Interim Joint Committee on Transportation


Minutes of the<MeetNo1> Third Meeting

of the 2006 Interim


<MeetMDY1> September 5, 2006


The<MeetNo2> third meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday,<MeetMDY2> September 5, 2006, at<MeetTime> 1:00 PM, in<Room> Room 171 of the Capitol Annex. Representative Hubert Collins, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members: <Members> Senator Brett Guthrie, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Walter Blevins Jr, David E Boswell, Robert J (Bob) Leeper, R J Palmer II, Richard "Dick" Roeding, Richie Sanders Jr, and Gary Tapp; Representatives Eddie Ballard, Carolyn Belcher, Denver Butler, J R Gray, Jimmie Lee, Paul H Marcotte, Charles Miller, Russ Mobley, Lonnie Napier, Don R Pasley, Marie L Rader, Rick W Rand, Ancel Smith, Jim Stewart III, Tommy Turner, and John Vincent.


Guests Testifying Before the Committee:  Anthony Reck, President, Paducah & Louisville Railroad and Chairman of the Kentucky Railroad Association; Randall Clark, President, Trans Kentucky Transportation Railroad, Inc.; Fred Mudge, Chairman, R. J. Corman Railroad Group; Tom Murda, Director of Infrastructure Protection, and Gabrielle Treesh, CSX Transportation; Terry Garcia Crews,  General Manager, LexTran, Alyce French Johnson, Transit Authority of River City (TARC); and Dave Malone, General Manager, Transit Authority of Northern Kentucky (TANK); and Transportation Cabinet officials - Asa Swan, Legislative Liaison; Tim Hazlette, Department of Safety; and Marc Williams, Department of Highways.


LRC Staff:  John Snyder, Jim Roberts, and Linda Hughes


Representative Gray moved to adopt the minutes from the July 6, 2006 Committee meeting, as distributed.  Representative Miller seconded the motion, which passed by voice vote.


The first item on the Committee's agenda was a discussion regarding the organization, operation, relationship with the public and security of Kentucky's railroads.  Testifying on these issues were: Anthony Reck, President, Paducah & Louisville Railroad and Chairman of the Kentucky Railroad Association; Randall Clark, President, Trans Kentucky Transportation Railroad, Inc.; Fred Mudge, Chairman, R. J. Corman Railroad Group; Asa Swan, Kentucky Transportation Cabinet; and Tom Murda, Director of Infrastructure Protection, CSX Transportation.


Mr. Reck said that there are three classifications of freight railroads, as defined by the Surface Transportation Board.  Class I railroads are those with 2004 operating revenues of at least $289.4 million.  These Kentucky railroads are:  BNSF, CSX, Canadian National (CN), Canadian Pacific, and Norfolk-Southern.  Class I carriers comprise just one percent of the carriers, but account for 70 percent of the industry's mileage operated, 89 percent of its employees, and 93 percept of its freight revenues.


Class II (regional) railroads are those with at least 350 route miles and/or revenue between $40 million and the Class I threshold.  The Paducah & Louisville Railway Co. is the only Class II railroad operating in Kentucky.


Mr. Reck said that Class III (local linehaul) railroads operate less than 350 miles and earn less than $40 million per year.  They generally perform point-to-point service over short distances.  Kentucky's Class III railroads are Fredonia Valley, Kentucky & Tennessee, Louisville & Indiana, R. J. Corman (which include R. J. Corman Central Kentucky Lines, R. J. Corman Memphis Lines, and R. J. Corman Bardstown Lines), TennKen, Western Kentucky, and Transkentucky Transportation (TTI).


Mr. Reck said that Kentucky's freight railroads are a vital force in the state and national economies and a crucial component of the state's transportation systems.  More than a dozen railroads operate in Kentucky, providing service to customers across a 2,600-mile rail network that reaches all corners of the state.  He noted that the majority of freight railroads in Kentucky are privately owned.  And, unlike barges and trucks, railroads must build, maintain and pay state and local property taxes on their rights-of-way.


A major concern of any railroad, Mr. Reck stated, was potential legislation that address work rules of railroad employees.  The position of the railroads is that these matters are best handled through negotiations with employees rather than action of the legislature.


Mr. Clark said that Kentucky's freight railroads contributed approximately $500 million directly to the state's economy in 2004 through wages and retirement benefits.  There were approximately 4,868 active Kentucky employees with a payroll of $264 million in 2004.  And that Kentucky's railroad employees are near the top of the U. S. wage scale, with average earnings of $61,000 and another $23,000 in fringe benefits.


