New York State will receive $18.5 million to relieve rail congestion in and around Syracuse, N.Y., an Amtrak station stop on right-of-way owned by CSX Corp.

The federal Department of Transportation will advance the money to its New York State counterpart to oversee reconfiguration of tracks and an upgrade of signal systems, to begin in 2015. New York State will contribute $4.6 million of its own funds to the project.

Work will include upgrading and some expansion of train sidings to alleviate conflicts between Amtrak Empire Service trains and CSX operations, addressing needs of Syracuse Station and a nearby CSX freight yard. The new layout also aims to increase speeds faster than the current 30 mph limit, according to local media.

Syracuse Station hosts four Amtrak trains per day in each direction, including the long-distance train Lake Shore Limited.

U.S. freight rail traffic continued offering mixed results for December as evidenced by data for the week ending Dec. 21, 2013, the Association of American Railroads (AAR) reported Thursday.

U.S. freight carload traffic for the latest week slipped 0.3%, measured against the comparable week in 2012, AAR said. U.S. intermodal, by contrast, notched another week of gains, up 6.4% compared with the same week of a year ago. Total U.S. weekly traffic gained ground, up 2.8%.

Five of the 10 carload commodity groups AAR tracks on a weekly basis posted increases compared with the same week in 2012, including petroleum and petroleum products, up 12.7%, and grain, up 5.0% Declining commodities included metallic ores and metals, down 6.5%, and coal, down 2.9%.

Canadian freight carload traffic for the week ending Dec. 21 fell 7.0%, but Canadian intermodal advanced 2.5% compared with the same week in 2012. Mexican freight carload traffic for the week moved up 4.2%, while Mexican intermodal volume also gained, up 3.6%.

Combined North American freight carload volume for the 51 weeks of 2013 on 13 reporting U.S., Canadian, and Mexican railroads was up a modest 0.1% measured against the same period in 2012. Combined North American intermodal volume tallied a 4.3% gain.

Pro-streetcar supporters served coffee and breakfast snacks to workers resuming construction Thursday, Dec. 26, 2013, on Cincinnati's controversial streetcar line, now proceeding once more following a reaffirmation of the project by the City Council.

Observers of the Queen City said the show of support was the coda to a six-week effort among pro-rail forces that showed impressive coordination and effectiveness, touching base with key players ranging from local citizenry to the Federal Transit Administration.

"It was so well organized, well executed and well populated," Gene Beaupre, a Xavier University professor, told local media. "I've never seen (a movement) that effective in terms of every aspect."

A crew from Delta Railroad Thursday unloaded sections of rail in Cincinnati's Over-the-Rhine neighborhood as work resumed on the 3.6-mile, $133 million project. Work was halted Dec. 4 per the wishes of newly elected Mayor John Cranley, who had intended to scuttle the project.

Unnamed private sources organized by The Carol Ann and Ralph V. Haile, Jr./U.S. Bank Foundation (Haile Foundation) will cover up to $900,000 of the estimated $3.5 million annual operating cost for the first 10 years of streetcar operation. The line is slated to open in September 2016.

The five-car, self-propelled work train, known as VakTrak, is equipped with a high-powered vacuum cleaning system designed to remove trash and steel dust from type-two (concrete-ballasted) subway track.

NYCT received the first of its custom built VakTraks, VT #1, in 1997 and added a second to the system in 2000, VT #2. The trains were purchased for close to $15 million each and automated work previously done by hand. Both trains are 8-feet, 9-inches wide, the same as the numbered lines (A Division), which have the narrower cars (in terms of loading gauge) on the system, so the trains can work and travel throughout NYCT’s entire system.

Spare parts for NYCT’s two VakTraks have long been exhausted and there are no more replacement parts to be had. However, the Division of Car Equipment has a long history of creating specialized equipment to meet the needs of New York’s subway system. “We are replacing the old components with new, more reliable ones,” said Joseph Ragusa, general superintendent, Division of Car Equipment-Work Equipment. “These trains were not what we would call maintenance-friendly equipment. We are taking this opportunity to make changes and improvements and we will take what we have learned as we design the next generation of vacuum trains.”

VT #2 is currently going through several system upgrades, and NYCT says several shortcomings in the train’s original design are being addressed. These changes will increase the train’s reliability and improve performance. One of the items being improved is the air brake compressor, which is being changed over from belt to hydraulic drive to keep the RPMs constant at 1,800, which provides for more dependable build-up of air. It will also solve the problem of broken belts, which had to be swapped out often.

Another area in need of improvement was the actual cleaning performance. The vacuum operation was being adversely affected by damage to the upper suction hood assembly, which is a sheet of metal below the roof that connects the ducts to the bins.

“We noticed that with everything else working properly, we weren’t getting the suction we should have been getting,” said Maintenance Supervisor Wendel Charlton. “An examination showed several holes in the upper hood assembly, which compromised the unit’s effectiveness.”

A new upper hood is currently being fabricated of stainless steel, a material far more resistant to corrosion. A similar change to the earlier vacuum train has been successful, and increased use of stainless steel will be specified for the next vacuum trains, particularly for areas within the train affected by the build-up of debris and moisture.

The control cabin is being upgraded with modern equipment, including a new “Slip/Slide Feature.” The exhaust system on the diesel propulsion units is being upgraded to a cleaner system that will employ a catalyst to help lower emissions. The vacuum trains are incredibly complex and one of the goals is to simplify that operation.

The vacuum trains are a major part of NYCT’s efforts to keep the system free of trash. The current work allows NYCT to make upgrades to existing equipment, and even more important, utilize many of the lessons learned to improve the operation of new equipment.

Axion says ECOTRAX® composite rail ties were chosen by the transit system to be used for an annual spot replacement of rotted wooden ties. The purchase order will be issued to support two install projects, with the second phase purchase order to be finalized by the first week of January.

