Destination:Freedom Newsletter
The Newsletter of the National Corridors Initiative, Inc.
  NCI Logo Vol. 2 No. 14, April 9, 2001
Copyright © 2001, NCI, Inc.
James P. RePass, President
Leo King, Editor

A weekly North American Railroad update

STB, rail industry clash
By Wes Vernon
Washington Correspondent

Sharp "lines in the sand" are being drawn between the railroad industry and members of the Surface Transportation Board (STB) on a legal question: Should the board consider "enhanced competition" as a major factor in deciding proposed mergers between the Class I lines?

The proposed rule spells that out, as did board members at a hearing on the rule Thursday of this past week. The rail industry steadfastly maintained that improved service should be the prime factor.

All sides to the rail merger issue heard STB Chairman Linda J. Morgan warn, "we cannot afford the service and financial problems associated with the last round of mergers."

As to the essence of the board's thinking, she said the proposed merger rules will "reflect competitive concerns" and "must ensure that future mergers add value and provide benefits that clearly outweigh potential harm."

The April 5 hearing was held to accept comment on the proposed ground rules for mergers. The final rule will be announced by the board on June 11, at the end of its 15-month merger moratorium, imposed to allow full consideration of the "big picture" on this issue.

It was the term "enhanced competition," included in the proposed rule and repeated by the chairman that raised the eyebrows of lawyers for major railroads. Some of them questioned whether the STB had the statutory authority to "enhance" competition, especially if it can be shown that encouraging more competitors, in and of itself, is not directly related to the issue of whether a given merger serves the public interest.

Samuel Sipe, Jr., of the Association of American Railroads, noted that, as a matter of fact, there are times when too much competition can "have an adverse effect" on the public good.

Moreover, he said, the board "may not have the authority" to impose "non-remedial government mandates to enhance competition."

Commissioner Wayne Burkes didn't buy that. He said if lack of competition had not had a harmful effect, "we would not be here today."

Sipe, the AAR attorney, cited language in the proposed rule, announced last fall, which he said would seem to "assume before the fact that there would be a problem."

Morgan told the gathering that in deciding whether to implement the rule, the STB would consider such factors as public benefits, service, the effect on labor agreements, "transnational" issues, the fallout for smaller railroads and rail passenger services, and downstream effects. It is the latter that some of the freight carriers seemed to equate with looking for trouble.

Specifically, the chairman said the commissioners would address the question, "How are the applicants to address the potential downstream effects of a merger proposal, and how should the board take these and other proposals into account?"

Paul A. Cunningham, speaking for Canadian National (CN), warned the commissioners the "enhanced competition" factor could be leading the board into "dangerous legal territory" that would encourage "shipper opportunism" and "getting something for free." Proclaiming CN "the most efficient railroad in North America," he complained that some sections of the proposed rule on "transnational issues" suggested there should be a different set of considerations for domestic carriers and those that are foreign-based or foreign-owned.

There seems to be an "Oh, my God" attitude on the prospect of foreign railroad advances in the U.S., "but no serious commentary on that," he said.

Canadian Pacific's Terrence M. Hynes agreed, saying such discrimination against foreign-owned transnational railroads "is in conflict with the spirit, if not the letter of NAFTA (the North American Free Trade Agreement)."

Peter Shudz of CSX, who followed Hynes, assured the board his company had "no such feeling of jingoism." For Union Pacific, J. Michael Hemmer defiantly declared, "We are looking toward the next transaction. We are looking to (the possibility of) a downstream of duopoly."

Two railroads can combine forces for the better good, he argued. Hemmer then outlined a project whereby UP, interchanging with CSX, operates carloads of perishable fruits quickly from the West Coast to the large metropolitan areas in the east.

"We got a service back on the rails that had previously gone to trucks," the UP attorney asserted. With that kind of "express lane service" as an example of what two railroads can do, "who can say whether a merger would be beneficial?" he asked.

UP endorsed a standard proposed by Norfolk Southern's G. Paul Moates: "Reasonableness."

Labor representatives took issue with the industry assumption that the railroads' profit margin is necessarily synonymous with the public interest. The question of whether financially unhealthy railroads could continue to serve "the public interest" was not addressed. If anything, the labor lawyers argued, the STB had been "far too flexible," a sentiment echoed, in varying degrees, by the short line railroads and the shippers.

"Enhanced competition as a policy matter," declared Nicholas DiMichael, speaking for the National Industrial Transportation League, the main advocate for the shippers, must also enhance intermodal competition, and "would achieve the public interest."

Ignoring the concerns of the railroad lawyers, DiMichael said enhanced competition should also apply not just to parties to a given merger, but also to "non-merging carriers."

Although the Class I rail carriers were generally targets of criticism by various groups, those groups also had some bones to pick with each other.

Richard Edelman of the rail labor division, Transportation Trades Dept., AFL-CIO, urged the board not to come to the rescue of every short-line railroad complaining of being victimized by the Class Is.

Edelman criticized the small carriers for claiming independence from the Class Is in the mid-1980s when they bought their "unprofitable" property, only to turn around and pay lower non-union wages for the workers left behind on the smaller carrier's property.

