Vol. 8 No. 17
April 22, 2007

Copyright © 2007
NCI Inc., All Rights Reserved

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A weekly North American rail and transit update

The E-Zine of the National Corridors Initiative Inc.

Publisher - James P. RePass
Editor - Molly McKay
European Correspondent - David Beale
Webmaster - Dennis Kirkpatrick

For transportation advocates and professionals, journalists, and
elected and appointed officials at all levels of government.

IN THIS EDITION...  In this edition...

  News Items…
Bipartisan Senate bill tackles nation’s transportation needs
Amtrak engineer beaten by street gang blocking rails
  Commuter lines…
80 years in the making: Manhattan subway project re-starts
  Selected rail stocks…
  Financial lines…
Hedge fund buys CSX stock as more market powerhouses see
   U.S. Class I railroads as merger/acquisition “play”
  Business lines…
New York’s MTA taps Philadelphia Transit exec for president
  Public Relations lines…
Reader’s Digest names Amtrak “Best of America” for innovative
   “Campus Visit” program for parents, student
Light Rail Now suggests ready-to-go rail projects as medium term
   response to America’s oil addiction
  End notes…

NEWS OF THE WEEK... News items...

Bipartisan Senate bill tackles
nation’s transportation needs

By DF Staff and from Internet Sources

WASHINGTON, April 17 -- Bipartisan legislation giving the freight rail industry tax incentives for capital improvements in infrastructure was introduced last Tuesday by Senators Trent Lott (R-MS) and Kent Conrad (D-ND).

The Freight Rail Infrastructure Capacity Expansion Act (S. 1123) would amend the Internal Revenue Code of 1986 to provide these incentives. The bill is expected to help combat congestion across the nation’s clogged transportation network by encouraging businesses to invest in infrastructure projects such as new track, intermodal facilities, rail yard, locomotives or other rail expansion improvements, its sponsors said.

The proposal would provide a 25 percent tax credit for capital expenditures by any business making such investments. Railroads, ports, shippers, trucking companies and other transportation businesses would be eligible.

The news was reported in a press release by the Association of American Railroads (AAR), whose president, Edward R. Hamberger, had this to say:

“We thank Senators Lott and Conrad for their foresight and leadership. This legislation is good news for the nation’s economy and for the future of transportation. It offers a proactive approach to dealing with the central challenge of how to move more freight without causing more gridlock on our highways.”

“Railroads are an integral part of the solution to congestion, offering a better alternative to highway transportation. Freight railroads not only reduce highway congestion and pollution, they help America conserve energy.”

Hamberger noted that a freight train can move one ton of freight 414 miles -- the distance from Baltimore to Boston -- on a single gallon of fuel. This efficiency is three times that of trucks and steadily improving. In 1980, a gallon of fuel would carry one ton of freight for only 235 miles.

If 10 percent of freight that is presently moved by highways were switched to rail today, it would save approximately one billion gallons of fuel per year. That would give a boost to the country’s efforts to reduce emissions that cause global warming.

Tom White, spokes person for AAR, also endorses the bill. He commented on the downsizing of track routes since 1980 when the railroads were partially deregulated by the Staggers Act. At that time, industry officials believed that the railroads had excess capacity so they started selling off or abandoning rail lines. White said that between 1980 and 2005, the route miles of the Class I railroads were reduced from 164,822 down to 95,880. About 40,000 miles were abandoned; the rest were sold off to short line railroads or other interests.

Today, the network of route miles nationwide totals approximately 141,000 when you add in short line and government-owned lines to what the Class I’s own. US Dept of Transportation predicts a 67 percent rise in freight rail across the country by the year 2020 and admits that today’s rail infrastructure cannot accommodate this growth even though, since 1980, the railroads have poured $370 billion back into capital improvements and operations. In the past five years, railroads have increased their capital spending by more than half as revenues have been rising. AAR’s Hamberger noted that the rail industry already invests billions every year into maintaining and expanding its infrastructure. “In 2007 alone, that figure is projected to be a record $9.4 billion,” he said.