“We continue to demonstrate that ECOTRAX® delivers great value to our customers and the rail industry,” said Cory Burdick, AXION’s ECOTRAX® sales manager. “Rail operators are actively seeking alternatives to address the increasingly expensive maintenance and replacement issues associated with wooden ties and ECOTRAX® provides them with a solution on a global scale. Over the past two years, we have expanded our business worldwide and continue to produce a very consistent-quality product, which is being recognized by both existing and new customers.”

During the Dec. 14, 2013 trip from Jacksonville to Miami, toys were distributed to representatives of the United States Marine Corps, for local Toys for Tots programs.

“We want to thank everyone who made this event possible,” said FEC Chief Executive Officer Jim Hertwig. “It is because of this compassionate giving that many children in the communities we serve welcomed Christmas morning with a gift from Santa.”

In its fourth consecutive year, the FEC Christmas Train has established itself as the premier fundraising event for FEC employees, customers, vendors, and suppliers, this year totaling more than $275,000.

A suicide bomber struck the main railway station in Volgograd Dec. 29, 2013, killing 17 and wounding many more, some critically. The following day, another suicide bomb went off on a trolleybus, killing 15.

Russian officials said the attacks are a grim reminder of terrorist threats the country is facing as it prepares to host February’s Winter Olympics in Sochi.

No one immediately claimed responsibility for the bombings, which came several months after Chechen rebel leader Doku Umarov called for new attacks against civilian targets in Russia, including the Winter Olympics. Officials believe the attacks are related.

Suicide bombings have occurred in Russia for a long time, but many have taken place in the Caucasus, the center of an insurgency seeking an Islamist state in the region. According to news reports, until recently, Volgograd (formerly known as Stalingrad) was not a typical target, but the city has now been struck three times this year. In October, a female suicide bomber blew herself up on a city bus in Volgograd, killing six people and injuring about 30. Officials said attacker came from the province of Dagestan, which has become the center of the Islamist insurgency that has spread across the region after two separatist wars in Chechnya.

The railway station bomber detonated explosives in front of a metal detector just beyond the station’s main entrance when a police sergeant became suspicious and moved to confront the individual, who has not been identified. The officer was killed by the blast, and several other policemen were wounded. The bomb contained about 22 pounds of TNT and was rigged with shrapnel. Security controls prevented a far greater number of casualties at the station, which was packed with people at a time when several trains were delayed.

Lifenews.ru, a Russian news portal that reportedly has close links to security agencies, said the railway station attacker appears to have been a woman whose two successive rebel husbands had been killed by Russian security forces in the Caucasus. Female suicide bombers, many of whom were widows or sisters of rebels, have mounted numerous attacks in Russia. They often have been referred to as “black widows.”

“Russia has been engaged in an enduring and violent struggle with extremists ever since it defeated a separatist movement in Chechnya in the 1990s,” the Washington Post reported. “After the war ended, a growing number of separatists turned radical, evolving into Islamic extremists who have launched sporadic terrorist attacks from Moscow to the country’s hinterlands. They have also carried out a low-grade battle with authorities that is centered in the southern region of Dagestan, inflicting casualties among Russian interior forces that are more numerous than the U.S. military suffers in Afghanistan.”

Volgograd, which borders the Caucasus, is 550 miles south of Moscow and about 400 miles northeast of Sochi, a Black Sea resort flanked by the North Caucasus Mountains.

The facility would be located at 100 Meadow Road in Hyde Park, Mass., a 200,000-square-foot site adjacent to the railroad, and the site of a former Stop & Shop supply facility, according to the Boston Globe. “That proposal, plus a plan to move MBCR’s downtown headquarters to Roxbury, was included in documents submitted to MBTA as part of the bidding for the commuter rail contract,” the Globe reported on Dec. 28, 2013. MBCR is competing against Keolis Commuter Services, which operates Virginia Railway Express commuter rail service in the Virginia suburbs of Washington, D.C.

According to the Globe, MBTA, “which has a policy to refrain from commenting on the commuter rail proposals, is expected to make a recommendation for the winning bidder in January to the board of directors of the Massachusetts Department of Transportation.”

“If selected, MBCR will move forward with innovative infrastructure solutions, while ensuring that diversity and inclusion continue to be fostered on the commuter rail,” MBCR spokesman Scott Farmelant said in a statement when asked about the project outlined in the documents, which are not public, but were provided to the Globe.

When asked about elements of MBCR’s proposal, Keolis spokesman Alan Eisner told the Globe that the company planned to adhere to the “code of silence” called for in MBTA’s procurement guidelines, and “accus[ed] MBCR of leaking the information to build momentum for its proposal and sway decision-makers,” the Globe quoted him as saying. “‘This not only represents a blatant disregard for the procurement process, but is yet another attempt by the incumbent to unduly influence the outcome,’ Eisner said. ‘Keolis will continue to honor the integrity of the procurement process by not disclosing any information contained in its proposal to any entity other than the MBTA.’”

“In the past, Keolis has provided only a few general hints of what the company’s proposal contains, including a planned partnership with local community colleges to provide first-in-the-nation, specialized degrees in transportation,” reported the Globe.

According to the Globe, MCBR’s proposal says that the new maintenance facility “would fill a vital role, as trains must currently be taken to a maintenance center in Somerville for inspections and significant repairs, adding time, fuel costs, and labor expenses to routine maintenance. A facility on the south side of the train system would allow staff to more quickly and efficiently make repairs on train lines that radiate south from Boston. This new maintenance facility will provide MBCR with the ability to effectively maintain all locomotives and coaches . . . a critical step toward achieving our goal of enhanced operation efficiency. The $65 million facility, which would be LEED-certified and include a $3 million green power system, would train locomotive engineers, with two locomotive simulators. “This new facility will become MBCR’s cornerstone of organization-wide training and workforce development.”