It turns out that claim "was based on a lie," Edelman bitterly alleged. He noted that the sales contracts included so-called "paper barriers" that prohibited the short-lines from hooking on to or interchanging cars with competitors to the Class Is involved in the contract.

"They did this," the Class Is, "to make more money on the backs of the workers," Edelman said, "and now that they (the short lines) are hurting because of 'paper barriers,' they are coming to you for help."

"But if the "paper barrier" were removed, "wouldn't that make the small railroads healthy and increase jobs for workers?" asked Commissioner Burkes.

"It was predicated on a lie in sworn testimony," responded the unmoved Edelman, "They were not really independent of the Class Is. This proves it." Frank Turner, who heads the American Short Line and Regional Railroads Association, said, paper barriers amounted to a 20 to 25 percent premium on their customers.

As for Edelman's charges, Turner said those deals with the class Is saved the lines, saved the jobs, and the small operations had to accept the terms of the Class Is.

"They had no choice." Besides, he went on, there was more Class I competition in the mid-'80s, with over 40 Class I carriers compared to just seven today. Further, he noted, 82 percent of the small railroads employing more than 50 workers, are unionized.

"It is not fair to villainize the small railroads," he said.

A new question emerged at the hearing: Should a port be considered the equivalent of a railroad?

Among the port interests represented, John D. Heffner urged that his client, the Jackson County Port Authority of Pascagoula, Miss., be declared "essential rail service."

If the idea of defining a port as "essential rail service," seemed unusual to the commissioners, Heffner noted the STB "has not considered a specific railroad to be essential" either.

Railroads, he said, are essential to a port's ability to compete. Without reciprocal switching, adequate car supply, and nondiscriminatory pricing, a port's ability to attract business and serve the public interest is compromised.

The STB's proposed rule, in Heffner's view, does not go far enough. In his statement, possibly the most bluntly pro-regulation comment in the entire proceeding, he noted that in many markets, the industry is really a duopoly or outright monopoly. Therefore, he proposed that the board look northward to Canada, which does have a two-carrier system, which offers customers in urban areas access to a competitive carrier by a reciprocal switch.

The idea of a privately negotiated solution, the board's oft-stated preference, "presumes that parties have equal bargaining power," said the port attorney.

"What remedies does a weaker party such as a short line railroad or customer have absent the prospect of regulatory intervention?" he asked the board.

So are the railroads and the STB headed for what could be a protracted legal battle in the courts over "enhanced competition?" Neither side wants to speculate. We won't know for two months whether the STB will stick with its proposed rule as currently written, though more often than not, it does.

We'll know in June

Maine trains again at STB doorstep

By Leo King
D:F Editor

The Surface Transportation Board (STB) wants to hear from the Federal Railroad Administration (FRA) by June 8 so it can tell Amtrak and Guilford whether or not the forthcoming Boston-Portland passenger trains can cruise at 79 miles an hour, or may only lope along at 59. The ruling, however, may not be made until June 30.

Guilford says despite major track upgrades, the track is only safe at the lower speed. No, no, argues Amtrak.

So, Amtrak took its argument back to the STB on March 12. That federal agency is requesting FRA's analysis and comment by June 8, but is ordering Guilford to reply to the Amtrak statement by May 14, and Amtrak must file its rebuttal by May 29.

The argument center around what is called by civil engineers, "track modulus," which is the result after mathematically testing the track to see how much it flexes under particular stress - such as a train speeding over it.

Both Amtrak and Guilford must also "serve copies of their pleadings on FRA."

The STB, wrote it this way in its decision to reopen the case after ruling last year that 79 mph was all right:

"Amtrak filed a motion for testing access and clarification of the board's October 22, 1999 decision. Amtrak and Guilford have reached an impasse over implementation of the Board's decision."

The STB also stated, "Guilford has apparently raised issues concerning the particular test to be used and the timing and frequency of testing."

The result was that Amtrak is now asking the STB to direct "Guilford to grant Amtrak access to the line for the purpose of testing its track modulus," and clarification that "Amtrak's use of a Track Loading Vehicle (TLV) owned and operated by the Transportation Technology Center, Inc. (TTCI), together with TTCI's testing methodology, is a reasonable approach for testing the line's track modulus."

The testing center is the DOT/AAR joint operation in Colorado.

Amtrak also wants a clarification that "if Amtrak's testing demonstrates that the required track modulus standards are satisfied, no further track modulus testing would be required," and the passenger trains could operate at 79 mph.

The Washington-based passenger train operator pointed out that the TLV would be available for use in July, so requested the board "issue a final decision by June 30 so that Amtrak and the Northern New England Passenger Rail Authority "can commit to July testing dates." The rail authority is the Maine agency that has gotten all the permits and permissions to run passenger trains between Portland, Me., and Boston via New Hampshire's southeastern coast.

Amtrak also requested that its pleading be treated as an opening statement to expedite matters. The STB agreed, so Guilford has 45 days to reply from the decision date, which was March 29, and Amtrak got 15 days to file a rebuttal.

The STB observed that "The FRA, which has jurisdiction over rail safety matters" and has "significant expertise, has participated in this proceeding, and its views contributed substantially to the board's October 22, 1999 decision," in which the STB stated 79 was okay; but because the new motion "raises additional rail safety issues," the board requested FRA to participate again.

