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Previsich
Previsich

In a letter dated, January 14, SMART TD President John Previsich wrote the Surface Transportation Board opposing a Canadian Pacific Railway proposal to acquire Norfolk Southern Railroad.

See the letter in its entirety below or click here to read the letter.

“Dear Chairman Elliott, Vice Chairman Miller and Member Begeman:

“I am writing to you on behalf of the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART TD), regarding Canadian Pacific Railway’s (CP) proposal to acquire Norfolk Southern Corporation (NS). 

“As the representative of more than 125,000 active and retired railroad workers, I am writing to convey that we are strongly opposed to this takeover proposal. This action has the real potential for a far-reaching, detrimental impact on America’s rail network, including lost jobs and an equally negative impact on those who ship by rail. We also strongly oppose CP’s scheme to circumvent the regulatory requirements through the establishment of a voting trust to assume control in advance of regulatory approval. Such a trust would violate existing statutory and regulatory prohibitions regarding unlawful control. 

“CP’s relentless pursuit of short-term profit with little regard to the impact on the greater good—workers, communities and our nation’s rail shippers is well known. History shows what happens when railroads harvest revenue for immediate self-enrichment of officers and stockholders at the expense of investing in maintenance and capital projects to ensure a viable industry well into the future. If approved, this merger would mean fewer railroads and less competition in the industry. The certain results will be fewer rail jobs, higher freight rates and diminished rail service. 

“E. Hunter Harrison, CEO of CP, has already boasted in the press that NS will be a “cash cow” because he will be able to sell off what he says are “excess” rail yards for real estate development. He has also stated that NS has a “gold plated” infrastructure that is overly maintained and he could greatly reduce capital investment on that road. Such a disinvestment in the nation’s rail network could only occur in a merged environment with diminished competition among carriers. The end result is higher costs and reduced service for the nation’s shippers.

“In addition, Harrison recently announced that he will reduce capital spending on CP in 2016 by $400 million and extend his moratorium on purchasing new locomotives until 2018 or longer on that railroad. His strategy is clear; use up the current railroad infrastructure and wear out the locomotives, leaving a railroad that will need dramatic investment once he leaves. The railroads’ officers, investment bankers, consultants and stockholders will walk away greatly enriched at the expense of the future health of our nation’s rail service. In fact, a January 12, 2016 white paper issued by CP in Calgary reveals that CP’s scheme for NS is to improve service by reducing investment, a plan that they note in their closing remarks may not produce the desired results: “CP’s forward-looking information involves numerous assumptions, inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking information” and that “forward-looking information is not a guarantee of future performance.” 

“In summary, if Harrison is allowed to take his CP model to the NS, through either a voting trust or with regulatory approval, the end result will produce an irrecoverable disinvestment in NS’s infrastructure, substantially diminished freight service, and a marked loss of jobs. 

“We urge members of the STB to safeguard our jobs and protect our nation’s freight rail infrastructure and those who ship by rail by advocating for the public interest, not enabling short term profits for the benefit of a few at the expense of the future viability of our nation’s rail system. We ask that the STB reject the proposed acquisition and also take legal action as required to prevent the circumvention of your regulatory authority through the establishment of a voting trust.”

STB_logoLast week, President Obama signed the Surface Transportation Board (STB) Reauthorization Act of 2015 into law, which realigned the STB an independent entity, autonomous of the U.S. Department of Transportation. 

Yesterday, STB Chairman Daniel Elliott III released a summary that outlines the major points and details of the Act. To read the complete press release, click here.

STB_logoThe Surface Transportation Board announced today that its staff will hold informal meetings with stakeholders between November 16, 2015 and December 7, 2015, on proposed rules for reporting railroad service performance data in the pending proceeding United States Rail Service Issues, EP 724.

The meetings will enable the STB to better assess what types of data might be useful to the public, and how individual railroads monitor performance. With measures in place to ensure public notice, fairness, and transparency, the Board is waiving its general prohibition on ex parte or private communications for a limited time in this proceeding.