MBCR, which is currently based at 89 South Street, close to South Station, said it would also move its offices to a location close to Roxbury Community College and Ruggles Station. “Both construction projects would be in partnership with Richard Taylor, Massachusetts’ first black state transportation secretary and one of the partners of Tubman Transit, a real estate development company,” the Globe reported. “Taylor said that though officials have not pinned down an exact site, they would probably erect a building larger than their needs, serving as an anchor tenant and renting the remainder of the space.”

According to a BNSF service advisory, at 02:10 p.m. Central Standard time, unit grain train GRYLRGT926 derailed on Main track 1 and impacted unit oil train UFYNHAY405, causing it to derail on Main track 2 just west of Casselton, N.Dak. (population 2,300), 25 miles west of Fargo.

The grain train that derailed was bound for an export terminal at Rivergate, Ore., just outside Portland. The unit oil train that got tangled up in the wreck was destined for Hayti, Mo., site of a BNSF-served rail-to-barge terminal. The explosions and fire involved about 10 oil tank cars, according to preliminary reports. The cause of the derailment has not been determined. There were no reports of injuries.

According to Sgt. Tara Morris of the Cass County Sheriff's Office, firefighters were forced to let the fire burn out, which was expected to take as long as 12 hours from the time of the accident, because they could not get close enough to the flames. The sheriff's office advised all residents in Casselton and two nearby townships to evacuate because the winds were shifting due to a high-pressure system.

BNSF said it had no estimate when the right-of-way would reopen, and that customers could experience delays of 24 to 48 hours on shipments moving through the corridor.

U.S. public transit users headed for work, school, or other tasks as 2014 began once again were receiving unequal fiscal pre-tax transport treatment from the federal government, something that was commonplace through 2008, though less so in recent years.

Congress adjourned in 2013 without renewing a $245 per month pre-tax set-aside for public transit users, allowing the amount to fall to just over half that amount, $130—all while comparative pre-tax offerings to auto users actually rise in 2014 by $5, to $250.

Observers note Congress is likely to reinstate the public transit pre-tax credit sometime this year, and it does have significant bipartisan support even within a contentious Congress. Its fate depends in part on whether a measure to restore the tax credit is advanced as a separate item or linked with other legislation.

Throughout December, American Public Transportation Association (APTA) President and CEO Michael Melaniphy urged Congress to vote to extend the transit pre-tax benefit, noting, "Commuters who use public transportation and especially those with the longer commutes by rail, bus, or vanpools may see their annual commuting cost increase up to $1,380 a year based on a bias in the tax code that eliminates the parity between public transportation and auto users.

U.S. rail traffic for the week ending Dec. 28, 2013 advanced strongly, the Association of American Railroads reported Thursday, Jan. 2, 2014. U.S. freight carload traffic gained 8.1% when measured against the comparable week in 2012, while U.S. intermodal volume did even better, up 10.6%.

Moreover, nine of the 10 carload commodity groups AAR tracks on a weekly basis posted increases compared with the same week in 2012. Gainers included grain, up 36.8%, petroleum and petroleum products, up 29.8%, and nonmetallic minerals and products, up 14.3%. Commodities marking declines included metallic ores and metals down 7.2%.

AAR said that for the 52 weeks of 2013, U.S. railroads reported cumulative volume of 14,608,403 carloads, down 0.5% from the same point last year, and 12,831,692 intermodal units, up 4.6% from last year. Total combined U.S. traffic for the 52 weeks of 2013 was 27,440,095 carloads and intermodal units, up 1.8% from 2012.

Canadian freight carload volume fell 0.4% during the week ending Dec. 28, 2013, but Canadian intermodal volume rose 8.1% compared with the same week in 2012. For the 52 weeks of 2013, Canadian railroads reported cumulative carload volume of 4,083,936 carloads, up 1.8% from the same point last year, and 2,790,389 intermodal units, up 4.5% for 2012.

Mexican freight carload traffic declined 6% compared with the same week in 2012, and Mexican intermodal volume also fell, down 9.6%. Cumulative volume on Mexican railroads for the 52 weeks of 2013 was 787,941 carloads, up 6.1% over 2012, and 518,804 intermodal units, down 0.4% from 2012.

Combined North American freight carload traffic for the 52 weeks of 2013 on 13 reporting U.S., Canadian, and Mexican railroads rose 0.2% measured against 2012. Combined North American intermodal volume was up 4.4%.

Polly Trottenberg, familiar to the rail industry in her role as Under Secretary for Policy at the U.S. Department of Transportation, will serve as the Transportation Commissioner for New York City's new mayor, Bill de Blasio, who assumed office Jan. 1, 2014.

Trottenberg is expected to advance de Blasio's agenda to expand Bus Rapid Transit in the city's outer boroughs, and address growing bicycle and pedestrian needs. But New York-area advocates, including those enthusiastic about her appointment, see few signs of any support for expanding rail transit, despite Trottenberg's clear support for same in her former role at DOT, as well as at her previous position as executive director of Building America's Future.

At DOT, she played a key role in developing the federal Transportation Investment Generating Economic Recovery (TIGER) program to advance multimodal projects.

An antitrust lawsuit alleging collusion in the setting of fuel surcharges, and what an STB official calls, “the mother of all rate cases” pending before the agency, have potential price tags in the billions of dollars if railroads fail to prevail.

Also, a shipper group is seeking to convert railroad private property into communal trackage; another continues its three-decade quest to roll back Staggers Rail Act freedoms, and subject railroads to greater antitrust exposure; short lines crave to preserve an investment tax credit and streamlining of financial disclosure rules for obtaining federal loans for capital investment; Amtrak funding is a perennial concern; the threat of truck size and weight liberalization is ever present; Congress is expressing concern over the safety of moving crude oil by rail; and a delay in implementation of Positive Train Control (PTC) may be legislated.

Following is summary of challenges railroads face in the nation’s capital and in federal courts in 2014.

Congress

Politicians, whose highest priority is reelection, are stereotypically chary of controversy in election years. Coupling to this a probability that the Senate will come under Republican control in 2015, and we have a prescription for the congressional leadership limiting 2014 lawmaking to matters of urgency.

