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Trade groups applaud House bill that encourages rail car scrapping

The trade associations for rail equipment and component manufacturers are rallying behind a U.S. House bill they say would incentivize the production of new rail cars or the modernization of existing ones.

The Railway Supply Institute (RSI) and the Rail Security Alliance (RSA) lent their support to the Freight Rail Assistance and Investment to Launch Coronavirus-era Activity and Recovery Act, also known as the Freight RAILCAR Act of 2023. The legislation, co-sponsored by Illinois Reps. Darin LaHood, a Republican, and Brad Schnieder, a Democrat, would amend the IRS Code of 1986 in order to provide a time-limited tax credit to encourage the replacement or modernization of inefficient and outdated freight rail cars. 

“Railway supply is at the heart of safe, efficient and sustainable movement of people and products in the United States,” RSI President Patty Long said in a Tuesday news release. “For this reason, RSI strongly supports legislation that will offer tax credits encouraging the adoption of new, more efficient and environmentally friendly freight railcars.” 

According to the RSA, approximately 250,000 rail cars will need to be updated over the next 15 years. The current North American rail car fleet consists of more than 1.6 million rail cars, with approximately 291,000 in storage, according to the alliance, which is a coalition of North American rail car manufacturers, component suppliers and others that formed in response to the development of a Chinese-owned rolling stock manufacturing conglomerate in 2015.

“Due to modern manufacturing methods and materials, new rail cars have significant safety and efficiency improvements that result in more goods being delivered to market faster, while reducing wear and tear on rail lines, further reducing incidences of service disruptions,” Rail Security Alliance said. 

The bill, introduced in the House on Feb. 6, has received bipartisan support with 32 co-sponsors, of which 29 are original co-sponsors. 

The proposed legislation is also a reintroduction of other bills with similar intentions. Those were introduced in August 2020, March 2021 and May 2022, respectively, each time by Schneider.

“I am proud to reintroduce this legislation with my colleague, Rep. LaHood, to protect jobs in the rail sector and help build a more fuel-efficient and safer rail fleet,” Schneider said. “As we’ve seen over the last three years, it is critical we strengthen every part of our supply chain — including all components of rail infrastructure — to be more resilient, especially as our economy emerges from the pandemic.”

The introduction of the bill comes as RSI and others released a commissioned report Monday that found the rail equipment and component industry directly and indirectly contributed more than $75 billion to the U.S. gross domestic product in 2020. 

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