ATLP’s editorial team compiled transportation items in the news that we found of interest:

1. Dr. Fauci supports mandatory coronavirus vaccines for air travel.  Read more by clicking here.
   
   
2. Kansas City Southern Railroad accepts Canadian Pacific Railway offer after the Surface Transportation Board denies the joint request by Canadian National and Kansas City Southern motion to use a voting trust.  Read more by clicking here.
   
   Read more about the Board’s decision at the ATLP’s Blog.
   
   
3. Head of Northeast Corridor Commission Executive Director says that the Biden infrastructure bill could fund significant improvements along the Northeast Corridor.  Read more by clicking here.
   
   
4. UPS will acquire delivery startup Roadie, which relies on gig-economy drivers to handle same-day, oversized, and perishable deliveries that UPS cannot otherwise handle.  Read more by clicking here.
   
   
5. U.S. Customs and Border Protection is in a frozen fish fight over the Jones Act in Alaska.  Read more by clicking here.
   
   
6. Although not directly transportation-related, ATLP Board Member Professor Robin Rotman has a new article in Ecology Law Quarterly, "Realigning the Clean Water Act: Comprehensive Treatment of Nonpoint Source Pollution," in Ecology Law Quarterly.”  Professor Rotman and her co-authors offer an extensive history and analysis of water quality regulation in the United States and propose a holistic framework for controlling nonpoint source pollution under the Clean Water Act and the Safe Drinking Water Act. Of interest to ATLP members may be the discussion of the definition of “navigable waters,” which affects the permitting requirements for many transportation infrastructure projects. Read more by clicking here.

On August 19, 2021, a panel of the Eleventh Circuit affirmed a district court dismissal of a putative class action filed by a cruise ship passenger against cruise ship operators for the alleged negligent failure to warn passengers of the danger of COVID-19, misleading advertisement, negligent infliction of emotional distress, and the intentional dismissal of emotional distress based upon the forum selection clause in the cruise contract. In Turner, on his own behalf  and on behalf of others similarly situated passengers aboard the Costa Luminosa v. Costa Crociere S.P.A., Costa Cruise Lines, Inc., 2021 WL 3673727,   __F.3d__ (11^th Cir. 2021), the Panel held that Section 2(a) of the General Conditions of Passage Ticket Contract (the “Contract”) required all passengers to file any suit arising out of the cruise in Genoa, Italy.

On July 26, 2021, the North America Freight Car Association, The National Grain and Feed Association, The Chlorine Institute, and The National Oilseed Processors Association (collectively, Petitioners) filed a petition for rulemaking requesting that the Surface Transportation Board (Board) exercise its authority under 49 U.S.C. §§ 1312 and 11122(a)(2) “to promulgate regulations governing the use by the Nation’s Class I railroads of freight railcars supplied to them by rail car owners, shippers, and other non-railroad entities (‘Private Railcars’).”  Petition for Rulemaking to Adopt Rules Governing Private Railcar Use by Railroads, EP 768 at 1 (filed July 26, 2021).

On July 30, 2021, the Surface Transportation Board (Board) issued a decision accepting for consideration the revised application seeking approval for: (1) CSX Corporation (CSXC), CSX Transportation, Inc. (CSXT), and 747 Merger Sub 2, Inc. (747 Merger Sub 2) to control the railroads controlled by Pan Am Systems, Inc. (Systems) and Pan Am Railways, Inc. (PAR); and (2) CSXT to merge certain PAR subsidiaries into CSXT (the Proposed Transaction).  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served July 30, 2021).  The Board had previously rejected as incomplete a prior version of the application.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served May 26, 2021). 

On August 6, 2021, the Surface Transportation Board (Board) issued a decision instituting a proceeding on an application filed by the National Passenger Railroad Corporation (Amtrak) regarding Amtrak’s operation of additional passenger trains over CSX Transportation, Inc. (CSXT) and Norfolk Southern Railway Company (NSR) lines between New Orleans, LA, and Mobile, AL.  Application of the Nat’l Passenger R.R. Corp. Under 49 U.S.C. § 24308(E)—CSX Transp., Inc. & Norfolk S. Ry. Co., FD 36496 (STB served Aug. 6, 2021).  In the decision, the Board also denied CSXT and NSR’s motion to dismiss the application.

Pending before the Surface Transportation Board (Board) are two potential merger proceedings involving Kansas City Southern – Docket No. FD 36500, regarding a potential merger with Canadian Pacific, and Docket No. FD 36514, regarding a potential merger with Canadian National.  On August 2, 2021, the Board issued a decision in Docket No. FD 36500, granting in part and denying in part Canadian Pacific’s petition for declaratory relief, addressing whether Kansas City Southern has a continuing obligation to provide Canadian Pacific with information Canadian Pacific needs to prepare its application, and whether Canadian Pacific has a continuing right to access the information that Kansas City Southern has already provided.  Canadian Pac. Ry. Ltd.—Control—Kansas City S., FD 36500 (STB served Aug. 2, 2021).  On August 31, 2021, the Board issued a decision in Docket No. FD 36514, rejecting Canadian National and Kansas City Southern’s joint motion for approval of a voting trust agreement.   Canadian Nat’l Ry. Co.—Control—Kansas City S., FD 36514 (STB served Aug. 31, 2021).

