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SEDA Council-of-Government's Joint Rail Authority & NS

Posted: Thu Jan 13, 2005 8:27 pm
by OwlCaboose2853
Freight controversy picks up

LEWISBURG — Some shippers contend that a tentative agreement between the SEDA Council-of-Government’s Joint Rail Authority and Norfolk Southern Railroad will hurt economic development.
Dennis Shaffer, one of Union County’s representatives on the Joint Rail Authority board, criticized the agreement Monday during a meeting of the county commissioners.

Meanwhile, other rail authority officials and their rail operator defended the proposal, saying the new agreement doesn’t substantially change anything.

A team of rail authority and Norfolk Southern negotiators met Thursday to hammer out the agreement, which may come to a vote by the full Joint Rail Authority as early as Wednesday.

The most divisive issue is whether the agreement will affect local shippers’ access to Canadian Pacific rail, and how much that access will cost.

"Shippers do believe that it’s going to be harmful," said a source close to the talks. "It will hinder economic development efforts in the region. Simply, it’s too restrictive in terms of allowable freight that can be shipped on the CP."

Not so, said rail operator Richard D. Robey.

He contended that the changes in the agreement are minor and won’t have a drastic impact on shippers.

"Rail traffic is going to continue and there will be continuing interchange with CP. That interchange is not going to be cut off," he said.

While access may not be cut off, there is concern that the new agreement will increase rail freight costs for most shippers as much as 10 and 15 percent.

That will have an impact on many businesses. And when the agreement is approved, it will be too late to complain, opponents said.

The controversy started years ago following the takeover of Conrail tracks in the region by Norfolk Southern.

Conrail did not allow local shippers to interchange cars at Sunbury.

But when Norfolk Southern took over Conrail’s tracks, it agreed to allow interchanging at Sunbury in return for local support of the takeover.

In 1997, Robey entered into an agreement with Norfolk Southern that limited such access, but it has never been enforced, shippers contend.

A new agreement could kill the practice of local interchange and force all cars to go to Harrisburg and be turned over to Norfolk Southern first and then come back Sunbury. While that has always been the requirement on paper, it has not been the practice.

"The proposal that is on the table now, basically, would clarify and secure access to CP with some limitations," said rail authority director Jeff Stover.

"What has happened is after 1999 when NS was in disarray it was a laissez-faire atmosphere that allowed anything, whether it comported with the 1997 promise," he said.

That promise pledged CP access to local shortline railroads and stations as long as they caused no harm to Norfolk Southern interests, said Stover. Shippers contend that isn’t true.

There is another clause in the proposed agreement that has also become controversial.

In it, the rail authority agrees to reduce trackage fees paid for use of Joint Rail Authority rail between Tyrone and Lock Haven by Norfolk Southern by nearly $100,000 a year.

According to a source close to the discussions, the clause was used to sweeten a deal that lets Robey off the hook for between $830,000 and $850,000 in penalties he owes Norfolk Southern.

Those penalties reportedly have been amassed in two ways.

About $350,000 comes in penalties due Norfolk Southern for slow speed orders on the Nittany & Bald Eagle line. Robey is responsible for track maintenance on that line, according to his contract with the rail authority.

The other $500,000 comes from penalties imposed by Norfolk Southern for cars being interchanged at Sunbury in violation of the agreement with Robey.

The reduction in fees was a negotiating point, said Stover.

"It’s all part of a large negotiation, and that was just one of the points," he said.

"There are ways for the authority to make that up. The authority would not be harmed in it."

http://www.dailyitem.com/archive/2005/0 ... 9local.htm

Posted: Thu Jan 13, 2005 8:29 pm
by OwlCaboose2853
Authority backtracks on rail pact

LEWISBURG — The SEDA-Council of Governments Joint Rail Authority decided Wednesday to seek the opinions of the shippers it serves before voting on an access agreement with Norfolk Southern railroad.
Rail operator Richard D. Robey was instructed by Jerry Walls, head of the rail authority’s mediation team, to contact shippers that use rail authority lines and seek their opinions about the agreement.

Robey has 10 days to complete the task. His findings will then be presented to the board before it votes on the agreement.

"I’m asking you shippers to cooperate when (Robey) pops in to call on you so we see the whole range of problems," said Walls, speaking to the handful of shippers who attended Wednesday’s meeting at SEDA-COG headquarters.

Only with honest and candid feedback can the authority make an informed decision, he said.

"This is not a done deal," Walls said.

A vote on the agreement is expected at the board’s meeting on Feb. 9.

The proposed agreement has pitted a handful of shippers against the board and Robey and divided the board itself.

Robey and some rail authority officials contend the agreement is the best they can get from rail giant Norfolk Southern.

Shippers and other rail authority officials argue it’s not good enough, saying it will eliminate rail competition and may drive shippers out of business.

"I think this agreement stinks," said board member Dennis Shaffer, Union County’s representative on the authority board. Shaffer works for PA Distribution in West Milton, a company that is a shipper. "I’ve never seen an agreement as one-sided as this one. Maybe we’re stuck with it, but let’s not sugarcoat it."

The main point of contention comes down to worries about access to Canadian Pacific rail.

"The issue is whether we’re going to have competition," said Shaffer.

At first glance, the proposal continues to provide some access to Canadian Pacific rail and may appear to grant competition, but over the long run it does not, Shaffer said.

Citing a portion of the agreement that prohibits new traffic west of Sault Ste. Marie, Ontario, Shaffer said the proposal will slowly choke local industries that do business in the far west.

"Over a period of time, this will become less and less of a viable interchange," he said.

In the end, the only option left to many local shippers will be Norfolk Southern, said Shaffer, adding: "This really creates a rotten business environment for our area."

Shaffer also worried that a portion of the agreement will not be open to public inspection.

The agreement falls into two categories, one includes the rail authority and will be made public, the other, mostly the technical aspects of a trackage rights agreement, will remain confidential.

"We can’t really know what we’re getting into," said Shaffer.

Robey disagreed on both counts.

As far as access, Robey said, not much will change under the new agreement. While access to Canadian Pacific will be limited, it has always been limited, he added.

"Some access to CP is better than none. I would like to have unrestricted access, but I have to deal with a Class I railroad," he said. "It’s my judgment that this is the best we can do under the circumstances."

On what portions of the agreement will be made public, Robey said that decision is not his.

"It’s not my choice not to be passing out this agreement. It has been insisted upon by Norfolk Southern," he said.

Walls also said the agreement is not ideal, saying that many Class I railroads operate as monopolies giving smaller railroads little leverage when dealing with them.

"They are entitled to protect that franchise," said Walls. "What we as a shortline are challenged with is to appeal and negotiate with this Class I operator to receive their consent and agreement to make compromise."

Rail authority director Jeff Stover said the proposal is an improvement over a 2001 trackage rights agreement signed by Robey and Norfolk Southern.

I think we’re a long way from ‘01," said Stover. "But it’s not a full load."

The mediation team’s attorney, Keith O’Brien, said one thing the new agreement will do is eliminate gray areas.

"Up to this point there have been some vexing uncertainties," O’Brien said. "This agreement will eliminate them."

Whether it measures up to what was promised when Norfolk Southern took over local Conrail routes is a matter of debate, he said:

Walls said there are points that are undeniably good.

One of them is the fact that in the proposed agreement the rail authority has been named a third-party beneficiary, which means a situation like the Robey-Norfolk Southern agreement in 2001 can not occur again, he said.

"That to me gives the rail authority a seat at the table to make sure all future changes are acceptable to us," said Walls. "We consider that to be pretty doggone good."

http://www.dailyitem.com/archive/2005/0 ... 0local.htm