Decision Handed Down in UP-Metra Dispute

Judge pronounces common carrier obligation for “commuter rail” dead.

A federal judge in Chicago handed a win to Union Pacific (UP) in its dispute with Metra, Chicagoland’s commuter railroad. The case, captioned Union Pacific Railroad Company v. The Regional Transportation Authority and its Commuter Rail Division, d/b/a Metra, No. 19 C 7957, was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

In a 22-page Memorandum Opinion and Order (download below) announced on Sept. 23, Judge Jorge L. Alonso held that UP has no common carrier obligation to operate three lines in the Metra system that were once operated by the Chicago & North Western Railway (C&NW): the West Line to Elburn, the Northwest Line to Harvard and McHenry, and the North Line to Waukegan, with limited service to Kenosha, Wis. Alonso summarized the history of railroad regulation in this country and concluded that UP is no longer under the sort of common-carrier regulation that existed in the past. 

Decision Highlights

In the “Background” section, Alonso discussed the history of commuting and addressed Metra’s current operation: “Metra is a municipal corporation that provides commuter service to and from Chicago over 11 rail routes. Of those 11 routes, Metra owns and operates four: Metra Electric, Milwaukee District North, Milwaukee District West and Rock Island. In addition, Metra operates three lines (Heritage Corridor, North Central Service and SouthWest Service) on tracks that are owned (or partly owned) by freight railroads. The final four lines are operated by freight railroads via purchase-of-service agreements. Three of those lines—Union Pacific North (which runs to Kenosha, Wis.), Union Pacific Northwest (which runs to McHenry, Ill.) and Union Pacific West (which runs to Elburn, Ill.)—are operated by Union Pacific.” The other line is the historic CB&Q (Chicago, Burlington & Quincy) line to Aurora on right-of-way owned and operated for Metra under contract by BNSF.

The opinion cited a 1978 agreement between Metra and the C&NW, which stated: “Continuance of Service. During the period of use of the Project Facilities … Railroad shall provide Commuter Rail Service over or upon the Project Facilities in accordance with the terms of the Service Agreement. In the event no Service Agreement is in effect, Railroad shall provide Commuter Rail Service over or upon the Project Facilities in accordance with its common carrier obligations” (emphasis added).

The most recent Purchase of Service Agreement between Metra and UP (as successor to C&NW) started in 2010 and ran until 2016. The parties have not been able to come to a new agreement since. The judge’s opinion explained why: “One reason they have been unable to agree is that, during those negotiations, the parties disagreed (and continue to disagree) as to whether Union Pacific has a common-carrier obligation to provide commuter services on the lines at issue in this case. In June 2020, Union Pacific notified Metra that, by August 2020, it would discontinue providing services on the Union Pacific North, Union Pacific West and Union Pacific Northwest Lines. Metra told Union Pacific that it cannot stop operating commuter trains, because it has a common carrier obligation to provide the services even in the absence of a purchase-of-service agreement. Union Pacific has: (1) informed Metra that it believes it has no such obligation; and (2) urged Metra either to take over operation of the commuter trains on those lines or to hire another operator to do so.”

The opinion presented a detailed history of railroad regulation, starting with Wabash, St. L. & P. Ry. Co. v. Illinois, 118 U.S. 557, 572-73 (1886), holding that state regulation violated the Commerce Clause of the Constitution, which empowers the federal government to regulate interstate commerce. In response, Congress established the Interstate Commerce Commission (ICC) in 1887. That agency lasted until 1995, when the Interstate Commerce Commission Termination Act replaced it with the Surface Transportation Board (STB). By then, Amtrak had taken over the surviving intercity passenger trains in 1971 and the Staggers Act had substantially, albeit partially, deregulated the freight side in 1980. In essence, Congress declared that competing transportation modes have weakened the monopoly that railroads once held, so the STB’s jurisdiction is significantly narrower than the ICC had.

In the present case, UP claimed that any common carrier obligation that had existed under the ICC died with it. Metra argued that UP had never received permission to stop providing services to Metra, so UP was still obligated to provide them. Those services include operating the trains and collecting fares.

