December 2019 - Passenger Rail Update

Introduction

The passenger rail sphere has seen a number of developments in the fall of 2019 on the regulatory, legislative and commercial fronts, including:

STB Extends Trail Use Negotiating Period

On December 4, 2019, the Surface Transportation Board (STB or Board) issued a final rule amending its regulations governing negotiations between abandoning railroads and potential trail users pursuant to the National Trails System Act. Limiting Extensions of Trail Use Negotiating Periods, STB Docket No. EP 749 (Sub-No. 1), Rails-to-Trails Conservancy—Petition for Rulemaking, STB Docket No. 753 (STB Served Dec. 4, 2019) (consolidated rulemaking proceeding). The STB increased the time period during which parties may negotiate the use of former rail corridors for trail use, from 180 days to one year. The STB also amended its rules to allow for up to three (3) one-year extensions of the initial negotiating period and permitted further one-year extensions in extraordinary circumstances.

The Board’s final rule grew out of two Petitions for Rulemaking that sought changes to the Board’s rails to trails regulations and procedures—one filed by the National Association of Reversionary Property Owners (NARPO) and the other by the Rails-to-Trails Conservancy (RTC). The Board consolidated the two proceedings, issued a Supplemental Notice of Proposed Rulemaking (SNPR) and requested comments on its specific proposals in June of 2019.

In adopting the final rule increasing the negotiating period from 180-days to one year, the Board relied on data submitted by RTC which showed that “of the 370 railbanked corridors for which [the RTC] database indicated the length of negotiations, 289 railbanking agreements (78.1%) required more than 180 days to negotiate, while approximately half (183 of the 370 corridors) were negotiated within one year.” The Board also noted that most of the parties who submitted comments on the SNPR supported the proposal for a one-year limit on the negotiating period and only a few commenters opposed it.

The STB’s decision to limit the number extensions of the interim trail use negotiating period to just three was based upon the Board’s conclusion that “reasonably limiting the number of extensions of the interim trail use/railbanking negotiating period would foster administrative efficiency, clarity, and finality.” In adopting the “extraordinary circumstances” standard for further extensions of time, beyond the first three, the STB wrote that “a more liberal standard would undercut the Board’s goals in this rulemaking,” and clarified that “extensions beyond the third would be unusual,” as “[f]our years is a significant amount of time to reach an interim trail use/railbanking agreement.”

The STB’s new rule will become effective on February 2, 2020.


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Amtrak Adds Mandatory Arbitration Clause to Passenger Tickets

In January 2019, Amtrak adopted a binding arbitration clause in its terms and conditions governing ticket sales that is creating controversy for the railroad. The arbitration requirement applies to claims a passenger may have against Amtrak based upon the following:

breach of contract, tort claims, common law claims, [the passenger’s] relationship with Amtrak, tickets, services and accommodations provided by Amtrak, carriage on Amtrak trains and equipment, any personal injuries (including, but not limited to, claims for negligence, gross negligence, physical impairment, disfigurement, pain and suffering, mental anguish, wrongful death, survival actions, loss of consortium and/or services, medical and hospital expense, expenses of transportation for medical treatment, expenses of drugs and medical appliances, emotional distress, exemplary or punitive damages arising out of or related to any personal injury), and any claims for discrimination or failure to accommodate . . .

Under the terms of the arbitration agreement, any claims listed above would be “decided by a single arbitrator through binding arbitration and not by a judge or jury.”

The new arbitration policy has drawn criticism from legislators and consumer advocates. On November 26, a group of Democratic Senators wrote to Amtrak President Richard Anderson stating that Amtrak’s new arbitration policy is “particularly disturbing due to its broadness of scope.” The Senators expressed concern over the fact that claims of gross negligence and wrongful death would be forced into arbitration.

A coalition of consumer groups, including the NAACP and Public Citizen, also wrote to Anderson urging him to “reverse course” on the policy, arguing that “Amtrak’s decision to force customers into arbitration shields it from accountability and scrutiny when placing passengers in unsafe conditions or sweeping discrimination and other wrongdoing under the rug.” The same coalition sent a letter to House and Senate appropriators requesting their support in urging Amtrak to change its policy. “Given its unique relationship with the federal government, and the fact that the company receives billions in taxpayer dollars, Amtrak should be a strong steward for the American public and leading the way when it comes to customer-friendly policies,” wrote the coalition.

The Connecticut Mirror reported that Amtrak CEO Richard Anderson responded to the Senators, arguing, “[a]rbitration provides a resolution in less time – generally well within a year of filing – by avoiding unnecessary discovery and other time-consuming proceedings, and the often years-long wait for a trial date on overcrowded court dockets.” Anderson added, “[a]greements to arbitrate are desirable precisely because they trade the procedures of the federal courts for the simplicity, informality, and expedition of arbitration.”

The Senate has not yet announced what further action it will take.


