WASHINGTON D.C. — It would cost billions to construct a rail line from Wisconsin to Indiana, but a company wanting to do just that might not have enough funds to lay a single track.
Citing financial concerns, the federal Surface Transportation Board (STB) has rejected the application of Great Lakes Basin Transportation, Inc. (GLBT) to build the 261-mile line. In its August 31 decision, the STB ruled it was unable to determine if GLBT could afford to construct the line because of financial information on the application cited as “flawed.”
Specifically, the board pointed out listed as net income was $1.2 million in red ink, and since no explanation was given for the calculation or discrepancy, a decision on the financial condition of GLBT could not be reliably made. GLBT, funded strictly by contributions from investors, also listed a net worth on its application only in the lower three-figures.
“While the board does not require that construction projects be fully funded at the outset of a construction application proceeding, the financial fitness of the applicant is part of the application process. GLBT’s current assets of $151 are so clearly deficient for purposes of constructing a 261-mile rail line that the board will not proceed with this application,” the STB stated.
It explained determining an applicant’s financial condition is part of the process to protect shippers from decisions that could jeopardize the carrier’s ability to carry out its obligation to them and communities from construction projects not being completed.
Frank Patton, chair of the GLBT, was listed as the major shareholder with 87 percent ownership, according to filings with the STB.
Illinois Farm Bureau (IFB) and county chapters upset about possible destruction of farmland and disruption of operations at farms separated by rail lines applauded the application being denied.
“Despite evidence showing the rail line unnecessary, the proposed 261-mile project would have cut through prime Illinois farmland, disturbing nearly 5,000 acres for the rail line and another 14,700 acres for the railport in Manteno,” said Richard Guebert Jr., president of IFB.
“We’re happy to see that the Surface Transportation board concurred with our written objections when they found GLBT’s application to be incomplete and the company’s assets insufficient to complete such a project,” he said.
The line would have run from southeastern Wisconsin to northwestern Indiana veering around existing heavy rail congestion in Chicago.
GLBT, citing a need for more complete information on its original application, withdrew it then, several months later, refiled the application with new plans to also construct a privately funded toll road to connect the Indiana Toll Road with interstates 80/94 and 65 near Gary and interstates 57, 55 and 80 in northeastern Illinois.
Indiana state Sen. Mike Bohacek, whose district includes an area the line would pass through, believes the idea for a toll road was to generate revenue for constructing the railroad, and questions if the project ever had sufficient financing.
There was speculation about hundreds, if not, thousands of jobs being created especially if a transloading facility went up at the end of the line in Kingsbury 20 miles south of Indiana’s Lake Michigan shoreline.
Bohacek seriously questioned the potential job impact, pointing out no major railroad ever signed up to use the line. He also said no additional rail traffic would be produced by the line, which would merely relieve congestion from existing railcars.
“There’s just not a need for it. None of the Class 1 railroads have an appetite for it. Neither does the investment community, so the application was denied and that was the right thing to happen,” said Bohacek, a Republican from LaPorte County.