In his opinion, Alonso said that the case turns on what authority the STB has under the facts of the case: “It makes sense that both parties agree this matter is within the Board’s jurisdiction. The undisputed facts are that the commuter service provided on the Union Pacific North, Union Pacific Northwest and Union Pacific West lines constitutes transportation ‘between a place in—(A) a State and a place in the same or another State as part of the interstate rail network,’ which is among the types of ‘transportation’ over which ‘the Board has jurisdiction[.]’ 49 U.S.C. § 10501(a)(2)(A). The commuter service runs from a place in Illinois (Chicago) to a place in Illinois (McHenry) or a place in another state (Wisconsin) over tracks that are part of Union Pacific’s interstate rail network.”

Regarding Metra’s claim that UP would need STB permission to stop providing service to Metra, he said: “The Court does not agree. Under that section, Board approval is required for only two things: (1) abandonment; or (2) discontinuance of all transportation on a line.” UP still runs some freight operations on those portions of its lines and expressed no intention of discontinuing or abandoning them.

According to Alonso, UP does not need STB or state permission to stop providing services to Metra. He stated: “the Court agrees with Union Pacific that, under the ICCTA [Interstate Commerce Commission Termination Act], Union Pacific does not need the Surface Transportation Board’s permission to stop providing the commuter services on the lines at issue in this case.” He continued: “The alternative Metra advocates—that Union Pacific has a state-law common carrier duty and must seek the state’s permission to toss off that yoke—is untenable in the face of ICCTA’s preemption provision,” and also said that Metra did not cite any Illinois law that would require state permission.

Alonso also denied a counterclaim by Metra and concluded: “Union Pacific is entitled to a judgment declaring Union Pacific Railroad Company has no common carrier obligation to provide services (operating trains, selling tickets and collecting fares) to Metra for its commuter rail services on the Union Pacific North, Union Pacific West and Union Pacific Northwest lines. Civil case terminated.”

There was a relatively-unusual procedural aspect to the case. It was brought with a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. That means there was no dispute about the facts of the case that would have required a trial. It concerned only a question of law: Whether or not UP had an obligation to continue providing services to Metra as a common carrier. UP asked for a declaratory judgment that it did not, and that is what UP got.

Looking Toward the Future

There have not been many immediate reactions to the decision. Metra declined to comment at this time, but the commuter railroad is the party required to make changes consistent with the court decision. KellyAnne Gallagher, Executive Director of the Commuter Rail Coalition, told Railway Age: “Due to the unique fact pattern in this case, the ruling doesn’t break any new ground. Passenger service was being operated on the corridor well before Metra even came into existence.” She added: “But if UP were to decide to stop service and deny Metra access to the corridor, that’s what’s of universal concern.” Depending on how events unfold, the event that Gallagher fears may not come to pass.

UP spokesperson Robynn Tysver told Railway Age: “We’re pleased with the court’s decision, and we look forward to our continued partnership with Metra. We’ve always said, and we can reaffirm that today, that we want to work collaboratively with Metra to ensure a smooth transfer of service with no disruption to passenger service.”

Time will tell what sort of arrangement Metra and UP eventually make. As Judge Alonso mentioned in his decision, negotiations between the parties had broken down. At this writing, it appears that both sides will eventually be back at the bargaining table. UP appears willing to talk, while Metra can no longer argue that UP has an obligation to keep operating the trains under a common carrier obligation. In essence, that means they will need an agreement.

As for a solution, nobody who is not privy to the actual negotiations can know how easy or how difficult it might be for the parties to reach agreement. If the train crews and support personnel are now employed directly by UP, Metra will need to operate the trains directly and pay UP for trackage rights; find a third-party who will operate the trains under contract; and perhaps take care of the all costs (including trackage fees) as part of an overall all-inclusive deal, or contract directly with UP for all aspects of operating the trains. The latter alternative appears unlikely, because it would be reasonable to expect that such an arrangement was considered in prior negotiations, when the parties ended up at an impasse.

How important is this case as a precedent?

