Short Lines: They'll eye the economy, potential 'regulatory tsunami'

By Jeff Stagl, Managing Editor

The pace of the recovery is as top of mind for short liners as it is for Class Is. As of late November, the large roads' 2009 traffic remained down about 20 percent year over year, and short lines — which count on their Class I interchange partners to help drive carloads — had a difficult time offsetting the decline, says American Short Line and Regional Railroad Association President Richard Timmons.

"Short lines have put in the time to develop new business this year — they've re-doubled their efforts and left no stone unturned," he says.

Class Is have been more receptive to short lines' new business ideas, but some of the new traffic generated "could melt away when volumes come back," says Timmons. So, uncovering long-term traffic opportunities will be key in 2010.

Regulation Overload

Finding ways to comply with about 32 new regulations and seven amended regulations stipulated in the Rail Safety Act of 2008 without sufficient funding and manpower will be a top short-line priority, as well, says Timmons.

The regulations are governed by the Transportation Security Administration, Federal Communications Commission, U.S. Environmental protection Agency, U.S. Department of Transportation and Federal Railroad Administration, and touch on hours of service, breathing apparatus, positive train control, private grade crossings, hazardous materials and a number of other key topics.

"It's a regulatory tsunami washed across us," says Timmons. "It's time consuming and expensive for short lines, and some of them could go out of business."

For example, the law requires that every private crossing be inventoried, even those that affect one farm or one industry, he says.

In addition, signs must be posted on both sides of the crossing featuring the railroad's name and a toll-free phone number to call in case of an emergency.

"A short line then would need to establish a call center to answer the 1-800 calls," says Timmons.

Less-than-perfect Storm

It would help short lines if the feds established "some sort of railroad czar" that could help them "wrap their arms around" the regulations, he says. Federal loans, tax credits or other funding assistance would help, too, Timmons believes.

"It's a perfect storm in a negative sense, with the regulations and economy," he says. "There aren't a lot of good options."

One potentially good option for extending short lines' infrastructure-improvement tax credits will be explored next year.

The ASLRRA plans to lobby for an inclusion of the tax credits in the surface transportation bill that extends SAFETEA-LU, says Timmons.

"We could get six years for the credits at a whack," he says. "It depends on the circumstances and who the supporters are."