Short Line Rail Advocacy Day

Floor Speech

BREAK IN TRANSCRIPT

Mr. GRASSLEY. Mr. President, in recognition of Short Line Rail Advocacy Day, which was on May 17, I want to speak about the important services short line railroads provide to their customers and the entire economy. I also want to highlight the importance of the railroad track maintenance credit, otherwise known as the short line credit, for maintaining a robust network of short line rail.

The short line credit is available to what are known as class II and class III railroads, which are categorized based on revenue thresholds set by the Surface Transportation Board. This tax credit is not available to the large national and international railroads most people are probably familiar with. While the short line railroads generally operate in a relatively small area, they have a massive impact.

Short line railroads serve a key role in transporting manufactured goods and agricultural products from factories and farms to markets in the U.S and beyond. They often serve as the ``first and last mile'' in our Nation's freight transportation network. These links to the rest of the world are crucial to Iowa's economic competitiveness and communities across the country. Nearly half of Iowa's railroad miles are operated by 13 small railroads that transport more than 300,000 carloads of material a year.

Support of short line railroads has been a long-standing bipartisan priority. Next year will mark the 20th anniversary of the short line credit. Though the credit has spent most of its existence as a tax extender, as then chairman of the Finance Committee, I helped to create the credit and later led a successful effort to make the credit permanent in 2020. I had a lot of support, which is reflected in the fact that legislation that was sponsored by Senator Crapo, current ranking member of the Finance Committee, to make the credit permanent had 62 cosponsors.

The short line credit provides smaller regional and local railroads a tax credit for a percentage of amounts spent to upgrade and maintain miles of railroad track. However, these small railroads operate on tight margins, and many have insufficient tax liability to claim the credit against.

To address this issue, the law allows short line railroads to assign the credit to another short line, or to a customer. The assigning railroad typically recognizes income for cash received and the assignee deducts payments made. This arrangement ensures that all short line railroads are able to fully utilize the credit.

This year on Short Line Rail Advocacy Day, many of the Nation's 600 short line railroads visited offices on Capitol Hill to remind us of the critical role they play in the industry. According to the American Short Line and Regional Railroad Association, nearly 30 percent of our national rail network, or roughly 50,000 miles of track, is operated by short lines who at some point handle a quarter of all rail cars moving through the national rail system.

It is important we understand and appreciate what these local and regional railroads do for our communities, and our whole economy.

BREAK IN TRANSCRIPT

Source