2019 May - June Newsletter Introduction

While an infrastructure funding deal remains elusive in Washington, passenger rail transportation on both the east and west coasts is facing special challenges because some major projects in jeopardy. On the west coast, California’s High Speed Rail project continues to be constructed in the Central Valley, but plans to extend high speed rail to the State’s major population centers look as doubtful as ever. In February of this year, then newly inaugurated Governor Newsom offered a realistic assessment that plans to expand the line into Los Angeles and into the Bay Area were not at this time feasible and would require further assessment. He did not kill the project, as widely reported at the time, but rather said that the State would continue to build the Central Valley segment between Merced and Bakersfield, while continuing to study how to connect the ends of that segment with the major metropolitan areas. In fact, rail lines, albeit not high speed, already exist between Merced and the Bay Area, thus opening the possibility of some combined traditional rail/high speed rail service between San Francisco and at least Bakersfield.

The Trump Administration, however, was quick to issue a notice of intent to terminate its almost $1 billion funding agreement for the California project and then to finalize that termination in May 2019. Citing a provision in the agreement that allows termination for breaches of the funding agreement or when the purposes of the funding statute “would not be adequately served by continuation of Federal financial assistance for the Project,” the Federal Railroad Administration recently provided California with a detailed, 25-page termination notice citing a long series of alleged missed deadlines, performance deficiencies and changed project goals which FRA claims justify funding termination. Further, and more ominously, FRA left open the possibility that it may seek to claw back another $2.5 billion in federal funds that were previously provided and already spent by the high speed project

While the California project will not necessarily live or die based on the federal funding, the State is likely to challenge the federal action in court, claiming that any violations of the agreement are not material and that the termination is politically motivated as payback for the State’s opposition to the border fence and other Presidential programs. The federal government might claim that the funding decision is not judicially reviewable, but either way any litigation is likely to raise some novel issues worth watching.

On the East Coast, the federal-state dispute centers around federal funding for the Gateway Project, which would replace crumbling rail tunnels under the Hudson and replace a nearby swing rail bridge in New Jersey that sometimes chooses not to close. Hundreds of thousands of New York-New Jersey rail commuters and Northeast Corridor Amtrak passengers depend on the over 100 year-old tunnels and bridge, and nobody denies that they urgently need replacement, particularly after the damage sustained during Super Storm Sandy in 2012. Nonetheless, the Trump Administration has stubbornly refused to rank Gateway as a project justifying priority for federal funds relative to some smaller transit projects in some other parts of the country. It is possible that the logjam will break if a larger infrastructure measure is agreed (Senator Schumer, a central player in the infrastructure wars, is pushing hard for federal support for Gateway), but this remains to be seen.

While the political wrangling continues in Washington, our editors have been hard at work on articles designed to keep you updated. On the rail front, our freight rail editors have prepared a useful summary of a recent and significant Rate Reform Task Force report to the STB suggesting changes to the methodologies and processes used to adjudicate rate reasonableness proceedings. The editors have also written about the STB’s forthcoming oversight hearings on demurrage and accessorial charges, a decision dismissing a complaint because it was based on a contract beyond the STB’s jurisdiction, and a waiver by the STB of its ex parte rules in a proceeding reviewing the scope of some existing rail exemptions.

In the motor carrier world, our editor writes about an unusual holding that a broker cannot be held responsible for poor selection of a carrier, but can be held responsible if it is portrayed as a carrier on the relevant paperwork. He also tells us about a case in which a court allowed an invasion of privacy claim brought by a truck driver to proceed where the driver found out he was being recorded while driving, as well as about a case exploring responsibility for cargo damage during the unloading process. On the motor regulatory front, our editor explains that a new hours of service rulemaking notice will be issued in early June, describes a change to the carrier compliance scoring system to allow carriers to avoid being penalized for accidents that were unavoidable and tells us about various other regulatory developments.

Our aviation editor discusses a case in which a disgruntled passenger sued Southwest Airlines for a flight cancellation resulting from the airline running out of de-icing fluid, while our maritime editor describes the key provisions of certain amendments to the Convention on Facilitation of International Maritime Traffic which recently entered into force and brings us up to date on a recent Supreme Court case that addressed the scope of a manufacturer’s duty to warn potential product users in the maritime tort setting. PHMSA activities on its emergency response guidebook and lithium battery transportation are addressed by our hazardous materials editor, while our labor editor writes about recent litigation versus arbitration decisions in California, including an unpaid wage claim brought by an employee against the San Francisco Giants, that could be a predictor of developments nationwide.

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