Volume 63 May 21, 1999
THIS ISSUE:
June 1 Split of Conrail Approved by STB
The Surface Transportation Board (STB), on May 20, approved the June 1 split of Conrail between CSX Corporation and Norfolk Southern Corporation. One of the conditions imposed by the STB when it approved the acquisition of Conrail by CSX and Norfolk Southern in July 1998 required the railroads to give 14 days notice of the date on which the division of Conrail's assets will occur.
The long interval between the decision and the split date reflects the unprecedented scope and complexity of the operational aspects of the Conrail transaction. No railroad the size of Conrail has ever before been partitioned between two other railroads the size of CSX and NS.
In approving the Conrail transaction, the Board expanded and imposed the settlement agreement between the applicants and the League, which provided that the applicants obtain the necessary labor implementing agreements before Day One. All labor agreements have now been obtained.
Conrail Shippers Need to Prepare for June 1 Split
A recent League survey of rail users showed that a fairly large proportion of shippers who currently use Conrail are encountering difficulties in preparing their own operations for the June 1 split-up of Conrail. Thus, the League is continuing to run this important message in the hope that our own members will not add to the complications of an already complicated transaction, after the extraordinary effort put into its planning and preparedness by Norfolk Southern, CSX, and Conrail. The following message was composed by NS and CSX. If members have not completed their own preparations for split date, they should contact their customer representatives at NS and/or CSX immediately.
Rail freight shippers using Conrail services today need to prepare for the division of Conrail into three separate parts on June 1. There are two critical areas requiring shipper attention:
First, due to the division of current Conrail lines and locations into three distinct parts on June 1 (CSX Transportation, Norfolk Southern Railroad, or Conrail "shared asset" operations), shippers must replace "Conrail" or "CR" in all bill of lading documentation and shipping instructions. "Conrail" must be replaced with either "CSXT" or "NS." This must be done on, but not before, June 1. "Conrail," "CR," or "Conrail Shared Assets" will not be valid in routing instructions on or after June 1. Shipping instructions tendered on or after June 1 indicating "Conrail" will automatically go into error status handling, which may be expected to result in a delay to the shipment.
Second, all cars released or dispatched by shippers located on Conrail lines must ensure that timely and complete bill of lading information be provided to the appropriate new serving railroad (CSXT or NS). Shipper release of "no bill" cars can lead to significant confusion, delays to the cars, and terminal congestion in rail operations on and after June 1. This is especially true in the new Conrail shared asset areas, where cars must be routed either by CSXT or NS.
DOT Announces Railroad Rehabilitation Program
The Department of Transportation has announced a new rail direct loan and loan guarantee program that could provide up to $3.5 billion in loans, including $1 billion for projects primarily benefitting shortline and regional railroads.
The Railroad Rehabilitation and Improvement Financing Program (RRIF) will help finance highway-rail grade crossing elimination projects and help the shortlines finance track to accommodate 286,000-pound cars, an increasingly important factor as the Class I railroads place them into their operations.
Priority consideration is provided for projects that enhance safety; enhance the environment; promote economic development; are included in state transportation plans; promote U.S. competitiveness; and preserve and enhance rail or intermodal service to small communities and rural areas.
RRIF funding may be used to acquire, improve, or rehabilitate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings, and shops; to refinance existing debt incurred for the previous purposes; and to develop and establish new intermodal or railroad facilities. Eligible applicants include state and local governments, government-sponsored authorities and corporations, railroads, and joint ventures that include at least one railroad.
STB Computes Railroad Cost of Capital <
The Surface Transportation Board determined that in 1998, the railroad industry had a composite after-tax cost of capital of 10.7 percent based on: a current cost of debt of 6.64 percent; a current cost of common equity capital of 13.11 percent; a cost of preferred equity capital of 6.19 percent; and a capital structure mix of 36.01 percent debt, 62.64 percent common equity, and 1.35 percent preferred equity capital.
