In order to facilitate implementation of the new regulations, the Board proposed: (1) requiring Class I carriers to submit certain data, which would be publicly accessible and generalized; and (2) adopting a new requirement that, upon written request by a customer, a rail carrier must provide to that customer individualized, machine-readable service data. The proposed regulations “would provide for the prescription of a reciprocal switching agreement when service to a terminal-area shipper or receiver fails to meet certain objective performance standards.” The three performance standards proposed by the Board are Service Reliability, Service Consistency, and Inadequate Local Service.
Service Reliability: Original Estimated Time of Arrival. The service reliability standard would measure “a Class I rail carrier’s success in delivering a shipment near its OETA, i.e., the estimated time of arrival that the rail carrier provided when the shipper tendered the bill of lading for shipment.” The Board stated that the “OETA would be compared to when the car was delivered to the designated destination” and would be based on all shipments over a given lane over 12 consecutive weeks. One proposed approach would be to ensure that at least 60% of shipments arrive within 24 hours of the OETA. Another approach would be to set the success rate during the first year after the rule’s effective date to at least 60% of shipments arriving within 24 hours of the OETA, and then raising the success rate to 70% the second year. The Board is seeking comments on which approach to adopt and on other aspects of the proposal, such as the appropriate success rate for service reliability.
Service Consistency: Transit Time. The service consistency standard would measure “a rail carrier’s success in maintaining, over time, the carrier’s efficiency in moving a shipment through the rail system.” The standard “would also apply separately to the return of empty private and shipper-leased railcars.” For loaded cars, the standard would be based “on the average transit time for shipments over the relevant lane during a 12-week period, where transit time is the time between the shipper’s tender of the bill of lading and the rail carrier’s delivery of the shipment at the agreed-upon destination.” The Board proposed that a petitioner would be eligible for relief if the average transit time for a shipment increased by a certain percentage—potentially 20% or 25%—as compared to the average transit time for the same 12-week period during the previous year.
Inadequate Local Service: Industry Spot and Pull (ISP). The inadequate local service standard would measure “a rail carrier’s success in performing local deliveries (‘spots’) and pick-ups (‘pulls’) of loaded railcars and unloaded private or shipper-leased railcars during the planned service window.” The Board proposed that a railroad would fail the ISP standard if it had an ISP success rate of less than 80%, over a period of 12 consecutive weeks, in performing local deliveries and pick-ups within the applicable service window. The ISP success rate would measure whether the carrier provides the service within its customary operating window for the affected shipper, not to exceed 12 hours. This service metric would provide rail customers with the first mile/last mile service information.
The proposed rule would require all Class I carriers to provide customers with the historical data for these service metrics within seven days of a customer’s request. It also would provide for affirmative defenses for service failures resulting from issues beyond the rail carrier’s control, such as natural disasters or actions of third parties. The Board also proposed that switching agreements would be for a minimum period of two years and up to a maximum of four years, depending on the evidence presented. However, the Board is seeking comments on whether a longer period would be necessary.
On September 29, 2023, the Board issued a decision extending the original comment period by 15 days. Comments on the proposed rule are now due by November 7, 2023. Replies are due by December 6, 2023.
B. Freight Service
1. The Board Issued a Preliminary Injunction Ordering BNSF to Transport a Minimum Amount of Coal for NTEC
On June 23, 2023, the Board issued a preliminary injunction ordering BNSF Railway Company (BNSF) to transport a minimum of 4.2 million tons of coal on an annual basis in 2023 from Navajo Transitional Energy Company, LLC’s (NTEC) Spring Creek mine for service destined to Westshore Terminals facility at Roberts Bank, B.C., Canada, and an additional one million annual tons as capacity is available to serve NTEC.
On April 14, 2023, NTEC had filed an ex parte application in NOR 42178, seeking an emergency service order pursuant to 49 U.S.C. § 11123, and in addition, or alternatively, seeking a preliminary injunction pursuant to 49 U.S.C. § 1321(b)(4). NTEC asked the Board to direct BNSF to provide specified levels of coal transportation service from NTEC’s Spring Creek mine to the Westshore Terminals facility. BNSF filed a reply opposing the application, and NTEC filed a rebuttal.
Concurrent with its ex parte application, NTEC filed a related complaint in NOR 42179, alleging that BNSF has breached its common carrier obligation, failed to provide adequate car service, and engaged in unreasonable practices with respect to the transportation at issue. Discovery is ongoing in this proceeding and is scheduled to end on November 30, 2023.
On April 24, 2023, the Board issued a decision in NOR 42178 announcing that it intended to hold an oral argument regarding NTEC’s request for emergency/injunctive relief on May 10, 2023. The Board held a pre-argument conference with NTEC’s and BNSF’s outside counsel on April 27, 2023 and held the oral argument on May 10, 2023. Following the oral argument, NTEC and BNSF filed additional submissions with the Board.
