Pavement Industry News March 2008

ARTBA Analysis

BUSH ADMINISTRATION’S FY 2009 BUDGET “NOT AS BAD” AS EXPECTED

The Bush Administration’s FY 2009 budget proposal includes $68.2 billion for federal transportation programs - $2.13 billion less than the total transportation investment in FY 2008. According to the American Transportation Builder’s Association (ARTBA), while there are some positive recommendations in the proposal, the budget could be characterized as not being as bad as many expected.

The deteriorating fiscal outlook for the Highway Trust Fund’s Highway Account has long been a source of concern. Last summer, the Administration estimated revenues into the account would be $4.3 billion below the amount necessary to finance the investement levels guaranteed under the 2005 highway and transit law, the Safe Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The type of shortfall, if unaddressed, could lead to a potential $16 billion cut in FY 2009 highway investment.

While the Administration’s budget does not recommend this type of devastating funding reduction, says ARTBA, it does call for cutting highway investment to $39.4 billion - $1.8 billion less than called for in SAFETEA-LU and provided in FY 2008. This level of investment is supported, in part, by a proposed $3.2 billion transfer from the Highway Trust Fund’s Mass Transit Account to the Highway Account. The budget recommends increasing federal transit investment to $600 million to $10.13 billion, which is still $200 million less than called for by SAFETEA-LU.

The highway and transit program funding levels in the budget proposal are driven less by trust fund revenues than by a statement from the Administration - made for the first time in announcing the budget proposal - that President Bush committed to provide only $286.4 billion when he signed SAFETEA-LU into law in 2005.

As such, the budget is proposing highway and transit investment levels below the amount called for in SAFETEA-LU to compensate for funding provided in excess of the levels guaranteed in the 2005 reauthorization law. SAFETEA-LU, however, requires upward adjustments in highway investment when revenues exceed what was anticipated when the bill was written in 2005 and past Administration budgets adhered to this mandate.

It’s important to recognize the Administration’s budget proposal is not binding, says ARTBA, but rather represents the first step in the annual budget process. Federal spending decisions for each fiscal year are not finalized until the enactment of the 12 individual appropriations bills.

A detailed analysis of the budget’s transportation funding recommendations are available at www.artba.org.

SEMMATERIALS TO SELL TERMINALLING, STORAGE FACILITIES

SemGroup to seal deal for $378.8 million

SemMaterials, L.P., a subsidiary of SemGroup, L.P., has agreed to sell 46 U.S. liquid asphalt cement and residual fuel oil terminalling and storage facilities to SemGroup Energy Partners, L.P. for $378.8 million. The terminalling and storage facilities, located in 23 states, have aggregate storage capacity of approximately 6.6million barrels. SGLP will provide SemMaterials liquid asphalt cement and residual fuel oil terminalling and storage services under a long-term terminalling and storage agreement.

SemMaterials will continue to own assets involved in the further processing of asphalt cement and will continue to purchase and market asphalt and residual fuel oil, as well as blend, process and market its line of specialty road-paving products.

SemGroup Energy Partners will not take title to any asphalt in storage or engage in any asphalt marketing activities. The sale does not involve any SemMaterials’ Mexico assets.

“This transaction positions SemMaterials to continue our expansion and growth. The sale is consistent with SemMaterials’ long-term business strategy, and it allows us to focus on road science, infrastructure services and continued innovation of road technology,” says Frank Panzer, SemMaterials’ president and chief operating officer. “The sale will have minimal impact on SemMaterials’ customers and employees.”

Panzer said that SemMaterials remains dedicated to helping its customers address their “ongoing needs and issues, which include aging infrastructure, funding shortfalls and the innovation of services and products.”

Kevin Foxx, SemGroup Energy Partners president and chief executive officer, commented on SemMaterials’ legacy as one of the largest asphalt suppliers and processors of polymer modified asphalt cement and emulsions in the United States.

“SGLP looks forward to facilitating the current and future terminalling and storage needs for SemMaterials as it continues to be a key player in the industry,” Foxx says.

The acquisition is subject to financing and other standard closing conditions and is expected to close in the first quarter of 2008.

CAT AUCTIONS CHOPPER ON E-BAY

Proceeds to benefit camp for sick kids

Constructed during two episodes of American Chopper, then showcased around 32 states and in Canada, the customized Cat Chopper is being auctioned in February to benefit Victory Junction Gang camp.

The 150-hp, six speed show bike was assembled in 2005 for a yearlong goodwill tour on behalf of Caterpillar Inc., the world’s leading manufacturer of construction and mining equipment.

In May 2007, Caterpillar donated the Cat Chopper to Victory Junction Gang, a 72-acre camp in North Carolina founded by the Petty family of NASCAR fame. The camp caters to children with chronic medical conditions and serious illnesses.

Bidding on the Cat Chopper began Feb. 7 and ran for 10 days. Richard Petty will hand over the keys to the winning bidder March 13 during a ceremony at the ConExpo-Con/Agg tradeshow in Las Vegas.

“The funds raised by the Cat Chopper’s sale will help continue our mission of providing recreation at no charge for kids who otherwise might be unable to attend summer camp,” says Pattie Petty, co-founder and CEO of Victory Junction. “Caterpillar has long been a friend to our family, NASCAR and Victory Junction Gang.”

Caterpillar has been a NASCAR sponsor since 1993, starting with Kyle Petty. Victory Junction Gang Camp has a racing theme with the sights, sounds and look of a race track. The camp was opened in honor of Adam Petty, the late son of Kyle and Pattie Petty.

Since June 2004, Victory Junction Gang Camp has offered children ages 7 to 15 a chance to participate in recreational opportunities they might otherwise be unable to enjoy because of their medical needs. Victory Junction Gang operates solely on donations. There is no charge for children to attend the camp during its weekly summer sessions and family weekends in fall, winter and spring.

The Cat Chopper was constructed by Orange County Choppers (OCC) in New York during two episodes of American Chopper that aired on the Discovery Channel in April 2005.

“The Chopper has become a symbol of Caterpillar’s community outreach, and we couldn’t think of a more appropriate sendoff than to auction it away for a very good cause - to help kids have fun,” says Robert Muntz, advertising manager for Caterpillar.

TRANSPO CELEBRATES 40 YEARS

Company offers safety products, transportation construction materials

Transpo Industries Inc. has been developing safety products for the transportation industry for 40 years. They’ve come a long way since 1968, when they first developed an energy-absorbing bumper for over 4,000 New York City taxicabs.

Across the country, states are using Break-Safe and Pole-Safe omni-directional breakaway systems for sign and light pole supports. Blast-Safe fence is used internationally at airports for safety and security measures.

Transpo was one of the pioneers in the development and use of polymer concrete materials for rapid highway and bridge repair. The Castek division manufactures a variety of precast products for bridges, tunnels and rails: including BODAN, a highway/railroad safety crossing system. Step-Safe ADA compliant detectable warning tile can be found on train platforms and street-corner crosswalks from Canada to Florida.

The Distributor Division supplies permanent and construction zone impact attenuators, truck-mounted attenuators and sand barrels. There is even a product, carefully engineered to keep roads and bridges Freeze-Free from snow and ice conditions.

Transpo Industries received ISO 9001 certification for the design, manufacture and supply of transportation construction materials and safety products in May of 2001. The Castek division received ISO 9002. Certification in September of the same year.

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