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Railroad Newsline for Friday, February 02, 2007

Compiled by Larry W. Grant

In Memory of Rob Carlson, 1952 – 2006

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RAIL NEWS

DM&E APPLICATION PROCESS COMPLETE; FRA HAS THREE MONTHS TO OK OR DENY LOAN

SIOUX FALLS, SD -- The Dakota Minnesota & Eastern Railroad got mixed news this week from federal agencies regarding a $2.3 billion federal loan to rebuild and extend its line.

The Federal Railroad Administration on Wednesday announced it has finished gathering information in the DM&E's loan application.

The administration issued a record of decision, which says the FRA has learned everything it needs to know about the project, and it has accepted all the environmental analysis of the proposed new line. This completes the application process, and now the FRA has 90 days to rule on the loan request.

The news prompted DM&E to begin seeking "in excess of $500 million" in private financing for the first phase of its project, according to railroad CEO Kevin Schieffer.

The entire project, which would rebuild it's line and extend it 280 miles to Wyoming's Powder River Basin coal mines, is expected to cost more than $6 billion.

The railroad, however received news this week that could hinder its progress as well. Tuesday the Surface Transportation Board announced it will prepare a full environmental impact statement before allowing the DM&E to haul Wyoming coal over its sister Iowa, Chicago & Eastern line. The IC&E gives the DM&E access to the important rail city of Chicago.

Schieffer dismissed the ruling as a hurdle they expect to clear possibly this year. He believes the environmental review is not likely to be expansive or complex.

But Frank Wilner, a transportation economist, suggests "the STB decision puts a big road block there."

"A full-blown EIS could well stretch into 2009," Wilner said. "While the (board) said you can go ahead and construct the line, you can't run any coal trains until we complete an EIS. Any lender looking at that would be concerned."

Some in South Dakota are frustrated with the delays.

"This project has just taken way too long," Lisa Richardson, South Dakota Corn Growers executive director, said. "We've got corn moving in all directions. We've got ethanol to move out of here." She called the FRA record of decision "very good news."

Schieffer took comfort in a statement from STB Chairman Charles D. Nottingham.

Nottingham said the DM&E project "will significantly advance key national transportation and energy policy priorities. The decision to proceed immediately with an environmental impact statement allows the STB to meet federal environmental law requirements, protects the project from legal attack, and should ensure that the environmental review process is completed prior to the DM&E's planned commencement of PRB coal train traffic."

The DM&E's planned reconstruction and expansion to Wyoming has drawn fire from the Rochester Coalition of Rochester, Minnesota, Olmsted County, Rochester Area Chamber of Commerce and the Mayo Clinic.

The DM&E tracks run close to the Mayo campus.

"The project currently poses an unacceptable risk to Rochester, allowing up to 34 high-speed trains carrying coal and hazardous materials to bisect the city each day, passing mere yards from Mayo Clinic, and threatening thousands of patients and doctors at one of the world's premier healthcare destinations," said Dennis Hanson, president of the Rochester City Council.

The coalition was frustrated about the FRA ruling.

"The ruling marks the FRA's decision to ignore the significant adverse environmental concerns raised by Rochester, Minn., Olmsted County, Mayo Clinic and the Sierra Club and begins the final review period when the Bush Administration will decide if the DM&E should receive billions of dollars in a taxpayer-funded loan," the group said in a statement Wednesday.
The group looked favorably on the STB ruling, though.

"The decision affirms the Rochester Coalition's belief that the environmental review of DM&E's overall proposal is incomplete and outdated and requires extensive additional review before any decisions are made concerning DM&E's loan application," says Chris Gade, spokesperson for the Rochester Coalition. - Peter Harriman, The Sioux Falls Argus Leader

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COLEMAN: WILL BE TOUGH TO STOP DM&E IN SENATE

WASHINGTON, DC -- Sen. Norm Coleman said Thursday that it will be tough to block the Dakota, Minnesota and Eastern Railroad's planned coal train project in the Senate, but said he would try if a mitigation plan isn't offered to meet the concerns of Rochester and the Mayo Clinic.

Coleman, R-Minn., made the remarks in a conference call a day after the Federal Railroad Administration determined the DM&E's project has met the requirements of the federal environmental review process, triggering a 90-day period during which the agency must approve or reject a requested $2.3 billion loan for the project.

"It is challenging to stop it in the Senate," said Coleman, who has threatened to hold up the project in recent months.

"The burden is on us as the department moves forward for us to try to stop something," he added. "Some of my colleagues who may support this project can make it very, very difficult to allow anything to get passed."

The Rochester Coalition, which includes the city of Rochester and the Mayo Clinic, has objected to the expansion because it would mean more trains running through the city and close to the clinic. The coalition organized Thursday's call, which also included Sen. Amy Klobuchar and Rep. Tim Walz, both D-Minn., as well as local and clinic officials.

Klobuchar had a similar take on prospects for stopping the project in Congress.

"I'm also committed to working on this through the Senate, but I share Sen. Coleman's concern that that can be problematic," she said.

Coleman said that are other options besides passing a law to block the project.

"In addition to legislation, individual senators can make it very difficult on a department - very difficult," he said. "Nominations for positions can be left unfilled for extended period of time, budget matters can come under extensive review that have no relation to this project."

Asked if he was threatening to use those tools against the Department of Transportation, Coleman responded that he will use all of his powers as a senator to protect Rochester's concerns.

The DM&E wants to add track to the Powder River Basin coal fields in Wyoming and upgrade its existing line in South Dakota and Minnesota. The $6 billion project would involve building about 280 miles of new track and upgrading 600 miles of existing track so trains could haul coal for power plants. - Frederic J. Frommer, The Associated Press, The St. Paul Pioneer Press

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CAGW BLASTS DM&E RAIL SUBSIDY

WASHINGTON, DC -- Citizens Against Government Waste (CAGW) Thursday urged the Federal Railroad Administration (FRA) to deny a record $2.3 billion federal loan to the Dakota, Minnesota, and Eastern Railroad (DM&E). The FRA announced it is ready to consider the loan and will issue a decision within 90 days.

