here this morning to hear from rail experts and enthusiasts and to celebrate the successes of rail advocates like the NCI, Senators Lautenberg and Hutchison, Gil Carmichael, Mike Dukakis, and many others in this room and elsewhere in the nation.
The National Corridors Initiative (NCI) began as the Northeast Corridor Initiative in the Spring of 1989, but has branched out to help bring improved passenger service, including high-speed rail, to corridors nationwide. Secretary Slater and I wish them continued success.
Senator Lautenberg has been a particularly strong supporter of high-speed rail, and we thank him for his continued advocacy. His bill, the High Speed Rail Investment Act, calls for a federal investment of $782 million to secure $10 billion in private sector investment for the development of high speed rail corridors throughout the nation. It’s clear to all of us that Amtrak will need long-term capital investment, and we want to work with Senator Lautenberg and the Congress to find the best ways to ensure that investment.
I also want to take this opportunity to thank NCI’s Chairman, Mayor John Robert Smith of Meridian, MS., who serves on the Amtrak Board of directors with me. Mayor Smith is a strong advocate for passenger rail to link urban areas and cities nationwide.
Rail is Real . . . and Real Important!
Across the country, governors, mayors, city council members and citizens are realizing that "Rail is Real" – and is a real important part of our transportation system. It’s not only part of our past, but of our present and our future. And, it’s finally getting the attention it deserves from citizens, the media and the decision makers on Capitol Hill!
If it weren’t for rail advocates like Jim, high-speed rail in the Boston – New York – Washington corridor probably wouldn’t be happening. Rail has begun to capture people’s attention. The Southeast is pushing for high-speed passenger trains within a decade or less. The governors of four Southeastern states (N. And S. Carolina, Georgia and Virginia) released a joint report this past Spring, Southeast High Speed Rail Corridor: A Time to Act, describing how high-speed rail will help them reduce congestion, improve air quality and make their communities more livable.
More than 200 communities in regions throughout the country are planning, engineering or building new rail projects, the highest level of interest in rail projects at any point in the nation's history.
Many of these projects need ample support and strategic planning to ensure they get built. To do that, state DOTs take more advantage of TEA-21's (The Transportation Equity Act of the 21st Century) flexible funding features, using core program funds in support of these investments.
In large and small markets, rail investment is being sought by local elected leaders as one of the preferred ways to manage development patterns, combat highway congestion and improve mobility.
Of course, it’s not surprising to you in this room that rail is capturing people’s attention – we’re just surprised that it took so long. Even airline executives have to admit that the train is "the only way to fly," which is exactly what United Airlines CEO Jim Goodwin said recently when his flight was canceled due to bad weather.
I urge you to check out Frank Lautenberg’s high-speed rail home page, which lists the "Ten Benefits of High-Speed Rail," one of them being "keeps going through rain, sleet, and snow."
President Clinton and Vice President Gore have long supported investment in increased and improved rail service for the nation. They believe that investing in rail is one of the best ways to lessen highway congestion and improve air quality and safety along busy routes.
The Administration’s proposed 2001 budget reflects our commitment to improving rail safety, advancing both traditional and high-speed rail research, and moving Amtrak toward operational self-sufficiency by 2003. So far, we have not gotten the support we need on the House side for allowing states to use Highway Trust Fund dollars for rail programs. We continue to support the Administration's RABA Revenue Alligned Budget Authority proposal for HSR funding.
Amtrak Self-Sufficiency by 2003
DOT is committed to supporting Amtrak as it progresses toward operating self-sufficiency. High-speed rail service in the Northeast Corridor and improvement to intercity passenger rail service nationwide are key investment strategies that we will pursue to help Amtrak meet this goal.
We expect Amtrak's financial performance to continue to improve as a result of the introduction of the Acela Regional service in January of this year and Acela Express service expected to begin in the Northeast Corridor later this year.
Many state governments have invested in passenger rail service, including high-speed rail. The Administration has proposed $468 million to help the states improve passenger rail service and to ensure that it continues to play a significant role in relieving traffic congestion and improving mobility.
Capital Financing: A New Era?
Freight railroads play an important role in our economy, shipping the bulk of our energy and agricultural products throughout the nation and to our ports. But to remain viable, they need massive amounts of capital to upgrade and to improve service.
