NCTA Issue 2, 2015 by National Coal Transportation Association

ISSUE 2 | 2015

2015 Fall Conference Grand Hyatt, Denver

New Waterborne

Committee

International

Marine Terminal

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Contents 8

PUBLISHED BY: National Coal Transportation Association 4 W. Meadow Lark Lane Suite 100 Littleton, CO 80127-5718 Phone: 303-979-2798 Fax: 303-973-1848 www.nationalcoaltransportation.org Editor: Pat Scherzinger Phone: 303-993-7172 scherzinger@ nationalcoaltransportation.org Production By: Suckerpunch Creative Inc. info@suckerpunch.ca www.suckerpunch.ca ©2015 NCTA. All rights reserved. The contents of this publication may not be reproduced in whole or part, without the prior written consent of NCTA. The opinions expressed by the authors of the articles appearing in the Coal Transporter are those of the respective authors and do not necessarily reflect the opinion of the NCTA, its Board of Directors or its member companies. Publication of the articles does not constitute an endorsement of the views that may be expressed.

ISSUE 2 | 2015

FEATURES

DEPARTMENTS

Meet Your Board: Don Vissat

Railroad Profiles

Message from the NCTA President – Kent Smith

International Marine Terminal

Transportation Research Board Recommends Six Changes for Regulating Railroads

Message from the NCTA Executive Director – Tom Canter

NCTA Membership Benefits

Associated Terminals

NCTA Committee Updates

Wheels, Wheels, Wheels

Calendar of Events

Who Will Pay for Additional Freight Infrastructure?

Members Sound Off

Coal Combustion Residuals Rule

View from the Caboose

Reflections: Kathy LeFevers Helps Give Old Cars New Life

Membership List

Index to Advertisers

CONFERENCES 14

Forty-First Annual Business Meeting & Conference

Grand Hyatt, Denver, Colorado

Spring General Conference Recap

The Wigwam, Litchfield Park, Arizona April 26-29, 2015

Operations & Maintenance Conference Wrap-Up

Pinehurst, North Carolina, June 8-10, 2051

COAL TRANSPORTER ||11

President’s Report / Kent Smith

A Message from NCTA President, Kent Smith

Common Sense?

’m probably naïve, but I’ve always felt like, with all of the craziness going on around us, common sense will one day prevail. My hope has been that at some point the vast majority of people will recognize just how silly some of our policies have become and will demand the ship be righted. It may take some time, maybe a lot of time, but common sense has to eventually prevail. I’ve also always felt like some of our detractors with extreme views would eventually show themselves for who they really are causing the majority of people to take note. A few things have happened recently that have made me wonder if this could be happening. • At the commencement exercises for the Coast Guard Academy in May, the President told the 218 graduating cadets “Climate change constitutes a serious threat to global security, an immediate risk to our national security, and, make no mistake, it will impact how our military defends our country. And so we need to act — and we need to act now.” I can’t help but wonder what the leaders of ISIS, Iran, North Korea, and Russia think when the leader of the free world makes a comment like that. • The EPA is awarding the University of California a grant to “perform research and develop preventative technology that will reduce fine particulate emissions (PM2.5) from residential barbecues.” • The Boy Scouts of America recently reminded leaders of the policy banning members from having water gun fights. Water balloons are permissible as long as they contain no more water than a PingPong ball and the balloon itself is biodegradable. I may be out of touch but I’m guessing the vast majority of Americans don’t believe that climate change is the most pressing immediate risk to our national security or that we need to mess with backyard grills, or that there is anything wrong with some kids having fun squirting water on each other. At some point common sense should tell us that a small minority of people with extreme views shouldn’t be making policy decisions for the rest of the population. I believe we need to continue the excellent progress the industry has made over the past 40 years to make coal use increasingly clean – and increasingly climate compatible as well. But this needs to be done in a measured and evolution2 | COAL TRANSPORTER

ary way that enables us to advance our other important goals – such as economic growth, grid reliability and global competitiveness. So how does all of this relate to the NCTA? With our limited resources we aren’t capable of matching the advertising or legal budgets of some of the organizations actively trying to destroy our industry. But there are some simple things we can do. 1. EDUCATE – This is a key portion of our mission statement. We can focus on providing members valuable information to discuss with our government representatives but more importantly our friends and neighbors. In other words, while we’re having a neighborhood cookout, enjoying the aroma of the “fine particulate emissions” from a perfectly cooked piece of meat and watching our kids and grandkids take battle with the Super Soaker Blaster, we can also have a thoughtful common sense discussion with our family and friends about energy policy. We are the coal industry’s biggest advocates. Being informed and spreading factual information can only benefit the greater goal – sound and sensible energy policy. 2. INSPIRE – While there is no denying our industry has taken some major hits over the past several years, we can’t give up. This is the industry that powers and strengthens world communities. It is too important. Abraham Lincoln said “My great concern is not whether you have failed but whether you are content in your failure.” We simply can’t give in – and I don’t think we will. I’m very proud and excited to serve this organization in this role. I can tell you that the staff and Board of Directors have met several times over the past year or so with one thing in mind – making certain the NCTA remains relevant in this challenging environment. The recent Member Survey was a direct result of that focus. Hopefully you’ve already noticed some of the new information coming out on a regular basis. Tom, Pat, and Melinda are doing a great job keeping us all informed through LinkedIn, special bulletins, and the new monthly newsletter, The Carbon Copy. Other changes will likely be on the way as we continue to delve into the survey results. We are committed to making this great organization an even better one. It only makes good common sense to do so. s

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Executive Director’s Message / Tom Canter

A Message from NCTA’s Executive Director, Tom Canter

Capitalism in the Crosshairs

nce again, the days of summer are progressively becoming shorter as dictated by the earth’s orbit. Ah yes, this is simply evidence of the immutability of the laws of physics and of the sidereal relationships of time and space. Comforting in a way. Especially, when contrasted against the hyperactivity of the radical environmentalist’s rendition of Chicken Little’s impassioned plea that “The sky is falling, the sky is falling! Yes, it is comforting to know that the sky is not falling. Facts are not a barrier for the ambitious politicians throughout the world. The intended consequence favored by politicians is an enforcement scheme for CO2 reduction controlled by national governments subservient to a UN regulatory body. The end game is socialist power over the citizenry that is fundamentally opposed to capitalism. The target, we all know, is any process that generates carbon dioxide, the oxidized version of the carbon building block of life. This is an attack on the chain of photosynthesis for the growing of nutritious food and producing the necessary oxygen to sustain life. Hello, anyone out there? Now that the fossil fuel industry has met the challenges of significantly reducing nitrous oxides, air particulates, sulfur dioxides and sulfates, and mercury and toxics, new hurdles must be found. I still remember the day that our combustion engineer came into my office and stated, “The radical environmentalists have come up with their trump card; carbon dioxide is now declared a major pollutant and the cause of global warming.” I thought, you mean we will no longer have carbonated drinks? No, no, this is about eliminating fossil fuels and making millionaires of investors and politicians who are behind the push for so-called renewables. The direct effect to human health as required under law is simply not a positive and viable finding, so externalities must be entered into the calculation to show some specious cost/benefit analysis. Externalities are the economist’s euphemistic terminology for fabricating detrimental harm to society or the earth arising from combusting fossil fuel. Count on it. The upcoming release of the “Clean Power Plan” will show amazing economic benefit with sustainability of the “clean energy” supply thanks to the manipulation of computer-based economic modeling to include externalities. Allow me to summarize my ramblings and musings: The politically correct thinking of the opponents of coal see harm to the earth and its environment that can only be mitigated by the elimination of the use of fossil fuels. 4 | COAL TRANSPORTER

Radical (not all) environmentalists possess a passionate belief that is tantamount to a religion wherein the earth itself takes precedence over the known advances in human lifespan, health, and improved standard of living since the advent of the widespread use of coal, petroleum, and natural gas. The environmentalist’s musings do not provide comfort to him or her. To only believe in the earth or “nature” is to accept the limitations of entropy and to force the belief in a god of scarcity. Then, the only remedy to anthropogenic activity generating CO2 is more anthropogenic activity that strains at the gnat to cap the CO2 concentration in the atmosphere to 400 parts per million. According to this belief system, one must not accept that natural variations in climate will return to their historical null point over sufficient time due to systemic negative feedback. Rather, one must start with the answer and develop a computer model than “predicts” the coming disaster. Throw in some unnatural “positive feedback” and the computer will spit out a graph with a “hockey stick” at the end of a future time. This printout becomes a marvelous talking point to generate a call to action. Finally, the fat is in the fire. The political agenda has been set in 2015. This is the year that NASA declared 2014 globally the warmest year on record in the spring. The “Clean Power Plan” was released on August 3 as timed for the second movement of the symphony of planned orchestration. The leading guru of scary disasters from climate change, James Hansen, released a computer model that shows why Antarctica has increasing sea ice while the earth and seas are warming. Religious leaders will demand a sustainable environment with a declaration that global warming is caused by rich nations overly consuming natural resources. This sets up the demands by the UN in Paris in December for “…a new sustainable development agenda that must finish the job and leave no one behind.” The UN has listed 17 goals for the December agenda and the first 12 are solely about a socialist global governance system that is to, among other goals, “reduce inequality within and among countries.” The remaining goals are about taking urgent action to institute sustainable, accountable (to whom?) development. So you can surely see that we are not solely in a war on coal, but there is a worldwide war on capitalism as well. Back to musing over the abundance of creation; for the record, I believe in a God of abundance, not scarcity. Have a safe day producing energy and wealth for the good people of North America. s

Energy to Power the Country®

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Know Your Board / Don Vissat

Know Your Board:

Don Vissat

Director of Customer Service Cloud Peak Energy

6 | COAL TRANSPORTER

on Vissat is the Director of Customer Service for Cloud Peak Energy, headquartered in Gillette, Wyoming with offices in Broomfield, Colorado, just north of Denver. Don enjoys his job because it is a big picture kind of position. The work provides a unique perspective of bringing the mine production and quality together with logistical requirements to meet customer contractual commitments. Don was born and raised in Pittsburgh and he is still a bit of a Steeler fan. While Abby Herl who was profiled at this time last year, was also part of a four boy and one girl household, Don’s family was a bit different in the boys were two sets of twins. Needless to say, Don grew up in a very active household which suited his parents’ just fine. After graduating from Pennsylvania State University in 1980 with a BS in Mining Engineering, Don went to work for Shell Mining Company. While he worked in several locations during his twelve years there, there was one move that changed his life. While living in New Philadelphia, Ohio, he decided to buy a house. It wasn’t the girl next door, but Kristen, the girl down the street that made all the difference. Don and Kristen were married in 1985. Don’s career path has taken him to mines in many locations and while his resume may look like he worked for many different companies, much of the change was a result of merger and acquisition activity. After leaving Wolf Creek Collieries, he did a stint for Shell Mining in their gold and silver operation before moving on to one of Shell’s coal properties in West Virginia. By the spring of 1993 he had arrived in the Powder River Basin and was now working for Ziegler’s-Triton Coal who had just purchased Shell’s Buckskin Mine. Don found Gillette to be a very welcoming and engaging community. In February of 1997 he took a job at Kennecott Energy’s Cordero Mine and was there when they purchased Caballo Rojo. It would not be the last time he

worked to bring two companies and two cultures together. The very next year, the Jacobs Ranch mine was added to the mix. In 2001, the family went on an Aussie adventure, spending a year and a half at Rio Tinto’s Hunter Valley Operations in New South Wales. After returning to the basin in 2002, Don spent most of his time at Jacobs Ranch, eventually taking control of the operation as General Manager. In October of 2007, Don took a position as Director of Health & Safety for Rio Tinto’s US coal operations. In 2009, Rio Tinto divested its US coal assets by spinning them off in an IPO that created Cloud Peak Energy. Don has been involved with the NCTA for about 10 years, the last three as a member of the Board of Directors. Don has been spearheading the effort within the Board to develop an investment policy for the association’s operating reserves. Don and Kristen have three sons Brent, Branden, and Bryan. They finally have a girl in the family with new daughter-in-law Chelsey. “Kristen is the rock and foundation of the family” says Don. With all the moves and travel, she kept up with the boys and always kept the family organized. As a registered nurse, she was able to pick a schedule that best fit in with the family’s needs. Don served as a scout leader during his time in Gillette and following in their Dad’s footsteps, all three boys achieved the rank of Eagle Scout. He was also very involved with coaching his boys during their soccer careers. The family enjoys living in Colorado so they can enjoy the outdoors by hiking, camping, and fly fishing in the summer and snow activities in the winter. Don and Kristen love to travel and are celebrating their 30th wedding anniversary with a cruise to several Mediterranean Countries. Don also collects and restores antique furniture. He particularly enjoys restoring old streamer trunks inside and out. The lining fabric he selects for a particular project is a reflection of its intended new owner. s

Formerly known as Ambre Energy NA, we are implementing our vision of being an emerging leader for the export of US thermal coal.

2b 1

2a 4

Focused on exporting clean, low sulphur PRB coal to the Asian Pacific rim by unlocking the export potential of the Pacific Northwest. We own and operate thermal coal mines in the Western US and are establishing new port infrastructure to support the export of American coal.

Signed offtake agreements with KOSEP and KOSPO

2 producing coal mines 2 port sites on US west coast

Lighthouse Resources US locations 1

Millennium Bulk Terminals - Longview

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Morrow Pacific Project (100%)

Salt Lake City corporate office

Coyote Island Terminal

Decker Mine

Port Westward

Black Butte Mine (50%)

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Infrastructure / Railroads

8 | COAL TRANSPORTER

TOM CRUISE, JAMES CASKY, AND ABRAHAM LINCOLN How These Gentlemen Impact Today’s Railroads NORFOLK SOUTHERN

Bottom’s Up: Top Gon ‘Retubs’ Add Life to NS Coal Fleet

orfolk Southern’s coal network provides customers with unparalleled access to the historic Central Appalachian and Northern Appalachian regions as well as the Illinois Basin and Powder River Basin and connections to U.S. domestic and export markets around the globe. With Norfolk Southern’s extensive market reach, the railroad is positioned to respond to the needs of its coal customers today and in the future. NS has been working with coal customers to keep pace with changing sourcing shifts by making strategic investments in infrastructure and capacity and ensuring its coal car fleet is in top condition. In recent years, several NS utility customers have required shifts from the Central App to the Northern App and Illinois Basin. Working closely with customers, Norfolk Southern responded by investing $25 million in extending yard tracks and sidings in the Illinois Basin to accommodate longer trains and enhance service.

