UTU News Digest - Tuesday, January 25, 2000

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Tuesday, January 25, 2000

WASHINGTON: Report ponders Amtrak's independence

WASHINGTON -- Amtrak supporters are fretting out loud that an oversight committee may be setting too high a bar for the national railway if it is to avoid potential liquidation and restructuring of operations, the Associated Press reported.

The Amtrak Reform Council, in its first annual report, challenged Amtrak's claim that it is on target to become self-sufficient by the end of fiscal year 2002, as required by Congress.

Under the council's interpretation, Amtrak must save or earn an additional $567 million by that deadline to avoid possible wholesale changes in its operations.

Ross Capon, executive director of the National Association of Railroad Passengers, said that financial gap could be nearly impossible to close.

"If you're going to raise the bar another $567 million, it seems to me it's a no-brainer that they can't do it,'' he said Monday.

Transportation Secretary Rodney Slater said the report "mischaracterized the intent of this administration'' on how to measure Amtrak's progress.

Using the standard it believes should apply -- which excludes the cost of equipment depreciation and some equipment overhauls -- Amtrak says it is on pace to be free of government operating subsidies by the end of fiscal year 2002.

But the council report said that, factoring in the disputed costs, Amtrak will miss that mark by $567 million.

The report also found that Amtrak's ridership "has remained virtually unchanged'' during a decade of transportation growth in America and that Amtrak continues to incur "significant financial losses.'' It questioned whether Amtrak productivity is improving.

Council Chairman Gil Carmichael said the report was written to raise questions rather than offer conclusions and was not meant to be a condemnation of Amtrak.

"The council wants Amtrak to succeed,'' he said.

But Amtrak officials said the report failed to recognize the railroad's recent progress over the last few years in increasing riders and revenues.

"For the past two years we've been ahead of our business plan targets,'' Amtrak spokesman John Wolf said. "Through the first quarter of this year, we're ahead of our business targets again. You can't argue with that success.''

Sonny Hall, president of the AFL-CIO transportation trades department, said the report should have been titled "a preliminary death wish for Amtrak.''

The report was approved 8-3 by the council, with two dissenters writing separate opinions.

Clarence Monin, the former BLE President who lost a recall election and acts as labor union representative, wrote that the council "has carved out an ideological agenda for itself which ... extends far beyond what Congress intended.''

Jolene Molitoris, administrator of the Federal Rail Administration who represents Slater on the council, wrote that the report "works counter to our shared goal'' of helping Amtrak.

Sen. Kay Bailey Hutchison, R-Texas, who chairs the Senate Commerce subcommittee on surface transportation, said she hopes to hold hearings in March on what standard should be apply to measure self-sufficiency.

Hutchison said it would be "very myopic to cut Amtrak off and lose (it) ... forever until we have given them every chance to succeed.''

WASHINGTON: STB to hold hearing on railroad mergers March 8

WASHINGTON -- The Surface Transportation Board will hold a public hearing beginning March 8 on railroad consolidation and the structure of the North American railroad industry, the Journal of Commerce reported.

In a notice released on Monday, the STB said the hearing was prompted in part by the proposed merger of Burlington Northern Santa Fe Corp. and Canadian National Railway.

In scheduling the hearing, the STB noted that it did not intend to prejudge the as-yet-unfiled BNSF-CN merger application, but would provide a forum for discussion of broader matters that have arisen since the merger was proposed last month.

CN and BNSF plan to file their merger application with the STB around March 20.

Speculation has been rife since the announcement that the CN-BNSF deal, if approved, would lead to another round of consolidation, ultimately resulting in just two North American transcontinental railroad systems.

In a joint letter to the STB last week, Rep. Bud Shuster, R-Pa., chairman of the House Committee on Transportation and Infrastructure, and Rep. James Oberstar, D-Minn., the committee's ranking Democrat, urged the board to "promptly explore all options to ensure an early and vigorous debate" on whether the "downstream" effects of the proposed BNSF-CN transaction are in the public interest.

