STB Won’t Implement Arbitration Program

A proposed arbitration program by the U.S. Surface Transportation Board to resolve small rate disputes will not be implemented.

The program, which was announced in a rule issued by regulators on Dec. 19, required all seven Class 1 railroads to agree to join the program.

However, four of those carriers asked the Board to stay implementation of the program, saying the Feb. 3 deadline to join or refuse to join the program didn’t give them enough time to review the program’s parameters before having to make a decision.

The STB denied that request on Jan. 24 and the carriers, CSX, Norfolk Southern, Union Pacific and the U.S. operating companies of Canadian National, on Feb. 3 submitted a new request for a stay.

That request was denied by the STB on Feb. 14. In response, three carriers agreed to participate in the program, but four others did not.

Because of the lack of unanimity among the Class 1 carriers, the arbitration program will not be implemented.

CSX told the Board in a filing that although it favored a voluntary arbitration program to settle small rate disputes, it was “concerned about certain aspects of the Arbitration Rule as proposed by the Board.”

Class 1 Railroads Eye Ground-Based Conductor Position Pilot Programs, Giving Workers Sick Days

Union Pacific is reportedly amenable to granting sick days to its operating workers. At the same time the Class 1 carrier is talking with its unions about launching a pilot program to move conductors to ground-based positions, something that Class 1 railroads sought but failed to achieve during the most recent negotiations to amend the labor contract with 12 railroad unions.

UP contends that moving conductors to trucks would give them more predictable work schedules and make the job more efficient.

Conductors would be assigned to a fixed base and thus would be able to return home every night.

Trains magazine reported the developments in a pair of stories posted on its website.

The ground-based positions – which UP is calling “expediters” – were discussed by a UP vice president during a hearing held this week by the Federal Railroad Administration on a proposed two crew member rule.

UP’s argument to the FRA is that positive train control has significantly reduced the conductor’s tasks and a ground-based worker would be better able to handle troubleshooting and fixing mechanical problems encountered while a train is out on the road.

Busy mainlines would have multiple “expediters” on duty at all times.

The Trains story also reported that Norfolk Southern is talking with its unions about a similar pilot program.

During the hearing, Tom Schnautz, NS vice president of advanced train control, said the carrier wants to use ground-based conductors in local service.

Schnautz said a conductor would arrive at a customer facility to line switches and perform other tasks before a train arrives.

The Trains story about the FRA hearing can be read at https://www.trains.com/trn/news-reviews/news-wire/union-pacific-details-plans-to-test-feasibility-of-ground-based-conductors/

As for paid sick leave, UP CEO Lance Fritz said during a U.S. Surface Transportation Board hearing on UP service issues that he would favor sick leave for union workers and providing certainty regarding scheduled days off.

“We definitely want to address sick leave and certainty in time off in terms of scheduling … There’s a host of ways we can get there,” Fritz said. “There’s economics that are available to make that happen. And we are committed to making that happen this coming year.”

UP is conducting a pilot program in Kansas that makes work schedules for locomotive engineers more predictable.

Richard Edelman, a lawyer representing several rail unions including the SMART-Transportation Division, said during the hearing that union workers are angry about the way they have been treated in recent years.

“I don’t think you can even calculate the fury over the lack of personal time, the lack of sick time, the furloughs of their coworkers,” he said.

Edelman said some railroad workers are likely to leave their jobs once they receive back pay and a one-time bonus dictated by a new national contract.

The Trains story can be read at https://www.trains.com/trn/news-reviews/news-wire/union-pacific-wants-to-provide-rail-labor-with-paid-sick-days-more-predictable-schedules/

4 Class 1s Must Continue Reporting Service Data to STB

Four Class I railroads will continue to submit data about performance and employment to the U.S. Surface Transportation Board for another six months.

The regulatory authority last May ordered BNSF, CSX, Norfolk Southern and Union Pacific to submit service reports in the wake of freight service deficiencies that were the subject of STB hearings.

The railroads have since been giving updates pertaining to their performance and labor force targets, and any service recovery plan modifications.

The reports the railroads must submit are in addition to similar data they had already been providing to regulators.

The additional reporting called for the four carriers to further explain efforts to correct service deficiencies.

In its most recent order, the STB said the early reports “revealed extensive service delays and reliability problems.”

That included one carrier that failed more than half the time on average to deliver railcars in manifest service within 24 hours of the original estimated time of arrival.

