Grand Elk RR

[mikerm19]

Heres some more interesting info...

Michigan Economic Development Corporation

Ms. Anne K. Quinlan, Acting Secretary
U.S. Department of Transportation
Surface Transportation Board
395 E Street S. W.
Washington, D.C. 20423-0001
Dear Ms. Quinlan:
This Is an urgent request to stay action by the Surface Transportation Board
(STB) on a proposal from Watco Companies that we believe would
adversely Impact the rai l transportation options for businesses In northwest
Michigan. By acting on a stay to this proposal today, November 26,2008,
you wil l give the companies affected time to voice their opinions.
If you do not stay this action, the STB wil l automatically approve a proposal
for Watco Companies to lease just the Grand Raplds-Elkhart segment of
the Norfolk Southern rai l line through a Watco subsidiary, Grand Elk
Railroad, LLC. This would effectively eliminate one of Marquette Rail's
Class I rai l connection at Grand Rapids, the Norfolk Southern connection at
Grand Rapids. That connection Is currently being used by large
manufacturers In northwest Michigan. This action would pose economic
threats to existing as wel l as future companies that are dependent upon
reliable, cost-effective rai l transportation for their viability.
Please stay action on this proposal to preserve rai l access options for
businesses In northwest Michigan.

[KenB]

Why is Marquette Rail fighting this? Do they want the line? Arn't they limited in interchange to deliver all existing traffic to/from CSXT?
KenB

[mikerm19]

That's the only thing I can think of. They are connected with CSX directly, so they have to go through CSX to get to NS anyway.

[Raildudes dad]

MQT's NS traffic will now have to be handled by the GER in addition to CSX & NS. One more entity that needs to get a piece of the revenue pie. It makes MQT even more "dependent" on CSX.

[skrail]

I personally hope this is shot down.
As an employee of NS, hoping to come back to Mich. to work!!!
Right now I work Elkhart yard. My choice. NS is already talking layoffs, system wide.
This will trickle if Mi is sold. more young guys on the street. I like trains as much as the nexyt guy,
but the thought of new hires running in MY town just scares me.
Want to see different power? Go looking, lets not invite WATCO back to MI! Jobs are already lost.
Mines is (allegedly) secure, albeit afternoons, or pool work.
Thinbk of fellow men/ women. Who wants to move>? not me, I m in process of building my train room!!!
.Ill drive to Elkhart, no big deal its only 75 miles...LOL
But, when a railfan tells me how cool NEW RAILROAD is, please forgive my attitude...
Cuz, it will be 3 hrs driving, round trip, away from my family, and loss of my fellow brothers jobs,.
Some wil lgo to Toledo,Bryan, Elk...who knows where...
I hope the STB rethinks all this....
peace fellow railfans...
SCOTT in DA ZOO

[donnieland]

MARQUETTE RR CONNECTIONS

iirc when marquette rr was formed from csx trackage the agreement stated that
all rail interchange will be via csx only, z151 runs thru from the end of their track
ownership at the north side of turner ave ( approx 1 mile north of ann st - gre rr )
at the app signal to the gre rr. they don't stop and interchange with gre or ns at
any point on csx trackage. the filing listed above is not quite the truth and ns
will not have alot of trouble disproving the interchange statement. iirc the ns
trackage rights are from the hughart runner to ann st ( gre interchange ) and includes
the run around track just north of ann st, but there is a .6 mile gap where the tracks
are csx owned with only marquette rr having trackage rights.
the tracks from sunnyside are totaly controled by csx, the rn issues permits to all trains
to run on the line from sunnyside to turner ave. both ns and marquette trains run as
z trains.
if this new shortline is not allowed to form and run, i would look for ns to file to abandon
from kalamazoo or plainwell to the north to grand rapids after gm closes the 36th st
plant at the worse and at the best maintain a local service out of botsford only, closing
down all other operations out of hughart yd.
as i have said before i doubt csx will even let marquette rr get a sniff of trackage rights
on the east leg of the wye on the main at sunnyside to the hughart runner at pleasant st

[AARR]

It may have already been posted but I've been told by the MQT guys that all interhcange is with CSX and anything that goes to NS goes to CSX first who turns it over to NS. So what I'm picking up from the above threads is if GER operates the NS trackage then CSX, NS, and GER will all get $$$ driving up the price (or taking away more of MQT's cut).

[CSX_CO]

It may have already been posted but I've been told by the MQT guys that all interhcange is with CSX and anything that goes to NS goes to CSX first who turns it over to NS. So what I'm picking up from the above threads is if GER operates the NS trackage then CSX, NS, and GER will all get $$$ driving up the price (or taking away more of MQT's cut).

