What’s the best way to keep passenger trains running on-time?

Posted by Malcolm Kenton
on Wednesday, July 15, 2015

In its March 9 ruling in US Dept. of Transportation v. Association of American Railroads, the Supreme Court decided unanimously that, for the purpose of exercising regulatory authority, Amtrak is to be considered a government entity rather than a private company. But it remanded the bigger issues in the case back to the US Court of Appeals for the District of Columbia Circuit, which had ruled that Amtrak is a private actor, to decide based on this interpretation of Amtrak’s status. The case concerns metrics and standards (M&S) for the performance of Amtrak trains operating over other railroads’ tracks that were developed pursuant to Section 207 the 2008 Passenger Rail Investment and Improvement Act — standards that are enforced by the government and that, in accordance with the law, Amtrak itself had a role in writing. 

An eastbound BNSF intermodal train waits for westbound traffic to clear as a San Diego-bound Amtrak Pacific Surfliner makes the station stop at Fullerton, CA on June 12, 2009. Photo by Patrick Dirden / Flickr.com.
The issues that remain surround whether the power that Amtrak exercises as a governmental body, pursuant to Section 207, is exercised constitutionally, given that the nature of this power is not squarely legislative or executive, and that Amtrak does not meet certain constitutional requirements for the exercise of government power.  The DC Circuit will re-hear the case this fall, and lawyers for a number of interested parties are filing briefs.

Among the troublesome legal aspects of Amtrak’s existence that the DC Circuit will ponder is that, even though the National Railroad Passenger Corporation is a governmental entity, its Board of Directors and senior management have no legal compunction to act in furtherance of the common good, but can instead act purely in the Corporation’s own self-interest. This is in part because Amtrak Directors — even though the President of the United States appoints them and the Senate confirms them — are not required to take an oath to uphold the US Constitution, which is a requirement for the most senior officers of all bona fide government agencies. Another lies in the way disputes are settled: the law calls for an arbitrator to be appointed who may not be a constitutionally empowered government official. It also calls for all damages, even if they result from Amtrak’s own deficient performance, to be remitted only to Amtrak for use at its sole discretion.

These issues sound abstract and theoretical, and the average American rail passenger can be forgiven for thinking that he or she lacks a stake in the case’s ultimate outcome. The passenger would be right — were there not such a seemingly clear correlation between whether the M&S are in force and how well Amtrak trains that share tracks with freight trains adhere to their schedules. 

In the months immediately following the DC Circuit’s July 2013 ruling invalidating the M&S, there was a noticeable decline in on-time performance throughout the Amtrak system, particularly of the long-distance trains. So far, the Supreme Court ruling reinstating the M&S seems to have had little effect, with systemwide endpoint OTP hovering around 73% since April. Of course, there are many other factors influencing OTP, such as the volume of freight traffic and adverse weather. But passengers seem to benefit greatly when Amtrak has more legal leverage to incentivize host railroads for more favorable dispatching and penalize persistent prioritizing of freight traffic.

Seeking to maintain or increase regulatory authority to enforce passenger trains’ statutory priority over freight trains, which has been in place since 1973, is certainly one way to effect more punctual trains — short of the more expensive options of increasing capacity or building dedicated lines for passenger trains. But using this approach alone risks continuing the hostile relationship between freight and passenger rail interests, when greater cooperation between the two could be more effective and better serve the interests of the entire railroad industry as it continues to face subsidized competition from the highway and air modes. (It is worth noting that the the statutory priority, as currently written, applies only to Amtrak and not to passenger trains operated by another company — more on that below.)

Union Pacific's Harriman Dispatching Center in Omaha, NE. Photo by 'America's Power' / Flickr.com.
What if, in exchange for receiving preferential dispatching, a passenger train’s operator were able to offer the host railroad something in return — perhaps investment in more sidings, double- or triple-track, more crossovers, more advanced signaling, and maybe even Positive Train Control? Amtrak may not have the budget to offer these kinds of carrots to its hosts, but Congress could certainly provide it. Or perhaps a passenger train operator other than Amtrak would be in a better negotiating position with a Class I host? Enter the Association of Independent Passenger Rail Operators (AIPRO), a trade association representing four firms with both domestic and foreign experience operating passenger trains that are interested in entering the American intercity passenger rail market. 

