PMA Bulletin -- March 5, 2014

Back on Track: Benefits of Dedicated Multi-Modal Funding

The January 20 derailment of five rail cars carrying crude oil through Philadelphia turned out to be a minor blip in media reports. Thanks to safety procedures of CSX railroad, the oil was contained and no one was injured.

Accidents involving transportation of crude oil and natural gas are rare. Speaking for the industry, Pennsylvania API Executive Director Stephanie Catarino Wissman said that 99.99 percent of shipments of oil and gas reach their destinations without a glitch. It’s the accidents, of course, we hear about.

Reports of rail, highway, and other transportation accidents in Pennsylvania are sure to decrease even further. The transportation funding measure shepherded through the General Assembly by Governor Tom Corbett and legislative leaders last fall, Act 89, contains billions for improved safety on all transportation fronts. Act 89 includes, among other changes, dedicated funding for rail and other shipping carriers, something the commonwealth has never had, through a new, dedicated Multi-Modal Fund.

Approval of Act 89 was especially important since oil and gas shipments across Pennsylvania are on the rise thanks to the drilling boom in the U.S.  The cars involved in the recent Philadelphia derailment carried Bakken crude from North Dakota to refineries in the Philadelphia area. (Note: those refineries, and their over 400 jobs, wouldn’t be there, without a 2102 Corbett Administration intervention that helped prevent their closings.)

“A comprehensive transportation funding plan was needed to address these kinds of challenges,” said PMA Executive Director David N. Taylor. “But the new funding is also crucial to continued job growth as shipments rise with the revitalization of our manufacturing sector.”

Dedicated funding through the Multi-Modal Fund eliminates the guesswork that existed under the old method, whereby the funding was approved each year as a line item in the General Fund budget.

PennDOT spokesman Rich Kirkpatrick explained that before Act 89, the amount set aside for rail and other intermodal transportation varied year-to-year. “Now not only will we know how much is available year-to-year but more importantly having the funding dedicated will make a difference to the carriers since they will be able to plan knowing how much there is to compete for,” he said.

The new funding is already making a difference. Recently Governor Corbett announced that 33 rail freight improvement projects, that will help sustain more than 43,000 jobs across the commonwealth, were approved for funding from three PennDOT-managed programs.

Overall, the State Transportation Commission (STC) voted to approve $33.4 million for 15 projects through the Rail Transportation Assistance Program (RTAP), a capital budget grant and 14 projects through the Rail Freight Assistance Program (RFAP), which was created under Act 89.  In addition, the STC approved $1.3 million for four projects from Marcellus Shale impact fees designated for distribution through PennDOT's Bureau of Rail Freight, Ports, and Waterways.

“Investing in our rail freight network keeps these invaluable assets in prime position to generate economic growth and jobs,'' Corbett said. "Improving rail networks not only spurs our economy, it also increases safety by helping to ease traffic on our highways."

The derailment in Philadelphia prompted the House Veterans Affairs and Emergency Preparedness Committee to schedule a hearing on “Public Safety and Emergency Preparedness and the ramifications for the railway transportation of crude oil across the Commonwealth” in Eddystone, Pennsylvania on Wednesday March 3.

The API’s Wissman, who appeared before the committee, said that besides discussing the industry’s near-perfect record (one she says the industry works constantly to improve), she also listed numerous safety measures taken by the industry. “Thirty percent of the tank cars carrying oil and gas surpass federal standards for safety,” she said.  “By the end of 2015, 60 percent of the cars will.”

Accidents, by their nature, will never be completely preventable, but Act 89 will certainly lessen the occurrences.