Regional Plan Association Forging a National Rail Plan for America Karen Rae Deputy Administrator Federal Railroad Adm

1. Regional Plan Association Forging a National Rail Plan for AmericaKaren RaeDeputy AdministratorFederal Railroad AdministrationMay 11, 2010  Thank you Petra for inviting me to participate on this panel and for your leadership with the RPA. This is a transformational time for FRA and our industry. Starting with the Rail Safety Act and PRIAA, and now with the Recovery Act, we have gained critical new responsibilities in the areas of safety and developing high-speed and intercity passenger rail, and to create America�s first National Rail Plan (NRP). � We look at freight and passenger rail operations not as mutually exclusive efforts, but as pieces that must work together in order for the entire transportation system to function efficiently. Thank you Petra for inviting me to participate on this panel and for your leadership with the RPA. This is a transformational time for FRA and our industry. Starting with the Rail Safety Act and PRIAA, and now with the Recovery Act, we have gained critical new responsibilities in the areas of safety and developing high-speed and intercity passenger rail, and to create America�s first National Rail Plan (NRP). � We look at freight and passenger rail operations not as mutually exclusive efforts, but as pieces that must work together in order for the entire transportation system to function efficiently.

2. Strategic Transportation Goals Building a foundation for economic competitiveness Ensuring safe and efficient transportation choices Promoting energy efficiency and environmental quality Supporting interconnected livable communities (transition in slide) Until now, this nation has never seen a strategic vision of how rail works together with other modes of transportation, but this Administration is building a vision based on a series of transportation goals that reaches from travelers and consumers to industry. I know many of you here want to hear about our high-speed passenger rail program, but I want to put that effort into a larger context for you, as that is what the National Rail Plan is about. � �(transition in slide) Until now, this nation has never seen a strategic vision of how rail works together with other modes of transportation, but this Administration is building a vision based on a series of transportation goals that reaches from travelers and consumers to industry. I know many of you here want to hear about our high-speed passenger rail program, but I want to put that effort into a larger context for you, as that is what the National Rail Plan is about. � �

3. Time To Rebalance Transportation Spending To help achieve these goals, President Obama and Congress has given us more than $10.5 billion to lay the groundwork for high-speed passenger rail. But we need to put this funding into perspective. For years, highways and airports received the vast amount of our transportation dollars, but President Obama and Secretary LaHood told us numerous times that we need to rebalance our transportation spending. Those in the back row may not see the fine line of rail investment at the bottom of the chart. Highways and aviation have a 50-plus year history of large federal government funding, and our highway and aviation systems are the envy of the world. With rail, we are starting at a much lower base. Private funding has established a financially successful base for freight rail, but the federal and state government -- with private sector involvement -- will grow high-speed rail corridors throughout the country�s major population areas. To help achieve these goals, President Obama and Congress has given us more than $10.5 billion to lay the groundwork for high-speed passenger rail. But we need to put this funding into perspective. For years, highways and airports received the vast amount of our transportation dollars, but President Obama and Secretary LaHood told us numerous times that we need to rebalance our transportation spending. Those in the back row may not see the fine line of rail investment at the bottom of the chart. Highways and aviation have a 50-plus year history of large federal government funding, and our highway and aviation systems are the envy of the world. With rail, we are starting at a much lower base. Private funding has established a financially successful base for freight rail, but the federal and state government -- with private sector involvement -- will grow high-speed rail corridors throughout the country�s major population areas.

4. National Rail Plan (Passenger and Freight) Government Investments Matter These investments were made when the cost of energy was cheap. These investments were made at a time when phrase �greenhouse gas� was not yet invented. Government investments matter. Look at the growth that has taken place along our interstate highway system Look at how strategic our aviation system has become. We are proud of these investments and we can�t even imagine what our country would be like today if we had not invested heavily in our highways and airports. However, the most fuel-efficient and environmentally friendly form of transportation � Rail � was largely left out of the picture. Government investments matter. Look at the growth that has taken place along our interstate highway system Look at how strategic our aviation system has become. We are proud of these investments and we can�t even imagine what our country would be like today if we had not invested heavily in our highways and airports. However, the most fuel-efficient and environmentally friendly form of transportation � Rail � was largely left out of the picture.

5. Public Benefits -- Passenger and Freight Rail Usually when we discuss the public benefits associated with changes in transportation policy we think about discreet and relatively smaller issues.Usually when we discuss the public benefits associated with changes in transportation policy we think about discreet and relatively smaller issues.

