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Rail stakeholders see promise and peril in Biden infrastructure push

Congressional leaders also introduce rail-related legislation amid ongoing transportation infrastructure investment debate

Trade groups offer their initial thoughts on President Joe Biden's American Jobs Plan. (Photo: Jim Allen/FreightWaves)

Freight rail stakeholders looked favorably upon the prioritization of freight rail within the transportation infrastructure provisions in President Joe Biden’s $2 trillion, 10-year American Jobs Plan. But some worry about its price tag and projects they view as unrelated to infrastructure.

“The OneRail Coalition applauds the Administration for prioritizing rail as part of President Biden’s infrastructure proposal, and for recognizing rail’s role as part of the solution to climate issues. Rail is a critical component of bolstering the economy and job growth as well as addressing climate change and highway congestion,” said OneRail Coalition Director Anne Canby. The coalition’s members include Amtrak, Association of American Railroads (AAR), American Short Line and Regional Railroad Association (ASLRRA) and the Railway Supply Institute (RSI), among others. Members also include labor groups such as the Brotherhood of Railroad Signalmen and SMART-Transportation Division.

The jobs plan, which also calls for renewing the electric grid, bringing high-speed broadband to all parts of the U.S. and delivering clean drinking water, comes amid efforts by congressional leaders to pass legislation addressing railcar recycling and highway grade crossings (see below).

The plan consists of increasing corporate taxes from the current 21% passed under the administration of former President Donald Trump in 2018 to 28%. If Congress accepts this as is, the plan could be fully paid for within 15 years, according to a White House fact sheet on the plan.

But the proposed corporate tax increase is giving some trade groups pause.

“President Biden’s proposal makes clear his administration’s priority for making these much-needed investments to restore our highways, bridges and roads, and improve our ports,” said AAR President and CEO Ian Jefferies in a separate announcement. 

“At the same time, mission number one is fueling an economic recovery. Railroads would urge the administration and Congress to abandon these divisive, unrelated funding sources and instead work toward bipartisan solutions to restore the Highway Trust Fund to a true user-pays system,” Jefferies said, referring to the fuel taxes that the federal government collects in order to pay for federal transportation infrastructure initiatives. Some have contended that Highway Trust Fund has deviated from its original purposes because it funds a number of non-highway programs.

Said National Retail Federation President and CEO Matthew Shay, “Investment in infrastructure needs to be a priority, but this legislation appears to be less about improving infrastructure and a lot more about a political agenda, at the expense of sound economic policy that benefits all Americans.” Shay didn’t specify which items might be more politically motivated.

Others took a more wait-and-see approach to how the White House, Congress and special interests will craft the plan. 

“We look forward to working with the Administration and Congress in a bipartisan way as they develop and consider this proposal,” said Chuck Baker, president of the American Short Line and Regional Railroad Association

Others took note of how the White House expects to address U.S. port infrastructure needs. 

“We look forward to working with the White House and Congress to upgrade our ports and shipping channels, adopt reforms to promote competitive and reliable freight rail service and bring trucking regulations into the 21st century so that our industry can deliver the essential products Americans depend on every day,” said American Chemistry Council President and CEO Chris Jahn. 

He added that his group has “grave concerns” with the plan’s proposed corporate tax provision, which he said could “make America less competitive, stifle innovation and interfere with our ability to invest, innovate, create jobs, and provide technologies that will be critical to infrastructure improvement, clean energy and climate solutions.”

Soy Transportation Coalition Executive Director Mike Steenhoek praised Biden’s efforts to address infrastructure needs in a comprehensive bill. But he was also concerned that the bill might have too many partisan elements, making its passage more challenging. Steenhoek didn’t specify which elements could be deemed as being more partisan.

“Given how Republicans and Democrats overall agree that improving infrastructure is a legitimate use of government resources, there is a unique opportunity to achieve something significant on behalf of the American people in a collaborative, bipartisan manner if the focus remains on enhancing roads, bridges, inland waterways, ports, railroads, etc.” Steenhoek said. “It does concern me to see the proposal extend beyond what most Americans would define as ‘infrastructure.’ Whenever legislative proposals and initiatives — especially controversial ones — get attached to a particular plan, the prospects of ultimate passage usually go down rather than up.”

Steenhoek called for a plan that would address the infrastructure needs of both rural and urban America, including infrastructure investments in ports and inland waterways. 

The America Jobs Plan calls for investing $621 billion in transportation infrastructure and resilience. 

For passenger and freight rail specifically, the plan is seeking $80 billion to “address Amtrak’s repair backlog; modernize the high traffic Northeast Corridor; improve existing corridors and connect new city pairs; and enhance grant and loan programs that support passenger and freight rail safety, efficiency, and electrification.”

Non-transportation related initiatives within the $2 trillion plan include $400 billion for home care services for aging and people with disabilities; $300 billion for manufacturing support; $213 billion for affordable housing; $111 billion for drinking water infrastructure; and $100 billion for electric grid and power infrastructure.

Legislation on recycling railcars, creating a highway grade crossing database

As the White House prepares to negotiate with Congress over the infrastructure plan, congressional leaders have introduced a handful of rail-related bills.

Among them is the bipartisan reintroduction of the Freight Rail Assistance and Investment to Launch Coronavirus-era Activity and Recovery Act or the Freight RAILCAR Act.

The bill, introduced by Reps. Brad Schneider, D-Illinois, Darin LaHood, R-Illinois, and 10 other members of the House of Representatives on Monday, calls for a time-limited 50% tax credit for purchasing new freight railcars or refurbishing existing freight railcars that result in improving capacity or fuel efficiency by at least 8%, according to the Railway Supply Institute (RSI). The bill also provides separate tax credits for scrapping railcars based on their depreciated value and for capital expenditures on equipment or technology enhancements that improve environmental standards or the safety, quality or efficiency of railcar manufacturing and repair operations, RSI said.

“The Freight RAILCAR Act will help incentivize private investment in the freight railcar manufacturing industry to preserve thousands of American jobs, reduce our carbon footprint, and ensure the integrity of our critical rail supply chains. This legislation would offer incentives for new and sustained investments to help stabilize the freight railcar manufacturing industry during this critical time,” said Nicole Brewin, senior vice president of government and public affairs for RSI.

Other bills that have been introduced include S. 700, which seeks to establish a portal and database to receive and maintain information regarding blocked railroad-highway grade crossings and to require the secretary of transportation to evaluate the requirements of the railway-highway crossings program; and S.468 or the Railroad Rehabilitation and Financing Innovation Act. This bill seeks to provide loans to build new intermodal or freight rail facilities.

S. 700 was introduced by Sen. Deb Fischer, R-Nebraska, on March 11, and S.468 was introduced by Sen. John Thune, R-South Dakota, on Feb. 25.

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.