Pennsylvania Supreme Court ruling affirms rail authority's short-line contract vote

[Editor's note: This story has been updated with an extended quote from North Shore President and CEO Jeb Stotter.]

The Pennsylvania Supreme Court last week upheld the legality of the SEDA-COG Joint Rail Authority's (JRA) decision to award a rail-operating agreement to Carload Express Inc.

The contract dispute involving the JRA, Carload Express and North Shore Railroad Co. began in July 2015 after Carload Express was selected as the highest scoring proposer to a JRA request for proposals to operate the JRA rail lines. At the end of the RFP process, the JRA board voted to award the agreement to Carload Express, with seven board members voting for the contract, three voting against and six recused and not voting.

Questions were raised over whether the recused non-voting board members, who were in the room at the time of the vote, should count toward the number of affirmative votes needed to award the contract. Rather than proceed with the contract award at that time, the JRA sought a judicial determination that the 7-3 vote failed under the Municipality Authorities Act because the six non-voting members were physically present at the time of the vote.

In its decision, the Supreme Court found that under common-law voting rules the phrase "members present" means voting members, as a non-voting member is not present for purposes of calculating a majority.

"This decision ends once and for all any question as to whether or not the 7-to-3 vote awarding a multiyear operating contract to Carload Express is valid," said Carload Express President and Chief Executive Officer Mark Rosner in a press release.

Since the RFP process began in 2014, Carload Express has been "eager" to serve businesses and communities in central Pennsylvania, Rosner said.

"Our success starting the Delmarva Central Railroad in 2016 demonstrates that we have the experience and capabilities to hit the ground running and set up operations quickly," Rosner said. "We look forward to partnering with the JRA for industrial and economic development throughout the JRA's eight member counties."

Although the JRA's 10-year contract with North Shore expired in 2017, the railroad company has continued to operate the five short lines serving eight counties over nearly 200 miles of authority track.

North Shore President and CEO Jeb Stotter said he was disheartened with the outcome of the Supreme Court ruling.

"But for me, it's never been about the efficacy of the 7-3 vote. I have never seen that litigation as our fight," Stotter said in a prepared statement.

"My concern is and always has been the fact that the vote never should have happened in the first place due to the inappropriate actions of a rogue board member," Stotter said. "Our counterclaim regarding the matter is still waiting to be litigated at Clinton County. With that said, I have every confidence that we were, are, and will continue to be the best rail operator for central PA, and we look forward to continuing to provide our customers with safe, excellent and affordable service."

JRA Executive Director Jeffrey Stover said the Supreme Court's ruling is "a significant decision that needs to be fully examined and carefully considered by the JRA board," the PennLive.com news outlet reported.