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Rail Report - Summer 2006
NGFA Urges STB to Launch Rulemaking On ‘Paper Barriers’ to Competitive Rail Access

WASHINGTON –The National Grain and Feed Association (NGFA) has urged the federal Surface Transportation Board (STB) to launch a rulemaking to address agreements between railroads that create so-called “paper barriers” to competitive rail access for shippers.

In a statement submitted to the agency, the NGFA supported a petition by the Western Coal Traffic League to conduct such a rulemaking. The rulemaking would focus on situations in which Class I railroads – the nation’s major carriers – that enter into agreements to sell or lease rail lines include provisions restricting the ability of the purchasing carrier – most often a short line railroad – to interchange traffic through connections with other carriers with alternate routes that compete against the Class I carrier selling or leasing the tracks.

In soliciting comments on whether to initiate a rulemaking, the STB noted that larger railroads since enactment of the Staggers Rail Act of 1980 had sold or leased many rail lines to small, newly created short line carriers. Some of these lease or sale agreements have had so-called “paper-barrier” provisions that limit the ability of the short line carrier to interchange traffic with connecting carriers that could provide competitive alternative service.

In its petition, the Western Coal organization asserted, among other things, that restrictions on these provisions should cover both pre-existing traffic and new traffic; that unreasonable paper barriers should be subject to challenge by shippers and short lines; and that a rebuttable presumption that a paper barrier is unreasonable should be established under various conditions, such as if it lasts longer than five years.

In its statement to the STB, the NGFA pointed out that such paper barriers may be detrimental to shippers served by short line carriers by:

• restricting or prohibiting short line carriers from hauling traffic over competitive routes;

• subjecting the short line carrier’s traffic to potentially higher rates by foreclosing the possibility of using potentially lower-rate competitive routes;

• limiting the ability of short line railroads to receive an adequate and timely supply of cars, since they depend for car supply on the connections of the Class I railroad selling or leasing the line. The NGFA noted that this issue is relevant particularly to the grain, feed and grain processing industry, where smaller facilities often rely on Class I carriers for car supply; and

• compelling short line rail traffic to move over routes that are more congested than alternative routes of another carrier that might be available were it not for the existence of paper barriers.

The NGFA’s statement also recognized that paper barriers may provide some “indirect benefits” to rail customers by inducing large railroads to sell or lease branch lines or other properties while those properties are in sufficiently sound physical condition to handle traffic without major rehabilitation expenses, rather than simply allowing them to deteriorate with the goal of abandonment. However, the NGFA stated that “even if paper barriers may help preserve some trackage for continued use, it does not necessarily follow that paper barriers imposed as a condition of track sale or lease should be continued in perpetuity…there may come a time when they outlive their economic justification.

“A rulemaking is an appropriate method for the (STB) to consider whether, or under what circumstances, if any, paper barriers should be permitted,” the NGFA concluded.

NGFA Voices Concerns to STB Over Expedited Abandonment Exemption for Railroads

WASHINGTON – The NGFA has expressed strong concerns over a proposal that would allow all shortline and regional railroads to abandon trackage by simply notifying the federal Surface Transportation Board (STB).

In a statement filed with the STB, the NGFA said the proposal to exempt all shortline and regional railroads – designated as Class II and III carriers – from the agency’s rail abandonment procedures is “unwarranted,” is predicated upon “inconsistent and faulty” propositions, and fails to meet the legal threshold for rail-line abandonments under the Staggers Rail Act of 1980. The NGFA also said there are workable and far-less-objectionable alternatives for expediting the STB’s rail-line abandonment process.

At issue is a petition filed with the STB by Class II and III railroads that would make all small carriers eligible to abandon lines by invoking a notice procedure. The notices would consist of relevant commercial and engineering information about the line to be abandoned, and would be published in local newspapers and national railroad industry publications, as well as in the Federal Register.

The NGFA said the proposal is based on a “faulty proposition.” Specifically, the NGFA cited the contention by the railroads that lines to be abandoned because they no longer can be operated profitably could somehow be preserved for future profitable use before “traffic on those lines has dried up…and the infrastructure…has deteriorated beyond repair.”

To the contrary, the NGFA said, the proposed class exemption for abandonment would be “highly unlikely” to preserve and save small railroad lines that otherwise would fail, simply because potential buyers likely would be equally reticent about purchasing an unprofitable line. “There is nothing to stop the owner of any small rail line from seeking out a willing buyer at any time (including prior to abandonment), and a class abandonment exemption, accordingly, is unnecessary to further line sales by small carriers,” the association said.

The NGFA noted that Class I railroads continue to have a “residual” common-carrier obligation to resume service over tracks leased to small carriers in the event the shortline or regional railroad subsequently discontinues service. The NGFA said that expanding any class exemption for abandonment proceedings to automatically include track leased by Class I railroads to small carriers “is beyond the scope of the exemption proposal…and totally unwarranted.”

In addition, the NGFA said the STB should not assume automatically that any small railroad proposing to abandon a line is experiencing a revenue shortfall over that line.