Not necessarily true. You get a portion of the revenue based upon how much you 'do' during that run. The bulk of the revenue comes from spotting and pulling the cars. Customer pays for any additional interchange charges that may get incurred.

For example, on loaded coal train moves from Terre Haute, IN to Sullivan, IN the INRD provides the crews for the run. The LOADS go via CSX from Belt Jct to Sullivan. The EMPTIES go via the INRD on the reverse route. INRD loses $6000 because they don't run the loads on their railroad. If they shift the loads to their railroad, it cuts CSX out of that portion of the haul, thereby making the INRD more money.

Depending on how its set up in GR, CSX may not get any revenue from the interchange between NS and MQT. Hawthorne Yard in Indianapolis is set up as this. LIRC, INRD, NS all come in and interchange with each other. Those railroads use CSX tracks to get to Hawthorne, CSX has to store the cars there, sometimes switches them out, and does not get a penny of revenue for it. It all comes down to the car routing and how the interchange agreement is set up.

I would think that the only gripe MQT would have is a lack of service on Grand Elk's part. If they can prove that their customers will be adversely affected by Grand Elk moving the cars a portion of the way, then they *may* have a case. A weak one, but a case none-the-less. They can't prove Grand Elk isn't providing the service until service starts. Get the cars routed via CSX to GR instead of NS, and they'd have no gripe what-so-ever.

My guess is it will go through with little to no opposition considering it is a LEASE and not an outright SALE. I don't think I'd be wanting to lease any track in Michigan now, especially considering the state of "The Big 3" and having to maintain the Michigan Line to AMTRAK standards (which I'm sure there will be a provision for). Isn't the body plant in GR supposed to close soon?

[kenN]

I wonder if they've considered that GM plans to close their Wyoming Plant (old Fisher Body Plant) at 36th and Bucanan sometime next year. Most of the times I've seen 36E (Elkhart to GR), the majority of cars are high-cube box cars for auto parts. Seems like that plant is most of the Grand Elk's business in Grand Rapids.

[AARR]

It may have already been posted but I've been told by the MQT guys that all interhcange is with CSX and anything that goes to NS goes to CSX first who turns it over to NS.

I'm pretty sure this is what a MQT employee whose involved with the numbers told me...

[mikerm19]

My guess is that Watco knows about the plant closing.

NS still does some transloading in their yard and such, so I tend to think that being up here won't be profitable for NS anymore, but a shortline would work fine.

[Raildudes dad]

IMHO, Watco didn't know about the GM plant closing during negotiations. It was a surprise to the local plant so I don't know how Watco / NS would know in advance. I've never priced or worked with MQT on pricing a move but my limited experience with another RR indicates a 1 RR move is good, a 2 RR move ok, most likely can be competitive with trucks, a 3 RR move probably will get beat by the trucks and a 4 RR move - forget it. CSX has a dog in this fight too. They really don't want MQT to have a direct connection with NS or anyone else in GR. They have insured they get a cut of every car MQT moves. Business growth on MQT is good for CSX. That's not necessarily the case if MQT doesn't have to go thru CSX.

[AARR]

As always, thanks for the good insights, RDD.

[GRTraction]

According to a recent rebuttal from lawyers on behalf of Watco (doing business as Grand Elk Railroad) the company knows about the GM plant closure. Something interesting in the filing also makes light that MQT and GER are in negotiations of establishing a direct connection. GER makes the accusation that MQT is filling petitions to gain leverage in this direct connection negotiation.

Filling can be found at the STB: http://www.stb.dot.gov/filings/all.nsf/ ... enDocument

[Mike H]

I love this industry! It is so unique and you never know what will happen next. This Watco stuff is fun!
Mike H

[mikerm19]

The latest filing as of today:
http://www.stb.dot.gov/filings/all.nsf/ ... enDocument

Here is the contents unformatted:

POK-ILAND, OREGON WASHINGTON. D C. BUND, ORFCONBEFORE THE
SURFACE TRANSPORTATION BOARD
STB FINANCE DOCKET NO. 35187
GRAND ELK RAILROAD, L.L.C.
-LEASE AND OPERATION EXEMPTION-
NORFOLK SOUTHERN RAILWAY COMPANY
REPLY TO UNITED TRANSPORTATION UNION'S
PETITION FOR STAY
Grand Elk Railroad, L.L.C. ("GER"), hereby replies in opposition to the United
Transportation Union's ('-UTU") Petition for Stay dated December 18,2008 ("Petition").
1
BACKGROUND
On November 3,2008, GER filed its Verified Notice of Exemption, pursuant to 49
C.F.R. Part 1150, Siibpart D—Exempt Transactions, to permit GER to lease and operate
approximately 122.9 miles of rail lines owned by Norfolk Southern Railway Company ("NS") in
Michigan and Indiana ("Notice of Exemption"). In the Notice of Exemption, GER explained
that its projected annual revenues may exceed $5 million and that, consequently, GER was in the
process of complying with the notice requirements of 49 C.F.R. § 1150.32(e). On November 25,
2008, GER certified its compliance with Section 1150.32(e). On December 1,2008, GER
revised its certification and, in so doing, expressly pointed out that the Notice of Exemption in
1
UTU also filed its Petition in STB Finance Docket No. 35188, Watco Companies. Inc. -
Continuance In Control Exemption - Grand Elk Railroad, L.L.C. (not printed), notice served
November 17,2008. The Notice of Exemption in that proceeding became effective on
December 3, 2008, thus, rendering moot UTU's request for a stay in that proceeding.this proceeding would not become effective until January 31,2009, Moreover, the labor notice
attached to the certification points but that GER will not be consummating the transaction until
March 1,2009.
REPLY
The standards governing disposition of a request for stay are: (1) that there is a strong
likelihood that the movant will prevail on the merits; (2) that the movant will suffer irreparable
harm in the absence of a stay; (3) that other interested parties will not be substantially harmed;
and (4) that the public interest supports the granting of the stay. Hilton v. Braunskill, 481 U.S.
770, 776 (1987); Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 559
F.2d 841, 843 (D.C. Cir. 1977); Virginia Petroleum Jobbers Association v. FPC, 259 F.2d 921,
925 (D.C. Cir. 195&)(" Petroleum Jobbers"). It is the movant's obligation to justify the exercise
of such an extraordinary remedy, Cuomo v. United Stales Nuclear Regulatory Comm., 772 F.2d
972, 978 (D.C. Cir. 1985), and the. movant carries the burden of persuasion on each of the four
elements required for the extraordinary relief. Canal Authority ofFla. V. Callaway, 489 F.2d
567, 573 (5th
Cir. 1974).
As is demonstrated below, UTU has failed to meet the stay criteria.
UTU Is Unlikely To Prevail On The Merits
UTU does not contend, much less demonstrate, that it will prevail on the merits in this
proceeding. UTU has not demonstrated, and cannot demonstrate that GER's Notice of
Exemption fails to comply with the Board's applicable regulations or that the proposed
transaction does not qualify for the class exemption.
Indeed, UTU's request for a stay is based on a false premise: that this proceeding is
similar to the one in STB Finance Docket No. 35063, Michigan Central Railway, LLC -Acquisition and Operation Exemption - Lines of Norfolk Southern Rail-way Company (the
"Michigan Central Transaction"), the approval of which was denied by the Surface
Transportation Board ("Board") in a decision served on December 10.2007.
As explained in the Notice of Exemption, the transaction in this proceeding is
significantly different and more routine than the Michigan Central Transaction:
• This transaction involves only a portion of the rail lines that were the subject of
the much larger and significantly more complex Michigan Central Transaction.
This transaction concerns the lease of 122.9 miles, with incidental trackage rights
over a 0.43 mile segment, to a new company, while the Michigan Central
Transaction involved the capital contribution of 299 miles of rail lines and 85.5
miles of trackage rights to a joint venture company.
- • In this transaction, GER will be a wholly-owned subsidiary of Watco. Unlike the
joint venture company proposed in the Michigan Central Transaction, NS will
have no ownership, management or other interest in GER, will have no members
on the GER board, and will have no ability - by veto rights or otherwise - to
control internal economic, strategic or operating decisions of GER.
• In this transaction, NS will not share in GER's profits. In the Michigan Central
Transaction, the parties proposed to create a joint venture limited liability
company that would have enabled NS - as a member of the limited liability
company - to participate in the profits.
. • GER will have the unrestricted ability to interchange with all of the rail carriers it
physically connects.with, and NS will receive no compensation for carloadsinterchanged with other carries, unlike the structure in the Michigan Central
Transaction.
UTU claims that it needs a stay so that it can review the discovery responses to ensure
that there arc no similar problems in this transaction as existed in the Michigan Central
Transaction. LTU's contention, however, is misplaced in at least two fundamental respects.
First, GER's Notice of Exemption would be void ab initio if this transaction were not as
described in the Notice. Second, UTU has propounded certain discovery requests on GER and
NS. GER intends to respond to the discovery requests in the very near future. Thus, UTU will
have more than adequate" time to review the responses and seek appropriate relief before the
