Governor Dayton and some Minnesota legislators have proposed nearly $100 million per year in new taxes that would fall on rail customers – via a railroad property tax hike and a railroad grade crossing tax.
The proposed tax increases would have a major impact on shippers, farmers, grain companies, mining companies, retailers and others that use rail as a cost-effective way to move goods with those costs passed on to railroad customers and ultimately consumers.
Minnesota railroads provide significant benefit to the state’s economy and they recognize the need for greater rail safety. Just in the past year alone, railroads have invested hundreds of millions to ensure our communities are safe while at the same time providing economic benefit to customers, taxpayers and the state.
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In Minnesota, freight rail investments from the 17 freight railroads operating in the state have been critical to retaining and attracting manufacturing jobs, providing access to domestic and international markets, and providing jobs for about 6,000 workers living in Minnesota.
Shippers in Minnesota originate over 1.15 million carloads of traffic every year and customers in Minnesota are the recipients of over 965,000 carloads of goods ranging from food to building materials to energy products critical for generating electricity.
Minnesota railroads rank first in the nation in the movement of iron ore and third and fourth, respectively, in the origination of farm and food products.
Minnesota’s Class I railroads will continue to invest in rail safety and upgrades and have committed more than $500 million in capital improvements in Minnesota in 2015.
Railroads help their customers control their prices, saving them billions of dollars each year, which enhances competitiveness and improves our standard of living.
If rail costs increase because of state taxes it means the cost of almost everything we use – food, electricity, clothes, automobiles, gasoline – will increase, meaning less money for Minnesotans to spend on other items.
Since 1980, rail safety has improved significantly with the number of train accidents dropping by 79% and grade crossing collisions dropping 81%.
By taxing railroads, Governor Dayton would limit the ability of railroads to invest back into the system by taking that money for government uses. Currently freight railroads spend nearly 18 percent of their revenues on capital expenditures, more than six times higher than the average U.S. manufacturer.
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In 2013, 99.99% of crude oil rail shipments were delivered without incident.
Grade crossing accidents almost never result in a train derailment. Only about 0.8% of car-rail collisions result in the derailing of rail equipment. In Minnesota, only four car-rail collisions in Minnesota in the last ten years resulted in a derailment.
Railroads support tougher restrictions on the tanker cars that carry crude oil. Approximately 228,000 tank cars are so-called “DOT-111” general service tank cars. Around 100,000 DOT-111 cars are used to transport crude oil or other flammable liquids. To the extent that DOT-111 cars are used to transport crude oil, the rail industry believes they should be retrofitted or replaced.
Under federal regulations, the entity “offering” crude oil to the railroad for transport (e.g., the oil producer) is responsible for properly classifying the oil based on its level of hazard. On February 25, 2014, the Federal Railroad Administration issued an executive order requiring that crude oil from the Bakken region be tested to ensure that it is properly classified before it is transported by rail. Railroads support the pursuit of proper classification and labeling of petroleum crude oil in tank cars by shippers prior to transport.
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At least one additional rail inspection is required each year in addition to Federal Railroad Administration (FRA) requirements
Railroads now require additional hot bearing detectors on crude oil routes above FRA requirements
Use of Rail Corridor Risk Management System (RCRMS) to determine the most safe and secure routes for crude oil trains
Implemented nationwide speed restrictions for trains carrying crude oil and other hazardous materials and products
Developed specialized Crude by Rail (CBR) first responder training and tuition reimbursement to train 1,500 first responders in 2014
Governor Dayton and some legislators have proposed to essentially double property taxes on railroads operating in Minnesota, even though Federal courts have repeatedly ruled that taxing railroad personal property where commercial/industrial property is exempt is a violation of the 4-R Act (Railroad Revitalization & Regulatory Reform Act of 1976) – Burlington R. Co. v. James, 725 F. Supp. 10-58 (D. Minn. 1983). This proposal includes $45 million/year in taxes that would go to local units of government to use however they want.
Governor Dayton’s proposed railroad grade crossing tax would be a new tax on railroads. Grade crossings are a public convenience allowing access across private railroad property. Improvement costs are already shared and railroads are investing hundreds of millions in Minnesota to improve safety and access.
We need your support today to ensure that legislators and Governor Dayton don’t raise costs for rail customers and consumers by creating nearly $100 million per year in new taxes.
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