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Amtrak to STB: We Want New Host Railroad Rules

Written by David Peter Alan, Contributing Editor
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Amtrak’s Wolverine. Photo by Ryan Katon, Michigan Central Lines/YouTube

The authority vested in the Surface Transportation Board (STB) to decide issues concerning passenger trains has been expanding lately. On May 27, Amtrak asked the Board to intervene in a dispute with Canadian National (CN) over a number of issues, including on-time performance (OTP), penalties for low performance, and incentives to improve performance.

Amtrak made its initial filing in a new round of proceedings in Case No. FD-35743, captioned Application of the National Railroad Passenger Corporation Under 49 U.S.C. §24308(a) – Canadian National Railway Company. Amtrak initiated this part of the overall case in the middle of the ongoing hearing concerning proposed service between New Orleans and Mobile, Docket No. FD-36496, which has been the subject of extensive coverage here, and which is scheduled to resume on June 13.

While the Mobile matter concerns proposed service, the subject of the present case is an operating agreement between Amtrak and CN that was originally executed in 2011 for a two-year term, and concerns Amtrak trains running on the former Grand Trunk Western (GTW) between Chicago and Michigan, and the former Illinois Central (IC) between Chicago and New Orleans, both of which are CN U.S. subsidiaries. The entire filing is 497 pages long, including a 78-page introductory brief. There were also a number of exhibits, including the 2011 Operating Agreement (OA) with CN (40 pages) and a statement by James A. Blair, Amtrak’s Assistant Vice-President – Host Railroads, which contains Amtrak’s narrative. Blair was also one of Amtrak’s witnesses at the ongoing proceeding concerning the proposed Gulf Coast service.

Because of the voluminous nature of the file, it is not possible to present Amtrak’s contentions and arguments in detail, but the file is available on the STB website, www.stb.gov, which there is a link to the docket number, FD-35743. Warning: The documents delve heavily into the weeds, but most of the material filed with the STB is there for your review. As with the Mobile matter, the parties considered some of the material to be confidential, and it was redacted. During this report, we will concentrate on Amtrak’s contentions as expressed in the Brief, which initiated the current round of the proceeding.

Amtrak’s Filing

Amtrak stated its request for relief in the Conclusion of its Brief, which reads in its entirety: “For the reasons explained in this brief, and in the Verified Statements of [Amtrak Senior Principal – Host Railroad Development] Yoel Weiss and James Blair, Amtrak requests that the Board, in imposing terms and conditions for a new Operating Agreement between CN and Amtrak, imposed the terms and conditions discussed herein and memorialized in the Amtrak Redline.” The Amtrak Redline is part of a counter-proposal from Amtrak for a new OA with CN that is considered “confidential” and was redacted from the version of the documents available to the public. 

The unredacted portions of the proposed new OA were the first exhibit, consisting of 85 pages, with changes made over time. Blair’s statement was next, 47 pages long, and setting out Amtrak’s view on the issues discussed in the Brief; some of which are reported here. The original 2011 OA, with some of the original Appendices that were not redacted, was next; a 160-page document.

Two Case History Events 

The next two exhibits disclose much of the important procedural background behind the current filing. On Aug. 8, 2019, the Board issued a 29-page Decision in the case. The original Digest of that document stated: “In this Decision, the Board issues interim findings and guidance to the National Railroad Passenger Corporation (Amtrak) and Illinois Central Railroad Company and Grand Trunk Western Railroad Company (subsidiaries of Canadian National Railway Company); and initiates Board-sponsored mediation in an effort to establish reasonable terms and compensation for Amtrak’s use of the carriers’ facilities (including rail lines) and services.” The mediation effort did not succeed.

The next Exhibit was a notice dated Nov. 16, 2020 in the Federal Register from the FRA. It set out “Metrics and Minimum Standards for Intercity Passenger Rail Service,” and was set to take effect on Dec. 16 (85 Fed. Reg., No. 221 at 72971). The summary states: “This final rule establishes metrics and minimum standards for measuring the performance and service quality of intercity passenger train operations.” The Notice itself went into considerable detail, taking up 32 pages of the fine print always used in the Federal Register. It established a new Part 273 of Title 49 of the Code of Federal Regulations (CFR). The text of the new rules started on Page 72,300 and required seven columns. In light of the new rules, Blair proposed new schedules to Scott Kuxmann, NAPC Operations Officer for CN. The letter was included as an exhibit, but the schedules themselves were redacted.

