Thursday, February 25, 2010

Short Line & Regional Perspective: Will tax-credit momentum be lost?

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Short Line & Regional Perspective: Will tax-credit momentum be lost?
By Keith Hartwell


images.jpgA friend of mine, a camp counselor as a teenager, often recounts an early learning experience. He was in charge of 10 eight-year-old boys. His primary disciplinary phrase was “if you do that one more time . . .” The phrase had no conclusion and never a real consequence. Two days into the camp session, the threat was repeated when the boys were violating a no-talking rule during a mandatory afternoon rest hour. Immediately one of his more precocious and perceptive wards popped up from his bunk and said, “Talk, talk, talk. When are we are going to get some action around here?”

2010 is going to be a year of action in Washington, D.C., and for the short line railroad industry it will be both eventful and challenging.

The short line rehabilitation tax credit (45G) expired at the end of 2009 and must be extended retroactively in 2010. The short lines have done their usual stellar job in setting up the legislation. To date we have secured more than 50% of the House (247) and the Senate (52) as co-sponsors. We are particularly proud that the sponsorship is almost evenly divided between Democrats and Republicans. In today’s Washington, that is rare.

The extension passed the House in late 2009 but was pushed aside by the health care debate in the Senate. The longer Congress waits to act, the more difficult it is for short lines to do the planning and make the material purchases associated with the certainty of the tax credit’s availability. If Congress holds up passage to the end of this year, even if it makes it retroactive to Jan. 1, 2010, it will have lost a real opportunity to maximize the job creating potential of the credit. The time to act is now.

Sen. Jay Rockefeller spent the better part of 2009 trying to hammer out compromise legislation on the issues surrounding railroad regulation. His legislation was approved by the Senate Commerce Committee in late December and now awaits action by the full Senate and, subsequently, by the House. This isn’t what the industry ever would have sought and the short lines, along with the Class I’s, have worked with the Senator to minimize the harm to our franchises.

In fairness, Sen. Rockefeller and his staff have devoted substantial time and effort to address our concerns, and the legislation does incorporate numerous changes advanced by the railroad industry. We are continuing those efforts as the legislation proceeds. Unlike past years, Congress likely will act on a final bill this year.

In 2009, Congress passed a new rail safety bill, and in 2010 the Federal Railroad Administration is implementing hundreds of requirements contained in that new law. The vast majority of these requirements will add significantly to our cost of doing business—in Washington lingo, unfunded federal mandates.

PTC, Hours of Service, enhanced bridge inspections, and dozens of other regulatory decisions will be made in 2010. The short line industry’s goal is to reduce the burden through the regulatory process and to convince Congress to provide a fair level of government funding for what remains.

SAFETEA-LU, which authorized federal surface transportation spending and established most modal transportation policy, expired in 2009. Reauthorization was discussed, but no action was taken, so the status quo was extended. The legislation is largely a highway and transit funding bill, but two items affect the railroad industry: truck size and weight limits, and funding for highway grade crossings. Many in the trucking industry seek to increase size and weights, and some congressmen seek to tear down the wall that prohibits state DOTs from using grade crossing funds for general highway repairs. Fighting both efforts will be a high priority for the short lines in 2010.

The SAFETEA-LU bill is traditionally a six-year bill funded primarily through the gas tax. Most observers believe that adequate surface transportation funding requires an increase in the gas tax, so passing this bill before the 2010 election be difficult.

Keith Hartwell is President of Chambers, Conlon &Hartwell, is Managing Member of the Board of CC&H subsidiary firm Seneca Group, and the firm’s lead lobbyist for the American Short Line and Regional Railroad Association.


William C. Vantuono, Editor-in-Chief

With Railway Age since 1992, William C. Vantuono has broadened and deepened the magazine's coverage of the technological revolution that is so swiftly changing the industry. He has also strengthened Railway Age’s leadership position in industry affairs with the conferences he conducts, among them Next-Generation Train Control, Light Rail, and Rail Insights. He is the author or co-author or editor of several books, among them All About Railroading; John Armstrong’s The Railroad: What It Is, What It Does; Railway Age’s Comprehensive Railroad Dictionary; and Planning, Engineering, and Operating Light Rail, With Applications in New Jersey.

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