Another carrier reported failing more than one-third of the time on average to deliver grain and ethanol unit trains within 24 hours of the original ETA.

In an order released Oct. 28, the STB said, “The most recent data show that the four carriers are currently meeting some of their six-month targets for service improvement, and many key performance indicators are trending in a positive direction.

“However, the data continue to validate the anecdotal information that continues to be reported to the Board regarding significant service issues. Key performance indicators, such as velocity, terminal dwell, first-mile/last-mile (FMLM) service (i.e., industry spot and pull), operating inventory, and trip plan compliance show that railroad operations remain challenged generally, and particularly when compared to pre-pandemic 2019 levels.”

The Oct. 28 STB order, though, said the four carriers will not be required to continue to participate in individual biweekly conference calls with the Board’s Office of Public Assistance, Governmental Affairs and Compliance.”

Foote Confident Pan Am Sale Will be OKed

CSX CEO James Foote expressed optimism this week that his company’s plan to acquire New England regional Pan Am Railways will be successful.

The U.S. Surface Transportation Board has twice complicated spurned CSX’s efforts to buy Pan Am, most recently saying its merger application was incomplete.

“We’re just in the early stages of seeking authority to complete the transaction from the Surface Transportation Board,” Foote said in addressing the Bernstein Strategic Decisions Conference.

“And I’m confident just because of the positive nature of it. Clearly it improves the overall rail transportation network, especially in the New England region.”

CSX announced last November its plans to acquire Pan Am. The STB in March ruled the transaction was a significant one that would thus receive a more comprehensive regulatory review.

The two carriers had sought to have the merger treated as a minor transaction that would have received less stringent review.

CSX said it is pulling tougher more information to share with the STB, including a full analysis of how the deal will affect railroad competition and rail-truck competition in New England.

A decision by the STB on the merger is not expected until sometime in 2022.

Foote says he doesn’t believe the proposed Canadian National-Kansas City Southern merger will trigger a round of Class I railroad mergers.

“You can make a case that consolidation might be good,” Foote said.

He pointed out that in 1980 there were 61 Class 1 railroads, some of which were not in good financial condition.

“They were a basket case, their service was horrible, there was no capital investment,” Foote said. “And over the years the railroads consolidated into what they are today and the core infrastructure of the rail industry now is significantly better than it was. And, No. 1 and most importantly, the seamless nature and the single line service provided today is much better than it was.”

STB Denies CN Bid to Put KCS in Voting Trust

A request by Canadian National to place Kansas City Southern into a voting trust has been denied for now by the U.S. Surface Transportation Board.

CN, which is seeking to buy KCS for $33.6 billion, sought to create the voting trust while the transaction is reviewed by federal regulators.

The STB denied the request by saying CN has not yet filed its merger application and therefore the record is incomplete.

CN said it plans to re-file the voting trust proposal once it completes sending documents to the STB pertaining to its merger with KCS.

The KCS board of directors has accepted CN’s proposal after earlier accepting a bid from Canadian Pacific to buy KCS for $29 billion.

KCS will pay CP a $700 million breakup fee for backing out of its earlier deal with CP although KCS has also given CP a week to make a counter offer to the CN bid.

However, CP has said it will not engage in a bidding war with CN over control of KCS.

The voting trust arrangement will enable shareholders of KCS to receive cash and shares of the acquiring company while the merger review process plays out.

Class 1 Rail Employment Up Slightly in February

Employment at Class 1 railroads in the United Stated ticked upward slightly in mid February.

The U.S. Surface Transportation Board said the carriers employed 114,068, an increase of 0.53 percent over mid January.

However, the February 2021 figure was down 10.63 percent compared with the same month in 2020.

Four of six employment categories saw gains in February compared with January’s level.

They were maintenance of way and structures, up 1.19 percent to 27,948 workers; transportation (train and engine), up 0.6 percent to 45,794; transportation (other than train and engine), up 0.53 percent to 4,750; and maintenance of equipment and stores, up 0.17 percent to 18,115.

Categories that lost workers on a month-over-month  comparison included executives, officials and staff assistants, down 0.37 percent to 7,266 employees, and professional and administrative, down 0.23 percent to 10,195.

On a year-over year comparison, all categories posted declines.

They were maintenance of equipment and stores, down 18.29 percent; transportation (train and engine), down 10.99 percent; transportation (other than train and engine), down 10.65 percent; maintenance of way and structures, down 7.77 percent; professional and administrative, down 5.75 percent; and executives, officials and staff assistants, down 4.09 percent.

