1998 Second Quarter Release

Volume 4 Issue 2                          2nd Quarter, 1998




Lexington, TN (01/98) –Welcome to the second quarter of 1998. Time flies. And things of interest seem to continue.

How about the combination (I don't think the term merger would fit.) of the Canadian National and Illinois Central? Railway Age calls it "A three-coast strategy".

GE Transportation Services had a record number of locomotive orders in 1997, creating a backlog. Shipments of locomotives to Canada and Mexico will exceed 450 units from 1997 to 1999. GE has had thirteen new AC6000 prototype locomotives on CSX and UP, where they have just completed 80,000 hours of reliability testing in preparation for full scale production in 1998. More than 365 of the AC6000-horsepower units are already on order from U.S. and Australian railroads. This probably means some older locomotives will become available for short line railroad utilization. As you know, replacement ratios aren't always one for one. Replacements will likely be two (or more) older units for one of the new units.

The NTSB opened hearings on whether safety suffered after Union Pacific bought Southern Pacific, and the FRA is already testing new rules requiring that CSX Corp. and Norfolk Southern Corp. submit safety plans for their takeover of Conrail.

The NTSB is also questioning UP officials about why they had so many crashes last year. Under a tentative proposal the FRA would require safety plans before all mergers, and the STB would have the authority to block the merger if the transition plan was inadequate.

And did you notice, that in March The Surface Transportation Board announced that it is publishing notice of an application filed by Dakota, Minnesota & Eastern Railroad Corp. requesting permission to build and operate 280.9 miles of new railroad? Why? Movement of Coal.

And what ties all of these seemingly unrelated "tidbits" together? Change in our industry. Brought on by an ever expanding global economy, of which transportation generally, and rail transportation in particular is a big part. The United States and our trading partners are continuing to experience growth. Look at the stock market.

But, as we experience growth, and the high of the boom rings on, do not let the bucket develop a leak. Don't ignore those incidents/claims, or fail to give them their due.



Thanks to everyone who has visited our webpage. We have received numerous compliments and several suggestions. One very good suggestion concerned links. If you or your company wish to link to our webpage, or would like a link from us to you, please email me. It is our hope and intent to make railway-claim-services a hub for rail related businesses and interests on the Internet.



During the past few months, there has been a rash of very expensive derailments in the shortline industry. Our friend, Al Nino (or is that El Nino) has been getting the lion’s share of the blame for this. Washouts, mudslides and other conditions caused by the severe winter storms have played havoc on the aging rail that is the lifeline of our industry. In the several years that RCSI has been handling claims for the railroad industry, we have never seen the frequency of derailments that we have seen over the last few months. The cost of these derailments is threatening the very existence of many shortline railroads across the country. Although the railroads carry insurance that covers the damage to foreign rolling stock and bill of lading, it almost always excludes the cost of repairing and/or replacing the railroad’s owned track. As many of you have discovered, the cost of track repair can be staggering. Adding to this is the fact that most railroads are self insured to a certain level.

So, what factors are to be blamed for the increased frequency of derailments? There are several factors that contribute to this problem, but the top three are: maintenance, Maintenance and MAINTENANCE. Ninety pound jointed rail, originally laid in the first half of this century, setting on twenty year old ties, with inadequate ballast. The most common method for dealing with this, unfortunately, is to remove the track from FRA Classification to an "Excepted" status. Many operators feel that by slowing the speed of the trains to 10 MPH or less they can avoid major damage in a derailment. They also feel that they can make a profit with this type of operation. A similar logic was pursued by the Class I’s in the late 60’s and early 70’s. It didn’t work for them, either. "Deferred Maintenance" was the catch phrase. Find a good maintenance of way supervisor who was working during that time period and mention "Deferred Maintenance" to him. This newsletter couldn’t contain even a summary of the horror stories you are likely to hear. In the early to mid 70’s, almost every expert in the field of transportation was sounding the death knell for the railroad industry. One key reason was the condition of the railroad infrastructure. Many railroads diversified. The money they diverted from track maintenance was used to purchase other businesses. Luckily, the need for healthy railroads was recognized and the railroads were freed from the shackles of over regulation by the Staggers Act. Almost immediately, the railroads set about the task of rebuilding their core lines. Branch lines were largely ignored. Until, that is, the shippers on these branch lines began to scream "foul". The Class I’s recognized that they could not spend the money to rebuild and update a 150 mile branch line just to handle 3 or 4 customers. Thus, the explosive growth of the shortline railroad industry.

