UTU News Digest - Thursday, October 1, 1998

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Thursday, October 1, 1998

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Conrail deal challenged by three more appeals

WASHINGTON -- The National Industrial Transportation League, National Lime & Stone Co. and Wheeling & Lake Erie Railway have filed appeals challenging portions of the Surface Transportation Board's (STB) July 23 decision that approved the acquisition of Conrail Inc. by CSX Corp. and Norfolk Southern Corp.

Earlier challenges to the Conrail sell-off were made by the Erie-Niagara Rail Steering Committee, representing some Buffalo, N.Y., area shippers, and APL Ltd. The notice filed by the NITL challenges the STB’s decision to retain the "acquisition premium" as the basis for determining the underlying value of the purchase.

NITL and other shippers claimed that the STB should not include the premium that NS and CSX paid for Conrail stock after a takeover battle. Conrail's share price rose by more than $40. The STB rejected those arguments, saying the value of the purchase should be the final price of approximately $10 billion, instead of the pre-takeover battle value of less than $7 billion.

The premium was an issue because some feared that the higher valuation would give NS and CSX more latitude to raise rates. Both carriers have said they have no plans to boost rates after the sale.

National Lime and Stone, an industrial minerals shipper in Carey, Ohio, challenged portions of the decisions related to shipments of aggregates and other minerals. The company seeks to have NS serve its Carey facility directly in addition to CSX, so that it can have a single-line shipment to major customers in West Virginia and Pennsylvania.

Wheeling & Lake Erie officials said the appeal was filed as a protection in the event that the company is not satisfied with the outcome of negotiations arising from some conditions attached by the STB to the final decision. W&LE had tried to convince the board that it faced substantial losses if it did not gain a package of 10 conditions. The STB called W&LE's proposal "a substantial overreach" in scope and impact.

Morgan may run STB solo for a while

WASHINGTON -- Surface Transportation Board (STB) Vice Chairman Gus Owen may leave the board after Dec. 31 leaving Chairman Linda Morgan to run the regulatory agency alone for the first few months of 1999 until the White House and the Senate agree on two appointments to the three-seat panel.

Because the Senate will adjourn for the year without approving nominees, STB lawyers have been researching Morgan's legal authority to run the panel as the only sitting member, an unprecedented circumstance. The plan could have an impact on pending board decisions, including as many as five major cases that involve policy on rail competition.

The broadest decision the STB must make is whether to implement its proposal to remove product and geographic competition as defenses that railroads can mount when they are accused of charging excessive rates.

A related case involving Union Pacific Railroad and FMC Corp., a shipper of soda ash and other bulk products, tests the railroads' ability to control rates by refusing to participate in multi-carrier freight shipments. In that case, the STB is being asked to decide whether a railroad that can ship goods all the way from origin to destination can be forced to accept a two-carrier haul that would offer a lower rate to the shipper.

Another case slated for decision later this year involves possible permanent changes to the rail network in Texas, where last year's UP service problems cost shippers at least $2 billion and the railroad itself more than $1 billion. The Texas case forces the STB to decide whether it should alter the terms of its 1996 decision to approve UP's acquisition of Southern Pacific Rail Corp. to give other carriers more customer access and better routes.

Another case is the planned $1.4 billion rail construction and rehabilitation plan presented by the Dakota, Minnesota and Eastern Railroad, which wants clearance to extend its tracks to Wyoming's Powder River Basin coal fields. That region is the single largest source of rail tonnage.

Resolving those cases would leave only one major issue undecided in 1999 -- a $2.4 billion rail-merger plan advanced by Canadian National Railway and Illinois Central Railroad.

Farmers can sue Canadian Pacific

VANCOUVER -- Regulators opened the door for angry Canadian farmers to sue Canadian Pacific ruling on Wednesday that the railroad had breached its obligations on shipping grain during the harsh winter of 1996-97.

The Canadian Transportation Agency ruled CP Rail did not give grain shipments headed to the port of Vancouver "a reasonable share" of railway's capacity and shunted grain aside in favor of other commodities.

The Canadian Wheat Board (CWB) filed complaints against CP Rail and Canadian National Railway, Canada's two largest rail lines, alleging the failure to provide adequate service cost the board and farmers about C$50 million in lost sales and shipping penalties.

The CWB, which handles export wheat and barley sales for Prairie farmers, settled its dispute with Canadian National before the agency ruled. Details of that settlement were not released but it is believed to involve compensation to farmers and rate-related arrangements.

The transportation regulators on Wednesday did not propose specific sanctions against CP Rail, but their ruling can now be used by the wheat board in an expected legal action to recoup damages.

