Railroad sues for millions due to allegedly fraudulent rail ties

Published 5:13 pm Tuesday, October 31, 2017


Residents of Shelby and Chilton counties may expect some railway hiccups in coming months as interstate rail carrier Norfolk Southern Railway Company replaces over 4.7 million allegedly counterfeit railroad ties purchased from Boatright Railroad Products, Inc. and Boatright Railroad Products, LLC over the course of nearly six years.

Norfolk Southern filed a lawsuit in the U.S. District Court on Oct. 23 against Boatright and Boatright affiliates President Shane Boatright, Vice President John Steven Bookout and former tie inspector Jimmy Lee Watt for “no less than” an estimated but unofficial $50 million, according to the federal lawsuit report.

An official amount will be determined upon trial.

Prior to 2009, Norfolk Southern purchased its railroad ties from Seaman Timber Company, Inc., located in Montevallo, with whom Norfolk Southern was contracted since June 2006 for purchase of specifically treated railroad ties.

When Boatright purchased the facility from Seaman Timber in 2009, Boatright agreed to continue contractual obligations for Norfolk Southern through an official Change Order agreement.

Between 2009 and 2014, Boatright sold Norfolk Southern millions of railroad ties, many of which were allegedly coated with deceptive substances, such as used motor oil and specially-created AFDO-50.

According to the lawsuit, “AFDO-50 was specifically formulated (by hired oil re-refining companies) to mimic the appearance and wood penetration of a properly treated railroad tie upon inspection, even though it was not actually a wood preservative and cost substantially less.”

Improper treatment of the ties remained unnoticed by Norfolk Southern throughout the duration of its business with Boatright, which concluded with the purchase of Boatright’s Montevallo facility and existing inventory by Stella-Jones Corporation in May 2014.

In June 2016, former Boatright employees warned Norfolk Southern of potential “premature degradation and failure” of ties due to alleged improper treatment of the wood, according to the lawsuit.

Upon investigation, Norfolk Southern discovered early manifestations of degradation for thousands of its ties.

Further investigation and communication with former Boatright employees revealed that Shane Boatright and Booker had instructed Boatright employees treating Norfolk Southern railroad ties to “make it black.”

Watt, a former Norfolk Southern consultant entrusted with railroad tie inspection, admitted in interviews to accepting payments from Boatright amounting to at least $128,000 while receiving additional benefits, such as treated hunting trips during scheduled inspection times, the lawsuit maintained.

Watt said he inspected pre-selected creosote samples stored in a “hidden tank” at the facility for the sole purpose of providing samples on demand, according to the lawsuit.

Watt’s inspection reports to Norfolk Southern alleged that the railroad ties met contract standards “at or above” the agreement’s specifications.

Test findings from purchased but unused Boatright ties confirmed that incorrect wood species were used for the ties, drying standards were not met, preservatives were improperly applied and “counterfeit substances” were substituted for tie treatment.

Susan Terpay, director of public relations for Norfolk Southern, said safety of operations is the company’s highest priority.

“The ties implicated in the recently filed litigation involve only a small percentage of NS’ overall track network, representing the number that NS typically would replace every two years under its existing track maintenance schedule,” Terpay said. “Any tie found to be experiencing premature degradation will be replaced before it can pose a risk to safety.”

According to the report, Norfolk Southern must prematurely remove approximately 72,000 bridge ties, 193,000 switch ties and 4.5 million crossties to avoid any potential harm to the railroad and its carriers.

“NS will continue to take all necessary steps to discover and deter attempts to defraud the company in any capacity,” Terpay said.