At this writing, the first witness in the slugfest between Amtrak on one side and CSX, NS and the Port of Mobile on the other, is focusing on confidential matters. That creates an opportunity to think further about the importance of the case and how to report it to you. We had previously thought that a single report about this week’s hearing before the Surface Transportation Board (STB) would be sufficient, but the opening statements made by the parties April 4 forced a change in plans.
Rather than a routine recap of a dull, technical trial, we now know that there are more legal issues before the Board than had been clear before today. This is a case of first impression, and it’s about more than how much infrastructure must be built along the Gulf Coast corridor to allow Amtrak to run two daily round trips between New Orleans and Mobile and still coexist with CSX freight and whatever is running on NS in New Orleans. In short, the opening statements deserve some coverage of their own.
Amtrak wants to run two daily passenger round-trips: one originating at New Orleans and the other at Mobile. To do this, Amtrak’s trains would proceed over 3.7 miles of NS track in the Crescent City, from the station (the New Orleans Union Passenger Terminal) to a junction with CSX. It would proceed the rest of the way to Mobile on CSX. Both carriers object to the plan, unless they are given new infrastructure that they claim they need to avoid negative impacts on their freight services. The amount and cost of such infrastructure forms the basis for their dispute with Amtrak, and they had requested that the Board order the parties into mediation. That may happen after the current hearing, but the Board declined to do so at this time. The Port of Mobile was added as an intervenor in February after arguing that it had a sufficient interest in the outcome of the case to warrant such status.
Bill Mullins, the attorney for NS, noted the historic occasion at the beginning of his opening statement. He said that the occasion is historic for two reasons: that it is the first “on the record” hearing before the Board, and that it marks the first time the that 49 U.S.C. §24308(e) is being raised in a case before the Board. That statute governs hearings by the Board when Amtrak desires to run “additional trains” over a carrier’s rail line. Whether or not the proposed Gulf Coast trains qualify as “additional trains” is an issue in the case.
As such, the case is definitely one of first impression, which essentially means that everyone concerned is operating in uncharted territory, at least they are all running at restricted speed on the legal equivalent of dark territory. So, at the end of the first day of the proceeding, all parties had made their opening statements and one witness has been called. To make scheduling matters worse, he still has to answer more questions. That means it is impossible to meet the original two-day schedule for the hearing, and it appears that the two “reserve” days will not be enough time to finish it, either.
While Amtrak initiated the matter in an effort to initiate service, CSX and NS, the two prospective host railroads, are making their presentations first. The Port of Mobile, which was allowed to intervene in the case, goes next. Amtrak goes last. While the opening statements of all parties were relatively long and comprehensive, we will provide only basic summaries. The video stream of the hearing is available on the Board’s YouTube page.
Ray Atkins, counsel for CSX, made the first opening statement. He started by saying that the established process requires a robust study and collaboration between parties but, in this case, the process fell apart. He said that a good Railroad Traffic Controller (RTC) study and coordination between parties is essential. He expressed concern about Amtrak adding “four high-speed, high-priority” trains to the traffic on the Gulf Coast line every day, and claimed that Amtrak is not serious about the impact of its prospective trains on the reliability of CSX’s freight service. He accused Amtrak of “aggressive legal posturing” instead of working with CSX and NS to ensure that the infrastructure they claim they need is built.
Bill Mullins, representing NS, went next. After mentioning the historic nature of the proceedings, he said, “But we shouldn’t be here today.” He mentioned that the Southern Rail Commission, its spinoff, the Gulf Coast Working Group, and others had pushed for completion of the original RTC study, but Amtrak had pulled out. He said that Amtrak did not analyze the impacts of the requested service on the docks of New Orleans.
Rob Wimbish represents the Port of Mobile, which consists of the Terminal Railway and the Alabama State Docks. He started by saying that this case is “unprecedented, has far-reaching significance,” and that it is “unfortunate,” and criticized Amtrak for a “hard-line, winner-take-all confrontation.” He said that, if Amtrak starts running trains, the result would be “definite and massive harm to the Port’s railroad operations” and a “catastrophic deterioration.” He argued that Amtrak was the “but for” cause of any need to build additional infrastructure, so Amtrak should pay 100% of the cost.
Jessica Amunson made the opening statement for Amtrak. She began by saying that the other parties wanted to turn the case into one about RTC modeling, but they really want to veto Amtrak’s service proposal. She invoked the Rail Passenger Service Act of 1970, which relieved the private-sector railroads of their historic obligation to provide passenger service and formed Amtrak to run passenger trains, and authorized Amtrak to run on those railroads’ lines by paying the incremental cost of doing so. She cited Congressional committee reports from later statutes that showed it was mandatory to allow Amtrak to run requested trains without demanding excessive amounts of additional infrastructure. She argued that the claims by Amtrak’s opponents are hypothetical, and that allowing Amtrak to run the proposed service “won’t cause the corridor to grind to a halt.”