6. Rail Public Benefits National Goals But now, given the transformative nature of our work, we need to think about these benefits as they relate to our larger, strategic goals, such as: The economy Energy and environment Safety MobilityBut now, given the transformative nature of our work, we need to think about these benefits as they relate to our larger, strategic goals, such as: The economy Energy and environment Safety Mobility

7. National Rail Plan (Passenger and Freight) Mega-Regions There are high counts of passenger travel in the corridors that connect these mega-regions The forecast for freight growth is on these same corridors There is a strong need for multi-modal participation on these corridors, using the inherent strengths of each mode. All of this matters more in certain corridors. Today, we are seeing the emergence of mega-regions. These mega-regions generate huge amounts of passenger traffic as people travel between them. Freight traffic travels these same corridors as well. If we look right here in the East, we have what is commonly called the I-95 corridor. But it is more than just highway; look at the amount of air traffic, and rail freight and passengers that use segments of this corridor each day. Toward the northern end of this corridor is the heavily traveled rail route we know at the Northeast Corridor. More people travel by rail between New York City and Washington DC. That�s where the investment in rail has already been made. Can we imagine what our aviation system and highway system would be like with out passenger rail in this market segment. This use of this corridor is expanding and freight is getting in the way of passengers. There is even a proposal from our friends in MARAD to initiate a �Marine Highway� on this north-south route. How will rail fit into this picture? Who will manage a passenger and freight, multi-modal, corridor? All of this matters more in certain corridors. Today, we are seeing the emergence of mega-regions. These mega-regions generate huge amounts of passenger traffic as people travel between them. Freight traffic travels these same corridors as well. If we look right here in the East, we have what is commonly called the I-95 corridor. But it is more than just highway; look at the amount of air traffic, and rail freight and passengers that use segments of this corridor each day. Toward the northern end of this corridor is the heavily traveled rail route we know at the Northeast Corridor. More people travel by rail between New York City and Washington DC. That�s where the investment in rail has already been made. Can we imagine what our aviation system and highway system would be like with out passenger rail in this market segment. This use of this corridor is expanding and freight is getting in the way of passengers. There is even a proposal from our friends in MARAD to initiate a �Marine Highway� on this north-south route. How will rail fit into this picture? Who will manage a passenger and freight, multi-modal, corridor?

8. National Rail Plan (Passenger and Freight) Here is a new concept: People require freight Each person requires the shipping of 40 tons of freight per year As our population increases, so does the demand placed on our freight systems As we develop the National Rail Plan we are trying to look at things differently. One way to calculate freight demand in the future is to look at how we have demanded freight services in the past. Historically if we divide all the freight shipped by the population of the US, we find that in round numbers, each person requires about 40 tons of freight to be shipped each year. This includes everything from coal for electricity to power our computers to the imported tennis shoes that we wear. If we do the math going forward, we can follow the growth in population as one method of forecasting the growth in freight demand. Actually, even this figure is somewhat less than the freight forecast of the Freight Analysis Framework. Therefore, we will look for a range of freight growth for forecasting purposes. As we develop the National Rail Plan we are trying to look at things differently. One way to calculate freight demand in the future is to look at how we have demanded freight services in the past. Historically if we divide all the freight shipped by the population of the US, we find that in round numbers, each person requires about 40 tons of freight to be shipped each year. This includes everything from coal for electricity to power our computers to the imported tennis shoes that we wear. If we do the math going forward, we can follow the growth in population as one method of forecasting the growth in freight demand. Actually, even this figure is somewhat less than the freight forecast of the Freight Analysis Framework. Therefore, we will look for a range of freight growth for forecasting purposes.

9. National Rail Plan (Passenger and Freight) Review of Current Rail System Issues and Policies Recommendation of Programs Policies and Investments A Balanced Transportation System (transition in slide) The NRP will be composed of three principal components. These will include: first, a review of the current rail system and how it serves the nation. This will also include a summary of the rail system of each state. This component will also look at projected demographic and traffic trends so an evaluation can be made with regard to future demand and needs for passenger and freight rail. This will lead into the second component of the plan; consideration of policies that can ensure that the nation�s rail system is truly considered in surface transportation discussions. The third component of the plan will be a recommendation of programs, policies, and investments that will be required so the nation can be served with a transportation system that is more balanced � utilizing our rail system to its fullest potential. (transition in slide) The NRP will be composed of three principal components. These will include: first, a review of the current rail system and how it serves the nation. This will also include a summary of the rail system of each state. This component will also look at projected demographic and traffic trends so an evaluation can be made with regard to future demand and needs for passenger and freight rail. This will lead into the second component of the plan; consideration of policies that can ensure that the nation�s rail system is truly considered in surface transportation discussions. The third component of the plan will be a recommendation of programs, policies, and investments that will be required so the nation can be served with a transportation system that is more balanced � utilizing our rail system to its fullest potential.