The regulators said CP Rail had also failed to meet its obligations on providing cars for shipment to the United States, but said there was no evidence of improper delays on grain headed to Thunder Bay, Ontario or eastern Canadian ports.

The railroads had blamed heavy snowfall, avalanches, extreme cold and equipment failure caused by the harsh weather for the delays that saw one ship berthed in Vancouver for as long as 62 days awaiting loading.

Calgary-based CP Rail called the ruling a "mixed decision," and was pleased the agency recognized the efforts of employees to move trains in spite of the weather.

Unions back Christian Coalition against government

WASHINGTON -- The Christian Coalition has picked up support from the AFL-CIO and the American Civil Liberties Union in its defense against a government lawsuit.

The labor federation, which is closely allied with Democrats, argued this week that the Federal Election Commission suit against the conservative Christian Coalition threatened free speech.

"Citizens and labor organizations of every political stripe will be severely constrained in their ability to speak out on policy issues of concern to their members and to the public," according to the friends-of-the-court brief filed Tuesday.

The Christian Coalition distributed excerpts from the brief. An ACLU spokesman was not immediately able to confirm that organization's involvement and AFL-CIO officials did not return calls seeking comment.

The FEC has alleged that the Christian Coalition violated campaign laws by spending thousands of dollars to promote the candidacies of such Republican politicians as former President Bush, Sen. Jesse Helms of North Carolina, Virginia Senate candidate Oliver North and House Speaker Newt Gingrich of Georgia.

The Christian Coalition has argued that it broke no law because its campaign materials did not expressly advocate the election or defeat of individual candidates.

The FEC's argument is that the coalition violated the law by improperly coordinating its activities with Republicans. The AFL-CIO and the ACLU agreed with the coalition that the FEC shouldn't be permitted to make that judgment.

FAA want funds for Y2K bug

WASHINGTON -- The Federal Aviation Administration wants Congress to permit the nation's airports to use up to $100 million in existing federal grants to help prepare for the Year 2000 computer problem.

FAA chief Jane Garvey says smaller airports can't prepare for possible problems because they can't afford to hire experts to test their computers. She said the Year 2000 problem won't affect safety and that the FAA will write to all airports soon to outline their responsibilities to prepare for 2000.

The Air Transport Association, an industry trade group, warned that of 81 airports it surveyed nationwide, more than one-third have no formal plans for dealing with the Year 2000 problem. And 24 of those 81 airports are at least three months behind or else acknowledge they won't finish preparations until June 1999, the association said.

But airline regulators, industry executives and some in Congress believe passenger jets will continue to fly safely after December 1999, when the calendar rollover will play havoc with some of the nation's computer systems.

Mexican trucks in U.S. hits six-month snag

MEXICO CITY -- Mexican Commerce Secretary Herminio Blanco said Wednesday the solution to a dispute with the United States over access for Mexican trucks would take at least six months to settle.

Mexico last week sought the formation of a NAFTA arbitration panel to review the matter. Under the North American Free Trade Agreement, Mexican trucks were supposed to be allowed access to U.S. border states as of Dec. 18, 1995. The U.S. has denied access, however, arguing that the trucks don't meet U.S. safety standards.

Blanco said both countries were in the process of selecting five panelists but reiterated that Mexico would drop the settlement procedure if the U.S. agreed to remove the transport restrictions beforehand.

USWA, Kaiser agree to postpone strike deadline

SPOKANE, Wash. -- Talks Wednesday between the presidents of Kaiser Aluminum Corp. and the United Steelworkers union failed to produce immediate agreement on a new contract but the two sides did agree to briefly postpone a strike deadline.

The contract between Kaiser and about 3,000 union workers was set to expire at 7 p.m. EDT, but the two sides pushed that to 10 p.m. EDT to give the union a chance to study a new contract proposal.

"The proposal is contingent on the union not going on strike and the union negotiating committee recommending ratification," said Kaiser spokeswoman Susan Ashe in Spokane.

The enhanced offer will be withdrawn if workers strike, she said. When the original deadline arrived, busloads of replacement workers rode past the gates of the company's Trentwood mill and stopped at temporary housing set up there.

Spokesman John Duray said union officials were studying the new offer and did not have an immediate response. "At this point we are still bargaining," Duray said from Minneapolis, site of the negotiations. He noted Kaiser was still planning to lay off about 400 people at its Spokane plants.

Customers ranging from The Boeing Co. to soft-drink can makers were closely following the talks. The contract covers more than 3,000 union members in five plants, including three in Washington state. Union officials say the workers were asking for parity in wages and pensions with employees of similar-sized aluminum companies, such as Alcoa and Reynolds.

The union contends Kaiser's wages and benefits are below industry averages because workers made pay and pension givebacks to help the company weather financial rough spots in the 1980s.