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

The prevalence of autonomous vehicles has increased in recent years. It is projected that approximately 58 million units will be sold by 2030.¹ To improve vehicle autonomy, safety, and operation, vehicle manufacturers are inventing and developing more features. These features, whether in their entireties or components thereof, are protected by one or more intellectual property assets—patents, trademarks, trade secrets, and copyright.²

Introduction

This is my first submission since joining Practus – In doing so, I and this article will highlight the pervasiveness of changes in employment and labor law and provide some guidance in how to plan and adapt to them, not just in everyday decisions, but in the broader context of business change, whether in acquisitions or sales, mergers, or more fundamental decisions about how to manage and classify employees to minimize risk.

In our industries, such changes, whether they emerge from the courts or legislatures define our work for our client, especially so in the modes ATLP encompasses.

 

ATLP's 92^nd Annual Meeting 2021 is a six-session online CLE program offering*. Beginning May 25 -through June 29, 2021, Tuesdays at 2 PM EDT. ATLP will present 2-3 hour sessions with topical discussions on a wide range of issues impacting the transportation law industry.

Join us for the next session of ATLP's 92nd Annual Meeting.

On May 7, 2021, the Colonial Pipeline Company learned it was the victim of a cybersecurity ransomware attack allegedly carried out by the criminal group known as “DarkSide.” DarkSide is a “ransomware-as-a-service” business believed to be headquartered in Russia, which loans out its malware to criminal affiliates who conduct cyberattacks on its behalf. DarkSide’s ransomware uses an encryption program to hold files and IT systems hostage in exchange for payment. The attack required Colonial Pipeline to take certain IT systems offline and temporarily halt all pipeline operations to ensure that the threat was contained.  The Colonial Pipeline is the largest pipeline system for refined oil products in the United States, spanning between Houston, Texas and Linden, New Jersey, and carries up to 100 million gallons per day of diesel, gasoline, home heating oil, and jet fuel.

The U.S. District Court for the Eastern District of Louisiana recently denied Delta Airlines’ motion to dismiss an action under Federal Rule of Civil Procedure 12(c), wherein it held Delta to the choice of law clause its own contract of carriage even though Delta argued that the law of the forum where the alleged injury to the plaintiff occurred applied.

President Biden has tapped Meera Joshi to lead the Federal Motor Carrier Safety Administration (FMCSA).  Joshi, who was already confirmed as Deputy Administrator and has been serving as the agency’s acting administrator since January, brings a wealth of transportation administration experience to the agency tasked primarily with ensuring the safety of the nation’s motor carriers, and those who share the road with them. Joshi previously served as CEO and commissioner of the New York City Taxi and Limousine Commission (TLC), where she had regulatory oversight of the city’s 130,000-strong private passenger fleet. 

 In March, the International Maritime Organization (“IMO”) announced the release of the Ship-Port Interface Guide (the “Guide”)¹ for the purpose of reducing Greenhouse Gas Emissions (“GHG”).   The Guide was developed by the Global Industry Alliance² to Support Low Carbon Shipping pursuant to the IMO-Norway GreenVoyage2020 project, ³   the Paris Agreement,⁴ and the United Nations 2030 Agenda for Sustainable Development.⁵ The Guide contains practical steps to be implemented for the overarching purpose of reducing GHG in the world shipping industry. A number of commercial shipping interests, including the cruise industry, have collectively endeavored to reduce GHG for the shipping industry. To that end, the Global Industry Alliance considered that the average lifetime of a commercial ship is approximately 25 years.

On March 23, 2021, Canadian Pacific Railway Limited (Canadian Pacific), Canadian Pacific Railway Company, and their U.S. rail carrier subsidiaries, Soo Line Railroad Company, Central Maine & Quebec Railway US Inc., Dakota, Minnesota & Eastern Railroad Corporation, and Delaware & Hudson Railway Company, Inc. (collectively, CP), and Kansas City Southern and its U.S. rail carrier subsidiaries, The Kansas City Southern Railway Company (KCSR), Gateway Eastern Railway Company, and The Texas Mexican Railway Company (collectively, KCS), notified the Surface Transportation Board (Board) of CP and KCS’s (collectively, Applicants) intent to file an application seeking authority under 49 U.S.C. §§ 11323-25 for the acquisition of control by Canadian Pacific, through its indirect, wholly owned subsidiary, Cygnus Merger Sub 2 Corporation (Cygnus Merger Sub 2), of Kansas City Southern.  Canadian Pac. Ry. Ltd.—Control—Kansas City S., FD No. 36500 (filed Mar. 23, 2021).  Applicants are also seeking authority for the acquisition of control by Canadian Pacific, through Kansas City Southern, of KCSR and its railroad affiliates, and for the resulting common control by Canadian Pacific of both its U.S. railroad subsidiaries and KCSR and its railroad affiliates.  Id. at 1.  Applicants intend to file the application on or after June 28, 2021.  Id.