"The DM&E loan has the potential to be one of the biggest taxpayer rip- offs in history," said CAGW President Tom Schatz. "The FRA must stop this handout in its tracks."

The loan, which would be used to expand and improve a rail line used primarily to transport coal from Wyoming to Minnesota, continues to roll full steam ahead despite significant financial and safety risks.

According to BearingPoint (a strategic consulting firm), the loan would require an annual payment from DM&E of $246 million on top of the $15 million from another loan. Even if the rail upgrade increases DM&E's current annual revenue of $200 million, the deal presents a poor credit risk to taxpayers, who will be forced to foot the bill if the company defaults. A senior manager at BearingPoint stated, "This loan finances a project with many financial uncertainties, ultimately calling into question whether or not DM&E can repay the loan."

The FRA's Railroad Safety Statistics Annual Report 2004 ranked DM&E last in safety among the nation's 43 largest railroads. Government handouts have failed to solve DM&E's safety problems in the past -- its main track accident rate has escalated to eight times the national rate since its last FRA loan of $233 million in 2003 -- and are unlikely to help in the future.

"This deal makes no sense from a fiscal, security, or commonsense standpoint," continued Schatz. "Taxpayers are being railroaded and most of them don't even realize it."

The loan has been compared to the $1.5 billion Chrysler bailout in 1980, but unlike the Chrysler deal, DM&E is not the subject of intense public and congressional debate. The DM&E loan has quietly moved through Congress thanks to behind-the-scenes lobbying and legislative maneuvers from Sen. John Thune (R-S.D.), a former lobbyist for DM&E. Sen. Thune was instrumental in increasing the FRA's loan guarantee authority from $3.5 billion to $35 billion in the 2005 Safe, Accountable, Flexible, and Efficient Transportation Equity Act, in apparent anticipation of the loan. Sen. Thune was CAGW's Porker of the Month in November 2006 for his support of the loan.

"DM&E is taking taxpayers for a ride and the FRA must put the brakes on this loan," concluded Schatz.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government. - PRNewswire, Source: Citizens Against Government Waste

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DAVIDSON RELAXED ON LAST DAY

Photo here: [www.omaha.com]

Caption Reads: The Trish and Dick Davidson Gallery was dedicated Sunday at Durham Western Heritage Museum in honor of the retiring Union Pacific chairman and his wife. (James R. Burnett, The Omaha World-Herald)

OMAHA, NE -- After 47 years in railroads, Dick Davidson said recruiting the leaders and directors who will guide the nation's largest railroad after his retirement as chairman of the Omaha-based Union Pacific was his most important achievement.

"I feel really good that this company is teed up on the verge of greatness," he said Wednesday, his last day. "The leadership I'm leaving behind, you couldn't have a better team."

Jim Young, president and chief executive, becomes chairman of the board today.

Davidson said he takes pride in the senior managers who, like Young, were chosen from within U.P.'s ranks or those who were hired from outside for key spots.

Each senior manager was placed during Davidson's tenure. Also, every current member of U.P.'s board except one was recruited during that time.

"This whole organization, I've had a hand in it," he said.

Davidson, 65, was relaxed, cheerful and at times slightly wistful during an interview that ranged from his first days as an 18-year-old brakeman, to the technological changes of railroads, to his greatest career disappointment. He spoke in his 19th-floor office in the headquarters building he pushed to have built in downtown Omaha.

Davidson said he was "coasting" on his last day, compared to his busy first days of railroading, when he took six student trips as a brakeman before officially beginning work. New hires today receive months of paid training before being allowed to work trains, he said.

"I probably got six trips in less than a week," he said. "And there was so much to learn."

He grew up near Allen, Kansas. His father died when he was 6 years old. To earn money while attending Washburn University, Davidson started working for Missouri Pacific Railroad, taking furlough from the railroad when necessary for school.

He graduated with a degree in history, and Missouri Pacific offered him a spot in its management training program.

Davidson decided to stick with railroading long enough to see if he could make superintendent by age 30. If he didn't, he decided, he would go to law school.

"The railroad saved the world from another lawyer."

He was 27 when he was named superintendent, getting the promotion after an "extremely stressful" trainmaster post at Fort Worth, Texas, where he led a project to make the rail yard computer-controlled.

The project was technologically advanced for the late 1960s and so complicated -- determining how to handle business while the yard was shut down -- that Davidson said he got the job after his boss had a heart attack. Completing the job was one of his greatest achievements and what put his career on its path.

Davidson learned Monday night at a board of directors dinner in his honor that Centennial Yard, where that turning point in his career took place, will be renamed Davidson Yard.

"That's really meaningful to me," he said.

Davidson rose quickly in Missouri Pacific and, after the merger, in U.P.

Other career highlights:

. Heading a focus-on-quality effort under former U.P. Chief Executive Mike Walsh. The work led to U.P. becoming a finalist for the Malcolm Baldrige National Quality Award in 1994, 2001 and 2002. To be an "old smokestack" industry and a quality-award finalist "is a wonderful tribute to our employees."

. Bringing U.P. Corp. back to Omaha. The holding company had been headquartered on the East Coast, most recently in Bethlehem, PA.

. Building a new headquarters building, a "once-in-a-century opportunity." The project assembled all the company's Omaha employees under one roof, plus brought 1,000 jobs from St. Louis. The project ended longtime speculation about whether U.P. might move its headquarters from Omaha.

. Refocusing the company on railroading by selling or spinning off other companies, such as Overnight Trucking, Skyway Freight System and U.P.'s oil and gas business and technology company, which the holding company had bought to diversify.

"Today, we are essentially just a railroad," Davidson said. "All those other companies were competing for capital. Not only was the railroad not a business where growth had disappeared, it turned out to be just the opposite."

One disappointment stands out starkly in Davidson's mind: The gridlock and service meltdown that followed U.P.'s 1996 merger with Southern Pacific.

"We disappointed so many people. That was the biggest challenge I've faced in my 47 years."

The federal government placed a moratorium on rail mergers in 2000 after the U.P.-S.P. merger and the breakup of Conrail between CSX and Norfolk Southern Corp., which also resulted in service problems.

