July 06, 2020

Weekly Column: Spurring Short Line Rail Investment

Guest column submitted by U.S. Senator Mike Crapo

Access to affordable and reliable options for transporting Idaho goods to markets is an important part of Idaho small businesses’ success and ability to grow and innovate.  I am a longtime champion of tax incentives that encourage and support investment in short line railroads because of short line railroads’ proven efficiency at moving Idaho goods to customers worldwide.  Short line rail has been instrumental in keeping goods moving throughout the pandemic response.  The enactment of legislation at the end of last year to extend the tax credit for short line railroad track maintenance expenditures is an encouraging step in supporting this much-needed infrastructure. 

The American Short Line and Regional Railroad Association (ASLRRA) reports “America’s freight railroads move approximately 40% of the nation’s freight ton-miles, including a vast array of goods critical to pandemic response, including fertilizer for crops, chemicals for medicines and food packaging, grain and corn for feeding animals, municipal waste to keep cities and towns clean, energy products for generating electricity, retail products to keep store shelves stocked with items for consumers, such as toilet paper, wheat for baking, and so much more.”

In January 2019, I introduced S. 203, the Building Rail Access for Customers and the Economy (BRACE) Act, that would make permanent a critical tax credit used to repair and upgrade short line railroad operations. This legislation would provide certainty to rail operators making use of critical tax credits for infrastructure improvements.  Since 2006, Congress has periodically extended the credit.  This legislation has had significant bipartisan support.  A bipartisan group of 63 senators, including Senator Jim Risch (R-Idaho), co-sponsored the BRACE Act, while companion legislation in the U.S. House of Representatives garnered 303 co-sponsors, including Representative Mike Simpson (R-Idaho).  In December, a provision extending the 45G credit for short line railroad track maintenance expenditures through 2022 was included in a year-end spending bill passed by Congress and signed into law by President Trump.  

ASLRRA indicates more than 10,000 customers are served by short lines.  Idaho Falls, Burley, Twin Falls, Boise, Cottonwood, St. Maries, Bovill, Spalding, Harvard, Moscow and Lewiston are among the communities served in Idaho by short line rail.  According to a PriceWaterhouseCoopers analysis, short line railroads and their suppliers support more than 61,000 jobs in the U.S., mainly in rural America, and add $6.5 billion annually to the U.S. economy.  Short line freight services save taxpayers more than $1.5 billion annually in wear and tear on roadways by keeping 31.8 million heavy truckloads off local roads. 

Watco Companies, which operates the Boise Valley Railroad, Eastern Idaho Railroad and Great Northwestern Railroad, reports it moved more than 66,500 carloads of goods through Idaho in 2019, with frozen vegetables, sugar, barley, wheat, lumber, pulp and paper products among the top commodities it transported.  Eastern Idaho Railroad used the 45G tax incentives to increase shipping options and create jobs in the Burley area.  In 2016, I had the opportunity to join executives of Watco Companies and local officials in Burley to celebrate the conversion and expansion of the former Keystone RV manufacturing facility in Burley to a warehouse and distribution facility for storage and transport of agricultural and other products.  Watco further reported the markets served by the warehouse were expanded from sugar and milk to also include steel, paper rolls, hay and butter. 

As Congress works to reauthorize our highway and other federal transportation programs, I will continue to push for a permanent extension of the 45G credit to protect our highways from additional wear and tear and to prioritize this energy-efficient way to move goods to market into the future.    

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