As recently as the business day preceding the hearing, the issues before the Board were what constitutes “unreasonable impairment to freight transportation” under 49 U.S.C. §24308(c)(2)(A) and whether the carriers have demonstrated that their freight transportation would be “impaired unreasonably” by the proposed Amtrak passenger service.
The opening statements raised other issues, though. Would Amtrak be required to build all required infrastructure before trains can start running, or can it be built after passenger operations begin? What sort of a study using RTC simulation would be needed? Does Amtrak’s current request fall within the purview of §24308(e), or should it have been made through subsection (a) of that provision, instead?
NS suggested that the Board require Amtrak to build the infrastructure improvements that the carriers demand before passenger trains can start running along the Gulf Coast. CSX and NS currently want $405 million to $440 million worth of infrastructure built for the trains, without which they claim their freight service in the region will deteriorate. Amtrak’s counter-suggestion is that the only urgently needed infrastructure project is a station with a station track, which could be built inexpensively. Then the remaining needed infrastructure could be built while service operates. On one side of that argument is the claim by NS that it would take two or three years to spend the $66 billion that the FRA has made available for infrastructure to support the initiative. Amtrak, and apparently the potential riders along the line, are in a hurry to get started preparing for trains. The last one ran before Hurricane Katrina devastated New Orleans and the Mississippi Gulf Coast in 2005. On the other side of the argument, CSX claims that the line in question contains seven movable bridges, a large number of grade crossings, and other features that make it five times as expensive to maintain as the average stretch of track of comparable length.
RTC stands for Railroad Traffic Controller, a computer simulation that models traffic on a stretch of railroad, taking infrastructure and demands on that infrastructure into account. It has been referred to as the “gold standard” of simulations, and it is used widely in the industry to simulate both passenger and freight operations. Charlie Banks, head of consulting firm R.L. Banks and Associates, testified about RTC at the hearing. He said that, first, it simulates demand on the capacity of the railroad’s infrastructure by putting in everything that is germane to that capacity. Second, the other inputs concern demands on that capacity, including length and weight of trains, when and how often they run, and similar data. Third, with that information, an attempt to run the simulation shows whether or not the railroad will function as modeled. If it runs, there is enough room on the segment under consideration. If not, it is necessary to build additional infrastructure or reduce demand on the line’s existing capacity.
Amtrak drew criticism, purportedly for not participating fully in RTC studies, and then not offering to build new infrastructure projects until the trains start running. For its own part, Amtrak argued that the parameters for the proposed study were unreasonable: no negative impacts of any kind on CSX or NS freight operations, and 95% on-time-performance for Amtrak trains (the current acceptable standard for Amtrak trains generally is 80%). Amtrak also argued that the carriers’ alleged infrastructure needs are hypothetical. Amtrak also suggested that some zero-cost or low-cost solutions, like changing freight schedules slightly, could eliminate the need for at least some of the proposed projects. Amtrak also argued that there is sufficient capacity on the line now to add the requested trains.
Amtrak brought the present case under 49 U.S.C. §24308(e)(1), which states in pertinent part: “When a rail carrier does not agree to provide, or allow Amtrak to provide, for the operation of additional trains over a rail line of the carrier, Amtrak may apply to the Board for an order requiring the carrier to provide or allow for the operation of the requested trains. After a hearing on the record, the Board may order the carrier, within 60 days, to provide or allow for the operation of the requested trains on a schedule based on legally permissible operating times.” In so doing, Amtrak argued that it already has agreements with CSX and NS to operate other trains over other lines which those railroads own and operate, so the Gulf Coast trains would be “additional trains” within the meaning of the statute. Amtrak also argued that the old pre-Katrina Gulf Coast portion of the Sunset Limited was one of those trains. NS argued that subsection (e) is not the correct provision for Amtrak to invoke, that Amtrak should have made its request under subsection (a).
Section 24308(a)(1) says in pertinent part: “Amtrak may make an agreement with a rail carrier or regional transportation authority to use facilities of, and have services provided by, the carrier or authority under terms on which the parties agree. The terms shall include a penalty for untimely performance.” Further provisions give the Board the authority to order that facilities be made available and services provided to Amtrak, and to prescribe reasonable times and compensation. The Board can assess Amtrak an amount greater than the incremental costs of using the facilities or providing the services in that context, though. There are 14 projects under consideration in the present case.