As potential alternatives to expedite abandonment proceedings for small railroads, the NGFA said the STB should consider reducing to one year the current requirement that a rail line not have traffic for two consecutive years before a carrier is able to file an abandonment application. Further, the NGFA suggested that the STB allow an abandonment or abandonment exemption from small carriers to proceed if objections are not raised within 30 days.

However, if the STB decides to proceed with a class exemption for abandonments for all small carriers, the NGFA urged that the agency impose several conditions:

• First, because affected shippers and receivers on the line no longer would be eligible to file objections or oppose the abandonment, the notice period before the abandonment process begins should be extended to 90 to 120 days.

• Small carriers should not be able to utilize the abandonment class exemption privilege for five years after acquiring a line from a major (Class I) railroad. That would be three years longer than proposed by the shortline and regional carriers.

GenSet Design Collaboration Produces Revolutionary New Switcher

Union Pacific’s Mike Iden, General Director, Car and Locomotive Engineering saw the need for a new generation of four axle yard switchers and branch line haul locomotives and approached National Railway Equipment Co. (NREC), proposing to collaborate on a design to meet the future requirements of ultra low emissions, improved fuel economy and enhanced attractive effort. Jim Wurtz, NREC’s Vice President of Sales and Marketing, has no doubts about how well the team executed their assignment.

“The new multi-engine GenSet locomotive concept will initiate a paradigm shift in four axle power design for the North American and international markets in both freight and passenger services," Wurtz said in an interview with G&FM.

The term “GenSet” is derived from “generator set,” referring to the pairing of a diesel engine and a generator (alternator). NREC’s GenSet locomotive, the N-ViroMotive, uses one, two or three GenSets rated at 700 HP, 1400HP and 2100HP, depending on the locomotive application. The GenSets are individually skid mounted and include, as part of the total skid package, the intake air and jacket water cooling systems, the AC to DC rectifier assembly and the engine-generator set. The prototype collaborative design switcher, the UPY 2005, is equipped with two engines, each able to provide a constant 700 horsepower. In production switchers, one GenSet is used in light duty units, two for heavy duty switchers and three are used in four axle branch line locomotives.

NREC’s GenSets use a 19 liter Cummins diesel engine that shares similar technology with the diesel engines used in semi trucks. As Wurtz puts it, the engine has “a truck genealogy,” but was specifically designed for industrial services such as electrical power generation and mining applications. “Cummins had the only EPA Tier III certified non-road engines in the continuous rated horsepower class we were looking for. We wanted a more robust engine with ultra low emissions capability than we could find anywhere else on the world market.”

“Mike Iden and the UP engineering and mechanical team identified and brought to us their four axle locomotive needs. We worked together on the design of the unit to meet and exceed these requirements and expectations. It’s a textbook example of a customer and a supplier working together to meet a dynamic and changing equipment application environment,” Wurtz said.

The four axle locomotive has changed little since the 1970s. “Locomotive switcher production dramatically declined in the mid 1970s and effectively ceased by the early 1980s,” Wurtz said. “For Class I railroads, the majority of capital [for power units] has been going to the six axle, 4400hp locomotives you see pulling long interstate trains.” As a result, he says, switchers and branch line locomotives are typically “long in the tooth.” As increasing fuel prices push a greater share of freight business from the trucking industry to the railroads, more pressure is put on the four axle fleets.

Perhaps more urgent were environmental concerns. The Class I railroads would need to comply with new emission targets set by the EPA and the California Air Resources Board (CARB) beginning in 2001 with multiple sets of targets going into effect through 2007 and beyond. Regulators had begun by requiring emissions reduction in cars, then in heavy duty trucks and lastly moving on to trains. “This was not necessarily a top priority in the 1990s,” Wurtz said, but a combination of new emissions regulations, increased freight revenue hauls and an aging fleet has directed more attention to the Class I four axle fleets. Fortunately, the Class I railroads and their suppliers will be able to benefit from the low emissions engine technology originally developed for the trucking industry.

The N-ViroMotive includes a number of new features, each of which is a major improvement over the previous generation of switchers.

• The switchers are remarkably quiet compared to traditional locomotives, sounding much like a tractor trailer. Wurtz noted that it’s possible for the operator to be in the cab with a single engine engaged and not be able to recognize that it’s running.

• The N-ViroMotive meets or exceeds all current EPA rail emission standards and is recognized by CARB as an Ultra Low Emissions Locomotive.

• End users can expect fuel savings of forty percent and at least an eighty percent reduction in emissions of nitrous oxide compounds. According to Wurtz, about half of the fuel savings generated are from advanced engine technology and efficiency improvements. The GenSet engines operate at about twice the rpm of the previous generation of locomotives, resulting in greater efficiency and lower emissions. The N-ViroMotive meets or exceeds the most stringent EPA and CARB targets.

The remainder of the fuel savings is a benefit of the N-Limit system, which electronically monitors idling. If any engine has been at idle for more than a prespecified period of time, the N-Limit system shuts it down.

