Obama administration spends $600 million on rail projects that benefit private companies
12/01/2013 2:46 PM
12/01/2013 2:47 PM
The railroad industry brags in its national publicity campaign that it spends billions of dollars improving its infrastructure “so taxpayers don’t have to.”
But the ads don’t tell everything. The nation’s freight rail network has been the quiet recipient of more than $600 million in federal investment during the Obama administration.
According to Federal Railroad Administration numbers, at least half that amount has gone to projects that benefit the nation’s four largest railroads, the companies at the heart of the industry’s ubiquitous “Freight Rail Works” campaign. They include Fort Worth-based Burlington Northern Santa Fe, owned by Warren Buffet’s Berkshire Hathaway.
The federal money doesn’t count tens of millions more that states have contributed for additional investment in ports and high-speed passenger trains that have boosted the nation’s freight railroads.
The public dollars have built new overpasses to separate trains from one another, as well as cars and trucks. They’ve replaced aging bridges, laid new track and upgraded signal systems. They’ve paid to enlarge tunnels and raise bridges so that shipping containers may be double-stacked.
They’ve built facilities where cargo containers can be transferred from trucks to trains, or vice versa.
Supporters say these public investments, combined with private capital, are model infrastructure partnerships that will help take trucks off crowded highways, reduce pollution and improve the flow of goods to and from the nation’s seaports.
“The majority of dollars that benefit freight rail are well-spent,” said Chuck Clowdis, the managing director of North American markets at economic forecaster IHS Global Insight.
But others wonder whether an industry that boasts about how little it depends on taxpayers really needs the extra help.
“We don’t run [ad] campaigns like that, and we move 70 percent of all the tonnage in America at some point every day,” said Bill Graves, president and CEO of the American Trucking Associations and a Republican former governor of Kansas.
The trucking industry isn’t bashful about pressing for more highway funding, Graves said, while railroads “probably overstate their independence from public investment.”
The Obama administration’s high-speed passenger rail initiatives have overshadowed its freight push.
While its passenger rail improvements have been mired in controversy and delays, many of the freight rail investments begun under the economic stimulus of 2009 are at or near completion. The White House is eager to show the results.
“This is the inland version of the widening of the Panama Canal,” Vice President Joe Biden said last month, not at a seaport but at a CSX freight terminal in the middle of a cornfield in North Baltimore, Ohio.
North Baltimore anchors the National Gateway, a project partially funded with a $98 million grant from the Transportation Department. CSX paid for the Ohio facility, while the federal money helped raise overhead clearances on its route to East Coast ports, to allow double-stacked container trains.
Last week in Missouri, Federal Railroad Administrator Joseph Szabo cut the ribbon on a new bridge that added a second track over the Osage River, eliminating a bottleneck between St. Louis and Kansas City. Though the Obama administration paid for $22 million of the $28 million project through its High Speed Intercity Passenger Rail Program, the bridge will benefit the nation’s largest freight railroad, Union Pacific, which operates as many as 60 trains a day on the line.
In November, the Port of Miami restored its rail connection, which Hurricane Wilma severed in 2005. A Transportation Department grant paid for $22 million of the $49 million project. Port Director Bill Johnson said that the grant was essential and that the project wouldn’t have happened without it. The Miami port is undertaking a massive expansion to accommodate bigger ships. It’s scheduled to be ready when the widened Panama Canal opens in 2015.
“We need a rail system to serve Florida and also the heartland of America,” Johnson said. “It’s all about connecting.”
In Charlotte, N.C., $129 million in American Recovery and Reinvestment Act money will separate the Norfolk Southern and CSX mainlines where they cross in the city. The grant is part of $520 million in stimulus funds awarded to North Carolina to improve passenger and freight service in the corridor from Raleigh to Charlotte.
For all the public money that freight railroads have received, they haven’t talked much about it. The industry spent years trying to free itself from government regulation, and it doesn’t want federal money with too many strings attached.
“I think the industry is concerned about maintaining its independence,” said David Clarke, director of the Center for Transportation Research at the University of Tennessee in Knoxville.
The worst recession since the Great Depression offered an opportunity few railroads could refuse. The Obama stimulus gave birth to a discretionary program called Tiger, for Transportation Investment Generating Economic Recovery.
The competitive program has proved popular with governors and mayors because it’s helped them start, and in some cases finish, infrastructure projects they’d long desired. Many of them involved freight railroads.
Tiger helped pay for two projects that involve the heavily congested intersections of two of the nation’s largest railroads, Union Pacific and BNSF.
Until August, Colton Crossing in Southern California was a choke point for cargo moving out of the ports at Los Angeles and Long Beach. A $34 million Tiger grant helped build an overpass. The California Transportation Department contributed $41 million more, and the railroads paid for the balance of the $91 million project.
A similar number of trains compete for a green signal at Tower 55 near downtown Fort Worth. A $34 million Tiger grant will cover about a third of the cost of fixing the junction, with the railroads sharing most of the rest. The work should be finished next year.
Freight rail investment might relieve congested roads, as well.
When it comes to moving smaller quantities of consumer goods faster over shorter distances, trucks have the advantage. But railroads excel at moving large quantities of freight over long distances at lower cost.
“Our growth is driven by taking trucks off the highways,” said Jeff Heller, vice president for intermodal at Norfolk Southern.
Norfolk Southern would like to skim some new business from one of the country’s busiest trucking lanes with what it calls its Crescent Corridor, stretching from the Northeast to the Mississippi River and the Gulf Coast.
In a $2.5 billion partnership that involves the railroad, the U.S. Transportation Department and several states, Norfolk Southern has upgraded track and signals and has opened several new intermodal facilities, where trailers and containers can be loaded on trains. The latest such facility will open in Charlotte early this month.
The railroad hopes to divert 1.3 million trucks a year, while the federal and state transportation departments hope to improve traffic congestion and safety on interstate highways.
Chicago hopes that a state, federal and local partnership will relieve congestion at the nation’s busiest rail hub.
A $2 billion decadelong project is building lots of overpasses to ease the delays caused when more than 1,300 passenger and freight trains converge on Chicago every day, creating headaches for shippers and commuters. Some trains arrive from the East Coast in a day only to get stuck in Chicago for two days.
But the success of both projects might be limited by decisions made in the 19th century that would take billions of dollars more to fix.
Chicago’s congestion stems from the fact that major railroads built into the city without making efficient connections. They still don’t connect seamlessly, and there are few options to bypass Chicago.
Portions of the Crescent Corridor were laid out before the Civil War, with an abundance of hills and curves that slow the trains. That makes it hard for a railroad to be an effective competitor with trucks on parallel interstate highways.
“The railroads are still hamstrung to a certain extent by how their routes run,” said Clowdis, of IHS Global Insight.
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