Meanwhile, Guilford Rail Systems says there's no ill will behind a planned media-only rail safety demonstration, reported Foster's Daily Democrat on April 5.

The newspaper stated Guilford invited local media on a private train from Portland, Maine, to Bradford, Mass. on April 13 to raise grade crossing awareness and demonstrate higher-speed traffic in anticipation of Amtrak service from Portland to Boston, however, the significant players, including Northern New England Passenger Rail Authority, Strafford Regional Planning Commission and Amtrak, were told they could not participate. They hope Guilford's message is not a slap in the face to continued rail safety efforts they have promoted for several years.

Guilford Executive Vice President David Fink Jr. said that is not the case, but instead, the trip is the result of requests from the media.

"For two years, you and your brothers (in the media) have begged, cajoled and pleaded with us to see the conditions and progress of the rail line and ongoing improvements," Fink said on Thursday. Space is limited, he said, and officials will have an opportunity in the future.

He denied speculation by one official that the trip may constitute a "scare train" to discourage passenger rail, because it falls on Friday the 13th.

"That day is Good Friday, and as such, is a railroad holiday, providing a good opportunity to demonstrate the progress with few hurdles and little rail traffic," he said.

The demonstration train will reach speeds up to 59 mph. Despite nearly $40 million worth of heavier rail and new ties installed to date, Guilford contends that 59 mph is the safest speed.

In other developments, one week earlier, Guildford said it was taking a state legislator to court for alleged libel.

From the March 30 pages in the Portland Press Herald, we learned that Guilford had served notice that it may sue the Maine legislature for critical statements made by a House lawmaker.

Robert B. Culliford, corporate counsel for Guilford, which owns the Maine Central Railroad Co., the Boston & Maine Corp., the Springfield Terminal Railway Co., and the Portland Terminal Co., contended it was libeled by Rep. Christopher G.L. Hall (D-Bristol). Culliford said Hall slandered the company in statements made in February.

Hall said he merely exposed the company's refusal to go along with plans for a Boston-to-Portland high-speed railroad connection.

Culliford said Hall defamed and slandered his company in statements that were false, damaging his company's reputation, and ability to conduct business in Maine and elsewhere.

Hall said he exposed the company's refusal to go along with plans for a Boston-to-Portland high-speed railroad connection, and now Guilford officials are angry and threatening to retaliate through the courts. He said the attorney general has agreed to defend him against any lawsuits arising from his statements about Guilford.

"I basically blew the whistle on Guilford's disrupting the Amtrak service," Hall said. "I sent out a press release to my local papers and followed it up with an op-ed piece... and they didn't like it."

But the freshman lawmaker said time has shown his published observations were true. As a result of the public exposure of the snag in state efforts to establish the rail link to Boston, he said negotiations have resumed and the outlook for a train connection between Maine and Boston seems brighter.

Hall said Guilford officials have a history of suing their critics to harass them into silence. "With the attorney general agreeing to defend me, they're not able to harass me in terms of paying legal fees," Hall said.

NCI CEO supports pick

Bush's choice: Rutter to head FRA

By Wes Vernon
Washington Correspondent

President Bush has named Allan Rutter to the Federal Railroad Administration.

Very few people in Washington know much about Rutter, other than the fact that he had been policy director in the Texas governor's office since 1995, which means that he served George W. Bush during his tenure as governor and in the service of Bush's successor, Gov. Rick Perry.

Rutter was deputy director of the Texas High-Speed Rail Authority from 1990 to 1995. He had served Texas Governors Mark White (D) and William Clements (R) as a senior budget analyst from 1985 to 1990.

D:F has received an e-mail from a source who claims to know that Rutter has "close knowledge of high-speed rail initiatives around the country, and of the need for an effective rail passenger service around the country," and that he should "provide balance between the private sector and the needs of government" and would lead the country "toward increased reliance on rail transportation."

All very hopeful, but despite our best efforts, we were unable to verify that one way or the other, as of press time late Friday.

What we were able to do was to talk to NCI CEO Jim RePass, who knows Rutter.

RePass tells us that Rutter "has demonstrated an ability to work with rail advocates, Amtrak and the freight railroads" to advance rail service in Texas.

"He worked with the railroads to improve and ultimately expand Amtrak's Texas Eagle, " RePass asserted.

While apparently originally a skeptic, Rutter was an open-minded person. His appointment should be "a positive step in the redevelopment of rail service in this country."

Meanwhile, AAR president and CEO Edward R. Hamberger said "President Bush has made an excellent choice in nominating Allan Rutter to be the next Federal Railroad Administrator."

He added, "His extensive transportation background serving as Governor Bush's transportation policy director as well as deputy executive director of the Texas High-Speed Rail Authority means that he starts out with a solid understanding of the issues and a well-rounded expertise in rail policy. He has garnered the respect of management and labor alike, and that too will stand him in good stead."

NCI's May confab draws near
May 10 and 11 are drawing near, and so is the 2001 National Corridors Initiative annual conference at the Marriott Hotel in Washington, D.C.

"'Making Multimodalism Work' is the theme this year, because, as President James P. RePass explains, "We are in the run-up to creating the successor to TEA-21, the omnibus transportation bill which funds most transportation construction in America."

