EFFECTIVE RESULTS

Transportation

LEADERSHIP: Marc D. Machlin

One of Pepper Hamilton LLP’s strengths is its experience in the transportation industry. We typically represent providers of transportation services, such as class I railroads, short-line railroads, motor carriers and logistics firms. Since the early 1970s, we have been actively involved in the partial deregulation of the freight rail sector and the restructuring of the rail industry in the United States. This has involved legislative drafting, legal support for lobbying efforts, and advocacy before regulatory agencies, including the Surface Transportation Board (STB) and its predecessor, the Interstate Commerce Commission (ICC). At this point, we not only advise rail carriers and motor carriers, but we also represent logistics companies, barge companies and other providers of transportation services. We represent these clients in a wide array of litigation matters, regulatory matters and transactions.

Legal services the firm provides include the following:

Railroad Regulation

For nearly 35 years, we have advised freight railroads on regulatory issues arising at both the federal and state level. We have been active participants in STB and ICC proceedings relating to market dominance, rate standards, forced access rules, joint rate cancellations, revenue adequacy, cost of capital, abandonments and related disputes. We have represented rail carriers in connection with disputes with shippers and with state agencies. Additionally, from time to time, we have represented rail carriers with respect to disputes involving other carriers over trackage rights, reciprocal switching, or proposed crossings of existing rail lines. We are intimately familiar with the Staggers Rail Act of 1980 and the Surface Transportation Board Reauthorization Act of 2015. Based on years of experience, we understand the legal and political environment in which the STB operates. Additionally, we have represented rail carriers in numerous appeals from STB and ICC orders. In many cases, our clients have simultaneously challenged aspects of new STB rules and have defended aspects of those rules. From time to time, in addition to representing individual carriers or groups of carriers, we have advised the Association of American Railroads on regulatory questions.

Formation and Expansion of Carriers

Pepper represents entities in developing business, financial and regulatory strategies for entry into the transportation industry. We have advised rail carriers on the development of new lines and on the relocation of existing lines. In 2015 and 2016, we advised a client on the development of a five mile line of a railroad on a right of way that had been used as a trail; this client was able to collaborate with a short-line railroad, and together, they designed and built a rail line needed for the transportation of natural gas liquids. In recent years, we also advised a leading processor of natural gas liquids on the development of a rail-truck intermodal facility; this facility was developed in collaboration with a short-line railroad. In the past, we have advised class I carriers on the sale of railroad lines to new entrants. Additionally, in recent years, we represented an electric utility based in Michigan in connection with the sale of a captive rail carrier to a short-line operator; we negotiated the terms for the transaction and secured all necessary STB orders. Years ago, we also were instrumental in the formation of a new regional rail carrier; this new carrier acquired rail lines from existing carriers and constructed additional facilities. For this carrier, we designed and implemented programs to obtain requisite regulatory approvals for the commencement of operations and the financing of the enterprise and we negotiated the necessary agreements with employees, suppliers and other carriers.

Other Mergers, Acquisitions and Franchising

Pepper has represented rail carriers and non-carrier interests in selecting and acquiring properties for merger or acquisition, in resisting proposed mergers or acquisitions, and in negotiating the terms and seeking or resisting conditions for such transactions before courts and federal agencies.

Rail Passenger Operations

Pepper has represented the nation’s largest passenger railroad in connection with a series of regulatory matters relating to power lines and power supply arrangements and related infrastructure projects; we also have advised this client on energy procurement and on various infrastructure improvements relating to its electrified right-of-way. Additionally, Pepper has represented a state highway commission in connection with a proposed rail relocation project. The state agency was seeking to collaborate with two rail carriers on a relocation project tied to the development of a new highway. We also have represented freight rail carriers in conveying rail properties or operating rights to commuter authorities.

Motor Carrier Safety

We advise motor carriers on the safety rules imposed by the Federal Motor Carrier Safety Administration. We have represented carriers in connection with audits and compliance reviews by federal regulators. We also have represented trucking firms in connection with the development of internal compliance programs. From time to time, we also have represented carriers in connection with challenges to unfavorable safety ratings issued by the Federal Motor Carrier Safety Administration.

Motor Carrier Mergers and Acquisitions

We have advised private equity firms and other entities on proposed investments in motor carriers. We also have advised motor carriers in connection with initial public offerings and other significant transactions.

Automotive Safety

Pepper also has represented clients in connection with all aspects of the regulatory framework established by the National Highway Traffic Safety Administration (NHTSA). We have advised clients on compliance with safety standards and on potential or proposed changes to these standards. We have represented clients in court challenges to new NHTSA regulations or policies.

In connection with product recalls, we have assisted companies in seeking and obtaining exemptions from NHTSA regulations, where appropriate.

Strong DOT and PUC Relationships

On a continuing basis, we handle regulatory matters involving various agencies within the U.S. Department of Transportation, including the Surface Transportation Board, the Federal Railroad Administration, Federal Aviation Administration and the Federal Maritime Commission. In many instances, we have advised regulated firms on compliance and enforcement proceedings. We have negotiated many settlements with DOT and its sub-agencies, including settlements requiring the payment of civil penalties. In other instances, we have presented evidence to these agencies that convinced them to withdraw or terminate their enforcement actions. Lastly, we advise transportation-sector clients on issues arising at the state level; we have obtained appropriate state approvals for many types of infrastructure projects, including highway crossings, bridge improvements and certain types of intermodal facilities.

Summary

The focus of Pepper’s transportation practice is on achieving positive economic results for our clients over the long term. We have an excellent record of success before regulatory agencies and courts regarding the adoption of rules and legal principles that not only solve the client’s immediate problems, but also help to achieve its long term business objectives.

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