Here is a listing of current railroad related new events form Wisconsin and around the Midwest. These pages will be updated as stories come in. If you have any railroad related news items of interest, please e-mail the webmaster.
SURFACE TRANSPORTATION BOARD ANNOUNCES PROPOSED BURLINGTON NORTHERN SANTA FE-CANADIAN NATIONAL RAILROAD CONTROL TRANSACTION
Tue, 28 Dec 1999
Surface Transportation Board Surface Transportation Board (Board) Chairman Linda J. Morgan announced today that the Board has issued a notice informing the public that the Burlington Northern Santa Fe (BNSF) and the Canadian National (CN) railway systems have formally indicated that they intend to file an application for Board approval for the railroads in their systems to be under common control.
[FOOTNOTE 1: The BNSF system includes the Burlington Northern Santa Fe Corporation and The Burlington Northern and Santa Fe Railway Company. The CN system includes the Canadian National Railway Company, Grand Trunk Western Railroad Incorporated, and Illinois Central Railroad Company.]
A formal application from these "applicants" is expected to be filed between March and June of next year. The notice issued by the Board finds that the proposed BNSF/CN control transaction is a "major transaction," which means that BNSF and CN will have to file substantial supporting information, and that the transaction will undergo more extensive review than other transactions. The Board's notice also observes that, in the past several years, the leading North American railroads have undertaken a series of major transactions that, when taken together, have dramatically reconfigured the entire North American railroad industry. For that reason, and because other carriers will likely respond to this proposal with similar proposals of their own, the notice indicates that the applicants will be expected to include in their application evidence on the "cumulative impacts and crossover effects" that are likely to occur in the wake of the proposed transaction, should it be approved.
In particular, the Board indicated that parties will be expected to address the effect of the proposed transaction, and any likely subsequent transactions that would produce further significant consolidation in the industry, upon the national rail transportation policy goals set out in the law. The Board's notice further indicates that, given the recent experience with post-merger rail service disruptions, the applicants also will be expected to include in their application evidence on the likely effects on rail service of any action the Board may take.
Of course, interested parties will be entitled to submit, in their comments filed in response to the application, evidence addressing these points.
The Board's notice was issued today in Canadian National Railway Company, Grand Trunk Western Railroad Incorporated, Illinois Central Railroad Company, Burlington Northern Santa Fe Corporation, and The Burlington Northern and Santa Fe Railway Company--Common Control, STB Finance Docket No. 33842, Decision No. 1.
Wis Central RR Considers Reactivating Wiouwash State Trail
Wisconsin Central considers
reactivating Wiouwash State Trail for freight train use
A major portion of the Wiouwash State Trail between Oshkosh and Hortonville could return to its original use as a corridor for freight trains under a concept being considered by the Wisconsin Central Transportation Corp. "We are looking at the portion of the trail between Oshkosh and Medina Junction. We think reactivating rail service over the Wiouwash trail could have a lot of benefits for the state," said J. Reilly McCarren, president and chief executive officer of Wisconsin Central's North American Operating Subsidiaries.
That portion of the trail is 13 miles long. The rest of the trail is seven miles long. McCarren said the project would be "very substantial if undertaken." "It's not something we could do on our own, obviously. We would look for some type of public/private partnership," McCarren said. The proposal, if realized, could force significant changes in plans to reconstruct State 110, but not necessarily eliminate the need for a $9.5 million railroad overpass being planned for Neenah, regional planners said.
The Wiouwash trail could also still be used as a recreation area. Maps showing the popular Wiouwash trail being used as a bypass of the railroad yards in Neenah have been distributed to the East Central Wisconsin Regional Planning Commission; state Sen. Michael Ellis, R-Neenah; state Rep. Rep. Gregg Underheim, R-Oshkosh, and local and county officials for review. "They know they have bottleneck in the Neenah yards with the switching and their intermodal (piggyback trailer) facilities," said Walter Raith, transportation planner for East Central. "But we are in the 11th hour of planning and designing 110. That is already a legislatively approved project." An informational meeting may be scheduled in January for municipal officials in Winnebago County to review Wisconsin Central's proposal, said Harlan Kiesow, East Central's executive director.
"We have been asked to put out feelers on this plan to local officials at the request of the state Commissioner of Railroads Rodney Kreunen," he said. The maps, distributed by Kreunen, indicate the Neenah bypass would become part of Wisconsin Central's "Iron Interstate" - 399 miles of rails in Wisconsin. Kreunen said the bypass concept, which has been rumored for years, "is starting to move." He said railroad officials informed him that the bypass, if in place today, would divert eight to 10 of the 22 trains that travel daily through Neenah between Superior and Milwaukee.
