Great Lakes Basin Railroad officials fire back

Railroad vice chairman says in filings that support for bypass railroad exists despite opponents' claims
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CHICAGO — The private corporation seeking to build a new 261-mile railroad to bypass Chicago freight congestion is challenging objections from opponents of the $2.8 billion project in a new filing with the federal regulatory agency that will ultimately decide the proposal’s fate.

Great Lakes Basin Transportation Inc. told the U.S. Surface Transportation Board last week that its plan for a new railroad running from southwest Wisconsin to northwest Indiana is viable and that Congress itself is on record in support of such competitive rail ventures.

Great Lakes’ filing came in response to a petition from opponents in three states requesting that the transportation board reject the Crete, Ill.-based corporation’s application. The opponents contend there is neither need nor demand for the proposed rail line and that Great Lakes has no solid financing for the project.

In a previous filing with the transportation board, reported on Train’s News Wire June 26, Great Lakes said it had a net worth of $151 at the end of 2016 and no net income for the year.

Yet, in its latest filing and in an accompanying letter from Vice Chairman James Wilson, Great Lakes said the investment community “has considerable interest in financing this project once all required regulatory approvals are received.”

Also, Great Lakes is confident in its ability to finance the project after regulatory approval is obtained, but is “unable to project exactly what form that financing will take” until approval has been obtained.

Great Lakes’ filing says “it is not necessary for rail line construction applicants to come to the (transportation board) with every penny of the cost of their proposed projects in hand.”

Great Lakes cited the 1998 case of the Dakota, Minnesota & Eastern Railroad, which received STB approval for constructing 280 miles of new railroad to serve coal lines in Wyoming’s Powder River Basin. The DM&E line was never built, however.

Great Lakes said its application provides “an even more compelling case for financial viability” than the DM&E because of the prospect of relieving the “Chicago chokepoint” on the nation’s rail network.

Great Lakes contends the railroad is projected to become profitable in the third year after completion and to have earnings before interest and taxes to fixed charges coverage of approximately 4.5 to 1 in its fifth year of operation.

In his letter, Wilson said potential investors have told Great Lakes that rules prevent investment in the preliminary state of the project because Great Lakes cannot assure them that the transportation board will approve the project, or give a timetable for the board’s decision.

Great Lakes’s executive team has met over the past three years with “hundreds” of qualified investors, from individuals to banks and pension funds. And have spoken with potential investors in several other nations, the Middle East and Australia, Wilson said.

Potential investors have said Great Lakes is a “no brainer” but that they cannot invest until regulatory authority is obtained, Wilson stated.

Great Lakes also contends that federal law, namely the Staggers Rail Act of 1980 and the Interstate Commerce Commission Termination Act, established a “clear and unambiguous policy in favor of construction of new rail lines.”

The act states that “Congress should encourage, rather than discourage, competition among railroads.”

The purpose of the proposed Great Lakes line is to provide an expedited route carrying through traffic around Chicago, which the filing described as a “19th Century jumble” of rail lines. Great Lakes said the line is not designed to serve any existing rail-served industries directly, but UPS has given notice of its support for the project.

Opposition to the project is coming primarily from groups representing grass-roots foes in eight counties in Wisconsin, Illinois, and Indiana. A Chicago attorney filed the petition for rejection in July on behalf of seven of those groups.

Other objections have been filed with the transportation board from groups such as the Sierra Club, the Environmental Law & Policy Center, and dozens of individuals.

Opponents contend that Great Lakes must be required to show the ability at the outset to fully fund track construction and that rail carriers and shippers will make use of the rail line.

Without evidence of Great Lakes’ ability to fully fund the construction, the communities along the line would face “disruptions and environmental harms that result from incomplete and abandoned track structures along the proposed rail line,” the petition states.

The opponents state that there is no evidence that Great Lakes has discussed financing with any identified entity, and there is “no basis … to find that Great Lakes has a reasonable prospect of obtaining financing.”

Similarly, the petitioners contend Great Lakes has shown no public need or demand for the rail line.

“The record regarding public need is every bit as barren as the record regarding financial fitness,” the petition states.

The opposition groups said they are prepared to provide evidence that at least two Class I carriers have stated publicly that they will not use the rail line. The filing did not name the carriers, but Norfolk Southern and Union Pacific have said previously that they would not use the Great Lakes line.

Opponents claim additional rail crossings will be disruptive, negatively impact farms and cattle, hurt the trucking industry and jobs.

NEWSWIRETrains News Wire

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