RePass said, "The principal cause of increasing transportation crisis has been our failure to create a transportation system as opposed to funding individual modes. We can no longer afford the luxury of overbuilding one mode while ignoring another, as we have largely done for so many decades. Intercity rail connecting with other modes needs to receive much more attention - and investment."

This year's speakers will feature Bush cabinet member Norman Y. Mineta, the President's choice to be America's Transportation secretary.

RePass explained that the National Corridors Initiative is "a business- and environment-oriented advocacy and educational group for passenger and freight rail development in America founded in 1989."

In a "Dear Colleague" letter, RePass told the membership, "Every now and again the world changes for the better, and in recent weeks we saw that happen in America with the start of Acela Express service on the DC-Boston fully electrified Northeast Corridor - the first Euro-style High Speed train service in the U.S."

He said, "That was an important event. But this year, at our May 10-11 conference, you will see how that event was not unique, because all over America we have the opportunity to build a balanced transportation system using high-speed rail as a backbone. And in May, the people making that happen will be gathering in Washington to share their experiences, tell their stories - and let the national news media know that the National Corridors Movement is gathering momentum.

An enthused RePass said, "From the Pacific Northwest to Maine, from the Deep South to the upper Midwest, from the Southeast to California, from Florida to Canada, gatherings of business, environmental, rail, and political figures - workers as well as management - are growing in number and influence."

He opined, "The interests of freight and passenger railroads, after a generation apart, are once more coalescing, and although that fact is not even on the radar screen of the general public, it is an event of great historical and economic import for this country. For more than a dozen years, the National Corridors Initiative has worked towards this outcome. It is not yet here, but it is at last on the way. Our work is not about nostalgia, and it's not about 'choo-choos,' but it is about one of the great untold stories of the past decade; and it is very much in keeping with the fundamental American characteristic of renewal and rebirth."

He invited the readers of Destination: Freedom to "Come and enjoy what we are doing, and join in. Many roadblocks remain, but as we go forward in the struggle for a balanced transportation system, you can be assured of at least one thing: the future will belong to those who are willing to fight for it."

High-speed rail bond bill postponed in House
D:F Washington Bureau

The High Speed Rail Investment Act, originally scheduled to be introduced in the House last week, has been postponed until after the current Congressional recess.

A spokesman for Rep. James Oberstar (D-Minn.), a prime sponsor of the measure, said there were no policy difficulties in advancing the bill. It was just that the House made a decision to adjourn several hours earlier than originally expected, thus there was no time to formally introduce it before the deadline. Leaders decided the news conference formally unveiling the package could wait until the lawmakers return.

The bill was introduced on the Senate side January 31. As of the beginning of the Congressional recess, more than 50 senators (a majority) had signed on to it.

No. 448 will be a bus, for a while
CSX is carrying out trackwork on its line east of Albany N.Y., used by train No. 448, the Boston section of the Lake Shore Limited, sources tell D:F.

In order to provide a work window with no train movement, CSX said, No. 448 will terminate at Albany, and buses will carry passengers to Pittsfield, Springfield, Worcester, Framingham, Back Bay and Boston, Mondays through Thursdays, beginning today, and continuing for the next eight weeks. The train originating in Chicago on April 8 will be the first train to be affected. Sleeper space is available only as far as Albany.

Other trains - 449 (westward to Albany and Chicago), 142 (New Haven, Conn., to Springfield, Mass., and Boston) and 145 (Boston to Springfield and New Haven) will not be affected.

Ticket agents are being told the Arrow reservation system will not be changed to show the bus substitution, but the agents are required to sell coach space normally and inform customers of bus.

HHP Number 654

NCI: Leo King

One year ago, the HHP-8s frequently visited Boston
HHPs scarce in New England;
'Adios' to some elderly veterans
Amtrak's newest electric engines, the high-horsepower electric locomotives - at 8,000 HP - have been scarce in New England the last several months, but Amtrak's spokeswoman Karen Dunn, in Philadelphia, tells D:F, "They are running on the south end," between New York City Philadelphia and Washington.

"Bombardier has delivered ten," she said, and "Amtrak has accepted eight."

Dunn reported, "They are in good working order." Some reports (read: rumors) suspected the Bombardier-built engines were having trouble making transitions through the various voltages they are required to operate under - from 25Kv between Boston and New Haven to 13Kv and other voltages between New Haven and Washington.

"No problems making changes over to various voltages," she said.

Elsewhere, in Louisiana, resplendent in their Kansas City Southern-inspired passenger livery, five former Amtrak F-40PHs and four former Amtrak coaches were bound for Panama for service on Kansas City Southern Industries' Panama Canal Railway.

The equipment was loaded aboard a ship on March 30 in New Orleans and included F-40s 1856, City of Panama, (formerly Amtrak 259); 1857, City of Gamboa (Amtrak 313); 1858, City of Gatun (Amtrak 358); 1859, City of Paraiso (Amtrak 354); and 1860, City of Pedro Miguel (Amtrak 374). The "new" Panarail Tourism Co. coaches include Rio Bayano, Rio Mamoni, Rio Gatun, and Rio Paqueni.