10. National Rail Plan and Passenger Rail In sum, the NRP will consider rail�s increasing role in meeting the strategic goals of the nation and must provide a long-range outlook for programs and investments that can improve corridors and connections for passenger and freight use. We are going to look at the growth that will take place in the next 25 years, the mega-regions that will form, and how rail corridors will be called upon to move people and goods in a fuel efficient and environmentally friendly manner. In sum, the NRP will consider rail�s increasing role in meeting the strategic goals of the nation and must provide a long-range outlook for programs and investments that can improve corridors and connections for passenger and freight use. We are going to look at the growth that will take place in the next 25 years, the mega-regions that will form, and how rail corridors will be called upon to move people and goods in a fuel efficient and environmentally friendly manner.

11. National Rail Plan -- Policy Issues Safety Network Design / Development Governance Funding/Financing Capacity Building Public / Private Opportunities & Challenges Security (TSA) Land Use (HUD) Environment (EPA) Expediting Project Delivery Rail Trust Fund Investment Tax Credit (transition in slide) Issues are being developed through discussions with state partners and stakeholders. Once the core issues were developed, white papers were drafted, laying out the background, what the nature of the issue is, discussion points, and potential recommendations. Focus groups were assembled with subject matter experts and stakeholders to discuss, review, and offer insights into the issues to more fully develop areas that the National Rail Plan should focus on. (transition in slide) Issues are being developed through discussions with state partners and stakeholders. Once the core issues were developed, white papers were drafted, laying out the background, what the nature of the issue is, discussion points, and potential recommendations. Focus groups were assembled with subject matter experts and stakeholders to discuss, review, and offer insights into the issues to more fully develop areas that the National Rail Plan should focus on.

12. National Rail Plan -- TIGER Criteria to examine infrastructure investments for developing an intelligent way to assess the benefits and cost for those investments Safety Environment State of Good Repair Economic Competitiveness Livability (transition in slide) In addition to the high-speed rail awards in the Recovery Act, the Secretary also initiated our TIGER program. Hundreds of millions were eventually allocated for the development of freight and passenger rail in American. More importantly, the TIGER program developed criteria to examine an array of transportation infrastructure investments and for developing an intelligent way to assess the benefits and cost for those investments. TIGER assessed the applications in the way that applications should be looked at. The benefits and cost of projects were assessed and all projects competed together for public funding. � The items that were assessed are the components for our national transportation goals: 1) Safety, 2) environment, 3) state of good repair, 4) economic competitiveness, and 5) livability. A good project will advance these goals in a way that is unique to that project under review. Rail is especially well positioned to meet all of these goals, and infrastructure investment in rail, whether private or public, should always rise to the top as being projects that have very good B/C ratios. Just as TIGER demonstrated the quality of rail investments, the National Rail Plan will show the quality of these investments are a wise choice in meeting our national goal and should be considered. (transition in slide) In addition to the high-speed rail awards in the Recovery Act, the Secretary also initiated our TIGER program. Hundreds of millions were eventually allocated for the development of freight and passenger rail in American. More importantly, the TIGER program developed criteria to examine an array of transportation infrastructure investments and for developing an intelligent way to assess the benefits and cost for those investments. TIGER assessed the applications in the way that applications should be looked at. The benefits and cost of projects were assessed and all projects competed together for public funding. � The items that were assessed are the components for our national transportation goals: 1) Safety, 2) environment, 3) state of good repair, 4) economic competitiveness, and 5) livability. A good project will advance these goals in a way that is unique to that project under review. Rail is especially well positioned to meet all of these goals, and infrastructure investment in rail, whether private or public, should always rise to the top as being projects that have very good B/C ratios. Just as TIGER demonstrated the quality of rail investments, the National Rail Plan will show the quality of these investments are a wise choice in meeting our national goal and should be considered.

13. National Rail Plan Timetable FRA delivered the Preliminary National Rail Plan to Congress -- on time -- last October with the help and input from of all DOT modes and numerous stakeholders. Getting feedback from outside sources as well as from every corner of the Department was critically important to us. FRA delivered the Preliminary National Rail Plan to Congress -- on time -- last October with the help and input from of all DOT modes and numerous stakeholders. Getting feedback from outside sources as well as from every corner of the Department was critically important to us.