In the end, the merger delivered efficiencies and improvements, Davidson said. The railroad had integration problems that took "an enormous amount of work to get the ship righted."

Throughout the greatest difficulties of the merger, "U.P. pulled together as a team. It was one of its finest moments."

Davidson said he has witnessed great technological changes through his nearly half century in railroads, from teletypes to train control and Omaha's high-tech Harriman Dispatch Center.

"Technology is what saved the railroad industry, along with deregulation," he said, recalling his early railroad days, when communications "nine times out of 10" would arrive by teletype after the train already arrived.

Instead of maintaining track with a shovel, equipment monitors rails and maintains track bed automatically.

"We can do a much better job of maintaining the railroad."

What he sees as permanent changes in the industry make its future bright: high fuel prices that make the more fuel-efficient railroads more attractive; growing import business from Asia that moves mostly by rail; strong business moving by rail to and from Mexico; and capacity that has been absorbed by higher freight demand.

"The railroad industry is going to be more valuable to our country than anybody ever imagined."

Davidson said he and his wife, Trish, will travel to visit their children and grandchildren in Sacramento, Fort Worth and Austin, Texas. They have a home in Bonita Springs, Florida, south of Ft. Myers, but also will keep an apartment in Omaha. He'll have an office in Florida and might use one at U.P., as well, he said. He'll continue as a director of Chesapeake Energy Corp.

Forty-seven years might not be enough of a career, though.

Davidson didn't rule out a second career - maybe something other than railroading - though he said he wants to relax a while and enjoy not working for the first time since he was a teen.

There's plenty on which to reflect.

"I'm just a farm boy from Kansas. Sometimes I feel like I should be walking around with an autograph book," he said, picking up a framed photograph of his family with President George W. Bush.

Not only did he meet the last several U.S. presidents but also the prime ministers of the United Kingdom and Canada, the king of Saudi Arabia and, of course, leaders of industry.

"It has been a lot of fun," he said. "It exceeded anything I ever dreamed." - Stacie Hamel, The Omaha World-Herald

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HIRING ON A FAST TRACK AT BNSF

Photo here: [www.dallasnews.com]

Caption reads: Brandon Rusk is one of BNSF Railway Company's newest conductors. A significant number of BNSF's new hires are ex-military personnel; Mr. Rusk was in the Navy. (Nathan Hunsinger/The Dallas Morning News)

FORT WORTH, TX -- After three six-month deployments to the Persian Gulf for the U.S. Navy, Brandon Rusk needed a change.

The 27-year-old Texan gave up life aboard a gigantic aircraft carrier for a different kind of adventure: barreling down the tracks on a freight train from Fort Worth to Oklahoma City.\

"I don't know anybody who doesn't think trains are pretty cool," said one of the newest conductors for Burlington Northern Santa Fe Corp.

Former military personnel such as Mr. Rusk make up an increasing number of new workers at the Fort Worth-based company, which has embarked on a hiring binge unlike any other in recent memory.

Last year, the railroad hired more than 4,800 people. That comes on top of adding 7,500 in 2004 and 2005, and this year, it anticipates welcoming 4,000 more.

"Our projection is that it's going to be at this level for a number of years," said Jeanne Michalski, BNSF's vice president of human resources and medical.

Retiring baby boomers and growing demand for railroad services sparked the hiring boom. The railroad estimates that 41 percent of its more than 40,000 employees will be eligible for retirement over the next 10 years.

The challenge for BNSF: Integrate a massive number of new employees while gracefully coping with the exodus of thousands of others.

The hurdle also looms in other growth industries with lots of retiring baby boomers. That's why thousands of openings exist for oil and gas engineers, electric utility linemen and truck drivers.

But the demand for new rail workers stands out.

Only in the last three years has the total number of rail workers increased, reversing decades of falling employment as railroads shrank their networks and struggled to become more efficient.

Today the industry is prospering, thanks to a tidal wave of imports from China that are moved across the country by rail.

Last year, total freight volume and revenue hit another record. With freight demand expected to jump 67 percent by 2020, the industry anticipates adding 80,000 jobs over the next six years, according to the Association of American Railroads.

That puts pressure on BNSF, which had gone a decade without significant hiring.

In addition to tapping into schools, colleges and jobs fairs, it's placed recruitment ads in unusual places such as movie theaters and highway billboards. It also talked to trucking companies to get ideas on how best to use the Internet to attract new workers.

Getting on track

Even with the industry's renaissance, many young people view railroads as yesterday's technology.

"People don't know about railroads," said Steven Klug, BNSF's assistant vice president of human resources- operations. "We're still one of the best-kept secrets."

Finding qualified new hires has proved the biggest challenge. Of the 85,000 job applications it receives a year, it selects only 12,000 for interviews. Most applicants are male.

Life on the rails isn't for everyone. Conductors are constantly on call and work odd hours, and they also work outdoors in the cold, rain and heat.

So far, the military has turned into the railroad's biggest source of new hires. Of 1,000 veterans hired last year, just over half came from the Army, 20 percent from the Air Force, 15 percent from the Marine Corps and 12 percent from the Navy.

The railroad even employs a manager who focuses on attracting current or former military personnel to the company.

These people understand the importance of safety rules and have already adapted to a 24/7 operating environment where you can get called up at any moment, Mr. Klug said. "The whole mentality fits really well."

Training

The railroad needed to do more than get new workers in the door. It also sought to preserve the institutional knowledge of longtime employees, who were retiring in droves.

To do that, it's bringing on new hires before their predecessors leave. And it's developing systems to document procedures, such as the best way to maintain a track.

These and other workforce moves require a tremendous investment.

The railroad spends about $20,000 to $25,000 on each new conductor, mostly to cover the cost of paid training programs that last 13 to 15 weeks.

One of those trainees is Wesley Zepeda, a 19-year-old conductor who's one of a growing number of young people enticed by a career on the rails.

These days, he's riding trains that are 86 cars long from the Fort Worth area to Temple, Wichita Falls, Tulsa, Okla., and other destinations. He expects to earn at least $50,000 before taxes.