The STB's annual determination of the railroad industry's cost of capital is one component used in evaluating the adequacy of railroad revenues each year under the procedures and standards mandated by Congress. This finding may also be used in other regulatory proceedings, including the prescription of maximum reasonable rate levels, the proposed abandonments of rail lines, and the setting of compensation for disputed trackage rights fees.
The only party to provide evidence in this proceeding was the Association of American Railroads (AAR), which concluded that the composite after-tax cost of capital for the railroad industry for 1998 was 10.7 percent, lower than the 1997 cost of capital rate of 11.8 percent.
STB Proposing Rail Waybill Sample Changes
The Surface Transportation Board (STB) is seeking comments on changes it is proposing to modify regulations governing the annual railroad Carload Waybill Sample. The changes would require identification of contract movements, establish procedures to ensure the confidentiality of contract revenue information in the Waybill Sample, and limit the period during which the Waybill Sample will remain confidential.
Most large and mid-sized railroads are required to report data, including revenues, on individual movements contained in a sampling of their traffic. This Waybill Sample is used for a variety of purposes by the Board, parties appearing before the agency, and the public in general.
However, the majority of railroad movements are conducted under confidential transportation contracts. Many of these contract movements are identified, or "flagged," in the carriers' samples, with the contract revenue information "masked" to protect its confidentiality. Some carriers, however, do not flag contract movements, and as a result, the STB is unable to develop complete information on contract traffic.
To ensure that it has more accurate data, the STB decided it needed to review its regulations to provide that all carriers identify contract movements. To protect the confidentiality of the contracts, the Board in its advance notice of proposed rulemaking, suggests a procedure under which, instead of providing in the final Waybill Sample actual revenues, movements would reflect average revenues for broadly aggregated movements of comparable commodities in comparable service.
Finally, in light of an expression by the National Archives and Records Administration (Archives) of its interest in maintaining historic Waybill Sample records for future studies, the Board has suggested setting a 20-year limit to the period during which waybill data will be considered confidential.
The Board's decision, which seeks comments by July 1, 1999, was issued May 20 in Modification of the Carload Waybill Sample and Public Use File Regulations, STB Ex Parte No. 385 (Sub-No. 4). It is available on the STB web site, www.stb.dot.gov. The notice appeared in the May 17 Federal Register, page 26723. For further information, contact H. Jeff Warren (202) 565-1533 or James Nash (202) 525-1542.
Bill Filed to Delay Ergonomics Rule
Senator Kit Bond (R-MO) has introduced S. 1070, the Sensible Ergonomics Needs Scientific Evidence Act (SENSE), a bill to require the Occupational Safety and Health Administration (OSHA) to delay moving forward an ergonomics rule or guideline until completion of a National Academy of Sciences (NAS) study of the medical and scientific evidence linking on-the-job activities and repetitive stress injuries.
In a press release Senator Bond stated, "This is a very complicated issue and we need sound science and thorough medical evidence to help guide us down the right path for both small business and their employees." In addition to delaying the implementation of guidelines, the proposal would give Congress 30 days to review the final report before OSHA issues proposed or final regulations, standards or guidelines.
"Waiting for the NAS study is the sensible thing to do," the Senator said. "In fact, I would encourage OSHA to use this time to research ergonomics further, identifying successful prevention strategies and providing technical assistance." Last year, Congress appropriated $890,000 for the NAS study, which will be completed by January 2001.
S.1070 is similar to H.R. 987, the Workplace Preservation Act, introduced by Rep. Roy Blunt. This bill was marked-up by the House Subcommittee on Workforce Protections and sent to the full Committee on Education and the Workforce on May 19, for consideration.
Transportation Tax Bills Introduced
Legislation has been introduced in both the House and Senate that would change the excise tax currently levied on motor carriers, railroads, and inland waterway operators. H.R.1001 and S.820 are companion bills that would repeal the 4.3 cent tax paid by both the railroads and barge companies. This tax was enacted in 1990 and placed on all carriers to help balance the federal budget.
