ASLRRA chief makes case for extending short line railroad tax credit

With a December 31 deadline looming for a short line railroad track maintenance credit looming, the top executive of the American Short Line & Regional Railroad Association (ASLRRA) pulled no punches in explaining why it needs to be extended.

By ·

With a December 31 deadline looming for a short line railroad track maintenance credit looming, the top executive of the American Short Line & Regional Railroad Association (ASLRRA) pulled no punches in explaining why it needs to be extended.

Speaking at the RailTrends conference in New York presented by Progressive Railroading magazine and independent railroad analyst Tony Hatch, ASLRRA President Richard Timmons said the tax credit has the support of 156 Congressional co-sponsors and 40 of the 87 House freshman, whom Timmons said are “generally skeptical” of tax credits, as well as the support of the United States Chamber of Commerce and the National Association of Manufacturers.

This credit has been in place since 2005 and represents real and immediate infrastructure investment and job creation that preserves transportation and economic development opportunities, according to the ASLRRA.

This credit creates a strong incentive for short line railroads to invest private sector dollars on freight railroad track rehabilitation and improvements and is capped based on a mileage formula, according to the ASLRRA. It added that the credit creates an incentive for short line railroads to invest in track rehabilitation by providing a tax credit of 50 cents for every dollar the railroad spends on track improvements

“With this credit, there are huge potential job creation opportunities and in 99.9 percent of the materials that goes into these projects is American-made,” said Timmons. “There is this ripple effect throughout the economy as we start to improve the infrastructure for rail bridges, right-of-ways, yards and facilities. The small railroads are contracting out all of that work as very few of them have their own maintenance departments. What they are doing [with this credit] is getting large numbers of railroad contractors, railroad material manufacturers and transporters work.”

Timmons said there is a reasonable opportunity to get this credit extended by the end of the year but cautioned there is a lot of work to be done for that to happen.

This tax credit provides myriad benefits for railroad and intermodal shippers and carriers alike.

“The real benefit is accruing to the [shipper],” said Adam Nordstrom a lobbyist for the ASLRRA and a partner in the Washington, D.C.-based law firm Chambers, Conlon & Hartwell, LLC, in a previous interview. “This is not about saving short line railroads; it is about keeping short line railroad customers connected to the national railroad network with adequate and safe rail service.”

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 past 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.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

ASLRRA · Intermodal · Rail Freight · Railroad · All Topics
Latest Whitepaper
Private Fleet vs. Dedicated: Which one is right for you?
Having the right fleet for your business can give you an advantage over the competition and lower transportation costs.
Download Today!
From the April 2017 Issue
While adoption rates have remained relatively flat, yard management systems (YMS) are helping logistics operations turn that important space between the loading dock and the gate into a vital link in the supply chain.
Information Management: Wearables come in for a refit
2017 Air Cargo Roundtable: Positive Outlook Driven by New Demand
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Maximize Your LTL Driver Adherence with Real-time Feedback
This webinar shows how companies are using real-time performance data to optimize the scheduling of their city fleets, as well as the routing of their standard, accelerated and time-critical shipments.
Register Today!
EDITORS' PICKS
2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...

ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...
2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...