At first, his parents, an orthopedic surgeon and a nurse, couldn't understand why he wanted to forgo college for a railroad job, he said. But after learning about the industry's potential, they now support his decision.

And it doesn't hurt that some of his friends with bachelor degrees are earning less money than he does.

"College is not a guarantee anymore," he said. - Katherine Yung, The Dallas Morning News

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UNION, RAILROADS EXCHANGE SHOTS AS CONTRACT NEGOTIATIONS STALL

OMAHA, NE -- The nation's largest railroads have reached an impasse in negotiations with the United Transportation Union, but railroad negotiators have not decided when to ask federal mediators to release them from talks, a spokeswoman said.

The negotiating committee for about 30 railroads, including Union Pacific and BNSF Railway Co., and the union ended talks last week without progress, said Joanna Moorhead, spokeswoman for the National Carriers Conference Committee.

The United Transportation Union took its differences over negotiations public this week with an open letter by its president, Paul Thompson, posted on its Web site. The letter said the railroads' negotiators refused to bargain, and it detailed what Thompson called deceptive, destructive tactics and "outright lies."

Moorhead said the union was attacking negotiators and questioning the railroads' commitment to safety rather than admitting that it simply wants more money than railroads are willing to pay. The railroads' last offer was a 16 percent increase in compensation over five years.

"Railroad workers are already among the top echelon of American workers. They have an average compensation package higher than the average paid in industries employing almost 92 percent of American workers," she said. "You can't confuse failure to agree with refusal to negotiate."

Thompson wrote that the UTU, which joined with railroads to fight for partial industry deregulation through the 1980 Staggers Act, now is taking its fight "from the bargaining arena to the legislative arena," a repeat of hints that the union will support shippers' efforts to re-regulate the rail industry.

He said members of the American Chemistry Council are among shippers "being abused by the railroad industry."

"The government may limit our right to strike, but it has not limited our right to seek legislation and tell our side of the story in the halls of Congress," Thompson wrote.

The union would hurt not only the industry but also its members by helping to re-regulate, Moorhead said, calling such an action by a union "astonishing."

"It's not in their members' best interests to return to the pre-1980s regulatory environment that was so destructive of the industry. The UTU has recognized that and is on record as telling Congress that re-regulation would bankrupt the industry and cost thousands of jobs," she said.

Thompson has been involved in national negotiations since 1984, and he wrote that this round has been marked by tactics of which even railroad chief executives might be unaware and which they wouldn't condone.

Union Pacific is pleased with the work the negotiating committee is doing, said railroad spokesman James Barnes.

"If we were not we would obviously talk with them (the negotiators). We don't have any issues with how they are representing us," he said.

He referred other questions to Moorhead.

Thompson wrote that the railroads' chief negotiator told him and the presidents of unions each separately that the others wanted to negotiate changes in the Federal Employers' Liability Act. None wanted the changes, Thompson wrote, and the unions later joined in an effort to fight the changes.

Railroad negotiators used the same tactic, according to Thompson, in assuring the UTU and the Brotherhood of Locomotive Engineers and Trainman that each union would be the survivor if single-person crews were implemented.

Moorhead said the charges were "a flat mischaracterization."

"There's a number of items in this piece that simply are not true," she said.

Thompson also wrote that railroad negotiators insisted on $184 million in savings on health and welfare benefits during the current round of bargaining, saying the figure was based on analysis of recent agreements in other industries. When the union's consultants couldn't corroborate the figure, the negotiators "admitted the figure was pulled out of thin air because 'that's what the railroads want,'" Thompson wrote.

The cost of health care benefits has reached more than $2 billion a year for the total railroad group, Moorhead said, and railroads sought an agreement that would provide "a more equitable sharing of the cost." Negotiators took the proposal off the table, she said.

"It's a very expensive, comprehensive package and a plan that is much more generous than what most Americans receive," she said of the union's current health plan. "We've made a genuine effort to reach agreement with the UTU. That is our goal."

Thompson wrote that carriers have forgotten that the unions supported the Staggers Act, even though it meant the loss of jobs but allowed railroads to again become profitable. Its employees are fatigued and shorted on training, he wrote.

Moorhead said the letter was rhetoric.

"We have been ready and willing to discuss the UTU's proposals. We spent days talking about training during this round," she said. "The union proposals will do nothing to improve safety but will only increase cost. The debate is not about safety, it's about money."

The industry has worked with the Federal Railroad Administration on a comprehensive study of train crew fatigue, she said.

"We've made concession after concession to reach the goal of a voluntary agreement with the UTU," she said. - Stacie Hamel, The Omaha World Herald

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U.S. RAILROAD FREIGHT TRAFFIC CONTINUES DOWNWARD SLIDE

WASHINGTON, DC -- United States railroads freight traffic continue to be hampered by winter storms, as traffic was down again for the week ending January 27 compared to the corresponding week in 2006, according to data released by the Association of American Railroads (AAR) Thursday.

The AAR reported the following: carload freight totaled 320,170 cars, a 5.2 percent decline from 2006; loadings declined 4.4 percent in the West and 6.3 percent in the East; total volume was estimated at 32.5 billion ton miles-down 4.1 percent from 2006; and intermodal volume came in at 229,178 trailers or containers, which was down 0.5 percent. Intermodal container volume was up 3.7 percent, and intermodal trailer volume was down 13.0 percent.

The AAR also reported that of the 19 carload commodity groups it tracks, only one of them-coal at 0.8 percent-percent, was up year-over-year. And the continued decline in the automotive and housing markets were evidenced with loadings of motor vehicles and equipment down 13.7 percent and loadings of lumber and wood products down 26.7 percent.

The AAR also reported that cumulative loadings for the first four weeks of the year totaled 1,235,173 carloads, which represents a 6.6 percent decline from 2006. And the 879,500 trailers or containers reported year-to-date is off 1.5 percent, as is total volume of an estimated 125.3 billion ton-miles, which is down 5.4 percent from last year. - Logistics Management

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RAILROADS, PRODUCERS STRAIN TO DELIVER BIOFUEL

Like the corn it's made from, ethanol is largely a product of the small-town Midwest, distilled in places like Nevada, Iowa, and shipped to market by train.