Mr. Clark said that railroads are hauling more commodities today than ever before, and that they carry 16 percent of the nation's freight by tonnage.  He said the system accounts for 28 percent of total ton miles, 40 percent of intercity ton-miles, and six percent of freight value.  And, since 1994, he said that short line railroads had moved over 8,900 car units of coal, which is equivalent to over one million coal haul truck loads.  Also, while Kentucky ranks 24th nationally among states for number of track miles, it ranks 5th in the number of actual freight car miles.


Mr. Murda said CSX Transportation, Inc. has its major Kentucky rail yards in Louisville and Russell.  With an employee base of 3,500, an annual payroll of $160 million, which serves more than 400 industries with products such as coal, synthetic fuel, automobiles, and appliances.  Its route covers 1,827 miles, with 2,000 grade crossings, with an annual 755,323 carloads of freight.


Mr. Mudge, R. J. Corman Railroad Group, stated that by year 2020 there will be a 50 percent increase in rail imports/outports.  And that railroads spend five times more for upkeep than other types of businesses.


Mr. Reck said that the Norfolk Southern Corporation (NS) has its major rail yard in Louisville.  With its 1,184 employees (annual payroll of $57.7 million) it ships a variety of freight, including coal, transportation equipment, chemicals, and allied products.  It covers 431 millions, with 926 grade crossings.


Mr. Swan, Kentucky Transportation Cabinet, highlighted a new agreement reached between the railroads operating in Kentucky and the Transportation Cabinet.  He said that, among his other duties, he will now be the contact person for citizens' railroad concerns.  And, he said that within 30 days the Cabinet plans to have a contact person located in each district office.  In closing, Mr. Swan stated that once the system is functional, the Cabinet and the railroads plan to have all questions answered within a 14 working day period.


Senator Boswell asked how many employees are employed by the short lines.  Mr. Reck said that he did not have that information with him, but would by happy to supply that data.


Representative Gray asked how many tons of coal was shipped by rail.  Mr. Reck stated that he did not have the exact amount; however, he knew that the two plants, one in Calvary and the other in Lake City, processed approximately 11 million tons a year.


Representative Mobley asked how many fatalities occurred last year at railroad crossings.  Mr. Clark noted that he did not have that number with him, however he would be happy to forward the information to Representative Mobley.  Mr. Clark noted that this was a concern of all railroads; however, he speculated that vehicular traffic was as much, if not more, to blame for railroad crossing accidents.  He noted that his office window over looks a busy railroad crossing in Paris, Kentucky, and all most daily he witnesses drivers trying to beat the train to that crossing and even trying to beat the railroad crossing guards.  He said that he has also witnessed a few drivers actually driving around the railroad crossing's two guards.  He cautioned that it takes a train over a mile to come to a stop.


Chairman Collins asked Mr. Reck if he was aware of previous legislation, 2006 House Bill 542.  He noted that HB 542 required railroad companies to provide up to two days off, without pay, if requested by a crew member who has worked for seven consecutive days.  Chairman Collins noted that although unsuccessful in becoming law,  he wanted to know if the railroads had an opinion on this measure.  Mr. Reck stated that the Paducah & Louisville Railway, which he is President & CEO of, normally has a six day rotation schedule; however he did caution that sometimes employees were asked to work overtime, i.e., longer than six days; however, those times were few and far in between.  He said that he was unaware of what other companies' rotation schedules were.


Representative Stewart asked if Mr. Reck had the number of fatalities that have occurred so far in 2006.  Mr. Reck stated no.  Mr. Swan stated that he would get that information for Representative Stewart.


Representative Stewart asked if all railroads employed detectives (policemen) and the total number of such detectives.  Mr. Reck stated no, not all railroads employed detectives, and in fact, the Paducah & Louisville Railway does not.  Mr. Murda stated that CSX and Norfolk Southern Corporation does employee policemen and he would be happy to supply the number to him, but would not publicly stated that number, for security purposes.


Senator Roeding noted that Homeland Security has five levels of security alert and asked if the railroads conformed to those five levels.  Mr. Reck stated that the railroads have four levels of alert, all pertaining to railroad security.  If specific terrorist threats target railroads, then the security level is adjusted accordingly.


Representative Pasley noted his concern of transporting nuclear fuel though Kentucky.  He commented that although there were no nuclear plants in Kentucky, there were several on the east coast and it is his understanding that there have been discussions about sending that waste to Nevada.  He questioned if the east coast's nuclear waste would be transported through Kentucky.  Mr. Murda stated that he did not know what means of transport, or routes, if any, would be taken if such a situation occurred.  Representative Pasley asked if states' regulations could preclude the transporting through their state.  Mr. Murda said that there is federal law that overrides state law for the hauling of certain commodities.


