Ag. Pushes Investment In Rail

From Gongwer News Report Volume #50, Report #173 — Friday, September 2, 2011

Michigan, and other states, have been working the last couple of decades to convert old rail lines to walking and biking trails, but more money now needs to go into refurbishing the remaining lines, the Michigan Agri-Business Association said in a paper released this week.

The report said rail service in a number of areas of the state is at risk without some improvements, but also urged policymakers to consider some expansions to rail.

Most of the group’s recommendations were for federal programs, but it did urge more funding for the Michigan Rail Loan Assistance program, which provides low-interest and interest-free loans for rail improvements.

“This is an important program that has seen much use by Michigan companies, particularly those involved in agriculture,” the report said.

Tim Hoeffner, administrator of the Office of Rail in the Department of Transportation, said the state agrees. He said the program would be open to new applications later in the fall, once it has accumulated enough funds to make adequate sized loans.

Mr. Hoeffner said the state also has a Freight Economic Development Program that makes low-interest loans that can be converted to grants if the borrower meets certain agreed traffic targets.

“With Governor Snyder’s renewed emphasis on agriculture and rural economic development, at transportation we take that very seriously,” Mr. Hoeffner said of efforts to business-related transportation in rural areas.

Agriculture and Rural Development Director Keith Creagh said his department and MDOT had been working to map the current rail lines and their proximity to agricultural development.

The MABA also urged extension of the Federal Short Line Rehabilitation Tax Credit and moving the Federal Railroad Rehabilitation and Infrastructure Financing Program to the U.S. Department of Agriculture.

The group said the financing program, now housed in the Federal Railway Administration, has $35 billion in funds for low-interest loans, but has approved only $1 billion because its application process is too difficult.

Without these state and federal programs, the state risks losing rail lines, which would mean moving more produce by truck. The group said in most cases the additional transportation costs would come out of the bottom line for growers.

Loss of rail in the Thumb region, for instance, would cost corn, soy bean and wheat growers $31.7 million a year for the extra cost of moving their commodities by truck.

“While some may say this is an exaggeration and that the rail is operating just fine, it should be noted that the speed on the track from Reese to Akron and beyond is limited to 20 miles per hour because of bad rail bed issues, and north of Bad Axe to Kindle, the speed is set at 10 miles per hour,” the report said.

“We are one washout, one trestle failure or one other problem away from rail not operating in this area!”

The state is also at risk of losing service because many rail companies are moving to larger cars that the rail in some areas of the state cannot handle, the report said.

Mr. Creagh said his department was working on a project in the Thumb region now to try to improve rail service.

Mr. Hoeffner said any actual improvements to the lines would have to be done by the companies that own the tracks, though the state was ready to step up with assistance if they apply.

He said the state is also working on a variety of projects, including a study with the Federal Highway Administration, to encourage more use of the state’s rail lines.

“In a lot of places, these are underutilized assets and there will be opportunity for more trains,” he said. More trains would mean bringing down costs for transporting produce from rural areas, he said.

The report said rail, because it is more efficient at carrying the bulk and weight of agricultural products and fertilizer, is essential to new agriculture development and that no new processing facilities in particular are likely to be located where rail is not available.

“There’s commonalty in having rail access and being successful over time,” Mr. Creagh said. But he said roads, bridges and communications are also key to success. “We need to have all those components as we look at the infrastructure,” he said.

Mr. Hoeffner said communities not currently served by rail should not expect to seen tracks laid. “I wouldn’t really see that there’s going to be a growth in the miles of rail in Michigan or anywhere in the country,” he said.

But Mr. Creagh did not completely close the door to new rail. “That’s where we’ll continue to work with businesses as they seek to expand,” he said.

Though the report did not specifically call for reopening any prior rail lines, it did note that loss of some lines have converted what were once through lines to short lines, meaning they will take only local traffic and are limited to the local commerce along those lines.

Mr. Hoeffner said the conversion of some lines to shortline providers was not necessarily a disadvantage to the farmers along those lines. “The shortline industry is very attuned to the needs of agriculture, particularly smaller agriculture business in the state,” he said.

The report also chastised efforts to move to high-speed passenger rail in the state. “While no one is against enhanced passenger rail travel, the fact is that in the broadest terms, a network of passenger trains that operate on an interconnected schedule to provide intercity travel is probably a lost cause,” the report said. “What appears to be developing is a patchwork of single lines
that might be dedicated to travel between select cities, without much thought to the broader transportation network or the impact on freight.”

For instance, the move by Amtrak to purchase track between Pontiac and Kalamazoo could inhibit freight movement along that route.

Mr. Hoeffner rejected the group’s concerns. He said improvements in passenger service are only part of the reason the state is seeking to acquire the line for Amtrak. “One of the reasons the state wants to obtain that line is not only increasing passenger service but for more people shipping by rail or more opportunities to ship by rail,” he said.