The STB said it wanted to hear from all interested persons about their concerns over the BNSF-CN deal's potential for sparking further consolidation and about the way the industry is regulated. It also invited interested parties to address whether these developments would be good for large and small railroads and their shippers.

Robert D. Krebs, chairman and chief executive of BNSF, said he was pleased that the STB had scheduled the hearings, and that BNSF would participate.

"I intend to address the overall effectiveness of the BNSF merger and the substantial benefits we are providing the shipping public, the financial community, our employees and the communities we serve," Krebs said. "In addition, I'll comment on criteria to be used to consider whether or not a railroad should be allowed to propose a combination and the assurances that railroads should be required to make regarding post-merger service to shippers."

Paul Tellier, president and chief executive of CN, said his railroad also will participate in the hearing.

He said he was pleased that the STB set March 8 as the hearing date, "because it will allow us to benefit from the views expressed at it prior to the filing" of the merger application.

The hearing will be held at the STB's headquarters in Washington. Anyone wishing to speak at the hearing must file with the board a written notice of intent to participate and the time needed to speak by Feb. 8.

WASHINGTON: Full STB notice about March 8 hearings

WASHINGTON -- Surface Transportation Board (Board) Chairman Linda J. Morgan announced (Monday) that the Board has issued a notice that it will hold a public hearing beginning on Wednesday, March 8, 2000, at its offices in Washington, D.C., to provide a forum for the expression of views by interested persons--including railroads, rail shippers and other users, rail employees, and other elements of the rail sector--on the subject of major railroad consolidations and the present and future structure of the North American railroad industry.

The Board's notice indicated that the hearing it will hold has been prompted in part by the initiation of--but will be conducted separate and apart from--the "BNSF/CN" control proceeding in STB Finance Docket No. 33842, which was initiated on December 20, 1999.[FOOTNOTE 1: On that date, Burlington Northern Santa Fe Corporation and The Burlington Northern and Santa Fe Railway Company (referred to collectively as BNSF) and Canadian National Railway Company, Grand Trunk Western Railroad Incorporated, and Illinois Central Railroad Company (referred to collectively as CN) filed a notice indicating their intent to file an application seeking Board authorization for a BNSF/CN transaction under which BNSF and CN would be brought under common control.] In this regard, the Board noted that it did not intend any prejudgment of the as yet unfiled BNSF/CN application in scheduling the hearing now, but rather it was providing a forum for the discussion of broader matters that have been raised since the announcement of the proposed BNSF/CN transaction. The Board also pointed out that the application, if and when it is filed, will be judged on its merits, on the basis of the record compiled in STB Finance Docket No. 33842, in accordance with the evidentiary directives already issued by the Board in its decision notifying the public of the future BNSF/CN filing, and subject to any other future rulings of the Board regarding that filing.

Issues. In its notice, the Board stated that it is aware that, in the wake of the filing of the BNSF/CN notice of intent, there has been a great deal of speculation that the strategic responses of the remaining North American rail carriers to the proposed BNSF/CN transaction will lead to a new round of major railroad consolidations, ultimately resulting in the formation of two North American transcontinental railroad systems. The Board noted in this regard that, by joint letter to Board Chairman Morgan dated January 14, 2000, Chairman Bud Shuster and Ranking Democratic Member James L. Oberstar of the House Committee on Transportation and Infrastructure, recognizing the restructuring that has occurred to date in the industry and the speculation about future restructuring, have urged that the Board "promptly explore all options to ensure an early and vigorous debate" on whether the "downstream" effects of the proposed BNSF/CN transaction are in the public interest.

