Will the carriers get richer?

Amendment to H.R. 4844 would yield another winfall to railroads

A deal originally intended to provide early retirement and other benefit improvements to railroad workers just keeps getting sweeter and sweeter.

Sweeter for their employers, that is.

The nation's major carriers could receive a windfall of up to $170 million per year under an amendment to H.R. 4844, the bill to provide tax and benefit changes to the Railroad Retirement Act.

This $170 million windfall is in addition to the $430 million per year they would receive from the original wording of H.R. 4844. In other words, if H.R. 4844 were passed into law today, the carriers would reap savings of more than a half billion dollars per year ($600 million to be exact).

"This bill is turning into the gift that keeps on giving, but only for the railroad industry," said BLE International President Edward Dubroski.

The amendment to H.R. 4844, passed by a voice vote in the U.S. House Ways & Means Committee on July 25, would cut the current 4.4 cent tax on diesel fuel used by railroads to just 0.1 cents per gallon. Early estimates predict this would save the carriers up to $170 million per year.

In addition, an agreement between the carriers and 11 railroad unions, which is the basis for H.R. 4844, proposed reductions in carrier contributions to the industry's pension plan, which is known as Tier II. These proposed reductions would provide the carriers with a net savings of more than $400 million per year.

The 4.3 cents per gallon tax on diesel fuel was originally used to help pay off the national debt. Now that the United States has a budget surplus, the Class I carriers and the nation's shortline industry were debating over how money raised from the diesel fuel tax should be used.

Class I carriers have invested in larger railcars that hold more tonnage than ever before. Shortline carriers need to upgrade their track infrastructure in order to safely handle these heavier loads. Over the objections of the Class I carriers and rail labor, the shortlines were lobbying to gain control of the extra tax money to help reach the same track standards as Class I carriers.


2000 Brotherhood of Locomotive Engineers