NS maintains a fleet of approximately 22,000 coal cars, including manual hopper cars for bottom-drop customers, gondolas for rotary dump service, high cubic capacity coke hoppers and air-operated quick discharge hoppers. Norfolk Southern replaces the oldest steel hoppers and gondola cars in its fleet as the cars come to the end of their productive lives. During the past nine years, NS has replaced about 12,000 coal cars – more than half the fleet. In an innovative program, Norfolk Southern is giving its “Top Gon” coal cars – a name inspired by the 1986 “Top Gun” movie starring Tom Cruise as a Navy fighter -- renewed life on the rails. Built to move export, domestic metallurgical and industrial coal, thousands of the gondolas were “rebodied” in the 1990s, a process that involved replacing the entire structure above the trucks and wheels. Now the cars are getting new bottoms, or tubs, to extend their usefulness even longer.

Central App Commitment Continues

While the conversion of Central App to Northern App and Illinois Basin will continue, Norfolk Southern will continue to support Central App coal moving to market the same way the railroad has for more than 100 years. Many NS-served utilities will continue to source Central App coal for some or all of their blends, and Central App coal will continue to be the dominant resource for metallurgical and export coal.

Serving Global Markets

As a key player in the export market, Norfolk Southern’s Lamberts Point facility in Norfolk, Va., the largest and fastest export coal loading facility in the Northern Hemisphere, offers more than 40 million tons of capacity. Norfolk Southern provides expert sourcing and blending of high quality steam and metallurgical coal at the terminal. Approximately 70% of NS’ export volume moves through Lamberts Point. NS-served river and lake facilities located strategically to the Central App and Northern App regions provide an additional 23 million tons of capacity. These facilities provide NS with market reach throughout the US and the world. Norfolk Southern is truly a global transportation provider of the U.S. coals. Norfolk Southern is positioned to meet the needs of its coal customers today and tomorrow. s

During the past nine years, NS has replaced about 12,000 coal cars – more than half the fleet.

COAL TRANSPORTER | 9

CSX TRANSPORTATION

CSX’s new Casky Yard will help CSX more efficiently connect the growing demand from the Illinois Basin coal traffic to utility providers in the southeast and industrial and steel destinations. The yard opened on Friday, June 26, with four 10,000 ft. inspection tracks in service. The current inspection track capacity is approximately 25M tons annually.

s the largest coal transporter east of the Mississippi River, CSX has an important commitment to move the coal that powers and builds our nation and the globe. CSX serves more than 120 load-outs in 9 states, interchanges seamlessly with Class I railroads and short lines, and provides access to multiple Eastern seaports. CSX moves coal Crew and Train Availability shipments to major export terminals in Newport News, Virginia; Keys to Improved Performance Baltimore, Maryland; and Mobile, Alabama. We also service two coal terminals on the Great Lakes and several terminals along the Locomotive and crew resources are also driving improved service inland river system in North America. for CSX. Locomotive availability remains high and the average CSX’s transportation offering provides flexibility to match number of trains delayed due to power continues to be well customer needs across the network. For shipments of a full below the levels seen in 2014. CSX expects to receive a total of trainload, CSX has dedicated trainload quantities to seamlessly 200 new engines in 2015, including the delivery of an addimove unit trains from mines to receivers. CSX’s services can also tional 125 new Tier 4 emissions compliant engines beginning in be tailored to meet the individual needs of less-than-trainload late July. shippers. In these cases, single cars or blocks of cars are readily Additionally, improved train crew availability has been funmanaged to service our customers. damental to delivering better operating performance in 2015. In order to safely and efficiently move customers’ freight Trains delayed due to crew availability in 2015 continue to across our network, CSX invests more than $1 billion track well below the levels seen throughout per year in infrastructure maintenance. The distribution 2014. Going forward, CSX will continue We have a proven track of this investment includes tracks, bridges and facilities. to balance crew resources with commercial CSX also strategically deploys capital investments across volumes on a geographic basis. record of providing our the network to increase efficiency. With the help of these investments and customers with safe

and efficient rail service, and we will continue to focus on transporting this important commodity

Modular Design Paves Way for Future Growth

CSX designed and built the new Casky Yard in western Kentucky to grow with the region, today and long into the future. Casky Yard is a modular design with capacity for ten inspection tracks. The modular design allows CSX to quickly and efficiently add inspection tracks as unit train demand within the region grows. Currently, the design also includes a full service car shop, locomotive servicing facility with two 400,000 gallon fuel tanks, and five 3,000 ft. storage tracks for system and customer replacement cars. Locomotives fuel in place on the train to increase productivity. 10 | COAL TRANSPORTER

resources, CSX will continue its focus on driving both service performance and service reliability improvements. Nonetheless, CSX’s coal business continues to experience market challenges as utility providers face regulatory pressures, low natural gas prices serve base load energy demands, the international market still maintains an elevated supply of coal. At CSX, we’re focused on ensuring that “It Starts With The Customer.” We have a proven track record of providing our customers with safe and efficient rail service, and we will continue to focus on transporting this important commodity. s

UNION PACIFIC RAILROAD

t was more than 150 years ago that Abraham Lincoln signed the Pacific Railway Act of July 1, 1862, creating the original Union Pacific. With the historic stroke of a pen, the stage was set for Union Pacific to open the American West to settlers and, in the process, unite a continent. It took an army of 20,000 men, working 12 to 16 hours a day, seven days a week, for six years. They crossed hundreds of miles of desert, pushed into mountains, and forded streams and rivers to connect America by rail. It was a remarkable feat, as the system was built primarily by hand. With the driving of the Golden Spike on May 10, 1869, the route was complete, and a vast, largely unpopulated region was poised for growth. The transcontinental route heralded the Industrial Revolution and modernized transportation. Many of the 7,000 communities throughout the railroad’s system can trace their origins directly to a Union Pacific depot. Today, our fleet of more than 8,000 locomotives travels to 23 states over 32,000 miles of track. Union Pacific is a Fortune 150 company with 47,000 employees working, day and night, for the good of those communities, our customers, our shareholders and one another.

BUSINESS LINES

Union Pacific’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products, Intermodal and service to Mexico markets. We combine excellent customer service with innovation, technology and capital investment to deliver the goods American businesses and consumers use daily. Union Pacific operates competitive routes from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada’s rail systems and is the only railroad serving all six major gateways to Mexico.

AGRICULTURAL PRODUCTS Union Pacific’s Agricultural Products business helps farmers deliver their products in a safe and efficient manner. We haul everything from fresh and frozen foods to beverages like beer, sweeteners, meals, oils and the whole grains and grain products that feed the nation. We also have a team of experts dedicated to serving the ethanol industry.

AUTOMOTIVE We serve customers in the finished vehicle and aftermarket vehicle sectors. Union Pacific directly serves vehicle assembly plants in the western U.S., carries imported vehicles from West Coast and Gulf Coast ports, and operates vehicle distribution centers for all major automotive manufacturers. We also provide expedited automobile parts.

Unsurpassed Quality | Competitively Priced | Prompt Order Turnaround

Your source

for parts WestRail has capabilities to cross reference coal car running marks to our parts catalog

• Complete line of replacement parts for 16 common coal car models • Large inventory of ready to ship materials in-stock at our McPherson, KS warehouse • Servicing repair shops throughout the United States, Canada and Mexico • Helpful and responsive customer service

For more information contact: Mark DeBoer at 800-821-2376 or Peter Sutcliffe at 303-494-1214 WestRail Division, Aero Transportation Products, Inc. 924 W. 1st Street, McPherson, KS 67460

800-821-2376 WestRail.net COAL TRANSPORTER | 11

Union Pacific is the only railroad to serve all six major gateways.

CHEMICALS Chemicals are integral to supporting America’s standard of living. They are used to make our drinking water safe, produce plastics used in the industrial manufacturing and disposable consumer goods markets and in fertilizers used to grow food. Union Pacific’s Chemicals group ships petrochemicals, fertilizer, soda ash and crude oil, an expanding market that Union Pacific is uniquely positioned to support. It serves the nation’s largest chemical production area, located in the Gulf Coast, and the world’s largest soda ash reserve, located in Green River, Wyoming.

COAL Coal generates 40 percent of the U.S. electricity supply and Union Pacific delivers more than 20 percent of the total coal American businesses and consumers use. Our Coal team is committed to providing coal transportation to the utility, industrial and export markets. Union Pacific’s geographic reach and connections allow us to deliver coal to electric plants across the nation, West Coast and Gulf Coast ports and facilities located on the Mississippi River, the Ohio River and the Great Lakes.

INDUSTRIAL PRODUCTS The Union Pacific Industrial Products team ships a variety of raw materials and finished goods. Key products shipped include aggregates, cement, roofing materials, military equipment, wind turbine components, generators, household appliances, lumber and panel products, pipe, sheet steel, beams, scrap metal, sand, lime, clay and waste.

12 | COAL TRANSPORTER

INTERMODAL Union Pacific’s Intermodal team offers a wide range of multimodal transportation solutions for domestic and international freight including electronics, furniture, clothing, toys, appliances and many other products. Our extensive door-to-door and ramp-to-ramp services provide customers truck-competitive transit times and access to markets throughout North America.

MEXICO MARKETS Union Pacific is the leading transportation services provider to and from the United States/Mexico border handling two-thirds of the rail market share in and out of the country. Union Pacific is the only railroad to serve all six major gateways. We have extensive sales coverage in Mexico City, Monterrey, Guadalajara and Irapuato, at border locations such as Laredo and El Paso, and throughout the United States. s

THE NEXT GENERATION OF PROGRESS PROVEN QUALITY. ADVANCED INNOVATION. THAT’S PROGRESS.

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NCTA 2015 Fall Conference / Preview

NCTA 2015

Fall Conference Grand Hyatt, Denver, Colorado | September 14-16, 2015

he NCTA continues to offer “Conferences with Character” as it stages its 41st Annual Business Meeting and General Conference, September 14-16, 2015 at the Grand Hyatt, Denver, Colorado. The 2015 Conference is an opportunity to learn the facts and explore the issues directly with knowledgeable executives, regulators, consultants, and industry leaders. Keynote speakers include STB Chairman Daniel Elliott III and Professor John N. Doggett, Senior Lecturer at University of Texas McCombs School of Business. Rail service has improved and inventories for most of our member utilities have recovered this year. To address the newest challenge for shippers, producers, and railroads alike, the theme of this year’s conference will be “Fuel Fitness: Flexibility and Balance.” As coal and natural gas compete on the margin, can we balance the desires of the parties to provide a ratable supply? Where is the least cost flexibility in the supply chain and how do we take advantage of it? Inventory on the ground is great - up to a point. What happens when we hit that point? Please check the NCTA web site for updated information and online registration or use the QR Code to register on your smartphone now.

REGISTRATION

Registration is required for each attendee of the NCTA Annual Meeting and Conference. The registration fee is now $480.00 for those representing an NCTA member company and $680.00 for all other attendees. The registration fee includes access to presentation materials; entry to all sessions; the receptions on Monday and Tuesday evenings; continental breakfast on Tuesday and Wednesday; and all refreshment breaks. Please consider pitching in to sponsor this event. Sponsorships are only $450 and can be paid in the conference registration process. The flyer sponsorship is $750 and includes a one-third page sponsor advertisement/acknowledgement. All sponsors will be recognized on the agenda, with banners at the event, on the NCTA website, and in the Coal Transporter magazine.

14 | COAL TRANSPORTER

ACCOMMODATIONS

The Grand Hyatt Denver Downtown is a new venue for the NCTA. The Grand Hyatt has 516 elegant guestrooms featuring free internet access, 42-inch flat-screen TVs, coffeemakers and rainfall showerheads. A recipient of the AAA Four Diamond Award, the Grand Hyatt is just two blocks from the 16th Street Mall. One of the most stunning features of the hotel is the 38th floor Pinnacle Club which offers panoramic views of the Rocky Mountains and downtown area. We are pleased to have both conference receptions at the Pinnacle Club. According to the USGS, the land area seen from this location is larger than Connecticut, Rhode Island and Delaware combined. Dining options at the Hyatt include a brewpub serving regional cuisine, a fireside bar and a Starbucks. The 4th-floor fitness center has an indoor heated pool and the rooftop holds both a tennis court and a running track. The Grand Hyatt is located at 1750 Welton Street, Denver, Colorado, USA, 80202.

RESERVATIONS: Telephone: 303-295-1234 ROOM RATES PER DAY: $179.00/day Single/Double Make your reservation by 5 pm local time on August 24, 2015 to get the guaranteed NCTA rate.

MONDAY, SEPTEMBER 14 All Day 3:00pm – 5:00 pm 5:30pm – 7:00pm

Packets at Hotel Check-In NCTA Board of Directors Meeting Welcoming Reception

TUESDAY, SEPTEMBER 15 8:00am – 11:30am 11:30am – 1:00pm 1:00pm – 3:45pm 4:00pm – 4:30pm 5:00pm – 6:30pm

General Session Lunch by Individual Arrangement General Session NCTA Annual Business Meeting for Members Sponsor’s Reception

WEDNESDAY, SEPTEMBER 16 8:00am – 11:30am General Session

THINGS TO DO AND SEE IN DENVER If you haven’t had the chance, check out Denver’s recently restored Union Station. Its $54 million facelift was completed last year. Starting in 2016, you will be able to take light rail directly from the Denver airport to Union Station. The historic ticketing office inside the Great Hall has been repurposed, and you will be pleasantly surprised at what you can buy there now instead of a train ticket to the west coast. All aboard!

