On April 7, 2022, the Surface Transportation Board (Board) issued a decision announcing that it will hold a public hearing on April 26 and 27, 2022, concerning recent rail service issues and recovery efforts involving several Class I carriers. Urgent Issues in Freight Rail Service, EP 770, slip op. at 1 (STB served Apr. 7, 2022).
On April 1, 2022, the Surface Transportation Board (Board) issued a decision seeking public comment on a petition for rulemaking filed on July 26, 2021 by the North America Freight Car Association, The National Grain and Feed Association, The Chlorine Institute, and The National Oilseed Processors Association (collectively, Petitioners), requesting that the Board exercise its authority under 49 U.S.C. § 11122(a)(2) to promulgate regulations governing the use of private railcars by railroads. Petition for Rulemaking to Adopt Rules Governing Private Railcar Use by Railroads, EP 768 (STB served Apr. 1, 2022).
On March 15 and 16, 2022, the Surface Transportation Board (Board) held a public hearing concerning the reciprocal switching regulations that it proposed in this proceeding. See Reciprocal Switching¸ EP 711 (Sub-No. 1) (STB served Mar. 1, 2022).
On February 15, 2022, the Surface Transportation Board (Board) commenced the initial phase of the public hearing regarding the March 16, 2021 application by the National Railroad Passenger Corporation (Amtrak) for an order allowing additional train operations over CSX Transportation, Inc. (CSXT) and Norfolk Southern Railway Company (NSR) lines along the Gulf Coast. See Application of the Nat’l Passenger R.R. Corp. Under 49 U.S.C. § 24308(E)—CSX Transp., Inc. & Norfolk S. Ry. Co., FD 36496 (STB served Feb. 11, 2022). The second phase, an evidentiary hearing, commenced on April 4, 2022. See Application of the Nat’l Passenger R.R. Corp. Under 49 U.S.C. § 24308(E)—CSX Transp., Inc. & Norfolk S. Ry. Co., FD 36496 (STB served Mar. 23, 2022).
On April 14, 2022, the Surface Transportation Board (Board) issued a decision approving the revised application seeking approval for: (1) CSX Corporation (CSXC), CSX Transportation, Inc. (CSXT), and 747 Merger Sub 2, Inc. (747 Merger Sub 2) to control the railroads controlled by Pan Am Systems, Inc. (Systems) and Pan Am Railways, Inc. (PAR); and (2) CSXT to merge certain PAR subsidiaries into CSXT (the Merger Transaction). CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served Apr. 14, 2022).
On March 16, 2022, the Board issued a decision directing the applicants in the proposed Kansas City Southern and Canadian Pacific merger proceeding to address an apparent inconsistency in traffic density data submitted to the Board. Canadian Pac. Ry. Ltd.—Control—Kansas City S., FD 36500 (STB served Mar. 16, 2022). The Board also provided an opportunity for other parties to reply to the applicants’ submission and suspended the procedural schedule.
On January 13-14, 2022, the Surface Transportation Board (Board) held a public hearing in the CSXT/Pan Am control and merger proceeding, in which the applicants are seeking approval for: (1) CSX Corporation (CSXC), CSX Transportation, Inc. (CSXT), and 747 Merger Sub 2, Inc. (747 Merger Sub 2) to control the railroads controlled by Pan Am Systems, Inc. (Systems) and Pan Am Railways, Inc. (PAR); and (2) CSXT to merge certain PAR subsidiaries into CSXT (the Proposed Transaction). See CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served Dec. 10, 2021).
On December 28, 2021, the Surface Transportation Board (Board) issued a decision announcing that it would hold a public hearing on March 15 and 16, 2022, concerning the reciprocal switching regulations that it proposed in this proceeding. Reciprocal Switching¸ EP 711 (Sub-No. 1), slip op. at 1 (STB served Dec. 28, 2021).