In its decision served on June 23, 2023, the Board stated that, under the Board’s precedent, a party seeking a preliminary injunction must generally establish that: (1) there is a likelihood that it will prevail on the merits of any challenge to the action sought to be preliminarily enjoined; (2) it will suffer irreparable harm in the absence of a preliminary injunction; (3) other interested parties will not be substantially harmed by a preliminary injunction; and (4) the public interest supports the granting of the preliminary injunction.
The Board found that, based on the record currently before the Board, NTEC had made the requisite showing. The Board ordered BNSF to transport a minimum of 4.2 million tons of coal from Spring Creek for service destined to Westshore in 2023, and ordered that service must be reasonably distributed through the remainder of the year, i.e., approximately 23 trains per month. The Board also ordered BNSF to transport an additional one million tons of coal from Spring Creek for service destined to Westshore in 2023—which would result in a total of approximately 29 trains per month to NTEC on average—to the extent that additional train sets and crews become available. Additionally, the Board ordered BNSF and NTEC to file status reports, beginning on June 30, 2023.
Board Members Fuchs and Schultz dissented with separate expressions. Board Member Fuchs stated that he was dissenting because the Board’s preliminary injunction decision “is not necessary to prevent irreparable harm, it is not substantiated by the record, and it risks harm to the broader rail network.” Board Member Fuchs stated that, “[r]ather than impose an unjustified and unneeded preliminary injunction that sets harmful precedent and invites broad unintended consequences, [he] would expeditiously proceed to fully and fairly consider NTEC’s underlying complaint.”
Board Member Schultz stated that “NTEC has not demonstrated that it is likely to suffer irreparable harm in the absence of injunctive relief, and the Board’s analysis of the merits of this case is deeply flawed.” Board Member Schultz further stated that, “beyond the legal deficiencies in the Decision, [she is] concerned that the Decision will create great uncertainty as to how the Board determines the level of service required to meet a railroad’s common carrier obligation, and how the Board determines a railroad’s capacity to provide that service.”
On July 17, 2023, BNSF filed a petition for partial stay of the preliminary injunction pursuant to 49 C.F.R. § 1115.5. BNSF sought to stay the requirement that it transport the additional one million tons should capacity become available. NTEC filed a reply on July 24, 2023. On July 28, 2023, BNSF sought judicial review of the Board’s June 23, 2023 decision in the United States Court of Appeals for the Fifth Circuit.
In a decision served on August 14, 2023, the Board denied BNSF’s petition for partial stay. The Board stated that the threshold consideration in deciding whether a stay is appropriate is whether the moving party will be irreparably harmed without it. Here, the Board found that BNSF failed to show that irreparable harm will occur if a stay is not granted.
Board Members Fuchs and Schultz again dissented with separate expressions. Board Member Fuchs argued that the Board should, on its own initiative, find material error and vacate its preliminary injunction decision. Board Member Schultz agreed with the dissent by Board Member Fuchs, and stated that she was writing separate only to underscore the damaging effects of the preliminary injunction decision on rail regulation—effects that the Board’s August 14, 2023 decision only exacerbates.
C. Passenger Service
1. The Board Instituted an Investigation into On-Time Performance of Amtrak’s Sunset Limited Service
On July 11, 2023, the Board instituted an investigation into “the substandard on-time performance of the Sunset Limited, Amtrak Trains 1 and 2, a long-distance passenger service between New Orleans, La., and Los Angeles, Cal.”
Under section 213 of the Passenger Rail Investment and Improvement Act of 2008, the Board may initiate an investigation if the “on-time performance” (OTP) of any intercity passenger train averages less than 80% for any two consecutive calendar quarters. The Board “shall” initiate such an investigation, upon complaint by Amtrak or another eligible complainant. The purpose of an investigation is to determine whether and to what extent delays or failures to achieve minimum standards are due to causes that could reasonably be addressed by the passenger rail operator or the host railroad. Following the investigation, if the Board determines that Amtrak’s substandard performance is attributable to the rail carrier’s failure to provide preference to Amtrak over freight transportation as required by 49 U.S.C. § 24308(c), the Board may award damages or other appropriate relief from the host railroad(s) to Amtrak. 49 U.S.C. § 24308(f )(2).