But that is still not enough. Even with this aggressive investment by the railroads, America needs an additional $2 billion a year in rail infrastructure investment if we want to meet the minimum freight transportation needs outlined by the American Association of State Highway and Transportation Officials.

Without substantial increases in capital spending, railroads will not be competitive with trucks and barges, which are heavily subsidized. Given the present rate of return, railroad revenues do not support the needed infrastructure improvements, commented Wall Street, which has even suggested that the railroads cut back on investments.

Without financial incentives, the railroads will keep falling behind.

One might ask what is in it for the public? The answer is a great deal - infrastructure expansion will help economic growth just by increasing the volume of goods that can be moved by rail. There are other benefits as well. It will reduce highway congestion by making it possible to take millions of additional trucks off the highways, which in turn will reduce air pollution and cut back on the use of fossil fuels.

Another question that has been asked is: “Why not raise rates?” but that is not feasible. There is a limit imposed by the Surface Transportation Board, and there is pressure from members of Congress to restrict rail rate increases. Some shippers are even pressuring Congress to bring back re-regulation. If this should occur, said Tom White, it would be impossible to expand capacity. The advantages gained by the tax incentives would be more than off-set by re-regulation. The dispute between shippers and railroads has been a constant presence for more than 100 years, with shippers demanding regulation and railroads resisting it. Missing from the equation is substantial government support for rail infrastructure, which this bill addresses in part.

Among the businesses and organizations that support S.1125 are the U.S. Chamber of Commerce, the National Retail Federation, the American Association of Port Authorities, the National Mining Association, Arch Coal, Chevron Phillips Chemical Company, Evergreen America and the Waterfront Coalition.

Janet Kavinoky, Director of Transportation and Infrastructure for the U.S. Chamber of Commerce, said, “Investment in the nation’s freight rail infrastructure is critical to meet growing transportation demands. This legislation will significantly help provide new capacity for America’s businesses to move their products to marketplace.”

“The U.S. retail industry is a major user of intermodal rail,” noted National Retail Federation Vice President Erick Autor. “As commerce continues to expand, retailers support this and other efforts to ensure the nation’s rail system can make necessary investments to meet growing demand from all rail customers well into the future.”

National Mining Association President and CEO Kraig Naasz said his organization also supports the legislation.

“America’s railroads are vital for transporting coal and minerals to U.S. power plants and factories,” he said. “Record-breaking demand for coal is a major reason why freight rail shipments are expected to triple over the next decade.”

In its Freight Rail Bottom Line Report, the American Association of State Highway and Transportation Officials (AASHTO) called for public investment in rail transportation to encourage more freight to move by rail.

“The highway system is increasingly congested and the societal, economic environmental costs of adding new highway capacity are prohibitively high in many areas,” said AASHTO, which is made up of all 50 state Department of Transportation leaders from around the nation. AASHTO historically has focused on highway expansion.

In a recent statement before the Surface Transportation Board, AASHTO officials noted that, “Public participation in rail investment would produce an industry that provides the cost-effective transport needed to serve national and global markets, relieve pressure on overburdened highways, and support local social, economic and environmental goals.”

Below is a list of current supporters of the legislation. Organizations and Businesses Supporting the Freight Rail Infrastructure Capacity Expansion Act (S. 1125) Shippers/Organizations -- AAPA (American Assn of Port -- Maersk Line Authorities) -- National Association of -- Alliance to Save Energy Railroad Passengers -- American Council for an -- National Mining Assn (NMA) Energy-Efficient Economy -- National Retail Federation -- Arch Coal -- Owens Corning -- ASLRRA-American Shortline -- Plum Creek and Regional Railroad Assn. -- Port of Oakland -- Associated Industries of -- Port of Portland Florida -- Port of Seattle -- BTI -- Port of Tacoma -- Chevron Phillips Chemical -- Port of Vancouver -- Essroc -- Portland Cement Association -- Evergreen -- Railroad-Shipper -- Foundation Coal Corporation Transportation Advisory Council -- Headwaters, Inc. (RSTAC) -- IANA - Intermodal Association -- Railway Supply Institute of North America -- Robbins Reload Inc. -- IARW-Intl Assn of Refrigerated -- SC State Ports Authority Warehouses -- TXU Corporation -- Iowa DOT & Dept Eco.Dev -- U.S. Chamber of Commerce -- IRTA-Intl Refrigerated -- Waterfront Coalition Transportation Assn. -- Jacksonville Port Authority