• GenSet locomotives have higher unit availability than older units. Frank Pezel, NREC’s General Manager of Operations at their Dixmoor, Illinois manufacturing facility, explained that between clearing out test cocks and other recommended procedures, restarting a traditional EMD switcher would be a 30 to 45 minute process. If the EMD has been sitting for 48 hours or more, that stretches out to an hour and a half with the prelubing of the engine, Pezel said. For this reason, traditional locomotives are often left at idle for long periods of time to avoid wasting time with restarting. In contrast, the diesels in an N-ViroMotive can be cranked up as quickly as a truck motor. Long idling periods are also avoided by using a glycol coolant system that allows the unit to be shut down in temperatures 10 degrees Fahrenheit and up.

• Unit availability is also increased by the skid mounting of the individual GenSets. The skids allow the GenSets to be removed with a forklift, and the system is designed with quick-disconnect couplings. “With the quick-disconnect couplings we’re looking at an hour and a half—that’s the top end--to remove the skid and about 2 hours to reinstall,” Wurtz said. “With a traditional single engine switcher locomotive you would need 160 to 210 man hours to remove, reinstall and validate the engine.”

• Longer engine life is achieved by using a load sharing system which evens out the wear and tear on the engines. The system tracks the hours each GenSet has been working, and assigns work to the motor with the shortest amount of hours.

• End users will also find that a given N-ViroMotive delivers more attractive effort/adhesion than its listed rating. In fact, Trains Magazine reports that Union Pacific expected their 1,400hp N-ViroMotive prototype to perform as well as a 2,000hp EMD GP38-2 in yard switching tasks. This is due in part to NREC’s use of individual traction motor controllers, a conventional electronic control design used by many European passenger locomotive builders. In upgraded switchers which incorporate traditional anti-wheel slip systems, controllers respond to slippage by reducing power to the entire truck assembly where the wheel is slipping, cutting the unit’s power in half. The traction controllers in the N-ViroMotive affect only the motor that is slipping, preserving more of the power and providing a 50% or higher increase in adhesion.

This power increase has a practical, even visible, effect. Wutz gave the example of three traditional switcher locomotives pulling/switching a car consist. “Typically this application would provide the opportunity to utilize two N-ViroMotive locomotives to do the same work,” he said.

• The N-ViroMotive is also equipped with the FRA S5506 fuel tank, which won’t spill fuel in the case of a derailment.

NREC will deliver 30 of the locomotives to UP this year and 30 more in the first quarter of 2007. The switchers will be used at yards in the Los Angeles Basin area. Wurtz said NREC has received numerous inquiries from “other Class 1 railroads as well as short line, industrial and government accounts in the North American and world markets." NREC is also building a demonstrator N-ViroMotive unit that can be application tested by potential clients. The demonstration unit will be ready for initial customer trials in July of this year.

Ethanol Industry Loses a Friend as Indy Racing League Driver Paul Dana dies in crash

Sioux Falls, SD– The American Coalition for Ethanol (ACE) has expressed its deep sadness at the death of Paul Dana at Homestead-Miami Speedway.

Paul, who would have turned 31 in April, was the driver for Team Ethanol, racing the #17 Honda/Panoz Firestone car for Rahal Letterman Racing. He was involved in a fatal crash on March 26th in practice prior to the IndyCar® season opener in Homestead, Florida.

The race at Homestead-Miami marked the opening of the ’06 IndyCar Series season, as well as the first race to be powered by ethanol-blended fuel. Paul was a true believer in the importance of and future of renewable fuels, and he was the primary force behind the league switching fuels from methanol to ethanol. This year’s IndyCar season will run on 10 percent ethanol, and next year’s season will run on 100 percent ethanol.

The American Coalition for Ethanol had the privilege of working closely with Paul and was fortunate to consider him a friend. ACE leaders shared these thoughts on his tragic passing:
Ron Lamberty, ACE Vice President / Market Development

“I don’t think there is another person who has done more to change the image of ethanol in this country than Paul Dana. He challenged us to think bigger, and ultimately, that is what brought all of us to Sunday. We all wanted to be celebrating the arrival of ethanol as the fuel of the Indy Racing League, and instead, we’re all mourning the loss of one of our most intelligent and articulate spokesmen, and to many of us, a good friend.

As sad as this tragedy is for all of us, we know it is a much greater loss to his wife Tonya, his brother Greg, and the rest of Paul’s family and friends. Our thoughts and prayers are with Paul and his family. Paul was a wonderful guy, and he will be missed.”

Brian Jennings, ACE Executive Vice President

“Words do not adequately express the sadness we feel with the tragic death of Paul Dana. Paul was a talented driver, an incredibly effective spokesperson for ethanol, and the primary influence behind the Indy Racing League’s decision to begin using ethanol-blended fuel. We will miss his friendship and his contagious enthusiasm. Our thoughts and prayers are with his family and many friends.

For more information about Paul’s efforts to build the ethanol racing program, visit www.ethanol.org.

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