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11 Legislative Update ACACSO Convention Kansas City, MO Ed McKechnie May 13, 2010.

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Presentation on theme: "11 Legislative Update ACACSO Convention Kansas City, MO Ed McKechnie May 13, 2010."— Presentation transcript:

1 11 Legislative Update ACACSO Convention Kansas City, MO Ed McKechnie May 13, 2010

2 22 1. Short Line Tax Credit 2. STB Reauthorization 3. Positive Train Control 4. Truck Size and Weight 5. As Of Today…

3 33 45G Tax Credit - Status 45G Expired on Dec. 31, One-year (Tax Year 2010) extension of 45G included in H.R – “Extenders Package”. House passed H.R on Dec. 9, Senate passed H.R on Mar. 10, H.R could be “conferenced” to resolve differences. Chairman Levin wants to see action on bill “in this work period” (i.e. before Memorial Day).

4 44 45G Tax Credit – Status (cont.) Problem: Congressional rules require tax credits to be “paid for.” “Solution”: Raising revenue elsewhere to pay for tax reductions like 45G. Additional Problem: To pay for a one-year extension of all expiring tax provisions requires finding $30 BILLION in “new” revenue.

5 55 45G Tax Credit – Status (cont.) 45G Tax Credit “scores” (i.e. “costs”) $165 million for each year extended 45G = $165 million Total “Extenders” = $30 billion COBRA Premiums = $9.9 billion Other Health Care = $14.4 billion Federal Medical Adjustment Percentage (FMAP) = $25 billion Unemployment Benefit Extension = $61 billion Total Cost of H.R = ~$140 billion

6 66 45G Tax Credit – Status (cont.) 45G = $165 million Total “Extenders” = $30 billion COBRA Premiums = $9.9 billion Other Health Care = $14.4 billion Federal Medical Adjustment Percentage (FMAP) = $25 billion Unemployment Benefit Extension = $61 billion Total Cost of H.R = ~$140 billion $110 billion is “Emergency Spending” that does not “need” to be “paid for” $30 billion “Tax Extenders” portion must be “paid for.”

7 77 Topic 2 – STB Reauthorization The issue formerly known as: “Rereg”

8 88 Meanwhile, back at the ranch… Sen. Rockefeller has introduced S Senate Commerce Committee unanimously “reported” S on Dec. 17 with no Republican votes against Sen. Brownback (R-KS) and Sen. Snowe (R- ME) have expressed concern re: short line impacts Sen. Rockefeller has promised those Senators that he will “work on” short line concerns

9 99 STB Status (cont.) Rockefeller staff seeking compromise bill that can attract near unanimous Senate approval –Unable to do so, yet. AAR has at least 11 outstanding issues, including anti-trust, network compensation, and paper barriers Rail unions are generally supportive of R.R. position on STB & Anti-trust issues.

10 10 The Legislative Clock is ticking… …and time is running out. STB Status (cont.)

11 11 Sec. 301 – Paper Barriers S would: –Prohibit new PBs unless “reasonable and in the public interest.” –Allow challenges to existing PBs, and allow STB to “take appropriate action” –Allow STB to set valuation for buyout of PB at option of a short line –Allow short lines to surcharge customers for PB buyout –Make PB buyout eligible for RRIF financing and provide grants for credit risk premiums

12 12 Sec Bottleneck S would: –Require Class I’s “upon request” and short lines “as deemed appropriate” by STB finding, to establish bottleneck rate. –Note: All carriers were originally required to quote rate upon request. Partial short line carve out represents initial ASLRRA lobbying success.

13 13 Sec Bottleneck S would: –Require Class I’s “upon request” and short lines “as deemed appropriate” by STB finding, to establish bottleneck rate. –Require STB to set standards for determining a “reasonable” bottleneck rate.

14 14 Sec. 303 – Terminal Access S would: –Board may require Class I’s to make areas available to other carriers. –Board may require short lines to make terminal areas available “as deemed appropriate.” –Access available where R.R. has “market dominance.” –Require STB to set standards for “reasonable” terminal access rates.

15 15 STB – House of Representatives House has twice called a hearing on STB Reauthorization only to cancel the hearing. C.C. appears to be pressuring House T&I Chairman Oberstar to accept whatever comes out of the Senate.

16 16 Topic 3 – Positive Train Control

17 17 PTC The Basics: –RSIA of 2008 Mandates Positive Train Control Systems by December 31 st, 2015 for Class I RR Main Line segments (carloads > 5M per year) which: Transport PIH or TIH Materials ( carloads > 100 per year) Host or Operate Over Passenger Lines –Short Lines are tentatively exempt from PTC requirements, expect those that: Operate on Class I lines Carrying PIH / TIH Materials Host of Operate over Passenger Lines Have At Grade Crossings Over Lines Required to Have PTC*

18 18 PTC Costs FRA estimates ≈ 60 Short Lines Will Need to Equip Locomotives with PTC Technology –Estimated Costs (FRA): $55,000 – $220,000 per locomotive Industry Wide Implementation ≈ $13.2 M Annual Maintenance ≈ $1.98 M Total Industry Front End Investment ≈ $15 M Other costs: Training, Economic, Derailments –Actual Costs: We Don’t Know But We Need to Know, Soon. –This will cost the rail industry billions with little or no economic return

19 19 PTC Funding Solutions Grants –Safety Technology Grants RSIA 08 authorized $50 M annually Maximum Federal Match of 80% –Rail Line Relocation Program Typically Appropriated ≈ $ 25 - $30 Million Annually Maximum Federal Match of 90% Program is well known and increasingly competitive Tax Credits –Class I Tax Credit AAR is working on making PTC upgrades eligible under a yet-to-be passed Class I credit –Section 45G PTC upgrades could fall under the category of Signal Upgrades and would therefore qualify for the Section 45G credit Loans –Commercial loans are not a viable option due to basic economics of PTC –RRIF Loans Modify to allow for a 35 year, 1% loan for PTC upgrades and/or increase cap

20 20 Topic 4 – Truck Size and Weight Update

21 21 TSW Update Threat continues Not going to happen in Congress until next year State level attacks will continue –Florida –Idaho

22 22 Topic 5 – As Of Today

23 23 As Of Today Republicans make gains in House –Probably take back majority –Most probably stopping majority of threats to rail industry Re-reg is a bigger problem than most want to admit Senate gets closer to 50/50 (D’s 52-48) New Congress moves forward –Then figures out in about April 2011 that this is harder than their press releases said


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