14. Focus Group Top Ten From our focus groups and meetings, several themes emerged that will help guide us toward the final Plan: 1) We are in a unique period of time; there are opportunities before us which we must take advantage of now. It is not time to bicker and try to get 100 percent of what we want � it is time to work together collaboratively to advance the cause of both freight and passenger rail. � 2) Federal leadership is needed to set transportation priorities, and the public would benefit by being educated about the benefits of passenger rail and freight rail transportation. � 3) Liability limits are needed for passenger operations on freight railroads. � 4) There is a strong desire to have high-speed rail supplement air travel for connections and 100 to 600-mile trips. FAA is not opposed to this; legislators are also thinking along these lines. � 5) Capacity for passenger equipment depends on long-term commitments to long-term dedicated funding. Buy-America is not a problem for conventional passenger equipment, but is a larger problem for true high-speed equipment. �From our focus groups and meetings, several themes emerged that will help guide us toward the final Plan: 1) We are in a unique period of time; there are opportunities before us which we must take advantage of now. It is not time to bicker and try to get 100 percent of what we want � it is time to work together collaboratively to advance the cause of both freight and passenger rail. � 2) Federal leadership is needed to set transportation priorities, and the public would benefit by being educated about the benefits of passenger rail and freight rail transportation. � 3) Liability limits are needed for passenger operations on freight railroads. � 4) There is a strong desire to have high-speed rail supplement air travel for connections and 100 to 600-mile trips. FAA is not opposed to this; legislators are also thinking along these lines. � 5) Capacity for passenger equipment depends on long-term commitments to long-term dedicated funding. Buy-America is not a problem for conventional passenger equipment, but is a larger problem for true high-speed equipment. �

15. Focus Group Top Ten 6) PTC will cost the freight railroads in a manner that will hurt their near-term ability to add capacity. Capacity limits will cause future shifts of freight to the highway which is much less safe than rail. � 7) Re-regulation can hobble the freight industry and limit its ability to invest in capacity for the future. We must be very careful with re-regulation, including efforts to repeal the anti-trust exemption, or we risk breaking the mechanism that will allow the development of meaningful passenger rail service as an alternative to auto and air travel. � 8) Freight corridors have developed historic land use patterns for industrial areas. Using these corridors for passenger routes, and encouraging TOD, may conflict with industrial land use. Land use is subject to local control but has local and national implications. � 9) There is a need to focus on corridors, to establish performance measures, and to measure and disseminate definitive information about public benefits/costs. There needs to be an organization in charge of a corridor, such as a Corridor Planning Organization (modeled after a Metropolitan Planning Organization. � 10) Much more freight capacity is needed for rail to absorb a meaningful market shift from highway. A meaningful investment tax credit is one of the tools that can be used to add capacity, and therefore public benefits. 6) PTC will cost the freight railroads in a manner that will hurt their near-term ability to add capacity. Capacity limits will cause future shifts of freight to the highway which is much less safe than rail. � 7) Re-regulation can hobble the freight industry and limit its ability to invest in capacity for the future. We must be very careful with re-regulation, including efforts to repeal the anti-trust exemption, or we risk breaking the mechanism that will allow the development of meaningful passenger rail service as an alternative to auto and air travel. � 8) Freight corridors have developed historic land use patterns for industrial areas. Using these corridors for passenger routes, and encouraging TOD, may conflict with industrial land use. Land use is subject to local control but has local and national implications. � 9) There is a need to focus on corridors, to establish performance measures, and to measure and disseminate definitive information about public benefits/costs. There needs to be an organization in charge of a corridor, such as a Corridor Planning Organization (modeled after a Metropolitan Planning Organization. � 10) Much more freight capacity is needed for rail to absorb a meaningful market shift from highway. A meaningful investment tax credit is one of the tools that can be used to add capacity, and therefore public benefits.

16. HSR & NPR Outreach (transition in slide) FRA sincerely believes in outreach to states and stakeholders, and which we began in the high-speed passenger program. We will soon be doing the same for the National Rail Plan, and I hope you will join us as we continue thinking about these issues at our upcoming workshops.(transition in slide) FRA sincerely believes in outreach to states and stakeholders, and which we began in the high-speed passenger program. We will soon be doing the same for the National Rail Plan, and I hope you will join us as we continue thinking about these issues at our upcoming workshops.

17. Rail Plan Discussion Questions If you attend our NRP outreach sessions, you will hear some questions that we�d like answered, including: What are the key criteria to be used when talking about future investment? How do we fund freight and passenger rail programs going forward? What form of governance do we use in the corridors between mega-regions? If you attend our NRP outreach sessions, you will hear some questions that we�d like answered, including: What are the key criteria to be used when talking about future investment? How do we fund freight and passenger rail programs going forward? What form of governance do we use in the corridors between mega-regions?

18. To leave off, I want us to think about where our entire rail system is going. We�re at the starting line in terms of creating a high-speed and intercity passenger rail system and integrating that with the existing freight system. Our work, along with the states and regions, is just beginning, and we look forward to working with you to make this happen.To leave off, I want us to think about where our entire rail system is going. We�re at the starting line in terms of creating a high-speed and intercity passenger rail system and integrating that with the existing freight system. Our work, along with the states and regions, is just beginning, and we look forward to working with you to make this happen.