CP & KCS Notify the Surface Transportation Board of Intent to File Application for Approval of Control Transaction

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.

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The Surface Transportation Board Finds that CSXT & Pan Am’s Proposed Control and Merger Transaction is “Significant”

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). 

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Court dismisses antitrust claims against Volkswagen for Forum Non Conveniens

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.

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HazMat Regulatory Updates from the US and Canada

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.

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The Future of Work (And Workforce Enforcement)

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.

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ATLP Association Highlights: Passenger Rail Update

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.

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U.S. District Court Upholds Rule that Montreal Convention “Accident” Inquiry is Objective

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.

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ATLP Headquarters' Happenings

Surface Transportation Board Virtual Meet & Greet

Please join us for a conversation with Robert Primus, Vice Chairman, Surface Transportation Board, Wednesday, March 24th at 2:00 PM ET, You will be notified when registration has opened.  You will be able to submit your questions for the Vice-Chairman ahead of the event. An event with Member Michelle A. Schultz will be announced when the date is confirmed.

ATLP Membership Survey

Soon you will receive a short email survey from ATLP asking for input on your experiences with ATLP and things you would like to see from the organization. We urge you to complete the survey. It’s only a few multiple-choice questions, and it will provide us with invaluable information about what is important to you. Your responses will be used by our Strategic Planning Task Force to update ATLP’s strategic plan to ensure that the organization continues to provide value to you in the years ahead. Please keep a lookout for the survey (check your spam filters!) and submit your responses.

Annual Meeting

The 92nd Annual Meeting will be provided virtually. Tuesdays at 2 PM ET, 2- 3 hour sessions, with a few networking/social activities included! Mark your calendars for Tuesday, May 25th through Tuesday, June 29th

What Will the FMCSA Prioritize in the Biden Administration?

The U.S. Department of Transportation (DOT) historically has been less prone to large shifts in policy between presidential administrations. Although Presidents Donald Trump and Joe Biden each nominated a Secretary of Transportation from his own party, before that, Presidents Barack Obama and George W. Bush each nominated a member of the opposing party.  While President Biden has not yet put forward his nominee for Administrator of the Federal Motor Carrier Safety Administration (FMCSA), the agency’s leadership and policies have historically followed this bipartisan approach. 

For example, when the Trump Administration took control of the FMCSA, the Obama-era rule requiring that driver hours of service be recorded by electronic logging device (ELD), rather than paper logbook, had not yet gone into effect. The Owner-Operator Independent Drivers Association (OOIDA) – a group that generally comprises many members of President Trump's base – had fought vigorously against the ELD rule. Despite years of effort to implement the ELD rule, it was uncertain if the FMCSA would postpone, chip away at the rule or even reverse course on ELDs. Nonetheless, the agency held firm and implemented the rule.

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TSA Issues Security Directive Ordering Masks to be Worn on Public Transportation Systems

The Biden Administration has issued a number of directives to public transportation providers, including operators of passenger rail service, directing operating entities to require that all persons working in their systems or using their services wear masks to prevent the spread of COVID-19.  While these directives provide that any individual who fails to comply with the mask mandate will violate federal law, the directives make public transportation providers responsible for requiring masks, but do not specify a mechanism for enforcing those requirements.  As the directives stand as of the date of this blog entry, the policy goal is clear and the directives identify various means for penalizing public transportation providers who fail to adhere to the requirements – but they do not specify an enforcement regime. We expect TSA and FTA will issue further guidance, so watch this space.

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The Board Finds that CN Cannot Unilaterally Designate the Belt Railway of Chicago’s Clearing Yard as the Interchange Point for Inbound CP Traffic

On October 30, 2020, the Surface Transportation Board (the Board or STB) issued a declaratory order finding that Wisconsin Central, Ltd. d/b/a Canadian National (CN) cannot unilaterally designate the Belt Railway of Chicago’s (“BRC”) Clearing Yard as the interchange point for inbound Soo Line Railroad Company d/b/a Canadian Pacific (CP) traffic.  Wisconsin Central, Ltd.—Pet. for Declaratory Order—Interchange with Soo Line R.R. Co., FD 36397 (STB served Oct. 30, 2020). 

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The Board Institutes a Rulemaking Proceeding to Consider a Proposal by Class I Railroads to Establish an Alternative Voluntary Arbitration Program for Small Rate Disputes

On November 25, 2020, the Surface Transportation Board (the Board or STB) issued a decision instituting a rulemaking proceeding to consider a proposal by five Class I railroads, Canadian National Railway Company (CN), CSX Transportation, Inc. (CSX), Norfolk Southern Corporation (NS), Union Pacific Railroad Company (UP), and the Kansas City Southern Railway Company (KCS) (collectively, Petitioners), to establish a new voluntary arbitration program for small rate disputes.  Joint Petition for Rulemaking to Establish an Alternative Voluntary Arbitration Program for Small Rate Disputes, Ex Parte 765 (STB served November 25, 2020). 

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The Board Opens a Rulemaking Proceeding to Consider a Petition by Three Class I Railroads to Modernize Annual Revenue Adequacy Determinations

On December 30, 2020, the Surface Transportation Board (the Board or STB) issued a decision initiating a rulemaking proceeding to consider a joint petition by several Class I railroads, Union Pacific Railroad Company (UP), Norfolk Southern Railway Company (NS), and the U.S. rail operating affiliates of Canadian National Railway Company (collectively, CN), to change the Board’s procedures for annually determining whether Class I rail carriers are revenue adequate under 49 U.S.C. § 10704(a)(3).  Joint Petition for Rulemaking—Annual Revenue Adequacy Determinations, Ex Parte 766 (STB served Dec. 30, 2020). 