"We were advised in a meeting with Wisconsin Central officials that if the bypass was double-tracked that would eliminate 12 to 15 trains a day through Neenah and free up a lot of the blockages that have caused problems in Neenah, Oshkosh and other places," Kreunen said. Kreunen said railroad officials recognize a recreation trail could be located parallel to the train tracks. He said the two corridors could be separated by a chain link fence.
McCarren would not commit to running trains along the same corridor as trail users. "That's something we would have to look at," he said. McCarren did not specify a time line for the concept to take final shape. "We have approached county and local officials in the past with the same thing, but it didn't seem to get a very sympathetic response. Mr. Kreunen is doing this (asking for public official opinion) on his own. Now I guess we'll have to see where it goes from here," he said. Kiesow said the "obvious informal reaction" from local officials contacted thus far is that the proposal stands little chance of acceptance unless Wisconsin Central can make a substantial case for its need to use the trail corridor.
"It would be a very difficult project to realize," said Winnebago County Parks Director Robert Way. He expects the proposal to generate opposition from users of the trail. Sue Kinde, president of Fox Cities Greenways Inc., a trails advocacy group, said there are precedents to locating train and recreation trails parallel to one another, "but that would change the rural character of the Wiouwash trail, which is a very popular trail." "I praise the foresight by public officials to develop the corridor. It's a shame to think it would not be available anymore," she said.
Way said the trail is not part of the nationwide "Rails to Trails" program in which railroads have the right, after a certain number of years, to reclaim used rail corridors. Way said the county purchased the majority of the trail route after the Chicago & North Western Railway abandoned it about 30 years ago. The only exception is in Larsen where the Larsen Cooperative's new store straddles the former railroad right-of-way. Way said he is aware the proposal has been forwarded for comment to County Executive Jane VanDeHey, but he has not been consulted at this point.
VanDeHey said she has referred information given to her to Way and Corporation Counsel John Bodnar. VanDeHey said she has no opinion on the proposal, but said there will be legal as well as emotional issues to face. "I think the legal issues will be more insurmountable," she said. Kiesow said the trail is popular with bicyclists, hikers and snowmobilers, "so the likelihood of public opposition is there." Raith said the proposal would be tough to sell not only to area residents, but also to the state Department of Transportation, which is nearing completion of plans to reconstruct and partially relocate 110 from U.S. 41 near Oshkosh north to Winchester. "The DOT would have to stop the presses right now," he said. McCarren said plans to accommodate a railroad overpass should be a part of the 110 project. The initial concept calls for changes to begin on Oshkosh's north side where trains would use an east-west corridor currently in use just north of the Leach Corp. to reach the vicinity of 41 at 110. Oshkosh City Manager Richard Wollangk said that if the proposal "comes to pass" it would likely not have a tremendous effect on the city.
"It would be going through an area that is an industrial park right now," he said. Raith said major design changes would be needed for the interchange at 110 and 41 and another interchange near 110 and County Y to accommodate both the train tracks and the recreation trail. The trackage would then follow the trail corridor north to Hortonville where trains could be switched to the Wisconsin Central rail corridor leading to Stevens Point and Superior.
Neenah Mayor Ken Harwood said he does not have enough information on the idea to form an opinion, but said the city will move ahead with planning for the Main Street overpass. "I'm not saying we would charge ahead and build it if there were a better alternative, but we will continue to move forward," he said.
On the overpass question, McCarren said that if the bypass is constructed there would be quite a few trains still passing through Neenah. "It is a bit of a bottleneck for us, but there would also be a pubic benefit to take a lot of the through train traffic and move it out of the city," he said. Harwood said the overpass project has been plagued by delays for a number of reasons.
"We will have to sit back and take a look at this (bypass proposal), but we need to move ahead with planning for the overpass," he said. He said that if the railroad is serious about constructing a bypass the city needs to know possible ramifications in rail traffic through Neenah.
"The time is now," Harwood said.
BNSF, CN agree to combine as North America's largest system
In a blockbuster move that would create the largest railroad in North America, Burlington Northern Santa Fe and Canadian National on December 20 announced that they would combine to form a 50,000-mile megasystem. If approved by American regulators and Canadian courts, the $19 billion deal would create a rail system stretching from Halifax to Los Angeles and the Gulf Coast to the Canadian plains and Vancouver, B.C.