In the House, Transportation & Infrastructure (T&I) Committee Chairman Bill Shuster (R-Pa.) says he has a bipartisan commitment to produce a comprehensive surface transportation reauthorization bill, which is primarily a highway funding and transit measure (historically split 80% for highways, 20% for transit), but which also includes funding for grade crossing safety, construction of efficient roadways linking ports and intermodal terminals, and rail relocation.

Although reauthorization of Amtrak is on the agenda given expiration this year of the Passenger Rail Improvement and Investment Act (PRIIA) of 2008, a standalone bill is highly unlikely to move amidst interparty bickering over the future of high speed rail and long-distance trains.

While there has been talk of including PRIIA reauthorization as part of a broad surface transportation reauthorization bill, this also is unlikely to occur. Thus, it will be up to the appropriating committees of both chambers to agree on funding to keep Amtrak running—a not uncommon outcome without a new authorization measure. In fact, Amtrak subsidies were appropriated by Congress, without accompanying authorization, from 2002 until PRIIA was passed in 2008.

Expect Amtrak’s current annual appropriation of $1.344 billion ($441 million for passenger train operations and the remainder for debt repayment and capital improvement) to be reduced by some 3% to match previously agreed to federal budget cuts known as sequester. That leaves for 2015 and a new Congress decisions on PRIIA reauthorization affecting Amtrak’s Northeast Corridor renewal and improvement, the fate of long-distance passenger trains, a previous edict that states fund almost 100% of corridor routes fewer than 750 miles, the future of high speed rail, and Amtrak’s desire for a multi-year appropriation.

Returning to surface transportation reauthorization, freight railroads will oppose attempts to liberalize truck size and weight limits. The Highway Trust Fund has been insolvent for several years (more than $40 billion in general tax revenue has been appropriated to bail it out since 2008 and provide needed funds for federal highway maintenance and reconstruction), and there is pressure to increase taxes on motor fuels, notwithstanding Republicans’ antithesis to raising taxes. American Trucking Associations President Bill Graves has voiced support for such a hike, but trucking interests are poised to ask, in exchange, for truck size and weight liberalization.

While short lines and regional railroads seek extension of an infrastructure renewal tax credit (H.R. 721 and S. 411, The Short Line Railroad Rehabilitation and Investment Act), congressional budget hawks seek to abolish what they term special interest tax breaks. Preserving that tax credit will be a steep uphill fight, but shouldn’t be assumed unwinnable—especially given a likelihood Sen. Chuck Schumer (D-N.Y.) gains chairmanship of the Senate Finance Committee if current chairman Max Baucus (D-Mont.) is confirmed as ambassador to China.

Short lines and regional railroads would also like the Railroad Rehabilitation and Improvement Financing (RRIF) Program (with $35 billion available) to provide for a more streamlined application process for smaller railroads seeking loans less than $5 million.

Surface transportation reauthorization is also a vehicle to delay implementation of Positive Train Control (PTC), which, under existing legislation (the Rail Safety Improvement Act of 2008), must be in place by Dec. 31, 2015, on some 60,000 miles of track carrying passengers and freight labeled as a toxic inhalation hazard (TIH). Railroads seek delay because of difficulties in obtaining and installing hardware and software, siting of communication towers, availability of the needed communications spectrum, and necessary system reliability testing.

Whether freight railroads gain federal financial assistance to help defray PTC installation costs—an unfunded Congressional mandate—is dicey, even with an authorization. Congress previously appropriated $50 million to assist commuter railroads with the cost.

Certainly don’t ignore self-proclaimed captive shippers seeking a rollback of Staggers Rail Act pricing freedoms and increased antitrust exposure for railroads. While it is unlikely that such language will be inserted by the Republican-controlled House, Senate Majority Leader Harry Reid (D-Nev.) indicated the Democratic-controlled Senate may draft its own surface transportation reauthorization bill.

That would be the vehicle for captive-shipper advocate and Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) to insert in the Senate version language to rollback some Staggers Rail Act provisions, override previous Surface Transportation Board (STB) decisions unwelcome by some shippers, and instruct the STB to give more weight to shipper complaints.

Language creating greater antitrust exposure for railroads—such as limiting federal courts from deferring to STB jurisdiction complaints that might otherwise qualify as Clayton Act violations—would originate with the Senate Judiciary Committee, where Sen. Amy Klobuchar (D-Minn.), is chairman of the Antitrust Subcommittee and already author of the Railroad Antitrust Enforcement Act (S. 638).

Two influential Republicans—John Thune (R-S.D.), the senior Republican on Rockefeller’s Commerce Committee and chairman of the Republican Senate Conference; and David Vitter (R-La.), a Commerce Committee member, deputy Senate Republican Whip, and co-sponsor of the Klobuchar bill—are supportive of the Rockefeller and Klobuchar initiatives. It is unlikely railroads could derail such language in a Senate bill, meaning it could wind up in a House-Senate conference that would meld both versions into a final bill.

Rockefeller is retiring at the end of 2014, and some shippers—observing how his previous legislative efforts on their behalf languished—question his resolve on the Senate floor, notwithstanding his very vocal stance supporting captive shippers. Several years ago, shippers complained that one of his senior staff members—now departed—had been cozy with railroads, and they are shaking their heads anew after another of his senior policy advisers was hired in December to head the legislative department of the Association of American Railroads.

Additionally to be watched is potential new rail safety language in surface transportation reauthorization. The horrific July accident in Lac-Mégantic, Que., involving crude-oil tankers—followed by other fiery explosions in Alberta, Alabama, and North Dakota, and all involving crude oil shipped by rail from North Dakota’s Bakken shale oil formation—have caught lawmakers’ attention. More than 70% of Bakken formation crude oil is now moving by rail.

