An official of the Rock Island railroad will testify about his firm's plan to create a consortium of privately owned railroads to carry freight in the Midwest.
Dubbed "FarmRail," the proposed venture would involve consolidating terminals, rail yards, equipment and revenue, according to a Rock Island spokesman, who said a company official was scheduled to testify about the plan today before the House Subcommittee on Transportation.
Besides the Rock Island Line, officially known as the Chicago, Rock Island and Pacific Railroad Co., the venture could consist of portions of the Milwaukee Road, Illinois Central Gulf, the Missouri-Kansas-Texas Railroad (the Katy) and the Kansas City Southern, according to Rock Island spokesman Ted Zirbes.
Zirbes said the new consortium would be aimed at serving thinly populated areas of the Midwest and MidSouthwest major farm areas.
"FarmRail would not constitute a monoply" because the Chicago and North Western Railroad competes against all of the other lines in the area, he said.
Zirbes also said that the Rock Island did not proposed the plan because of financial difficulties. In fact, he said, the railroad cannot handle all the Midwest business it is being offered because it doesn't have the capacity.
He said the plan could be implemented wih the help of loans already authorized by the Railroad Revitalization and Regulatory Reform Act of 1976.
The plan caught industry and government officials by surprise, although most said they were interested in seeing the details of the proposal.
In prepared testimony scheduled for the same hearings, Interstate Commerce Commission Chairman Dan O'Neil said "it may be necessary to provide a higher level of funding under the Emergency Rail Services Act, and possibly other acts as well" to help turn around the bleak railroad situation in the Midwest.
Although some lines there reportedly have been improving under federal grant programs, last month still another, the Milwaukee Road, filed for bankruptcy.
"Like other railroads experiencing financial difficulty, the problem of the Milwaukee Road has been that it is unable to generate sufficient cash flow from its operations to support its physical plant," O'Neal said.
But O'Neal said the "Milwaukee has made very effort to continue maintenance and rehabilitation of its physical plant during its period of financial stres," and he partially blamed extenuating circumstances - including severe weather - for its failure.
O'Neal addressed the problem of possible loss of service because of the Milwakee Road's failure.