Reading & Northern sues over Pennsylvania rail authority's no-bid contract

Reading, Blue Mountain & Northern Railroad Co. (R&N) late last month filed a lawsuit against the SEDA-COG Joint Rail Authority (JRA) in Port Clinton, Pa., alleging the authority illegally competes with the railroad and other for-profit businesses.

The suit states that the JRA was established in 1983 under a state law that prohibits public authorities from setting up enterprises that in whole or part compete with for-profit businesses that perform the same purpose.

The suit alleges that the JRA has been "open in its efforts to compete with R&N and to divert rail business from R&N to JRA's own rail lines," according to an R&N press release.

R&N also alleges that the JRA failed to follow the legal requirements for competitive bidding as specified under the Pennsylvania Municipalities Authorities Act. The railroad claims that since 1983, when JRA awarded a contract to the North Shore Railroad, the authority has not offered its operations for bid. R&N claims that, during those 30 years, the authority failed to return money to the taxpayers.

"After being warned by the Pennsylvania Attorney General in 2011 that its practices for awarding its operating contract were in violation of the Municipalities Authorities Act, the JRA disregarded the attorney general’s offer to assist in developing an appropriate procedure," R&N officials said in the press release. "Instead it designed a two-stage bid process that R&N alleges was inherently flawed because it was entirely subjective and arbitrary in nature as opposed to seeking the highest financial return for the taxpayers as required by Pennsylvania law."