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Senator Durbin Introduces the Rail Passenger Fairness Act

Senator Dick Durban (D-IL) has introduced a bill that would allow Amtrak to take host railroads to court over preference violations. The Rail Passenger Fairness Act (S. 2922) would permit Amtrak to bring civil actions against host railroads in Federal district court when host railroads fail to give Amtrak trains preference on their lines, in violation of the statutory mandate which requires Amtrak passenger trains to have preference over freight trains on host railroad lines.

Enforcement of the statutory provision giving Amtrak preference over the freight trains currently resides with the Attorney General and the Surface Transportation Board. However, as Senator Durbin’s bill notes, the Attorney General has only brought an enforcement action under the preference statue once, in 1979, and the statutory provisions that allowed for the STB to enforce preference rights have been tied up in courts for years. Accordingly, Senator Durbin’s bill would allow Amtrak to bring an action for relief in the U.S. District Court for the District of Columbia or in any jurisdiction where Amtrak resides or is found.

The text of Durbin’s bill cites historical on-time performance data and explains that “[a]s a result of violations of Amtrak’s right to preference, Amtrak has been consistently unable on host railroad networks to meet its congressionally mandated mission and goals. . .” The bill also notes that Amtrak’s on-time performance improved following legislation that gave the Surface Transportation Board jurisdiction to enforce preference violations but fell after those provisions were ruled unconstitutional. The bill has been referred to the Senate Committee on Commerce, Science and Transportation for review.


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New Appropriations – Over $15.7 Billion for Transit and Rail

A bipartisan spending bill signed into law on December 20, 2019, includes more than $15.7 billion for transit and rail-related activities. H.R. 1865, “Further Consolidated Appropriations Act, 2020,” includes $2.8 billion for the Federal Railroad Administration and Amtrak for critical rail safety and infrastructure improvements. The new law provides $2 billion for the Northeast Corridor and the Amtrak Network as well as funding for the replacement of the 40-year old fleet of single-level passenger cars used on the Northeast Corridor. The law also prohibits funds provided to Amtrak from being used to reduce the total number of Amtrak police officers.

Additionally, the law contains provisions which relate to the Gateway project to improve rail connections between New York City and New Jersey, namely, “[n]one of the funds made available in this or any other Act shall be used to impede or hinder project advancement or approval for any project seeking a Federal contribution from the capital investment grant program of greater than 40 percent of project costs as authorized under 49 U.S.C. 5309.”


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Brightline/Virgin Trains Updates

Brightline, which is developing high-speed passenger rail service in Florida, will soon be rebranded as Virgin Trains, a transition the company plans to complete in 2020. Brightline currently operates between West Palm Beach and Miami and is constructing a line west to Orlando, with future plans to extend service to Tampa. We discuss two recent developments, talks with the Walt Disney Company to establish a station on or near Disney property in Orlando, and Brightline’s efforts to reduce pedestrian and motorist deaths along what is currently the deadliest line of railroad in the U.S.

Brightline and Disney in Talks Over Florida Station on Disney Property

Officials with the Walt Disney Company have confirmed to press that they are in talks with Brightline about a station on or near theme-park property in the Orlando area. The station at or near Disney property would be on Brightline’s projected route to Tampa. In a statement to media, Representatives of Disney said, “[a]s the top vacation destination and largest single-site employer in the United States, Walt Disney World Resort is an obvious choice for a rail station between Orlando International Airport and Tampa.”

Brightline currently operates stations in Miami, Fort Lauderdale and West Palm Beach and is in the midst of a 160-mile expansion from West Palm Beach to the Orlando International Airport. A station serving Disney property would extend Orlando-area service west of the airport.

Brightline Operations Deadliest in United States

According to the Associated Press (AP) Brightline is the deadliest railroad in the United States, with 41 fatalities since it began running test trains in July 2017–a rate of more than one death per month or one death for every 29,000 miles the trains have traveled. The majority of the deaths have been suicides, while most others “involved impatient motorists, pedestrians or bicyclists who misjudged the trains’ speed and ignored bells, gates or other warnings.” Additionally, drugs, alcohol or both have been found in many victims’ systems.

Brightline has indicated that it is taking steps to increase safety at at-grade crossings including: erecting fences and plant barriers, adding four-way gates at major road crossings, and working with cities to eliminate side-street crossings. The company also said that signs advertising suicide prevention hotlines will be posted.

The state of Florida is reportedly seeking to reduce fatalities by adding new markings to roads at 4,000 of the state’s railroad crossings. Tests showed that markings reduced the number of cars that would stop on or close to the tracks by at least 15%. Additionally, Florida Governor Ron DeSantis asked his Secretary of Transportation to look into the safety issues surrounding Brightline.

Notably, quiet zones have been established to reduce the horn noise resulting from Brightline trains operating between Miami and West Palm Beach, including the longest quiet zone in the country in Broward County. The establishment of a quiet zone requires specific safety precautions in order to allow for the reduction in horn use and engineers may still use the train horn in emergency situations. Brightline’s current efforts to increase safety measures at at-grade crossings must address the interaction of safety measures required to maintain quiet zones and enhancements to address circumstances specific to Brightline.


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