The Board also noted, among other things, that a majority of the large railroads have recently stated that now is the time to concentrate not on further consolidation but, rather, on existing opportunities to improve service. And, the Board added, other persons have expressed concern about more restructuring while the industry is still recovering from service difficulties and other disruptions associated with implementation of the last round of major rail consolidations. [FOOTNOTE 2: While noting that it would expect commenters to reference implementation and other issues that have arisen in the wake of mergers that have already been approved, the Board reminded those participating in the hearing that the Board has other proceedings more specifically focused in oversight of individual mergers and thus would not expect the use of this proceeding to litigate or relitigate issues specifically related to those transactions.] The Board stated that, against this background, it wished to explore public and, in particular, rail shipper and other user views on the timing of any proposed large-railroad consolidation.

The Board also said that it would like to hear from all interested persons about, among other things, the publicly expressed concern that the strategic responses engendered by another large railroad consolidation would lead to significant additional consolidation, and possibly other changes in the structure of the rail industry and the way in which the industry is regulated. The Board also invited interested parties to address whether these developments would be good for large and small railroads and their customers and employees and, more broadly, whether such developments would be in the public interest.

The Board also is seeking views on the effects of railroad consolidations on the financial condition of the railroad industry and the industry's ability to provide responsive service at reasonable prices. In addition, the Board is seeking views of interested persons on whether the railroad industry currently has, and whether it will have, the necessary infrastructure, capacity and configuration to meet expected demand for freight service now and in the future.

Hearing Date(s). The hearing will begin on Wednesday, March 8, 2000, at 10:00 a.m., in the 7th Floor Hearing Room at the Board's headquarters in Washington, D.C.; can be expected to continue into the evening hours; and, if necessary, will resume on Thursday, March 9, 2000, and continue until every person scheduled to speak has been heard. The hearing is being scheduled to begin on March 8 both because the letter from Chairman Shuster and Ranking Democratic Member Oberstar has urged prompt action on the Board's part and because the application in the BNSF/CN control proceeding could conceivably be filed as early as March 20, 2000.

Notice Of Intent To Participate. Any person wishing to speak at the hearing must file with the Board a written notice of intent to participate, and must request therein the time needed to speak, by February 8, 2000.

Coordination Encouraged. The Board encourages interested persons to coordinate the presentation of their views by selecting a single individual to appear at the hearing on behalf of their common interests. Because of the importance of shipper views on the subject matter, however, the Board encourages individual shippers to appear and express their positions.

Schedule. A hearing schedule, which will include a list of speakers and their Board-allotted times, will be issued by February 18, 2000.

Statement And/Or Summary. Each speaker or commenter must file with the Board the text of his/her anticipated written statement, and/or a summary, by February 29, 2000.

Paper Copies; Electronic Copies. Each person intending to speak at the hearing should submit an original and 10 paper copies of his/her notice of intent to participate (due February 8, 2000). Each person intending to speak or to submit written comments must submit his/her written comments and/or a written summary thereof (due February 29, 2000). Each such person should also submit, in addition to an original and 10 copies of all paper documents filed with the Board, an electronic copy of each such paper document. The electronic copy should be on a 3.5-inch IBM-compatible floppy diskette, and should be in, or convertible by and into, WordPerfect 7.0. Any person may seek a Board waiver from the electronic submission requirement.

Post-Hearing Action. In the notice issued today, the Board stated that it intends to take such action, if any, as necessary to respond in an appropriate fashion to the views expressed at the hearing.

The Board's notice was issued today, January 24, 2000, in Public Views on Major Rail Consolidations, STB Ex Parte No. 582, and will be published in the Federal Register on January 28, 2000.

A printed copy of today's notice is available for a fee by contacting: D-To-D Office Solutions, Room 210, 1925 K Street, N.W., Washington, DC 20006, telephone (202) 289-4357. Today's notice is also available for viewing and downloading via the Board's website at www.stb.dot.gov.

CANADA: CN welcomes U.S. regulatory hearing

MONTREAL -- Canadian National President and Chief Executive Officer Paul M. Tellier today welcomed the decision of the United States Surface Transportation Board (STB) to hold a public hearing on the subject of major railroad consolidations and the present and future structure of the North American rail industry, a company press release said.