On November 23, 2021, the Board issued a decision accepting for consideration the application filed on October 29, 2021 in Docket No. FD 36500, regarding a potential merger between Kansas City Southern and Canadian Pacific. Canadian Pac. Ry. Ltd.—Control—Kansas City S., FD 36500 (STB served Nov. 23, 2021).
On November 15, 2021, the Board issued a supplemental notice of proposed rulemaking (SNPRM) in Docket Nos. EP 755, Final Offer Rate Review, and EP 665 (Sub-No. 2), Expanding Access to Rate Relief. Final Offer Rate Review, EP 755 (STB served Nov. 15, 2021). The Board stated that, in response to comments received on the notice of proposed rulemaking (NPRM) in those dockets, and to ensure parallel consideration of the proposal in Docket No. EP 765, Joint Petition for Rulemaking to Establish an Alternative Voluntary Arbitration Program for Small Rate Disputes, the Board was inviting parties to comment on certain modifications to the rate reasonableness procedure proposed in the NPRM. Id., slip op. at 1.
On November 15, 2021, the Board issued a notice of proposed rulemaking (NPRM) to modify its regulations at 49 C.F.R. Part 1108, Subpart B to establish a voluntary arbitration program for small rate disputes. Joint Petition for Rulemaking to Establish an Alternative Voluntary Arbitration Program for Small Rate Disputes, EP 765 (STB served Nov. 15, 2021). The Board also stated that it has decided to defer final action in Docket No. EP 755, Final Offer Rate Review,to allow for “parallel consideration of the voluntary, small rate case arbitration program proposed in this docket.” Id., slip op. at 8.
Introduction
In this Passenger Rail Update we mark Congress’s passage of the Infrastructure Investment and Jobs Act in November last year, which provides a range of passenger rail funding opportunities. We also note Amtrak’s announced support for the proposed merger between the Canadian Pacific (“CP”) and the Kansas City Southern (“KCS”) Class I railroads, which is currently pending before the Surface Transportation Board (“STB”). Finally, we review a recent Illinois federal district court case discussing whether a freight railroad’s common carrier obligation includes the obligation to provide passenger rail service (spoiler alert—the court held that it does not).
(The authors note at the outset that they represent the Commuter Rail Division of the Regional Transportation Authority, d/b/a Metra, as a party in the CP-KCS merger proceedings before the STB in FD No. 36500, and as Metra’s outside rail counsel in the Illinois district court case discussed below.)
Introduction
This edition of the Commuter Rail Update delves into a recent decision issued by the Surface Transportation Board (“STB”) concerning cost allocation between Regional Transportation Authority’s Commuter Rail Division (“Metra”) and the National Railroad Passenger Corporation (“Amtrak”) for use of Amtrak’s Chicago Union Station. We also highlight New Jersey Transit’s award of a $1.6 billion contract to conduct a much-needed replacement of the Portal North Bridge connecting New Jersey to New York City.
Surface Transportation Board Issues Decision in Dispute Between Amtrak and City of Chicago Over Access to the Chicago Union Station
On July 26, 2021, the North America Freight Car Association, The National Grain and Feed Association, The Chlorine Institute, and The National Oilseed Processors Association (collectively, Petitioners) filed a petition for rulemaking requesting that the Surface Transportation Board (Board) exercise its authority under 49 U.S.C. §§ 1312 and 11122(a)(2) “to promulgate regulations governing the use by the Nation’s Class I railroads of freight railcars supplied to them by rail car owners, shippers, and other non-railroad entities (‘Private Railcars’).” Petition for Rulemaking to Adopt Rules Governing Private Railcar Use by Railroads, EP 768 at 1 (filed July 26, 2021).
On July 30, 2021, the Surface Transportation Board (Board) issued a decision accepting for consideration the revised application seeking approval for: (1) CSX Corporation (CSXC), CSX Transportation, Inc. (CSXT), and 747 Merger Sub 2, Inc. (747 Merger Sub 2) to control the railroads controlled by Pan Am Systems, Inc. (Systems) and Pan Am Railways, Inc. (PAR); and (2) CSXT to merge certain PAR subsidiaries into CSXT (the Proposed Transaction). CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served July 30, 2021). The Board had previously rejected as incomplete a prior version of the application. CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served May 26, 2021).
