Not Sunk Yet

Not Sunk Yet

Copyright 2004, Traffic World, Inc.

A loss for the Surface Transportation Board and the City of New York is being hailed as a win for New York shippers and shortline railroads.

The U.S. Court of Appeals for the District of Columbia Circuit berated the STB on July 13 for a 2003 decision that would have allowed the City of New York to abandon the city''s rail-float bridge operating between New Jersey and Brooklyn. The appeals court remanded the case back to the STB because it found the agency had ruled against precedent without sufficient explanation and did not take into account the effects of the abandonment on shippers.

"The board failed to distinguish its adverse abandonment precedent and to properly balance all the competing interests involved in the abandonment application," the appeals court said. "In each respect, it acted arbitrarily and capriciously in granting (New York City Economic Development Corporation''s) abandonment application."

The decision gives the New York Cross Harbor Railroad and its shippers a new lease on life. Cross Harbor, which operates the barge floats, serves businesses on both sides of the New York harbor with daily crossings between Jersey City, N.Y., and 51st Street in Brooklyn. The operation provides New York City and Long Island with connections to CSX and Norfolk Southern.

With the appeals court decision, "we can now go ahead with plans to make upgrades in our rail facilities," said Gordon Kuhn, chairman of Cross Harbor parent company New York Regional Rail. "This decision should help us increase business as well, because some customers were hesitant to make plans to ship over our route given the uncertainty of the situation."

Kuhn also said that the decision sets a positive precedent for shortline railroads around the country. "It goes a long way in helping shortlines in situations where there''s a government entity that''s trying to force an adverse abandonment when the service is being used."

"By remanding the decision back to the board, the court safeguarded the continued competition between NS and CSX" for New York area shippers, said Washington, D.C. attorney Fritz Kahn. Without it, Kahn said, shippers and receivers in Brooklyn and Long Island would have had to route traffic up the east side of the Hudson River via CSX through Albany, N.Y., and then back down the West side of the river to New Jersey. Such a route is not necessarily an inefficient routing for freight moving east to west, but could add up to five days of added cycle times for north-south freight.

"The court felt we didn''t balance the interests of those involved," said STB Chairman Roger Nober. "But I was disappointed that the court didn''t seem to take into account that this was property owned by the city, and not simply a case of the city wanting to take over the rail lines."

The STB must reopen the proceeding. "How much we do on remand is open to question," Nober said.

"We''re currently reviewing the circuit court''s decision and understand that the STB is evaluating the next steps," said New York City Economic Development Corp. senior vice president of transportation Joan McDonald. "We''re awaiting whatever outcome the STB makes in this regard."

The fight began in 2001 when New York City filed an adverse abandonment petition with the STB against Cross Harbor, which leases land from the city. The city claimed the railroad ignored requests for back taxes, to clean up hazardous waste, and to adequately maintain the float barges and surrounding property. The STB granted the adverse abandonment in 2003, and later that year Cross Harbor, along with seven shippers operating over the line, filed its appeal.

In its decision the appeals court acknowledged it gave "considerable deference" to past STB abandonment decisions. It noted that only two years ago STB stated it had never granted an adverse abandonment when a carrier was operating over the protested line. The court also said the STB neglected its statutory duty to preserve and promote continued rail service when it ruled against the railroad in 2003.

"Would Cross Harbor continue to operate its car float service without its facilities in Brooklyn?" the court asked. "If not, what effect would its demise have on rail freight service in and around New York City? Is a rail trip to Albany, N.Y., economically and competitively viable for Cross Harbor''s overhead traffic? If not, could, or should, the Verrazano-Narrows Bridge and Triborough Bridge support additional traffic? And at what additional cost to current and future shippers?" The court said STB dismissed questions like these and "failed to explain what effect its action will have on shippers'' options and competition generally."

Cross Harbor officials say the railroad is now poised to compete for more highway traffic. According to a 2000 study conducted by the city, the New York metropolitan area is the only major economic area in the United States that has a freight transportation system that is almost completely dependent on its highway system. In New York, only 3 percent of freight is moved by rail compared to 40 percent in other major metropolitan regions. It estimated that 11 million annual truckloads cross through the New York area each year, compared to 19,500 rail carloads.