January 2008 – AggBeat


January 1, 2008

For daily news updates and Web-exclusive news items, visit the “Industry Breaking News” section

by  Tina Grady Barbaccia, Senior Editor

Federal Rail Safety Program Funding Approved

The U.S. House of Representatives voted 377 to 38 to reauthorize the Federal Railroad Administration and fund federal rail safety programs for the next four years.

The Federal Railroad Safety Improvement Act of 2007 (H.R. 2095) renames the agency the “Federal Railroad Safety Administration” and seeks to address a number of issues pertaining to employee fatigue, grade crossing safety, employee training, and positive train control, according to the vote.

Rep. John L. Mica (R-Fla.), Transportation and Infrastructure Committee Republican leader, says that he is concerned that this rail safety bill “concentrates too much on accommodating a big labor wish list rather than on the most effective means to improve rail safety.” He notes that 97 percent of rail fatalities involve grade crossing accidents and trespassers, but that the bill focuses primarily on the other 3 percent of fatalities that occur.

U.S. Rep. Bill Shuster (R-Pa.), ranking member on the Subcommittee on Railroads, Pipelines and Hazardous Materials, says that during the past 30 years, there has been tremendous progress in rail safety. “But I believe that we can and must do more,” Shuster said in a press release. “This landmark legislation goes far to promote a safer rail system in our country. However, we must do more to deal with rising incidents of rail accidents from trespassing and rail crossing collisions. While this bill does include language to deal with these issues, it is my hope that the committee will look closely at these issues in the future.”

The bill increases the number of FRA safety inspectors from 421 to 800, an increase with an uncertain potential for improved safety. Advanced technologies are capable of detecting track defects that are invisible to the human eye, and the bill authorizes the acquisition of several more cost-effective advanced track inspection vehicles.

The bill also mandates the installation of positive train control (PTC) systems by the end of 2014; these systems are intended to help eliminate train collisions caused by human error.

The FRA reports that less than 2 percent of accidents per year involve incidents preventable by PTC. For instance, in 2006, three PTC-preventable train accidents resulted in six deaths, compared to the 369 people killed at grade crossings and 517 trespassers killed in the same year.

The mandated installation of PTC will cost billions — costs that are likely to be passed on to shippers through rate increases.

The bill includes some grade crossing safety improvements. A provision requested by U.S. Rep. Sam Graves (R-Mo.) authorizes up to $250,000 in emergency funding for any crossing, which experiences a collision with a school bus or an accident with three or more injuries or fatalities. Additionally, U.S. Rep. Henry Brown (R-S.C.) contributed to the development of a provision fostering the use of advanced warning devices at rail crossings.

The bill contains a phase-down of “limbo time,” the time train crews must wait to be picked up after a run. In some instances these workers, who are considered to be neither on-duty nor off-duty, can wait several hours for transportation. The bill gradually limits limbo time to 10 hours per month, making exceptions for accidents, track obstructions, “acts of God,” weather delays, and other circumstances.

The bill increases fines for safety violations by $30 million for the years 2008 to 2012, and $60 million in the years 2008 to 2017.

The bill also places the National Transportation Safety Board in charge of assisting families of rail accident passengers, as is the case with aviation accidents.

Real Men at Pennsy Wear Pink

Pennsy Supply employees on Oct. 15 paraded four pink cement mixer trucks from City Island, Pa. to downtown Harrisburg, Pa., to raise awareness and show support of breast cancer. October was National Breast Cancer Awareness Month.

The ceremonial parade ended with the presentation of a $5,000 pink check to the Pennsylvania Breast Cancer Coalition (PBCC), money that was raised by Pennsy Supply employees. The ceremonial parade was part of the first-ever “Paving PA Pink” campaign, which Pennsy created to benefit the PBCC. The campaign began with a grand kick-off on Sept. 1 before the Senators vs. Reading game at Commerce Bank Park. Since then, Pennsy featured the pink trucks at various company events to garner additional support from employees and clients.

The company created the campaign Web site, www.pavingPApink.com to provide information on the campaign, including stories of courage from Pennsy employees, as well as detailed instructions on how to make a donation to the cause.

News Briefs

EPA: Aggregate Stormwater a Priority

The U.S. Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance (OECA) has issued its national enforcement priorities for 2008-10 and has identified stormwater problems from aggregates operations and ready mixed concrete plants as one of OECA’s three main focuses for storm water enforcement, according to a National Stone, Sand & Gravel Association Washington Watch & eDigest report.

The others include homebuilding construction and big box store construction. According to EPA, many construction and aggregate companies operate nationwide in multiple states, and EPA has the ability to take enforcement actions that address these companies on a national basis, according to the report. The government agency also says that it has the ability to provide consistent and widespread compliance assistance to these sectors.

Cemex Constructing $400 Million Facility

Monterrey, Mexico-based Cemex plans to begin the permitting process for the construction of a 1.9 million-short-ton cement manufacturing facility near Seligman, Ariz. The official public announcement came on Sept. 19.

Cemex says it will invest approximately $400 million throughout five years in the Seligman Crossing Plant, which is expected to become operational by 2012. The state-of-the-art facility will manufacture cement to serve the growing needs of Arizona, including the Phoenix metropolitan area.

Mergers & Acquisitions

The acquisition of Florida Rock Industries, Inc. by Vulcan Materials Co. was finally completed on Nov. 16, 2007. Total consideration for the acquired company approximated $4.2 billion, based on the closing price of Vulcan stock on Nov. 15, 2007. The acquisition further diversifies the geographic scope of Vulcan’s operations into higher-growth markets while also providing more than 2 billion tons of incremental reserves.

On Nov. 19, 2007, U.S. Concrete, Inc. announced the sale of its Knoxville, Tenn., and Wyoming, Del., operations to Oldcastle Materials, Inc. Total revenue for the sold assets approximated $34 million for the 12-month period that ended in September 2007. Oldcastle paid $16.5 million in consideration for the operations, and no other terms or conditions were provided.

Also, on Nov. 20, 2007, the U.S. operations of Holcim announced the acquisition of a large minority interest in Lattimore Materials Co., L.P., one of the larger ready-mixed concrete and aggregates suppliers in Texas. Lattimore operates six aggregate quarries, 19 ready-mixed concrete plants, four rail terminals, and a truck fleet (mixers and haulers) of more than 400 vehicles. Existing Lattimore executives will remain to operate the business, and the company should benefit from the capital investment of Holcim to continue its growth.

—by Bill Watkins, managing director, National City Capital Markets. Watkins is a contributing editor and may be reached at 216-222-7134 or at William.Watkins@NationalCity.com.

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