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railyard, train yard; trainsWASHINGTON – The nation’s freight rail industry this week will outline for the Surface Transportation Board (STB) the various negative impacts of a proposal to force non-market based requirements on railroads at the request of the National Industrial Transportation League (NITL). The proposal calls for the STB to override market forces by forcing Class I railroads to turn over to their competitors substantial portions of rail traffic which moves across tracks they own and have spent billions to build, maintain, and upgrade so taxpayer’s don’t have to.

Specifically, the NITL proposal would give a small group of shippers the right to demand that in some cases where one railroad serves their facility, the serving railroad must transfer or “switch” loaded rail cars to competitors. In addition to increased operating and infrastructure costs, other impacts of the proposal would include things such as: an increase in the number of locomotives and rail cars needed; increased dwell and delay time; increased fuel use; reduced network efficiency; and increased risk for employee injury due to additional handling and switching requirements.

“This proposal is a solution looking for a problem,” Association of American Railroads (AAR) President and CEO Edward R. Hamberger stated. “Railroads already voluntarily switch traffic when it makes economic sense for all parties.”

Hamberger also noted that other existing STB regulations provide various options if a shipper believes its rates are unreasonable. In fact, of the 46 shipper complaints filed with the STB since 1996, 37 of the complaints were decided in favor of shippers or settled through commercial negotiations.

“Freight railroads are among those American industries with very high fixed costs, as they operate on infrastructure they own, maintain and continuously upgrade,” Hamberger said. “Since 1980 alone, average inflation adjusted rail rates are down 42 percent, while railroads have spent more than $550 billion to build, maintain and upgrade track, signals, bridges, tunnels, and equipment. But this proposal would undermine the benefits all rail customers have seen thanks to these investments, and would all but ensure a return to the days when most rail customers were unhappy.”

Under the NITL proposal, the freight rail industry could lose about 13 percent of its annual net income – roughly equivalent to what the industry spent in 2010 on capacity expansion projects designed to benefit all shippers. If the proposal were adopted, it would ensure that railroads could not recover all of their fixed costs, which would lead to postponed maintenance, deferred capital upgrades and expansion programs, service quality declines, and negative impacts to all shippers.

“Railroads work with their customers and find market-based solutions that serve American businesses all across the country, and help ensure freight rail lives up to its mission to power our economy,” Hamberger said. “This proposal ultimately would serve the interest of a small group of shippers, but have far-reaching and long-term negative impacts on all rail customers. As American businesses and our economy are coming back from the recession, we just can’t afford to get this wrong.”

railyard1-150pxWASHINGTON – The nation’s freight railroads this year project they will spend approximately $26 billion to build, maintain, and upgrade their nationwide rail network, according to an estimate released March 12 by the Association of American Railroads. Railroads also expect to hire more than 12,000 people in 2014, for jobs throughout all areas of the industry and located all across the U.S.

“This year’s projected record investments continue a decades-long trend of private railroad dollars that sustain America’s freight rail network, so taxpayer’s don’t have to,” said AAR President and CEO Edward R. Hamberger. “The result is a rail network that is the envy of the world, serving both freight and passenger railroads, and this massive private financial commitment is a demonstration of the industry’s resolve to never stop improving.”

Hamberger noted that freight railroads have invested approximately $550 billion of their own money into the rail network since 1980, including $115 billion in the past five years alone. From upgrades to bridges and tunnels to new tracks and facilities, freight rail infrastructure is constantly maintained and upgraded to meet the demands of an evolving economy. Thanks to a strong rail network infrastructure, railroads in recent years have been able to successfully meet increased demand for intermodal shipping, a booming domestic energy market and more. The industry’s investments also include implementing the latest safety technology across the rail network.

“The rail industry is committed to safety and we’re investing record amounts to implement safety enhancing technology across the network,” Hamberger said. “Railroads are working to deliver a safe, modern and efficient rail network that can reliably serve our customers and communities. And at the same time, this spending creates jobs for more American workers.”

The freight railroads estimate they will hire more than 12,000 employees in 2014, up from a projected 11,000 new hires in 2013. Company job listings can be accessed via www.aar.org/jobs.

“Freight rail is a great industry for a potentially life-long career with one of our great railroad companies,” Hamberger said. “America’s railroads also have a long history of hiring veterans, and railroad careers rank among the best for military veterans and their families.”