On August 6, 2021, the Surface Transportation Board (Board) issued a decision instituting a proceeding on an application filed by the National Passenger Railroad Corporation (Amtrak) regarding Amtrak’s operation of additional passenger trains over CSX Transportation, Inc. (CSXT) and Norfolk Southern Railway Company (NSR) lines between New Orleans, LA, and Mobile, AL. Application of the Nat’l Passenger R.R. Corp. Under 49 U.S.C. § 24308(E)—CSX Transp., Inc. & Norfolk S. Ry. Co., FD 36496 (STB served Aug. 6, 2021). In the decision, the Board also denied CSXT and NSR’s motion to dismiss the application.
Pending before the Surface Transportation Board (Board) are two potential merger proceedings involving Kansas City Southern – Docket No. FD 36500, regarding a potential merger with Canadian Pacific, and Docket No. FD 36514, regarding a potential merger with Canadian National. On August 2, 2021, the Board issued a decision in Docket No. FD 36500, granting in part and denying in part Canadian Pacific’s petition for declaratory relief, addressing whether Kansas City Southern has a continuing obligation to provide Canadian Pacific with information Canadian Pacific needs to prepare its application, and whether Canadian Pacific has a continuing right to access the information that Kansas City Southern has already provided. Canadian Pac. Ry. Ltd.—Control—Kansas City S., FD 36500 (STB served Aug. 2, 2021). On August 31, 2021, the Board issued a decision in Docket No. FD 36514, rejecting Canadian National and Kansas City Southern’s joint motion for approval of a voting trust agreement. Canadian Nat’l Ry. Co.—Control—Kansas City S., FD 36514 (STB served Aug. 31, 2021).
In recent weeks, several states and cities have launched efforts aimed at growing passenger rail nationwide and encouraging funding for various rail projects at the state and federal level. Colorado Governor Jared Polis signed Senate Bill 238 creating a new taxing district to support passenger service from Fort Collins to Pueblo with connections to Wyoming in the North and New Mexico in the South. The bill provides funding for start-up costs for the line.
In Northern California, the Link21 program aims to “transform Northern California’s passenger rail network into a faster, more integrated system.” The Capitol Corridor Joint Powers Authority and the San Francisco Bay Area Rapid Transit District (BART) hosted a virtual workshop on July 15 to get public input on the project.
In a decision served on April 5, 2021, the Surface Transportation Board (Board) adopted a final rule amending the thresholds for classifying rail carriers. Mont. Rail Link, Inc.—Pet. for Rulemaking—Classification of Carriers, EP 763 (STB served April 5, 2021). Under 49 C.F.R. Part 1201, rail carriers are grouped into one of three classes for purposes of accounting and reporting. Id., slip op. at 1. This classification affects the degree to which rail carriers must file annual, quarterly, and other operational reports, and it is used in various other contexts, including differentiating the legal standards and procedures that apply to certain transactions subject to Board licensing, and prescribing labor protection conditions. Id.
In a decision served on April 6, 2021, the Surface Transportation Board (Board) adopted a final rule “requiring Class I carriers to include certain minimum information on or with their demurrage invoices and provide, in the format of their choosing, machine-readable access to the required minimum information.” Demurrage Billing Requirements, EP 759, slip op. at 3 (STB served April 6, 2021). According to the Board, “[d]emurrage is a charge that serves principally as an incentive to prevent undue car detention and thereby encourage the efficient use of rail cars in the rail network, while also providing compensation to rail carriers for the expense incurred when rail cars are unduly detained beyond a specified period of time (i.e., ‘free time”) for loading and unloading.” Id., slip op. at 1-2.