"The STB hearing will permit a disciplined public evaluation of the concerns expressed about the present and future structure of the North American rail industry since the announcement of our combination with Burlington Northern Santa Fe Corporation (BNSF) on Dec. 20, 1999," Tellier said.

"CN will be an active participant in the hearing and will respond to all the questions the STB is addressing to participants". The hearing will be held in Washington, D.C., at the offices of the STB.

Tellier added: "I am especially pleased that the STB has set March 8 as the hearing date, because it will allow us to benefit from the views expressed at it prior to the filing of our application for approval of the CN/BNSF combination. We will file our application on or shortly after March 20, the earliest possible filing date."

TEXAS: BNSF announces record 4^th Q earnings, record year results

FORT WORTH -- Burlington Northern Santa Fe Corporation (NYSE: BNI) (BNSF) today reported record fourth quarter 1999 earnings of $0.69 per share on a diluted basis, a 10 percent increase from fourth quarter 1998 earnings of $0.63 per share. Net income increased $19 million to $315 million from fourth quarter 1998 net income of $296 million, a company press release said.

"Increases in our intermodal, carload, automotive and agricultural business units contributed to our record fourth quarter revenues, and the continued impact of efficiency initiatives implemented earlier in the year kept our expenses in line and strengthened our performance compared with the fourth quarter of 1998," said Robert D. Krebs, BNSF Chairman and Chief Executive Officer.

Revenues of $2.37 billion for the 1999 fourth quarter were $76 million higher than the 1998 fourth quarter. Intermodal revenues increased $42 million, or 7 percent, to $679 million. Carload revenues reached $645 million, an increase of $17 million, or 3 percent, from last year. Automotive revenues improved $13 million, or 12 percent, to $124 million, primarily due to growth in vehicle shipments. Agricultural commodity revenues increased $7 million, or 2 percent, to $361 million, primarily due to stronger Mexico and Pacific Northwest soybean exports. Coal revenues declined $6 million, or 1 percent, to $554 million.

Operating expenses of $1.77 billion were $41 million, or 2 percent, higher than 1998 despite an increase in volume of 4 percent. Higher purchased services, depreciation, fuel, and other expenses were partially offset by lower compensation and benefits and equipment rents expenses.

Operating income was $603 million for the fourth quarter 1999 compared with $568 million for the same period in 1998. The operating ratio improved to 74.6 percent for the fourth quarter 1999 compared with an operating ratio of 75.2 percent for 1998.

During the fourth quarter, BNSF repurchased 4.4 million shares at an average price of $28.66 per share, bringing total repurchases under BNSF's 30 million share-repurchase program to 27.1 million shares through 1999 at an average price of $31.02 per share since the program was approved in July 1997. In 1999, BNSF repurchased a total of 22.1 million shares. In December 1999, the Board of Directors authorized the Company to repurchase an additional 30 million shares.

"Continued growth in revenue and cost containment led to ongoing improvements in our 1999 earnings on an adjusted basis. During 1999, we reduced cash capital expenditures $359 million from 1998 spending levels to $1.79 billion, and for the first time as a combined company, we generated free cash flow (cash from operations less capital expenditures, other investments and dividends paid) of approximately $260 million for full year 1999," said Krebs. "We expect free cash flow to rise considerably in 2000," Krebs pointed out.

BNSF's adjusted earnings for the year ended December 31, 1999, were $2.43 per diluted share, a 3 percent increase from 1998 adjusted earnings of $2.36 per diluted share. Adjusted net income increased $10 million to $1.13 billion from 1998 adjusted net income of $1.12 billion. Including second and third quarter special items, BNSF reported earnings of $2.44 per diluted share for the year ended December 31, 1999.