The Broncos are home on Sunday the 13th against conference rival the Baltimore Ravens. Kickoff is 2:25 pm. New Bronco coach Gary Kubiak gets to scheme against his 2014 team, so that should make things interesting. Sadly the Rockies are on a west coast road trip, so there will be no peanuts and crackerjacks this year. The iconic 640 acre Red Rocks Park is a great place for a day hike. It includes an outdoor amphitheater that seats 9,525

and serves as a fabulous outdoor music and event venue. Built as a WPA project in the 1930’s, it opened on June 15, 1941. If such a project was proposed in this century, environmentalists would probably have blocked its development. That would have been a huge disappointment for the 912,000 fans who attended concerts, films and events at Red Rocks last year and an estimated one million others who also visited the site for tourist and recreational activities. s

COAL TRANSPORTER | 15

Terminals / International Marine Terminal

INTERNATIONAL MARINE TERMINAL Ready for the New Panamax BY: Dave Gambrel

16 | COAL TRANSPORTER

t takes foresight and courage to invest huge sums of money in a market downturn or when an industry sector is being pummeled by opposition, namely against coal and other fossil fuels. Never a company to recoil from challenges, Kinder Morgan recognized several years ago that in spite of all the fear-mongering generated by environmental groups, international companies that had burned coal knew it was still the best fuel available. Even when dozens of investors were flocking to the Pacific Northwest to initiate new terminal plans, Kinder Morgan knew that it would emerge ready to export PRB coal years via Gulf Coast terminals before any of the new terminals would complete. Today, the Pacific Northwest has lost its one-time luster.

Kinder Morgan’s foresight was bolstered by some recent long-term agreements with Peabody Energy to secure Gulf Coast export facilities for its PRB, Colorado, and Illinois coal production. Under the 2012 throughput agreements Peabody would have privileged access to Kinder Morgan’s Deepwater Terminal and Houston Bulk Terminal near Houston through 2021, and to Kinder Morgan’s International Marine Terminal (IMT) in Myrtle Grove, La., through 2020. The IMT exports would begin in 2014; the Cora Terminal throughput agreement would be extended through 2018 under a then-existing agreement. Kinder Morgan would invest about $400 million to expand its entire Gulf Coast terminal network. There was solid reason for optimism, and the IMT upgrade was

approved at $186 million. The Peabody agreements were very important, but Kinder Morgan’s optimism was also charged by the imminent completion of the Panama Canal Expansion. The final gate has been placed, expansion is 85% complete with the final cost totaling over $7 billion, and there is a projected date of completion between this coming December, or the early months of 2016 if there are no further setbacks. IMT will be ready for the much larger vessels that will start calling at its dock. New Panamax: All vessels with dimensions greater than Panamax or Panamax Plus that comply with the size and draft limitations of the new locks; namely, 366 meters (1200’9”) in length by 49 meters (160’9”) in beam by 15.2 meters (49’10”) Tropical Fresh Water

...Kinder Morgan’s optimism was also charged by the imminent completion of the Panama Canal Expansion. COAL TRANSPORTER | 17

Located north of Port Sulphur, IMT is just a short distance from the Gulf

Location of International Marine Terminal at River Mile 57R (River flows from left to right). (SAI Gulf replaced the SGS sampling and testing office located on the property.) draft. (Some shipowners use the term “Post Panamax”, which is not used by the Panama Canal Authority.) Where is IMT? The vessel entering Southwest Pass will travel 20 miles up the maritime superhighway called Southwest Pass before passing the point called Head of Passes, then another 57 miles up the Lower Mississippi River before its master sees IMT’s dock on the port side of his vessel. It is in deep, protected waters with no obstacles to avoid. The natural water depth in this stretch of the river may be as deep as 200’. The depth of Southwest Pass is only 47’, and is the controlling depth for loaded vessels. Legislation has been passed to increase it to 55’, but local pressure is being applied to increase it to only 50’ in view of the New Panamax dimensions. 18 | COAL TRANSPORTER

Logistics Components

The essential pivot points of the logistics trajectory are Cora Terminal near Cora, IL and International Marine Terminal (IMT) near Myrtle Grove, LA. Kinder Morgan owns Cora Terminal and about 2/3 of IMT. The remaining 1/3 of IMT is owned by AEP, which also owns AEP River Operations. (See “Cora Coal Terminal”, Coal Transporter, Spring 2013). Kinder Morgan operates the IMT facility. High level CAPEX and managerial decisions are made by a management committee that is comprised of two Kinder Morgan and one AEP River Operations employees. Located near the final outlet of the Mississippi River to the U.S. Gulf the terminal known for years as IMT has long been recognized as the ideal place for a ship-loading terminal. IMT would be the final piece in the logistics puzzle, trans-

porting Powder River Basin (PRB) coal to the export market. (“Shipping PRB Coal to Asia Now”, Coal Age June 2013). IMT has been in existence as a coalhandling facility since the 1950s, when it was built to serve coal-fired power plants in Florida. It is located on the west bank of the Mississippi River about 23 miles south of New Orleans at river mile 57. It occupies 659 acres of land, of which 500 acres are undeveloped. The facility handles coal, petroleum coke and other direct transfer barge and vessel cargoes, and it serves as a storage and trans-loading facility for use by IMT customers. The terminal currently has 111 employees, most of whom live and pay taxes in Plaquemines Parish. In 2013 Kinder Morgan completed Phases 1 and 2 of the IMT Expansion Plan. Phases 1 and 2, completed at a cost of approximately $88 million, added 7 million tons of throughput capacity. A third phase was completed in 2014 at a cost of approximately $64 million. The Phase III expansion was completed on schedule and added 3.3 MM tons of throughput capacity. Export nameplate capacity at IMT is 16 MM tons. In 2014, IMT placed 4.6 MM tons of coal in storage and loaded 4.8 MM tons. Forty barge tows of coal barges are loaded 1000 miles upstream at Cora Terminal. Smaller tows may be loaded on the Ohio River or tributaries and assembled into forty-barge tows at Cairo, Illinois. Cora Terminal is served by the Union Pacific Railroad (UP) on a 2.9-mile double loop track. The track is capable of holding two loaded unit trains, and two empty unit trains. (A typical unit train from the Powder River Basin (PRB) consists of four locomotives and 125 coal gondola cars, and is about 1.3 miles long.) Recent tonnage came from coal mines located in the Powder River Basin (PRB), Colorado, and Illinois. The Cora-to-IMT barge leg of the trip has a few advantages that other bargeloading terminals do not have: (1) Cora has 21’ of water at its loading dock; the terminal has never stopped loading due to water depth at the terminal; (2) Barges loaded at Cora do not have to traverse river locks and

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dams. It is a straight shot downstream for barge tows headed to IMT.

Dockside

Dockside equipment at IMT consists of a Jones Act barge loader at the top end (farthest north), two continuous bucket barge unloaders, two floating E-cranes, and the ship-loading dock. The terminal also owns four tugboats, which are run by IMT employees, and fleeting capacity for 250 barges under normal river conditions. One of the key features of the dock is the Bruks Shiploader, which was commissioned for use at the beginning of 2012. It has a 150’ traveling and slewing boom belt, which enables IMT to fully load Capesize vessels without having to warp the vessel or to set equipment into the cargo hold in order to reach the offshore side of the vessel to trim the cargo. It is capable of loading up to 5000 tons per hour. Even when the new New Panamax vessels start showing up with the completion of the Panama Canal Expansion IMT will be ready and able to fully load them up to the determining draft at Southwest Pass. The dock is capable of accommodating and loading a Capesize vessel up to the recommended Southwest Pass draft, which is now 47’. Constant re-positioning of the coal-loading spout is accomplished remotely by an IMT employee responsible for controlling the entire operation from viewing positions beside the hold being loaded. The feeder belt for the ship-loader is covered to minimize airborne coal dust. Another advantage of the Bruks Shiploader is that by eliminating ship repositioning and the requirement for putting trimming equipment into cargo holds it saves quite a bit of time for loading operations. This enables IMT to minimize ship demurrage, saving the owner and charterer valuable costs which would otherwise be incurred. A Panamax vessel such as the one shown below typically fetches daily rates of $12,000-$15,000 per day, so a one hour demurrage saving could be $500-$625. While this may not sound like much, one recalls that daily rates were ten times this amount in the 2007-2008 period; the potential exists for hourly savings of more than $5000. Part of the $186 million improvement program consisted of adding a second Metso bucket barge unloader and a Jones Act dock and unloading system. The second barge unloader enables the 20 | COAL TRANSPORTER

terminal to unload 40 barges per day, basically the equivalent of 60,000-65,000 short tons per day. In addition to the second barge unloader the terminal added two floating E-cranes to clean barges and improve barge turn and release time after unloading. A dedicated dock and vessel loading system was added for domestic (Jones Act) coal. The addition of the domestic coal dock eliminates competition for dock time and potential conflicts with the export dock, which is now dedicated to export cargo movements. The export dock was previously shared by domestic and export shipments, but is solely devoted to exports now. The Jones Act dock loads 14-15 Gulf barges per month at 16,500-25,000 tons per barge. The E-Cranes used for barge cleaning are from the MH1200 Series. They have a maximum outreach of 95’ and a maximum lift capacity of 20.9 short tons. The E-Crane is mounted directly to a floating barge. The attachment used to clean coal is a 10.5 cubic yard hydraulic clamshell bucket. The E-crane/pay-loader combination enables IMT to thoroughly clean

box end barges, ensuring that none of the original coal cargo is carried back upriver. Along with cleaning the excess coal out of barges, the E-Crane is used to lift pay-loaders in and out of the barges. The pay-loaders are placed into the material barges to consolidate all of the coal to one side of the barge. They are attached directly to the E-Crane underneath the grab in order to move them easily and quickly in or out of the coal barges. Pay-loaders are stored directly on the crane barge inside containment areas located on the barge deck. This allows for maintenance to be performed on the pay-loaders directly on the barge. Bucket maintenance is also performed inside of these containment areas.

Landside

The capacity of the stockpile area is now 2 million tons on soil cement, which mitigates pad losses and coal contamination. The original pad base of oyster shells no longer exists, which means that clean coal may be loaded directly onto the ship-loading belt system. It also means that every stockpile may be zeroed out accurately,

eliminating tonnage loss disputes. Stockpiles are built by a system of covered 72” belts and three 96” belts. The stockpile area covers 159 acres of improved land entirely between the levee and Highway 23. It consists of four different yards referred to as the Northeast, Northwest, Southeast and Southwest yards. Recent improvements have increased the efficiency of the terminal such that the facility can unload from two different barge unloaders into separate storage yards and be loading two different vessels, all simultaneously. There are 16 surface-mounted chain reclaimers for reclaiming coal, 10 for the South piles and 6 for the North. Each reclaimer has a belt feeder and belt scale, guaranteeing 2% accuracy by weight. The North and South pile areas each have a Thyssen Krupp stacker/reclaimer with 90’ arms, which can still be used for backup reclaim. There are seven Caterpillar dozers: six D-10T and one D-10. Ground storage space is allocated by customer, typically on the basis of an annual throughput agreement. Also, a state-of-the-art ASTM sampling systems has been added.

During the Phase I, II, and III expansions Kinder Morgan spent over $30 million in environmental improvements throughout the facility, including a Rain Bird sprinkling system for dust suppression. The dust suppression/automated sprinkler system uses meteorological data to schedule and activate the spraying of the coal piles with water to suppress airborne dust. IMT also employs particulate matter monitors on the facility to verify compliance with its Louisiana Department of Environmental Quality (LDEQ) air permit. This monitoring system is operated by an independent third party that has consistently reported acceptable results. Regarding environmental stewardship IMT seeks to be a good neighbor to the surrounding community, to citizens of Plaquemines Parish, and to Louisiana in general. It seeks to operate safely and does so by seeking to be in compliance with all applicable rules and regulations. IMT holds itself to the highest environmental, health and safety standards, and is in compliance with all permits. In 2013-14, IMT initiated the following initiatives in an effort to mitigate coal dust issues and better communicate with the community: • Installed modernized conveyors with covers and enclosed hoppers; • Installed containment pans under conveyors with pumping systems and dock containment that prevent product from entering the water; • Utilized a water truck and 4-6 man crew dedicated to dust suppression for areas not covered by a new water sprinkler system; and • Initiated a community outreach program to keep parish residents informed of terminal activities. The North and South yards have individual retention ponds for settling and purifying stockpile run-off. There is a new rain bird system for dust control capable of spraying 2,000 gallons per minute. New environmental controls include completely covered air belts installed over water to help eliminate product entering water; a 7,000 gallon water truck which is used throughout the terminal; and other EHS related upgrades making IMT one of the most environmentally-friendly carbon handling facilities on the lower Mississippi River.

New Panama Canal Status

A new third lane will double the canal’s capacity to assist the passage of New Panamax ships, which are 1,200 feet in length. According to reports by the Panama Canal Authority, the route from south Louisiana to Japan would be cut by 11.4 days. Substantial increases in coal and propane exports are expected. (See “Colombian Coal Prepares for Canal Expansion”, Coal Age Magazine, November 2013.) IMT is ready for the New Panamax vessels, and the Big Rivers Coalition is honking for a further deepening of the Lower Mississippi to 50’ under the 1986 COAL TRANSPORTER | 21

Water Resources and Development Act (WRDA). The Big River Coalition and Louisiana Department of Transportation and Development commissioned economist Dr. Tim Ryan to calculate the economic impacts that deepening the Mississippi River would have on the state and national economy. The results of the study will be released during a press conference at the Port of New Orleans Administration Building, 1350 Port of New Orleans Place, Thursday, Aug. 22 at 3:15 p.m.

Pilot Fees, Vessel Service Fees, and Barge Handling Fees Its southern location guarantees that ships calling on IMT will pay the least possible pilot fee, but these fees are still high. According to news reports pilots earn from $350,000 to nearly $400,000 per year. Shippers pay pilot fees under a regulated tariff system, so the Bar Pilots cannot raise pilot fees at will. Fees are set by the Louisiana Pilot Fee Commission, and are paid by vessels that use Pilots to bring ships and their cargo in and out of the Mississippi River.

Vessel agents for ships calling at IMT are advised to acquire a copy of the terminal’s Vessel Rate Sheet, which specifies the vessel service charges that shipowners can expect: dockage, towage, line handling, launch, security, access, and bunker/lube charges. The Rate Sheet also delineates charges for servicing barges that have been placed in IMT care. s

In his prior position as Director of Transportation for Peabody Coal author Dave Gambrel used many of the U.S. coal terminals, including IMT. He has chartered many coal vessels of both Panamax and Capesize capacities, and understands both the shippers’ and ship-owners’ concerns. He may be reached at bunkgambrel@earthlink.net.