STB OKs Waybill Rule Change

A rule that seek to improve waybill sample data collection has been adopted by the U.S. Surface Transportation Board.

The agency said the rule, which takes effect on Jan. 1, 2021, will result in the creation a more robust data set for decision-making and analyses.

In a news release, STB officials said the agency will increase sampling rates of certain non-intermodal carload shipments and specific separate sampling strata and rates for intermodal shipments.

Board members expect the enhanced data set to provide more comprehensive information to the STB and other users of waybill sample data in a variety of contexts, including exemption decisions, stratification reports, traffic volume and rate studies, board-initiated investigations and certain rate cases.

The final rule also eliminates the paper system for reporting waybill data.

Promulgation of the rule began in November 2019.

House Passes Surface Transportation Bill

The U.S. House this week passed a five year reauthorization of surface transportation programs.

H.R. 2, which was named the Moving Forward Act, authorizes spending of $1.5 trillion on various transportation-related programs, including Amtrak.

The legislation approves $500 billion to reauthorize surface transportation programs and funding for infrastructure projects.

That includes $105 billion for public transportation and $60 billion for commuter rail, Amtrak and other high-performance rail service.

The bill has received mixed reviews from railroad trade associations because of various mandates that railroads generally oppose.

H.R. 2 faces considerable opposition in the Senate, which is expected to adopt its own surface transportation reauthorization bill with differences to be worked out in a conference committee.

The current surface transportation law, known as the FAST Act, will expire on Sept. 30.

Aside from specific transportation programs, H.R. 2 also authorizes $130 billion for schools, $100 billion for rural broadband and $100 billion for affordable housing.

G&W Subsidiary to Acquire Ohi-Rail

The Mahoning Valley Railway has filed noticed with the U.S. Surface Transportation Board that it plans to acquire Ohi-Rail, a short-line carrier based in Minerva.

The noticed, filed on Jan. 17, seeks an exemption from certain regulations as provided by federal law to consummate the purchase of 44.7 miles of Ohi-Rail track in Carroll, Stark, Columbiana, Jefferson, and Harrison counties.

The Mahoning Valley is a subsidiary of Genesee & Wyoming. The STB filing did not disclose the purchase price of the transaction but said G&W and Ohi-Rail have executed an asset purchase agreement to acquire the rail lines.

A map included in the filing shows that the track in question includes the Tuscarawas Industrial Track between Minerva and Bayard, the Tuscarawas Secondary Track between Minerva and Pekin, a route between Minerva and Hopedale, and the Wolf Run Branch between Philips and East Springfield.

MVRY said in the filing that it expected to begin operations on the Ohi-Rail network “upon the closing of the acquisition, which will occur following the date on which this Notice of Exemption is effective.”

The filing noted that if the exemption is granted that the transaction would not be subject to labor protection conditions, and would not require environmental and historic reports.

MVRY said the agreement does not include an interchange commitment and that the projected revenues from taking over Ohi-Rail lines will not exceed the threshold that qualifies MVRY as a Class III carrier.

The MVRY asked the STB to issue a notice allowing the acquisition to become effective 30 days from the filing of the notice of exemption.

Class 1 Railroad Employment Down 1% in November

The U.S. Surface Transportation Board reported this week that Class I railroads in mid November employed 133,225 people, which was down 1 percent from mid-October’s level and down 10.58 percent from November 2018.

All six workforce categories posted month-to-month employment decreases.
Executives, officials and staff assistants were down 0.31 percent to 7,629 employees; professional and administrative was down 0.83 percent to 10,910; maintenance of way and structures was down 0.28 percent to 31,242; maintenance of equipment and stores was down 1.72 percent to 23,370; transportation (other than train and engine) was down 0.35 percent to 5,438; and transportation (train and engine) was down 1.31 percent to 54,636.
On a year-over-year basis, all categories also logged decreases.

Executives, officials and staff assistants was down 7.97 percent; professional and administrative was down 7.75 percent; maintenance of way and structures was down 3.54 percent; maintenance of equipment and stores was down 15 percent; transportation (other than train and engine) was down 4.6 percent; and transportation (train and engine) was down 13.66 percent.

In November BNSF employed 41,551 people; Union Pacific had 37,013 workers, Norfolk Southern had 22,818; CSX had 18,783; Canadian National/Grand Trunk had 7,123; Kansas City Southern had 3,024; and  Canadian Pacific/Soo Line had 2,913.