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The Board Declines to Issue a Declaratory Order, But Offers Guidance, Regarding Preemption of Certain Provisions of the Clean Water Act

The Surface Transportation Board (the Board or STB) issued a decision on December 30, 2020, denying a request by the Association of American Railroads (AAR) for a declaratory order regarding preemption of the Clean Water Act’s (CWA) National Pollutant Discharge Elimination System (NPDES) permitting program and discharge prohibition.  Ass’n of Am. R.R.—Pet. for Declaratory Order, FD 36369 (STB served Dec. 30, 2020).

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The Board Preliminarily Concludes that the Transportation Aspects of the Proposed Construction and Operation of a Rail Line in Utah Meet the Statutory Exemption Standard

On January 5, 2021, the Surface Transportation Board (STB or Board) issued a decision addressing the transportation merits of the proposed construction and operation of an approximately 85-mile rail line in Utah.  Seven County Infrastructure Coalition—Construction and Operation—in Utah, Carbon, Duchesne, and Uintah Counties, UT,FD 36284 (STB served Jan. 5, 2021) (with Board Member Oberman dissenting).  The Board preliminarily concluded, subject to completion of the ongoing environmental review, that the transportation aspects of the proposed project meet the statutory exemption standard under 49 U.S.C. § 10502.  Id., slip op. at 1.

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CDC Issues Framework For Conditional Sailing Order For Cruise Ships

The once vibrant U.S. cruise industry has been sharply impacted by the COVID-19 pandemic.   On March 14, 2020, in response to the pandemic, the Centers for Disease Control and Prevention (“CDC”) issued a No Sail Order effective for 30 days precluding cruise ship operations arriving or departing from U.S. ports.1  The CDC Director entered the No Sail Order to mitigate the threat of severe illness and death from COVID-19. The No Sail Order was renewed by the CDC on April 9, 2020, July 16, 2020, and September 30, 2020.2  Over the past eleven months, cruise ship operations were brought to a standstill.

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Grappling with Deregulation and Shared Facilities

Last summer, the long-running In re: Rail Freight Fuel Surcharge Antitrust Litigation 1 case took a detour through a rarely cited section of the Staggers Rail Act of 1980 (“Staggers”)2 that excludes certain communications and agreements between competing rail lines from evidence in antitrust cases. In response to the parties’ briefing on the scope of the statute, the Court requested the Department of Justice’s views on the statute. Though the DOJ’s guidance was specifically focused on the statute at issue, the advice it contained is relevant for competitors in any industry that have legitimate reasons in certain contexts to communicate with competitors or agree on prices with competitors, even as they otherwise compete on prices with them in the market. In the Rail Freight Fuel Surcharge litigation, the legitimate communications involve interline pricing between rail carriers shipping freight across multiple rail networks. In other industries, for example, it can involve a vertically-integrated company providing logistical or back-office services to a customer-facing competitor with which they compete for retail customers, or other dual distribution circumstances.

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President Joseph Biden, Jr. Has Designated Martin J. Oberman As Chairman of The Surface Transportation Board

President Joseph Biden, Jr. has designated Martin J. Oberman as Chairman of the Surface Transportation Board.  Chairman Oberman issued the following statement praising the outgoing chairman, Commissioner Begeman:

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Motor Carriers and California - No Clear Preemption Road Ahead

Federally licensed motor carriers that operate trucking companies in the Ports of Los Angeles and Long Beach, two of the largest ports in the United States, often contract with owner-operator truck drivers to perform drayage, or the short distance movement of cargo. Since these trucking companies often classify the owner-operator truck drivers as independent contractors, when doing so they do not pay unemployment insurance taxes, employment training fund taxes, or disability insurance taxes. For purposes of this article, it is assumed that such trucking companies do not provide workers’ compensation or reimbursement for business expenses, such as fuel, truck insurance, parking, and routine maintenance costs.

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ATLP Highlights – Hazmat

In a year like no other, 2020 saw the advancement of numerous pipeline safety initiatives at the Pipeline and Hazardous Materials Safety Administration (PHMSA).  In early 2020, PHMSA issued a Final Rule adopting safety standards applicable to underground natural gas storage facilities, which was required by the PIPES Act of 2016.  Among other things, the Final Rule requires operators to apply integrity and risk management principles to storage facilities, narrows certain reporting requirements, and clarifies compliance with respect to non-mandatory industry practices.  In 2020, PHMSA also published four major Notices of Proposed Rulemaking (NPRM): Liquid Pipeline Regulatory Reform, which would modify the agency’s enforcement and regulatory procedures, regulations governing facility response plans for oil pipelines, and safety regulations applicable to hazardous liquid pipelines; Gas Pipeline Regulatory Reform, which would modify a number of reporting and safety regulations applicable to gas pipelines; Requirements for Valves and Rupture Identification and Mitigation, which proposes new requirements to install remote-control valves, automatic shutoff valves, or equivalent technology on newly-constructed or entirely-replaced onshore gas transmission and certain hazardous liquid pipelines, and would impose new rupture and mitigation standards; and Class Location Requirements, which would permit an alternative approach to managing the safety of certain gas transmission pipelines whose class locations change from Class 1 to Class 3.  The comment deadline has closed for each proposed rule.  

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