In the past, railroad companies weren’t much interested in public funding because they thought it would come with too many rules attached. Today, major freight handlers are becoming more interested in working with federal and state governments to expand and improve infrastructure and service.
Within six months of the acquisition of Conrail, the value of NS and CSX collectively as measured by stock price, was less than the price paid for Conrail. Similar declines in value have been seen by the other major railroads.
Indeed, in some investors eyes, the rail industry might have greater value as rights-of-way for fiber optics and other new technologies than for moving freight . . .
The decline in stock value has had an effect on the ability of the freight railroads to raise the capital they need to grow in the private markets. Given their massive capital needs, railroad companies are becoming more receptive to partnerships with government.
In light of the changing landscape, elected officials and public servants responsible for spending taxpayer dollars need to ask themselves some questions: Do freight railroads serve a public purpose in moving freight that would otherwise move over publicly maintained highways and waterways? Is there a public interest in seeing the capability of these systems increase? If so, how would the public interest be protected?
The debate on these points surfaced in an article in last month’s Wall Street Journal, entitled Railroads Learn to Like Public Funding. The focus of the piece was a proposal by Virginia’s Norfolk Southern Corporation that the state help pay part of the $900 million to add a second track route that parallels Interstate 81. The railroad could then handle a good amount of the freight that now travels via the Interstate, easing traffic and putting off an expensive highway-widening project.
Several years ago, Conrail and the state of Pennsylvania jointly funded expansion of rail tunnels to handle more efficient freight trains. In California, a public-private partnership is building the 20-mile Alameda Corridor from the ports of Long Beach and Los Angeles to freight yards near downtown Los Angeles.
I believe that federal funding could make the difference in what companies are able to do in terms of infrastructure upgrades and improving performance. In return, we would ask them to allow more passenger rail.
CMAQ Funds for Inter-City Rail
Rail is seen by many as a great way to protect air quality today and enhance it in the future as population and its demand for mobility grows. Another potential source of funding for rail infrastructure improvements is our Congestion Mitigation and Air Quality Improvement Program (CMAQ). Established under TEA-21, CMAQ seeks to reduce greenhouse gas emissions and improve air quality in "non-attainment" areas (aka: the dirtiest areas of the nation).
On March 30, our Federal Highway Administration issued a proposed rule that would allow the use of these funds – a total of $8.1 billion over the 6-year life of TEA-21 – for inter-city high-speed rail projects that are not in non-attainment or maintenance areas. This makes sense in cases where such projects would link large cities -- such as Atlanta, Georgia and Knoxville, Tennessee -- in which one city is a non-attainment or maintenance area currently and the other is not but is on its way to becoming one. The bottom line is increased mobility – making it convenient for people to travel to cities and towns they may not otherwise visit. New transportation links also contribute to economic development.
We received a total of 39 comments, primarily from "traditional" FHWA customers (State DOTs, MPOs) as well as EPA and air quality agencies. Of those 39, 21 opposed CMAQ eligibility expansion, 13 supported it, and 5 expressed some support but with conditions. I should mention that 8 of the 13 were railroad interests.
If you believe that CMAQ eligibility for rail is a good idea, I urge NCI and the entire community of rail supporters to make their voice heard on Capitol Hill and in the public on the CMAQ issue. I also hope that we will see many more public/private sector partnerships in support of rail.
Merger Moratorium
Another issue that is facing the rail industry and the nation today is mergers among the nation’s railroads. What can and should government do with regard to ensuring a competitive and efficient marketplace in a time of mergers?
The proposed merger between Burlington Northern Santa Fe (BNSF) and Canadian National Railway Co. (CN) raised concerns about service and access due to the problems with earlier transactions and because it could lead us down the path to only two systems providing service in the U.S. Some shippers are frustrated with a regulatory process they say does not ensure real access and fair competition.
Secretary Slater and I think that the proposed BN-CN merger probably could have been handled without the 15-month moratorium. While the Department has taken no position on the proposed merger, we will be monitoring – as well as supporting – the work of the Surface Transportation Board as they review the nation’s rail merger rules as well as other regulatory issues.
Conclusion
Many of you in this room have helped to put rail issues on the radar screens of the public and the leaders in Congress. We need to continue to emphasize the fact that Rail is Real Important -- in fact critical -- to the future of our transportation system, our economy, our environment and our quality of life. We cannot afford to take it for granted, and we must be making the wise decisions today.
Thank you.