The railroad renaissance through the prism of gradual growth, short-line tax credit caught in 'extenders' undertow, and on the gender diversity beat — by Pat Foran (Context, January 2012)

— by Pat Foran, Editor

The 'renaissance' through the prism of gradual growth

This month, we continue to view the "rail renaissance" through the prism of gradual growth. The growth-focus subject: BNSF Railway Co. BNSF execs see opportunities in an array of business segments, notably within the energy sector, which should generate "6, 7 or 8 percent growth" this year, as Chairman and Chief Executive Officer Matt Rose told Managing Editor Jeff Stagl (see this month's cover story). Shale drilling activities will help lead the charge. During the past two years, the accelerated growth in shale-related traffic has been the equivalent of "going from zero to 100 mph," as Executive Vice President and Chief Marketing Officer John Lanigan put it. Overall, the Class I's traffic could outpace economists' projection of gross domestic product growth of 3 percent in 2012, BNSF execs say.

A bit better than gradual growth is exceedingly welcome, given the sluggish (at best) traffic pace of the past four years. That said, BNSF execs aren't exactly giddy about "gradual." No railroader is. U.S. railroads lost about a half-dozen years of rail-traffic progress as a result of the recession. They won't reach the all-time-high traffic mark set in 2006 until later this year or early next, Rose told Stagl.

But reach that mark, they will. Rose can't shake what he believes in his soul to be true, and I suspect other CEOs can't, either: Over time, the U.S. economy will grow, and freight railroads will grow right along with it. Railroads will make up that lost ground, and then some, but they'll do it gradually. In the meantime, they'll celebrate segments of accelerated growth (read: shale) when they can while keeping that prism in plain view. As Rose told Stagl: "I feel pretty good about things, but I keep a mirror up to see what's behind me."

Short-line tax credit caught in 'extenders' undertow

Some not-entirely unexpected news at 2011's end: Congress didn't extend the short-line tax credit before recessing for the holidays. As a result, legislation governing the credits officially expired Dec. 31. So, the lobbying work continues.

The Short Line Railroad Rehabilitation and Investment Act of 2011 (H.R. 721/S. 672) proposes to extend the Section 45G tax credit for six years from Dec. 31, 2011, through Dec. 31, 2017. The measure also would make qualified infrastructure expenditures by regionals and short lines created after 2005 (for taxable years 2005 through 2011) and before 2011's end (for taxable years after 2011) eligible for the tax credit.

A "tax extenders" bill could have extended the 45G short-line tax credit a year or more beyond Dec. 31. But on Dec. 17, the Senate passed a two-month payroll tax extension that did not include a tax extenders measure; on Dec. 21, the House rejected the Senate bill and voted to go to conference to "work out their differences," said Jeff Van Schaick of Chambers, Conlon & Hartwell L.L.C. in an item published in the Dec. 22 edition of the American Short Line and Regional Railroad Association's "Views & News" newsletter. By 2011's end, the extenders bill had 243 co-sponsors in the House. But only 43 senators supported S. 672, so "increasing these [co-sponsor] numbers is increasingly important as both chambers may consider tax legislation early in 2012," Van Schaick said.

Resolved: We're on the gender diversity beat

The holiday season and slow-news cycle that accompanies it are tailor-made for sound-bite-friendly look-backs and look-aheads, and "best," "worst" and "top 10" lists. Among the lists that wafted into our world late last month: The American Association of State Highway and Transportation Officials' Dec. 28 list of the top 10 transportation issues that will be "talked, written or tweeted about and legislated" in 2012. For me, the listed issues that resonate include "Enacting a long-term transportation bill" (No. 1), "Managing in lean times" (No. 2) and "Generating new ways to fund transportation" (No. 6). We'll definitely be tracking those.

Of course, there are other topics the likes of us will talk, write and (possibly) tweet about this year. Among them: an array of workforce development issues, including gender diversity. Although Class I execs acknowledge railroads have a ways to go to achieve gender equity in the workforce — and they want to because it makes good business sense — they believe they're narrowing the gap through initiatives designed to recruit, retain and promote women into positions of authority, as Assistant Editor Julie Sneider reports (see Class I Diversity Strategies).

Consider it a New Year's resolution, then: We'll continue to track the evolution of gender diversity, and other workforce issues, in the rail realm.