“This will be the Board’s first permanent collection of service-related data. These informal meetings will allow open and candid conversations between STB staff and stakeholders regarding the highly technical data questions at issue here,” STB Chairman Daniel Elliott said. “Dialogue between stakeholders and STB technical staff is especially valuable and efficient in these informal circumstances, outside of an appearance before the Board.”

The Board’s decision announcing the meetings and providing information for their scheduling in United States Rail Service Issues—Performance Data Reporting, EP 724(Sub-No. 4), can be found on the Board’s website, www.stb.dot.gov, under “E-LIBRARY” / “Decisions & Notices / 11 / 9 / 2015.”

railyard, train yard; trainsThe U.S. Senate recently pointed the way forward for the U.S. Surface Transportation Board (STB) on the issue of ensuring sufficient revenue at freight railroads to pour back into the nation’s infrastructure.

The Surface Transportation Board Reauthorization Act of 2015, which was passed by unanimous consent in June, would provide commonsense process improvements. They would allow the STB to work more efficiently and, at the same time, recognize the need for freight railroads to provide billions of dollars in private spending to build, maintain and grow the nationwide rail network, so taxpayers don’t have to.

In fact, the bill explicitly states that in considering the concept of revenue adequacy, the Board must consider the “infrastructure and investment needed to meet the present and future demand for rail service.”

Read more from Huffington Post. 

Hamberger

Hamberger

WASHINGTON, D.C. – The Association of American Railroads (AAR), leaders from its member railroads and economic experts today urged federal regulators to beware of upending numerous national economic goals if they choose to pursue re-instituting revenue caps on freight rail companies.

Speaking before a Surface Transportation Board (STB) hearing on railroad revenue adequacy, AAR President and CEO Edward R. Hamberger told the Board that misapplying regulations would have far-reaching impacts on the freight rail industry’s ability to sustain the billions of private funds spent by railroads each year to build, maintain and upgrade the nation’s 140,000-mile rail network.

“As you take up the issue of revenue adequacy, you are painting on a much, much larger canvas than just the inside of this room,” Hamberger said. “What you are considering and may decide here in this hearing room a stone’s throw from the U.S. Capitol will ripple across the economy and ultimately impact most every American.”

Hamberger, and others testifying before the Board, ran through many examples of how earning sufficient revenues has allowed railroads to make massive private investments in rail infrastructure – nearly $29 billion in 2015, and $575 billion since 1980. This is in contrast to other modes of transportation, such as highways, which are funded by taxpayers.

Regulation of railroads’ overall revenue levels would run counter to Congress’s goals in the Staggers Act of 1980 that partially deregulated the freight rail industry to allow railroads to earn sufficient revenue to meet their long-term needs without having to rely on the federal government.

As Dr. Roger Brinner, chief economist with SandPointe, LLC testified, the concept of revenue adequacy should be a goal, and not a directive to constrain revenues; railroads should not be penalized for improved financial performance.

“Now comes a handful of interest groups that want you to cut their transportation costs by direct government intervention at the expense of the greater good. Let’s call it what it is: they want you to institute a regime of wide ranging price controls on freight railroads,” Hamberger testified.

Hamberger outlined the many national goals that would be at risk, should the STB decide to relapse into 1970s-era regulatory policies. Doing so, he noted would undermine the industry’s ability to: continue to improve rail safety, efficiency and reliability; increase U.S. exports; support U.S. energy independence, and effectively provide a healthy rail network relied upon by millions of daily Amtrak and commuter rail passengers.

“Freight rail success today is due to the foresight of the government leaders in 1980 who unleashed the transformational power of the market place through partial deregulation,” Hamberger said. “Subsequent federal involvement in rail economics both in the legislative and regulatory arenas honored the belief that a developed nation requires a top-notch freight rail system and that system is best provided by private companies in control of their resources rather than through the government.” 

STB_logo

Daniel R. Elliott III was sworn in June 26, 2015, as the Chairman of the Surface Transportation Board (STB), pledging to continue to promote transparency and to improve and streamline regulation of the Nation’s freight railroads.