If a Class I Railroad, cash cow that it is, could not afford to refurbish and update an aging branch line, what chance does a shortline operator, operating on a razor thin profit margin, have of accomplishing this monumental task? Thankfully, the type of person willing to undertake the risk of operating a shortline railroad is, of necessity, creative and resourceful. While 90 pound jointed rail may not be the first choice for mainline track, it is abundant and relatively inexpensive. It is therefore the standard for the majority of shortline operations, and is likely to remain so for the foreseeable future. A top grade crosstie may have a 30 year life expectancy, but the cost of a relay tie is almost 70% less, allowing the resourceful operator to triple the number of ties replaced within the same budget restraints. Creativity in the expenditure of budgeted resources is crucial in maintaining a viable (read profitable) shortline railroad operation.

Which brings us to the present. The past winter weather has injured many shortline railroads. The track and roadbed is in worse condition than it has ever been. Super saturated ground conditions, mudslides and washouts have crippled many roads. How the roads allocate their maintenance dollars over this next year may determine their survival into the next century.

RCSI recognizes that there are hundreds of vendors providing services for our industry. The fact that we may mention one by name should not be taken as an endorsement of that particular vendor over another providing the same service. The reason we may mention a company by name is to identify them as the source of information and to thank them for taking the time to explain specific areas of interest to us. Having said this, I would like to thank Vice President of Operations Rick Ebersold of Herzog Services, Inc. for taking the time to discuss rail flaw detection with me. His company, along with others, provides ultrasonic rail testing to detect flaws not visible in normal track inspections. In normal conditions, the roadbed should provide a stable platform to eliminate or minimize rail flexing. When the ground becomes super-saturated, sections of the roadbed may become unstable, causing crossties to "pump". This allows the rail to flex. Think of bending a coat hanger back and forth. Heat is generated and the rail may become brittle, developing internal cracks and flaws. At some point the rail will fail, and a derailment will result. Ultrasonic rail testing can identify these internal flaws. The cost of this service is not cheap, but if one derailment is averted, it is money well spent. It has been my experience that the cost usually runs between $2,000 to $2,500 per day, with about 40 miles of track inspected in an 8 hour day.

The Class I’s usually conduct ultrasonic rail testing at intervals of 20 million gross tons. And this is usually on 132 pound welded rail (or better). RCSI highly recommends this type of testing. There are a number of companies that do this. You should be able to locate one near your location. If you do decide to take advantage of this service, ask the company to also test your stockpiled rail. This will prevent you from replacing bad rail with bad rail. I would also ask that you contact RCSI to voice your opinion of this service. We will post your comments on our webpage for the benefit of others.


Is this sign posted at your company? How is your employee turnover ratio? Do you hire five employees in hopes of getting one who will be an asset to your organization? Well, help is on the way. RCSI provides employee background checks. Call, write, fax or email us for the necessary forms and releases. We have a basic background check, with the option to provide more detail at your request. Submit your request and we can have the information back to you within days. Some information is available within hours. Another service to benefit our industry from Railway Claim Services, Inc.


Speaking of services, RCSI’s primary function is to protect the interests of the railroads in accidents and claims. The majority of claims we deal with involve legitimate accidents in which there are questions of causation or disputes as to the damages. These are fairly straightforward investigations. Frequently, however, we come across the staged accident and the professional claimant. These are very difficult to identify, as you might imagine. After all, these people are professionals. With our incredibly huge database, however, we are able to identify them almost immediately. Anytime you have a claim in which the claimed injuries or damages seems out of proportion to the circumstances of the accident, give us a call. For a nominal charge, we will search our database to determine if you are the target of the professional claimant. As an example, we recently ran a name for a client in the Northeast. We found that his particular claimant had been involved in 13 accidents in the past two years. He had legal representation in all 13 claims, but used a different attorney in each claim. We turned this information over to the State Attorney General. Needless to say, our client did not pay this claimant.


FELA – ICRR – This switchman was lining switches in IC’s Fulton, Kentucky yard. He had lined several switches that morning and some were hard to throw. He next had to line the #10 switch. According to him, his past experience had taught him that the #10 switch was hard to throw, so, he applied excessive force. Uh Oh, the switch was in good working order and operated as intended. The switchman sustained an injury to his back due to his over exertion. He filed suit under FELA alleging that the railroad failed to provide him with a safe place to work. In a convoluted reasoning process, he claimed that he was injured, not because the #10 switch was defective, but because other switches in the yard were defective, leading him to believe that the #10 switch would also be difficult to throw. Do you follow that? Neither did the court. Summary judgement granted to the defense. Johnson v. Illinois Central Railroad, US Court of Appeals for the Sixth Circuit No. 96-5911.