On July 9, 2021, President Biden signed a major executive order titled “Promoting Competition in the American Economy.”¹ The executive order targets conduct in nearly every sector of the United States economy, including various transportation industries. The executive order noted that Congress has passed a number of laws directed at promoting competition across all sectors of the economy, including the Sherman Act and the Clayton Act, as well as industry-specific fair competition and anti-monopolization laws, including the Shipping Act of 1984² and the ICC Termination Act of 1995.³ Those industry-specific laws are in turn overseen by agencies including the Department of Transportation, the Surface Transportation Board, and the Federal Maritime Commission.

The pending enactment of large-scale construction incentive and funding legislation at the federal level will catalyze new projects for each mode of the transportation industry. The core transactional competencies will invoke areas that, while important to the interest groups involved, are not as well known.  For example, many of the projects likely to be funded will invoke wage and benefit mandates under federal contracting laws, such as the Davis-Bacon Act, the Service Contract Act, and the National Labor Relations Act. Furthermore, the legislative effort on infrastructure itself is closely linked to independent spending authorizations that must be enacted. This means that access to funds for new projects will likely be linked to tax and other provisions that, in specific situations, will provide the union(s)and other interest groups a market share advantage.

In recent weeks, several states and cities have launched efforts aimed at growing passenger rail nationwide and encouraging funding for various rail projects at the state and federal level.  Colorado Governor Jared Polis signed Senate Bill 238 creating a new taxing district to support passenger service from Fort Collins to Pueblo with connections to Wyoming in the North and New Mexico in the South.  The bill provides funding for start-up costs for the line. 

In Northern California, the Link21 program aims to “transform Northern California’s passenger rail network into a faster, more integrated system.”  The Capitol Corridor Joint Powers Authority and the San Francisco Bay Area Rapid Transit District (BART) hosted a virtual workshop on July 15 to get public input on the project. 

The cybersecurity ransomware attack on the Colonial Pipeline system in early May 2021 received extensive media coverage.  It caused a surge in panic buying of gasoline, leading to a gasoline shortage at stations up and down the East Coast of the United States. In the wake of the high-profile incident, there has been substantial public pressure on federal agencies and Congress to implement stronger cybersecurity controls.

In the immediate wake of the cyberattack, the Transportation Security Administration (“TSA”), an agency of the Department of Homeland Security, ramped up its oversight of pipeline cybersecurity by issuing two Security Directives seeking to enhance the cybersecurity of critical pipeline systems and facilities.

In two recent construction cases, Chairman Oberman has objected to the Board granting a petitioner preliminary construction approval based on the transportation merits but conditioning the approval upon completion of an environmental and historical review. 

The construction of a common carrier rail line requires Board approval.  An applicant can either apply to the Board under 49 U.S.C. §10901 or an applicant can petition the Board for an exemption under 49 U.S.C. §10502 from the approval requirements of section 10901.

Prior to 2007, an applicant could seek preliminary Board approval of a rail construction project, subject to completion of either an Environmental Impact Statement or an Environmental Analysis.  The Board established a new policy in 2007, that it would “not address transportation-related issues in construction proposals until the entire record, including the environmental record, is completed” because the petition could be later rejected when the Board considers the environmental impacts of the project.  Six County Ass’n of Governments – Construction & Operation Exemption – A Rail Line Between Levan and Salina, Utah, STB Finance Docket 34075, slip op.  at 2 n.4 (served Sept. 3, 2015).

The U.S. District Court for the Central District of California recently dismissed a plaintiff’s claims against an airline and its holding company arising from an alleged sexual assault she suffered on an international flight from Los Angeles to Panama City for lack of personal jurisdiction over the holding company and because the claims against the airline were preempted by the Montreal Convention.¹

According to the plaintiff’s complaint, she was sexually assaulted by a passenger sitting next to her almost immediately after she took her seat.  She requested a seat change, but the crew initially denied her request.  After the alleged assailant “completely mount[ed]” the plaintiff, she escaped her seat, woke up the flight crew, and requested again that her seat be moved.  This time she was accommodated, but moved to a seat still within visibility of the alleged assailant, who allegedly continued his behavior and terrorized the plaintiff.  The offending behavior continued after the flight landed, when the plaintiff was forced to wait near the alleged assaulter.

Dear Members,

The ATLP recently concluded its 92nd annual meeting. Thank you to all of those who attended. For those of our members who could not join us virtually, we look forward to seeing you again soon, in person. Our sincere thanks goes to Wayne Rohde and the Program Committee for putting together a successful and informative program.

At the conclusion of the meeting, we elected a new slate of officers. I am grateful to be serving as President for the upcoming year and excited to be working with the board on enacting and implementing new strategic initiatives. Special thanks to Jason Tutrone - as the outgoing President - who successfully steered our organization through the challenges of a global pandemic.

