Court ruling supports SEDA-COG Joint Rail Authority

Press Release from SEDA-COG:

The SEDA-COG Joint Rail Authority (JRA) is not an “illegal monopoly,” a Northumberland County judge recently ruled, recognizing that the JRA was formed for a good purpose and has fulfilled its industrial development mission for over 33 years.

President Judge Charles Saylor’s Aug. 12 ruling stated that the JRA was formed to “carry out a laudable and necessary vital function.”

The court threw out anti-competition claims raised by Reading and Northern Railroad because the JRA was established in 1983 and Reading and Northern was incorporated in 1990; the private railroad cannot sue on the basis of illegal competition when the JRA existed before it did.

Reading and Northern also alleged that state law required the JRA to bid out the railroad operations like a construction contract, which would go to the “lowest responsible bidder.” The judge roundly rejected that argument, saying, “It is inapplicable and not subject to further analysis.” This means that the “lowest responsible bidder” requirement does not apply to a Request for Proposals for rail operations. 

Judge Saylor’s ruling rebuffed all but one of Reading and Northern Railroad’s claims. The railroad had sought to be the JRA’s private freight rail operator, but was disappointed when it was not invited to proceed to the final selection process.

Judge Saylor’s ruling allows Reading and Northern to attempt to prove that it was treated unfairly. The court was bound at this stage of litigation to treat all allegations in Reading and Northern’s complaint as true, which is why Reading and Northern is allowed to make its case on the single narrow issue of alleged unfairness in the selection process.

“The JRA’s process to select a rail operator was designed to be fair, and the facts will show that to be the case,” said Jerry Walls, JRA chair.

No taxpayer dollars support the JRA’s administrative operations, which solely are supported by an operating fee paid from freight revenue from its private operator, which is currently North Shore Railroad.

“Not only is the JRA self-supporting, but it injects funds into rail projects. We’ve greatly improved the railroads and created family-sustaining jobs,” said Jeff Stover, JRA executive director. “When the JRA funds certain rail projects, it saves taxpayers from doing so.”

The JRA was formed by the forward-looking efforts of its eight member counties to save the rail lines and service abandoned by Conrail. In 1984, that action saved 3,000 jobs; today, with six lines that provide rail service to about 85 industries, it has helped local business preserve over 10,000 employees in the region. In 2015, rail traffic topped 21,000 carloads over 200 rail miles; in the 1980s, it was less than 2,000 carloads on 80 miles of line.

The JRA’s public-private partnership has documented phenomenal results in terms of rail infrastructure improvement, economic development and community benefits. The JRA was recognized by the World Bank in a 2009 independent study as a model for public-private partnerships to stimulate rural economic development. Since 2004, the JRA has invested or leveraged over $46 million in rail capital projects with over 40 public and private partners.

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