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NCTA CALENDAR

OF EVENTS 2015

Summer/Fall 2015 Presentation of NCTA Scholarship Awards: South Dakota School of Mines & Technology University of Arizona University of West Virginia University of Wyoming David L. Laffere Scholarship Three Memberâ&#x20AC;&#x2122;s Children Scholarships September 14-16, 2015 Forty-First Annual Business Meeting and Conference Grand Hyatt, Denver, Colorado December 18, 2015 Receipt at NCTA office of all re-certification forms for the UMLER Fee Waiver for Calendar Year 2016

2016 January 30, 2016 Payment of Annual Membership Dues February 5, 2016 Advertising and Editorial Deadline for Issue 1 2016 of the Coal Transporter Magazine April 10-13, 2016 Spring General Conference Royal Sonesta Hotel, New Orleans, Louisiana June 13-15, 2016 Operations and Maintenance Conference Hyatt Regency, Austin, Texas July 6, 2016 Advertising and Editorial Deadline for Issue 2 2016 of the Coal Transporter Magazine September 12-14, 2016 Forty-Second Annual Business Meeting and Conference Grand Hyatt, Denver, Colorado

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2015 Spring Conference / Review

NCTA 2015 Spring Conference The Wigwam, Litchfield Park, Arizona | April 26-29, 2015

he 2015 Spring Conference was held April 26-29, at the historic Wigwam in Litchfield Park, Arizona. Initially, the Wigwam seemed like a vast sprawling resort. However, once you figured out the pattern of interconnected walkways that wind from your adobe style casita through the rose bushes, towering palms, and citrus trees to the main lodge, it becomes surprisingly compact. The heart and soul of the property was the Palm Courtyard which was like an outdoor great room, complete with overstuffed chairs, lamps, fire pits, and bocce ball. Every morning attendees were scattered in the courtyard for their morning latte and in the evening for music and possibly one of the Wigwam’s signature Prickly Pear margaritas. The 19th Annual NCTA Golf Tournament was held on the Wigwam, Gold Course. The Gold course was created in 1964 by Robert Trent Jones Sr. and at 7,430 yards, it is one of the longer courses in Arizona. The group seemed happy to be getting their money’s worth, especially under a beautiful, sunny Arizona sky. The weather was perfect for the annual reception and dinner on the Wigwam Lawn and Patio. Entertainment was provided by the Giant Steps Jazz Combo. Attendees and guest dined on cowboy chili and freshly grilled steak, pork chops and

mahi-mahi. The apple cranberry crumble was quite popular for dessert and it disappeared quickly. The conference covered the latest in regulation, transportation, supply/demand, and the generation mix. On the regulatory side, updates were presented on the Clean Power Plan, STB initiatives, and coal ash regulation. Transportation by both rail and water were discussed by Mike Wade of the BNSF and Mike Toohey of the Waterways Council respectively. James C. Paul of Airflow Sciences Corporation made an interesting presentation on using air foils to reduce fuel costs. Supply and demand for both coal and natural gas were covered as these fuels compete head-to-head. On the generation side Dr. Karen Obenshain of the Edison Electric Institute discussed what she termed a “Generation Fleet in Transition” and Kevin Geraghty explained NV Energy’s significant investment in solar power. As one of Tuesday’s breakout opportunities, Fred Forstall from the STB’s Rail Customer & Public Assistance (RCPA) program was on hand for private, confidential meetings with attendees. In the main room, John Ward held a mini-seminar on coal ash storage, handling, and beneficial uses. The 2016 Spring Conference is scheduled for April 10-13, 2016 at the Royal Sonesta Hotel in the French Quarter in New Orleans, Louisiana. s

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GOLD:

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The Waterways Council 24 | COAL TRANSPORTER

Craig Romer

Jeff Zerkle

Jeff Papineau, John Ritter, Allen Gould, Dwight Porter

Ray Miller, Randall Talley, Jim Owens, Nathan Harbeck

Jeff Peters and Scott Smith

Jeff Peters, Scott Smith, Randy VanAartsen, Mitchell Hackman

Jim Owens and Bob Almer

Marc Flippin

Allan Buckley, Gayle TenBrink, Carol and Mark Strzala

Randall Talley and Dâ&#x20AC;&#x2122;Andrae Larry

Paul Linton and Margie Towle

Carolyn and John Mayer Theresa and Matt Levar COAL TRANSPORTER | 25

Economic Regulation of Freight Railroads Transportation Research Board Special Report 318 By Tom Canter, NCTA Executive Director

ongressional legislation in 2005 mandated that the U.S. DOT sponsor a study of the freight railroad industry’s economic regulation. The study specifically calls for recommendations on the future role of the Surface Transportation Board (STB) in overseeing service levels and rates as the railroads become revenue adequate. However, the study wasn’t funded until 2014. The NCTA (Executive Director) and the WCTL were both asked to represent coal shippers in making presentations to the panel of academics that developed the final report. My presentation on the need for an update and review of regulatory practice was presented in March 2014. The report was published in May 2015. The Transportation Research Board (TRB) is a subsidiary of the National Research Council that is in turn a division of the National Academy of Sciences. The special report was comprehensive with 190 pages including appendices and some novel economic approaches and recommendations for captive shipper regulation. Of course, any suggested scheme for regulatory change invokes some skepticism, but there is unquestionably a thorough review of the history of regulation under the Staggers Act and a fair criticism of the limitations of regulation by the STB under the Staggers Act. Whatever your opinion on the recommendations of TRB, the study is instructive and educational on the history and challenges of the current regulatory process and the underlying processes and assumptions. The study closely addressed five controversial regulatory provisions: 1) Maximum Rate Protection 2) Common Carrier Obligation 3) Annual Determination of Revenue Adequacy of Class I Railroads 4) Railroad Merger and Acquisition Approvals 5) Reciprocal Switching with Competitors and Mandated Trackage Rights The study committee was “struck by the extent to which these regulatory provisions serve purposes that are now expired or are being implemented in ways that no longer serve their goals.” The six recommendations are below. I plan on a thorough presentation of these recommendations at the NCTA Fall Conference in Denver on September 14-16. Also, please note that the regulatory relief for shippers will primarily be for tariff rates with bilateral contracts being exempt. Recommendation #1: Prepare to repeal the 180 percent revenue-tovariable cost formula by directing USDOT to develop, test, and refine competitive rate benchmarking methods that can replace URCS in screening rates or eligibility to be challenged. The competitive benchmarking procedure may be feasible, but will keep economists fully employed. If the process makes tariffs competitive, the confidential freight contracts may eventually give way to tariffs for unit train shippers. Of course, this is quite speculative.

Recommendation #2: Replace STB rate reasonableness hearings with arbitration procedures that compel faster resolutions of disputes involving rates deemed eligible for challenge because they substantially exceed their competitive rate benchmarks. Wow, this would do away with stand-alone costing and findings of maximum rate protection in favor of the Canadian arbitration of “final offer” or “baseball” style arbitration. The recommendation requires the arbitrator to find market dominance exists; otherwise, the arbitrator must rule for the railroad. Recommendation #3: Allow reciprocal switching as a remedy for unreasonable rates. The arbitrator, if requested, in a final offer may rule for reciprocal switching to be imposed. Recommendation #4: End annual revenue adequacy determinations and require periodic assessments of industry-wide economic and competitive conditions. This is a recognition that this determination is a waste of time and money in an era of robust profitability by Class I railroads. Recommendation #5: Transfer merger review authority to the antitrust agencies and apply customary antitrust principles rather than a public interest standard. The Staggers Act favored railroad mergers to reduce inefficient trackage and operations and did not want a cumbersome DOJ process to hamper necessary improvements through merger and abandonment to rail carrier efficiency. Recommendation #6: Congress should give STB the direction and resources to undertake a strategic review of all of it data programs to simplify or discontinue the reporting of little-used data as a general matter and to support the recommended changes in its regulatory practices and approaches. The panel was unimpressed with the accuracy of the current process for developing the Carload Waybill Samples, and recommends implementing competitive benchmarking as an alternative. A sample competitive benchmarking analysis is shown within the appendices to the study. “The committee’s two main recommendations go hand-inhand,” said committee chair Richard Schmalensee, Howard W. Johnson Professor of Management Emeritus and professor of economics emeritus at the Massachusetts Institute of Technology. “Currently, burdensome STB rate hearings compensate for an unreliable initial process for identifying unusually high rates and in effect, they safeguard railroad revenues by making it too costly for most shippers to litigate a case. So, a more credible method for identifying unusually high rates would permit the use of less burdensome arbitration procedures, while not risking the adequacy of railroad revenue.” 1 Now that Congress has the report we’ll see if they take legislative action on the recommendations. s 1 National Academy of Science Press Release, June 10, 2015.

26 | COAL TRANSPORTER

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Changes on the

MISSISSIPPI O

“The addition of these new Gottwald cranes and midstream berths will allow us to react to changing shipping markets quickly, so when export coal returns to the Lower Mississippi River, we will be ready.” - Terry May

28 | COAL TRANSPORTER

n March 11th, Associated Terminals acquired the assets of St. James Stevedoring Company (“SJS”). The combined company is now the largest and most diverse stevedoring and terminal services provider on the Lower Mississippi River. President Todd Fuller stated: “With 14 of the most technologically advanced cranes in the world and a footprint that spans 173 miles on the Lower Mississippi River, as well as operations in every major barge fleet on the river, we are able to provide our customers advantageous options. At Associated, our people are our most important asset. We are excited to have the senior management of SJS join our team of experts. Additionally, we will continue to lead the industry in the incorporation of technology into our operations.” Individuals joining the management team at Associated Terminals include Jeff Morton, Vice President of Financial Planning and Analysis, David Ryan, Vice President of Sales and Marketing and Jerry Ryan, Vice President of Operations. Through the transaction, Associated Terminals has added three Gottwald model G HPK 8400 B cranes and three Gottwald Model G HPK 330 cranes bringing its combined fleet to fourteen Gottwald crane barges. The company’s footprint spans from mile 55 AHP to mile 228 AHP on the Lower Mississippi River with twenty deep draft berths. The company operates multiple dockside and in-plant service locations along the Gulf Coast in Louisiana. Growing the in-plant services footprint is part of the Company’s growth strategy. Associated Terminals, who has been using St. James Technologies’ Harbor Telematics product, will deploy SJS proprietary technology throughout its footprint. “The addition of these new Gottwald cranes and midstream berths will allow us to react to changing shipping markets quickly, so when export coal returns to the Lower Mississippi River, we will be ready” stated Terry May, Senior Vice President of Associated Terminals. The SJS headquarters located in Convent serves as a base of operations for Associated Terminals. Currently, renovations are underway at this location. In early 2016, Associated Terminals will relocate its corporate headquarters to Convent, LA. s

Do one thing well. We move cargo. Thatâ&#x20AC;&#x2122;s it. Our fleet of fourteen Gottwald cranes is one of the largest in the world. We have twenty deep draft berths on the Mississippi River located from Mile Marker 56 to Mile Marker 158. We offer a scope of services that simply canâ&#x20AC;&#x2122;t be matched for the import and export of commodities on the Mississippi River. Our most important asset is our team who are experts on providing logistical solutions for our customers. We move cargo safely and efficiently. That is our focus and we do it well. w w w. a s s o c i a t e d t e r m i n a l s . c o m

ASSOCIATED TERMINALS

NCTA Membership Profile / xxxx

MEMBERSHIP CRITERIA Membership in the association shall be open to entities that are producers or consumers of coal produced in North America and other entities which are interested in its transportation and related issues. Entities or their affiliates whose primary business is providing transportation of coal by rail, barge, truck, pipeline slurry, or any other mode shall not be eligible for membership. One individual from each member company is designated to act as its representative. However, any individual employed by the member may participate in association activities.

CLASSES OF MEMBERSHIP Voting Members:

Actual or potential producers or consumers of coal shall be entitled to apply to become voting members of the association in accordance with provisions in the bylaws and policies adopted by the Board of Directors.

Associate Members:

Individuals or entities who are interested in the transportation of coal or related issues, but who do not otherwise qualify for admission as voting members, may seek admission as a non-voting member. Associate members may serve and be empowered by the committee chair to vote on committees, but shall not have the right to vote in general or special meetings of NCTA.

Honorary Individual Members:

For good cause shown including but not limited to exemplary and outstanding service to the NCTA, a former Designated Representative of a Voting Member may be appointed an Honorary Individual Member of the National Coal Transportation Association. Honorary members may serve and be empowered to vote by the committee chair on committees, but do not have the right to vote in general or special meetings of NCTA. Membership dues and registration fees and other assessments of NCTA may be waived for Honorary Individual Members.

MEMBERSHIP BENEFITS

Your company may belong to more industry associations than just NCTA, but no other association provides the unique combination of education and real world results that come from NCTA membership. The financial impact associated with the procurement and delivery of coal demands this focus. NCTA maintains a high level of national prominence and credibility by participating in hearings, workshops, and symposiums, coordinating with ad hoc coalitions, providing resource material for governmental agencies, negotiating and educating on issues of general membership concern with carriers.

30 | COAL TRANSPORTER

Conferences with Character

For three days in the spring and fall of each year, NCTA provides coal industry professionals with an exclusive opportunity to share their outlook and knowledge and to exchange ideas. NCTA conferences provide its members the opportunity to learn from the experiences of others with similar responsibilities and from outside experts in an open and noncompetitive environment. Think of the ideas you can borrow, the pitfalls you can avoid and the valuable insight you can give and receive. Members attend all conferences at a preferential rate.

Logistics and Planning Subcommittees

The Eastern and Western Logistics & Planning Subcommittees do much of the heavy lifting to solve problems with respect to the efficient operation of the coal delivery process. An important source of strength is the NCTA working committee system that is made possible by the dedication and expertise of our member representatives and the cooperation of the rail carriers. Each Logistics & Planning group meets at least twice annually. These working group meetings are open meetings and are free to attend.

Operations & Maintenance Subcommittee

For companies that do not have the resources, or have diminished resources to support company representation on industry and consensus-based technical panels, the O&M subcommittee helps to fill this gap. The annual conference program provides excellent information on new technologies and best practices for coal car design, maintenance, and repair.

Access to Railcar Leasing Exchange Board

NCTA members have exclusive access to a railcar leasing exchange board where excess train capacity can be posted for lease and where members can post railcar needs. With 86,000 private cars owned and operated by NCTA members, this is a good place to start when you need to adjust your capacity requirements.

Commitment to Education

Education is a hallmark of NCTA. NCTA educates its members through its annual conferences and publications. NCTA also

supports education through its scholarship program that awards scholarships to students in transportation at several major universities as well as to the dependent sons and daughters of employees of member companies.