On February 25, 2021, CSX Corporation (CSXC), CSX Transportation, Inc. (CSXT), 747 Merger Sub 2, Inc. (747 Merger Sub 2), Pan Am Systems, Inc. (Systems), Pan Am Railways, Inc. (PAR), Boston and Maine Corporation (Boston & Maine), Maine Central Railroad Company, Northern Railroad, Portland Terminal Company, Springfield Terminal Railway Company (Springfield Terminal), Stony Brook Railroad Company, and Vermont & Massachusetts Railroad Company (collectively, Applicants), filed an application pursuant to 49 U.S.C. §§ 11323(a)(1), (3), (4), and (5) and 49 C.F.R. Part 1180, seeking approval from the Surface Transportation Board (Board) for: (1) CSXC, CSXT, and 747 Merger Sub 2 to control the railroads controlled by Systems and PAR; and (2) CSXT to merge certain PAR subsidiaries into CSXT.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (filed Feb. 25, 2021). 

On March 22, 2021, United States District Judge Bernard A. Friedman of the Eastern District of Michigan dismissed antitrust and business tort claims against Volkswagen AG and Volkswagen Group of America on forum non conveniens grounds.¹ The claims were brought by plaintiffs Prevent USA Corporation and Eastern Horizon Group. The two plaintiffs alleged that they were two members of a group of related companies known collectively as the Horizon Group. They alleged that Volkswagen had acted in violation of Sections 1 and 2 of the Sherman Act, and similar Michigan state laws, to block efforts by Prevent Group to acquire auto parts suppliers that sold auto parts to Volkswagen.

FRA Plans to Complete Impact Testing of Cryogenic Tank Cars in 2022

            The past decade has seen a marked increase in natural gas production in the United States.  This, in turn, has led to greater demand to transport products such as liquified natural gas (LNG) by rail and pipeline.  In 2019, the Pipeline and Hazardous Materials Safety Administration (PHMSA) granted the first special permit to transport LNG using a DOT-113C120W (DOT-113) tank car, which was issued to Energy Transport Solutions for service between Pennsylvania and New Jersey.  In 2020, PHMSA issued a Final Rule permitting the transportation of LNG by rail in the DOT-113 specification tank car.  The DOT-113 is a double-walled tank car (“tank-within-a-tank”) that is designed to transport cryogenic liquids such as LNG.

As you know I sit as a legislative appointee to the California Committee on the Employment of Persons with Disabilities (CCEPD) and am newly appointed to and elected chair of the inaugural panel of the Interagency Advisory Committee on Apprenticeship (“IACA”) Standing Committee for People with Disabilities authorized by the Legislature to develop standards for individuals with Disabilities in apprenticeship, with a focus on non-construction industries. In the course of my service I have worked directly with the Agency leaders of the California Future of Work Commission which has just released its initial report. 

In this article, I will highlight the goals articulated by the Commission and identify proposals in the newly introduced state budget that will affect ways in which the structure of California wage Enforcement is likely to change as a result of the joint work of the Governor, the Legislature and the Commission. Bear in mind that the legislative work on the budget is ongoing, so the precise form of reorganization is pending. I focus on this as of national import with the nomination of a former Laborers Union executive as the new Secretary of Labor and Julie Su, California’s Labor Secretary and a policy-based architect of California’s innovative efforts at enforcement as Deputy.

Recent news in the passenger rail transportation regulatory realm includes the following:

• Amtrak asks STB to Order Class I’s to Add Trains Along Gulf Coast
• US DOT Increases Passenger Rail Liability Cap
• FRA Issues Emergency Order Requiring Masks in Railroad Operations

Read on for details.

The United States District Court for the District of Massachusets recently reaffirmed the rule that the inquiry into whether an “accident” occurred for Montreal Convention purposes is an objecive inquiry, not one subjective to the passenger claiming that an “accident” causing his or her injuries occurred. In Moore v. British Airways, PLC,¹ Plaintiff was a passenger onboard a British Airways flight from Boston to London, as part of round-trip transportation.² Upon arrival in London, the jetbridge intended for disembarkation was broken, which forced the passengers to disembark via a mobile staircase. According to the uncontradicted British Airways testimony submitted with its motion for summary judgment, the use of mobile staircases to disembark aircraft at London’s Heathrow Airport is a common occurrence. The Plaintiff successfully navigated nearly the entire staircase but fell off of the bottom step, which had a greater distance between it and the ground than the space between the preceeding steps. She claimed that she was not expecting this difference, or the use of a mobile staircase for disembarkation, which allegedly were the cause of her fall, and sued British Airways on account of her resulting injuries.