By PAULENE POPARAD

Officials of the publicly owned South Shore passenger service on Tuesday ended more than a decade of litigation and arbitration with the privately owned SouthShore freight service by approving an omnibus settlement to end all disputes over terms of a 1989 agreement.

Also Tuesday, commuter line officials ratified a new contract into 2007 with the United Transportation Union representing 75 South Shore engineers, conductors, and ticket collectors; the current contract expired in July 2002.

Directors of the four-county Northern Indiana Commuter Transportation District, which owns and operates the passenger service, called the freight agreement historic.

Said NICTD chairman St. Joseph County Commissioner David Niezgodski, “This is going to be a very, very good day, a momentous day for NICTD. This litigation consumed a great deal of time.” With a new computerized traffic control signal system and catenary upgrades about to be undertaken, “This future is upon us; it’s a new beginning,” he added.

NICTD general manager Gerald Hanas said after the meeting, “Both parties blinked in the interest of moving forward.” He estimated NICTD has spent several hundred thousand dollars on legal fees related to the dispute.

NICTD and SouthShore officials met twice publicly in 2001 to hammer out a resolution but failed. At that time NICTD contended the freight service, which leases and uses a portion of NICTD’s tracks, owed the passenger line $11.5 million in unpaid fees. SouthShore officials countered in May 2001 that NICTD had been paid more than $32 million since 1991.

Freight service officials also said in 2001 that they had spent over $1 million in legal fees on the dispute and if NICTD won its demands, the SouthShore would be put out of business.

Under the current settlement NICTD will receive a $4 million payment at closing; an additional $3 million or comparable real estate may be paid or transferred within 36 months subject to additional conditions.

NICTD agreed to change the way it charges the freight service for helping to maintain NICTD’s right-of-way; rather than paying a percentage of gross revenues from freight operations, to which the freight service vehemently objected, the contributions will be based on a car-mileage fee structure adjusted for inflationary impacts. SouthShore also agreed to make an unrestricted annual payment of $175,000 to NICTD for a bridge reserve fund for future repairs.

In addition, NICTD agreed to allow certain heavy-axle load freight traffic on restricted portions of its right-of-way in return for unspecified surcharges and engineering studies to evaluate such moves for long-term maintenance implications. The SouthShore serves NIPSCO generating stations and steel-related customers including International Steel Group’s Burns Harbor plant, formerly Bethlehem Steel.

NICTD’s approval included authorizing settlement bonus payments to the Chesterton firm of Harris Welsh & Lukmann, the district’s legal counsel for the freight litigation, and to Hanas in the amount of 1 percent each of the $4 million.

Regarding the union contract, Hanas said cost of living adjustments of 22 cents per hour for 2002 and 2003 will be added to the base wage rate with a total imputed adjustment of 3.5 percent for those years; no retroactive wages are due under this arrangement. Wage increases of 3 percent for 2004, 2.5 percent for 2005-06, and 3.5 percent for 2007 were approved.

Vote to approve the contract was 7-0 with NICTD board member Dennis Burke, a railroad union employee, abstaining and member George Smerk of Indiana University absent.

The UTU, which has ratified the new contract, is one of six unions represented among NICTD’s 340 employees.

The next NICTD board meeting is Jan. 30, 2004.

Posted 12/24/2003