Round 2 Over, Round 3 Under Way

The clock has run down on Round 2, and, as you read this, Round 3 at the Surface Transportation Board is in progress. This battle may decide railroad supremacy, at least on the passenger side, for the next decade and more.

In one corner is Amtrak, the challenger, who wants to get started on dozens of new corridor-length state-supported routes that it hopes to initiate by 2035. In the other corner is CSX, the defending freight champion of the Gulf Coast region, with its seconds: Norfolk Southeern with its local base in New Orleans, and the new contestant, the Port of Mobile. The spectators are gathered around the ring for the best view of the battle, and everybody knows that the outcome could set the precedent over most of the nation for years. The bets are down, as the “big money” stakeholders (CSX customers and elected officials in and beyond Alabama) have rallied to their chosen side.

Round 2 had been fought throughout February and March, in preparation for Round 3, now under way. In a final maneuver to stall the proceedings or avert a knock-down, drag-out legal battle, depending on which side you support, CSX, NS and the Port requested mediation in a motion filed March 25. Amtrak did not agree, and the Board denied the request on April 1. The Board criticized the parties for not agreeing to mediation sooner, but any Board-sponsored mediation must now await the result of the current evidentiary hearing.

We reviewed Board filings in the matter from before the February hearing until now. They show that Round 2 was fought not with wide public dissemination, but through documents that are available on the Board’s website, www.stb.gov, under Docket No. FD-36496. Some concerned preparations for the battle and setting its ground rules. Most were comments from concerned non-parties, only a few of whom made statements at the February hearing. Six supported Amtrak’s plan to run two daily round trips between New Orleans and Mobile, but 30 objected to the plan or called for more study or other events that would delay the start of the proposed new service.

Most of the objectors expressed concern about the condition of supply chains generally and about how well CSX could deliver shipments under these conditions, especially if the railroad is required to allow two Amtrak round trips per day through Mississippi and eastward to Mobile. Some of the letters filed by opponents of the new service contained identical language in places, a phenomenon often associated with filing a version of a form letter prepared by somebody else. The opponents included corporations and trade associations, along with elected officials from Alabama, Georgia, Florida and Tennessee.

The 19 private-sector objectors included 12 corporations, six trade associations and one “free-market” think tank. They included such rail shipper giants as UPS and Cargill, smaller companies and trade associations based in Alabama, and a few from other states. They included the Mississippi Railroad Association, the Tennessee Chamber of Commerce and Industry, and the Effingham Railroad Company in Illinois.

Ten elected officials from Alabama and other places took the side of the Port and the potential host railroads. The ones in Alabama were Lieutenant Governor Will Ainsorth and Senate President pro tempore Greg Reed. Officials from other states were Georgia Governor Brian Kemp and two of his appointees, Tennessee Governor Bill Lee and Senators Marsha Blackburn and Bill Haggerty, and Jacksonville Mayor Lenny Curry and Rep. John H. Rutherford from the district that includes Jacksonville. All are Republicans.

Although three members of the Southern Rail Commission (including Alabamian Greg White) made statements at the February hearing supporting Amtrak, Stephen McNair, chair of the Alabama delegation, took a less-favorable position in his letter filed on March 16. He called for the Mobile Station to be located at the Brookley Aeroplex, an airport about five miles from downtown Mobile, to keep it away from Riverfront freight yard, although he did not suggest how rail passengers would get from the airport to the attractions located downtown. He called for infrastructure improvements to be completed before the trains run, and he thanked the Board for allowing the Port of Mobile to intervene in the proceeding. In closing, he referred to his organization as the “Alabama Southern Rail Commission.”

The initiative had a few new supporters. They included Patrick O’Malia, Economic Development Director, City of Streetsville, Ohio; Edward T. Morris (a stage designer); the American Association of Private Railroad Car Owners (AAPRCO); Marianne Viegland of Missoula, Mont., Railroad Workers United; and the Greater Northwest Passenger Rail Coalition. 

On March 8, the Port of Mobile thanked the Board for allowing it to intervene and offered a tour of Port facilities, saying, “Nothing can replace seeing our operations in person.”

Some of the persons who made statements at the February hearing filed written copies of those statements. They included Jim Matthews of the Rail Passengers’ Association (RPA) and Ray Chambers of the Association for Innovative Passenger Rail Operations.

Other Matters

There were replies concerning pleadings filed before the February hearing. Amtrak responded to a Board request concerning compensation agreements on Feb. 18. Amtrak served the Board with copies of its compensation agreements with CSX and NS, but stressed: “CSX should not be permitted to see Amtrak’s compensation terms with NS and NS should not be permitted to see Amtrak’s compensation terms with CSX.” This sort of secrecy is a standard business practice. Some of the content of Amtrak’s letters to the prospective host railroads was included in the public version, though.

Also included was the schedule for the proposed service. Morning trains would leave Mobile at 6:30 and arrive at New Orleans at 9:53, and leave New Orleans at 7:35 and arrive at Mobile at 10:58. Afternoon trains would leave Mobile at 4:30 and arrive at New Orleans at 7:53, and leave New Orleans at 5:31 and arrive at Mobile at 8:54. The running time for all trains would be 3 hours and 23 minutes. Trains would make four intermediate stops in Mississippi: Bay St. Louis, Gulfport, Biloxi and Pascagoula, with two minutes of dwell at each of those stops.