Policy Insights

The Board of Directors continues to meet in Washington, D.C. each year to visit governmental agencies and other trade associations. Maintaining a presence in Washington enables NCTA to have input into federal policymaking and to better represent member concerns on federal issues. NCTA fosters relationships with key personnel and departments within the Department of Energy, the Department of Transportation, the Surface Transportation Board, the Federal Railroad Administration, and with various elected representatives. NCTA is an educational entity and does not officially lobby for or against legislation. However, we do actively participate in hearings and rulemaking proceedings of interest to our membership.

Communications

Through its ever growing web presence, NCTA communicates with the world about the coal industry and with NCTA member companies - linking potential customers to its members and linking its members to other useful Web sites throughout the Internet. A “Members Only” section provides detailed member contact information, valuable updates on current subcommittee initiatives, a railcar leasing marketplace and other items of interest exclusively to NCTA members. The conference archives date back to 2004, creating a virtual library of information on energy and transportation issues. The semi-annual Coal Transporter magazine focuses on getting to know people in the industry, as well as informing NCTA members and the coal industry as a whole of new and relevant events occurring within the organization. Membership in NCTA is a sound business decision with a solid return on investment and we look forward to serving you. A member company of the National Coal Transportation Association is not just another utility, coal supplier, rail equipment supplier, or coal related services organization. It is part of a tradition of excellence that through affiliation with NCTA, it signals exceptional commitment and obligation to the market, its customers and to the public.

Membership in NCTA is a sound business decision with a solid return on investment Annual Dues

The annual dues for membership in NCTA are $1,600 for Voting Members and $1,400 for Associate Members payable in January of each year.

Application for Membership

All entities or persons desiring membership in the association should apply using the online application or contacting the NCTA for a membership application. The application will include the name, principal business activity and business address of the applicant and the full contact information for the applicant’s proposed Designated Representative. Application forms, along with payment of the annual dues, should be returned to the Executive Director of the Association. The Board of Directors shall approve or disapprove all applications for membership and shall make a determination as to the class of membership into which the applicant shall be admitted. s COAL TRANSPORTER | 31

NCTA COMMITTEE

UPDATES

NCTA Committee work is at the heart of the Association. The committees provide valuable information and education to members, foster best practices, improve communications among the parties, and keep members up-to-date on new rulings and technologies. This is where members get payback many times over for their annual membership fees.

ew! N Waterborne Transportation Committee We heard the membership and we are responding. The NCTA is proud to announce the formation of the Waterborne Transportation Committee. The significant amount of coal that touches water as it winds its way to the consumer is astounding. Coal is the freight commodity constituting the largest volume moved by barges on the nation’s inland waterways. The group will focus specifically on the coal industry’s unique logistical, regulatory, and infrastructure needs, addressing all segments of the transportation of coal by water including the Great Lakes, export and river terminals, ocean shipping, regulatory challenges, coal exporting, rail to water logistics, and much, much more.In accordance with our mission,

32 | COAL TRANSPORTER

the primary purpose of this committee will be to educate, advocate, and facilitate resolutions to transportation challenges. A preliminary meeting was conducted at the NCTA Spring Conference in Litchfield Park. We were pleased that Mr. Michael Toohey from the Waterways Council, representatives of ports, coal producers, utilities, transportation service suppliers, and exporters all participated and contributed ideas. The stakeholders discussed organizational structure as well as a path forward. Our first Committee Meeting will be held on November 11, 2015, in New Orleans, LA. The meeting will be held immediately prior to and in coordination with the always excellent

Waterways Symposium in New Orleans, Louisiana from November 11-13. Maximize your travel dollars and attend both events. The Chairman of this working committee is Terry May of Associated Terminals. We look forward to the active participation of terminal operators, coal producers, coal consumers, barge and tug operators, coal quality analysts and service providers, draft surveyors, ocean shipping companies, and all other enthusiasts of water transportation. You can be included in all Waterborne Transportation Committee correspondence by contacting Melinda Canter at 720–227–1049 or nationalcoaltransportation@ gmail.com s

Western Logistics & Planning

Jeff Zerkle (AEP) has taken on the role as Chairman of the Western Logistics and Planning Committee following Molly Mitchell’s move to APS from Peabody. Chris Zygmont (Ameren) will assume the Vice-Chairman position. The Committee met on Thursday July 9, 2015 in GE Capital Rail Services’ offices in downtown Chicago. In addition to the actual committee meeting, the group enjoyed a facility tour and a networking event on the preceding day, July 8. The tour of the Greenbrier Company wheel facility in Chicago Heights was very informative. See details on the tour on page 43. NCTA Member companies Exponent and Railroad Financial Corporation were our hosts for a fun networking event on Wednesday evening at Wrigley Field. The Chicago Cubs took on the St. Louis Cardinals in what turned out to be a very exciting game and proving once again, that in baseball, “it ain’t over till it’s over.” In the top of the ninth with a one run lead, two outs, and one strike away from the win, the Cubs pitcher give up a walk. The next batter, Jhonny Peralta, connected on a 1-2 pitch, hitting a drive that barely cleared the left field wall, scoring two runs and ultimately sealing the win for the Cards. Maybe the coal business should borrow this Yogi Berra saying and make it our new mantra.

Education Committee

At the Thursday morning meeting in GE Capital’s conference facility, railroad updates were provided by Beth Zeigler for the Union Pacific and Will Cunningham of the BNSF. Lloyd Kelly, President, Greenmont Energy Consulting, LLC, gave the group an update on coal markets from a unique perspective. A short YouTube video on the Clean Power Plan was presented. Billed on the agenda as “A Video Even a Kindergartener Can Understand” you can find it on YouTube under the title “EPA’s hidden tax could cost the US taxpayer $47B.” Mark Strzala, GE Capital Rail Services, provided an update on Railcar Leasing Markets. GE is actually looking for a buyer for its railcar leasing business. The business is just one component of $20 billion in assets they are looking to sell by next year. If you have untold billions to invest, give Deutsche Bank a call. The meeting concluded with a panel on what is likely the first of many discussions on the impact on logistics of increasingly volatile coal demand. All three sides of the NCTA triangle were represented - utilities, producers, and transporters. The next meeting of the Western Logistics and Planning Committee will be in February 2016 with the location to be determined. If you would like to host this meeting please let us know. s

The application deadline for the 2015 Scholarships for children of employees of NCTA member companies was July 31st. The winners will be announced in September and will be profiled in Issue 1 2016 of the Coal Transporter. We are currently looking for a volunteer to assist in the selection process and to serve as Vice-Chairman of the Education Committee. Mindy Watson-Ward (Cloud Peak Energy) is currently the Committee Chairman.

As it does with many entities that support the beneficial use of coal, the NCTA, through its Executive Director, is developing relationships with personnel at the University of Wyoming’s Energy Innovation Center (EIC) in Laramie. The EIC opened in December 2012 to support the University and its School of Energy Resources (SER) in achieving the mission of positioning Wyoming as a global leader in energy education, research and outreach. We hope to bring you periodic reports on their work and their progress in achieving this goal. COAL TRANSPORTER | 33

NCTA COMMITTEE UPDATES Operations and Maintenance

The Operations & Maintenance Committee just completed its annual conference in Pinehurst North Carolina. The conference was very successful, containing great educational content and a wealth of networking opportunities. The utility and all member segments of the roundtable were separated this year not just by lunch, but by lunch that included a bus ride and tour of Railroad Friction Products facility in Maxton, North Carolina.

The tour was very informative. The variety of raw materials necessary for production was surprising and lead one to believe that a culinary background might come in handy to get a job there with all the necessary measuring and mixing of the raw materials that are integral to the brake manufacturing process. The onsite R&D department monitors key manufacturing and performance characteristics of production and develops of new friction materials. For more details and

photos of other conference events, see the conference recap in this issue. Gayle TenBrink (TrinityRail), Kevin Johnson (NPPD), and Scott Marino (Entergy Services) were elected by the membership to serve 3-year terms on the Executive Committee. Scott had previously been appointed to the committee to fill a seat vacated by Shon McNamara when he left Dynegy. Participation on any of the Operations and Maintenance committee’s activities is open to all members. s

Eastern Logistics & Planning

Things have been fairly quiet on the Eastern front following the EL&P Committee’s earlier than usual March meeting hosted by the CSX at Curtis Bay in Baltimore. That meeting was detailed in the last issue. The fall meeting of the Eastern Logistics and Planning Committee has not been scheduled and will likely be a webinar that will cover our usual rail and water transportation updates. If you would like to host the next face-to-face meeting in early 2016, please contact a NCTA staff member or EL&P Chairman Edwin Fisher (Arch Coal). s

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2015 Operations and Maintenance Conference

CTA Operations & Maintenance Committee held its annual conference June 8-10, 2015, at the Pinehurst Resort in Pinehurst, North Carolina. From the moment you drove up the tree-lined street to the Carolina, you knew you were in for a special experience. The hotel was that most wonderful combination of modern convenience and southern hospitality. The meeting began on Monday with the annual private car owner Roundtable. This is a unique event within the industry, providing NCTA members the opportunity to discuss maintenance trends, do some problem solving, and share best practices. The technical review committee reported on the response thus far to the collection of wheel removal data. Railroad Friction Products provided lunch, transportation and a tour of their facility in nearby Maxton, North Carolina. After the tour, the Roundtable reconvened for all NCTA members. Tuesday’s general session began with a welcome from Thomas O’Toole Jr., President USGA. Tom informed the attendees how and why the USGA was Justin Lidgett founded to implement common rules of play, and how the governing body is meeting needs of today’s modern, diverse, but time-limited, golf enthusiasts. Brian Fuller, Director Coal Services at Southern Company Generation was the only utility speaker, but represented what many utilities are facing with respect to increased competition from natural gas. The market will ultimately decide whether a growing segment of generation will be coal or gas, and the outcome will affect everything from ratable deliveries to fleet sizes. The program was fittingly heavy on the rail with four Class I roads represented (BNSF Railway, 36 | COAL TRANSPORTER

PINEHURST

North Carolin

June 8-10, 2

015

Norfolk Southern, CSX Transportation and the Union Pacific), the American Association of Railroads, and the Transportation Technology Center. Topics covered by the rail representatives fell generally in three areas; service and capital improvements; mechanical issues including wheels, railcar modifications and reflectorization; and technology that increasingly manages car health through wayside detection. The program was rounded out by speakers from several member companies discussing product characteristics and new developments. The Tuesday evening reception and dinner was a plated event befitting the elegance of the Carolina Hotel. Progress Rail sponsored the dueling piano entertaining which was a bit more genteel than last year’s raucous event in the wild, wild, west. The annual NCTA O&M Golf Tournament was held Wednesday on Pinehurst #1. The afternoon started off in fine form with everyone in good spirits and enjoying this iconic resort. The clubhouse was like a museum with display cases chronicling many of the championships hosted there – more championships than anywhere else in America. About half way through the back nine, a thunderstorm rolled through unleashing a torrential downpour. Golfers took shelter where they could; some were even taken in by a friendly homeowner along the course. Half the foursomes waited out the worst of it and continued on while others called it a day. Dig out those cowboy hats and shine up those boots because the 2016 Operations and Maintenance Conference will be held June 13-15 at the Hyatt Regency in Austin, Texas. s

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NCTA Initiatives

WHEELS, WHE 40 | COAL TRANSPORTER

EELS, WHEELS COAL TRANSPORTER | 41

â&#x20AC;&#x153;The guy who invented the first wheel was an idiot. The guy who invented the other three, he was a genius.â&#x20AC;? Sid Caesar

WHEELS

heels have been a hot topic around the NCTA this year. We educated you about them, have a project underway to helping you make sense of the real life operation of the wheels on your coal fleet and have gotten you up close and personal with the men and machines that literally keep the wheels on. This is all ongoing work of the O&M Committee, so step up and participate!

Wheel Facts

Beyond the fact that no railcar moves without them, wheels are important because of their economic impact on fleet operations and maintenance. According to the TTCI, Car Repair Billing (CRB) data shows that of the $1.2 billion in reported repairs for 2013, 56% of it went to wheelsets. The need for repairs is mainly driven by tread damage, with asymmetric flange wear being a secondary cause of removal. In his presentation at the Operation and Maintenance Conference simply titled Wheels, Byron Dickey, Director Mechanical Reliability for the BNSF reported that the maintenance spending on its coal car fleet follow a similar pattern. He said the average life for wheels in coal service is 290,000 miles. Very few wheels actually make it to the point where they would be considered worn out (800,000+miles). Byron offered that a Class D might have a lower failure rate in coal service than the current Class C wheels used. We hope to put together a webinar to further explore this topic. Derailments attributed to wheel issues are expensive and can impact system velocities. Over the past five years, half the total cost of derailments on the BNSF is due to broken wheels. Carriers can alleviate some wheel problems by making sure hand breaks are released and reducing the instances of stuck airbrakes. Private car owners can help by continuing to do routine maintenance of their fleets including the brake and truck systems, empty/load devices, and slack adjusters. Technology that enables early detection of wheel problems will continue to improve.