Amtrak’s filing concluded with a 30-page statement from Yoel Weiss. It contains an analysis of OTP and scheduling issues on a train-by-train basis, and some unredacted exhibits that display schedules. There was also correspondence between Amtrak and CN officials that showed existing and proposed schedules on the trains in question on the Grand Trunk and IC components of CN. CN proposed lengthening scheduled run time by slowing the run itself, or by adding additional recovery time at the end of a run at Chicago or the outlying terminal.

Amtrak’s Requests

Amtrak summarized its requests in the Preliminary Statement of its Brief (at 1-4). The statement began: “In this action pursuant to 49 U.S.C. §24308(a)(2), the Surface Transportation Board (‘The Board’) will establish the terms and conditions (including the terms of compensation of a new operating agreement (‘OA’) under which the National Railroad Passenger Corp. (‘Amtrak’) will have access to the facilities of certain subsidiaries of Canadian National Railway in order to operate Amtrak passenger trains. Among other things, the Board will establish terms under which Amtrak will pay incentives to CN, or CN will incur penalties, based upon its the performance of Amtrak trains operating on CN’s tracks.” The statutory provision cited by Amtrak calls on the STB to intervene if the parties can’t agree; essentially the Board would arbitrate all or part of a new Operating Agreement in that event. 

Amtrak then said: “Neither the Board nor the Parties are writing on a blank slate. The Parties previously engaged in extensive discovery and submitted voluminous briefs and evidence (including several verified statements). Upon reviewing the record, the Board issued a Decision dated Aug. 9, 2019 (‘the 2019 Decision’), providing the Parties with rulings on certain issues and guidance on others, and directing the Parties to engage in Board-sponsored mediation (which ultimately was unsuccessful).”

Amtrak then described the important intervening development: the new rules issued late 2020 by the FRA. The agency established a customer on-time performance (COTP) metric that “assures the performance of Amtrak’s trains based on the percentage of all Amtrak passengers that have arrived on-time at their destination stations.” The “minimum standard” was set at 80% for any two consecutive calendar quarters. There was also a measure of Host-Responsible Delay (HRD), measured in minutes per 10,000 train-miles. Amtrak commented: “The metrics established in the FRA’s Final Rule are not only reasonable, but were issued after careful deliberation and review of comments submitted by numerous railroad industry stakeholders (including Amtrak, CN, other Host Railroads and the Board).”

The brief continued: “In proposing its terms and conditions for a new operating agreement with CN, Amtrak’s goal is to address the Board’s findings, guidance and concerns as expressed in its 2019 Decision. Amtrak’s proposal is also intended to propose terms that not only are fair and equitable to CN, but also incentivize conduct by the Parties that will foster the provision of quality passenger rail service to Amtrak’s passengers. For example, Amtrak is proposing an incentive and penalty system that incentivizes CN to deliver all of Amtrak’s passenger[s] to their destinations on time, but that does not inordinately penalize CN for delays that it did not cause (for example, delays caused by another Host Railroad, or by Amtrak itself).”

Amtrak called for use of the COTP metric for determining whether Amtrak could collect a penalty from CN for poor OTP, or would give CN an incentive payment for consistent OTP over 80%. CN would receive less incentive pay as its own HRD increased. According to Amtrak, that would encourage CN to promote greater COTP on Amtrak trains and minimize delays on trains that are already late. Amtrak also wanted to modify a “lookback” provision that it claimed allows CN to delay trains without incurring penalties because of a setoff clause, and to modify recovery time at certain stations.

“Factual and Procedural History”: Amtrak’s View

Amtrak’s brief then turned to the facts of the case and the procedural history that we have started to describe (at 4-24). The current action concerns six trains or corridors that use CN tracks: the Blue Water (Chicago – Port Huron, Mich.), Wolverine trains (Chicago – Detroit – Pontiac, on a route partly owned by Amtrak and Michigan), Lincoln Service (Chicago – St. Louis; on CN between Chicago and Joliet, Ill.), Texas Eagle (Chicago – St. Louis – San Antonio), Illini/Saluki (Chicago – Carbondale, with the Saluki suspended since late January and slated to return on Sept. 12), and City of New Orleans (Chicago – Carbondale – New Orleans). 

Amtrak described previous rounds in the present case and said that the STB had ordered that CN keep providing facilities and services to Amtrak on an interim basis under the 2011 OA that had expired in 2013 and that “the 2011 OA continues to govern the Parties’ relationship through present day.” Then the parties engaged in litigation before the Board concerning proposed terms for a new OA. 