To parry Congressional action, the railroad industry urged the Department of Transportation to prescribe stringent new construction and retrofit requirements for flammable-liquid hauling tank cars, and to order an aggressive phase-out of older model tank cars not retrofitted to the new standards. Yet to be determined is why crude oil, which is not an explosive commodity, erupted into fireballs. Investigators are beginning to examine if the crude oil contains impurities from the fracking process or from naturally occurring highly flammable organic compounds.

As for the competing Keystone XL pipeline, which would stretch 1,700 miles south from Alberta’s oil-rich tar sands, environmental concerns are delaying its construction permit. Although oil will begin flowing this year through the already constructed southern leg of the pipeline from Cushing, Okla., to Texas Gulf Coast refineries, railroads are minimally concerned, as rail transportation of crude oil is more flexible in terms of refinery destination, and just 10 unit trains, of 120 tank-cars each, haul as much crude oil as the projected 850,000 barrel daily flow of the northern leg of the Keystone XL pipeline.

A standalone House bill (H.R. 3040, The Safe Freight Act) to require two-person crews nationwide on freight trains has but one Republican co-sponsor, and is unlikely to survive given Federal Railroad Administration safety oversight and existing labor agreements requiring two-person crews.

Surface Transportation Board

Senate confirmation of Democrat Deb Miller to the three-member STB, to succeed now departed Democrat Frank Mulvey, is expected. Chairman Dan Elliott’s first term expired Dec. 31, 2013, but the statute permits Elliott, a Democrat, to remain in place until Dec. 31, 2014, and he is expected to be renominated, confirmed, and retained by President Obama as chairman. The lone Republican is Ann Begeman.

The three face one of the busiest rail regulatory agendas since the years of mega-mergers. Here is a summary of the most significant cases currently before the STB:

• DuPont v. Norfolk Southern is a rate challenge involving 27 commodities (including chlorine) and 130 origin/destination pairs. Because of the complexity, some STB staff term it “the mother of all rate cases.” The potential exposure for Norfolk Southern is in the billions of dollars.

• National Industrial Transportation League, Petition for Rulemaking to Adopt Revised Competitive Switching Rules, seeks a ruling allowing shippers in origin or destination terminal areas served by one Class I railroad, and without effective truck or barge competition, to be granted access to a second railroad having an interchange point within 30 miles. The AAR says granting the petition could cost the industry $7.8 billion in revenue, which is equivalent to some 80% of the railroads’ entire annual capital budget.

• Sunbelt v. Norfolk Southern is a rate challenge on chlorine shipments between MacIntosh, Ala., and New Orleans, where the traffic is interchanged with Union Pacific. The potential exposure for NS is in the tens of millions of dollars.

• Intermountain Power Authority v. Union Pacific is a rate challenge on coal shipped from Provo, Utah, via Utah Railway and interchanged with Union Pacific at Lynndyl, Utah. The potential exposure for UP is in the tens of millions of dollars.

• Total Petrochemicals v. CSX is a rate challenge involving four commodities and 120 origin/destination points. The STB Jan. 2 denied a CSX petition to hold the case in abeyance pending a CSX appeal to a federal appeals court challenging a previous market dominance determination by the STB.

Federal Courts

Four major railroads—BNSF, CSX, Norfolk Southern, and Union Pacific—are defending themselves against charges they conspired to fix, raise, maintain, or stabilize fuel surcharges imposed on some 30,000 shippers, through bilateral contracts, between mid-2003 and 2008. Estimates of the liability exceed $10 billion. The case is unlikely to be resolved in 2014 and currently is back with a U.S. district court after the Court of Appeals for the District of Columbia remanded to the district court its earlier decision granting class action status.

The district court must now determine if the class action includes shippers who should not be included, and whether the class can be modified to avoid including such shippers. Individual shippers could file their own actions, but the cost could be prohibitive. A revised district court decision could be issued in 2014, but the matter is likely to drag on for years in the courts, or pre-trial settlements could occur.

Amtrak has its own legal headache languishing in a Cincinnati federal court, defending against American Financial Group’s (AFG) demand for reimbursement of Amtrak common stock it purchased from the trustee of bankrupt Penn Central.

In 1997, Congress instructed Amtrak to redeem all of its common stock at “fair market value.” Amtrak initially asked a federal court to declare the common shares “null and void,” with AFG asserting that would be an unconstitutional taking of private property. In a seeming replay of Dickens’ Bleak House—the generations-long Jarndyce v. Jarndyce lawsuit—the case has dragged on.

Amtrak subsequently offered AFG three cents per share ($158,000), with AFG demanding some $300 million—based on the original $52 million purchase price indexed to inflation—plus interest and unspecified damages. Binding arbitration was ordered, but on appeal by Amtrak, it was held that an arbitration clause in the original stock purchase by AFG had expired. Litigation resumed, with a federal court dismissing the lawsuit, holding the congressional instruction for redemption did not give shareholders a right to sue Amtrak and that AFG failed to demonstrate Amtrak had an obligation to provide common stockholders a profit by repurchasing the shares.

In March 2013, the Sixth Circuit Court of Appeals upheld the lower court’s dismissal of AFG’s monetary claims, but held that AFG’s ownership created a “protected property interest” entitling AFG to due process. The case was returned to the federal district court for further consideration and, presumably, to establish a value on the common stock.

(Penn Central, BNSF predecessor Burlington Northern, CN predecessor Grand Trunk Western, and CP predecessor Chicago, Milwaukee, St. Paul & Pacific, accepted Amtrak common stock in lieu of tax credits when most of the nation’s passenger rail operations were transferred in 1971 to Amtrak. BNSF, CN, and CP are not parties to the AFG lawsuit.)

Labor talks

Most Class I railroads and their labor unions will exchange Section 6 notices (objectives for a new national freight agreement) Nov. 1, two months ahead of the current five-year agreement coming open for amendment. During the previous round of bargaining, labor gained a 17% wage increase over five years, and a 78-month $200 cap on employee healthcare insurance premium cost-sharing.