Tomorrow, advocates and representatives from the freight rail community will participate in Rail Day 2014, meeting with policymakers and elected representatives on Capitol Hill to stress the importance of America’s railroads to our economy. “Today’s news of record investments and steady hiring demonstrates how America’s economy rides the rails,” Hamberger said. “That’s a message we’re eager to share.”

railyard1-150pxAmerica’s railroads today are handling more business more efficiently and safely and for better profits than ever before in their nearly 200 years of existence. They remain a growth industry.

The record $15 billion they invested in 2013 will no longer be a record in 2014, considering that two of the Class I’s alone will be spending close to $10 billion.

Read the complete story at Railway Age.

railyard1-150pxWASHINGTON – The Association of American Railroads Nov. 21 issued the following statement from President and CEO Edward R. Hamberger in response to the Senate Commerce Committee staff report Update on the Financial State of the Class I Freight Rail Industry.

“Unfortunately the Committee’s updated report ignores that the rail industry’s return to financial health has resulted in record private investments – not taxpayer dollars – being plowed back into the nation’s rail network that serves the needs of diverse freight shippers and passengers alike. At a time when there is pressure to reduce government spending on just about everything – including transportation infrastructure – the country’s privately owned freight railroads have, in the last three years alone, reinvested nearly $70 billion back into the rail system, including $25.5 billion in 2012. This includes billions of dollars in a new, Congressionally-mandated, state-of-the-art positive train control system that the Rail Safety Improvement Act of 2008 requires railroads to install by the end of 2015.

There is nothing wrong with success. In fact, the rail industry’s success is predicated on the fact that the balanced regulatory system in place today is working. This success should be lauded, not undermined. Freight railroads provide safe, reliable and efficient service to American businesses large and small, and help keep them competitive in domestic and world markets, all the while keeping average rates lower than where they were 30 years ago when the Staggers Act was passed.

The rail industry didn’t stand on the sidelines during the recession, we continued investing and we continued hiring. In fact, our industry has seen almost a 6 percent increase in employment the last three years and as many as one in five of all new hires are veterans. That is a track record we are proud of.

Much is riding on freight rail to continue helping deliver our recovering economy and all efforts should be focused on letting the current system work.”

Earlier in the day, Commerce, Science and Transportation Committee Chairman John D. Rockefeller IV issued an update to the 2010 Committee Majority Staff Report that examined the financial state of the rail industry, concluding that the financial performance of dominant Class I freight rail companies is at its strongest since the passage of the Staggers Act of 1980.

“The Staggers Act was designed to give a boost to the rail industry during a time when railroads were struggling – but today the railroads are enjoying tremendous financial success,” Rockefeller said. “At this point the evidence is clear that the dominant freight railroads are financially strong.”

“It is not any secret that I think that – more than three decades after the Staggers Act – the Surface Transportation Board (STB) needs to take a close hard look at whether large freight rail companies now enjoy an unfair competitive advantage,” Rockefeller added.

oil-train-railWASHINGTON – The Association of American Railroads Nov. 14 urged the U.S. Department of Transportation to press for improved federal tank car regulations by requiring all tank cars used to transport flammable liquids to be retrofitted or phased out, and new cars built to more stringent standards. AAR said in comments filed with the Pipeline and Hazardous Materials Safety Administration (PHMSA) that the safety upgrades it is recommending will substantially decrease the likelihood of a release if a tank car is involved in an accident.
The AAR estimates that roughly 92,000 tank cars are currently moving flammable liquids, with approximately 78,000 of those requiring retrofit or phase out based on its proposal. Another 14,000 newer tank cars that today comply with the latest industry safety standards will also require certain retrofit modifications under AAR’s proposal. The tank cars affected by the AAR’s recommended safety enhancements include those used to transport crude oil and ethanol.
“We believe it’s time for a thorough review of the U.S. tank car fleet that moves flammable liquids, particularly considering the recent increase in crude oil traffic,” said AAR President and CEO Edward R. Hamberger. “Our goal is to ensure that what we move, and how we move it, is done as safely as possible.”
The AAR is recommending that PHMSA consider the following when determining what federal safety standard improvements should be required for tank cars moving flammable liquids:

  • increase federal tank car design standards for new cars to include an outer steel jacket around the tank car and thermal protection, full-height head shields and high-flow capacity pressure relief valves;
  • require additional safety upgrades to those tank cars built since October 2011, when the rail industry instituted its latest design standards that today exceed federal requirements, including installation of high-flow-capacity relief valves and design modifications to prevent bottom outlets from opening in the case of an accident;
  • aggressively phase out older-model tank cars used to move flammable liquids that are not retrofitted to meet new federal requirements, and
  • eliminate the current option for rail shippers to classify a flammable liquid with a flash point between 100 and 140 degrees Fahrenheit as a combustible liquid.