Section 24308(e)(2)(A) says: “The Board shall consider, when conducting a hearing, whether an order would impair unreasonably freight transportation of the rail carrier, with the carrier having the burden of demonstrating that the additional trains will impair the freight transportation.” This is one of the issues that the parties had agreed to bring before the Board. CSX argued that, if the Amtrak trains were to run on current infrastructure, there would be 13 hours of delay per day, or 45% of Mobile’s delays. For its own part, Amtrak argues that the requested operation with today’s infrastructure would reduce the average speed of CSX freight trains only from 14.8 mph to 14.1 mph. Amtrak also argued that CSX and NS were proposing “a model to gold-plate a railroad.”
To illuminate that argument, Amtrak spokesperson Marc Magliari sent Railway Age a photo, apparently from the Gulf Coast Working Group, that shows a “desktop railroad” with the hashtag #NoGoldPlatedRR.
Questioning and Observations
It took almost three hours for the lawyers to present their opening statements, and for Board members to question them about those statements. Board Chair Martin J. Oberman asked the most questions, while members Karen J. Hedlund, Patrick J. Fuchs and Michelle A. Schultz asked some, too. We don’t have the space to bring you a detailed discussion of the questions and observations from the Board members, but they were often pertinent and probing, and fitting for members of an agency who are dealing with a case of first impression that is complex and will probably set precedents that will stand for years.
Oberman commented to Mullins of NS: “You have a very energetic group of five people” and asked Mullins why he did not file a Motion to Dismiss if he believed Amtrak was invoking the wrong statute. Hedlund also commented after Mullins’ statement, observing, “Most of the $66 billion [from the Bipartisan Infrastructure Law] is going to infrastructure on the freight railroad system. The window is going to open and shut real fast.” She added that there will be lots of competition for available grants.
The Board members had more to say after Amtrak’s statement. Much of that discussion concerned what authority the Board might have, whether an action is brought under Subsection (a) or Subsection (e). Could they directly order Amtrak to build the infrastructure that a carrier claims to need, or a lesser amount, if the Board decides that such lesser amount would be enough to allow both the passenger and freight operations to arrive on time? If not, could the Board specify infrastructure improvements that would be necessary, and not allow the passenger trains to run until they are built? Alternatively, could the Board issue a declaratory judgment about precisely what infrastructure would be needed? These are the sort of questions that go with a case of first impression, as the tribunal use the parties’ arguments as a guide to help them reach their own destination and setting their own precedents. Karen Hedlund had the last word. She noted that they were “looking for options to meet the public interest.”
More to Come
The two railroads and the Port called for Board-sponsored mediation in an effort to settle the dispute. The made their request too late to have it granted now, but the decision dated April 1 denying that request left the door open for mediation to occur after the ongoing hearing. Whether or not it will happen is anybody’s guess, especially since the Board is in “dark territory” along with everybody else concerned. Nonetheless, sometimes it is easier for parties to reconcile their differences if they know which way the proverbial wind is blowing. After the Board renders its decision, even if it includes a recommendation for mediation, we will all know more.
Counsel for NS called for mediation again in his opening statement, and then criticized Amtrak for wanting a legal precedent, instead. It makes sense that Amtrak would want a precedent in this case. As Amtrak could reasonably be expected to see it, the only way it could move toward establishing more state-supported routes by 2035 would require the Board (maybe with some expert help from the FRA) telling potential host railroads that they can’t get away with requiring Amtrak to pay for gold-plating as part of the deal. Likewise, potential host railroads like CSX and NS want a precedent just as much. They want to call the shots when it comes to determining how much additional infrastructure they would receive in return for allowing Amtrak to run passenger trains on their railroads. From the public perspective, precedents set rules, which everybody can follow in the future.
At this writing, the hearing has only begun, and it has already fallen far beyond schedule. Like trains, hearings can lose time, especially in matters of first impression, like the present case. We previously reported that testimony from other scheduled witnesses was estimated to take a total of seven hours. The opening statements by the four parties, along with questions from the Board members, took three.
The Board heard from one witness: Charlie Banks. Instead of being “on the stand” for one hour, he was on for 3½, and the day ended shortly after 5:00, but while there were still more questions for him. So he will finish and there will still be all the other witnesses lined up, too. There were originally two days scheduled for the hearing, with two more, if needed. It now appears that even those two extra days will not be enough, if the pace of the first day is any indication.
Just as the Board is not quite sure what they will do to accommodate the rest of the hearing, we are not quite sure how we will report it to you. Round 4, the testimony and questioning of the witnesses, has already begun, and it will continue, probably until the Board members and everybody else listening end up knowing more about the railroad along the Gulf Coast (between New Orleans and Mobile at least) than we ever wanted to know.