1. A Good Year for Short Lines & Regionals Dave Mears Senior Director American Short Line and Regional Railroad Association ACACSO Conference Orlando, FL November 12-13, 2008

2. October 22-24, 2008 2 A Good Year for Short Lines & Regionals  Carloads  Legislative  Regulatory  Communications

3. October 22-24, 2008 3 Rail Industry Carloads 1st Half Class I's – Short Line Traffic Only RR H1 2007 H1 2008 Variance BNSF485,225 526,135 +8.4% CN 286,794 301,433 +5.1% CP 135,015 129,465 -4.1% CSX 478,960 480,586 +0.3% NS 486,052 491,427 +1.1% UP 679,716 679,275 -0.1% KCS Unavailable

4. October 22-24, 2008 4 Legislative Emergency Economic Stabilization Act of 2008 (HR 1424) "Short Line Tax Credit"  2 Year Extension - 2008 (Retro) and 2009  Can Be Used Against the Alternative Minimum Tax (AMT) Railroad Safety Improvement Act 2008 (HR 2095) "Safety Bill"  No PTC for Short Lines on Dark Territory  No PTC for Short Line Commuter Operations  No Switch Indicators for Short Lines on Dark Territory  Towns and Counties Cannot Petition the STB on Rail Facilities (Preserved STB Preemption)  RRIF Program Loan Repayment Period Extended from 25 to 35 years Taking Responsible Action for Community Safety Act (HR 6707)  With AAR Defeated this Bill which Created New "Public Interest" Tests for Certain Class I / Short Line Transactions

5. October 22-24, 2008 5 Legislative Rail Safety Improvement Act of 2008 Hours of Service – Implement by 2010 Risk Reduction Program – Implement by 2012 Positive Train Control – Implement by 2015 Bridge Safety Requirements – Implement by 2010 Tunnel Requirements – Implement in 120 Days 1–800 ENS – Implement by 2010 Grade Crossing Inventory – Implement by 2009 Sight Distance Law & Regulations at Xings – Implement

6. October 22-24, 2008 6 Legislative Rail Safety Improvement Act of 2008 (Cont'd) Civil Penalties $25K-$100K – Implement Radio Monitoring Authority – Implement New FRA Inspectors – Implement when $ are appropriated Dark Territory Switch Technology – Regulations in 12 months Broken Rail Service Failure Rate – Study Certify Conductors – Implement by 2010 Minimum Training Standards and Plans – Implement by 2009 Emergency Escape Breathing Apparatus – Implement in 2010

7. October 22-24, 2008 7 Regulatory FRA  $75K Grant to ASLRRA for AREMA Bridge Inspection Handbook Purchase for All Short Lines & Regionals and Class I's  Endorsed ASLRRA Bridge Program and Joined as Principals  Joint Seminars and Conferences on:  Track & Bridge Safety  Operating Practices & HOS  Power Brake  HazMat  Relief from Locomotive Alerter Standards for Speeds Less Than 25 MPH

8. October 22-24, 2008 8 Regulatory STB  Supported DOE Application to Construct & Operate the Caliente Rail Line to Yucca Mountain Spent Nuclear Fuel Depository  Approved the Acquisition of the DM&E by CP  Denied Shipper Request to Exclude Short Line Local Traffic from 3 Benchmark Test (Small Rate Case Methodology)  In Effect, Insulates Short Line Local Traffic from STB Small Rate Case Proceedings  Holds Hearings on Common Carrier Obligation  Commissioners Exposed to Liabilities and Risks Short Lines Experience Moving TIH Materials  Commissioners Recognize Insurance Problems for Short Lines Moving TIH Commodities  STB Ruling Anticipated Before End of 2008

9. October 22-24, 2008 9 Regulatory TSA  Committed to Pay for FreightScope HazMat Tracking Software for 2009  $1.8M Grant to ASLRRA for Web Based HazMat Training for 2009  TWIC Rollout Coordination for Short Lines by Port Area  Working Partnership on Review of Corporate Security Plansfor Holding Companies

10. October 22-24, 2008 10 Regulatory FCC  Implementation Timeline Established for Narrow Band Radio Conversion (July 2010-Jan 2013)  Many Short Lines Currently Operate Bimode Radios (25khz / 12.5khz)  Phase-In Decision Provides Sufficient Time to Acquire Radios and Adjust to New Spectrum Requirements IAW the Implementation Plan

11. October 22-24, 2008 11 Regulatory EPA  Short Line "Green" Equipment and Initiatives – Some Grants  Gen-Set Locomotives  EPA Tier IV Locomotives  Hybrid Locomotives  Bio Diesel Locomotives  Pacific Harbor Line – EPA "Smart Way" Award Winner – Only Railroad  Class III Railroads Exempted from New Locomotive Emission Standards  All Pre-1973 Locomotives are Exempt and "Grand Fathered"  All Post-1973 Locomotives Need Only Comply if *Rebuilt or *Refurbished * EPA Technical Definition & Specs

12. October 22-24, 2008 12 American Short Line and Regional Railroads  Connecting America's Communities  Strengthening America's Economy  Protecting America's Environment

13. October 22-24, 2008 13