“Freight railroads understand the rail supply marketplace is seeing an increased demand for tank cars needed to move more flammable liquids, such as crude and ethanol,” Hamberger said. “We believe our suggested approach to improving tank car safety allows railroads to continue to serve their customers, while taking rail tank car safety to the next level. We look forward to working with PHMSA, rail customers and the rail supply community as this rulemaking process moves ahead.”
To learn more about how railroads ensure that approximately 99.998 percent of all hazardous materials moving by rail reach their destination without a release caused by an accident, visit www.aar.org/safety.

The oil industry and U.S railroads are resisting the Obama administration’s attempt to boost safety standards for the type of rail car involved in a fiery, fatal explosion in Canada, citing costs and technical challenges.

Industry groups say it is impractical to retrofit tens of thousands of existing tank cars used to haul oil, even as they have adopted voluntary standards to ensure that cars ordered after October 2011 meet tough requirements recommended by federal transportation experts following a deadly ethanol train derailment and explosion in Illinois two years earlier.

Read the complete story at madison.com.

WASHINGTON –The Association of American Railroads (AAR) strongly objects to the Railroad Antitrust Enforcement Act, introduced today by Sen. Amy Klobuchar (D-Minn.) and Sen. David Vitter (R-La.), saying that while the bill claims to repeal freight railroads’ limited antitrust exemptions, it actually singles out railroads for policies that could undermine the industry’s ability to build, maintain and continuously upgrade the nation’s rail infrastructure without taxpayer assistance.

“This bill proposes sweeping changes that would negatively impact this country’s freight rail industry,” said AAR President and CEO Edward R. Hamberger. “Sections of this bill are designed to override existing regulatory decisions and could potentially roll back government-approved transactions in railroad history. That retroactive application would inevitably create conflicts and uncertainty for railroads, railroad customers and courts. The resulting regulatory uncertainty could undermine the private freight railroads’ ability to sustain necessary and critical private investments in America’s rail infrastructure.

“There’s one thing in Washington that everyone agrees on – and that is our nation’s infrastructure needs attention and serious investment. Freight railroads have invested more than $526 billion in private capital over the past three decades – half a trillion dollars – into America’s rail infrastructure so taxpayers didn’t have to. A regulatory environment that encourages private investment should remain a priority.”

Contrary to what bill proponents assert, Hamberger said that railroads are subject to most antitrust laws. In areas where they do have limited exemptions, railroads are regulated by the Surface Transportation Board (STB). “Bear in mind, there is no gap in government oversight of railroad activities,” he added.

“The elimination of billions of dollars from railroads’ revenue stream by Congress intervening on behalf of multi-billion dollar corporations trying to get lower shipping rates would certainly eliminate thousands of railroad jobs,” SMART Transportation Division President Mike Futhey said.

Added SMART Transportation Division National Legislative Director James Stem: “We did not like the concept of rail mergers that we knew were going to eliminate railroad jobs and customer service, when the mergers were occurring. This issue today is not about customer service, only about the price of the service. We strongly support growing our rail industry.”

To view an AAR fact sheet urging senators to refrain from co-sponsoring the legislation, click here.

A mining and natural resources company, Oxbow Carbon and Minerals, has filed an antitrust suit against BNSF and Union Pacific, alleging the railroads have illegally fixed freight rates, in violation of the Sherman Antitrust Act, “to gouge customers.” Oxbow mines and ships coal and petroleum coke.

The lawsuit, before the federal District Court for the District of Columbia, was filed the same day the Association of American Railroads and the American Short Line and Regional Railroad Association urged members of Congress to oppose legislation introduced in the Senate earlier this year by Sen. Herb Kohl (D-Wis.) to bring railroads more fully under the nation’s antitrust laws. That bill is S. 49, the Railroad Antitrust Enforcement Act of 2011.

There is no direct connection between the Oxbow lawsuit and S. 49, although they both deal with antitrust law. The lawsuit alleges violations of the Sherman Antitrust Act of 1890.

Oxbow, controlled by industrialist William Koch, is asking the federal court to order BNSF and UP “to stop their illegal practices that restrain competition,” and is seeking unspecified damages that would be tripled under antitrust law if the lawsuit is successful.

The lawsuit also alleges BNSF and UP “have colluded” with CSX and Norfolk Southern, with the four railroads “[conspiring] since 2003 to use the deceptive concept of a ‘fuel surcharge’ to raise prices charged to their customers. The so-called ‘fuel surcharge’ has little to do with the actual cost of fuel and is simply a mechanism to increase rail shipping prices,” alleges Oxbow.

