Venable partner and former U.S. Secretary of Transportation Jim Burnley was quoted in a December 12, 2009 National Journal story about the railroad industry’s lobbying campaign to secure a large investment tax credit to fund construction of privately owned infrastructure.
Encouraged by Warren Buffett’s $34 billion purchase of the Burlington Northern Santa Fe Railway last month, many railroad supporters are feeling bullish about the industry’s prospects. Although the industry is struggling today, rail boosters say that a future of environmentally friendly, fuel-efficient methods of shipping freight and taking pressure off the roads belongs to an industry once consigned to the past, provided it can pay for its infrastructure.
The railroad industry, which owns and operates its entire infrastructure, requires substantially more capital investment than most other industries. For example, railroads invested more than $10 billion in capital improvements last year, and a 2007 study by the Cambridge Systematics consulting firm estimated that the Class I railroads will need to invest $135 billion through 2035, or $4.8 billion a year, to keep up with economic growth and to handle the 88 percent increase in tonnage that the Transportation Department projects they will have to carry by then. To meet that need, railroad owners are lobbying for a 25 percent investment tax credit to help offset future shortfalls as maintenance needs accelerate.
Burnley questioned the railroads' lobbying campaign. "The railroad industry over the last 20 years has been enormously profitable, and in this time of $1.4 trillion deficits, the sound of them banging on a tin cup rings a little hollow," he said. "They are extremely profitable, and they are not regulated in any meaningful way on pricing."