Senator John Chafee (R-RI) has taken a broader approach to the transportation tax issue by introducing S. 1056, the Highway Tax Equalization and Simplification Act . While this bill also repeals the 4.3 cent tax paid by the railroads, it imposes a 19 cent a mile tax on tractor trailer combinations that weigh 80,000 pounds, repeals a current 12 percent excise tax on new truck sales, and reduces the federal tax on diesel fuel from 24.3 cents to 18.3 cents.
The House Ways and Means and the Senate Finance committees have not yet scheduled action on these legislative initiatives. Reaction from the affected carrier groups is mixed.
Senators Tom Daschle and Tim Johnson, both from South Dakota, have introduced S. 983, legislation that would require all railroad equipment to be marked with reflective devices. In a "Dear Colleague" letter, Sen. Johnson said, "The purpose of this bill is to help prevent fatal accidents and injuries at poorly lit railroad crossings."
If enacted, this would bring railroads in line with a similar law requiring reflecting devices on trucks. Sen. Daschle cited studies that show that a number of rail-highway accidents occurring at night could be prevented with such devices.
Railroads predicted that the cost of installing these devices would be $100 to $250 per car. The Federal Railroad Administration said the cost would be closer to $39 per car.
DOT Using Infrared Technology for Truck Inspections
The Department of Transportation has begun testing an infrared technology imaging device that could improve highway safety by helping to inspect commercial trucks for faulty equipment.
Georgia, Kentucky, North Carolina and Tennessee will be the first states to test the Infrared Inspection System (IRISystem) during a two-year pilot project. The IRISystem is designed to detect faulty brakes as well as exhaust leaks, over-inflated tires, hot wheel-bearings, and other mechanical problems while the vehicles are moving at highway speeds. According to DOT's Office of Safety and Motor Carriers, faulty brakes comprise the most frequently cited inspection violation for motor carriers.
Coast Guard to Monitor Ballast Water
The Coast Guard issued an interim rule, effective July 1, that requires ships operating outside of U.S. waters to report their ballast water management practices. The rule also establishes voluntary ballast water management guidelines for all waters of the United States. The Coast Guard is taking these actions to implement the National Invasive Species Act of 1996 (NISA).
The Coast Guard's measures are aimed at preventing environmental and health problems resulting from harmful aquatic plants and animals carried from abroad in ships' ballast water.
The interim rule, published in the May 20 Federal Register , requires a ship with ballast tanks, after having operated beyond the 200-mile-wide Exclusive Economic Zone, to provide information that documents the ship's ballast water management efforts. This information will be collected by the Coast Guard and entered into the National Ballast Water Information Clearinghouse (NBIC) database.
The Coast Guard is issuing the requirement as an interim rule while seeking public comment. Additional information and copies of the interim rule are available at: www.uscg.mil/hq/g-m/mso4/First.htm; or LT Mary Pat McKeown, Office of Environmental Standards (G-MSO-4), U.S. Coast Guard Headquarters, 2100 Second Street S.W., Washington, D.C. 20593, (202) 267-0500, fax (202) 267-4690.
The U.S. Customs Service and the U.S. Census Bureau are advising exporters that the 30-year-old Census Automated Export Reporting Program (AERP) ends December 31. It is being replaced by the Automated Export System (AES), run jointly by the Census Bureau and Customs. Exporters are encouraged to sign on to AES now, while there is time for needed testing, or revert to filing their paperwork manually.
AES now includes 165 companies, transmitting AES commodity information for approximately 20,000 exporting companies or individuals. There are over 470 applicants testing or developing AES software.
Current AERP filers are encouraged to submit an AES Letter of Intent and begin programming to ensure their AES certification and testing can be completed before the AERP termination date. AERP companies that have not migrated to AES by December 31 will have to file their export shipment information manually on the paper Shipper's Export Declaration (SED); Department of Commerce form 7525-V.
For more AES information, visit www.customs.treas.gov/aes or call (800) 549-0595.