Now, as ethanol producers ramp up production, they are straining railroads already taxed by burgeoning shipments of coal, containers and grain. And they worry that the transportation crunch could make it difficult for ethanol, despite its surge of support in Washington, to compete with energy rivals.

Rail and transportation logistics for the ethanol industry is "the mountain to climb ... as we go forward," says Ken Eriksen, a senior vice president of Informa Economics Inc., an agricultural and renewable fuels consulting firm in Memphis, Tennessee.

Unlike gasoline, natural gas and oil, ethanol attracts water and other chemicals, so it can't be sent through the long-established pipelines that move those fuels. That means the ethanol industry has been forced into a marriage with the already groaning railroads.

"It's supply and demand," says Walt Wendland, president and CEO of Golden Grain Energy LLC in Mason City, Iowa. "We're a captive market for them."

Few people think the strains will derail the boom, fueled first when it became a popular replacement for the gasoline additive methyl tertiary-butyl ether (MTBE) and boosted by President Bush's call for more homegrown energy alternatives. But ethanol's popularity has meant that producers have had to struggle to upgrade their rail yards and secure enough tank and grain cars to efficiently ship both ethanol and its byproducts. Railroads are prodding them to make the changes while also rushing to expand their own tracks and freight yards to handle the increasing shipments. Even though some parts of the economy have slowed recently, rail freight volumes are still near record highs.

Despite the concern about the rail system, producers aren't flocking to the waterways. Barges are considered too slow to handle ethanol's rush to market, most plants aren't located near bodies of water and other liquid commodities already have soaked up the majority of the tank-barge capacity.

Railroad executives say ethanol, though still a small part of their total freight traffic, promises to be a lucrative growth opportunity. Shipments of ethanol have nearly tripled since 2001 to about 106,000 rail carloads last year and are projected to increase to at least 140,000 in 2007, according to the Association of American Railroads in Washington. Each tank car has a capacity of 30,000 gallons.

"We had a hiccup here and there, absolutely," says David Lawson, vice president of industrial products at Norfolk Southern Corp., a large railroad based in Norfolk, Virginia. "But we feel like we handled the growth very well."

Railroads have been pushing producers toward shipping by longer, more-efficient trains, called unit trains. Such trains carry 75 to 95 tank cars of ethanol and provide a faster and more economical alternative to shipping a few ethanol cars at a time. Burlington Northern Santa Fe Corp. in October 2003 began running its Ethanol Express to shuttle ethanol to California from the Midwest. It now runs two to three times a week. But some producers have chafed under the industry's initiatives.

After the corn is distilled into ethanol, it's mixed with a small amount of gasoline at the production plant before being shipped by train to a petroleum terminal, where it is blended with gasoline. Large petroleum terminals are accustomed to receiving their product by pipeline and then distributing locally by truck. Most terminals haven't developed the infrastructure of tracks, storage tanks and rapid unloading to receive ethanol by unit trains, says Kevin Kaufman, group vice president of agricultural products of BNSF's rail unit. Expanding is difficult because they are sometimes hemmed in by buildings, highways and bodies of water.

On the other end of the line in ethanol country, many of the producing plants aren't large enough or lack the track and facilities to fill unit trains themselves. That is forcing the producers to shell out millions on tracks and equipment they hadn't planned to spend. Engineers from rail giant Union Pacific Corp. in Omaha, Nebraska, are requiring Mr. Wendland to triple the size of Golden Grain's rail yard even though he is only doubling the size of the 65 million-gallon ethanol plant in land-locked Mason City.

The 24,000-foot track expansion will push him over his $2 million budget by $1.5 million. He also had to purchase 55 acres of nearby land for $500,000. Mr. Wendland says Union Pacific told him their freight yards were too strapped for space to store his cars, so he'll have to store them himself. "It's a huge commitment, to say the least," he says. The railroad confirmed Mr. Wendland's account.

Lately, large railroads have used their newfound market power to raise prices on many commodities they carry. For producers it comes at a time when high corn prices are squeezing their margins.

To cope with the price increases, Rick Brehm has started packing tight every car of distillers dried grain, an ethanol byproduct sold as cattle feed, he ships out. The 50-million-gallon-a-year Lincolnway Energy LLC ethanol plant in Nevada, Iowa, sits beside Union Pacific's mainline.
Mr. Brehm is having an employee shovel the grain into every corner of his rail cars. That way he can fill up an extra 3 percent to 4 percent of space that was lost to air pockets before.

Union Pacific is ratcheting up investment to expand its own yards and track lines to handle the extra shipments in ethanol producing areas in Iowa, Minnesota and Nebraska. Even small railroads are trying to climb aboard. Iowa Northern Railway Co. is helping to build a new ethanol-storage facility in Manly, Iowa. Trucks will collect ethanol from production plants over hundreds of miles and bring it to Manly, with unit trains heading out from there.

Still, some railroads question the durability of the ethanol boom. Oil prices could drop, corn supplies could dwindle and alternatives could crop up. Ethanol producers are pushing ahead despite their dependence on the railroads.

"We are going to do what it takes to move it," says Dennis Miller, president and CEO of Iowa Interstate Railroad Ltd. in Cedar Rapids, Iowa. "But you just don't bet the farm on something that is volatile and controlled by many different forces." - Ilan Brat, The Wall Street Journal

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CHANGES PLANNED FOR GROVER BEACH TRAIN STATION

GROVER BEACH, CA -- Handicapped passengers riding Amtrak trains and buses through Grover Beach's train station will have directional signs and improvements to help eliminate confusion and solve compliance problems with Americans with Disabilities Act requirements.

Last week, the City Council unanimously directed city staff to signal the San Luis Obispo Council of Governments to proceed with construction of platform and sign improvements at the station.

According to City Engineer Jim Garing, SLOCOG will funnel money to the Amtrak Engineering Division, which is responsible for the construction. SLOCOG would not be doing any construction, he said.

Improvements will make the platform on the east side of the railroad tracks compliant with Americans with Disabilities Act regulations, Garing said.

Plans are to demolish the existing bus platform, build a new platform just to the west of the current site, relocate the bus shelter to the new platform and install new directional signs, crosswalks and markings, he said.

