A 2007 class-action antitrust suit brought by a large group of rail shippers against four Class I railroads took yet another turn in its 12-year court dance, this one in the defendants’ favor, when the U.S. Court of Appeals for the D.C. Circuit ruled on Aug. 16 against class-action certification. The plaintiffs contend that the railroads—BNSF, CSX, Norfolk Southern and Union Pacific—colluded to engage in unlawful price fixing to set fuel surcharges.
In 1907, Boy Scout founder Robert Baden-Powell, an English soldier, devised the Scout motto—Be Prepared. He published it in Scouting for Boys in 1908. Upon publishing the Scout motto, Baden-Powell was asked the inevitable follow-up question: Be prepared for what? “Why, for any old thing,” he answered.
When we published the sixth article in this series last month, we promised continuing coverage of the Gateway saga. What we did not know at that time was that so much news would come to us so quickly. At a Board meeting of the Gateway Program Development Corp. on July 22, a Gateway spokesperson presented an analysis of delays that he attributed to the existing Portal Bridge and the existing Hudson Tunnels (also known as the North River Tunnels) on Amtrak’s Northeast Corridor (NEC) and criticized the plan currently under way to rehabilitate the Canarsie Tunnels in New York City. Both analyses omitted facts that indicate that Gateway’s Hudson Tunnel and Portal North Bridge projects are not as cost-effective or necessary as he made them appear. Later that day, the Gateway Corporation became a “Commission” with questionable fundraising authority. Despite that change, a former offer by New Jersey Transit (NJT) to impose a surcharge on future rail trips to and from New York has been scuttled, raising the question of how New Jersey can replace the money that would have come from the surcharge.
FINANCIAL EDGE, AUGUST 2019: With a 100-plus-degree F temperature and/or heat index blanket covering half the U.S., the summer doldrums are fully upon us. The time of year lines up with the anniversary of one of the most horrible rail tragedies in recent memory—the Lac-Mégantic derailment in July 2013. The 47 deaths that occurred as a result of that accident are unrecoverable losses for families and communities. Their memory should always serve as a reminder of the importance of safety and the need for best practices throughout the railroad industry.
WATCHING WASHINGTON, AUGUST 2019: The Surface Transportation Board (STB) and other independent regulatory agencies operate as a fourth branch of government, exercising quasi-judicial and quasi-legislative powers.
For a sleep inducer, consider working with the Uniform Rail Costing System (URCS), long a general costing system indispensable for determining maximum reasonable rail rates. Worse, its second side-effect is indigestion, as this 30-year-old accounting relic is much like a classic car lacking modern GPS and satellite radio. Practitioners too often become frustrated with its built-in averages from a time when railroads, rather than shippers, owned most of the freight car fleet and line hauls were shorter as the modern merger movement had not yet run its course.
Amtrak’s Hoosier State train, Nos. 850 and 851, died on Sunday, June 30 at Indianapolis, after a long illness. She was 38. The immediate cause of death was removal from life support by Indiana state officials. During her lifetime, she ran between Chicago and Indianapolis, but her later life was difficult and plagued by ever-increasing weakness, except during one brief period in 2015-17. She is survived by Amtrak’s Cardinal, which traverses the same route on its journey between Chicago and New York, but only three days per week.
The news on July 26, 2019 of the derailment at speed of Amtrak 393 at University Park, Ill., due to a careless truck driver created a PTSD-like reaction for me. Instantaneously, I thought back to the derailment of Amtrak 59 at Bourbonnais, Ill., the night of March 15, 1999. Despite denials, this wreck was due to the overt negligence of a driver attempting to beat fully functional grade crossing warning devices with a truck loaded with 22 tons of steel pipe. Regrettably, the driver’s reckless behavior resulted in 11 people killed; much equipment was destroyed in the ensuing fire.
CEO Richard Anderson’s announced strategy to reposition Amtrak’s train operations is a puzzle. It appears incapable of working. He proposes to end most long-distance services in favor of higher frequency corridor services connecting nearby urban areas. Yet, much better opportunities exist that are easier to exploit and promise much higher returns on invested capital.
Editor’s Note: RealClear Markets published this editorial by AAR President and CEO Ian Jefferies on Aug. 1. With mixed economic signals coming from Washington D.C., Jefferies argues that federal lawmakers must do their part to provide certainty.