UTU, BLET oppose NS Mich. lease deal

October 18, 2010

A Norfolk Southern sought lease of trackage to a newly created short line railroad in Michigan is being opposed by the UTU and the Brotherhood of Locomotive Engineers and Trainmen, which represent affected train and engine workers.

The U.S. Surface Transportation Board (STB) is being asked by the UTU and the BLET to revoke an exemption from regulatory review previously provided a proposed transaction of NS and Adrian & Blissfield Rail Road, a holding company intending to create a new shortline to lease and operate almost 45 miles of NS track near Lansing.

The new short line, to be called Jackson & Lansing, is expected — as is the case with virtually all upstart shortlines — to hire a new workforce that will be paid lower wages and benefits than NS now pays the five trainmen, three engineers and three other employees now assigned to that trackage by NS.

The UTU and the BLET are asking the STB to revoke a previously granted STB exemption that would permit the transaction to move to completion without regulatory scrutiny. Such exemptions are permitted if the STB is satisfied that neither competition, continued rail service, safety nor other so-called public interest considerations will be jeopardized as a result of the transaction.

In fact, STB Vice Chairman Frank Mulvey filed a dissent in the previous 2-1 decision granting the exemption, saying that the outward written commitments imposed by the parties require more information, “particularly when they contain outright bans on interchange with third party carriers or, as here, economic incentives that can only be evaluated with the provision of additional information.”

Specially, the UTU and the BLET ask the STB to reconsider its granting of the exemption for the following reasons:

  • Competition and reasonable rates: The transaction, as proposed, would exclude third party carriers (other than NS) from operating over the line, and limit interchange to and from other carriers. Also, the transaction, as proposed, appears to limit competition in order that Jackson & Lansing be able to increase freight rates to fund upgrades to the leased track and facilities. This would be in violation of congressionally imposed national rail transportation policy that supports rail-to-rail competition and fair and reasonable freight rates.
  • Safety: The so-far known facts of the transaction suggest it is highly unlikely either the holding company or its shortline, Jackson & Lansing, currently have sufficient funds and cash flow to upgrade the leased track and facilities to provide safe and reasonably timely operations. As expected carloadings will contain industrial waste, track and rail operating safety must be of significant concern.
  • Fair wages and working conditions: In the current economy — especially in Michigan, where unemployment is twice the national average — the affected employees and their families, and the State of Michigan, will suffer significant economic harm. By granting an exemption from regulatory scrutiny, the STB is permitting the transaction to move forward without imposing labor protection.

This also would violate national rail transportation policy, as it requires “fair wages and suitable working conditions.” The STB is obligated to consider (which can only be done by revoking the exemption and investigating the transaction) whether the new entity will impose substandard wages and working conditions, thereby significantly circumventing the terms and conditions of current collective bargaining agreements under which the affected employees are now covered.

Click here to read the joint UTU/BLET filing.