This week's headlines tell a story about rail safety as train traffic picks up steam in Minnesota.
Campaign contributions and financial news tell another story.
Forum News Service political reporter Don Davis writes in State leaders disagree on rail oil safety:
There is no overall agreement on how to prevent Minnesota oil train explosions.
Democrats want to raise railroad taxes $100 million to improve oil train safety. Republicans balk at higher taxes and say more information is needed before drawing up a solution.
Assistant House Minority Leader Paul Marquart of Dilworth and Rep. Frank Hornstein of Minneapolis, along with Democratic colleagues, on Tuesday released their plans to expand the property tax to railroad cars and to increase assessments on railroads. It is a plan similar to that of Democratic Gov. Mark Dayton.
Republicans, who control the House, are expected to release their transportation plan soon, but House Transportation Chairman Tim Kelly, R-Red Wing, said more information is needed before a comprehensive rail safety plan is written. . . .
On Friday, Governor Dayton held a press conference to discuss his plan; he was joined by mayors of towns along railroads. The Associated Press reports in Dayton wants railroads to pay for safety upgrades:
Gov. Mark Dayton is giving railroad companies a tongue-lashing for resisting his tax plan to fund safety improvements.
Seven trains haul North Dakota crude across Minnesota daily. The Democratic governor has suggested a series of tax changes and fees on railroads to upgrade railroad crossings and improve first responder training to prepare for a major accident.
Railroad companies like BNSF Railway have balked at those proposals and suggested they may violate federal laws by singling out their industry.
Dayton brought officials from towns with heavy train traffic to St. Paul Friday to ramp up pressure for his plan. Dayton says railroad companies' opposition to pay more for safety improvements is "totally unacceptable.''
Majority House Republicans have also signaled they're not on board with the governor's proposal.
Not a single Republican lawmaker joined Dayton at the press conference, although a source tell us they were invited.
Campaign contributions and profits
As usual, Bluestem thought we'd see who's paying the piper for our new House Republican overlords. Turns out that one railroad gave $85,000 to the Republican State Leadership Committee, which in its turn gave $325,000 to the Minnesota Jobs Coalition, a major player in independent expenditures that flipped the Minnesota House to Republican control.
From the Open Secrets database of donors to the Republican State Leadership Committee, $85,000:
|$25,000||BNSF RAILWAY COMPANY||FORT WORTH TX||10/27/14|
|$50,000||BNSF RAILWAY COMPANY||FORT WORTH TX||09/29/14|
|$10,000||BNSF RAILWAY COMPANY||FORT WORTH TX||01/27/14|
[Bluestem looked in giving to DFL state-level politics, including ABM, WIN Minnesota and the 2014 fund, and didn't find giving by the rail industry to the left. Like the regulation of railroads themselves, the big political giving by railroads and rail-related PACs is to federal candidates.]
The railroad business is booming. Forbes reported in late February in Warren Buffett says Berkshire's railroad BNSF 'disappointed' in 2014 that while its customers were disappointed, the shareholders were not:
. . . BNSF didn’t spell disaster for Berkshire’s shareholders in 2014. The company earned nearly $4 billion, up 2% from a year ago. To be sure, that was much slower than the 13% jump in profits the railroad experienced the year before.
Overall, BNSF has been a very good investment for Buffett. Berkshire bought the company for $26 billion in 2009. Last year, BNSF had revenue of $23 billion and profits over the past three years of just over $11 billion. Buffett says BNSF now carries 15% of all inter-city freight, which he says is more than anyone else—by land, air, or sea.
What's more, the long-term profitability of the rail industry is even more eye-popping. The Florida Times Union reported in February 2015:
For Jacksonville-based CSX Corp., freight volume has dropped 7 percent since 2004. Meanwhile, its shares have climbed to $35 from less than $6, and its net income has risen 450 percent, to almost $1.9 billion in 2013, according to SEC filings.
It’s the same story for the other three mega-railroads. Their traffic is down from a decade ago, but their profits are up: 107 percent for Norfolk Southern Corp., 626 percent for Union Pacific Corp. and 380 percent for BNSF Railway. Norfolk’s stock price has tripled, Union Pacific’s has sextupled, BNSF’s doubled before the company was gobbled up by Berkshire Hathaway in 2010.
In this region, traffic is up, however.
That $85,000 to get Republicans in state-level offices? A drop in the bucket.
