Recommendations

            Comments received at the public forums covered a broad range of topics; from direct government intervention on the operation of rail to a laissez-faire attitude of let the market dictate the winners and losers, and from the need for better highways to handle increased truck traffic to the diversion of as much freight traffic to rail as possible.   However, one overarching fact that couched all comments was cost, either for rail or roads.   At all sites, no one looked at lost rail service as just a freight hauling issue.   Everyone present looked at this issue as an economic development issue that affected all persons within the rural community and ultimately, the State.   As a farmers’ cooperative manager stated at one of the public forms: “When an elevator is bypassed and grain is hauled elsewhere; that local elevator is financially hurt and possibly requires closure a good part of the year if not for good.   This means loss of jobs at the elevator that may have offered other farm supplies, fuels and etc.; this in turn would be shopped for out of town.   Everyone loses in this situation.”   Communities that lost rail service lost one important artery to the community.   Everyone felt that the loss of one artery led to the over dependence on another and in this case the use of motor carriers.   The participants also felt that the loss of transportation options led to less competitive rates for the hauling of their commodities and for local communities to compete in a global market they needed all options available.   

            Many of the individual comments generated at the public forums were grouped into the following general areas:

• If rail service would be lost to a specific community, freight rates charged by truck would increase due to the loss of competition.
• At peak hauling times there may not be enough trucks available to haul the grain.
• More large farm trucks are in use.
• Greater farm storage capacity.
• Rail service is necessary to make ethanol plants cost effective
• Some of the attendees with first-hand knowledge of road damage felt that the estimates for the individual counties were too conservative or underestimated the actual pavement degradation.   Unpaved county roads were not included in the cost analysis.  
• The State should buy grain cars and lease them to shippers when needed.
• Communities lost jobs when rail service was lost.
• Communities lost options when pursuing economic development opportunities if rail service was not available.

            Incremental road damage estimates for counties if short-line rail service would be lost was the most interesting data presented to the groups at the public forums.   This gave the attendees an idea of the amount of tax dollars their individual counties would have to raise in order to pay for the additional road maintenance from increased truck traffic.   Based on the dependence of short-line rail service and amount of grain produced the annual maintenance costs were deduced.   Two counties had annual increased maintenance costs of over $ 6 million.   One was Sedgwick County with a population of over 450,000 with the city of Wichita driving its economy and the other was Greeley County with a population of less than 2,000.   The question arises; “how does a county such as Greeley pay for this increase?”

            Figure 3 shows the cost of road damage repair in each Western Kansas Crop Reporting District based on the average crop production for the years of 1998 through 2001.   The actual county cost estimates are available in the attachment following this text.   The county population numbers were included to demonstrate the extreme financial burdens some counties will face.

            Recommendations will be presented at two levels.   The first set of recommendations will be directed toward National policy issues and the second set of recommendations will be Kansas specific.   Participants recognized that the future of rail freight movement is interrelated with other modes of transportation and a strong National policy is necessary for states to be able to be effective in their respective policy development.

Figure 3

National

National Policy Recommendations:

• The U.S. Department of Transportation needs to deemphasize highways and spend more time educating the public about all modes of transportation.   It is true that the majority people are most familiar with highway programs.   However, the benefits of multimodal transportation, especially containerized freight, are more pronounced now than they were in the past and their benefits need to be better articulated.   
• Transportation dollars spent on rail infrastructure are not mutually exclusive with dollars spent on highway infrastructure.   The public needs to better understand that dollars spent on rail will lead to a savings of highway expenditures.
• Fuel efficiency for hauling freight by rail needs to part of the National Energy Policy.   Public awareness of the long haul fuel efficiency of railroads needs to be better articulated.
•  The Railroad Rehabilitation and Improvement Financing (RRIF) Program set aside for other than Class I railroads has been criticized for its inaccessibility for small railroads and it penalizes the railroads it is designed to help through high interest rates and especially the credit risk premium.   Suggestions range from lowering the interest rate to eliminating the credit risk premium.   While it is acknowledged that the credit risk premium has been simplified with an online calculator the fact remains that it hinders borrowing for rehabilitation and building critical infrastructure.
• A tax credit bill has been introduced in the 108 th Congress, H.R. 876, designed to provide a credit against federal income tax for expenditures for the maintenance of railroad tracks of regional and short-line railroads.   It was believed that this will be quite beneficial for the Class II and III railroads.
• There is a need for an open National dialogue with state government, transportation administrators, state legislators, local government, freight user groups (shippers, producers and manufacturers) and economic development professionals on the future of freight movement.   The collaboration of the respective public information groups and associations forming a private/public partnership with key federal agencies (U.S. Departments of Transportation, Agriculture, Commerce, Justice and Homeland Security) would make a good model to follow.   Some of the topics that should be included but not limited to are:
• Containerized freight movement
• Identity preserved   products
• Terrorist threats to the freight supply system including food safety
• Determine each individual state’s stake in the movement of intrastate freight
• Discussions on how individual states can best create multimodal efficiency in both intrastate and interstate freight movement.  

            While many of the recommendation listed above also apply to Kansas, a more state-specific program is necessary to address these issues.   Issues such as better education as to the efficiency of rail freight movement; how tax dollars are not mutually exclusive when spent on rail rather than highways and the use of the State’s low interest loan/grant program are necessary to increase the efficiency of the movement of freight.

Kansas

Kansas Policy Recommendations:

• It is important that state policy makers know the needs of their constituency.   To better understand the freight issues, constituent groups need to better understand their needs and articulate them to policy makers.   To make this a reality, regional planning groups need to be established.   Since the movement of freight varies in each region of the state it is natural to assume that each region should help determine the best combination of transportation modes for freight movement.   This could best be accomplished through the establishment of several regional transportation planning organizations that could direct input to the State’s transportation administration.   The boundaries of these regional planning organizations should be based on similar economic activity and road and rail usage.   They could be based on current transportation district boundaries, crop reporting districts or planning area districts.   The underlying thread needs to be similar economic activity levels for each district.   These transportation planning organizations would serve as a mechanism for local elected officials and stakeholders to aid in the design of a multimodal transportation plan that would capitalize the resources available to each region and create an efficient method of moving agricultural commodities and other freight.   These organizations should:
• Be multi-county groups determined by sound criteria such as listed above
• Have a governing body that is representative of the local governments within the region
• Have transportation planners or direct access to them
• Provide a public forum for the cross flow of information
• Provide all necessary rail-related education for the region
• Be coordinated by the Kansas Department of Transportation

      Stakeholder groups that should be enlisted are:

• City and county officials
• Agriculture producers
• Shippers of commodities and other freight
• Representative of Class I and III railroads and trucking companies
• Local economic development officials
• Transportation planners
• State elected officials from their respective region
• The State should continue and augment the low interest loan/grant program that is available for short-line railroads operating in the state
• As on the National level, the State should better educate its constituents about the benefits of an integrated, total transportation system that offers modal choice.
• A rail user’s taskforce should be created to articulate regional freight issues and educate the public on the uses of multimodal transportation.
•  The State should explore the possibility of buying rail cars and leasing them to shippers at peak demand times.

The State needs to address the impact of larger grain cars (286,000 pound) on short-line railroads as fewer standard grain cars are available.   Much of the fleet of standard sized grain cars (263,000 pound) has reached their useful life.   It is recognized by the author, that the State’s low interest loan/grant program is designed to help short-line rail companies deal with this situation, but the current level of program funding is inadequate to sufficiently help our short-line railroads with this situation.  

Michael Babcock, et. al., p.p. 112 - 115