American law is based on court rulings which set precedents which, in turn, bind other judges who rule on cases that are similar to an earlier matter, but whose facts are not identical to those in the prior case. Some cases stem from such narrow sets of facts that they have little or no precedential value in making policy for the future. That, in itself, does not mean that such cases are unimportant. The Supreme Court’s three cases collectively captioned Bush v. Gore that were decided in 2000 did not set precedent for the future, because they were limited to the facts from that election. Still, the case determined the outcome of a national election, and, arguably, the course of American politics from that time and onward to the present.

UP v. Metra does not appear to have much precedential value, and it seems unlikely that it will affect policy and custom regarding operation of regional railroads, often called “commuter” railroads. The facts concerning the UP operation of Metra trains on lines that it inherited from the C&NW in 1995 appear unique. Much of the track over which regional railroads in the Northeast operate are owned by public entities: state transportation departments, the railroads themselves, or Amtrak, which is considered part of the public sector for regulatory purposes (Department of Transportation, et al. v. Association of American Railroads, 575 U.S. 43 [2015]).

Many other local passenger railroads operate over track owned by a private-sector railroad, and the parties have been able to reach agreement consistently about those operations. No railroad like Metra had claimed before that a private-sector railroad had the obligation of a common carrier to keep operating trains as it had done before, and without a new contract. It appears highly unlikely that one will in the future, either.

It is not an absolute certainty that Judge Alonso’s ruling will stand. Metra is allowed to appeal it to the Seventh Circuit, the appellate court whose territorial jurisdiction includes Chicago. If that court affirms Judge Alonso’s ruling, Metra could petition the Supreme Court for review. In this writer’s opinion, the Court is unlikely to grant such a request, even in the unlikely event that the Seventh Circuit reverses Alonso. There would not be any question of major public importance presented, and the Court agrees to hear only a small portion of the number of cases presented to it through petitions. So it appears likely that the ruling will stand, and that Metra will need to work out with UP the details of how trains on the former C&NW lines near Chicago will keep running and continue serving their riders.

Re-enter the STB, But Not Here?

There are some ironic events in railroad regulation taking place now that seem unfathomable through the lens of 1995, when the ICC was terminated and the STB replaced it. While changing an agency’s name acts as a symbolic reminder that the agency’s jurisdiction or functions have changed, the switch from the ICC to the STB signaled that the agency’s jurisdiction would be significantly narrower in the future than it had been in the past. By 1995, Amtrak had taken over the operation of the few intercity passenger trains that survived, and the Staggers Act had deregulated much of the freight side of railroading. The few “legacy” regional rail systems, including Metra, had taken the operation of local trains away from the private-sector railroads and moved them into the public sector, often as segments of local public-sector transit agencies.

Yet, the STB is now considering matters concerning Amtrak. The Board has become involved with monitoring Amtrak’s on-time-performance, while the dispute between Amtrak and CSX and NS over access to Mobile, Ala., for operating passenger trains between that city and New Orleans is a case in point. Railway Age has covered that controversy extensively and will continue to do so, but it shows that the STB is dealing with issues related to passenger trains. There is also a bit of private-sector railroading in the offing, as Brightline prepares to restore service in South Florida between Miami and West Palm Beach, and to extend service northward and westward to Orlando Airport next year.

These may bring new regulatory challenges and opportunities to the STB, but regulating a common-carrier obligation for UP to operate trains for Metra, or a similar situation elsewhere, will probably not be one of them.

David Peter Alan is one of America’s most experienced transit users and advocates, having ridden every rail transit line in the U.S., and most Canadian systems. He has also ridden the entire Amtrak network and most of the routes on VIA Rail. His advocacy on the national scene focuses on the Rail Users’ Network (RUN), where he has been a Board member since 2005. Locally in New Jersey, he served as Chair of the Lackawanna Coalition for 21 years, and remains a member. He is also a member of NJ Transit’s Senior Citizens and Disabled Residents Transportation Advisory Committee (SCDRTAC). When not writing or traveling, he practices law in the fields of Intellectual Property (Patents, Trademarks and Copyright) and business law.