SLOCOG will provide $60,000 for the project, Caltrans Rail funds will add $20,000 and the city will contributed $20,000 from a surplus of Caltrans planning funds, the report said.

Amtrak Engineering Division will consolidate plans for, receive bids for and manage construction of the project, officials said.

Over the last several years, the city has received complaints about handicapped access problems on the east side of the bus platform loading and unloading area.

Passengers also complained about confusion regarding signs and the necessity to cross the railroad tracks to reach the train station and bus facilities, according to a city staff report.

A feasibility analysis of alternative site layouts with both facilities on the west side has been completed, but to date no funding has been located for design and construction of any of the alternates produced by Wilbur Smith Associates, according to the report.

"At some point in time, we need to take up the larger issue," said City Manager Bob Perrault.

"As long as we make it a priority and put it on the capital improvement program, we can look at this as a shorter solution," Mayor Steve Lieberman said of eventually relocating the bus platform to the west side of the tracks. - Josh Petray, The Santa Maria Times

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KCS NAMES CHIEF LEGAL OFFICER

KANSAS CITY, MO -- Kansas City Southern has promoted William Wochner from vice president and interim general counsel to senior vice president and chief legal officer.

As chief legal officer, Wochner is responsible for the legal, claims and corporate secretary functions for the Kansas City-based company (NYSE: KSU) and its U.S. subsidiaries, as well as commercial contracts and operating agreements for the United States and Mexico, the company said in a release Thursday.

"With 26 years of dedicated service to the company in the legal, marketing and commercial contracts areas, Jim was a natural to step into the role as chief legal officer," Chairman and CEO Michael Haverty said in the release.

Wochner joined KCS in 1981 as general attorney and was named as senior vice president of marketing in 1992; vice president and general solicitor in the legal department in 1994; vice president, sales and marketing coal business unit and contracts in 2005; and vice president, associate general counsel and then interim general counsel in 2006. He has practiced law since 1972.

KCS is a transportation holding company with railroad investments in the United States, Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway Co., which serves the central and southern parts of the country. - Kansas City Business Journal

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CLEANER TRAINS ROLLING OUT FROM COMMERCE

COMMERCE, CA -- Fuel-efficient trains that will replace older models arrived Wednesday at the Union Pacific Railroad rail yard.

Photo here: [lang.sgvtribune.com]

Caption reads: The first of 60 low-emission locomotives at the Union Pacific Railroad in Commerce that the Union Pacific Railroad explains will reduce emissions by 80 percent and use 16 percent less fuel January 31. 2007, Union Pacific Michael E. Iden P.E., General Director-Mechanical is the person most responsible for the new locomotive. (SGVN Staff Photo Keith Birmingham/SXCity)

The decision to switch over to the low-emission diesel trains comes after seeing more-stringent emissions regulations placed on other transportation markets, said Mark Davis, a Union Pacific Railroad spokesman.

Sixty low-emission diesel trains, called Genset, will be delivered to the company's rail yard through July.

Part of the company's effort to adhere to federal, state and local environmental agencies, the low-emission trains have been recognized by the California Air Resources Board.
Union Pacific has an "aggressive environmental program and has been a environmentally minded company," he said.

Photo here: [lang.sgvtribune.com]

Caption reads: The control panel. (SGVN Staff Photo Keith Birmingham/SXCity)

Photo here: [lang.sgvtribune.com]

Caption reads: The brain of the new locomotive. (SGVN Staff Photo Keith Birmingham/SXCity)

Wednesday's ceremony included a dedication from Commerce Mayor Nancy Ramos.

The 2,100-horsepower train will reduce emissions by up to 80 percent while using as much as 16 percent less fuel than current low-horsepower trains.

In 2005, Union Pacific trains used 1.3 billion gallons of diesel fuel.

Union Pacific said the low-emission trains will serve customers and will replace the 95 low-horsepower trains the company currently uses to deliver goods across the country.

Reducing emissions from engines is a priority of the Environmental Protection Agency, said Francisco Arcaute, an agency spokesman.

The agency would like to reduce emissions from the more than 11 million diesel engines by 2014, he said. - Caroline An, The San Gabriel Valley Tribune

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AMTRAK AND FOX HOME ENTERTAINMENT PARTNER TO LAUNCH FLICKA ON DVD

WASHINGTON, DC -- Amtrak and Twentieth Century Fox Home Entertainment (TCFHE) have teamed up to offer one lucky fan and three friends the chance to travel on Amtrak to Colorado. In conjunction with the DVD release of Flicka, Amtrak and Fox are launching the Flicka Saddle Up Sweepstakes.

The Grand Prize winner of the Flicka Saddle Up Sweepstakes will receive four Amtrak round-trip coach tickets to travel to or within the state of Colorado and a check for $2,000. Amtrak serves 500 destinations across the country.

In addition to the Grand Prize, Amtrak will offer five First Prizes which include Amtrak branded binoculars and a duffel bag; 10 Second Prizes consisting of an Amtrak picnic basket, water bottle and tote bag; and 50 Third Prizes of the Flicka soundtrack CD.

Based on the novel My Friend Flicka, by Mary O'Hara, the movie is an inspiring, coming-of-age story of a young girl's courage, determination and passion. The movie stars country music superstar Tim McGraw, Maria Bello and Alison Lohman.

To learn more about the sweepstakes or to enter, visit www.flickadvd.com by February 28. The movie is available on DVD February 6. - Amtrak News Release

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BNSF EMPLOYEES SAY THEY MAY HAVE SEEN SOMETHING THAT WAS OUT OF THIS WORLD

You may be weary of those who say they have seen a UFO - an unidentified flying object - but two BNSF Railway Company employees say they saw something in the sky that was neither a bird nor a plane.

Recently, Alliance, Nebraska, residents joined the ranks of other cities such as Roswell, New Mexico, with the citing of a UFO. Thousands of people from across Colorado, Wyoming, Kansas and Nebraska say they saw something odd in the night skies.

Ron Akers and Vaun Kipper, BNSF diesel pit laborers, Alliance, Nebraska, both reported seeing a fiery light burn across the sky in a north-south direction during the pre-dawn hours Thursday, Jan. 4.