An attorney for one of the law firms representing Oxbow said, “This lawsuit will finally force Union Pacific and BNSF to account, in federal court, for their long history of breaking American antitrust laws. The complaint filed today describes how the railroads have used monopolization and price-fixing illegally to drive up the price of shipping coal and many other products, and those higher prices affect every business and consumer in the country.

“Only the power of the federal court can compel the freight railroad industry to fundamentally reform its business practices and stop abusing customers, consumers and the national economy,” said the attorney representing Oxbow.

Additionally, the Oxbow complaint alleges that since passage of the Staggers Rail Act of 1980, which partially deregulated railroads, mergers have resulted in only four major rail carriers – BNSF, CSX, NS and UP — and that the four “control shipping in the western states and agreed not to compete with each other or encroach on each other’s service territories by offering lower prices to potential customers.”

A BNSF spokesperson told Bloomberg news, “BNSF has not colluded or conspired in violation of any law.” UP said in a prepared statement that Oxbow had long warned of litigation unless the railroad came through with “exceptional commerical concessions.”

In its letter to congressional lawmakers June 7, the Association of American Railroads and the American Short Line and Regional Railroad Association said S. 49 “purports to repeal the railroads’ antitrust exemptions in order to treat the railroads like all other industries. However, the bill goes much further than repealing the limited antitrust exemptions the railroads currently have. It would subject railroads to discriminatory provisions that do not apply to other regulated industries.

“Railroads are already generally subject to the same antitrust laws as other businesses,” said the railroad associations in regard to S. 49. “The limited exemptions that the railroads do have exist only where the Surface Transportation Board regulates the same matter or activity. There is no gap in government regulatory oversight.

“Going beyond the antitrust laws, the bill limits the application to the railroads of the judicial doctrine which allows courts to defer to the primary jurisdiction of an administrative agency on matters that are within the agency’s areas of expertise and oversight,” the railroad associations told lawmakers.

“This doctrine is common for all regulated industries and for all legal matters,” said the railroad associations. “However, [S. 49] singles out only the railroads for hostile treatment in a manner which has nothing to do with an antitrust exemption.”

WASHINGTON — The Obama administration suggests scaling back by 10,000 miles a federal mandate that positive train control (PTC) be installed on some 140,000 miles of freight and passenger track no later than Dec. 31, 2015.

The 10,000 miles represents track over which freight railroads say neither passengers nor dangerous hazmat will be transported in 2015.

PTC is a crash-avoidance safety overlay system long supported by the National Transportation Safety Board and rail labor organizations. Installation of PTC was required by the Rail Safety Improvement Act of 2008, with the FRA subsequently setting the 140,000-mile mandate, which was said to encompass all track over which passengers and the most dangerous hazmat cargo travel.

Bloomberg business news writer Angela Greiling Keane reports that the proposed 10,000-mile scale-back of PTC is part of a White House initiative to repeal or modify regulations at 30 federal agencies said to pose a significant compliance costs to American business.

The Association of American Railroads had previously filed a federal lawsuit seeking the 10,000-mile scale back of the PTC mandate; and rail CEOs earlier this year visited the White House to plead for administration support.

Railroads contend that the 140,000-mile FRA mandate for PTC installation is based on outdated hazmat traffic data, and that railroads will not be transporting those hazmat cargos over the 10,000 miles sought to be removed from the mandate. The Association of American Railroads says the removal of those 10,000 miles from the mandate will save the industry some $500 million in installation costs.

There is currently no provision to liberalize the timetable for installation of PTC over the remaining 130,000 miles of track.

A safety warning has been issued by the Association of American Railroads after a razor blade was found “strategically placed in the eye of the airbrake release rod” on a hopper car set out at an industrial plant in Baton Rouge, La.

Although the razor blade was found and removed without injury, the AAR is concerned that vandals may have sabotaged other freight or passenger cars with the intent of causing severe injury to workers who come in contact with rail equipment.

“This type of vandalism may have been perpetrated on multiple railcars that can arrive at numerous facilities across the country,” the AAR warned.

“Employees should be advised to inspect not only air brake release rods for such traps, but also safety appliances, coupler operating levers, angle cocks and any other surfaces employees may contact,” the AAR said.

Railroads have been asked to report such incidents to AAR so that the entire industry may be alerted to these acts and assist railroad police and federal law enforcement in searching for the criminal or criminals.

Train and engine workers should remain alert to this potential danger and report to carriers if they encounter a similar instance of vandalism intended to cause bodily harm.