Co-sponsors of the bill:

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Amtrak engineer beaten by
street gang blocking rails

Amtrak Engineer Still Hospitalized After Attack

Written by George Warren, Reporter

From Internet Sources

SACRAMENTO---An engineer on Amtrak’s Capitol Corridor service remains hospitalized following a Monday night attack by a group of young people that had been blocking the tracks in West Sacramento.

The engineer had slowed the train immediately upon being notified of people on the tracks, possibly saving the lives of the people who then beat him when he got down from his cabin.

The engineer, identified by Amtrak only as a man in his 30s, suffered injuries from thrown rocks and bottles when he left the cab. He was expected to be released from the UC Davis Medical Center on Thursday.

Amtrak spokeswoman Vernae Graham said the eastbound Capitol Corridor train #546 was approaching the I Street bridge after 10 p.m. when the engineer stopped for a group of roughly seven people blocking the tracks.

He had already been alerted to the presence of “trespassers” on the tracks and had reduced his speed, according to Graham.

Both the engineer and a conductor left the train to try to clear the group when they were attacked, she said.

The conductor was not injured and a student engineer brought the train the short distance to the Sacramento station.

“We’ve had small acts of vandalism on this stretch of the rail line for generations,” said West Sacramento Mayor Christopher Cabaldon. “But the magnitude, the barbaric quality of what happened Monday evening, is what we’re really concerned about.”

Train crews interviewed by News10 said they’re concerned as well.

In a separate incident the day after the West Sacramento assault, another Capitol Corridor engineer was slightly injured by a rock thrown in Richmond.

“We’re basically under attack every day,” said Capitol Corridor engineer Roy Cocreham, reported Channel 10 News in Sacramento, “It’s actually a very common thing. Getting rocks thrown at us, getting shot at.”

Graham said there’s no specific policy regarding crews leaving the trains. She said the incident remains under investigation and security procedures are being reviewed.

Amtrak Capitol Corridor

Photo by News10 Sacramento  

Amtrak Capitol Corridor Train

Police questioned several people following the Monday night attack. One juvenile was charged with attempted murder and faces 14 felony counts, including assault with a deadly weapon, train robbery, vandalism and criminal street gang activity, according to Channel 10.

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COMMUTER LINES...  Commuter lines...

80 years in the making:

Manhattan subway project re-starts

From the Internet

NEW YORK -- Gov. Eliot Spitzer led a group of state and city officials at the groundbreaking -- the fourth such event known to have occurred since the 8.5-mile underground route was first conceived in the late 1920s, only to collide with the Great Depression of the 1930s. Plans also collapsed for lack of funds despite new efforts in 1972, 1973 and 1974, 1010 WINS radio reported.

“This is different because we have the money,” said Spitzer, echoing the words of other speakers, who insisted that after so many false starts the Second Avenue subway line was at last certain to become reality, reported WINS.

The first section, costing $3.8 billion in federal and state funds, is to be completed in 2013, the entire project from Harlem to lower Manhattan by 2020, according to officials of the Metropolitan Transportation Authority, which runs the subway system, the nation’s largest.

The MTA’s latest tunnel vision was spelled out in a six-block-long tunnel some 40 feet underground, which was built in the 1970s but soon became a trackless waste, sealed by then-Mayor Abraham Beame when the city fell on hard financial times.

Over time, the cost of the Second Avenue subway rose from $86 million in 1929 to $504 million over the next 20 years, to the present figure of nearly $4 billion for just one part.

“It isn’t what you pay for it today, it’s what it would cost in the future,’’ MTA Chairman Peter Kalikow said.