"When I first saw it I thought it was a plane that was having major problems," says Akers.

Kipper, on the other hand, described it as an "other worldly" object and said it resembled a comet.

"We weren't sure what it was," says Ackers, "but it gave off a bright white light and streams of red and yellow were emitted from its tail."

Kipper said the unearthly phenomena probably only lasted a minute but it was long enough to make you wonder what it was.

Before you go chasing the night skies looking for aliens, the North American Aerospace Defense Command (NORAD) and the U. S. Northern Command (NORTHCOM) says the unidentified flying object was actually a spent Russian commercial SL-4 rocket body re-entering earth's atmosphere.

When Akers and Kipper heard about the report of the item that went soaring through the sky they were amazed. "It was awesome," Akers said. "It looked like a giant roman candle."

The rocket was launched from Russia in December and carried a French telescope into orbit. NORAD and NORTHCOM say they're aware that a piece of the rocket had landed in Riverton, Wyoming.

NORTHCOM says more than 200 pieces of space debris fall every year, but usually the debris burns upon re-entry into the atmosphere, rarely hitting landmass. Although the debris is not believed to be hazardous, NORTHCOM warns anyone who comes across debris to stay well away from it and notify local authorities. If near train tracks or BNSF right of way, contact BNSF's Resource Protection Solutions Team immediately. - BNSF Today

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TRANSIT NEWS

BROKEN WIRE SHUTS DOWN PART OF LIGHT RAIL

DENVER, CO -- A broken connector on an overhead light rail electric line has shut down some service on the new Southeast Corridor's segment on Interstate 225.

RTD says it hopes to have full service restored by the evening rush hour.

But in the meantime, it is running trains only to downtown from the Nine Mile station on Parker Road. Trains from Nine Mile are not currently serving the Lincoln Station on the south end of the line.

RTD spokesman Scott Reed said an insulator holding the high-voltage wire to the overhead suspension system apparently failed around 04:30 Thursday morning. That is right around the time service begins from Nine Mile. The wire is over the northbound track.

When the line sagged, other connections came loose and the nearby substation shut off power.

For about two hours, RTD used buses to ferry passengers from Nine Mile to the Dayton Station, the next one down the line, and to the Southmoor Station, which is on the Interstate 25 segment of the corridor. Power was available to the system from Dayton onward, so RTD could run full service from there.

Around 06:45, service began using the southbound track, allowing RTD to resume the 15-minute schedule from Nine Mile for the H line, which serves downtown.

But because single-track service limits the schedule, RTD still hasn't resumed the G Line from Nine Mile to Lincoln. Crews are working on the northbound overhead wire.

G Line riders are advised to take the H Line to Southmoor, where they could transfer to southbound E or F Line trains to Lincoln. - Kevin Flynn, Rocky Mountain News

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FOR LAS VEGAS VISITORS, MONORAIL IS A TRAIN TO NOWHERE

LAS VEGAS, NV -- To board the Las Vegas Monorail from the northwest entrance of Harrah's for a ride to the Flamingo, you need to walk 551 paces. That's just 38 fewer steps than if you walked the 589 paces on the sidewalk from Harrah's to the Flamingo - and you wouldn't have to wait for the ride or pay a $5 fare.

Walking through the casino also takes longer. But inconvenience and the closeness between rail stops are probably minor reasons for the monorail's poor performance, highlighted in a recent report that showed fewer riders boarded the monorail in December than in the system's 2 1/2-year life.

The 4-mile-long, $650 million line has lost riders steadily since peaking in mid-2005 at just over 32,000 paid riders per day. December's ridership averaged 15,430 daily. It might be crowded in a casino, but you could easily swing a dead cat at a monorail station and not hit a thing.

Carl Steinmetz, a 57-year-old Pullman, Washington, resident - who happens to be a distant relative of Mark Twain, who once famously wrote of the aforementioned "swing a cat" - states very clearly one day this week why he will never take the monorail, one of the few gee-whiz Strip wonders to fail.

"Look, we know when we come here, we're going to spend money," says Steinmetz, a drug and alcohol counselor from the city named after the Pullman of railroad fame. "But that doesn't mean we're going to just throw our money away."

The idea of spending $5 for a one-way ticket to ride the monorail, he says, "is ridiculous."

Especially considering that the bus pass in his hand also cost $5, but is good all day and allows for transfers so he can go just about anywhere, including the outlet mall near downtown.
A daylong pass for the monorail is $15.

"The bus is very convenient," he adds, nodding to his wife, Teena, and their friends, Christopher and Debra Mohammed from Vale, Oregon.

Steinmetz and yet another visitor, Bob Plant, 68, from Fifield, Wisconsin, in town for a bank board meeting, talk almost wistfully of the convenience of another monorail, the one that goes from the Treasure Island and the Mirage. Not only is that free, but it delivers riders almost to the casino floor, rather than a few hundred yards away.

"That's one of the things that is real different," says Plant, who took a walk to the Flamingo monorail station Tuesday to find a map of its stops.

So maybe the monorail is inconvenient, goes nowhere people want to go, and you'd have to swing a dead cat on a very, very long rope before you'd hit anyone from Las Vegas riding it - so what? As advertised, the monorail is privately financed and taxpayers are never supposed to pay a dime, even if it goes belly-up.

Terry Murphy, a monorail board member since its inception, says the monorail's bonds are "doubly" insured, in case it does face a financial shortfall. Investors, including casinos, are footing the bill and taking the risk. If the monorail fails to make payments on its loan, insurance is supposed to pay off the bondholders.

There is, however, one way that the monorail affects state residents. When Brian Krolicki, the newly elected lieutenant governor, was state treasurer, he helped the monorail get a not-for-profit designation. So like churches or the Red Cross, it doesn't pay taxes on the money it makes.

Looking back, Krolicki says the argument was that the monorail "serves a public good" - no, not by engorging casinos with the tourists who plug the slots and help boost the state's tax revenues - by easing traffic congestion and all the costs and problems that go with it.

Not everyone buys that argument.

