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Short lines group celebrates Congressional support of tax credit

The American Short Line and Regional Railroad Association (ASLRRA), a trade group representing U.S. and Canadian shortline and regional railroads, said today that Congressional support is growing for a tax credit that would enable railroads to invest in infrastructure.

Support in the U.S. House of Representatives has reached 272 co-sponsors for H.R. 510, a bill which would make the short line tax credit permanent. The tax credit, known as 45G, would offer a credit of 50 cents for each private dollar spent on freight rail upgrades and maintenance, up to a cap of $3,500 per track mile annually. The term 45G refers to where the tax credit is discussed in the U.S. tax code.

Meanwhile, the Senate equivalent, the BRACE Act or S. 203, has 60 co-sponsors as of Sept. 17.

Group members met with over 40 Congressional offices on Sept. 10 to push the tax credit forward.

“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 ASLRRA President Chuck Baker said. “This BRACE Act bill has an overwhelming amount of bipartisan 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.

ASLRRA said that since the inception of the tax credit in 2005, more than $4 billion in private investment has gone to infrastructure improvements. 

But the tax credit expired on Dec. 31, 2017, and Congress has been extending the tax credit through various bills since. The two bills currently awaiting action before the House and the Senate would make the tax credit permanent.

“The basis for the tax credit is for the purposes of developing infrastructure for short lines and regional railroads, and it has been successful in that respect” over the years, said transportation consultant Michael Ogborn. Ogborn also previously served as an executive vice president and managing director for shortline operator OmniTRAX from 1991 to July 2012.

Both bills have bipartisan support, in part because the infrastructure investments go towards preserving shortline service to small communities, including rural areas in particular, he said.

ASLRRA’s website says shortline railroads have been in business since the mid-1800s, but the industry itself grew following the Staggers Act of 1980 when many of the short lines were created from the light-density branch lines that the Class I railroads were seeking to abandon.

Short lines operate 47,500 route miles, which represent 29% of overall U.S. route miles. The group says the industry touches one in five cars moving annually at origin or destination.

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.