Welcome to the Fall E-Edition of Steel Wheels. This edition includes articles about the status of Caltrans state owned equipment, an article by Brian Yanity on a proposed California Rail Authority, Part One of Planes vs. Trains by Brian Yanity, hybrid diesel locomotives, a new technology appearing on the market, and finally “From the Rear Platform” by Paul Dyson. I hope you find it informative.

This edition’s cover is a little far afield. It is the Heartland Flyer. I wanted to highlight this service because over the years it has led a “Perils of Pauline” existence, almost discontinued on numerous occasions, despite its vital service and strong ridership. 2026-2027 seemed to be another repeat with the Texas Legislature adjourning without providing funding. Oklahoma funding seemed at risk as well. Then (“Perils of Pauline”), with the North Texas Council of Governments coordinating with TexDOT, the Texas Transportation Commission is transferring $4.2 million in funding from other accounts through next year to operate the route until the Texas Legislature reconvenes and considers funding in future years.

The next chapter is very interesting. In the recent Federal-State partnership awards, Texas received over $800 million for grade separations. Some of the grade separation awards (and one in Oklahoma as well) are on the Heartland Flyer route and were awarded “contingent on the continued operation of the service.”  Someone decided to leverage the Texas Legislature.

While many of the recent Federal-State Partnership awards were for state-of-good repair projects, others focused on improving existing rail service or making it safer. However, several others are of note. Amtrak received several significant awards and was a co-sponsor (along with states or freight railroads) for several others. The largest Amtrak award was for $2.05 billion for fleet and facilities expansion, specifically the acquisition of forty-three trainsets and supporting facilities for state funded corridors. The number of trainsets purchased with this grant would seem to lay the foundation for additional state corridor frequencies and new routes since the number of cars appears to exceed the number of non-Venture cars currently in operation. 

Another Amtrak award ($572 million) was for the design and construction of a new maintenance facility in Chicago. This new facility, to be built at the location of Union Pacific’s Canal St. yard, will be long and linear allowing the construction of long train maintenance buildings able to service road-length trains intact. This will eliminate the need to switch out cars needing minor repairs. A separate grant ($87 million) will repair all the viaducts and bridges associated with the Canal St. yard. These two grants will free up land occupied by the current maintenance facility for a landing footprint for Amtrak’s proposed St. Charles Airline direct connection https://www.trains.com/pro/maintenance-of-way/amtrak-unveils-infrastructure-plan-to-transform-chicago-operations/ and for property development (a new downtown city ballpark for 

the White Sox has been mentioned). A third grant ($37.3 million) is for the rehabilitation of the bridge, used by dozens of Amtrak trains daily, over the Chicago River just south of Chicago Union Station.

Brightline Florida was another major recipient with two grants – one for a new station at Cocoa ($57.5 Million) and $79 million for a double track replacement bridge over the St. Lucie River. The current bridge is the only single-track segment of the Florida East Coast RR south of Cocoa, requires lifting for all boat traffic and is 100 years old. The station at Cocoa also serves Port Canaveral, a major cruise port and the home port for all Disney Cruises. Both of these investments underpin future revenue growth and represent a strong show of support for Brightline’s restructuring efforts.

I also took note of several grants on long-distance routes to improve reliability or deal with bottlenecks created by passenger train operations. These grants were: rockfall mitigation investments and grade crossing analysis on UP’s route of the California Zephyr in Colorado. On the BNSF in Nebraska and Iowa, also on the route of the CZ, there are replacement of life-expired turnouts, switch heaters, and hot air blowers. At Havre, MT, on the route of the Empire Builder, six miles of double track, access roads, support tracks, and direct-to-locomotive fueling will be constructed to improve the mid-route servicing of the Empire Builder at this important location. This will eliminate conflicts with freight trains. On the CSX in Florence, SC a $39.5 million grant is rebuilding 31 miles of second track and a station siding to minimize conflicts between freight trains and Silver Service trains. One final note, a major part of this grant phase was CAHSR funding that was clawed back by the Administration. The result is that the HSR funding will not be tied up in court for three years, instead will be constructing rail infrastructure.

Expanded passenger rail service is expected to begin in November when the second Pennsylvanian between New York – Philadelphia – Pittsburgh commences operation. The current Pennsylvanian has been a strong performer. The second Pennsylvanian should also be a strong performer offering an alternative schedule option and ridership boosted as a result of high gas prices, the crowded Turnpike, only three Greyhound schedules across the state and limited intrastate air service. Regarding route expansion, Rob Gleason, Amtrak Board member, will chair the Board’s system expansion committee for both expanded state funded corridor routes and long-distance routes.

As it stands now, the proposed budget for Amtrak for FY27 is similar to its FY26 budget and will provide sufficient funds to operate all services, maintain equipment, and provide some capital dollars. The big threat for rail service is the current proposal for the new Surface Transportation Bill to replace the expiring Surface Transportation bill (the IIJA). In the proposed legislation rail and transit investment is deprioritized, the new bill is basically a highway bill. While there are some yearly authorizations for Amtrak capital, these must be appropriated by Congress each year. In other words, a return to “Stop and Go” funding. One key feature of the IIJA was not only yearly authorizations for Amtrak capital (never fully appropriated) but advanced appropriations. Advanced Appropriations allowing Amtrak, its stakeholders (states), manufacturers, and their supply chains to invest and plan for a multi-year investment program. The planning and early foundational investments enabled by Advanced Appropriations are critical for the implementation of any new long-distance route.

It is critical that you contact your Representative and indicate that the new Surface Transportation legislation include Advance Appropriations for intercity rail.

Turning to the Union Pacific – Norfolk Southern merger, there were some developments since the last issue of Steel Wheels. On July 27th Union Pacific submitted the last information requested by the Surface Transportation Board (STB) when it put the merger application in abeyance in May. BNSF, CSX and five major shipper organizations have commented that UP’s updated application was inadequate and requested that the STB rejected the application. One key focus of the opposition was UP’s Committed Gateway Pricing plan which they say falls short of enhancing competition. One unanswered question opponents highlighted was the UP/NS combination as a trigger for further railroad mergers and the impact of those follow-on mergers on competition.

On August 18th, the STB removed the US/NS merger application from abeyance, formally accepted the application as complete and adopted a schedule for the proceeding. Its acceptance did not indicate any decision on the merger, just that the application was sufficient to begin the merger review. The first date in the proceeding is September 30th when any party who wants to participate in the merger review must file their indication to do so. The STB also indicated that it would rule in the near future on the request by BNSF, CSX and five major shippers to deny the merger application. Final briefs on the merger must be submitted by May 28, 2027.

One major pre-merger agreement was concluded in July. As a result of this agreement Canadian National agreed not to oppose the merger. The agreement that is contingent on the merger gives CN access over UP line from St. Louis to Kansas City and usage of UP’s Neff Yard. CN can eventually buy the former Missouri Pacific route and Neff Yard. CN also gains access to certain shippers on the UP and NS and will receive Norfolk Southern’s ownership shares in the Kansas City Terminal Railway and the Terminal Railroad Association of St. Louis. The other agreement, which is not contingent of the merger, gives UP trackage rights on CN’s bypass route around Chicago (the former Elgin, Joliet, and Eastern RR). In return CN receives haulage rights and eventually trackage rights on the UP between Memphis and the Eagle Pass border gateway to the Mexican Railway Ferromax. This is a major coup for CN as it links Mexican auto parts and assembly plants with auto parts and assembly plants in Michigan and Ontario, Canada.