Revenues for the year were $9.1 billion, up $159 million or 2 percent over 1998 revenues. Adjusted operating expenses of $6.86 billion for 1999 increased by $81 million or 1 percent. Adjusted operating income was $2.24 billion for 1999 compared with operating income of $2.16 billion for 1998. The adjusted operating ratio improved to 75.4 percent for 1999 compared with an operating ratio of 75.9 percent a year earlier.

On December 20, 1999, BNSF and CN announced that their boards of directors had approved a definitive agreement to combine the businesses. On January 11, 2000, a registration statement was filed with the United States Securities and Exchange Commission related to securities that will be issued in connection with the proposed business combination.

The BNSF/CN combination will create an end-to-end North American railroad that will offer shippers substantially expanded single-line service over a 50,000 route-mile network across Canada and the central and western United States. Combined, BNSF and CN would employ approximately 67,000 people and have combined annual revenues of approximately $12.5 billion. Benefits of the combination include new single-line traffic routes, high-quality, efficient and reliable service, and low integration risk.

"Canadian National and Burlington Northern Santa Fe are two of the most efficient and financially-strong railroads in North America today, each with industry-leading service plans and a proven track record of implementing previous consolidations. The combination is expected to push the frontier of efficiency in the industry even further. We anticipate service and transit-time improvements, asset utilization efficiencies, and cost savings in information technology, purchasing and other shared services. The prospect of 'best practices' transfer between the two railroads is significant," said Krebs.

The combination is subject to, among other things, approval by the shareholders of both companies, as well as approvals by the Quebec Superior Court and the United States Surface Transportation Board. The companies expect that all required regulatory approvals can be obtained and the transaction completed by mid-2001.

CANADA: Canadian Pacific profit up on cost-cutting

CALGARY -- Transport, energy and hotel conglomerate Canadian Pacific Ltd. (CP.TO) said on Monday its fourth-quarter profit rose 17 percent to a record level, boosted by higher oil prices and cost-cutting, Reuters reported.

The Calgary-based company, known for its cross-Canada railroad and opulent resort hotels, said fourth-quarter net income rose to C$307 million, or 93 Canadian cents a share, from C$263 million, or 79 cents, in the year-earlier period.

"The fourth quarter was our strongest ever as the improving business environment magnified the impact of major cost-cutting,'' President David O'Brien said in a statement.

Revenue rose 15 percent to C$3.27 billion from C$2.85 billion in the fourth quarter of 1998.

The richer results were lead by earnings in its oil and gas subsidiary, PanCanadian Petroleum Ltd., which on Friday reported a 168 percent rise in quarterly earnings to C$147 million, or 58 Canadian cents a share, from C$55 million, or 22 cents, in 1998.

One of Canada's biggest oil and gas firms, PanCanadian (PCP.TO) was responsible for 12 percent of all wells drilled in western Canada last year. It also has exploration and production operations in the U.S. Gulf of Mexico and the North Sea.

Canadian Pacific's railway division, CPR, had record fourth-quarter net income of C$121 million, up C$8 million from the year-earlier period, because of growing revenue from the shipment of automotive, industrial and forest products.

"We handled significantly higher volumes of freight at virtually no additional expense,'' said CPR President Robert Ritchie.

At CP Hotels, fourth-quarter earnings almost doubled to C$39 million from C$21 million because of improved performances at Canadian resort hotels.

For the year, net income rose 13 percent to C$886 million, or C$2.67 a share, from C$781 million, or C$2.32, in 1998.

Revenue increased 12 percent to C$11.4 billion from C$10.2 billion.

Canadian Pacific stock was down 10 Canadian cents at C$31.60 at midday on the Toronto Stock Exchange on Monday.

NEBRASKA: U.P. revives winged logo

OMAHA -- Union Pacific Railroad is bringing back its "winged-shield" logo to highlight its corporate symbol and to honor its heritage and employees, the Omaha World Herald reported.

"The image will reflect our pride in our people and our company," said Dennis Duffy, the Omaha railroad's executive vice president for operations.