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STOCKS...  Selected Rail Stocks...

Source: www.MarketWatch.com

Burlington Northern & Santa Fe(BNI)94.0790.69
Canadian National (CNI)49.9047.74
Canadian Pacific (CP)62.5759.53
CSX (CSX)45.0442.46
Florida East Coast (FLA)71.7864.34
Genessee & Wyoming (GWR)28.7828.43
Kansas City Southern (KSU)39.0837.67
Norfolk Southern (NSC)56.0653.89
Providence & Worcester (PWX)19.2318.64
Union Pacific (UNP)117.21109.78

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FINANCIAL LINES...  Financial lines...

Hedge fund buys CSX stock as more market powerhouses
see U.S. Class I railroads as merger/acquisition “play”

From Internet Sources and by DF Staff

LONDON --- TCI Fund Management LLP of London has taken a “significant position” in CSX Corporation, and has said it may buy up to $500 million in stock, the Corporation announced this week.

It marked the second time in recent weeks that a U.S. Class I Railroad has been the subject of a major stock acquisition announcement. Warren Buffet’s Berkshire Hathaway, a former textile company transformed by Buffet into one of the largest holding companies in the world, announced recently it had taken a major position in BNSF, another US Class I railroad, and two other railroads.

There has been growing interest in U.S. railroads despite a recent softening of business activities because they are seen as undervalued assets by so-called hedge funds, which invest in companies that they think are candidates for takeover, merger, or break-up into smaller, more valuable pieces.

Despite their giant size and recent strong earnings from operations, U.S. railroads do not earn a sufficient return on investment to replace or maintain their sprawling physical plant, making them vulnerable to asset plays when the market is awash in cheap cash, as it is now. The United States and its companies are seen as a safe haven for foreign cash in a very unstable world.

The recent double-digit growth in Asian and South Asian countries such as China and India, to which many thousands of American and European jobs have been effectively transferred by stateless multi-national corporations seeking cheaper labor costs for back-office, customer, and programming support, has effectively created large concentrations of new cash looking for investments.

Hedge funds and holding companies have succeeded in attracting this cash, as well as accessing cheap debt from essentially the same source, leading to a surge in buyouts, and in public companies going “private” with borrowed money, such as has not been seen since the 1980’s “Greed is Good” decade.

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BUSINESS LINES...  Business lines...

New York’s MTA taps Philadelphia
Transit exec for president

From Internet Sources

NEW YORK CITY---”The MTA tapped a former military man with years of mass transit experience in the Big Apple and Philadelphia to head New York City’s subway and bus system,” AM New York reporter Chuck Bennett reported this past week, succeeding Larry Reuter who had lead the MTA for a decade.

After an international search, Howard Roberts Jr., 67, was selected yesterday to lead New York City Transit, the MTA’s largest agency.

“We interviewed many exceptional candidates from around the world and within the MTA family, but Howard’s experience, leadership and management style made him the clear choice,” Elliot Sander, the MTA executive director, said in a statement quoted by AM New York.

For the complete story see: http://www.amny.com/news/local/transportation/subway/am-mta0411,0,4953485.story.

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PUBLIC RELATIONS LINES...  Public relations lines...

Reader’s Digest names Amtrak “Best of America” for innovative
“Campus Visit” program for parents, student

From Amtrak

WASHINGTON--- Amtrak has been named “Best of America” by the editors of Reader’s Digest magazine for the railroad’s highly popular Campus Visit Program, the magazine has announced.

The program, which allows prospective college students to bring along a parent and or guardian for free on Amtrak when visiting colleges and universities, is available to students nationwide.

After speaking to hundreds of experts for this special issue, Reader’s Digest editors rated the Campus Visit Program as the “best transportation” and “travel twofer” under its “America’s 100 Best” category. The program is featured in the publication’s May, 2007 issue.

“It is certainly gratifying for Reader’s Digest to acknowledge the popularity and the value provided by the Campus Visit Discount program,” said Emmett Fremaux, Amtrak’s Vice President of Marketing and Product Management. “We hope that prospective college students and their parents will continue to consider the train as the most affordable and hassle-free way to see colleges.”