"The route doesn't go anyplace that the public wants it to go," freshman Clark County Commissioner Chris Giunchigliani says. "It's an antiquated piece of equipment. Even Third World countries don't rely on monorails. They have true light rail. This will never link to a light rail because they are different tracks and systems. It's never been set up to serve the citizens."

Murphy would dispute that, noting that since its inception, the monorail has carried 20 million people.

"That's better than 20 million people riding up and down the Strip. And if they wanted to be on that bus, those buses would be awfully crowded."

The monorail might do better, Murphy adds, if a spur is built to the airport. The Las Vegas Monorail Co. is studying whether an estimated $500 million, 4-mile line to McCarran International Airport would help the ailing monorail. Investors are expressing interest in funding that spur, she added.

Krolicki, who says he goes through McCarran about once a week, always believed an airport line was the most important link to the system. "The taxi line out there is extraordinary," he says.

And still, there are doubters. Transportation engineer Mohamed Kaseko, a UNLV associate professor of civil engineering, imagined a mom and dad with three kids arriving at McCarran, loaded with luggage and having to decide: Monorail or cab?

"It could work," Kaseko says of the monorail-airport line. "But there again, there are some issues. Because at some point, if you have a family | it won't be cheap or convenient, and you'd have to haul all that luggage."

For at least 551 steps. - Joe Schoenmann, The Las Vegas Sun

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DRAPER RESIDENTS' PETITION TO MOVE TRAX LINE FALLS SHORT

DRAPER, UT -- A group of Draper residents again fell short of signatures required to force a vote on remapping a future TRAX extension.

Summer Pugh and Citizens for Responsible Transportation (CRT) have learned they were 122 signatures shy of the number needed to force a vote on whether to move the line. They requested a recount that was completed early Wednesday, but the tally was the same: 1,444 verified signatures.

"The total number of certified signatures . . . does not equal the number required," Draper City Recorder Kathy Montoya wrote in a letter to Pugh. "By statute, then, I must mark the petition as 'insufficient.'"

CRT wanted to keep the TRAX line away from residential areas by moving the future extension to State Street. They oppose the City Council's unanimous decision to support the Utah Transit Authority's choice to run the extension past Draper City Hall and up to South Mountain along a UTA-owned railroad right of way.

Pugh said that while she was frustrated to come up just short, this is an important issue and she will not let it die.

"This is a mass transit coming every 10 minutes through low-density, residential areas, and it has no business coming through this neighborhood," she said.

She said there are small discrepancies in the numbers that she will look at, though in the long run she thinks the petition would still be 60 to 70 signatures short. - Steve Gehrke, The Salt Lake Tribune

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AMTRAK WELCOMES CHICAGO RTA TRANSIT CHECKS

CHICAGO, IL -- Frequent users of Amtrak trains to and from Chicago can save money by buying tickets using special "Transit Checks" issued by their employers through the Chicago-based Regional Transportation Authority (RTA). Effective today, Amtrak will accept the checks that list Amtrak among the area transportation providers.

Amtrak accepts RTA Transit Checks for the purchase of multi-ride tickets that are perfect for long-distance commuters and others who make regular trips in Illinois. They are also usable for other routes, with many available connections through Amtrak Chicago Union Station.

"Although Amtrak does not currently receive funding from the Chicago RTA, we work closely with the RTA on several projects, including Union Station improvements and looking ahead to Chicago's bid for the 2016 Olympics," said Don Saunders, General Superintendent of the Chicago-based Amtrak Central Division. Amtrak is also a partner in the RTA's Moving Beyond Congestion campaign and hosts an RTA Chicagoland TRIPS travel information kiosk at Amtrak Chicago Union Station.

"Ridership is growing on our corridors to and from Chicago and we appreciate the RTA's decision to include our passengers in the RTA Transit Check program as another enhancement to our service," Saunders added.

""Expanding our Transit Check program to include Amtrak offers significant benefits for commuters traveling between Chicago and other destinations in Illinois, Michigan, Missouri or Wisconsin," said Stephen Schlickman, RTA Executive Director. "They receive tax advantages, avoid traffic congestion, and can use their traveling time more effectively for relaxation or catching up on briefcase work. Encouraging the use of Amtrak also helps to improve air quality and promote energy independence," he added.

The RTA Transit Checks can be used for the purchase of Monthly Tickets for the Hiawatha Service trains between Chicago and Milwaukee (seven round-trips daily, Monday through Saturday and six round-trips on Sunday).

The RTA Transit Checks can also be used to buy 10 Ride Tickets for the Hiawathas, along with Lincoln Service and other trains between Chicago and St. Louis (total of five daily round-trips); Illini, Saluki and other trains between Chicago and Champaign/Carbondale (total of three daily round-trips); Illinois Zephyr & Carl Sandburg trains between Chicago and Quincy (two daily round-trips); Wolverine Service trains between Chicago and Ann Arbor/Detroit/Pontiac (three daily round-trips); Pere Marquette trains between Chicago and Grand Rapids (one daily round-trip) and Blue Water trains between Chicago and East Lansing/Port Huron (one daily round-trip).

These named trains are operated by Amtrak under contracts with their respective state transportation departments (except Wolverine Service).

RTA Transit Checks are purchased by employers and distributed to employees. Checks may be purchased in any denomination from $10 to $110. RTA Transit Checks are tax-deductible to employers and a tax-free benefit to employees. The program puts money back in employees' pockets by lowering their commuting costs and it helps employers support clean air, reduce traffic congestion and promote a more reliable, on-time work force.

Employers seeking more information about the RTA Transit Check program as a benefit to their employees should visit [www.rtachicago.com] or call 800-531-2828 between 09:30 and 19:30 Central Time. The program is a low, or no cost, benefit for both employees and employers. As of January 1, 2007, federal law allows individuals to set aside up to $110 in pre-tax earnings each month to pay for transit costs.

RTA Transit Checks are also accepted by the Chicago Transit Authority, Metra commuter rail, Pace suburban buses, the South Shore Railroad commuter service to and from Indiana and vanpools. - Marc Magliari, Amtrak and Diane Palmer, Chicago RTA, Joint News Release

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THE END