Pennsylvania Region Schedules Meeting
The Pennsylvania Region of The National Industrial Transportation League and the Delaware Valley Chapter of the American Society of Transportation & Logistics (AST&L) have scheduled a joint meeting in Philadelphia, June 16 at the Old Original Bookbinder's Restaurant, 125 Walnut Street, 10 a.m. to 2:30 p.m.
In addition to a Washington legislative update on transportation issues from Ed Rastatter, director of policy for NITL, the agenda will include updates on the status of the Conrail split, and a 10th annual "State of Logistics Report" presented by Bob Delaney of Cass Information Systems. For further information, contact Gin Roberts, (703) 524-5011; fax (703) 524-5017; roberts@nitl.org.
Order Your OSRA Reference Book Now
The NITL Ocean Shipping Reform Act (OSRA) Reference Books are now available. To make sure you have a copy, order today. An order form is available on the League's Web site, www.nitl.org. You can also request a fax of the order form by faxing your request to (703) 524-5017, or e-mail to info@nitl.org.
The OSRA Reference Book contains detailed information necessary for understanding all the changes in the U.S. law. Contents include: A copy of the Ocean Shipping Reform Act of 1998; a summary of key OSRA changes and comparison of the 1984 Act to OSRA; section-by-section comparison of OSRA changes to the 1984 Act; the Federal Maritime Commission's (FMC) Final Rules implementing OSRA; a legislative history of OSRA; and, a contract check list.
June 14
NITL Board of Directors meeting, Arlington, Virginia.
June 15
Motor Carrier EAC meeting, Arlington, Virginia.
June 16
NITL Pennsylvania Region and AST&L joint meeting, Philadelphia.
Sept. 12-14
Tripartite Meeting of Shippers, Vancouver, British Columbia.
Sept. 15-18
Data & Computer Systems Committee meeting, Vancouver, British Columbia.
Sept. 15-18
Third Party Logistics Committee meeting, Vancouver, British Columbia.
Nov. 14-17
92nd Annual Meeting & TransComp, San Antonio, Texas.
Fuel Index(week of May 17)
The Department of Energy's [(202) 586-6966] fuel price for the week beginning May 17:
If you'd like to advertise a position in Job Opportunities, contact Cheryl Melencio, (703) 524-5011; melencio@nitl.org. Cost is $25 per 50 words for League members and associates; $35 per 50 words for others.
Directors, Transportation Management. Opportunities in Detroit and Dallas. As the business world's number one choice for solutions in transportation, distribution, logistics and supply chain management, Ryder Integrated Logistics posted net revenues of $1.5 billion in 1998, and we're focused on consistently increasing our market share and improving our ability to deliver excellent services. These positions require solid expertise in both domestic and international logistics as well as thorough knowledge of multiple transportation modes. Experience with global pipeline visibility technology; expertise in inbound/outbound supply chain management; and the ability to develop/maintain strong internal and external relationships are prerequisites. A Bachelor's degree and minimum 10 years of directly related experience are required; leadership, team-building, and customer service abilities are essential. As part of $5-billion Ryder System, one of the world's most admired transportation services companies, we offer highly attractive compensation, performance incentives, excellent benefits with 401k, tuition assistance and employee stock purchase plan. For consideration, please forward your resume to Dept. PH/NITL5/17, Human Resources, 24 Frank Lloyd Wright Dr., Box 372, Lobby K, Level 1, Ann Arbor, MI 48106. Fax: (734) 913-2393. An EOE. Drug testing is a condition of employment. Posted May 21.
The Notice--a weekly newsletter that provides up-to-date information on domestic and international transportation issues--is published by The National Industrial Transportation League. The League, founded in 1907, is the nation's oldest and largest shipper association representing businesses of all sizes, using all modes of transportation to move their goods in intrastate, interstate, and international commerce.
The information contained in the Notice is copyrighted by The National Industrial Transportation League. The Notice, The Shippers' Voice, and The Shippers' Voice on the Internet are registered trademarks of The National Industrial Transportation League.