The Campus Visit Program enables high school juniors and seniors to purchase a ticket on Amtrak at the best available fare and bring a parent or guardian along for campus visits for free. Younger siblings, ages 2-15, can travel for half-price using Amtrak’s everyday children’s discount. To take advantage of the Campus Visit discount, students need to simply log on to http://www.campusvisit.com/amtrak/, complete the form and receive the discount code to be used when making travel reservations online at amtrak.com or by calling 1-800-USA-RAIL.

Reservations are required at least seven days prior to travel, and the student and parent or guardian must travel on the same itinerary. Tickets may be upgraded to business class or sleeping accommodations for an additional charge. These special fares are not available on Acela Express, Auto Train or the Canadian portion of joint Amtrak/VIA rail trains. Routes and offers subject to change without notice. Other restrictions may apply. Seats are limited and subject to availability, the railroad stated.

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COMMENTARY...  Commentary...

Light Rail Now suggests ready-to-go rail projects
as medium term response to America’s oil addiction

From the Internet

( NEW ORLEANS--- The Light Rail Now Project, a charitable educational enterprise designed to support efforts both within North America and worldwide to develop and improve light rail transit (LRT) and other rail transit and mass transportation systems, has released the fourth in a series of thought pieces about light rail and the way its implementation could help reduce America’s dependence on oil. )

Written by Alan S. Drake, an engineer and professional researcher based in New Orleans,
and a former accountant specializing in public transportation and energy issues,
the commentary is excerpted below.


Photo: SITRAM   France has been vigorously installing new urban electric rail systems, such as this tramway system opened in 2006 in the small French town of Mulhouse (pop. 111,300).


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The United States is ‘Addicted to Oil’. And oil prices keep climbing, plus future availability is a very serious concern!

What if Iran is bombed, Saudi Arabia has a revolution? What about Chavez in Venezuela, Nigerian and Iraqi civil wars, more hurricanes, or any other major oil supply interruption?

And what if world oil production peaks and starts declining? World oil exports will shrink even faster than world oil production. Half the world’s oil production is consumed where it is produced; the balance is exported. In a shrinking – or even flat – oil production world, domestic demand will still grow in many oil exporting nations, shrinking the volume of available exports.

A serious, and prolonged crunch is in store for the United States if world oil production just fails to increase steadily!

What can be done, and preferably done quickly, to save significant amounts of gasoline and provide a non-oil alternative for many millions of American commuters? A non-oil transportation alternative would be especially useful during a prolonged oil supply interruption or shortfall, when the Strategic Petroleum Reserve will simply not be enough.

One very viable alternative is to build much more urban rail – in particular, electrified urban rail – and build it quickly! Such an approach also can preserve the quality of urban functioning while ensuring adequate mobility.

In the USA, efforts to develop an adequate safety net of urban rail has been starved for funding at the federal level for decades – and even more so in recent years. One way for the Federal Transit Administration to ration out the relatively few dollars available is to slow all projects down as much as possible. Thus it takes decades to build out new urban rail systems, one slow project after another.

The French, with a much smaller population but much greater determination to be more energy self-reliant, are building as much new urban rail as the United States – and all running on electricity.

Amazingly, it takes as little as three or four years from a “Oui” in Paris to a ribbon cutting. In contrast, the infamous American bureaucracy drags projects out for unnecessary years. (A “can-do”, “just-solve-the-problem” French attitude vs. a stodgy, red-tape-focused American policy: Is there something wrong with this picture?)

To access the complete article and others in the series, and/or to join and support Light Rail Now, see below:

Light Rail Now!
9702 Swansons Ranch Road
Austin, Texas 78748
Phone: (512) 282-1149
E-mail: lightrailnow@lightrailnow.org
Website: http://www.lightrailnow.org


[ Readers may wish to also return to DF Vol 8, Num. 7, Feb 12, 2007 for an editorial by NCI’s David Beale on this topic - Ed. ]

NEWS ITEMS...  End notes...

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