Majority of elected officials support legislation to make 45G tax credit permanent

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Legislation that would make the shortline tax credit, also referred to as 45G, permanent, has reached a milestone in its quest for cosponsors.

The Building Rail Access for Customers and the Economy (BRACE) Act (S. 2595) (H.R. 4626) has garnered majority support in both the Senate and the House of Representatives, the American Short Line and Regional Railroad Association (ASLRRA) announced today.

With 51 co-sponsors in the Senate and 221 co-sponsors in the House, ASLRRA says the BRACE Act is expected to offer long-term security for the 45G small railroad tax credit, which officials say would allow for improved investment predictability among small railroads and railroad industry suppliers.

“We thank Congress for getting behind the BRACE Act and, particularly, our lead sponsors who worked so hard to make this possible,” said Linda Darr, president of ASLRRA. “Our members have worked tirelessly in the pursuit of this piece of legislation, which is so critical to our industry. Our shortline railroad members provide the origin and termination of many of the freight shipments on the national rail system, getting our customers’ goods to market. We are pleased that the majority of members in Congress feel so strongly about this effort that they have signed on as co-sponsors to the 45G tax credit for many years.”

The shortline railroad track maintenance tax credit provides regional and shortline railroads a 50-cent credit for every dollar spent on track restoration and maintenance. The credit has a cap at $3,500 per mile of track owned or leased by the railroad, allowing small railroads to spend more on renovating their infrastructure.

ASLRRA notes that shortline railroads have allocated between 25 and 33 percent of their finances into infrastructure improvements since 2005, including during the recession. The association also says the shortline industry operates 38 percent of the national rail network with more than 50,000 miles of track in 49 states.

“The BRACE Act is supported by key agricultural and industrial sectors of the American economy. These companies depend on shortline railroads to move a tremendous variety of goods and services in an efficient and cost-effective manner,” said Jerry Vest, senior vice president of Government & Industry Affairs, Genesee & Wyoming Railroad Services, Inc., and the chairman of ASLRRA Legislative Policy Committee. “Over 572 shortline customers, representing [more than] 1,605 locations, have come together in a formal statement to Congress that they need the Short Line Tax Credit to be extended. Additionally, the American Association of State Highway and Transportation Officials has called on Congress to enact the BRACE Act. They understand the critical nature of shortline rail transportation in their states.”

ASLRRA noted that Congress has passed legislation to extend the credit five times. The legislation has also regularly ranked within the top 25 most cosponsored bills in the House.

“Our small railroads have never shied away from investing in their businesses to provide a safe and competitive mode of transportation. The 45G tax credit has been extremely successful in allowing us to invest to provide even better service to our customers. However, depending on a reauthorization strategy has hampered the planning for investment as many projects are years in the making,” said Judy Petry, president of Farmrail System, Inc. and chairman of ASLRRA. “The BRACE Act would provide certainty going forward, and will promote further investment in our industry.”