Mike Iden, general director of locomotive engineering and quality with U.P., originated the idea while looking for a way to improve the company logo's visibility on locomotives.

The design has blue and white wings swept back from a red, white and blue Union Pacific shield in the center.

The design, originated in 1939 for new, streamlined "E-Unit" passenger locomotives, will be applied to 1,000 new locomotives to be delivered starting in April by the Electro-Motive Division of General Motors Corp.

Workers will add the logo to the railroad's 7,000 older locomotives during regular overhaul work.

Railroad buffs had called the streamlined passenger locomotives "smiling E's" because the logos made the engines look like they were grinning.

As locomotives changed during the 1960s to a more utilitarian design, the wings were dropped in favor of the shield logo, which was first adopted in 1887.

FLORIDA: CSXT spurs more than $1.4 billion in capital investment, helps 5,500 new jobs

JACKSONVILLE -- CSX Transportation Inc. (CSXT), one of America's leading railroads, announced today that the 129 industrial development projects it facilitated with businesses in 1999, marked a 42 percent increase over the railroad's 91 projects in 1998, a company press release said.

This growth revealed a new development trend in which customers are using rail to position products closer to their markets. CSXT new customer revenues generated from these projects will total $135 million when the businesses' facilities are built and in full operation.

CSXT worked closely with state and local economic development authorities on projects involving site location and development of rail infrastructure designs to connect new customers to the CSXT rail system. Through these efforts last year, the railroad attracted more than $1.4 billion in investment capital and helped create more than 5,500 new jobs in 19 states and Quebec, Canada.

CSXT reported the greatest number of industrial development projects overall in Florida and Kentucky. Its new customers will generate over 124,000 carloads to be transported by the railroad annually.

"The record number of industrial development projects in 1999 demonstrates increased confidence in the rail system," said Randy Evans, CSXT vice president for real estate and industrial development. "Customers are increasingly using rail to forward-position their products closer to the markets that they want to reach. Receivers and shippers are not only using rail because it is economical and efficient, but also because it is an important part of their logistics chain."

For example, CSXT partnered with five gypsum wallboard manufacturers -- including Lafarge Corp., Standard Gypsum, National Gypsum Company, Celotex Corporation and United States Gypsum Company -- in locating seven new state- of-the-art plants along the rail system over the last two years. CSXT will transport for these companies a combined total of approximately 10,000 carloads of finished drywall product, a critical building material that has recently reached scarcity levels. All new production of wallboard will be located on the CSXT system in the next several years.

As a result of the integration of Conrail in June 1999, CSXT has expanded its efforts helping businesses locate on the rail system to the Northeast and a greater section of the Midwest. For example, in Massachusetts, CSXT undertook twelve projects attracting more than $41 million in investment capital and approximately 220 new jobs to the state. The number of CSXT industrial projects in Massachusetts ranked third among all of the states.

"Another major factor contributing to our increase in projects last year was the new CSXT franchise serving Connecticut, Massachusetts, New Jersey and New York," said Evans. "A total of more than $25 million in new customer revenue can be attributed to our work on 26 projects in this area over the last seven months of the year. With the addition of this former Conrail territory, we now serve 23 states and the District of Columbia, including all major ports along the eastern Seaboard and Gulf Coast."

As a result of the Partners for Growth program that CSXT launched last May, the railroad has secured four plastics industry customer expansions -- three in its new Northeast territory and one in the Midwest. The initiative helps plastic manufacturers to significantly reduce their costs by buying in bulk and using the most efficient means of transportation. CSXT plans to launch a new Partners for Growth campaign in the first quarter of 2000 targeting the paper industry.

In 1999, CSXT saw the most productivity in projects with aggregate distribution facilities, attracting more than $34 million in investment capital to communities along the rail network. Other industries in which CSXT cited significant accomplishments during 1999 included scrap metal and steel processing plants, wallboard manufacturing facilities, feed mills, and plastic receivers.