There is unconfirmed speculation that the carriers might not bargain as a coalition this round, but seek individual agreements. In previous rounds, at least one rail labor union bargained individually, but with the merger of the United Transportation Union and the Sheet Metal Workers International Association, all rail unions may wish to bargain as a coalition (only the UTU bargained separately during the previous round). Without the ability to reach a pattern separately with a more aggressive union, the carriers may, for the first time in decades, seek individual railroad-by-railroad bargaining.

Healthcare cost sharing likely will be the thorniest of bargaining issues, but carriers continue to seek agreements for one-person crews, which a federal court previously ruled could not be sought in national bargaining (as those agreements initially were negotiated railroad-by-railroad). The Brotherhood of Locomotive Engineers and Trainmen previously made a one-person crew agreement on a single division of BNSF, but it cannot be put in force without the agreement of the UTU.

Timing in negotiations, which will begin in 12 months, is crucial because national freight labor talks often stretch for years. Should the Senate join the House under increasingly anti-labor Republican leadership next year, an impasse leading to Congressional action would be hazardous for rail labor. Should an impasse occur in 2017, there is the threat to labor of a Republican president’s appointment of a Presidential Emergency Board to make settlement recommendations.

This year will not be a road less taken, as railroads have oft traversed a problematic landscape in Congress, before the courts and the STB, and at the labor bargaining table. What lawmakers, regulators, shippers, and rail labor unions must comprehend is that railroads are to the nation’s commerce what human arteries are to the human body. Those arteries best not be clogged.

Canadian Pacific and Genesee & Wyoming, Inc., in a joint announcement Thursday, Jan. 2, 2014, said they had "executed an agreement pursuant to which CP will sell the west end of its Dakota, Minnesota & Eastern (DM&E) line to G&W for continued rail operations."

The two rail companies said the DM&E west end encompasses approximately 660 miles of CP's current operations between Tracy, Minn., and Rapid City, S.D., north of Rapid City to Colony, Wyo, south of Rapid City to Dakota Jct., Neb., and connecting branch lines, as well as trackage from Dakota Junction to Crawford, Neb., currently leased to the Nebraska Northwestern Railroad (NNW).

Under the terms of the definitive transaction agreements, the purchase price is approximately US$210 million, subject to certain adjustments including the purchase of inventory, equipment and vehicles.

Customers on the line ship approximately 52,000 carloads annually of grain, bentonite clay, ethanol, fertilizer, and other products. The new rail operation will have the ability to interchange with Canadian Pacific, Union Pacific, BNSF, and the NNW, the two railroads said.

The asset sale is expected to close by mid-2014, subject to approval of the U.S. Surface Transportation Board and satisfaction of other customary closing conditions. Upon closing, the new railroad will be named the Rapid City, Pierre & Eastern Railroad.

Darien, Conn.-based Genesee & Wyoming expects to hire approximately 180 employees to staff the new company and anticipates these employees will come primarily from those currently working on the rail line.

CP said the agreement concludes the comprehensive strategic review process that Calgary, Alberta-based CP launched more than a year ago on Dec. 4, 2012. CP has operated the rail line in this area since it assumed operational control of the DM&E railroad in 2008, and will continue to own and operate approximately 1,900 miles of former DM&E track following the sale of the west end.

For CP, it is anticipated the sale will result in a net after-tax write down of approximately USD $240 million, subject to closing adjustments, which will be recorded in CP's fourth quarter 2013 financial statements. The transaction is cash positive for CP and the sale will not have a material effect on anticipated future earnings. For G&W, it is expected the transaction will generate annual revenues of approximately US$65 million and be immediately accretive to book and cash earnings per share in 2014.

"There is a strong long-term franchise here and we are pleased to have found a partner in Genesee & Wyoming, which will maintain a high standard of customer service," said CP Chief Executive Officer E. Hunter Harrison. "South Dakota remains an important economic driver in the Midwest and CP looks forward to working with G&W."

Said G&W CEO Jack Hellmann, "We are excited to be working with CP to expand G&W's rail operations into South Dakota, as well as into Wyoming, Minnesota, and Nebraska. Given G&W's commitment to safety, service and long-term infrastructure investment, we believe this transaction will significantly benefit our customers, the employees we plan to hire, the communities that we serve, and our connecting Class I rail partners."

New York-based Evercore Group LLC served as exclusive financial advisor to CP on the transaction.

The answer, some experts are suggesting, may lie within Canada’s petro-state politics, dominated by a governing party committed to maximum extraction and export of the country’s oil resources.

Calls for a judicial inquiry independent of government influence are emerging from public frustration at the perceived secrecy surrounding Canadian railway regulation and accident investigation. Freedom-of-information adjudicators have accused Transport Canada of secrecy. The country’s Auditor General is questioning the government agency’s responsiveness and competence. Academic safety experts are now asking whether Transport Canada or the TSB are up to the political challenge of identifying and fixing the causes of the crude oil explosion that killed 47 people at Lac-Mégantic six months ago.

The finger of blame is shifting toward Transport Canada. The fact that the agency leads the criminal aspect of the investigation is hardly reassuring, say critics. Will Transport Canada find itself to be culpable?

Chemical engineer Jean-Paul Lacoursière was the first scholar to call for a judicial inquiry from his vantage point as Associate Professor of Risk Analysis at University of Sherbrooke, not far from Lac-Mégantic in Quebec’s bucolic Eastern Townships. Lacoursière's argument for an inquiry independent of the regulator is widely quoted by Canadian media, but so far has been ignored by the government.

Mark Winfield, Associate Professor of Environmental Studies at York University in Toronto, and a respected authority in public-safety regulation, echoed distrust of government self-investigation. Transport Canada, Winfield wrote in The Gazette of Montreal, is in no position to expose its own responsibilities for the disaster:

“So far, the federal government has been carefully managing its responses to each incremental revelation of Transport Canada’s failings. This may be politically expedient in terms of underplaying the colossal scale of the regulatory failure in the Lac-Mégantic case. It has also had the effect of limiting the scope of the government’s responses and the extent to which they interfere with railway operations, particularly the movement of oil by rail.”