Three of the F-40s had been leased to the Florida Fun Train, decked out in "beachball" bright blue, yellow, and orange colors. After the operation failed and the units were returned to Amtrak, they became the only F-40s repainted in the new silver with dark-blue stripe NortheastDirect scheme, which also included black roofs.

KCS and partner Mi-Jack Products won the 25-year concession to operate the railroad in 1998, and are undertaking a $75 million rehabilitation of the railroad and converting it to standard gauge.

Thanks to Dave Bowe and the United Transportation Union

Amtrak expands 'quiet car' program
Starting April 2, Amtrak designated "quiet cars" on 16 more trains along the Northeast Corridor between Washington and Boston "in response to the overwhelming positive feedback from its guests," a spokesperson enthused.

"In today's business world, being connected and able to work from the road is an advantage. Amtrak realizes that, and so we allow cell phone use on-board our trains," said Amtrak Northeast Corridor President Stan Bagley. But it is clear that "there is also a market for peace and quiet, and providing one car on each train where travelers can unplug is also an advantage for us."

Amtrak said it was responding to market demand in New England by adding quiet cars to two Acela Regional trains between Boston and Washington, Nos. 177 and 190.

Eight more northbound Metroliners between Washington and New York and an additional six southbound Metroliners between New York and Washington will each have a quiet car.

Spokeswoman Karen Dunn said, "managers will continue to ride the quiet cars while the program catches on. The company is also working on signs for them, and will continue to put notices on the seats to help inform guests."

She added, "Seats in the quiet cars do not require a special reservation - they are available on a first come, first served basis."

Corridor lines...

Amtrak resists Arizona crew law

Amtrak wants a federal court to keep Arizona from enforcing its safety rule requiring at least two crewmembers to be in the cab of a train's lead locomotive. The passenger carrier contends that operating a train with only one person in the lead locomotive's cab is not a hazard.

A lawsuit filed by Amtrak against the Arizona Corporation Commission contends that the state regulatory agency's authority to enforce the rule is pre-empted by a federal railroad law. Amtrak said in court papers that complying with the rule would be too costly and interfere with the railroad's labor contracts with engineers, who made an average of $74,000 in 2000, the Associated Press reported on April 1.

"The imposition of the Arizona regulation will impede Amtrak's ability to maintain or expand its service," said Travis Hinton, chief transportation officer of Amtrak's intercity business unit. Hinton said Amtrak trains headed toward Arizona could be halted and service interrupted if a second cab-crew member is unavailable.

Amtrak's court papers said most of its trains operate with only one crewmember in the lead engine's cab for up to six hours and that letting Arizona enforce its rule could "embolden other states to similarly regulate minimum staffing levels."

Sounder trains gain riders
While critics batter Sound Transit's plans for light-rail service between SeaTac and Seattle, the agency is buoyed by growing ridership on its commuter trains, reports the South County Journal.

Ridership numbers on the Sounder commuter trains, operating on BNSF rails, grew by 200 or 300 per week during March. A total of nearly 8,700 riders boarded the trains during the week ending March 9. The total ridership figure climbed to 9,027, then to 9,464, over the next two weeks.

The surge began a few weeks after the opening of new passenger stations in Tukwila, Kent and Puyallup. The Sounder trains began service between Tacoma and Seattle last fall with stops at stations in Auburn and Sumner.

The Sounder offers only limited service now, with two trips from Tacoma to Seattle each weekday morning and two trips back each afternoon. Service is scheduled to expand in stages to 18 trips each weekday, with trains running both north and south in the morning and afternoon.

Freight lines...

STB agrees with itself over rates

Surface Transportation Board Chairman Linda J. Morgan said last week that the board, following judicial review, "has again examined and reaffirmed its decision to exclude consideration of product and geographic competition from the market dominance analysis in railroad rate complaint proceedings."

Under the law, she said, the STB "may not review the reasonableness of a challenged rail rate unless it first finds that the railroad at issue has 'market dominance."

She explained that term, "Market dominance, refers to an absence of effective competition from other rail carriers or modes of transportation for the transportation to which a rate applies."

She added, "The market dominance statute requires the board to look at both how high a rate is relative to the costs that the railroad incurs in providing the service and whether, from a "qualitative" perspective, there is competition for the traffic at issue."

Before 1999, the board's procedures permitted railroads to demonstrate, qualitatively, that there was no market dominance by showing competition among railroads (intramodal competition); competition from other transportation modes (intermodal transportation); or that the complaining shipper could avoid using the defendant railroad by shipping or receiving a substitute product (product competition), or by obtaining its product from a different source or shipping it to a different destination (geographic competition).

In decisions issued in December 1998 and July 1999, the STB excluded product and geographic competition as factors to be considered in market dominance proceedings, finding that the applicable law "did not require consideration of those factors; that consideration of those factors unduly burdened shippers attempting to bring rate cases; and that the exclusion of those factors would not have any substantial effect on the rates that the railroads could charge in the marketplace.

The railroad industry sought judicial review of the STB decisions, and in a case with the Association of American Railroads vs. the STB, the U.S. Court of Appeals for the District of Columbia Circuit Court sent it back to the board for further consideration.