Through its industrial development program, CSXT has played a key role during the last six years in helping approximately 500 companies locate and expand along its rail lines. Since 1994, CSXT has supported a total of $10.5 billion in new industrial expansion investment, creating nearly 32,000 jobs. While generating new jobs and investment dollars in eastern and Midwestern states, CSXT is growing its revenue by building a stronger customer base.

PENNSYLVANIA: Judge refuses to block free newspaper

PHILADELPHIA -- A federal judge yesterday refused to grant a restraining order requested by three newspaper companies, including the publisher of The Inquirer and Daily News, that would have prevented SEPTA from distributing its new free newspaper in any area off-limits to other publications, the Philadelphia Inquirer reported.

The two-sentence order by U.S. District Judge Robert F. Kelly came the day the tabloid-size Metro was introduced, handed free to thousands of morning commuters using SEPTA's regional transit system.

Although Kelly did not file an opinion explaining his ruling, the order said the three companies - Philadelphia Newspapers Inc., The New York Times Co. and Gannett Satellite Information Network Inc., whose papers include USA Today, The Reporter of Lansdale and South Jersey's Courier Post - had failed to show that Metro's distribution plans would cause them "immediate and irreparable harm."

Michael A. Schwartz, the Philadelphia attorney who argued for the newspapers during the hearing before Kelly, said the papers would seek an expedited hearing from the U.S. Court of Appeals for the Third Circuit.

SEPTA spokesman Richard Maloney said, "We're obviously pleased that the federal court has found we have a legitimate contract with Metro." He said the ruling vindicated the service SEPTA wants to provide.

The judge's finding of a lack of "immediate and irreparable harm" to the newspaper companies appeared to be based on a SEPTA official's statement at an emergency hearing Friday that the equipment needed to distribute the 24-page tabloid on the authority's buses might not be ready for two weeks.

SEPTA officials also said they would not, at least for now, distribute Metro on subway and rail station platforms or in other areas where commuters have paid to gain entry.

The newspapers' lawsuit, filed Friday, contended that distribution in those areas would violate the First Amendment because SEPTA would become a government entity publishing its own newspaper and would have a competitive advantage over non-government publications.

SEPTA's contract with TPI Metro Pa., a unit of Sweden's Modern Times Group that produces the paper, requires that the tabloid comply with SEPTA's editorial and advertising policies, and gives the authority its own page inside the paper for transit information and public messages.

At yesterday's hearing, SEPTA's lawyers insisted they had no editorial control over Metro and described TPI Metro Pa. as a SEPTA contractor providing readers with a larger, flashier version of a SEPTA newsletter.

SEPTA attorney William H. Roberts called the newspapers' allegations a "hyperbole" and said they could not prove Metro would pose a financial threat.

Roberts called the timing of the newspapers' lawsuit anti-competitive because "it is arguing for relief that will seriously disrupt another publication."

Schwartz argued that "SEPTA cannot auction off First Amendment distribution rights" and sought to point out a contradiction in SEPTA's position.

Schwartz referred to a January 1999 policy adopted by SEPTA after several civil rights lawsuits filed by religious groups whose members had been barred from leafleting in paid areas of SEPTA's subway stations. At that time, SEPTA said First Amendment activities had been banned from platform and paid areas because they posed a public safety hazard.

Yesterday, Roberts said that SEPTA itself - and its contractors such as Metro - are exempt from the policy. "No matter what SEPTA says on paper," Schwartz added, "its conduct is that it is allowing Metro to be distributed where no other newspaper is allowed to be distributed under its own rules."

Meanwhile, outside the federal courthouse, Philadelphia-area commuters were getting to know the region's first new daily newspaper in two decades.

Since 1995 the Swedish company Modern Times Group has launched mass-transit Metro papers in six European cities and Santiago, Chile. Philadelphia is the company's first U.S. venture; others are planned.