STB’s 2019 Decision

The Board provided guidance concerning several items (at 6-17). They suggested redistributing recovery time between more checkpoints, without lengthening schedules. They suggested changing the incentive payment and penalty system, but keeping the 80% OTP standard. They did not suggest eliminating the “lookback provision” that Amtrak claimed permitted CN to run Amtrak trains late without paying the otherwise-required penalties. CN wanted to increase the types of costs to the “incremental costs” for which Amtrak would be required to reimburse CN, but the Board defined the concept as including costs that CN would not have incurred “but for” the Amtrak trains on its lines.

Concerning performance measures, the Board did not go along with CN’s call for a “root cause” analysis of incremental costs. Amtrak argued that the term is not well-defined, and wanted to stay with a measure based on “proximate cause”; a well-defined term. The concept, as defined in tort law, means that the result was caused directly by a specific act (often a negligent one), and where there was no intervening event that could be blamed as the cause of the harm; in the present case, a late train. On that issue, the Board agreed with Amtrak because CN did not defend or explain its own concept sufficiently. 

There were other issues, including the term of a new agreement and confidentiality. Amtrak’s brief went into considerable detail concerning every item in prior proceedings, but the mediation that the Board ordered in 2019 was not successful, and the dispute continues.

The 2020 FRA “Final Rule”

The FRA adopted “customer on-time-performance” (COTP), defined as “the percentage of all customers on an intercity passenger rail train who arrive at their detraining point no later than 15 minutes after their published scheduled arrival time, reported by train and by route.” The goal was to establish a customer-focused measure: “The OTP metric should measure train performance from the eyes of the customer” instead of restricting checkpoints to the final terminal and only a few intermediate stops. So COTP is the percentage of passengers who arrive at their destinations no more than 15 minutes after scheduled arrival time, compared to all riders on that train, and the minimum standard is 80% OPT for two consecutive calendar quarters. That standard is based on the entire route, and not split between host railroads if there are more than one. Still, the calculation takes delay minutes on each host railroad into account. 

The rule also encourages Amtrak and host railroads to agree on “certified” schedules they can attain, but does not require a specific means to resolve a dispute, if there is no such agreement. Delays can be attributed to Amtrak, the host railroad, or third parties. The measure of delay per 10,000 miles was also adopted. According to Amtrak, efforts at mediation after the 2019 Decision were not entirely successful, but Amtrak and CN were able to work out “certified schedules” for trains on lines other than the historic IC main south from Chicago to Carbondale and New Orleans.

Amtrak’s Proposed CN OA Terms

The rest of Amtrak’s Brief (at 25-78) lists Amtrak’s proposals and argues for them. Amtrak is calling for large-scale changes in its operating relationship with CN, and many of the proposed terms are sufficiently arcane or technical that they stand outside the purview of this article. These issues include confidentiality, indemnification, structure of penalties or incentive payments, and reallocation of recovery time in Amtrak’s schedules. If you want to learn more, the Brief is available on the STB website as previously cited, but there are a few highlights that are worth mentioning.

Amtrak began its discussion (at 25) by saying: “The Board’s Final Decision setting terms and conditions for a new OA between CN and Amtrak must be informed by the regulatory and statutory frameworks applicable to Amtrak’s relationship with its Host Railroads. In addition to the Board’s 2019 Decision, that framework includes: 

  1. “The requirements imposed on freight railroads under the ‘public bargain’ that accompanied Congress’ creation of Amtrak.
  2. “The Congressionally mandated preference afforded to Amtrak’s passenger trains while operating on a Host Railroad’s system.
  3. “Amtrak’s Congressionally mandated mission and goals.
  4. “The COTP and other metrics and standards established by the FRA in its Final Rule and the requirement that Amtrak OA’s are consistent with them.”

Having articulated those principles, Amtrak went on to explain each one in detail, beginning with background about how and why Amtrak was established more than 50 years ago, and then turning to Amtrak’s mission and goals. The brief (at 29) cited statutory provisions concerning requirements for Amtrak (at 49 U.S.C. §§24101(c)(1)(D) and (c)(4,6,7)):

  1. “Operate Amtrak trains, to the maximum extent feasible, to all station stops within 15 minutes of the time established in public timetables.
  2. “Improve its contracts with operating rail carriers.
  3. “Implement schedules based on a systemwide average speed of at least 60 miles per hour that can be achieved with a degree of reliability and passenger comfort.
  4. “Encourage rail carriers to assist in improving intercity passenger transportation.”