The next item on the Committee's agenda was an overview of Kentucky's funding for public transit.  Testifying on this subject was: Terry Garcia Crews,  General Manager, LexTran, Alyce French Johnson, Transit Authority of River City (TARC); and Dave Malone, General Manager, Transit Authority of Northern Kentucky (TANK);


Ms. Crews thanked Kentucky Legislature for allocating to TARC, TANK, and LexTran, the $2.5 million need to match federal funds in FY 2007.  She noted that, to date in FY 06, TARC's ridership is up 8.2 percent, TANK's is up 5 percent, and LexTran's is up 34 percent.  Ms. Crews said that the increase demand in ridership, the increase in demand for additional routes, and the increase in fuel costs cripple the possibility of obtaining money for matching federal funds, and thus threatens the mere existence of public transit.  Not only does transit provide mobility, she stated, but it also offers much needed access to jobs, health care, and education, to name a few of its benefits.


Ms. Johnson stated that, at a glance, TARC serves 15.8 million customers, annually, has a $62 million annual budget, 677 team members,  and operates 263 buses and 9 trolleys, with 80 paratransit vehicles.  TARC traveled approximately 12.1 million miles in FY 06 over its 53 routes in five counties.  Ms. Johnson said TARC needs approximately 16 replacement vehicles yearly (currently the majority of its fleet is over eight years old), assistance with the higher fuel costs, $2.5 million/yearly to provide more service to meet demand, infrastructure improvements and customer amenities, and updated technology (its radio system is 14 years old).


Mr. Malone said that TANK serves approximately 3.7 million customers yearly, has a $19.2 million annual budget, 263 team members, and operates 101 buses and 27 paratransit vehicles.  It traveled over 4.4 million miles last year over its 27 routes in three counties.  TANK's needs are 8 to 10 replacement buses and 3 to 5 paratransit vehicles, annually, match money for hybrid buses, and technology improvements (scheduling software, fareboxes, trip planning, and real time information).


LexTran, Ms. Crews said, serves 3.8 million customers yearly, has a $12 million annual budget, 161 team members, and operates 58 buses and 30 paratransit vehicles.  It traveled over 1.5 million miles last year over its 22 routes. LexTran 's needs are 5 replacement buses annually, support for growth and upcoming equestrian games in 2010, more service to meet demand, passenger amenities (shelters), technology improvements (radio system, AVL, fareboxes), and continued support of toll credits and cash match.


Ms. Crews said that Kentucky ranks 36th in the nation in state funding, lower than several of its surrounding states, i.e., Illinois at 7th, Indiana at 15th, Tennessee at 19th, Ohio at 23rd, and W. Virginia at 29th.


The three transit authorities presenting testimony today (TARC, TANK, and LexTran) asked for three things - (1) dedicated funding each year to ensure that they can matched all federal money, to keep their vehicles updated, safe, and reliable and to expand service to meet future demands; (2) that the state consider funding of $2.5 million in each year for FY 09-10 budget; and (3)  that the state continue support of toll credits.


Senator Guthrie asked the reason LexTran had increased by such a large number.  Ms. Crews said LexTran had expanded its service area and added 32 percent more route miles.


Representative Marcotte asked if TANK was considering expanding its routes do to the suspension bridge's closing restoration for one year.  Mr. Malone stated that there had been some discussion but no decisions had been made at this time.


Senator Tapp asked if any of the transit authorities were using bio-diesel.  Ms. Crews said that LexTran has a three month pilot program in place using a 10% blend in five of their cars, and if successful they will then use the blend in five additional cars, and continue the process.  Mr. Malone stated that TANK had abandoned such a pilot program several years ago due to the high price of the fuel; however, since bio-diesel has become cost competitive, he noted that TANK is considering another such pilot program.


Senator Roeding commented studies have shown that a 20% bio-diesel fuel consumption could be used in automobiles without any modification to that vehicle.


The last item on the Committee's agenda was the review of Executive Order 2006-839.  Commissioner Tim Hazlette, Department of Safety and Commissioner Marc Williams, Department of Highways, Kentucky Transportation Cabinet, spoke on this issue.  After a brief discussion, Senator Boswell moved to accept Executive order 2006-839.  Representative Miller seconded the motion, which passed by voice vote.


Before the Committee meeting adjourned, Senator Boswell informed Commissioner Williams of a situation in McClean County whereby roads had been damaged by the hauling of coal by a particular coal company who had since gone out of business.  Senator Boswell stated there was a bond in place to repair the road used by the company; however the bonding company refused to pay for all of the damage and McClean County is now in litigation with that bonding company.  Senator Boswell asked if there was a way to preclude that bonding company from doing future business in Kentucky and was "due process" by the courts the only alternative for the County.  Commissioner Williams said that the state does not penalize companies for such actions, and unfortunately litigation was the County's only alternative.


With no further business before the Committee, the meeting adjourned at 2:55 p.m.