Belt-tightening constrains STB action on ambitious agenda

Belt-tightening constrains STB action on ambitious agenda The budget impasse in Congress is affecting the ability of the Surface Transportation Board to regulate the rail industry, Chairman Charles “Chip” Nottingham said in a speech earlier this month.
      All departments and agencies, except the departments of Defense and Homeland Security, are operating under a continuing resolution because Congress was unable to pass appropriations bills for them. The STB is part of the Department of Transportation. The stalemate means that the spending bills for fiscal 2007, which began Oct. 1, will hold over until the 110th Congress convenes in January and that agencies must operate at 2006 funding levels with no room to make long-term plans.
   Nottingham said the agency, which has jurisdiction over freight railroad rate and service disputes as well as railroad restructuring, is dealing with a $2.5 million shortfall, or about a 12.5 percent funding cut out of an annual budget of $24 million to $25 million. The agency is cutting back on travel, training, and hiring to stay within its budget, he said.
   The former head of the Virginia Department of Transportation expressed worry that the budget constraints might slow the STB’s ability to review plans for much needed rail line expansion projects.
   “I don’t want to be the chokepoint for environmental reviews,” he said at a Transportation Table luncheon sponsored by Traffic World magazine.
   The STB, which has a staff of about 140 people, also faces a looming brain drain because many staff members are eligible for retirement, Nottingham warned. He has ordered a position-by-position review to identify potential departures and implement a succession plan so that people can be hired and get training while the incumbent is still on the job.
   Nottingham said he plans to hold several hearings next year on key issues, including how railroads earn their cost of capital and invest in new capacity. The way the STB computes the cost of capital for the rail industry has not changed in nearly 20 years and Nottingham said he wants to make sure the paradigm used to develop the data is still optimal.
   Yesterday, the STB announced it will hold a hearing on Jan. 31 to help develop guidelines designed to simplify the process for shippers to bring small rate cases to the board.
   Nottingham said he expects the agency to issue a final rule by the end of the year on how railroads should calculate fuel surcharges.
      The overarching issue for the STB, however, is to help the nation meet the future challenge of infrastructure congestion and maintaining the flow of freight on which the economy depends, Nottingham said. Rail freight volumes alone are expected to grow 50 percent to 60 percent in the next 20 years.
   Every decision made by the three-person board has to factor in whether it will attract capital into capacity expansion or discourage investment, Nottingham said.
   The STB will make a recommendation to Congress in 2007 on proposed legislation that would provide a 25 percent tax credit to railroads, shippers and others that invest in rail expansion projects, he said. His comments that short line railroads have experienced success with their own investment tax credit program and positive response to public-private partnerships to help expand transportation infrastructure suggested that he favors a private sector tax credit.
   The STB plans to work with the Federal Energy Regulatory Commission to monitor U.S. energy stockpiles and distribution issues so that an energy crisis isn’t “traced back to a rail supply issue and back to the STB,” Nottingham said. Among the trends that an informal working group could watch are track conditions in the Powder River Basin, which contains some of the nation’s largest coalfields.