The International Maritime Organization (“IMO”) has directed its focus on the analysis of the potential regulatory scheme that must be implemented to address the emerging technology of autonomous and remotely controlled commercial ships.  The IMO Strategic Plan for the years 2018 through 2023 contains a Key Strategic Direction to “integrate new and advancing technologies into the regulatory framework.”¹ Specifically, this Key Strategic Direction entails weighing the benefits of new technology against safety concerns, security, cybersecurity, environmental risks, costs, and the facilitation of international trade. Commensurate with that goal, IMO is conducting an analysis of all applicable treaties in assessing the regulation of Maritime Autonomous Surface Ships (“MASS”). ²   Three IMO standing Committees, including the Marine Safety Committee (“MSC”), the Legal Committee (“LGL”), and the Facilitation Committee (“FAL”) have commenced a “Scoping Exercise” to analyze MASS against the backdrop of the international treaties that govern the world’s commercial shipping industry.

In a decision served on April 5, 2021, the Surface Transportation Board (Board) adopted a final rule amending the thresholds for classifying rail carriers.  Mont. Rail Link, Inc.—Pet. for Rulemaking—Classification of Carriers, EP 763 (STB served April 5, 2021).  Under 49 C.F.R. Part 1201, rail carriers are grouped into one of three classes for purposes of accounting and reporting.  Id., slip op. at 1.  This classification affects the degree to which rail carriers must file annual, quarterly, and other operational reports, and it is used in various other contexts, including differentiating the legal standards and procedures that apply to certain transactions subject to Board licensing, and prescribing labor protection conditions.  Id. 

In a decision served on April 6, 2021, the Surface Transportation Board (Board) adopted a final rule “requiring Class I carriers to include certain minimum information on or with their demurrage invoices and provide, in the format of their choosing, machine-readable access to the required minimum information.”  Demurrage Billing Requirements, EP 759, slip op. at 3 (STB served April 6, 2021).  According to the Board, “[d]emurrage is a charge that serves principally as an incentive to prevent undue car detention and thereby encourage the efficient use of rail cars in the rail network, while also providing compensation to rail carriers for the expense incurred when rail cars are unduly detained beyond a specified period of time (i.e., ‘free time”) for loading and unloading.”  Id., slip op. at 1-2.

On May 28, 2021, the Surface Transportation Board (Board) issued a decision granting the Association of American Railroads’ (AAR) petition to initiate a rulemaking proceeding to establish a new class exemption for emergency temporary trackage rights, with certain modifications made by the Board.  Pet. for Rulemaking—Railroad Consolidation Procedures—Exemption for Emergency Temporary Trackage Rights, EP 282 (Sub-No. 21) (STB served May 28, 2021).  The Board also proposed related changes to the class exemptions for trackage rights and temporary trackage rights.  Id., slip op. at 1. 

On May 26, 2021, the Surface Transportation Board (Board) issued a decision rejecting as incomplete an application seeking approval for: (1) CSX Corporation (CSXC), CSX Transportation, Inc. (CSXT), and 747 Merger Sub 2, Inc. (747 Merger Sub 2) to control the railroads controlled by Pan Am Systems, Inc. (Systems) and Pan Am Railways, Inc. (PAR); and (2) CSXT to merge certain PAR subsidiaries into CSXT (the Proposed Transaction).  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served May 26, 2021). The Board also permitted the applicants to file a revised application.

Pending before the Surface Transportation Board (Board) are two potential merger proceedings involving Kansas City Southern – Docket No. FD 36500, regarding a potential merger with Canadian Pacific, and Docket No. FD 36514, regarding a potential merger with Canadian National.  A summary of these proceedings is provided below.

Twenty years after issuing stronger regulations for the Surface Transportation Board’s review of railroad mergers, the STB is finally reviewing a merger of two Class I carrier railroads. But it’s not the merger that the Board expected to be reviewing two months ago.

On March 21, 2021, Canadian Pacific Railway (CP) announced it had reached an agreement to acquire Kansas City Southern for $29 billion. Both firms were Class I rail carriers as defined by the STB, meaning that they each had annual revenues of $505 million. The STB has authority to review mergers between Class I carriers.¹ This was the first such merger since the STB finalized its “Major Rail Consolidation Procedures” regulations in 2001.² Those regulations heightened the scrutiny that the STB would apply to Class I carriers’ mergers, but included a waiver of that scrutiny for transactions involving Kansas City Southern, unless the Board determined that the 2001 regulations should apply. Competing railroads and shippers urged the STB not to apply the waiver to this transaction.³ The Department of Justice also filed a comment through its Antitrust Division, objecting to the proposed use of a voting trust structure because of the effects on the firms’ incentives of such a structure, and because a voting trust could undermine the STB’s ability to conduct a meaningful review of the transaction or order divestitures as remedies.⁴ But the STB determined that the waiver in the 2001 rules should still apply twenty years later in the transaction with CP.⁵ The Board noted that Kansas City Southern’s rail network overlapped less with CP’s than with any other Class I railroad, and that the combined company would still be the smallest Class I railroad. The STB subsequently approved the CP-Kansas City Southern voting trust.⁶