The Appeals Court rejected the railroads' claim that the law expressly requires the agency to consider product and geographic competition. It found, however, that the STB did not adequately explain how it had taken into account a Rail Transportation Policy directive (written into law) "to allow, to the maximum extent possible, competition and the demand for services to establish reasonable rates for transportation by rail."

In last week's decision, the three-member board "observed that it must balance the various policy directives, and that excluding product and geographic competition to make the market dominance process easier to administer would advance the policy directives to resolve disputes expeditiously and to give shippers practical access to the rate review process."

At the same time, Morgan said, "The board found that its decision would not contravene the RTP policy directing the board to rely on competition rather than regulation when possible, because a competitive rate is unlikely to be challenged and, even if challenged, is unlikely to be disturbed;" so, after again considering the various policy goals of the law, the Board concluded, "the scale tilts heavily in favor of excluding product and geographic competition from consideration in rail rate cases."

The board denied an AAR petition requesting that the STB reopen the proceeding to further consider specific proposals for taking evidence of product and geographic competition in rail rate cases, and requesting that the board direct shipper and railroad interests to negotiate compromise rules in this regard. The STB indicated that it "had already considered and rejected such proposals, and that nothing but unwarranted uncertainty would be gained by reopening the proceeding at this time."

Morgan said "negotiations could have taken place before now and could take place any time in the future, but that there is no need to further delay the proceeding for that purpose."

From the STB web site, at

Safety Lines...

NTSB wants locomotive voice recorders

Three freight trains that collided in Ohio some two years ago have prompted federal safety regulators to renew their call for audio recorders in all engine cabs. A locomotive engineer and a conductor in the same locomotive died in the January 1999 wreck.

The National Transportation Safety Board (NTSB) said rules governing train recorders would be similar to those that cover aircraft cockpit voice recorders, according to a report last week from Reuters news agency.

Information would be used solely by accident investigators, who could only release a written transcript of cab conversations to the public.

"There have been a number of accidents where we have not been able to, for one reason or another, talk to the crew and get information on how the train was operated," senior NTSB rail investigator Bob Chipkevich told a safety board hearing.

"We're currently investigating some accidents where that situation exists and that we really need the information to really understand what happened," Chipkevich said.

Amtrak's high-speed Acela Express passenger train has a voice recorder in the locomotive cab, according to a spokeswoman at the passenger railroad.

A spokeswoman for the FRA said the agency would review the recommendation. She would not comment on it until a formal proposal was received from the safety board.

The safety board recommendation was prompted by the January 1999 crash of three Conrail freight trains in Bryan, Ohio, that killed both people and caused an estimated $5.3 million in damage.

A mail train traveling westbound at 56 mph, near maximum speed, slammed into the rear of a much slower moving freight train at night and in heavy fog.

Three locomotives and 13 cars of the mail train and the last three cars of the other train derailed into the path of a third train traveling in the opposite direction on an adjacent track. Eighteen cars of the third train derailed.

The engineer and conductor of the mail train were killed, while no one else on either of the other two trains was hurt, investigators said.

The safety board, in a declaration of probable cause, concluded that the crew of the mail train failed to comply with signals.

The NTSB website is

Business lines...

Numbers decline; NS seeks investors

U.S. factory orders declined in February, reflecting losses in the industrial machinery and transportation equipment industries. The Commerce department said last week that manufacturers were still struggling as the world's richest economy stuttered.

Factory orders fell 0.4 percent in February to a seasonally adjusted $362.98 billion after tumbling 4.3 percent in January. Excluding the volatile transportation sector, orders dipped 0.3 percent to $321.31 billion, according to a report from Reuters.

Wall Street economists had forecast a 0.2 percent decrease.

Transportation equipment orders fell 1.3 percent to $41.67 billion in February after plummeting 24.2 percent in January. Other sectors also showed sharp declines.

In other rail-related business news, Norfolk Southern last week filed with the Securities and Exchange Commission to sell periodically up to $1 billion in debt securities, preferred and common stock, depository shares. The Norfolk-based company said in an SEC filing that it plans to use the net proceeds from the shelf offering for general corporate purposes, including outstanding debt, acquisitions and working capital.

Its shares, which have ranged from $11.94 to $19.75 in past year, were trading at $16.55 on Friday's close (April 6).

In other stock news, rail giant BNSF warned last week it would miss the consensus forecast for first quarter earnings, citing U.S. economic softness.

It also said it expects to take a $40 million investment write-off in the quarter and said it would cut $100 million in spending projects, and take other steps to lower quarterly operating expenses by about $20 million.

Matthew K. Rose, BNSF's president and CEO, said first quarter results would include charges for FreightWise, an internet transportation exchange; Pathnet, a telecommunications venture; and several real estate investments. The earnings report, scheduled to be announced April 24, also will include a $6 million charge that was used to pay off debt.

Shares of the Fort Worth company traded at $29.20 a share at Friday's close on the New York Stock Exchange.

Elsewhere, Wisconsin Central reported last week that stockholders approved the merger with Canadian National. About 79 percent of WC's 46.4 million shares outstanding were voted on the proposal, of which 99 percent supported the transaction. The action was taken at a special stockholders meeting. Each WC stockholder will get $17.15 in cash for each outstanding share of common stock held on the effective date of the merger.