Only a judicial investigation, with powers to seize evidence and compel testimony, can reveal essential truths, wrote Winfield: “The range of factors at work in the Lac-Mégantic case requires a comprehensive review, free of the possibility of political interference, and with full investigative powers.”

So far, Canadian investigators and regulators have confined their pronouncements to blaming MM&A and its employees for allowing the doomed oil train to slip its brakes and roll unattended into the resort town, where it jumped the track, causing tank cars to accordion and set off a chain reaction of explosions. That the railway’s carelessness in the handling of the 72-car unit train was the proximate cause of the catastrophe is uncontested. But the runaway and derailment were not responsible for the deaths and destruction. That was the work of the exploding crude, mis-labelled as merely “flammable.”

Half a year after Lac-Mégantic, the Conservative government of Prime Minister Stephen Harper has announced no enforcement action to end what many observers say is the disregard of oil loaders, brokers, and buyers of their obligations to accurately inform railroads about the hazards of the cargo they proffer for carriage, and the refusal of Canada’s autonomous accident investigators to divulge the chemical composition of the Bakken crude oil that shocked railroad and emergency response professionals by exploding rather than simply burning when the runaway train derailed.

It is now broadly known that at least some operators in the oil extraction, shipping, and refining sectors knew in advance of the Lac-Mégantic disaster that crude oil from North Dakota was nearly as explosive as gasoline. Terminal operators, brokers, and importers including Canada’s Irving Oil allowed the extra-volatile oil to be mis-classified for rail transportation as a low-risk crude, according to documents assembled by investigators, journalists, and legal counsel for Lac-Mégantic victims.

Since Lac-Mégantic, two more trains carrying Bakken oil have exploded upon derailment, one in Alabama in November and the latest last week in North Dakota, where tank cars of freshly loaded crude erupted into fireballs, despite arctic temperatures. The latest incident dispelled any lingering notions that the Lac-Mégantic event was uniquely the result of an unusual batch of crude oil sloshing its way across half-a-continent under a hot summer sun. It is now seems obvious that there is something inherently explosive about even the freshest crude in the coldest possible environment.

The positive consequence of the Alabama and North Dakota incidents is that the U.S. National Transportation Safety Board now has events entirely within its own jurisdiction to investigate.

The refusal of Canadian investigators to release Lac-Mégantic test data is apparent in TSB Strategic Communications Manager Rox-Anne D’Aoust’s response to Railway Age’s Dec. 16 request for test results: “The TSB investigation is ongoing and it would be irresponsible to release information piecemeal.” This contradicts TSB’s initial commitment to promptly advise railroads of any continuing danger to trains and crews: “If along the way we discover urgent safety issues, we will act quickly to make them known, so that Transport Canada and the rail industry can take immediate action,” TSB Chair Wendy Tadros said in Lac-Mégantic six days after the catastrophe.

Two days later, TSB chief investigator Don Ross told this writer that the contents of the surviving tank cars were being sampled for urgent analysis. Ross said he was concerned that “there could be another accident like this one at another location.”

Then, literally overnight, a curtain of silence descended over the testing. Asked the next day to simply confirm for attribution that analysis of the cargo was under way, TSB’s D’Aoust refused. She said that TSB would deny that any testing was taking place or that the oil was even under scrutiny: “We would deny that we are investigating this.” Her reason was that revealing the fact that the oil was being tested would “be inflammatory and compromise a parallel criminal investigation.”

Half a year later, following numerous news reports of raids by investigators on MM&A offices and the Irving Oil refinery that imported the oil, TSB maintains its refusal to reveal just what was in the oil.

At this point, there is no way to know for certain whether understanding the chemistry of the Lac-Mégantic oil could have prevented the subsequent explosions in Alabama and North Dakota, but it surely would have made the risks better understood by oil loaders, train operators, first responders, and trackside citizens.

In an unusual flurry of regulatory and stock market activity on the first day of business in 2014, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) on January 2 issued a safety alert warning “that the type of crude oil being transported from the Bakken region may be more flammable than traditional heavy crude oil.”

Shares in the largest owner of Bakken drilling rights, Continental Resources, fell 4.2% upon the news, showing that financial markets anticipate an eventual end to the free-for-all loading of untested Bakken crude into older tank cars long judged by safety boards in the U.S. and Canada to be not-fit-for-purpose.

That would be of some relief for railroads and crews who have been the first unwitting victims in a potentially fatal deception in which oilfield loaders mix crude from various sources into tank cars without testing the resulting blend and then hand inaccurate shipping documents to train conductors. That was indeed the case in the July 6 inferno that took 47 lives at Lac-Mégantic, Quebec.

Canada’s Transportation Safety Board said that the Lac-Mégantic crude had been mis-classified as low-risk. Lawyers for the Montreal, Maine & Atlantic and its locomotive engineer will argue that accurate knowledge of the cargo’s explosive nature would have changed the way the MM&A and local first responders managed the train after a locomotive fire and subsequent shutdown led to a slow discharge of brake pressure and an unmanned runaway train. By systematically mis-classifying high-volatility Bakken oil as the lowest-risk crude, shippers can employ North America’s ubiquitous fleet of low-pressure DOT-111 tank cars rather than more secure high-pressure cars approved for explosive liquids. There are simply not enough high-pressure cars available for the booming CBR business, and there is as yet no new government-approved tank car design to replace older DOT-111, even though the industry has been building stronger, safer cars under voluntary standards developed by the Association of American Railroads and carbuilders since October 2011.

Oil companies, car lessors, and fuel brokers own the huge fleet of DOT-111 cars and are resisting rapid retirement of the cars, despite evidence that many of them are rotting from the inside due to the exceptionally corrosive nature of at least some Bakken crude.

