A Good Year for Short Lines & RegionalsDave Mears

Senior DirectorAmerican Short Line and Regional Railroad Association

ACACSO Conference

Orlando, FLNovember 12-13, 2008

October 22-24, 2008 2

A Good Year for Short Lines & Regionals

Carloads

Legislative

Regulatory

Communications

October 22-24, 2008 3

Rail Industry Carloads 1st Half

Class I's – Short Line Traffic Only

RR H1 2007 H1 2008 Variance

BNSF 485,225 526,135 +8.4%

CN 286,794 301,433 +5.1%

CP 135,015 129,465 -4.1%

CSX 478,960 480,586 +0.3%

NS 486,052 491,427 +1.1%

UP 679,716 679,275 -0.1%

KCS Unavailable

October 22-24, 2008 4

Legislative

Emergency Economic Stabilization Act of 2008 (HR 1424) "Short Line Tax Credit"

2 Year Extension - 2008 (Retro) and 2009 Can Be Used Against the Alternative Minimum Tax (AMT)

Railroad Safety Improvement Act 2008 (HR 2095) "Safety Bill" No PTC for Short Lines on Dark Territory No PTC for Short Line Commuter Operations No Switch Indicators for Short Lines on Dark Territory Towns and Counties Cannot Petition the STB on Rail Facilities

(Preserved STB Preemption) RRIF Program Loan Repayment Period Extended from 25 to 35

years

Taking Responsible Action for Community Safety Act (HR 6707)

With AAR Defeated this Bill which Created New "Public Interest" Tests

for Certain Class I / Short Line Transactions

October 22-24, 2008 5

Legislative Rail Safety Improvement Act of 2008

Hours of Service – Implement by 2010

Risk Reduction Program – Implement by 2012

Positive Train Control – Implement by 2015

Bridge Safety Requirements – Implement by 2010

Tunnel Requirements – Implement in 120 Days

1–800 ENS – Implement by 2010

Grade Crossing Inventory – Implement by 2009

Sight Distance Law & Regulations at Xings – Implement

October 22-24, 2008 6

Legislative Rail Safety Improvement Act of 2008 (Cont'd)

Civil Penalties $25K-$100K – Implement

Radio Monitoring Authority – Implement

New FRA Inspectors – Implement when $ are appropriated

Dark Territory Switch Technology – Regulations in 12 months

Broken Rail Service Failure Rate – Study

Certify Conductors – Implement by 2010

Minimum Training Standards and Plans – Implement by 2009

Emergency Escape Breathing Apparatus – Implement in 2010

October 22-24, 2008 7

Regulatory

FRA $75K Grant to ASLRRA for AREMA Bridge Inspection Handbook

Purchase for All Short Lines & Regionals and Class I's

Endorsed ASLRRA Bridge Program and Joined as Principals

Joint Seminars and Conferences on:

Track & Bridge Safety Operating Practices & HOS

Power Brake HazMat

Relief from Locomotive Alerter Standards for Speeds Less Than 25

MPH

October 22-24, 2008 8

Regulatory

STB

Supported DOE Application to Construct & Operate the Caliente Rail Line to

Yucca Mountain Spent Nuclear Fuel Depository

Approved the Acquisition of the DM&E by CP

Denied Shipper Request to Exclude Short Line Local Traffic from 3 Benchmark

Test (Small Rate Case Methodology)

In Effect, Insulates Short Line Local Traffic from STB Small Rate Case Proceedings

Holds Hearings on Common Carrier Obligation

Commissioners Exposed to Liabilities and Risks Short Lines Experience Moving TIH Materials

Commissioners Recognize Insurance Problems for Short Lines Moving TIH Commodities

STB Ruling Anticipated Before End of 2008

October 22-24, 2008 9

Regulatory

TSA

Committed to Pay for FreightScope HazMat Tracking Software for 2009

$1.8M Grant to ASLRRA for Web Based HazMat Training for 2009

TWIC Rollout Coordination for Short Lines by Port Area

Working Partnership on Review of Corporate Security Plans for Holding Companies

October 22-24, 2008 10

Regulatory

FCC

Implementation Timeline Established for Narrow Band Radio Conversion (July 2010-Jan 2013)

Many Short Lines Currently Operate Bimode Radios (25khz / 12.5khz)

Phase-In Decision Provides Sufficient Time to Acquire Radios and Adjust to New Spectrum Requirements IAW the Implementation Plan

October 22-24, 2008 11

Regulatory

EPA

Short Line "Green" Equipment and Initiatives – Some Grants

Gen-Set Locomotives

EPA Tier IV Locomotives

Hybrid Locomotives

Bio Diesel Locomotives

Pacific Harbor Line – EPA "Smart Way" Award Winner – Only Railroad

Class III Railroads Exempted from New Locomotive Emission Standards

All Pre-1973 Locomotives are Exempt and "Grand Fathered"

All Post-1973 Locomotives Need Only Comply if *Rebuilt or *Refurbished

* EPA Technical Definition & Specs

October 22-24, 2008 12

American Short Line and Regional Railroads

Connecting America's Communities

Strengthening America's Economy

Protecting America's Environment

October 22-24, 2008 13