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Rail Report - Fall 2007

Association of American Railroads provides rail security update

With the commencement of U.S. military action in Iraq and in consultation with the Department of Homeland Security and other national security officials, North America’s major freight railroads are taking additional security steps. These steps will ensure that commerce continues to move safely along our nation’s freight rail system, which carries more than 40 percent of America’s goods and products. Since September. 11, 2001, freight railroads have been on heightened alert. Under a comprehensive security plan developed by the industry with the assistance of counter terrorism experts, the freight railroads established a progressive series of counter terrorism measures based on the level of threat against the industry.

The railroad industry is one of the few private sector industries to receive an “A” for its security efforts in a recent independent analysis by The Washington Post.

Some of the actions taken since Sept. 11 include increased cybersecurity, restricted access to railcar location data, spot employee identification checks, increased tracking and inspection of certain shipments, new encryption technology for selected data communications, increased security at physical assets, and increased employee training to ensure that the industry’s more than 200,000 employees serve as the “eyes and ears” of the security effort. The industry also created a DOD-certified, 24/7 operations center that links the railroads with the appropriate national security intelligence officials. This allows the railroad industry and the intelligence community to immediately share information and respond to threats.

With military action against Iraq, the industry has taken additional security steps including real-time monitoring and additional surveillance of designated trains, increased security at certain rail yards, increased inspection of priority track, tunnels and bridges, and working with customers to tighten control of supply chain logistics.

Just as we have in the past, North America’s freight railroads will meet the nation’s transportation needs in times of both peace and war.

NGFA Commends House for Including Major Rail Study in 2007 Farm Bill

WASHINGTON – On July 30, the National Grain and Feed Association today commended the House for including a provision in its version of the 2007 farm bill that would require a comprehensive study of rail transportation issues affecting U.S. agriculture.

The provision, sponsored by Rep. Tim Walz, D-Minn., had been added as an amendment during House Agriculture Committee consideration of the farm bill, and was retained when the full House passed the measure on July 27 by a 231-191 vote. The NGFA strongly supported the amendment during the committee’s deliberations.

The Walz amendment would require the secretary of agriculture, in consultation with the secretary of transportation, to complete the study within nine months after the farm bill is signed into law. Among other things, the provision requires that a report and recommendations be submitted to Congress concerning the adequacy of rail capacity, competition and service reliability in rural America, as well as the accessibility of rail customers to federal forums to resolve disputes with rail carriers.

“The competitiveness of U.S. agriculture increasingly is dependent upon having reliable, cost-efficient rail transportation,” said NGFA President Kendell W. Keith. “To maintain our ability to remain competitive in a very dynamic domestic and world market, and to be in a position to capture new market opportunities, the United States must address the many transportation challenges facing rural America.”

The rail study mandated in the House-passed farm bill would require that the report assess the importance of freight railroads concerning: 1) the location of grain elevators, ethanol plants and other agricultural facilities; 2) the movement of agricultural commodities and products to market; 3) the delivery of equipment, seed, fertilizer and other products important to agricultural production; 4) the delivery of ethanol and other renewable fuels; 5) the delivery of domestically produced resources for use in generating electricity in rural areas; 6) the development of manufacturing facilities in rural areas; and 7) the vitality and economic development of rural communities.

Michigan Central Railway Will Initiate Freight Service in Michigan and Indiana

KALAMAZOO, MI. – The Michigan Central Railway will initiate freight rail service over 384 route miles of rail line in Michigan and Indiana in first-quarter 2008 under a joint venture to be formed by Norfolk Southern Railway Company and Watco Companies, the parent company of the newly formed Michigan Central.

“The new Michigan Central will preserve and enhance freight rail service in southern Michigan,” said David C. Eyermann, Michigan Central’s interim president. “The company will be headquartered in Kalamazoo and will employ approximately 118 people. In the first year alone we plan to invest more than $6 million to improve track and equipment to capitalize on the rail-served economic development opportunities we envision for the region. A critical component of industrial growth and job creation is a vibrant freight rail network, and we are excited about the partnerships we will establish with shippers doing business in southern Michigan, as well as with state and local governments on the Michigan Central network.”

The new Michigan Central will operate over freight rail line segments between Ypsilanti and Kalamazoo; between Jackson and Lansing; and between Grand Rapids and Elkhart, Ind. The Michigan Central also will acquire Norfolk Southern’s trackage rights on the Amtrak-owned line between Kalamazoo and the Michigan/Indiana state line. The transaction is subject to regulatory approval by the Surface Transportation Board (STB) in Washington, D.C. Norfolk Southern and Watco will make the required filings with the STB later this month.

“Our focus will be to grow the business and add value for our customers and the Michigan economy,” Eyermann said. “We will have a marketing team based in Kalamazoo that will be tasked to move additional freight traffic by rail. These officers will be meeting with customers and communities on a daily basis to find ways to move more freight via the railroad.”

A major part of the transaction will be the investment of more than $6 million in infrastructure in the first year, and more than $20 million in the first three years of Michigan Central operation.

“The track investments reflect our belief in the future of this railroad,” Eyermann said. “Our goal is to work with the state of Michigan, communities, Amtrak, and most importantly our freight customers to make this a growing railroad that is even more a part of the Michigan economy.

“Overall, our top goal is safety. We are following a great heritage of safe operations in the Michigan area that has been led by Norfolk Southern. We will demand safe operations from all of our managers and team members, and we will invest the capital dollars necessary for the Michigan Central Railway to be the best railroad in Michigan.”

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