The Washington-based American Short Line and Regional Railroad Association (ASLRRA) recently announced it has hit what it called a historic high, of 272 supporters, for the companion bill in the United States House of Representatives, H.R. 510, which calls for the permanence of the Short Line Tax Credit (45G).
This came on the heels of obtaining the 60th supporter of the United States Senate’s BRACE Building Rail Access for Customers and the Economy) Act.
ASLRRA officials explained that the Short Line Tax Credit offers a cap of $0.50 for each private dollar that is spent on freight rail upgrades and maintenance up to a cap of $3,500 per track mile on an annual basis. And it added that this credit has been renewed six times going back to 2005, accounting for more than $4 billion in private investment. The credit, though, expired at the end of 2017 and is still waiting for an extension, noted ASLRRA.
“Congressional leadership must work together to secure certainty and renewed investment for the thousands of small communities and small businesses served by short line railroads,” said Chuck Baker, President of ASLRRA, in a statement. “This BRACE Act bill has an overwhelming amount of bi-partisan support, with an almost exactly even split of Democrats and Republicans. The credit has the clear support of Congress and it has been reviewed and recommended for renewal by both the House Ways and Means Committee and the Senate Finance Committee within the past year. Evidence provided in an independent study completed by PwC is clear – this is simply smart public policy that maximizes investment in efficient, safe, and environmentally friendly freight transportation for thousands of shippers throughout the country, particularly in the agricultural, energy, and manufacturing industries, and it also drives employment and growth in the railroad supplier community and in the regional economies where railroads operate.”
The call for a permanent short line tax credit extension has been raised in various bills over nearly the past two years by various Congressional committees, including: the U.S. Senate Finance Committee Business Cost Recovery Tax Force, The House Ways and Means Committee, and the Senate Finance Committee’s Tax Extender and Disaster Relief Act of 2019.
As previously reported, the ASLRRA has said that 45G “represents real and immediate infrastructure investment and job creation that preserves transportation and economic development opportunities.”
And on top of that, this legislation provides myriad benefits for railroad and intermodal shippers and carriers alike.
Railroad stakeholders have said that this is really about is about keeping short line railroad customers connected to the national railroad network with adequate and safe rail service, which makes this provision has such broad appeal.
There are more than 500 short line railroad carriers in 49 states, which serve as the first and last mile for more than 11,000 rail shippers. And preserving and upgrading short line railroad tracks is critically important to so many economies and communities throughout the U.S.
When freight railroads were deregulated in the U.S. in 1980 through the Staggers Act, there were 200 short line railroads, and today there are more than 550. Deregulation in effect encouraged the creation of short lines, which would have otherwise been abandoned, and short lines were previously owned by Class I railroads whom did not want to operate them anymore, because they were not part of the Class I’s core networks and were not financially viable for them, although they were financially viable for short line operators.
What’s more, abandoned short lines had suffered from decades of deferred maintenance, which supported the point of passing the tax credit to create a way of effectively lowering the costs of infrastructure upgrades so that more infrastructure upgrades could take place and preserve rail lines that would have otherwise been abandoned.