Subject to regulatory approval of the STB and certain other conditions, WC expects the transaction to close this fall, "assuming the STB reviews the transaction as a 'minor' proceeding, a spokesman said, and added, "WC and CN believe the merger should be treated as a minor one by the STB, but, if it is not, CN has the option to terminate the merger agreement without penalty."

Will Hollidaysburg close?
Six rail unions and the state of Pennsylvania last Wednesday jointly petitioned the Surface Transportation Board to issue an order that Norfolk Southern keep several Pennsylvania car repair shops open.

NS announced late last year that it planned that it planned to close the former Conrail shops in Hollidaysburg. Since NS acquired 58 percent of Conrail for $5.8 billion, some basic changes had occurred in its business. Export coal traffic, among the company's most lucrative, has withered to half of its former volume, and the railroad said it no longer needed facilities to repair and maintain as many railcars as it once did, the Journal of Commerce Online reported.

Unions retorted by saying that that the railroad's commitment to keep the shops open were not conditional.

In the 1997 joint application by NS and CSX Corp. for permission to acquire the former Conrail Inc. for $10 billion and divide its operations between them, NS committed to keeping the shops open and to investing $4 million in the facility.

These organizations are on the web. Norfolk Southern Railroad can be found at, CSX Railroad at, and the Journal of Commerce Online at

Canadian lines...

Bombardier becomes huge, really huge

Bombardier Inc. will become the world's-largest maker of rail equipment on May 1.

Last week, the European Commission approved the Montreal locomotive and carbuilding firm's $1.1-billion bid to acquire money-losing Adtranz, the rail assets of Germany's DalmlerChrysler AG, according to the Montreal Gazette.

The $725-million deal, in American dollars, which is set to close on May 1, will nearly triple Bombardier's rail-transportation division.

The firm will have a combined $8 billion in annual revenues, 37,000 employees, and up to one-fourth of the world's rail-equipment and services market.

"We've had limited access (to Adtranz's books during the due-diligence process) and when we close the deal, we'll have more access," said Brown.

"We fully intend to talk with the workers' councils (German unions) and we will follow all regulations. We've had constructive relations with these people in the past."

Even if it turns out it doesn't have to shed people, Bombardier will have to shed some Adtranz assets as a precondition set by the commission to allow the transaction.

The EC stipulated that Bombardier sell Adtranz's stake in Austrian tramway firm Elin and in the Berlin-based joint venture Stadler Pankow, that it co-operate with Dusseldorf's Kiepe for five years on some specific products, that it provide "a certain level of work" for various companies Adtranz dealt with, and that it divest itself of some trams by licensing their production.

In addition to the new businesses of manufacturing locomotives and engine-propulsion systems, Adtranz is also involved in the lucrative rail-services industry.

Bombardier will also take over Adtranz's $13 billion in booked orders, adding to Bombardier Transportation's own backlog of about $9 billion. The order backlog for Bombardier as a whole will be $45 billion.

Robert E. Brown, Bombardier's President and CEO said "The combination of Bombardier Transportation and Adtranz will rank the new entity as the global industry leader in all activities related to rail vehicles, with 37,000 employees, annual revenues in excess of $8 billion Cdn and a backlog of $22 billion (Canadian)."

Bombardier also agreed to divest by way of licenses, the Regioshuttle and Variotram products to Stadler Rail AG.

Lines on On-line reading... Lines on on-line reading...

Concerning women photographers...

NCI friend Doug Riddell told us about a site that is unique among railroaders and photographers.

Doug writes, "I don't often send out stuff other than personal messages, but I thought you'd like to see this website maintained by Shirley Burman, who, besides being one of the best professional photographers in the business, is really into documenting the role of women in railroading.

"She and her husband, legendary railroad photographer and author, Richard Steinheimer, have set up a foundation to do so. Those of you who are into media and find yourself looking for reference material in this area will find a wellspring of information here." Ms. Burman's website address is

Engineering the Acela
The March-April issue of Progressive Engineer, an online engineering magazine and information source, focuses on transportation and currently includes two rail-related stories, publisher Tom Gibson tells us.

One, by Carol Carder, describes the engineering behind Amtrak's new Acela Express. The electrified train travels up to 150 mph between Boston and Washington, D.C. using the same active tilt technology and propulsion system used on French high-speed TGV trains.

The other is a profile of O. Winston Link, a commercial photographer from New York City who set out on a personal mission to document the last days of steam locomotives in America between 1955 and 1960. He focused mainly on the former Norfolk & Western, and on night shots, developing elaborate flash systems for creating images that are now on display in museums throughout the world. The e-zine is at

Amtrak Historical Society

The seventh annual Amtrak Historical Society Conference will be held in Chicago from April 27 to 29 at The Quality Inn in downtown Chicago, One Mid City Plaza (Madison at Halsted Streets). Highlights will include a tour of Amtrak's Chicago Reservation Call Center and a tour of the city's Historic Pullman District and Pullman Porter Museum, as well as presentations by Amtrak. Each year, the conference is held on the weekend closest to Amtrak's Anniversary and this year is Amtrak's 30th Anniversary. For details, go to HTTP://WWW.TRAINWEB.COM/AHS/2001/

