AAR Statement Concerning Indemnification

[Anonymous]

Statement from Edward R. Hamberger
President and CEO, Association of American Railroads
Regarding Indemnification


To assert that the indemnification system places an unfair burden on taxpayers and provides no incentive for the freight railroads to improve safety shows a complete lack of understanding of how our nation’s rail system operates.

First and foremost, safety is the rail industry’s number one priority. Freight railroads have every incentive to keep their tracks safe, since they are the primary users of the track and are responsible for the safety of their employees and the goods they carry. The freight rail industry has a strong and impressive safety record. Since 1980, train accident rates have declined by 65 percent and the employee injury rate has declined by 76 percent.

Amtrak, not the freight railroads, brings passenger liability to tracks owned, maintained and operated by the freight railroads. Under law, the nation’s privately owned freight railroads must let Amtrak use their tracks, must give Amtrak priority, yet can’t charge Amtrak the actual cost of using their tracks. Each year, Amtrak pays only about 19 percent of the cost of using the freight network, leaving the nation’s largest freight railroads to subsidize Amtrak to the tune of $243 million a year.

It is unworkable from a business and practical standpoint to ask the freight railroads to bear the additional cost of liability that would not be there if not for Amtrak.

Indemnification is used throughout the rail system. When freight railroads operate on Amtrak, Amtrak is indemnified! And, when one freight railroad operates on track owned by another railroad, the visiting railroad indemnifies the host railroad. The visiting railroad --- Amtrak and the freight railroads --- pays for any damages to its employees, property and customers, while the host railroad pays for damages to its employees, property, and customers.

[arbfbe]

The NRPC was an agreement between the signatory railroads and the Federal Government wherein AMTK took over the direct costs of running passenger trains that railroads wanted to abandon or discontinue account of massive losses to the railroads. The railroads agreed to the terms in order to be rid of the passenger business.

Now the railroads want to be free of payment of damages to AMTK patrons and equipment account they say they are forced to let AMTK on their property. Perhaps they want to be required to supply passenger service to the public again and bear all the costs. I would guess the majority of AMTK derailments are caused by problems in the railroad infrastructure, broken rails, sun kinks, bad switches, etc than by AMTK equipment failures, broken wheels, burned off journals. So if it is the railroad's fault then AMTK should pay for injuries and damages to the railroad property? Doesn't seem fair now does it? Isn't that what the industry is asking for?

Note also there is no mention of what AMTK pays the railroads annually to upgrade signals for passenger operations nor what AMTK pays the freight railroads to improve their tracks to 79 mph standards. I wonder if that is factored in the $243 million subsidy the freight railroads are providing AMTK.

Well, the frieght railroads all contributed heavily to the party that now controlls the executive and legislative branches of government . AMTK is forbidden by law to use your tax dollars to do the same. Guess which side of this argument will get heard in the next sessions of Congress? It won't be too hard to figure out what will happen to AMTK's cost structure if they have to carry insurance to cover damages caused by the railroads.

[Anonymous]

You make it sound like the freight railroads are asking for the indemnification NOW. That is not the case. The indemnification has been part of the agreement between the railroads and Amtrak since the very beginning. Nothing new. Just the NYT sticking its nose into an old agreement.

LC