"Metro. Get your free Metro," was the cry of hawkers in green aprons bearing Metro's inaugural edition.

Metro, which reported a 165,000-paper print run, found eager readers among hotel workers, nursing home assistants, food service workers, and other commuters in between early morning transfers at the Upper Darby SEPTA station.

"Now I can stop buying the Daily News and still have something to read on the bus," said Albert Singleton, 48, of Southwest Philadelphia, while waiting for the Route 108 bus to his airport laundry job. "This keeps me on top of current events."

With most stories no more than one or two paragraphs long, the colorful tabloid was touted by editor Mary Ellen Bornak in a column as a paper for "those who have abandoned traditional newspapers because they have no time to read."

Yesterday's local stories included a front-page paragraph and a photo on the early Sunday Levittown fire that killed four, and a front-page note referring readers to a three-paragraph inside story about the trade of the Philadelphia Flyers' Rod Brind'Amour.

After giving the Metro a quick scan, Niya Sadler, 22, and Tamika Anderson, 21, both of West Philadelphia, said the paper did not offer them what they looked for most: better job opportunities as certified nursing assistants.

"A free paper is not always good," Anderson said. "Where are the good jobs? Where are the classifieds? That's what I read The Inquirer and Daily News for."

Metro publisher Jack Roberts said he expects the newspaper will have classified advertising as it becomes more established. Despite few initial advertisers, Roberts said the goal was to sell half the paper's 24 pages as ads.

"I don't know of any free paper that can survive with that formula, said Skip Henry, publisher of eight free weeklies, including the News Gleaner in the Northeast, that have a combined circulation of 150,000.

Henry said he believed Metro would have difficulty selling ads targeted at commuters across SEPTA's five-county service area because local advertisers would find the potential market too fractured.

"They will need national advertisers," he said.

TENNESSEE: Overnite sues Teamsters for $5.2M

NASHVILLE -- Overnite Transportation Co. is seeking at least $5.2 million from the Teamsters for costs, damage and losses stemming from the union's 3-month-old strike against the trucking firm, the Associated Press reported.

A federal lawsuit filed Monday also accuses Teamsters president James P. Hoffa and other union leaders in a string of violent and illegal activities aimed at extorting a labor contract with Overnite.

The Teamsters devised a scheme to "put Overnite out of business'' if employees don't agree to a union-proposed deal, the lawsuit said.

The lawsuit also alleges a pattern of violence, including 57 acts of attempted murder and 131 acts of extortion.

Dave Cameron, a national coordinator for the Teamsters, said the lawsuit is Overnite's "desperate'' attempt to draw public attention away from its own illegal activities, including the alleged harassment and illegal firing of its workers.

"This sounds like a public relations stunt. This company has been famous for their legal machinations,'' Cameron said. "To try to connect the Teamsters to these activities is baseless and without foundation.''

The Teamsters launched a strike Oct. 24 at Overnite terminals in seven states, five weeks after talks on a new contract broke off with the Richmond, Va.-based company.

The Teamsters and Overnite have been trying for several years to negotiate a contract for 22 terminals where the union represents Overnite workers. Both sides say pensions have been the major area of disagreement.

Police have said at least five shootings appear related to the strike. The most serious came Dec. 1, when William Wonder of Evansville, Ind., was shot in the stomach as he drove from the Memphis hub.

Overnite officials say 95 percent of the pickets have been non-Overnite workers who are Teamsters from union companies. They say its 22 union-represented locations account for 14 percent of the company's 13,000 employees in 166 terminals in the United States, Canada, Mexico, Puerto Rico and Virgin Islands.

The suit seeks damages for security expenses, property damage and costs of replacing workers who "missed work due to the lawlessness.''

A subsidiary of Omaha, Neb.-based Union Pacific, Overnite competes in the less-than-truckload industry, in which the trucking company coordinates and consolidates small shipments of less than a truckload for pickup and delivery.