Amtrak then called on the Board (at 30-31) to set terms and compensation for host railroads under a list of principles that included: reasonableness of conditions, considering quality of service when allowing compensation in excess of incremental costs, considering COPT as a key “quality of service” metric, observing the FRA’s “Final Rule” including COPT, terms must be consistent with Congressionally mandated goals, including arriving at stations no later than 15 minutes behind published schedules, and terms that would incentivize “CN’s strong performance under the metrics and standards established by the FRA” including honoring Amtrak’s statutory preference.

Another component of Amtrak’s request was a payment system that would use “passenger miles” as a metric, in an effort to incentivize moves that would increase ridership (at 34). Amtrak would also incorporate “degree of lateness” into the assessment to minimize delays and “afford CN a meaningful opportunity to earn incentives based upon its own performance, even if other Host Railroads for the route perform poorly” (at 35). Incentives would be based on a “ridership factor” (at 36-37), which would be adjusted annually (at 38-39) with a further “delay adjustment factor” (at 40-42), which would also be adjusted based on passenger miles ((at 43-47). 

Amtrak also offered suggestions about provisions relating to dispute resolution (at 47-50), reallocation of recovery time in Amtrak schedules (at 50-58), optimizing disputed schedules (at 58-71), and other, more-technical issues. One of the most controversial, according to recent posts by advocates on their blogs, is remedial action to correct low COTP (at 66-71). 

Three Tiers of Proposed Remedial Actions

Tier 1 would be triggered “in the event of one quarter where CN’s HRDs exceed 924 minutes per 10,000 train-miles for a particular Amtrak train” (at 68). In that event, CN would be required to report to Amtrak monthly for each HRD in excess of five minutes, with detailed and specific delay reports. CN would also allow Amtrak representatives to view its dispatching screens. These remedies would last for up to six months, at Amtrak’s discretion. 

Tier 2 would add further actions to the dispatch reporting and screen view requirements of Tier 1 if they prove ineffective and the delays continue for a second consecutive quarter. Amtrak could then designate a representative (an employee or a third party) to sit alongside CN’s dispatchers in real time (at 69), and Amtrak would have the discretion to approve non-emergency repairs or maintenance on the right-of-way in the affected area. These remedies would be implemented for at least one year.

Tier 3 remedies are more invasive, and could be imposed after four consecutive quarters of OTP that failed to meet the standard. That remedy would allow Amtrak to take over the dispatching on the route in question for at least two years and until the deficiency is cured and OTP again meets the standard (at 70-71). There would be no incentive payments or penalties while Amtrak dispatches the line. 

New Test of STB’s Statutory Mandate

Like the ongoing slugfest before the STB over proposed service between New Orleans and Mobile, the issue of a new OA between Amtrak and CN is a case of first impression and a test of how far the Board will go toward implementing the statutory preference that Amtrak trains are supposed to enjoy on lines operated by host railroads. 

At this writing, we don’t know where this phase of the case will go, because circumstances have changed considerably since the agreement between Amtrak and CN expired in 2013. The trains are still running (except for the now-suspended Saluki and the five-day-per-week operation of the City of New Orleans, but those trains are slated to return to full operation on or about Sept. 11). The 2019 Decision by the Board and the “Final Rule” implemented by the FRA in 2020 are now part of the equation, and it is up to the Board to implement those changes.

CSX and NS are fighting as hard as they can against the proposed Mobile trains, unless they can get all of the infrastructure they want, because they know that the STB will set a precedent that will apply to all new services and the railroads that will host them. The same holds for OPT standards, incentive payments for good OTP, penalties for substandard OTP, and many other provisions that would be covered by an operating agreement between Amtrak and the host railroads on all of its routes.

In essence, the present case will become a matter of contract arbitration, even it does not fit the strict definition of such a proceeding. In effect, Amtrak has asked the Board to set conditions that will govern the relationship between Amtrak and CN, and other host railroads in the future, when Amtrak and the host railroad(s) are unable to come to agreement on specific terms. In covering the ongoing Gulf Coast matter, this writer has observed Chair Martin J. Oberman and the other Board members, and they appear competent to handle the job. 

It is too early to determine how this case might go, because CN has not answered Amtrak’s filing yet. If other cases like Mobile are any indication, this matter could become a slugfest, too. Still, the Board has new marching orders from Congress, and time will tell what steps its members take to follow those orders. As with the Gulf Coast matter, we expect to provide lots of coverage of the present case as it moves toward the future and ultimate resolution of some sort.  

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