July 14, 2006

US infrastructure expansion faces local opposition

By Nick Carey

ROCHESTER, Minnesota (Reuters) - Rochester doesn't mind
railroads -- unless there's a possibility that they could
disturb the southern Minnesota city's most important resident,
the Mayo Clinic.

Both the city government and the world-famous medical
center are fighting a $6 billion network expansion by Dakota,
Minnesota & Eastern Railroad to bring coal to the Midwest from
Wyoming's Powder River Basin. The project would include
upgrading DM&E's line through Rochester to accommodate heavy
coal trains.

"The clinic is the biggest private employer in Minnesota,
and we can't have that put at risk," said Dennis Hanson,
president of Rochester's city council.

The conflict is emblematic of tensions between U.S.
communities and transport companies.

"People want easy access to goods and services; they want
electricity," said Fitch Ratings analyst Stephen Brown. "But
they don't want the risk of noise or pollution that may
accompany that access."

Profits at transport companies have soared in recent years
along with demand for their services. They are benefiting from
two trends -- double-digit increases in U.S. imports as the
nation outsources its manufacturing base to developing
countries like China and soaring demand for coal as a cheap
alternative to increasingly expensive natural gas.

Both trends have led to a need for more trains and trucks
to haul goods.

But rail and trucking networks are strained as demand
outstrips capacity, requiring additional infrastructure. This
brings the companies up against people who live near the
proposed new sites -- spawning the catchphrase "Not in my back

Take Rochester. Continuing the work of their father, Dr.
William Worrall Mayo, Drs. William and Charles Mayo opened
their first hospital in Rochester in 1889 near the railroad
tracks so patients from across the United States could get

Today the Mayo Clinic employs 28,000 people in a city of
85,000 and takes up the entire downtown.

"Mayo is Rochester, plain and simple," said Hanson, the
city council president.

Although most of the sprawling clinic is a half-mile from
the railroad tracks operated by privately held DM&E, locals
have expressed concern about the proposed upgrade. The rumbling
from heavy coal trains, they said, could scare patients away.

Instead, they want the Sioux Falls, South Dakota-based
company to put a 6-mile (9.7 kilometer) tunnel under the city,
a modification that transport analysts said could easily add
more than $100 million to the project's cost.

Rochester has fought DM&E's plans in and out of court for
eight years, and Hanson said the city would keep doing so
unless the tunnel is built.


It's not just DM&E. Other railroads, trucking companies and
even oil refineries face similar problems.

For instance, the California Department of Transport
decided in April to scrap a project to expand existing lines in
Fresno with the Burlington Northern Santa Fe Corp. railroad,
citing the community's concerns that the upgrade would affect a
residential area.

The Fresno City Council had opposed the project because it
feared residents would be exposed to noise and pollution.

U.S. railroads have come under fire from utilities for not
delivering enough coal to power plants, but efforts by Norfolk
Southern Corp. to put in new track are frequently unpopular
with nearby residents.

"Even when we have the land rights to new track it can take
years to overcome local opposition," said Donald Seale, chief
marketing officer of the Norfolk, Virginia-based railroad.

Trucking companies also face this problem.

"On the popularity scale, any trucking terminal is right
behind a crack house or a landfill," said Bill Zollars, chief
executive of YRC Worldwide Inc., the largest U.S.
less-than-truckload operator.

Less-than-truckload operators consolidate small loads into
a single truck and require multiple facilities across the

"Part of our challenge is to improve our image," Zollars
said. Overland Park, Kansas-based YRC has an outreach program
through which it tries to cooperate with local communities on
the best solution for a new facility.

Since the approval process for a new truck terminal can
take years, fellow less-than-truckload operator Con-way Inc.
factors in additional capacity beforehand to avoid opposition
further down the line, said Rick Trott, vice president for

"If we need to expand, we can do so without restarting the
whole process," he said.

The resistance to new infrastructure, however, is good for
some shippers, such as Aries Maritime Transport Ltd. and Teekay
Shipping Corp.

These companies, which transport refined oil products, have
benefited as opposition to new oil refineries in the United
States has driven up demand for imports from places like Russia
and Europe.

"If the refined product has to come from further away,"
said Aries CEO Mons Bolin, "this means more business for our
product tankers."