The ASLRRA is charged by its membership to represent the concerns of short line and regional railroads and ASLRRA associate members before Congress and the Administration. The ASLRRA’s position on current legislative and regulatory issues is outlined below.
Extension of the Short Line Tax Credit (26 U.S.C. 45G)
The ASLRRA strongly supports S. 881 and H.R. 1584, the Short Line Railroad Investment Act of 2007. This important legislation will extend the already existing Section 45G short line tax credit, and provide relief from the alternative minimum tax. For more information on how you can help to extend this important credit, please visit the §45G Short Line Tax Credit page.
Today, nearly 550 short line railroads operate 43,000 miles of track in 49 states and employ more than 19,000 workers. They serve close to 12,000 customers, many in small town America, and are often the only way those towns stay connected to the national railroad system.
The railroad industry is rapidly moving to larger, heavier freight cars to improve service and lower costs. These cars place added demands on track structure, requiring short lines to undertake expensive track upgrades. The cost for these upgrades is estimated to be $7 billion. In 2004, Congress enacted a short line railroad rehabilitation tax credit, Section 45G, that expires in 2007. This program provides short lines with up to $500 million to make track improvements required to keep pace with today’s freight service demands and assist short lines in winning back traffic levels sufficient to complete this multi-billion dollar investment in rural America’s infrastructure.
Now, over two-thirds of the way through the originally enacted three-year period, the tax credit is yielding significant dividends. It allows short lines to increase annual rehabilitation spending and expedites projects that previously had to be completed over long periods. Additionally, it has convinced railroad customers to make new investments in their own facilities to take advantage of the short lines’ ability to move longer and heavier trains. In the end, the credit will leverage private investment well above the cost to the federal government.
Congress should act now to extend this credit and the investment it generates. For more information on how you can help to extend this important credit, please visit the §45G Short Line Tax Credit page.
One National Rail Safety Standard
On March 27, 2007 the House of Representatives passed H.R. 1401, a bill “to improve the security of railroads, public transportation, and over-the-road buses in the United States, and for other purposes.” Section 3 of the manager’s amendment was presented to the House hours before it was passed with little debate or consideration. Section 3 is a sweeping change in federal rail safety policy by eliminating the supremacy of federal safety standards over conflicting state and local standards under the Federal Railroad Safety Act.
The supremacy of federal regulations and laws governing the rail transportation is an essential component of rail safety and a functioning interstate rail network. Since freight rail transportation crosses a multitude of state and local jurisdictions, it is important that safety regulators and railroads follow one coherent set of standards to protect all Americans. The ASLRRA opposes any efforts that would strip the US Department of Transportation and the Federal Railroad Administration of their ability to issue and enforce a uniform and national set safety rules.
As the Federal Railroad Administration has said: "Section 3 of H.R. 1401 would undermine the policy of national uniformity at the heart of railroad safety and security law. States could layer on additional requirements to Federal standards and the latest jury verdict would become the defacto safety and security standard. Section 3 would also overturn many years of Supreme Court decisions and spawn a great deal of needless litigation. It is also ambiguous in that, while it appears to be aimed at preventing preemption of tort suits, it speaks in terms of State causes of action, which might include other kinds of litigation such as State or local bodies trying to impose and enforce their own railroad safety and security regulations. That would Balkanize railroad safety and security and probably lead to an increase in wrecks, deaths, and injuries on the
Nation's railroads."
Why ASLRRA Opposes Efforts to Reregulate the Freight Railroad Industry
Despite the tremendous gains made by the railroads since the Staggers Act, some groups want to again give government regulators control over crucial areas of rail operations. The primary objective of those who call for rail reregulation is to lower rail rates for certain rail shippers.
As the Congressional Budget Office noted in a recent report, “As demand increases, the railroads’ ability to generate profits from which to finance new investments will be critical. Profits are key to increasing capacity because they provide both the incentives and the means to make new investments.”
Existing proposals to reregulate the railroad industry are not the answer when it comes to improving freight rail capacity and enhancing service. In fact, enactment of those bills would lead to decreased capacity and disinvestments in our nation’s freight rail system.
In most cases, the post-Staggers rail regulatory structure relies on competition and market forces to determine rail rates and service standards, with maximum rate protections available to rail customers who need them. Only by pricing in accordance with demand can railroads efficiently recover their costs, serve the largest number of customers, and maintain the viability of the nation’s rail system.
Reregulation would, over time, force railroads to cut their costs by shrinking the size and quality of the nation’s rail network. This would harm every rail customer, including those that reregulation is intended to benefit. It would damage our nation’s global competitiveness by undermining the efficiency and cost-effectiveness of our nation’s freight transportation system, and it would lead to the diversion of traffic onto already overcrowded highways. These outcomes are certainly not in the best interest of our nation.
Amtrak Funding
The ASLRRA recognizes the importance of passenger railroading and supports continued federal funding for the National Railroad Passenger Corporation (Amtrak) at a level that allows investment to maintain the system in a state of good repair.
Why the ASLRRA Supports Infrastructure Tax Credits Advocated by the Association of American Railroads
The Association of American Railroads (AAR) represents the concerns North America’s large “Class I” freight railroad companies. The AAR has recently advocated infrastructure tax credits for investments made to expand rail capacity. The ASLRRA supports this initiative.
Investment in rail infrastructure must grow sharply over the next 20 years to take full advantage of railroads’ potential to meet the nation’s freight transportation needs. Railroads, though, will be able to fund only a portion of the investments that will be required.
Tax incentives for rail capacity enhancements would help bridge the funding gap by leveraging private investment and producing benefits — such as reduced highway congestion, a more efficient freight rail system for shippers, and reduced highway construction and maintenance costs — that would far exceed the cost of the tax incentives.
The Class I freight railroads propose a tax incentive program designed to leverage private investment in infrastructure and locomotives through a 25 percent tax credit on investments that expand capacity. Eligibility for the credit would extend to any taxpayer that makes a qualifying expenditure, not just railroads. This credit would place capital cost recovery for rail infrastructure on the same basis as competing modes of freight transportation.