Board well before the Notice of Exemption becomes effective.
Denial Of The Stay Will Not Cause UTU Irreparable Harm
An administrative decision is not ordinarily stayed without an appropriate showing of
irreparable harm. Permian Basin Area Rate Case, 390 U.S. 747, 777 (1968). UTU has failed to
demonstrate that anyone will suffer irreparable harm in the absence of a stay.
UTU claims, but submits no supporting evidence, that an unidentified number of UTU
members will be displaced as a result of this proposed transaction. Foremost, UTU's allegation
is highly speculative. In any event, the allegation, even if accurate, does not rise to the level of
sustaining a finding of irreparable harm. See STB Finance Docket No. 34145, Bulkmalic
Railroad Corporation - Acquisition Exemption - Bulkmalic Transport Company (not printed),
served December 27, 2001. The showing of "mere injuries, however substantial, in terms of
money... expended in the absence of a stay" do not constitute irreparable injury because adequate
compensatory relief can be had at a later date. Petroleum Jobbers, at 925. Neither the Board nor
the courts have found economic injuries of this nature to be irreparable because they arecompensable through reparations. See Finance Docket No. 30965 (Sub-No. 1), Delaware and
Hudson 'Railway Co. - Lease and Trackage Rights Exemption - Springfield Terminal Railway
Company (not printed), served July 15,1988. Indeed, the claimed loss of 72 employees was
deemed inadequate by the Board to support a showing of irreparable harm. See STB Finance
Docket No. 33326, I&M Rail Link, LLC - Acquisition and Operation Exemption - Certain Lines
ofSoo Line Railroad Company D/B/'A Canadian Pacific Railway (not printed), served April 4,
1997.'
A Stay Would Harm Shippers And GER
GER intends to upgrade the tracks and, as a short line operator, improve service to the
shippers'located on the leased lines. Thus, delaying the implementation of the involved
transaction will have a material, adverse effect on the shippers located on the leased lines by
delaying the benefits.they will realize once GER commences operations. Any delay in GER's
operations will cause GER to incur significant expenses, resulting in a loss of business that will
be unrecoverable and cause uncertainty among its employees and the shippers located on the
leased rail lines.
GER plans to spend $2.7 million on track rehabilitation once it leases the lines from NS,
including the replacement of 20,000 ties and the rehabilitation of two yards. GER's planned
rehabilitation program will create new jobs and infuse money into the ailing Michigan economy.
Any significant delay in the effective date of the Notice of Exemption will jeopardize GER's
ability to complete the rehabilitation program during the construction season. Also, GER will be
hiring more employees than are currently working on the lines. Consequently, GER's lease of
the lines will not only improve service to the shippers on the leased lines but will also infuse
capital into the Michigan economy and increase jobs at this critical time.
• 7A Stay Is Not In The Public Interest
UTU has failed to demonstrate how issuance of a stay would further the public interest.
UTU attempts to bootstrap the arguments raised by the Michigan Economic Development
Corporation ("MEDC") earlier in this proceeding. But MEDC's arguments have already been
rejected by the Board in a decision served in this proceeding on December 22,2008. The only
"concern" raised by UTU is whether the issues of concern to the Board in the Michigan Central
Transaction exist in this proceeding. As explained above,'that "concern" is totally without merit.
On the other hand, GER's proposed change in operations is intended to increase the
efficiency of rail operations in the area, improve service to the shippers and increase jobs on the
leased rail lines. For more than two decades, the Board and its predecessor have consistently
stated that the public interest is served by encouraging the formation of short line and regional
carriers. Consequently, granting the stay is contrary to the public interest.CONCLUSION
GER respectfully urges the Board to deny UTLPs Petition. The Petition falls woefully
short of meeting the criteria for a stay.
Respectfully submitted,
KARL MORELL
Of Counsel
BALL JAN1K LLP
Suite 225
1455 F Street, N.W.
Washington. DC 20005
(202) 638-3307
Attorney for:
GRAND ELK RAILROAD, LLC
Dated: December 24,2008CERTIFICATE OF SERVICE

[CAT345C]

Do you need any experience to be a signal maintainer?

If nobody will hire me as a conductor I would love to work on signals and stuff... I first went to college for electrical work.

DR can tell you all about it. He went from Meijers to National Signal in MI. Another acquaintance of ours went from Dura Mfg. in Mancelona to National Signal in MO. In fact they are hiring right now MI and Cinnci OH http://www.nationalsignal.com/

And thats why the gates in Durand going into the yard never work right Danes in charge of them from the rusty rail! JK Dane does a pretty good job I think....

[GRTraction]

MQT has sent a letter to the STB with official support for GER's exemption. There's a portion of the letter that is "Highly Confidential," but sounds like both parties have reach some form of agreement. Maybe that agreement is a direct connection between GER and MQT?

[SD80MAC]

This will get confusing, now we'll have a GRE and a GER!

[AARR]

This will get confusing, now we'll have a GRE and a GER!

Fortunately when the RR's get gthis confused (and you know they will the cars will still end up in Grand Rapids for GRE