Wheel Data Collection

With wheel change-outs being the number one maintenance expense for coal car owners, the Operations and Maintenance Tech Review Committee (TRC) has spearheaded an initiative to create a large (owner anonymous) database on wheel removals. Once the database is sufficiently large, it will be analyzed for trends and commonalities pertaining to wheel life that might lead to opportunities to save money on premature wheel change-outs. To facilitate the data collection, the TRC has developed a Universal Wheel Removal Template for the use by the membership. We have a group of companies that have already submitted the data but we need more in able to identify trends that are statistically significant. If you need a copy of the template or wish to submit your data, please contact Melinda Canter at wheelweardata@gmail.com. 42 | COAL TRANSPORTER

Wheel Shop Tour

On July 8th, Greenbrier hosted a tour of their wheel shop in Chicago Heights, Illinois in conjunction with the summer Western Logistics and Planning Committee meeting. It was a great tour and always enjoyable to see the kind of work being done that really fuels the economy. First off the bearings are removed and collected. The wheels are demounted and sorted with un-serviceable wheels sent to the scrap pile. The loose axle is then cleaned, inspected and checked to make sure that it meets all AAR dimensions / customer specifications before being qualified for re-use. All the wheel sets and axles that leaves the shops meets or exceed Association of American Railroad (AAR M-1003) specifications for quality assurance of new and reconditioned components. The usable wheels sets are then re-profiled using a wheel turning lathe that removes the minimum amount of metal from the tread of the wheel necessary to re-contour the wheel surface. It is quite the sight to see the ultra-thin ribbons of steel shaved off, not only transforming the wheel into a product that is mechanically sound but visually all shiney and new. Too bad it only lasts a few days until that patina of rust sets in again. All re-profiled wheels are ultrasonically tested as part of this process. The reconditioned wheels are then remounted and new or reconditioned roller bearings are applied. This was very interesting part as the force needed to mount the wheel had to fall within a specific range throughout the entire process, not just the ultimate amount of force required. It seemed as if there were more reusable axles than wheels, so some new wheels were also on hand to be mounted. Thanks again to Nathan Harbeck and the Greenbrier team for such an educational tour and for suppling images for this piece. s

WHEELS

â&#x20AC;&#x153;If you own a home with wheels on it and several cars without, you just might be a redneck.â&#x20AC;? Jeff Foxworthy COAL TRANSPORTER | 43

Who Will Pay for Additional Freight

Infrastructure 44 | COAL TRANSPORTER

he U.S. Department of Transportation (“DOT”) has projected that total freight shipments will increase 45% from 19.7 billion tons in 2012 to 28.5 billion tons in 2040.1 Rail freight shipments are expected to increase 37% and multimodal shipments by 125%.2 However, these estimates are based on DOT’s Freight Analysis Framework model, which assumes that the capacity of the infrastructure will not limit growth.3 While protracted capacity shortages are unexpected, freight infrastructure rehabilitation and improvements continue to be a focus of federal policymakers By: Katherine F. Waring, as a means of relieving potential local chokepoints and areas of congestion.4 Slover & Loftus LLP There are currently a number of ambitious legislative initiatives pending before Congress to assist in the funding of freight infrastructure projects. Proposed legislation includes the Administration’s “Generating Renewal, Opportunity, and Work with Accelerated Mobility, Efficiency, and Rebuilding of Infrastructure and Communities throughout America” (“GROW AMERICA”) Act; the Senate’s version of H.R. 22, “Developing a Reliable and Innovative Vision for the Economy Act (“DRIVE”) Act as amended and passed by the Senate; Congressman Lowenthal’s H.R. 1308, “Economy in Motion: The National Multimodal and Sustainable Freight Infrastructure Act;” and Representatives Janice Hahn and Ted Poe’s H.R. 935: “National Freight Network Trust Fund Act of 2015.” Each of these initiatives would establish national freight programs that would potentially provide additional funding for freight rail infrastructure projects. The catch – and it The catch – and it is a big is a big one – is that these freight programs one – is that these freight would require identifying additional sources of revenue. programs would require H.R. 935 would establish a Naidentifying additional tional Freight Network Trust Fund that sources of revenue. would collect 5% of the current import duties collected at U.S. Ports and these funds would then be reserved for freight transportation projects. H.R. 1308 is to be funded by levying a freight tax on shippers. Meanwhile, the Administration has proposed funding the GROW AMERICA Act over the next six years using revenues from the fuel tax receipts with a one-time 14% transition tax on untaxed foreign earnings to encourage U.S. companies to bring funds home. As of the date of this publication, the DRIVE Act, which authorizes funding for six years, but provides definite funding for only the first three years. While these legislative initiatives certainly face obstacles to enactment, funding freight rail projects as part of the Highway Trust Fund (“HTF”) or a freight tax has the potential to result in additional fees for railroads and/or shippers. This is because (1) the HTF does not have a sustainable source of revenue; and (2) a freight tax would be an additional fee paid by rail shippers but these fees would not necessarily be reserved for rail projects. 1 See Dep’t of Transp., Bureau of Transp. Statistics, Freight Facts & Figures 2013, 3 (2014) (“Table 2-1. Weight of Shipments by Transportation Mode: 2007, 2012, and 2040”). 2 See id. (multimodal percent calculation based on numbers reported for “multiple modes & mail”). 3 Transp. Research Bd. of the Nat’l Academies, Modernizing Freight Rail Regulation, 60 (2015) (prepublication copy), www.trb.org/Railroads/Blurbs/172736.aspx. 4 See generally id. at 61 (“As traffic on a rail system grows, congestion is likely to begin to appear at local chokepoints, which may be in terminals or heavily used segments of mainline.” However, at least for rail freight infrastructure, “protracted capacity shortages would not be expected.”); Am. Soc’y Civil Eng’rs, 2013 Report Card for Am.’s Infrastructure, http://www.infrastructurereportcard.org/ (America’s Infrastructure received an overall grade of D+). COAL TRANSPORTER | 45

Funding Freight Projects as part of the Highways Bill The crux of the problem confronting Congress is that there is no attractive option for funding a long term Highways bill. While many Americans are reportedly amenable to paying more at the pump for better infrastructure if they get to have better roads,5 raising the gas tax is a political third rail and is not supported by the majority in Congress6 or the Administration.7 As such, new sources of revenue would need to be identified to fund the additional projects currently proposed for inclusion within the Highways Bill. The HTF is currently supported in part by federal motor fuel taxes.8 However, railroads are currently exempt from the diesel fuel tax and instead are only required to contribute

0.1 cent/gallon tax towards the federal Leaking Underground Storage Tank Trust Fund.9 In contrast, truckers, in addition to the 0.1 cent/gallon tax, pay a 24.3 cents/gallon federal tax on diesel fuel with 84% of these funds going into the Highway account of the HTF.10 Historically, the HTF has not been used to fund freight infrastructure, and the railroads have fought to remain exempt from the federal diesel tax, even when the tax would have gone towards a separate Railroad Trust Fund.11 Likewise, some states also exempt the railroads from paying a diesel fuel tax.12 Therefore, what could potentially become an issue down the road for the railroads and rail shippers should these initiatives move forward is how the Administration’s GROW AMERICA Act and DRIVE Act would be funded, and the possible diversion of funds from the HTF13 to pay for freight

5 See Kelly Phillips Erb, AAA: Most Ams. Support Fed. Gas Tax Increase if it Leads to Better Rds., Forbes (June 10, 2014, 12:28 PM), http://www.forbes.com/sites/kellyphillipserb/2014/06/10/aaa-most-americans-support-federal-gas-tax-increase-if-it-leads-tobetter-roads/; Asha Weinstein Agrawal, PH.D. & Hilary Nixon, PH.D., What do Ams. Think about Fed. Tax Options to Support Public Transit, Highways, & Local Streets & Rds.? Results from Year Six of a Nat’l Survey, Mineta Transp. Inst. Report 12-51, 3-4 (June 2015), http://transweb.sjsu.edu/project/1428.html (report found that a majority would support an increase in the gas tax “under certain conditions” such as if the increase were directed towards better roads). 6 See Keith Lang, House GOP Leadership sees Gas Tax as Politically Unfeasible, The Hill (June 22, 2015 9:00 AM), http://thehill.com/policy/transportation/245684-mccarthyon-gas-tax-politically-that-will-not-make-it; Jason Plautz & Libby Isenstein, Cong. Isn’t Raising the Gas Tax, But These States Are (May 12, 2015), http://www.nationaljournal. com/energy/gas-tax-by-state-20150512. 7 See Scott Horsley, Obama Recluctant to Raise Fed. Gas Tax, NPR (Feb. 4, 2015, 5:12 AM), http://www.npr.org/2015/02/04/383724460/obama-reluctant-to-raise-federalgas-tax.

8 See Am. Ass’n of State Highway & Transp. Officials, Fed. Motor Fuel Taxes (2015), http://www.transportation-finance.org/funding_financing/funding/federal_funding/motor_fuel_taxes.aspx (“Motor fuel taxes provide about 82 percent of the revenue used for Federal surface transportation funding.). 9 See David Austin, Pricing Freight Transp. To Account for External Costs, Cong. Budget Office Working Paper 2015-03, 15 (Mar. 30, 2015), https://www.cbo.gov/publication/50049 (“CBO Working Paper”). 10 See Am. Ass’n of State Highway & Transp. Officials, Fed. Motor Fuel Taxes (2015), http://www.transportation-finance.org/funding_financing/funding/federal_funding/motor_fuel_taxes.aspx. 11 See Charles P. Fischbach, Revisiting a Nat’l R.R. Trust Fund, RailwayAge (Dec. 9, 2014), http://www.railwayage.com/index.php/freight/class-i/revisiting-a-national-railroad-trustfund.html. 12 CBO Working Paper at 15. 13 The Administration is proposing a move to a Transportation Trust Fund, but funding for the Multimodal freight incentive program and the National Freight Infrastructure Program would still be from the “Highway account of the Transportation Trust Fund.”

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rail programs.14 In the short term, incremental funding may be beneficial to help resolve some of the bottleneck areas for freight rail. However, given that no long-term sustainable funding source has been identified for either the GROW AMERICA Act or the DRIVE Act, funding at some later date would likely again be an issue. Given that federal money is never free, it is foreseeable that rail and/or shippers may be asked to contribute funds either now or at some later juncture . Also, if railroads become eligible for and opt to receive funds out of the Highway or the proposed Transportation Trust Fund, that could potentially trigger questions on whether the railroads’ existing diesel fuel tax exemptions might be put in jeopardy. Railroads certainly would have concerns about this issue, but if states were to successfully implement new taxes on railroads, railroads would inevitably seek to pass on to shippers such new costs.15

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The Proposed Freight Tax

Congressman Lowenthal introduced his legislation supporting freight infrastructure in both 2014 and again in 2015 with the hope it would be included as part of the final Highways Bill. This legislation calls for a general one percent tax on the waybill to be paid by the shipper. The argument in support of a freight tax as proposed by H.R. 1308 is that there are external costs that should be paid by shippers and requiring these fees will result in a more efficient and environmentally friendly system.16 However, a potential problem with a general freight tax is that it arguably fails to take into account the differences between rail and highways and how these systems are currently funded. Rail infrastructure, as opposed to highways, is largely privately funded. Rail shippers arguably should also not be taxed at the same rate when “the external costs to ship by truck are about eight times higher than by rail.”17 Rail shippers and truckers are also already subject to container fees at some ports.18 But most significantly, the geographical and political realities must be considered. For instance, rail shippers in Colorado are likely to oppose paying a freight tax if these fees could potentially be used to fund a highways project in Florida. Truckers have also had a similar reaction to the idea of cross-subsidizing rail infrastructure and the Owner Operator Independent Drivers Association (“OOIDA”) opposes H.R. 1308.19

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OUR STANDARD OF EXCELLENCE waver from our commitment to be the best. From drives us to focus on safety first, and to never our account managers, to our engineers, to our waver from our commitment to be the best. From maintenance team, GATX provides industry-leading our account managers, to our engineers, to our railcar leasing and support to a broad range of maintenance team, GATX provides industry-leading customers who depend on our 136,000 railcars railcar leasing and support to a broad range of and 600 locomotives. customers who depend on our 136,000 railcars and 600 locomotives.

Conclusion

In summary, the GROW AMERICA Act, the DRIVE Act, H.R. 935 and H.R. 1308 will help provide funding for freight infrastructure, but as always, federal money is never free. Unfortunately, there is a legion of criticisms and few viable solutions for funding the various projects needed to meet the Nation’s infrastructure investment needs. As new infrastructure funding solutions are considered, Congress will need to be mindful of the impacts on the individual modes and on the end consumers. s 14 The GROW AMERICA Act provides that funds for the Fixing and Accelerating Surface Transportation (FAST) Grants will be funded at $6 billion over six years, with $3 billion coming out of both the Highway and Mass Transit Accounts of the Transportation Trust Fund. 15 The HTF contributes to various other projects that have little to do with paving roads, so receiving this money does not necessarily equate to future taxes or fees being imposed, but it does represent a change in precedent. See Tracy C. Miller, The Rd. not Taken, U.S. News (May 11, 2015, 4:30 PM), www.usnews.com/opinion/economic-intelligence/2015/05/11/ congress-can-fix-the-highway-trust-fund-without-raising-the-gas-tax. The DRIVE Act also reserves 90 percent of freight funding for highways. See DRIVE Act, H.R. 22, 114th Cong. § 43001 (2015). P: (404) 16 See CBO Working Paper at 1. 17 See id. at 24. GATX_35_9875C.indd 1 18 See CBO Working Paper at 7. 19 E-mail from OOIDA to author (June 18, 2015) (on file with author).

w w w . g a t x . c o m

Jay Leadingham - VP SaLeS, CoaL w w w . g a t x . c o m 725-0594 | e: Jay.Leadingham@gatx.com 1/23/14 9:22 AM

COAL TRANSPORTER | 47

Regulations / Coal Combustion Residuals

EPAâ&#x20AC;&#x2122;s New Coal Combustion Residuals Rule

New Challenges for Utilities & Ash Handling Suppliers BY: Michael J. Roush II, PE MBA, Burns & McDonnell

48 | COAL TRANSPORTER

n April 2015, the EPA published the Coal Combustion Residual (CCR) Rule to the Federal Register with an effective date of October 19th of this year. The new rule is intended to regulate ponds and landfills containing fly ash, bottom ash, boiler slag and FGD byproducts. While the rule does not directly require the retrofit or closure of CCR ponds and landfills, it places a whole host of new restrictions and requirements on them. The requirements include structural stability calculations, seismic zone criteria, aquifer separation requirements, groundwater monitoring, and both weekly and annual inspections. All of these requirements are focused around proving that the pond is stable and is not leaking; when these requirements are met the ponds can continue to operate. Three of the new requirements will trigger pond closure: location restrictions, stability safety factor criteria and the groundwater contamination requirements. The rule also offers incentives to accelerate pond closures. Ceasing placement of CCR materials in an impoundment prior to the effective date of the rule will provide a 30-month window to complete pond closure and avoid the requirements of the rule altogether. Many impoundments will not be able to meet the new requirements and, even if they do, there is a significant operating risk due to timeline for closure if an issue arises in the future. The closure of an ash pond is a big undertaking and typically involves rerouting many plant flows other than just ash. Many plants will have to convert existing ash systems to dry handling and these new

requirements will definitely play a part in closing many impoundments as well as contributing to the closure of many coal-fired plants. The significant number of pond closures over the next five to ten years will place an unprecedented demand on the ash handling equipment industry. The situation is comparable to pulling up to your favorite fast food restaurant and seeing a school bus pulling into the parking lot. It’s at that point that you realize you better get inside and place your order. To date only a handful of utilities have placed orders for new equipment to retrofit their bottom ash systems to dry handling. The obvious question is: “why haven’t all the utilities already placed orders for equipment

morning quarterback, and with all the changes to the rule, it is very difficult to justify wasting millions of dollars to meet a proposed law that ended up being nothing like the final version. Therefore, until the rule was finalized it was difficult for many utilities to get buy in from their stakeholders. Because of this circumstance most utilities are on the same schedule as their neighbors to begin and complete their pond closures. There are only a handful of suppliers that regularly provide equipment to the power industry. For years the lead time has been twelve months from placing an order until finalizing deliveries. Currently those lead times are unchanged, and can even be beat. However, the wave is building and those