CSX filed a Motion on Feb. 23 to postpone the evidentiary hearing from its original start date of March 7, until April 5 and 6. The motion was unopposed, and the Board granted the requested continuance. 

CSX and NS replied to Amtrak’s sur-rebuttal on Feb. 24. They argued that Amtrak had mischaracterized their positions and criticized Amtrak’s engineering model, concluding that they had met their burden under §23408(e) of showing that their freight service would be “unreasonably impaired” if the Board allows Amtrak’s application to initiate the service in question. The proceedings were released as Document Nos. 304161 (Feb. 15) and 304162 (Feb. 16). The entire transcript is 557 pages long. 

Stipulated Facts and Issues for the Hearing

On March 28, the parties submitted stipulated facts and issues for the Board to decide (Document No. 304183). A joint submission of stipulated facts eliminates the need for a tribunal to hold a trial concerning those facts, which limits the need for fact-finding and, therefore, saves time for all concerned. A stipulated set of issues helps limit the scope of a trial or other hearing, which focuses effort and also saves time.

There were 43 stipulated facts that filled nine pages. The factual record includes how much of the line is owned by whom (136.8 miles by CSX, 3.7 miles by NS, and 3.6 miles by Amtrak; #2). The Gulf Coast Corridor includes at least 160 grade crossings (#7) and seven movable bridges (#8). The history of prior service (#12-19 and #22). CSX and NS have taken the position that $405-$440 million would be needed to build the infrastructure they want (#20), and there is $66 million in federal and state funds dedicated for the project (#21). The pre-Katrina tri-weekly train between New Orleans and Orlando was scheduled to take 5 hours and 51 minutes to run between New Orleans and Mobile; almost 2½ hours longer than the currently proposed schedule (#22). 

The statement of facts also detailed the earlier history of the present initiative (#23-27) and the procedural history of the current matter before the Board (#28-31). On the issue of station and layover tracks (#32-37), Amtrak does not need a separate station track in Mobile at launch, but plans to build a station/layover track and would require about 15 minutes each for station standing time and deadhead moves. The statement concluded with the schedule (#38-40), the current plan’s limit to two round trips per day (#41), operation with a locomotive at each end (#42), and a Coast Guard pilot program with scheduled bridge openings (#43). The Coast Guard wrote directly to the Board on March 28 with further information about the bridges located along the proposed route.

There were also three issues stipulated for the Board to decide, although the parties reserved the right to add more.

• What constitutes unreasonable impairment to freight transportation under 49 U.S.C. §24308(c)(2)(A)?
• Have the carriers demonstrated that their freight transportation will be impaired unreasonably by passenger service on the Gulf Coast corridor on the terms proposed by Amtrak?
• All issues identified in the Board’s decision served on March 14, 2022.

Setting up the Hearing 

As the hearing date approached, the parties submitted their lists of witnesses and submitted exhibits. All of these events occurred March 30 and 31.

The Port proposed two witnesses. Amtrak proposed three witnesses who would testify for an estimated 150 minutes total, along with a list of nine witnesses for cross-examination, and a request to cross-examine “any other individual called as a witness by any other parties,” a standard request. Amtrak also filed a list of 23 exhibits it plans to offer: four made available to the public with the filing, four listed as “confidential” and 13 listed as “highly confidential,” all of which were redacted from the public version. The other two were not designated. Amtrak separately objected to some letters and visual aids submitted as exhibits by CSX, NS and the Port. 

CSX, NS and the Port submitted a joint list of witnesses. There were seven, including employees and consultants for the parties, with an estimated testimony time of 270 minutes (4½ hours). There was a standard request to cross-examine Amtrak’s witnesses. There was also a request for the order of presentation: CSX/NS, the Port and Amtrak, in that order. 

The ongoing battle will be hard-fought and time-consuming. There are already seven hours of witness testimony scheduled. Even if that includes time for both direct and cross-examination, there will be more time needed for any potential re-direct and re-cross examination of each of them, as well as time for evidentiary motions and preliminary matters that will be requested and decided at the beginning of the proceeding. It may be possible to conclude them in the two allotted days, but it may be necessary to use the additional time that has been set aside later in the week.

Potential Long-Term Implications

It will be an important week, as the slugfest continues. The results of the ongoing Round 3 will have an impact on determining whether or not Amtrak’s plans of adding dozens of new state-supported corridors by 2035 will have any chance of coming to fruition. CSX and NS say a massive investment in new infrastructure to accommodate the proposed Amtrak service is needed, more than the FRA says. Will the Board side with the prospective host railroads, or will it reduce the amount of infrastructure and its cost? Time will tell before long, and all of us will know about the future of new Amtrak routes, at least in theory.

There could be further delay, if the loser at the STB files a litigation to reverse the Board’s decision. That could be done by a direct appeal to the D.C. Circuit court, and the loser at that level could petition the Supreme Court for review and reversal. While it does not appear likely that SCOTUS would grant such a petition, the potential host railroads could delay having to accommodate new Amtrak trains for a number of years. In that event, it could be 2027 or later before trains between New Orleans and Mobile actually run; other states could stop holding their collective breath and cease planning for the new routes that now only exist on Amtrak’s 2035 map. In that worst-case scenario, there could be no new trains until almost half-way to Amtrak’s 2035 planning frontier. Stay tuned for our next report.