The Federal Trade Commission has given Berkshire Hathaway, Inc. antitrust approval for its planned takeover of Burlington Northern Santa Fe Corp.,operator of BNSF Railway. The approval, which was expected, appeared Mondayin a list of antitrust clearances routinely issued by the FTC.
Berkshire has offered to pay $26.4 billion for the 77.4% of BNSthat it does not now own. Combined with previously owned shares and$10 billion in debt, the takeover is valued at around $44 billion.
Berkshire has also filed a preliminary proxy statement withthe Securities and Exchange Commission giving notice that it has set Jan.20 for a special shareholders meeting in Omaha. Shareholders will beasked to approve a 50-for-1 split of Berkshire's Class B shares. The higher-priced Class A shares will not be affected.
The split would bring Class B shares down to about $66 eachfrom their current level of around $3,300.
Berkshire's Warren Buffett said earlier in an interview withCNBC that the split will enable "anybody that has as little as oneshare of BNSF to opt for the tax-free exchange ... So those small shareholderscan have exactly the same availability that otherwise would only have beenavailable to a big shareholder."
Jersey City, N.J., has hired a former state Supreme Court chief justice to mediate a disagreement over its Sixth Street Embankment, former ex-Pennsylvania Railroad right-of-way sought by various interests for green space, housing development, and/or light rail use.
The City Council has approved hiring former Chief JusticeJames Zazzali to mediate a resolution among city interests, developer Steve Hyman, and Conrail, the most recent rail operator of the property. The city will split the cost of hiring Zazzali with developer Steve Hyman and Conrail, which sold the property to the developer in 2005 for $3 million.
The route in dispute runs along the city’s Sixth Street between Marin Boulevard and Brunswick Street, and is an infrastructure remnant from the days when the city’s entire waterfront was served by several major Class I railroads. Hyman has fought an intense public battle to put housing, including upscale condominums, along the route. Jersey City planners seek the same right-of-way for open space and a new branch of New Jersey Transit's Hudson-Bergen Light Rail Transit system.
The city filed a lawsuit in 2006 arguing that, under federal law, Conrail, the previous owner, should have offered the site to the city before selling it to Hyman. In 2007, the Surface Transportation Board backed the city’s position. But Hyman took the case to the U.S. Court of Appeals, which threw out STB’s decision in June, saying it didn't have jurisdiction to hear the case.
The city and Embankment Preservation Coalition, a local advocacy group, have asked the appellate court to reconsider its decision. But the city and Hyman also have agreed to seek a mediated settlement out of court. "I think it's a worthwhile expenditure," said city attorney William Matsikoudis.
U.S. Transportation Secretary Ray LaHood gave the opening address Friday at a conference in Washington, D.C. convened to address domestic high speed rail manufacturing potential, and hammered at rail manufacturing’s potential to put Americans to work as an extension of the American Recovery and Reinvestment Act (ARRA).
Perhaps mindful of criticism in recent days suggesting a large portion of federal stimulus dollars targeted for alternative energy development was reportedly generating jobs outside the U.S., LaHood stressed that no such scenario would occur for U.S. high speed rail. “If this program is perceived as not creating American jobs, it is not going to succeed,” he asserted. “This a tremendous opportunity for the rail industry to capitalize on a historic achievement.”
DOT noted the Federal Railroad Administration has received 45 applications from 24 states totaling about $50 billion to advance large HSR corridor programs, while 214 applications from 34 states, totaling $7 billion, were submitted for corridor planning and smaller projects.
LaHood noted that 30 rail manufacturers and suppliers, “foreign and domestic, have established or expanded their base of operations in the United States,” cognizant that in all likelihood they would be “required to build in the U.S.” if they hoped to capture any significant business.
DOT released a list of those rail industry manufacturers and suppliers, which included: GE Transportation; Wabtec; Columbus Steel Castings; Bombardier Transportation; Alstom; Talgo; Kawasaki Rail Car; Siemens; Hyundai Rotem USA; Motive Power; National Railway Equipment Co.; CAF USA; US Railcar; Nippon Sharyo; Electro-Motive Diesel; Ansaldo STS USA; Lockheed Martin; Safetran Systems Corp.; Tangent Rail; Amstead Rail; AnsaldoBreda; American Railcar Industries; CXT Tie; Railroad Controls Ltd.; A&K Railroad Materials; Cleveland Track Material, Inc.; New York Air Brake; Plasser American; Simmons Machine Tool; Ellcon-National; Harso Rail; and ORX Railway.
“This is a significant achievement for America, and a positive sign of things to come for our country,” LaHood said. “This will be a real win-win for private industry, American workers, and the traveling public.”
