American Railroads

News each weekday of American railroads. Our focus is on freight rail, but Amtrak and commuter rail are also essential ingredients. Nothing published on holidays.

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Location: Middleburg (Jacksonville), Florida, United States

Published in Trains magazine, Railfan & Railroad, Passenger Train Journal

Friday, October 27, 2006

The following stories were intended to be posted on Thursday, but because Blogger.com was down for maintenance, it was impossible to do so.

-Ed.

Law expert says Amtrak lawyers were lax

An forensic legal fee analyst hired by the federal government to investigate Amtrak’s extensive legal expenses with private law firms said yesterday he found numerous questionable management practices and lax oversight over tens of millions of legal expenses billed to Amtrak each year, according to the House committee and Infrastructure.

“Amtrak’s Law Department is not fulfilling its role,” John W. Toothman wrote in his 102-page report.

“Instead of being the aggressive protector of Amtrak’s interests, many in the law department, including upper management, seem to view themselves as the advocates for outside counsel,” he stated.

Reps. John Mica, R-Fla., and Don Young, R-Alaska, who is the committee chairman, requested the investigation.

Both solons said Toothman was hired for his expertise in analyzing legal billings to assist in a federal investigation of Amtrak’s Legal department by the Amtrak Office of the Inspector General and the USDOT’s Inspector General.

Yesterday the Transportation Committee released the report by both inspectors general which outlined alleged numerous examples of mismanagement and lack of oversight for more than $100 million in taxpayer-financed legal fees paid by Amtrak between 2002 and 2005).

A press release from the House committee stated Toothman was selected to assist the inspectors general investigation as one of the top U.S. experts in the field. He is a former Justice department attorney, who is often retained by public entities and large private clients who feel the performance of their legal counsel is in question, Mica and Young said

Some of the major findings in his report include questionable process for selecting outside legal firms.

He alleged, “Amtrak’s in-house lawyers appear to have been co-opted by their outside firms, they rarely select new outside firms, they are making no apparent effort to engage in a thorough law firm selection process, and the firms they use are among the largest and most expensive in the country.”

He said questionable billings and expenses by outside legal firms are rarely challenged. Instead of challenging many of the fees and expenses billed by the outside legal firms, Toothman wrote, “Amtrak’s Law department acts as though its job is to defend outside counsel, not manage them. The attitude exhibited by Amtrak’s Law department when their handling of outside lawyers was questioned was to defend the lawyers and provide excuses for not reviewing them more aggressively.”

He added, “This is a bad sign, indicating that the Law department has lost sight of its primary job: To protect the interests of Amtrak.”

Toothman wrote in his report Amtrak’s legal department “has not investigated its firms properly and not considered alternative law firms that would be cheaper and provide equivalent, if not better, services. There are thousands of firms with expertise handling most of the work done for Amtrak – most of Amtrak’s work is routine, both in subject matter and complexity.”

The Associated Press reported yesterday Amtrak’s law department responded that the review didn’t take into account “the rigorous oversight of work done by outside counsel.” Amtrak’s lawyers also said they save money by performing work in-house, which is cheaper than using outside firms.

The law department lowered its legal fees by 22 percent, from $31 million to less than $24 million, from 2003 to 2005.

Amtrak’s 130-person law department includes 25 lawyers, investigators said.

Toothman agreed with Mica’s estimates, but said that Amtrak is probably not unique among government agencies.

“My suspicion is that it’s toward the bad end,” said Toothman, who has investigated other government agencies.

The report found that Amtrak didn’t request budgets and didn’t scrutinize bills.

Mica conceded that Amtrak had changed some of its practices since the inspector general’s investigation.

A copy of the redacted Toothman report is online at www.house.gov/transportation.

BLE alleges:

AAR, CEOs attack disabled rail unionists

The railroad industry has again shown its contempt for its workers, including those who are retired, the Brotherhood of Locomotive Engineers charged yesterday.

“Edward Hamberger, president of the Association of American Railroads, recently wrote to Sen. Michael Enzi, R-Wyo., in opposition to H.R. 5483, the Railroad Retirement Disability Earnings Act the union stated in a press release.

Enzi is chairman of the Health, Education, Labor and Pensions Committee.