He was nominated to the STB by President Barack Obama on January 13, 2015 for a four year term expiring Dec. 31, 2018. He was confirmed by the U.S. Senate on June 22, 2015. This is Chairman Elliott’s second term on the STB. He previously served as Chairman of the agency from Aug. 13, 2009 to Dec. 31, 2014.

At his confirmation hearing before the Senate Commerce, Science and Transportation Committee in May 2015, Elliott stated that he would continue the reforms that he had begun during his first term to increase STB transparency and efficiency; to promote a reliable rail network; and to bring more accessibility to the STB’s processes.

“I would like to thank President Obama for honoring me with this second appointment,”Chairman Elliott said. “I am so pleased to return to the STB to continue work to make sure the STB’s processes are fair, efficient and accessible for all stakeholders. I look forward to working with my fellow board members and board staff to continue the progress that we have made.”

Prior to Chairman Elliott’s first term at the STB, he served for 16 years as associate general counsel to the United Transportation Union. Earlier, he practiced at law firms in Washington and Cleveland. He graduated from the University of Michigan with a degree in political science in 1985 and earned a law degree from Ohio State College of Law in 1989.

Elliott, Dan; Dan Elliott; Elliott; STB; STB Chairman

Elliott

The Senate on June 22 easily confirmed the nomination of Daniel Elliott for a reappointment on the Surface Transportation Board.

Elliott’s nomination was confirmed by voice vote. During his confirmation hearing, Elliott said he would ensure the board continues “to facilitate the resolution of service issues so that interstate commerce flows as smoothly and efficiently as possible in support of the U.S. economy.”

Elliott was a lawyer with the United Transportation Union. He was the board’s chairman from 2009 until December, when his term expired.

Read more from Transport Topics.

STB_logoCongress over the weekend sent to President Obama for his signature a two-month extension of federal funding of highway and transit programs. The surface transportation law known as MAP-21 was set to expire May 31.

The House passed its bill — sponsored by Transportation and Infrastructure Committee Bill Shuster (R-PA.) and House Ways and Means Chairman Paul Ryan (R-Wis.) — a week ago, while the Senate passed the bill on Saturday. 

Although pleased that the legislation will prevent a shutdown of summer projects, some transportation industry leaders expressed frustration and disappointment that Congress passed another short-term extension of the Highway Trust Fund.

Read more from Progressive Railroading.

STB_logoThe Surface Transportation Board today approved Norfolk Southern Railway Company’s (NSR) acquisition of approximately 283 miles of rail line in Pennsylvania and New York from the Delaware & Hudson Railway Company, Inc. (D&H), subject to certain conditions. The lines at issue, known as D&H’s South Lines, consist of approximately 267 miles of the main line between Sunbury/Kase, Pa., and Schenectady, N.Y., and approximately 15 miles of the running track between Voorheesville Junction and Delanson, N.Y. 

In reaching its decision, the Board found that NSR’s acquisition of the South Lines from D&H is not likely to cause a substantial lessening of competition or create a monopoly or restraint of trade. The Board found this to be true, even when taking into account D&H’s planned discontinuance of trackage rights that connect to the D&H South Lines, which are the subject of a separate proceeding. The Board concluded that any anticompetitive effects are unlikely and, even if they were to occur, would be far outweighed by the very strong public benefits of the transaction. Such benefits include allowing NSR to provide more reliable, safe, and efficient service for shippers and allowing NSR and rail transportation generally to provide more effective competition with other modes of transportation, such as trucking and barge. The Board issued the approval subject to a number of conditions, including a condition that NSR enter into two voluntary commercial agreements with D&H to preserve certain shippers’ access to two carriers (NSR and D&H). 

The Board issued its decision today in Norfolk Southern Railway Company—Acquisition and Operation—Certain Rail Lines of the Delaware and Hudson Railway Company, Inc., FD 35873. That decision may be viewed and downloaded at the STB website, www.stb.dot.gov, under “E-LIBRARY/Decisions & Notices/05/15/2015.”