Questioned aggressively by one meeting attendee on the slow pace of spending the $8 billion for HSR in particular and transportation needs in general, LaHood, polite but bristling, defended DOT’s performance in 2009. “The money that hasn’t been spent is the $8 billion for high speed rail; this notion that the ‘recovery money [in general] hasn’t been spent is nonsense,” he declared.
Citing funding commitments to numerous modes, including light rail transit, LaHood asserted, “Our money is out the door, it is being spent, people are being put to work.” He added, “When it comes to DOT, I don’t care what anyone says; I know what’s going on. ... I make no apologies; our money is out the door. We’ve done our job [so far] at DOT.”
Another questioner asked whether identifying manufacturing states with high unemployment was a form of favoritism. Replied LaHood, “There are places in America that are really huring. This money could be used to put Americans back to work.” And, too, he added, the states themselves have been proactive in submitting HSR proposals, further limiting the concept of political favorites in the HSR development process. “What we want to do is what the Recovery Act is supposed to do; use the money to put people back to work.”
LaHood also lauded the current Congress, which he said was the most pro-passenger rail assemblage in recent memory. “High speed rail is a priority; this Congress gets it,” he said. “They understand that the $8 billion is a down payment.” It’s only a funding start, he acknowledged, “but it’s $8 billion more than we ever had.”
FRA Associate Administrator Mark Yachmetz echoed LaHood’s belief in opportunity for the private sector. “Success for us is development of a long-term program that transforms the way Americans view intercity travelingoptions,” he said.
“Rail capital investment was once one of the engines that drove the U.S. economy. That is not the case today,” but it could be once again, Yachmetz said, driven in large measure by the “development of the high speed rail program.”
Traffic increased in nine of the 19 carload freight commodity groups in the week ended Nov. 28, although total carload volume was down 3.9% compared with the same week last year. Both weeks included the Thanksgiving holiday.
The Association of American Railroads reported Thursday that increases were seen in nonmetallic minerals (38.1%), grain (21.3%), farm products not including grain (20.1%), motor vehicles and equipment (15%), chemicals (13.2%), grain mill products (11.5%), metals and products (11.2%), metallic ores (3.1%), and petroleum products (2.2%).
Declines in commodity groups ranged from 0.9% for crushed stone, sand, and gravel to 28.3% for coke.
Intermodal traffic added up to 165,856 trailers and containers, down 6.4% from last year and down 32.1% from 2007.
Total volume on U.S. railroads for the week ending Nov. 28, 2009 was estimated at 27.6 billion ton-miles, down 3.8% compared with the same week last year.
Canadian railroads reported 69,216 carloads for the week, down 3.8% from last year, and 42,123 intermodal units, down 7.5%. Mexican railroads originated 12,760 carloads, down 1.7% from the same week last year, and 7,602 trailers and containers, up 24.1%.
Combined North American rail volume for the first 47 weeks of 2009 on 13 reporting U.S., Canadian, and Mexican railroads totaled 16,056,494 carloads, down 17.4% from last year, and 11,160,176 trailers and containers, down 15.4%.
GE Transportation announced Thursday it has signed an agreement with America Latina Logistica, SA (ALL), Curatiba, Brazil, to deliver 10 new AC44i locomotives by year's end for freight transport. ALL reportedly operates the largest independent general cargo railway in South America, with a fleet of more than 1,000 locomotives and 21,000 kilometers (about 13,000 miles) of rail routes connecting Brazil and Argentina.
The Model AC44i locomotive (pictured at left) is powered by diesel engines supplied by GE Transportation's manufacturing plant in Grove City, Pa. They feature GE's AC individual-axle traction-control technology that enables the Model AC44i to haul heavier loads by significantly reducing slippage on startups, inclines, and suboptimal track conditions.
Model AC44i locomotives also are equipped with dynamic braking in addition to air brakes to provide smoother handling when hauling heavier loads.
"GE welcomes ALL as a new customer in South America. This agreement is another milestone validating GE's investment in market-leading AC heavy-haul, diesel-electric locomotive technology and the performance value it provides our customers," said Lorenzo Simonelli, president and CEO of Erie, Pa.-based GE Transportation.
"We look forward to the increased performance advantage these new AC locomotives will provide," said Gabriel Martelli, ALL's superintendent of Mechanical. "The delivery of these new locomotives will be key to our continued railroad infrastructure development and economic growth."
"The Model AC44i locomotives will be built by GE Transportation South America, GE Transportation's affiliate facility located in Contagem, Brazil. They are scheduled for delivery later this year," said Guilherme Segalla de Mello, president and CEO of GE Transportation South America.
Hard and persistent work by short line and regional railroad advocates throughout 2009 have solidified congressional support for extending and improving the short line railroad tax credit, according to officials of the American Short Line and Regional Railroad Association meeting Wednesday in Washington, D.C.