On December 8, 2022, Amtrak submitted a Complaint and Petition for Board Investigation and Other Relief, requesting that the Board initiate an investigation of the OTP on its Sunset Limited service, a 1,997-mile-long Amtrak passenger train service that runs three times weekly, in each direction, between New Orleans, La., and Los Angeles, Cal. The route travels mostly over track that is hosted by Union Pacific Railroad Company (UP). Amtrak asserted that “[c]ustomer OTP has fallen below the statutorily prescribed threshold of 80% for the last four quarters that have been reported by the [Federal Railroad Administration].” Amtrak requested that the Board initiate an investigation pursuant to 49 U.S.C. § 24308(f), and award damages and other appropriate relief. Additionally, Amtrak filed a separate motion proposing a procedural framework for the proceeding.
Replies were submitted by UP and other parties, including BNSF Railway Company (BNSF), and Canadian National Railway Company, operating through its subsidiary Illinois Central Railroad Company (CN).
In its decision served on July 11, 2023, the Board found that the standard necessary to begin an investigation under 49 U.S.C. § 24308(f) had been met and, as required by the statute, the Board initiated an investigation. The Board stated that it would separate the investigation into two stages where the second stage is used, if necessary, to determine damages and prescribe other relief. The Board adopted a procedural framework for the investigation, under which the Board will, among other things, conduct an initial round of fact-finding by directing the parties to answer interrogatories and produce documents. The Board stated that it “will use this proceeding to inform future on-time-performance cases and will look for opportunities to make such proceedings more expeditious.”
Following the Board’s July 11, 2023 decision, UP requested an extension to the due date for UP to respond to the Board’s requests for information, and an extension to the due date for UP to reply to Amtrak’s opening statement. Additionally, CN requested an extension to the reply due date for all parties. In a decision served on August 18, 2023, the Board extended by one month for all parties the due date for responses to the Board’s requests for information. The Board also denied the UP and CN requests to extend the reply deadline as premature, without prejudice to parties requesting an extension at a later date.
On August 28, 2023, Canadian Pacific Kansas City Limited (CPKC) filed a petition to intervene in this proceeding, stating that it has an interest in this proceeding because its rail carrier subsidiary, The Kansas City Southern Railway Company (KCS), operates over approximately 124 miles of rail line in Texas over which Amtrak’s Sunset Limited also operates. CPKC noted that it did not anticipate taking any position on the merits of the issues raised in the proceeding.
In a decision served on September 12, 2023, the Board added CPKC as a party of record in this proceeding, directed CPKC to respond to the Board’s request for information, and denied as moot CPKC’s petition to intervene because CPKC will participate as a party. The Board also ordered the parties to notify the Board by September 22, 2023, if they are aware of any entity not already a party to this docket that owns or leases rail tracks, or dispatches train movements, on any portion of the Sunset Limited route. Multiple parties have filed responses to the Board’s September 12, 2023 order or the Board’s requests for information.
II. Safety Issues
A. President Biden Issued Executive Order 14108 Regarding the East Palestine Derailment
On September 20, 2023, President Biden issued Executive Order 14108, Ensuring the People of East Palestine Are Protected Now and in the Future. The order addresses the February 3, 2023 Norfolk Southern Railway Company (Norfolk Southern) derailment incident in the Village of East Palestine, OH. It details the actions taken by President Biden’s Administration thus far and stresses the importance of continuing to hold Norfolk Southern fully accountable.
Specifically, the Executive Order states that it is a continuing priority of the Administration “to hold Norfolk Southern fully accountable under the law for this disaster and any of its long-term effects and to provide additional Federal assistance that the affected States, the people of East Palestine, and all those affected in surrounding communities may need.”
In order to implement this policy, the Executive Order:
- Directs the Department of Homeland Security, Environmental Protection Agency (EPA), Department of Transportation (DOT), Federal Emergency Management Agency, Federal Railroad Administration (FRA), Pipeline and Hazardous Materials Safety Administration (PHMSA), and Department of Health and Human Services (HHS) to use their authorities and resources to advance the Executive Order’s policy;
- Directs the Secretary of Homeland Security to designate a Federal Disaster Recovery Coordinator to oversee long-term recovery efforts and identify unmet needs of affected communities;
- Holds the State of Ohio’s request for a major disaster declaration in abeyance;
- Directs the EPA to continue to remove contaminated soils and wastewater from the disaster site. The order further directs the EPA to submit a report to the President within 30 days, and every 60 days thereafter, on cleanup efforts and Norfolk Sothern’s compliance with the EPA’s Unilateral Administrative Order;
- Directs HHS to submit a report to the President within 60 days summarizing “key conclusions from the public health testing and assessments;”
- HHS is also directed to continue to “monitor the public health consequences of the derailment” and to consider whether the declaration of public health emergency is warranted;
- HHS is further directed to provide technical assistance to Ohio and Pennsylvania if either state considers submitting a proposal for services through Medicaid; and
- Lastly, DOT is directed to submit a report of its actions to the President within 60 days, to be updated within 120 days of the final National Transportation Safety Board investigation.