The Dayton Plan
Here's the press release from the Governor's office, explaining Dayton's proposal:
Seventy-five railway safety projects – at Minnesota’s most dangerous and congested rail crossings – would be completed statewide, if a proposal from Governor Mark Dayton is passed this session. Governor Dayton today revealed a comprehensive list of those specific projects, which were compiled by experts at the Minnesota Department of Transportation and chosen based on their levels of danger and congestion.Governor Dayton’s railway safety proposal would invest $330 million over the next ten years in the construction of safer railroad crossings across Minnesota, and provide additional bonding dollars to fund four major grade separations in Coon Rapids, Moorhead, Prairie Island, and Willmar. The plan would implement new quiet zones in communities located along busy rail lines, provide better training for emergency managers and first responders, and hire a new Rail Office Director who would position the state to play a larger role in addressing freight rail service and safety issues throughout the state.If passed, Governor Dayton’s plan would also provide local governments the resources they need to respond to local infrastructure needs caused by increased railway traffic. By modernizing property taxes paid by railroads, the proposal would provide $45 million every year for cities, counties, and townships to fund their own local priority rail infrastructure improvements. A comprehensive list of how much new railway safety funding each city, county, and township would receive under the Governor’s plan is available online.“Over the last year, I have traveled across Minnesota and seen firsthand the very serious and costly challenges that increased rail traffic have thrust upon our communities,” said Governor Dayton. “Minnesotans did not cause these disruptions; they are not responsible for the endless barrage of dangerous cargo being shipped through their communities every day. The railroads responsible for these problems have a responsibility to pay for these essential safety improvements.”What the Proposal Would DeliverThe Governor developed his railway safety proposal after holding seven railway safety meetings across Minnesota, hosting a railway safety summit last fall, and conducting a statewide survey gathering the input of local community leaders. His recommendations are based on the input of Minnesotans, emergency managers and first responders, and experts at the Minnesota Department of Transportation. Specifically, the proposal would deliver:
- Four Major Grade Separations – When the Governor introduces his bonding proposal later this month, it will include funding for four major grade separations in Coon Rapids, Moorhead, Prairie Island, and Willmar. Improvements at these rail crossings, which are heavily congested and considered particularly dangerous, are urgently needed and require major investments.
- Another 71 Infrastructure Improvements Statewide – The Governor’s proposal would also fund 71 additional railway safety improvements at rail crossings across Minnesota. A comprehensive list of these projects, which were chosen by MnDOT experts based on their levels of danger and congestion. A comprehensive list of those projects is available online.
- Better Training for First Responders – In order to adequately prepare for potential derailments or railway disasters, the Governor’s proposal would fund additional training measures for first responders and emergency managers across Minnesota. Specifically, this would include the construction of a new multifaceted training facility at Camp Ripley, which would simulate response scenarios related to the transportation and storage of hazardous materials, including Bakken oil.
- More Quiet Zones – The Governor’s proposal would also provide funding to help establish new quiet zones in communities located along busy rail lines.
- A New Rail Office Director – The proposal would hire a new Rail Office Director who would position Minnesota to play a larger role in addressing freight rail service and safety issues in the state. This would allow accelerated and expanded delivery of grade crossing safety improvements, expanded rail safety inspection, and enforcement of rail safety regulations and rail planning.How the Proposal is FundedThe Governor’s proposed railway safety improvements would be funded through the following measures:
- Assessments on Class I Railroads – The proposal would implement a $33 million annual assessment on the four Class I railroads that operate in Minnesota, based on their track mileage in the state. It would be used to fund additional grade separations and crossing improvements across Minnesota.
- State General Obligation Bonds – The Governor’s bonding bill will include funding for four major grade separation projects in Coon Rapids, Moorhead, Prairie Island, and Willmar. It will also include funding for a new railway safety training facility for first responders at Camp Ripley and funding for quiet zones.
- Modernizing Property Taxes Paid by Railroads – Minnesota’s current railroad property tax laws are have not kept pace with railroad uses, or the need for improved safety. Modernizing railroad property taxes would expand the taxable property of railroads to include rolling stock, rail cars, trestles, and rail bridges. This would expand the tax base for communities that are now dealing with increased rail use and congestion. Property tax modernization would provide $45 million in new annual revenues for cities, counties, and townships to address their local infrastructure needs. It would provide $21 million each year to help fund statewide rail safety measures.Building on Recent ProgressThese needed improvements would build on new railway safety measures implemented last year by Governor Dayton and the Minnesota Legislature. Those efforts required railroad companies to submit disaster prevention and emergency plans to the State, increased the number of rail inspectors at MnDOT, required railroads to respond to derailments or spills of hazardous cargos within a specified timeframe, and provided additional emergency response training for local police and fire departments, and other first responders in Minnesota.
This is part 2 of a multipart series about investments by North Dakota energy interests (and those who transport their products) in Minnesota politics.
Photo: Dayton's Friday press conference with mayors and legislators. Not a single Republican lawmaker joined the mayors and the governor at the event.
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