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3/19/2002



Rail News: Rail Industry Trends

FRA issues final rule addressing safe operations after future mergers


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Federal Railroad Administration March 18 announced that the agency issued a final rule designed to ensure the safety of railroad operations resulting from future mergers or acquisitions.
The rule, which FRA plans to publish in the Federal Register, completes a multi-year cooperative effort with Surface Transportation Board.
The final rule addresses mergers, acquisitions, or consolidations of property involving all Class Is and, in more limited cases, Class IIs. Railroads proposing transactions will be required to submit a Safety Integration Plan (SIP) to both FRA and STB, after which FRA will review the document and report its findings and conclusions to STB.
STB — which recently published a complementary final rule of its own — will continue to be responsible for approving or disapproving proposed transactions; FRA will be responsible for monitoring the safe implementation of STB-approved transactions.
FRA initiated the rulemaking in response to what administration officials believed were systemic safety deficiencies related to large-scale mergers in the mid-1990's involving Union Pacific and Southern Pacific railroads, and Burlington Northern Railroad and Atchison Topeka & Santa Fe.
Per FRA's request, STB required the filing of SIPs as part of the Conrail split by CSX Transportation and Norfolk Southern Corp., and merger involving Canadian National Railway Co. and Illinois Central Railroad.
SIPs, which are designed to address the safety of railroad operations during every phase of a proposed transaction, detail actions each railroad plans to take to ensure the safest integration of operations, operating practices, and corporate cultures.
As a result of SIPs' success, FRA and STB in 1998 entered into a memorandum of understanding, which formalized FRA's role in reviewing SIPs and monitoring their implementation. FRA and STB then agreed to codify the SIP evaluation process and in December 1998 published coordinated Notices of Proposed Rulemaking.
"We have an obligation to do all we can to ensure the safety of merged rail operations, particularly where consolidation could have a significant impact on the thousands of rail employees nationwide and the communities in which they operate," said FRA Administrator Allan Rutter in a prepared statement.


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