FELA – MNCRR – As long as we are talking about the bizarre, two middle aged employees of the Metro North Commuter Railroad got into a fight on company property. Evidently neither could claim victory, so what do they do? Exactly. Both sued the railroad for improper hiring and negligent retention of the other party. This is one of those cases where there was no winner. The verdict was for the defense, but both employees kept their jobs. Wiley Tinkler and Donald Lincks v. Metro North Commuter Railroad, New York County Supreme Court.

FELA – CNW – This is a good opinion to use to show that a jury question is not always present in an FELA lawsuit. A jury question is only presented when a reasonable person might conclude that negligence on the part of the railroad played a part in the employee’s injury. Lager v. Chicago Northwestern, 8th Circuit, August, 1997, 122 F3 523.

Trespasser – CSX – CSX obtained a defense verdict is a case where a seven year old suffered an injury when he crawled underneath a car on a standing train near a well worn path. The train moved. The child’s parent sued. The railroad won. Ask your counsel to get a copy of Thomas v. CSX, Saginaw County Circuit Court, Michigan, November, 1997.

SOAPBOX - In keeping with our efforts to educate, enlighten, entertain and inform, we have added this new feature to our newsletter. This will be a forum for those people in our industry to contribute articles of interest for our mutual edification. Our guest for this issue is Mr. Daniel Fowler, a good friend and attorney in the Kansas City area. Dan can be reached at 11020 Ambassador Drive - Ste. 104, Kansas City, MO 64153. Ph: (816) 880-0811 FAX: (816) 880-9393 Email: dlfowler@swbell.net


"The crossing should have had gates." "The train was speeding." "The locomotive should have had ditch lights." "The cars should have been reflectorized." These are arguments that railroads used to face in almost every lawsuit over a grade crossing accident. However, since 1993 the courts have increasingly disallowed these arguments because of the legal doctrine known as "federal preemption". In fact this doctrine has become one of the most powerful legal tools available to railroads in grade crossing cases as well as some FELA cases. This article will give a brief summary of what federal preemption really is to foster a better understanding of the doctrine.

Federal preemption is a legal doctrine that is based on Article VI of the United States Constitution. This Article is also known as "The Supremacy Clause." In short this clause states that the Constitution, laws and treaties shall be the supreme law of the land. Federal preemption comes about when there is a conflict between federal law and state law. In such cases federal law governs.

Obviously there are many areas where federal law and state law cover the same subjects and appear to be in conflict with each other. Courts, however, are reluctant to use preemption, and use it only in two circumstances. The first is where Congress specifically states that the federal statute is intended to preempt state law. The second is where the federal law is so complete that it "occupies the field" of the subject of the legislation.

In 1993 the U. S. Supreme Court decided that when Congress passed the Federal Railroad Safety Act of 1970 it intended to occupy the field of railroad safety. In passing the F.R.S.A. Congress stated that the Act was intended to promote uniformity of rail law and regulation. However, existing state law was to remain in force until the Secretary of Transportation (acting through the FRA) adopted specific regulations in the areas in which he was authorized by the FRSA to act.

As a result of the Supreme Court’s decision there are areas of railroad safety that are not "preempted". An example is where the FRA has not expended sums or otherwise acted to upgrade a specific crossing. Still, where a crossing has been upgraded by the expenditure of federal funds, an argument that it should have had more protection that was ordered by the FRA, or a state agency with FRA funding, cannot be made.

We thank Dan for the contribution of his time and expertise. In our next newsletter, we are hoping to list the winners of the 1997 Jake Jacobson Safety Awards. I recently spoke with Mr. Jacobson to convey our appreciation for his tireless efforts on behalf of the shortline industry. As most of you are aware, Jake is a past Railroader of the Year. Maybe we can convince him to write a few words for our next newsletter to coincide with his list of 1997 winners.


As you surf the web in the coming weeks, take a look at these two sites.

http://www.rrb.gov/mmoinstr.html posts information from the Railroad Retirement Board

http://perseus.lanl.gov/NON-RESTRICTED/MSDS_List.html is a good reference point for MSDS information.

RCSI welcomes your input. If you have any questions or comments of interest to our industry, please contact Dave Gardner at (901) 967-1796 or FAX your message to (901) 967-1788.

Visit the Railway Claim Services, Inc. webpage. It’s located at www.railway-claim-services.com


Railway Claim Services, Inc. is the recognized leader in independent railroad claims management, which includes investigation, negotiations, and all those things in between. If RCSI is not already a partner in your loss control and claims management program are you accepting too much risk?


Railway Claim Services, Inc. 52 South Main Street Lexington, Tennessee

800-786-5204 FAX (901) 967-1788 Email – rcsi@hcol.net

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