Financing Freight Transportation Improvements Conference

USDOT's modal agencies will discuss financing freight transportation improvements, including existing financing options from the federal, state, local, and private sectors, innovative financing approaches, program and policy issues and options to finance future freight transportation projects between April 29-May 2 in St. Louis. Rail topics will include Railroad Rehabilitation and Improvement Financing Program (RRIF), Class I Railroads Financial Overview and Future Investment Needs, and several other programs. Contact Karen McClure at 202-493-6417 or email

Partnerships for Corridor Building:
Making Multimodalism Work
- National Corridors Initiative

U.S. Secretary of Transportation Norman Y. Mineta and Rep. John Cooksey (R-La.) will be the keynote speakers May 10-11 at NCI's 2001 Conference at the Marriott in Washington, D.C. (

Mineta is a former Chairman of the House Public Works Committee and was a U.S. House member from California.

Cooksey, a member of the House Transportation and Infrastructure Committee, is both a pilot and a practicing physician, and has become a strong advocate for intermodal transportation investment.

NCI's highest award, the Claiborne Pell award, will be presented to Sen. Majority Leader Trent Lott (R-Miss.) and Sen. Minority Leader Tom Daschle (R-S.D.), who have kept their promise to re-introduce legislation to provide capital for intercity passenger rail. Last year's recipient was Sen. Kay Bailey Hutchison (R-TX).

2001 Union Pacific steam trips

June 10

Union Pacific reports two steam excursion scheduled so far this year. Challenger steam engine No. 3985 on June 10, 2001 from Council Bluffs to Sargeant Bluff, Iowa and return.

Contact The Camerail Club
Sioux City & Pacific Excursion
6307 Seward St.
Omaha, NE 68104-4761

June 19

Challenger steam engine No. 3985 on June 19, 2001, from St. Louis to Gorham, Ill., and return. St. Louis Chapter, NRHS is also hosting the 2001 annual NRHS convention, June 19-23.

Contact St. Louis Chapter, National Railway Historical Society
2129 Barrett Station Rd., PMB 271
St. Louis, MO 63131-1638
(314) 839-2356

Off the main line...
We got a note the other day from John R. O'Neill who told us about a project some Bay State ex-Conrail buggies. John wrote, "Most of us enjoy seeing old railroad equipment restored and not scrapped. At the closing days of Conrail, the Massachusetts Call-Volunteer Firefighters Association was given two Conrail cabooses, CR 21212 and CR 21245.

"Former CR 21212, now MCVX 21212, was rebuilt and painted in Conrail's Locomotive Shop at Juniata, Pa. It is painted the color of Conrail's Business Train, Pullman Green. MCVX 21212 travels on the rear of our Safety Train II.

"Now, MCVX 21245 will travel to Jacksonville, Fla., for a paint job. It will become a power car for our Safety Train III, which will include former Amtrak 2464, now MCVX 432, the Silver Isle.

We have maintained all of the donator's reporting numbers in our reporting marks, except the Silver Isle, which was built as Chicago, Burlington & Quincy 432. Our association is the only fire organization in the country that owns active railroad equipment."

The way we were...

Cape Cod Central 4-4-0

NCI: Leo King Collection

William Mason's locomotive works of Taunton, Mass. built this 4-4-0 "American" for the Cape Cod Central's passenger and freight trains in 1867. It was named Highland Light. The Cape Cod Central began in 1848 with a line from Middleborough to Sandwich, and the line was extended to Hyannis and Yarmouth in 1854. The route became part of the Old Colony Railroad in 1872, and around the turn of the century, part of the New York, New Haven & Hartford. Highland Light was but one of 700 engines Mason built, including 14 for the then newly formed Central Pacific. The painting is from a 1975 calendar for the former Hobby 1 shops in Rhode Island. The artist's name is illegible.
End Notes...

We try to be accurate in the stories we write, but even seasoned pros err occasionally. If you read something you know to be amiss, or if you have a question about a topic, we'd like to hear from you. Please e-mail the crew at Please include your name, and the community and state from which you write.

Destination: Freedom is partially funded by the Surdna Foundation, and other contributors.

Journalists and others who wish to receive high quality NCI-originated images that appear in Destination: Freedom may do so at a nominal fee of $10.00 per image. "True color" .jpg images average 1.7MB each, and are 300 dots-per-inch for print publishers.

Destination: Freedom's editor, Leo King, also writes for "ThemeStream," a forum for writers and readers. King's articles are all rail-related, and mostly chronicle events over the last ten years on the Northeast Corridor, particularly in New England. Look for his articles at under the heading "Travel," and the sub-heading, "Riding the Rails."

In an effort to expand the on-line experience at the National Corridors Initiative web site, we have added a page featuring links to other rail travel sites. We hope to provide links to those cities or states that are working on rail transportation initiatives - state DOTs, legislators, governor's offices, and transportation professionals - as well as some links for travelers, enthusiasts, and hobbyists.

If you have a favorite rail link, please send the uniform resource locator address (URL) to the webmaster in care of this web site. An e-mail link appears at the bottom of the NCI web site pages to get in touch with D. M. Kirkpatrick, NCI's Site in Boston.

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