Ed McKechnie, chief commercial officer for Watco Cos., Inc., and chair of ASLRRA’s Legislative Policy Committee, detailed widespread support for the tax credit bills. House bill H.R. 1132 has acquired 241 sponsors, while S. 461 in the Senate has 52. Both bills would provide a tax credit of 50 cents for every dollar a railroad spends on track improvements. ASLRRA noted the credit is capped based on a mileage formula.
“This is the first time in the history of [this] tax credit that we have a majority of both houses supporting the bill” as sponsors and co-sponsors, McKechnie asserted.
Both versions of the bill would extend Section 45G for three fiscal years (2010, 2011, and 2012, ending Dec. 31, 2012); Section 45G currently expires December 31. Both would “allow eligibility for new short line railroads created after Jan. 1, 2005 and before Jan. 1, 2009,” ASLRRA said, adjusting for previous language seeking to limit incentives for short-line abandonment by Class I railroads.
Both also would increase the per-mile credit limitation from $3,500 to $4,500, “to account for increased construction costs since 2004, and to bring the credit closer to its original goal of $10,000/mile supported bynearly 290 representatives and senators in 2004,” ASLRRA said.
Bipartisan support is indicated in the House bill by sponsors Rep. Earl Pomeroy (D-N.D.) and Rep. Jerry Moran (R-Kan.), and in the Senate version by Sen. Blanche Lincoln (D-Ark.) and Sen. Mike Crapo (R-Idaho). Asked by Railway Age if such bipartisan support extended to the numerous subsequent co-sponsors, McKechnie said it indeed did.
ASLRRA representatives said Congress supported the measure in part because it was in some ways a “precursor” to or model of the larger stimulus packages passed this year, and because the short line tax credit has “no special interests; it’s in the public interest,” according to George Betke, CEO of Farmrail System, who also sits on ASLRRA’s Legislative Policy Committee. “Any short line railroad has an equal shot; there are no favorites.”
Added McKechnie, “This is an instant job creation [process] not just for the railroads, but throughout the supply chain. He observed, too, that “there are 500-plus short lines, and 500-plus ways to do this” to best benefit short lines, their suppliers, and their customers.
McKechnie also observed, “The tax credit is not about short line railroads; the tax credit is about rural economic development,” while allowing that short lines in urban areas also could benefit. But the list of co-sponsors for both bills, at present, carries an unmistakable rural tilt, with support especially strong in the nation’s heartland states. Urban New Jersey, by contrast, has three of its 13 House representatives supporting the bill, all from relatively rural districts within the Garden State.
Canada’s federal government Monday introduced legislation to terminate the strike against Canadian National, which commenced Saturday, calling the strike a threat to the weak economic recovery. Passage of the bill is expected shortly, perhaps as early as this week. The bill orders contentious issues between CN management and labor to be addressed by binding arbitration.
Federal Labour Ministor Rona Ambrose said she would have preferred to see a negotiated end to the walkout, but added that action was required after talks faltered.
“This is more than a private dispute between CN Rail and the Teamsters Canada Rail Conference,” she stated. “It has serious repercussions for the national economy at a time when Canada's recovery from the global recession is still fragile.”
About 1,700 locomotive engineers represented by the Teamsters Canada Rail Conference have walked out; CN has attempted to keep trains running by tapping qualified engineers from within management ranks.
CN is offering a 1.5% wage increase and seeking to raise the maximum distance engineers cantravel in one month from 3,800 miles to 4,300 miles. Labor counters that the hike in the distance cap would require some staff to work seven days a week, and cause layoffs.
CN denies those claims, saying engineers would work between 16 and 18 days per month, up slightly from the current level of between 15 and 17 days. It also says it seeks simply to require engineers to work the same number of miles as conductors, noting they will be paid for their work at adjusted rates.
Iowa Northern Railway has extended its contract with RailComm for its computerized Track Warrant Control system.RailComm’s Domain Operations Controller (DOC®) dark territory train control system is accessed through a web-enabled Software-as-a-Service (SaaS) delivery model. RailComm’s SaaS offering provides a “pay-as-you-go” model, thus eliminating capital equipment procurement constraints.
The DOC® (Domain Operations Controller) software-based control system is an advanced command, control, communications, and information (C3i) server-based platform that supports a wide variety of uses for indication, control, access, and distribution of critical operational data across the corporate enterprise.
RailComm says that through SaaS, local IT support is minimized, traditional capital constraints are eliminated, and DOC® customers receive regular updates as RailComm continues to add functionality to its product.
The DOC® system is designed with built-in expansion capabilities for adding workstations and/or field control nodes without interrupting operation of the current system. Since the DOC® control application resides on servers within RailComm’s managed data center in Rochester, N.Y., the requirement for local IT support at each railroad is greatly reduced, the company says.