R&N files suit against SEDA-COG Joint Rail Authority

Reading & Northern Railroad (R&N) filed suit against the SEDA-COG Joint Rail Authority (JRA) in Northumberland County Court on June 26, 2015 for allegations that include illegally competing against R&N and other for-profit businesses.

The suit points out that JRA was established in 1983 under Pennsylvania’s Municipality Authorities Act (MAA) and that “the MAA prohibits public authorities from interfering with existing business by the establishment of enterprises which in whole or part duplicate or compete with existing enterprises serving substantially the same purpose.” R&N claims that the JRA has been very open in its efforts to compete with the short line and to divert businesses from R&N to it’s own rail lines.

The suit also alleges that JRA has failed to follow the legal requirements of competitive bidding as specified in the Pennsylvania MAA, R&N says. Sine 1983, when the JRA awarded a contract to the North Shore Railroad, R&N says the authority had failed to even offer its operations for bid. “During that thirty-year period, JRA failed to return any monies to the taxpayers while instead allowing its operator to enjoy a sweetheart deal,” R&N says.

“After being warned by the Pennsylvania Attorney General in 2011 that its operating contract was in violation of the MAA, the JRA disregarded the Attorney General’s offer to assist in developing an appropriate procedure,” R&N says. Instead it designed a two-stage bid process that R&N alleges was “inherently flawed” because it was “entirely subjective and arbitrary in nature as opposed to seeking the highest financial return for the taxpayers as required by Pennsylvania law.”

“Under the subjective procedures, the JRA was able to eliminate R&N as a bidder even though R&N was the only bidder (other than the current operator) with direct ties to the region and even though R&N is widely recognized as one of the outstanding regional railroads in the nation,” the railroad says.

R&N is asking the Court to stop the JRA from awarding a right to operate the rail lines until such time as the case is heard. Since the current contract does not expire for two years, R&N notes that such a delay will do no harm to any party.