UTU News Digest - Monday, March 8, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Monday, March 8, 1999

TRAFFIC WORLD: CN-IC merger opposition slams marketing agreements

WASHINGTON -- At the request of the Surface Transportation Board, Canadian National Railway last week submitted redacted versions of its marketing alliance with Illinois Central and Kansas City Southern Railway, and its access agreement with KCS. But opponents of the merger say the filing, rather than addressing their concerns, is nothing more than a procedural enhancement in the CN-IC merger hearings scheduled to begin March 15.

Opponents - primarily Union Pacific Railroad and Louisiana chemical shippers - have argued that CN should show the benefits of the merger and the marketing agreements separately in order that the merger be judged on its own merits. But CN has held that all pertinent information regarding its agreements with IC and KCS already have been separated. "All the testimony in the deposition and all the evidence that's in shows that we measured the transaction and didn't measure the alliance," said a CN attorney. "(Opponents) have submitted no evidence that shows otherwise, they just made claims in argument. They're being aggressive, but they haven't gotten witnesses to say so. They've submitted no evidence. They don't have a case."

The STB partly addressed the matter by asking for redacted versions of the marketing agreements "in view of the importance of the issues that have been raised with respect to the two agreements," the board stated.

It also noted that getting the marketing agreements in the public record would make it less difficult to discuss the alliances as they came up in the merger proceeding. "This makes it procedurally easier than having CN's attorney jump up every three minutes whenever the marketing alliance is discussed and have everyone clear the room," said Marty Bercovisi, who represents shipper opposition to the merger. "The STB is saying, 'Give us something clean to work with without violating the confidentiality of the essential financial terms.'"

But the redacted agreements do not go far in addressing the issues brought up by the merger's opponents. UP was not so much interested in the specifics of the marketing agreements as it was in the internal planning and implementation documents that are off-limits to everyone except outside counsel. "But to understand the alliance, UP marketing people and shippers need to know how it will be implemented," said a UP attorney.

The redacted agreements, submitted to the STB Feb. 22, note that the merged CN-IC will permit KCS access to any rail freight traffic to which CN-IC has access at Geismar, La. - chemical shippers Shell, Borden Chemical and BASF, which make up roughly 75 percent of the Geismar chemical production.

That access, according to the filing, would be in the form of overhead haulage rights (including switching between such facilities and Geismar Yard) between Geismar Yard and Baton Rouge, La., "including switching provided or arranged by CN-IC but exclusive of inter-or intra-plant switching," it stated. "CN-IC will make arrangements with KCSR to lease locomotives from KCSR for use at Geismar Yard and for other means of indicating KCSR's active presence as a service provider at that yard."

The agreement also states that if the merged CN-IC does not provide the same quality of service to Geismar customers that it does for other customers, it will have three months to get its act together. If it still can't provide the service, CN-IC must provide overhead rights at a separate rate, the agreement states.

The access agreement with KCS will not apply if KCS acts upon a long-proposed plan for a rail build-in or spur that would give it access to the remaining 25 percent of the Geismar market, including chemical shippers Rubicon, Uniroyal and Vulcan Chemical. However, this is a moot point, these shippers say, because the marketing alliance eliminates KCS's incentive to build.

"(CN President and CEO Paul) Tellier himself has made it known that the access agreement would provide KCS the ability to serve only a portion of the market at Geismar," said Bercovisi. "What about the other shippers?"

Illinois: Where should freight trains park?

SPRINGFIELD, Ill. -- Should freight trains be forced to park themselves away from residential neighborhoods when their engineers stop for a break?

State Rep. Maggie Crotty, D-Oak Forest, thinks so, and she got a bill calling for such a change recommended today by an Illinois House committee.

Crotty notes that in her Chicago suburban legislative district, freight trains passing through often stop, while leaving their diesel engines running. She says the smell of diesel fumes and noise from the engines is upsetting to local residents.

Her bill would require them to stop only in places at least two miles from residential neighborhoods. Crotty notes local officials in her district have tried working with the railroads, only to get no response. "They pay the fines for making noise, but don't do anything to solve the problem," she said.

"What I want is just some courtesy shown to residents," Crotty said.

Whether her bill can go any farther in the legal process is questionable. Various lawmakers say they want to know more from the railroad industry before they consider imposing such a change.

They note many trains are left running because it would be too difficult to stop, then quickly start up, the diesel engines again. And state Rep. Edgar Lopez, D-Chicago, notes Crotty's two-mile requirement would be difficult for trains passing through Chicago to comply with.

"There is very little non-residential area in Chicago," he said. "It would be impossible for trains to comply with this in the city."

Japan: Bullet trains face chronic delays due to snow

TOKYO -- The Tokaido Shinkansen Line, one of Japan's main transportation arteries, suffers chronic delays due to seasonal snowfall, but finds itself helpless to address the problem.

This winter, Tokaido bullet train service has so far experienced 27 days of schedule disruption due to snow, already upstaging last year's winter figure of 24 days.

On Feb. 3, passengers riding both ways to Tokyo and Shin-Osaka stations on the last trains of the day had to be put up at "train hotels" because their arrivals were too late for them to get home.

The inability to implement drastic structural measures to address the issue is seen as the source of the problem.

An official at Central Japan Railway Co. (JR Tokai) said, "Snow is a natural phenomenon. That there is going to be some inevitable tardiness is the way to think of the situation."

The main areas affected by snowfall on the bullet train line are centered along a stretch of about 70 kilometers around Sekigahara, between Gifu-Hashima Station in Gifu Prefecture and Maibara Station in neighboring Shiga Prefecture. According to JR Tokai, sprinklers and electric snow-melting equipment have been installed to melt the snow since the line opened in 1964.

Sand spread out on tracks as "ballast" becomes a problem, as snow stuck to trains traveling at high speeds falls, causing the sand to waft up, which damages the undersides of cars.

To prevent the problem, hot water is used to melt the ice, but since much of the Tokaido Shinkansen line runs atop earthen embankments, the use of great quantities of water would likely cause the embankments to crumble. Lesser amounts of water, however, do nothing more than mix with the snow.

There are no such worries on the Joetsu Shinkansen Line, which runs through Niigata Prefecture facing the Sea of Japan in central Japan, where snow falls heavily. Most of the line's rails are built on concrete slabs mounted to overhead structures, enabling liberal use of hot water to melt the ice.East Japan Railway Co. said its trains were "almost never late."

JR Tokai said it considered installing concrete slabs and constructing tunnels on its routes, but that the high costs and construction-related route stoppages made the prospect impossible.