Even as the Federal Railroad Administration and PHMSA finally move to protect railroads and crews, public and political questioning will now shift to why these agencies have not upgraded tank car specifications and have not ensured that crude shippers respect existing hazmat law. Each time either agency issues a fresh safety alert, it exposes its own laxity in enforcing laws passed by Congress.

Last spring, before Lac-Mégantic, the judicial Federal Energy Regulatory Commission found that extraordinary concentrations of hydrogen sulfide in some Bakken crude was endangering the health and safety of pipeline workers and gave operators the right to refuse it. The finding did not apply to rail terminal operators or railroads and the H2S-contaminated crude was in all likelihood diverted to rail.

Unlike pipelines, railroads do not test the crude they are offered for carriage, relying on the veracity of the documentation provided at the loading terminals. The PHMSA alert contains its strongest imperative yet that Bakken crude be tested before shipment and, significantly, that dangerous gases such as H2S be removed before loading into tank cars.

“Based upon preliminary inspections conducted after recent rail derailments in North Dakota, Alabama, and Lac-Mégantic, Quebec involving Bakken crude oil, PHMSA is reinforcing the requirement to properly test, characterize, classify, and where appropriate, sufficiently degasify hazardous materials prior to and during transportation,” reads the PHMSA alert.

Some oil industry experts speculate that Bakken crude, initially assayed to be exceptionally sweet, is being soured by the formation of H2S generated by microbes inadvertently introduced with the water and chemicals injected to increase flow through the shale.

The PHMSA Safety Alert says that even stricter testing requirements are being developed. That will be an onerous burden at the loading terminals, where virtually no testing is taking place at present. Loading terminal operators will have to add substantial infrastructure and personnel to draw samples from each car and analyze them before trains are handed over to railroads.

With new requirements on the way, terminal operators cannot yet know the extent of testing that will eventually be required, but were ordered by the PHMSA to proceed immediately with existing test requirements.

Expensive facilities to remove H2S and other explosive gases will also be required. This would have to be done before crude is loaded, complicating the existing practice of co-mingling oil from a variety of well sources in holding tanks before loading into tank cars.

With no east-west pipelines existing or proposed, rail is the only option for coastal refiners wanting to substitute Bakken oil for crude imported by sea. The now inescapable reality is that massive investment will be required in tank cars, testing facilities, and de-gasification plants.

That will certainly disrupt CBR, but it will not stop it. Oil shippers and buyers will bear the costs. Railroads will benefit by better protection for trains, tracks, and crews, and perhaps some relief from the unfair blame they accrue if an oil train explodes.

Massachusetts Bay Transportation Authority (MBTA) reportedly is considering replacing Massachusetts Bay Commuter Railroad Co. (MBCR), its current contract operator of MBTA regional rail service.

Paris-based Keolis, whose majority owner is French National Railways (SNCF), is the favored replacement, according to a report in the Boston Globe.

MBCR has operated and maintained MBTA regional reail service for 11 years, succeeding Amtrak as the contract operator. Amtrak operated MBTA service for roughly 16 years.

Any change will require a vote from the MBTA Board of Directors, which could occur Wednesday, Jan. 8, 2014.

"Keolis has been selected. The one thing remaining is the board approval," the Boston Globe quotes one source saying. "The T board is the wild card."

MBTA General Manager Beverly A. Scott reportedly was personally involved in the negotiations. MBTA officials so far have declined to comment, saying only that a recommendation for either Keolis or MBCR would occur either on Jan. 8 or Jan. 29.

Last month MBCR said it would build a $65 million train maintenance facility on the south side of Boston's South Station to allow for more efficient equipment repairs and serve as a job training center.

Culbertson, N.D., may be added to Amtrak's national network due in part to ongoing shale oil activity in the Bakken formation, according to the National Association of Railroad Passengers (NARP).

The stop would be served by Amtrak's long-distance Empire Builder, whose on-time performance has been hampered in recent weeks due in part to the substation increase in rail traffic generated by the oil shale activity. The Empire Builder travels over BNSF right-of-way through the region.

Culbertson lies between Williston, N.D., and Wolf Point, Mont., NARP said in its January 2014 NARP News.

"Culbertson is a prime location for an Amtrak stop that feeds the Bakken and makes it easier for workers to get to the region," said Culbertson Mayor Gordon Oelkers.

Bridgeport, N.J.-based Pandrol USA says Luke Reardon has joined the company as a sales and customer service representative, based at company headquarters.

Reardon will have internal sales responsibilities as well as supporting Transit Agencies in the northeastern United States.

Reardon is a graduate of the University of Arkansas and has held customer service and business development positions,the company said.

Pandrol USA is the U.S. subsidiary of Addlestone, Surrey, Britain-based Pandrol Holding Ltd., itself part of the Delachaux Group.

Howard R. Permut, president of MTA Metro-North Railroad and an original team member of the railroad since its creation in 1983, reportedly will step down from his post by month's end.

Permut announced the move to staff members late Monday, Jan. 6, 2014, according to sources reached by The New York Times. One source told the newpaper that Joseph Giulietti, currently executive director of the South Florida Regional Transportation Authority (SFRTA), is expected to succeed Permut.

An MTA spokeswoman contacted by Railway Age Tuesday declined to comment on the report.

Permut became Metro-North president in 2008, continuing to advance service options for riders besides traditional "commuters" and overseeing Metro-North's rise to the largest regional passenger rail carrier (by ridership) in the U.S., surpassing longtime champion sister Long Island Rail Road. An emphasis on off-peak service, counter-rush service to large suburban New York satellite cities such as White Plains, N.Y., and Stamford, Conn., reflected such efforts.

But several incidents marred Metro-North's public status in 2013, including a fatal accident Dec. 1 near Spuyten Duyvil in the Bronx, N.Y., where a train derailed at a speed exceeding the limit, killing four an injuring 70 – the first passenger fatalities directly attributable to rail operations by the railroad in its 30-year history.