AIPRO’s members hold contracts to operate and maintain many US commuter rail systems and already do business with freight railroads. The trade group has filed an amicus brief with the DC Circuit arguing that the M&S — particularly the way in which PRIIA says disputes between Amtrak and host railroads must be settled — should be invalidated, as it gives Amtrak an unfair advantage over not only freight railroads, but also other passenger carriers, perhaps even including commuter railroads. (Full disclosure: I am engaged as a consultant to AIPRO and one of its member firms, Herzog Transit Services, on research and business development projects, and have been since June 2014.)

According to its brief, AIPRO seeks to ensure “that federal regulatory authority over intercity passenger rail is exercised in a manner that is both fair and consistent with the due process mandates of the United States Constitution.” The brief maintains that the laws governing Amtrak’s relationships with its host railroads need to be modified to recognize that Amtrak is no longer the nation’s only carrier of intercity rail passengers. The same 2008 law that required Amtrak and the Federal Railroad Administration (FRA) to jointly write the M&S also opened up the state-supported short-distance passenger train routes to the same kind of competitive bidding for operations & maintenance contracts that has occurred in the commuter rail sphere for nearly two decades. (The Senate Commerce Committee’s proposed Railroad Reform, Enhancement and Efficiency Act of 2015 would extend this concept to long-distance routes, allowing firms to compete for federal subsidies to operate any route, including those currently and formerly operated by Amtrak. More on that in my next column.)

The part of PRIIA in question, AIPRO maintains, “gives Amtrak a distinct, direct, and unfair advantage in that competition by making it the regulator for the entire passenger-rail industry,” as the M&S that Amtrak helped draft (the way the law is written) apply equally to trains operated by a company other than Amtrak. The process is constitutionally questionable, AIPRO argues, even though the content of the product that it creates (the M&S themselves) may not necessarily be objectionable. This is in part because the states, in awarding contracts on a competitive basis for the operations and maintenance of intercity train services that they sponsor, must incorporate into those contracts standards that Amtrak has helped to write. One flaw in the substance of the M&S, though, is that assignment of the cause of a delay to an Amtrak train is based only on Amtrak conductors’ reports, which do not account for facts of which a conductor may have been unaware at the time. 

“Competition is almost inevitably stifled—and the requirements of due process are straightforwardly violated—when one competitor gets to write the rules for the competition, as Amtrak does under Section 207 of the PRIIA,” AIPRO argues. “Due process and fundamental fairness require that this inequitable scheme be dismantled.” But should the DC Circuit dismantle it, what will replace it, and what can be done to ensure that passenger trains adhere to their schedules in the meantime? One can hope that all the stakeholders — FRA, states, Amtrak, independent operators, and host railroads — would come together and produce an arrangement that serves all of their interests as well as those of the traveling public and shippers. But in the absence of such cooperation, some new form of regulatory regime will be necessary, at least in the short term. 

As I discussed in my March 13 column, there are a number of possible consequences to the DC Circuit’s ruling, no matter which way it goes, and litigation may continue for several years. The easiest fix would be for Congress to simply amend PRIIA to remove Amtrak’s joint authority to write the M&S, leaving that job solely to the FRA, with enforcement solely in the hands of the Surface Transportation Board, which may act upon a complaint from any stakeholder. In general, I believe that passenger and freight railroaders should cooperate and see each other as allies, and I agree with AIPRO that competitive bidding for passenger rail services — if undertaken properly — would result in more and better service for passengers at a lower long-run cost to taxpayers. But in the short term, if the stakeholders cannot agree to a more copacetic way of ensuring passenger trains’ punctuality, then the FRA and/or STB should ensure it through regulation, even if that means keeping PRIIA Section 207 in place until Congress fixes it to remove Amtrak’s competitive advantage — which it should, and soon.

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