The Railroad
Perspective
Adam Nordstrom
Partner – Chambers, Conlon & Hartwell
– Washington, DC –
Washington Representative – American Short Line
and Regional Railroad Association
Short Lines and the Planning Process
• Why are short lines overlooked in the
transportation planning process?
• Better Question: Why do short lines ALLOW
themselves to be overlooked?
• Also: After the public input process, MPOs,
RPOs,
municipalities,
broad
political
considerations, and tediously repetitive federal
reporting requirements, what is an overtaxed
state official to do?
• Small railroads often end up an afterthought
from the planning process: What’s a short line?
“Short Line” “Regional” Industry
Total
11,653
7,769
19,422
Employment
2008
22
235
34
Ave/R.R.
“Back Office”
4.2
26.0
5.7
Average*
Rail: Whoop-TEA-Do?
ISTEA
TEA-21
SAFETEA-LU
(1991)
(1998)
(2005)
167,296
3,751
2.24%
324,427
3,329
1.03%
Word Count 131,521
Rail Text 3,121
Rail Text % 2.37%
Of course, its not the length of your text…
Rail Text %
ISTEA
TEA-21
SAFETEA-LU
(1991)
(1998)
(2005)
2.37%
2.24%
1.03%
Intermodal
Earmarks
“Goal to promote
Elements
intermodalism”
Intermodal
Studies
High-Speed Rail
High-Speed Rail
Short Line Grants
(unfunded)
RRIF Loans ($3.5B)
Rail Line Relocation
Grants
1,000% Increase in
RRIF Cap ($35.0B)
Tank Car Safety
Rail in a Different Cup of TEA
Recovery Act (ARRA)
High-Speed
Elements
Rail
Value
Tax Bills
TIGER
Section 45G Short Line
Railroad Track Credit
$10.1 B
~$400 M
$1.16 B
(some rescinded)
(for freight)
Rail in a Different Cup of TEA
Recovery Act (ARRA)
High-Speed
Elements
Rail
Rail Text %
0.26*
Tax Bills
TIGER
Section 45G Short Line
Railroad Track Credit
0.29†
1.65‡
* PL 111-5 (376/179,072); PL 111-117 (695/176,031); PL 112-10 (60/80,392); Total (1,131/435,495)
† PL
‡
111-5 (619/179,072); PL 111-117 (591/176,031); PL 112-10 (50/80,392); Total (1,260/435,495)
PL 108-357 (4,710/106,386); PL 109-135 (289/29,202); PL 109-432 (102/100,198);
PL 110-343 (157/73,731); PL 111-312 (55/12,778); Total (5,313/322,295)
TEA for Two Rails
• Truck Size, Weight, and Safety
• Section 45G Short Line Railroad Tax Credit
• Railroad Rehabilitation and Improvement Financing
• Flexibility
45G – The Federal Short Line
Track Mechanism
• Section 45G Short Line Railroad Tax Credit
– $3,500/mi. tax credit for infrastructure upgrades
– $165 million / year
– $1.16 billion to date
– Assisted $2.3 billion in track upgrades to date
– Expires at the end of 2011
• Good News: No Need to Apply
• Bad News:
No Need to Apply
Awesome, Inc.
Customer
Ye Lil’
Short Line
Credit Cap: Total Mileage x $3,500
100 mi. x $3,500 = $350,000
*
*
*
Credit Rate = 50%
To Earn Max Credit must invest:
$350,000/0.50 = $700,000
Big Daddy Class I
100 miles
45G – Rhymes with “TEA”
S. 672 – Rockefeller-Crapo
45G – Rhymes with “TEA”
H.R. 721 – Jenkins-Blumenauer
45G – Rhymes with “TEA”
• Section 45G Short Line Railroad Tax Credit
• Enjoys broad political support:
2004
2008
2010
2011
(to date)
House
268
248
259
133
Senate
19
45
53
34
45G – Senate - 2010
45G – House - 2010
Examination of 156,270 bills introduced between 93rd and 108th Congresses
45G – Rhymes with “TEA”
2004
2008
2010
2011
House
268
248
259
133
Senate
19
45
53
34
16
4
(to date)
Mean for All Bills
2004*
*Source: J.H. Fowler, Social Networks 28 (2006) at 457
“45G” – Really Bad 1980’s Rap
Approximate Rhyme with “State DOT”
• In the 111th Congress several state DOTs
supported extension of 45G
• Usually in the forms of policy support letters
to Congressional delegations from DOT
Secretaries or Rail Directors
TSW…
Truck Size and Weight
• Frequent Battle in TEA Bills
• Increases beyond 80,000-lb. endanger
short line survival
• Large Railroads and Safety Groups also
opposed
Railroad Rehabilitation and
Improvement Financing
• $35 Billion Loan Ceiling
• Less than $1 Billion ever outstanding
• Favorable Terms:
– Low Interest
– Long Term
• Historically uncertain review process
• Frequently mentioned by Chairman Mica as a
way to leverage private sector investment
Flexibility
…Provided further, That projects eligible for funding provided
under this heading shall include, but not be limited to,
highway or bridge projects eligible under title 23, United
States Code, including interstate rehabilitation, improvements
to the rural collector road system, the reconstruction of
overpasses and interchanges, bridge replacements, seismic
retrofit projects for bridges, and road realignments; public
transportation projects eligible under chapter 53 of title
49, United States Code, including investments in projects
participating in the New Starts or Small Starts programs that
will expedite the completion of those projects and their entry
into revenue service; passenger and freight rail
transportation projects; and port infrastructure
investments, including projects that connect ports to
other modes of transportation and improve the efficiency of
freight movement…
Adam Nordstrom
Partner – Chambers, Conlon & Hartwell
– Washington, DC –
202-638-7790
adam.nordstrom@CCH-LLC.COM