The significant number of pond closures over the next five to ten years will place an unprecedented demand on the ash handling equipment industry. since the rule was first proposed nearly 5 years ago?” The answer is found in the unique dynamic and pressures that are being put on the regulated power and coal industry. Most utilities answer to public commission and oversight boards in their specific state. If the utility can prove that spending money is required by law and that the utility was prudent with the project then it can get rate recovery. If it can’t prove these things, then the utility faces intense public scrutiny and a strong chance of having the rate recovery denied. It’s always easy to play Monday

times will start to creep up. For many utilities the time to wait is over; it is time to start planning the conversion projects needed to meet the new CCR rule. With a 12-month lead time and an expeditious start, meeting the required compliance dates is not a concern. But in six months, those 12 month lead times will grow. It’s difficult to predict how long the fabrication schedules will get, but it is safe to say that the suppliers are going to be extremely busy and waiting to get started may not play out well. Bottom line… start planning now. s

COAL TRANSPORTER | 49

NCTA / Member Sound-Off

Member Sound-Off The Coal Transporter asked members and associates to offer their opinions on a current topic in the coal industry.

n April of 1984 the Government Accounting Office (GAO) reported on the Environmental Protection Agency’s (EPA) major efforts to prepare cost-benefit analyses to support regulatory decisions, as required under President Reagan’s Executive Order 12291. In its report, the “GAO found large gaps in the underlying scientific information which EPA uses to estimate the environmental benefits of its regulatory alternatives. EPA has also had

difficulty determining how much people are willing to pay for health and environmental improvements.” Flash forward 30 years to the Supreme Court decision on the MATS regulation. In the majority opinion, Justice Antonin Scalia, wrote that it was not appropriate for the EPA “to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.” When it comes right down to it, does the EPA even care

What’s next for MATS?

how much people are willing to pay for health and environmental improvements? Are they now so driven by ideology that a cost/benefit analysis is just a nuisance to be worked out after the fact? While we don’t know the answer to these questions we posed some others to the community on what happens next and the impact the decision may have on future EPA actions including the Clean Power Plan. s

Putting EPA on Notice

We gave respondents four ways to answer the question “Now that the Supreme Court has remanded the MATS regulation back to the D.C. Court of Appeals for reconsideration in accordance with its decision, what do you think will happen next?” They only needed two.

What will the EPA do next with MATS?

Ok. So the decision was a pyrrhic victory for the coal industry. One would think that this would put the EPA on notice that the cost of compliance for future rules must be justified. So we asked respondents, “Do you think the MATS ruling

will bring more public scrutiny to how the EPA justifies the costs associated with regulatory compliance?” Their answers were not encouraging.

“I would hope that it would, but feel it will be brushed aside as an insignificant, inconvenient fact of “fixing” Global Warming issues.” John Jennings, Lexair, Inc.

Irrelevant, utilities have complied

Back to DC Circuit

“It may help those who intend to bring lawsuits after EPA finalizes CPP” Emily Regis, Arizona Electric Power Cooperative, Inc.

44%

56%

“No - The EPA will find a way to show that the increased costs will be offset by increased benefits, no matter how vague or inconclusive the benefits are.” Kenneth Gray,Western Fuels Association

“No, most people don’t care” David Carlile, Lighthouse Resources Inc

A slight majority believe that so many years have passed between when the rule was put in place and the Supreme Court decision that most utilities have already complied. This invoked the now classic Clintonesque answer, “What difference does it make now?” The rest of the respondents think they will just go back to the DC Circuit and move the rule forward. No one thinks the EPA will start over or scrap the rule entirely. 50 | COAL TRANSPORTER

“No, the public will not be engaged until their checkbooks are impacted.” Dirk Cook, Southern Company

“No. The consumer doesn’t react until it hits his pocketbook. The complexity of government regulations impacts on daily life far too late to matter.”

“Probably not because the media’s coverage will continue to sway public opinion” Patricia Jensen, Alliant Energy

Toni Radtke, Dairyland Power Cooperative

“Not until such time that energy bills begin to impact the consumer’s pocket book.”

Only one person thought that that there will be more public scrutiny on costs and benefits but he failed to elaborate why he thought so.

Craig, Romer, Xcel Energy

Next up, the Clean Power Plan

Under traditional regulatory review, courts rarely put a stay on new EPA rules, even if states and utilities can show that they are causing irreparable and irreversible harm. With the long lead time and investment decisions that need to be made about compliance with any new rule, does any rule they put in place ever ultimately need to be found legal to get their way?

The Supreme Court ruling on MATS will cause no delay in the finalization of the Clean Power Plan.

The Clean Power Plan is already the subject of numerous lawsuits. Respondents were asked if they agreed or disagreed with the statement:

The Supreme Court ruling on MATS will cause no delay in the finalization of the Clean Power Plan. Here people were a little less certain about what might happen next.

“The EPA is on a mission for the Administration that wants this as a piece of its legacy, good or bad.” Dirk Cook, Southern Company

40% 35%

“The history of EPA success illustrates a support structure that is impervious to reason. Obama is the cornerstone.”

30%

David Gambrel, Logisticon

35% 20%

“I feel that the EPA and the Administration will take whatever steps that are necessary to ramrod the rules down the throats of the Utility Companies and the general public.”

15% 10%

John Jennings, Lexair, Inc.

5% 0% Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

“Obama administration will revise benefits estimates (another lie). With the benefits revision all will be fine inside the beltway!” Jerry Wess, Constellation

Those that agreed or strongly agreed with the statement seemed to think “EPA won’t admit it did anything wrong in the MATS regulation, so it that ideology trumps all, includ- would it influence their CPP decision?” ing common sense and Emily Regis, Arizona Electric Power Cooperative, Inc. Supreme Court rulings. Commented was optional. “The EPA acts on its own schedule and is not swayed by law or precedent. No amount of science can dissuade a religious zealot.” Craig Romer, Xcel Energy

There was a little hope that all might not be lost and the Clean Power Plan will be delayed. “The Supreme Court’s action will cause additional review, modification and litigation.” Dan Gray, Retired Utility Coal Transportation

COAL TRANSPORTER | 51

The

Final Question

It seems as if most government entities think that they can solve any problem if given enough money. The final question was how much money (or economic value) would it take for the government to be able to control the climate, keeping in mind that the current US GDP is on the order of $17.4 trillion.

There was some optimism that a cool $100 billion would do the trick, but most thought there is no amount of money that would do the job. The climate cannot be controlled. Just ask the dinosaurs.

How much Economic Value will it take to Control the Climate? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $100 Billion

52 | COAL TRANSPORTER

$100 Trillion

$100 Quadrillion

$100 Quintillion

$100 Sextillion

Climate Canâ&#x20AC;&#x2122;t Be Controlled

Personal Profile / Reflections

Cathy LeFevers Still Plays with Trains

Foreword by Pat Scherzinger, Editor IT OCCURRED TO ME after profiling Jim Henry in the last issue and subsequently having a conversation with Cathy LeFevers, that many of us share more than just common work goals. We share a passion for trains. And what’s not to be passionate about. Trains are big, powerful, and efficient. They help create commerce and connect people. They are relaxing to ride and conducive to conversation, especially when dinner and drinks are included! Many of them are beautiful, coal trains included.

This passion manifests itself in a variety of ways. Maybe it’s pulling over to watch a train go by and grabbing your camera for a shot. Maybe it’s putting that train under the Christmas tree every year - especially when you can get replica cars with the same PGEX markings and signature rose decals as the trains you actually purchased back in the day. Maybe it’s carving out a space in the house (or an entire basement) for a year-long display. Maybe it’s jumping at every opportunity to ride a train – the wine train in Napa, the Cog

Railway up Pikes Peak, and the Durango & Silverton Narrow Gauge trains have all been part of or accessible easily from NCTA events. Maybe it’s on a vacation when you indulge in your passion; it could be checking out the local rail museum or making a train ride part of the vacation plan. And maybe you have a passion like Cathy’s or at least wish you could. There is no scaled down models for this girl, she deals in the real thing. I invite you to enjoy her story and think about your passion for trains and plan on sharing it in the next issue. s COAL TRANSPORTER | 53

athy LeFevers grew up in Brookf ield, Illinois twelve Over the next year or so she watched this group getting things miles outside Chicago. She was the youngest of three done. They were a true working group with many contributors, girls and most definitely a daddy’s girl who loved on many levels, all with a passion for trains and preserving the spending time with her father. Whether it was out history of regional railroads. for a quick run to the store or their annual excurThe Alexander Chapter of the NRHS was established sion to the Chicago Auto Show at McCormick Place, she was under the sponsorship of the Alexander Railroad in 1979 and just happy to be with her daddy. Family vacations always had is the oldest railroad preservation society in Western North some educational aspect which at times seemed a bit boring to a Carolina. The club has nearly 50 members from the surroundlittle girl, but there was one trip that really made an impression. ing area, each member with their own personal story about To this day she keeps a small wooden train on her dresser- a how their interest in trains brought them together. Over its memento she got when the family visited Greenfield Village in first 15 years, the chapter sponsored many railfan excursions Dearborn, Michigan. The railroad transportation section was the on the Alexander and Norfolk Southern railroads. In 1995, the best part and so began a lifelong love of trains. Newton Depot Authority was formed by the City of Newton. Her family relocated to Charlotte, NC when LeFevers was The Newton Depot Authority worked to relocate and restore 16. With a new high school came new opportunities. She was the original 1924 Depot building to a site along the tracks that always interested in drafting and spent a lot of time playing was more suitable for the vision of the complex. As a tribute to with triangles and t-squares as a child. Her father worked for railroad heritage in the piedmont of North Carolina in particuDietzgen in the early 1960’s as a packaging designer, so draftlar and the southern United States in general, the Southeastern ing equipment was just part of the family art supplies available Narrow Gauge and Shortline Museum was established by the in the house. She excelled in drafting in high school and upon Newton Depot Authority. It is aided by the collaborative efforts graduation was offered a job at Duke Power as a designer trainof the Alexander Chapter of the NRHS; both organizations ee. Her parents moved to New Jersey the year after she graduare 501(c)3 non-profit corporations. Through the efforts of the ated from high school, but her heart was planted in the south. two groups, along with the community, they have raised over Through the next 27 years she built upon her experience $525,000 for the museum complex. The four acre museum and moved from piping design to failure trending to major projects. After three One day, she was talking to Clarence Ray, President, years of traveling 4-5 days a week, it was time to find a new direction that didn’t Duke Energy Generation Services, and he asked her, require so much travel. One day, she “What do you know about trains?” her response was, was talking to Clarence Ray, President, Duke Energy Generation Services, and he asked her, “What do you know about trains?” her response was, “I don’t know a lot about them, but I really like them.” So, in 2005, LeFevers began to work in the fuels department at Duke Energy. One of her first opportunities was working on the railcar complex is made up of the acquisition project, where Duke Energy invested in a private Newton Depot with associatrailcar fleet of 1260 cars. During that period she learned about ed welcome center, a covered railcar design and function. Once the cars were in service, she car pavilion for the restored was responsible for scheduling and expediting coal train delivercars, and a future park. ies. Along with the logistics functions, she learned about rail The museum is located at accident investigations. As time went on, the railcars began to the geographical mid-point of the need maintenance and LeFevers worked to learn more about the original Chester & Lenoir Narrow maintenance requirements of a railcar fleet. By 2013, the fleet Gauge Railroad, later known as the Carolina & North-Western had grown to 5000 railcars and there was a need for a full time Railway. This was the longest narrow gauge railroad in the railcar maintenance manager. She happily accepted the challenge Carolinas. The narrow gauge lines provided a means for the and responsibility. transport of raw materials, merchandise and passengers. Matt Bumgarner is also a railroad historian who has authored eleven Activity at the Local Depot books related to railroads of Western North Carolina and the LeFevers and her husband David live in his hometown of Civil War. “Those raw materials fed the growth of both the Newton, NC. After a few years of settling back in to more of textile and furniture industries which led us to become the soa normal life of work and home, she started to notice changes called furniture capital of the world. Our economic legacy was taking place at the old depot near their house. She didn’t know built on those things and the ability of the railroads to bring the much about what the depot group was doing up the street, but materials in and out was an essential part of that.” she never missed a train show that the group hosted. At one The museum collection of rolling stock will be a selecof the train shows, she met Matt Bumgarner, an officer of the tion of the equipment that would have been used in the region. Alexander Chapter of the National Railway Historic Society Among the cars in the collection are one of the country’s oldest (NRHS) and he added her to the group’s email distribution. narrow gauge boxcars, a gathering of East Tennessee & Western

“I don’t know a lot about them, but I really like them.”

54 | COAL TRANSPORTER

North Carolina Railroad equipment from the famed Tweetsie line, an Edwards Railcar built and operated in North Carolina and a steam locomotive, the Virginia Carolina #50. Johnny Graybeal is another member who is also a railroad historian and author. His work focuses on the famed Tweetie Railroad. He considers himself the names, dates, and places person of the museum.

Lady with a Crowbar

Lefevers decided to become a member of the Alexander Chapter of the NRHS in 2013. She told Bumgarner that she was interested in being the Operation Lifesaver representative and would like to help with fundraising. After all, she had no interest in working on the actual railcars they were restoring. She did work to become an Operation Lifesaver Authorized Volunteer and she has been scouring the web trying to find foundations that support preserving rail history and promoting railroad safety, but the part that she didn’t expect was enjoying working on the actual railcars. Bumgarner encouraged her to attend a work session and the group was so welcoming. George Ritchie is the owner of Foothills Woodcrafters and has provided shop space and the equipment necessary for the chapter to restore the railcars.