The railroads anticipate closing the deal by mid-2001. A new Montreal-based company, North American Railways, will be created to serve as the parent company of BNSF and as a sister company to CN. BNSF shareholders will own about two-thirds of the new company.
Does that mean that BNSF is acquiring CN? "No," Paul Tellier, CN's president and CEO, said emphatically at a Montreal press conference. "This is a combination of two very successful concerns." Officials from both railroads stressed that this is a merger of equals, and not an American takeover of the former government-owned CN. And the BNSF-CN end-to-end combination will be unlike other recent mergers because the same people responsible for day-to-day operations of both railroads today will be responsible for the combined operations, Tellier and BNSF Chairman and CEO Robert D. Krebs stressed.
Both railroads will retain their regional focus, but North American Railways will ensure that they work as an integrated railroad. BNSF will remain headquartered in Fort Worth; CN, as required under Canadian law, will remain headquartered in Montreal. Upon the closing of the transaction, Krebs will become non-executive chairman of North American Railways and of CN. Tellier will become president and CEO of North American Railways as well as CN. E. Hunter Harrison, executive vice president and chief operating officer of CN, will become COO of North American Railways as well as CN. Thomas N. Hund, BNSF's chief financial officer, will become CFO of North American Railways and of CN. Matthew K. Rose, president and chief operating officer of BNSF, will become president and CEO of BNSF.
About 3000 jobs would be lost, mostly through attrition, during the first three years of the merger. But about 1000 new jobs are expected to be created through growth over the same period, the railroads claim.
Since BNSF and CN don't overlap--they share gateways at Chicago, Memphis, Duluth/Superior, and Vancouver, B.C.--no line sales or abandonments are anticipated. Krebs said the combination would offer much broader single-line service options for shippers. A combined BNSF-CN would mean single-line moves for automotive traffic moving between Ontario and the U.S. Midwest and the West Coast and Mexico; for Canadian grain moving to Gulf Coast ports; for chemical shippers from the Gulf Coast to Canada; and for forest products moving from British Columbia to California and the Southwest. "This is truly a great network," Krebs said at the news conference. "From Halifax to Los Angeles, we will have truck-competitive service." The new railroad would blanket all of the North American continent with the notable exception of the Northeast and Southeast, where Norfolk Southern and CSX are struggling to integrate Conrail into their systems. Tellier would not address whether gaining a foothold in the East would fill in the only missing piece of the BNSF-CN puzzle.
Fighting trucks is a driving force behind the combination, Tellier says. In 1960, he points out, railroads had about a one-third share of the transportation revenue in North America. This year, that figure stands at only 12 percent. Through dependable, on-time service, BNSF and CN hope to attract new customers to rail, Tellier says. "The potential of this is huge," he says.
The railroads are eyeing $4 billion worth in traffic diversions from highway to rail. Krebs and Tellier brought about the combination, which surprised many rail observers. "Paul and I have known . and respected each other for years," Krebs said. They had discussed how to better position their respective railroads for the future. Then, about 60 days ago, they began discussions about combining BNSF, America's second-largest railroad, with CN, Canada's largest. "We reached the same conclusion," Krebs said. "The best thing for our companies and their customers was a combination of CN and BNSF."
But railroad executives in Omaha, Calgary, and Kansas City may not agree that what's best for BNSF and CN are best for them. Omaha-based Union Pacific said it was evaluating the BNSF-CN proposal. "An immediate area of concern is how this will be viewed by rail shippers who have already expressed strong reservations about further rail mergers," UP said in a statement. "We will be meeting with our customers to solicit their views and decide what Union Pacific can do to protect their interests, particularly those in areas where competition would be adversely affected by the proposed connection."
Calgary-based Canadian Pacific Railway did not have an immediate comment on Monday. And neither did K.C.-based Kansas City Southern, which through a marketing agreement relies on CN as the northern leg of its "NAFTA Railroad" linking Mexico, the US, and Canada. CN, however, says it will continue to honor that marketing agreement. CSX and NS, meanwhile, said they were studying the BNSF-CN combination.
The National Industrial Transportation League--weary from the initially rocky mergers of Burlington Northern and Santa Fe, Union Pacific and Southern Pacific and the breakup of Conrail--expressed reservations about the BNSF-CN proposal.
The BNSF-CN deal is the latest in a wave of consolidation to sweep the railroad industry. CN began operating Illinois Central on July 1. Conrail was split between CSX and NS June 1. UP swallowed SP in 1996. And Burlington Northern and Santa Fe merged in 1995.
Who will be next? Stay tuned.--Bill Stephens (posted 12/20/99)
Southern Wisconsin Railcar Group.