The bill, scheduled for Senate consideration after the November 7 elections, would increase the amount of money a disabled individual can earn without affecting his or her Railroad Retirement disability benefits.

The House passed the bill on September 28 and the Senate needs to pass it in order for it to become law. However, AAR is lobbying against it.

“The House of Representatives saw fit to increase the amount of money these men and women can receive from outside employment,” BLET National President Don Hahs said in Cleveland at union headquarters.

“However, the railroads can’t concede an inch in their battle against their workers – both present and former. The total cost of this legislation would be about $400,000 annually – a pittance compared to the millions raked in by these CEOs in salary and bonuses.”

Current law limits the outside earnings of a railroad worker drawing disability benefits from the Railroad Retirement Board to a maximum of $400 per month. These limits have remained unchanged for more than a decade. The bill raises the monthly limit to $700. If passed, the measure would become effective January 1, 2007, and would also create an indexing formula to provide for automatic increases in the future.

“This is an attack against the most vulnerable,” said BLET vice-president and National Legislative Representative John Tolman, who is lobbying for passage of the bill on Capitol Hill.

He added, “Many of the individuals that would be affected by the passage of this legislation were hurt on the job.”

Tolman said others are considered disabled or disqualified from working by the railroads themselves for various reasons. These individuals rely on their Railroad Retirement disability benefits in combination with outside work.

“The attempt to destroy this legislation would jeopardize their benefits – and their ability to provide for their families,” he said.

http://www.ble.org/pr/news/newsflash.asp?id=4374

Freight rails were up and down last week

Intermodal volume was up but carload freight was down on U.S. railroads during the week ended October 21 in comparison with the corresponding week last year, the Association of American Railroads (AAR) reported yesterday.

Intermodal volume of 253,387 trailers or containers was up 1.3 percent from the comparable week last year. Container volume rose 5.8 percent for the week while trailer volume declined by 11.8 percent.

Carload freight totaled 339,525 cars, down 1.1 percent from last year, with loadings up 0.9 percent in the West but off 3.5 percent in the East.

Total volume was estimated at 34.8 billion ton-miles, up 0.3 percent from 2005.

Only five of 19 individual carload commodities showed increases from last year, with coke up 6.4 percent, coal up 6.0 percent, and farm products other than grain up 4.9 percent. On the downside, primary forest products were down 22.1 percent, lumber and wood products fell 20.5 percent and metallic ores were off 18.8 percent.

Cumulative volume for the first 42 weeks of 2006 totaled 14,152,678 carloads, up 1.4 percent from 2005; 9,958,449 trailers or containers, up 5.9 percent; and total volume of an estimated 1.41 trillion ton-miles, up 2.7 percent from last year.

On Canadian railroads, during the week ended October 21 carload traffic totaled 77,054 cars, down 3.9 percent from last year while intermodal volume of 49,241 trailers or containers was up 2.9 percent from last year.

Cumulative originations for the first 42 weeks of 2006 on the Canadian railroads totaled 3,136,686 carloads, down 1.2 percent from last year, and 1,906,506 trailers and containers, up 5.6 percent from last year.

Combined cumulative volume for the first 42 weeks of 2006 on 13 reporting U.S. and Canadian railroads totaled 17,289,364 carloads, up 0.9 percent from last year and 11,864,955 trailers and containers, up 5.9 percent from last year.

The AAR also said that during the week ended October 21 Mexican railroad Kansas City Southern de Mexico (KCSM) reported total carload volume of 11,400 cars, down 3.6 percent from last year. KCSM reported total intermodal volume of 4,109 trailers or containers, down 2.6 percent from the 42nd week of 2005.

For the first 42 weeks of 2006, KCSM reported total cumulative volume of 477,980 cars, down 3.5 percent from last year, and 168,068 trailers or containers, down 3.2 percent.

Railroads reporting to AAR account for 87 percent of U.S. carload freight and 96 percent of rail intermodal volume. When the U.S. operations of Canadian railroads are included, the figures increase to 96 percent and 100 percent. The Canadian railroads reporting to the AAR account for 91 percent of Canadian rail traffic.

Railroads provide more than 40 percent of U.S. intercity freight transportation, more than any other mode, and rail traffic figures are regarded as an important economic indicator.

The AAR is online at www.aar.org/.

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