When LeFevers first came to the work sessions, she wasn’t really sure how she was going to contribute, but started out moving materials, then doing some sanding and grinding and even helped with putting molding in place, though one of her favorite things is the satisfaction of demolition. One particular Saturday, LeFevers and James Glenn, one of the younger members of the group finished removing the flooring from the baggage car they are restoring with crow bars and what fun it was. The boards were rotted and would have to be replaced. The 1902 baggage car was originally built by Jackson and Sharpe Company and served West Virginia Midland and the Pardee Curtin Lumber Company. James Glenn is a 21 year old member, who was always interested in trains. As a child his grandfather would take him to watch trains. Glenn said, “Ironically, I had read books that were written by Matt and Johnny and I lived right here in Newton. It is incredible that a train museum was built right up the street from me, so it was natural for me to get involved”

Restoring century-old railcars involves working with metals such as cast iron and steel, as well as as any variety of wood, from pine to poplar, from oak to hemlock. (Left), Cathy LeFevers uses an electric grinder (with proper eye protection) to clean years of dirt and corrosion off a piece of iron before it is repainted. (Right), Matt Bumgarner uses an oldfashioned wood-chisel and hammer to handcraft a notch in the the end sill of a 115-year old baggage car. COAL TRANSPORTER | 55

BEFORE

AFTER

(Left column) The top photo shows the first restoration project, a circa-1875 narrow gauge boxcar, as it prepares to go into the shop for repairs in 2008. Six years later, the car emerged and was put on display at the SE Narrow Gauge & Shortline Museum in Newton, NC. (Right Column). One of the more challenging aspects of these “narrow gauge” projects is finding or creating historically accurate wheelsets, or rather “trucks.” In the top photo, the gang is mounting sets of wheels and journal boxes to the new wooden frame. In the lower photo, a lively discussion is being held about accurately drilling a 28 inch hole through three massive timbers that will make up backbone of a restored log car. James is a working musician and multi-instrumentalist, who adds the comedic side to the group, at any given point in a work session, James lightens up the moment with well placed, “really bad” railroading jokes and amusing puns. With this group everyone contributes in one way or another. George Richie is a master craftsman who oversees the rebuilding of the railcars. Ritchie spent his career building custom cabinetry and now is passing on his knowledge and expertise to the grous as they rebuild the hundred year old railcars.

Restoring a 1914 Log Car

One of the more recent projects the group is working on is the restoration of a log car from 1914. This car was built for the Westside Lumber Company in California and was one of the most famous logging railroads. At 32 feet long, the car had but one purpose - to haul huge timbers out of the virgin California forests. Though not from the region, this car will represent the logging industry that helped build the reputation of Newton and the surrounding area as the “furniture capital of the world.” Mark Lewis was researching the logging car and found the plans for building a model of a logging car that turned out to be 56 | COAL TRANSPORTER

almost identical to the one the group is restoring. Mike Brady is another club member who works as a steel fabricator and collects antique gauges and tools. Restoration of the log car was not simple, as every piece of wood on the car was rotten beyond use and could be used for little more than patterns. Huge replacement timbers of oak, nearly a foot square, and more than 30 feet long were required for the project. The museum’s restoration team first needed to lash the beams together to prevent warping, and then set about connecting them permanently to each other. The crew needed to drill extremely straight 1 inch diameter holes through nearly 3 feet of wood and none of the conventional tools in the shop would work. While members were brain-storming the problem, and probably enduring one of James Glenn’s jokes, Brady managed to solve the problem. At the next work session, he brought in a huge antique drill from his collection which was perfect to accomplish what was needed for the restoration of the railcar. Brady also has a story about his fascination with trains. One day there was a group of chapter members traveling to the Streamliners at Spencer event at the North Carolina Transportation Museum. Brady was talking about growing up in a house

that backed up to the train line from Lenoir to Hickory. Robert Cline said he grew up in a house that backed up to the same line. They started describing the houses where they lived and not only discovered they knew the same neighbors, but when Robert’s family moved out of the house, Mike’s family moved in, to the same exact house! Several of the members have stories where they were in the same place, at the same time, even as children, witnessing the same things and now as adults, their interests have brought them together.

Is it Work if it’s this Much Fun?

Work sessions are a combination of history lessons, construction lessons and sharing of good times. The car shop is located on the Norfolk Southern main line in Hickory, NC and when the group hears a train coming, work stops and they all rush outside to watch the trains go by, then it’s right back to work. The chapter has an annual “hobo lunch” in December. The meal is complete with German Bologna sandwiches and a hearty side of pinto beans and cornbread, not to mention sweet tea and a variety of desserts. During the event, family members are introduced to the projects that they have been hearing about all year, along with many embellished stories of the antics of the chapter members. A fun time is had by all. The Alexander Chapter hosts the NC Railroad Expo every spring in Hickory, NC. The show is made up of railroaders, The Alexander Chapter of the National Railway Historical Society has approximately 50 members, with ages from 2 to 88. In this photo, one of the younger volunteers, Chris Stinson helps drill some precision holes in an oak beam.

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railfans, and model railroaders. This past year was the first time LeFevers promoted Operation Lifesaver as an authorized volunteer. She spent the day greeting the visitors, giving Operation Lifesaver hats to the children and sharing rail safety information. Mark Lewis said he was walking through the model section of the show and heard a little girl say to her father, “Daddy, I think that train lady up at the front knows more about trains than these guys back here.” Mark thought it was too funny and quite insightful of the little girl. LeFevers enjoys her career at Duke Energy overseeing the railcar maintenance program and finds her volunteer work with the Alexander Chapter of NRHS and Operation Lifesaver very rewarding. So she really can say she, “Still plays with trains.” s The work gang poses proudly in front the restored boxcar, Carolina & North-Western #401 as the project comes to an end. Like all museums, the SE Narrow Gauge & Shortline Museum is always looking for volunteers and funding. If you are interested in attending meetings or work sessions, the group meets on the first Thursdays of every month and alternating Saturday mornings. All donations are tax-deductible and naming opportunities for displays and rooms in the museum are available. For more information, please visit www.newtondepot.com

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The View from the Caboose

The humo sometime rous s serio , sometim us ra es mbl of be st frie ings nd Pete and A s nn.

THE VIEW FROM THE CABOOSE By Pete Moss & Ann Thrawsite

ANN: I can’t believe the summer is almost over. Where does the time go, Pete? PETE: Well the good news is that you must have had some fun, as time goes really slow when you’re bored. ANN: I have been to some fun educational events put on by NCTA from Phoenix to Pinehurst to Chicago. But not to get too “Dorothy” on you, there’s no place like home. PETE: Then you must be happy that the Fall Conference is always in Denver. I’m bringing my golf clubs this time, as I hear Colorado is looking a wee bit like my Emerald Isle homeland these days. ANN: It is more lush than usual for this time of year, so by all means, come and enjoy the great outdoors. PETE: I think I’ll bring my fishing pole too and head up to Rocky Mountain National Park and see if I can catch some trout. I have a very expensive taste, so I’m hoping that some of those native greenback cutthroat trout might be just the ticket. ANN: I think they call them greenback trout because they literally have GREEN backs. Oh, never mind. If you catch one, be sure to enjoy it with some GOLDEN potatoes and some PEARL onions. PETE: Cha-ching! $$$ ANN: Speaking of fish, your ma didn’t happen to eat 300 pounds of lake fish when she was pregnant with you, did she? No judgement, but it could explain a few things. PETE: No. The only thing my ma ever fished for was a compliment. And trust me; if we’re still talking about cooking and eating, her bait wasn’t that good. But I think you were talking about the EPA’s calculations in the Mercury Air Toxic Standards that portend to know the effect mercury has on the wee ones and the monetary value of a person’s IQ. Hey, if I can use the

word portend in a sentence, then I’m all good, if not a little insulted by your insinuation. Oh. “insinuation” - five syllables. Booya! I’m a genius. ANN: Well, I was talking about the MATS rule and I apologize for offending you. How about I take some of my greenbacks and buy you a drink? PETE: Apology accepted. You know I’ve traded in drinking Long Island Iced Teas for Raspberry Ice Tea and I would like a cold one. Some say alcohol is bad for the brain so I’m cutting back; some say marijuana makes you a dope (hehehe) but it’s becoming legal all over the place. Bottom line is no one can seem to agree how any of these things affect a person’s health let alone their IQ. Besides, it would probably be cheaper to send every lake fish eating pregnant woman in North America 300 pounds of chicken and take away their light bulbs than what ratepayers will be stuck with in MATS compliance costs. I wonder if anyone did that math. ANN: Well, math is not EPA’s strong suit. It appears that it is viewed as an unnecessary evil. Even the Supreme Court, who has let a lot of stinkers go by lately, knew the math on this one smelled fishy. They sent the EPA back to the DC Circuit to make up some different numbers. PETE: I have another mercury question for you Ann. The EPA justifies using light bulbs that contain mercury by saying the use of CFLs actually helps reduce total mercury emissions in the U.S. They are more energy efficient, so reduce the demand for electricity, which reduces the amount of coal burned, which reduces emissions of mercury, blah, blah, blah. Of course it never was true if the coal plants weren’t on the margin, but ignoring that blaringly important point, post MATS, is this still true? There are a lot of light bulbs out there and eventually they all end up broken. ANN: Good question Pete. Somebody needs to do that math. PETE: I was afraid you were going to say that.

Have something to say to Pete? Send comments or questions to pete@nationalcoaltransportation.org COAL TRANSPORTER | 59

NCTA Membership List A. Stucki Company AKJ | NALCO Alliance Coal, LLC Alliant Energy Corporate Services Alltranstek LLC Alpha Coal Sales Co., LLC Alpha Products, Inc. Ambre Energy North America Ameren Missouri American Electric Power Amsted Rail Appalachian Railcar Services Arch Coal Sales, Inc. Arizona Electric Power Coop. Arizona Public Service Arkansas Electric Power Cooperative Associated Electric Power Cooperative Associated Terminals LLC Aventics Basin Electric Power Cooperative Blackhawk Mining, LLC Bowie Resource Partners CANAC, Inc. CDG Engineers, Architects, Planners CIT Rail City Utilities of Springfield Cleco Cloud Peak Energy Colorado Springs Utilities CONSOL Energy Inc. Consumers Energy Company Cooper Consolidated

CPS Energy Crown Products CSX Coal & Ore Terminals Dairyland Power Cooperative David J. Joseph Company Detroit Edison Duke Energy Dynegy, Inc. Ecofab Australasia Empire District Electric Company Energy Publishing, LLC Entergy Services, Inc. Exponent, Inc. First Union Rail FirstEnergy Florida Power & Light Company FreightCar America GATX GE Rail Global One Transport, Inc. Grand River Dam Authority Great River Energy Greenbrier Companies Hall St. Coal Terminal Hendricks River Logistics Hi Crush Partners LP iIRX Jim Walter Resources, Inc. Kansas City Power & Light KCBX Terminals Co. Kiewit Mining Group Inc. Kinder Morgan Terminals Lexair, Inc.

LG&E and KU Energy Locomotive Service, Inc. Lower Colorado River Authority Luminant Energy Maxeefish LLC MEAG Power Metro East Industries, Inc. MidAmerican Energy Company Midland Railway Supply Midwest Industrial Supply, Inc. Miner Enterprises Inc. Minnesota Power MinTech Enterprises Mitsui Rail Capital, LLC Muscatine Power and Water Nebraska Public Power District New York Air Brake Northern Indiana Public Service NRG Energy, Inc. NV Energy OG&E Electric Services Oglethorpe Power Corp. Omaha Public Power District Otter Tail Power Company PacifiCorp Patriot Coal Corporation Peabody Energy Platte River Power Authority Portland General Electric PPL EnergyPlus, LLC Progress Rail Services, Corp Rail Link Railroad Financial Corporation

RAS Data Services RESIDCO River Consulting Romeo RIM, Inc. RungePincockMinarco Salt River Project Sandy Creek Energy Station Seminole Electric Cooperative, Inc. SMBC Rail Services LLC Southern Company Generation Standard Steel Strategic Rail Systems Strato, Inc. T Parker Host Tampa Electric Company Tennessee Valley Authority Three Rivers Marine & Rail Terminals Timken Company Transportation Services Inc. TrinityRail Tri-State G&T Association TUCO/NexGen Coal Services Tucson Electric Power Company Wabtec Corporation We Energies Westar Energy Western Farmers Electric Western Fuels Association, Inc. Westmoreland Coal Sales Company WestRail Wisconsin Public Service Corporation Xcel Energy Xcoal Energy & Resources

Index to Advertisers Amsted Rail. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Associated Terminals LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Cloud Peak Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Crown Products & Services, LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Freight Car America. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBC Fuel Tech, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 GATX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Kiewit Mining Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Lexair, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IFC Lighthouse Resources, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 MCRL, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

60 | COAL TRANSPORTER

MinTech Enterprises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OBC Mitsui Rail Capital, LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 NexGen Coal Services, Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Progress Rail. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Slover & Loftus LLP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SMBC Rail Services LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Three Rivers Marine & Rail Terminals . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Western Fuels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Westmoreland Coal Sales Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Westrail. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Xcoal Energy & Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

FREIGHTCAR AMERICA: A LEADER IN RAILCAR MANUFACTURING AND SERVICES

• • • • •

Railcar Manufacturing and Rebuilding Leasing and Financing Program Repair and Preventive Maintenance Fleet and Maintenance Management Replacement and Repair Parts

308-382-3880 freightcarrailservices.com

312-928-0850 freightcaramerica.com

800-458-2235 freightcaramerica.com

When the dust settles, there’s only one company left standing.

MinTopper S+0150 received BNSF approval at the lowest application rate. MinTech’s MinTopper S+0150 is also an approved topper agent for Union Pacific. MinTech can treat coal all the way from mine site to export terminal to final destination. Our Car Topper Dust Suppression, Full-Body Dust Suppression, Spontaneous-Combustion Inhibitor, Side Release, and Road Dust Treatments are ideal for customers receiving coal both domestically and internationally. Of course, you’d expect nothing less from the hardest working company in the business. To learn more about putting MinTech Enterprises to work for you, call 614-736-1918, email info@mintechenterprises.com or visit mintechenterprises.com.