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UP vs METRA

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UP vs METRA
Posted by highball6868 on Friday, July 24, 2020 5:24 PM

Chicago would shut down if UP stoped the N side Commuter rail...Now the case is before the STB. MY prediction is that METRA will buy out the 3 lines and then run themselves or under contract like Kelois or First Transit. Seemed to work well for MBTA and few other places. MBTA bought out the former NYC Boston and Albany Former Conrail btwn Boston and Worchester MA.

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Posted by CSSHEGEWISCH on Monday, July 27, 2020 10:03 AM

Except for the purchase of service agreements with UP and BNSF, Metra operates with its own crews on its own tracks.  A contract arrangement with a third party on the UP lines may not be practical under current labor agreements.

The daily commute is part of everyday life but I get two rides a day out of it. Paul
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Posted by charlie hebdo on Monday, July 27, 2020 12:22 PM

The UP might be glad to sell the North and Northwest lines to Metra.  But the West line is vital to UP for freight,  as it is one of the busiest the US.  They would never sell and lose control over operations. 

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Posted by Falcon48 on Tuesday, July 28, 2020 10:19 PM

CSSHEGEWISCH

Except for the purchase of service agreements with UP and BNSF, Metra operates with its own crews on its own tracks.  A contract arrangement with a third party on the UP lines may not be practical under current labor agreements.

 

  Metra operates commuter service with its own crews over several Class I rail lines in the Chicago area, most notably the CN lines to Antioch (ex WC) and Joliet (ex ICG). Part of the latter route is also over UP trackage near Joliet. 

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Posted by highball6868 on Wednesday, July 29, 2020 12:37 PM

METRA is claiming before the STB that UP has "common carrier" obligations for both passengers and freight. Problem is that after the ICC Interstate Commerce Commission The ICC Sunset Act (S. 1396, the Interstate Commerce Commission Sunset Act of 1995) limited what the STB could do in railroad regulation and passengers and LTL/LCL and Intermodal were left out.

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Posted by Falcon48 on Friday, July 31, 2020 4:11 PM

highball6868

METRA is claiming before the STB that UP has "common carrier" obligations for both passengers and freight. Problem is that after the ICC Interstate Commerce Commission The ICC Sunset Act (S. 1396, the Interstate Commerce Commission Sunset Act of 1995) limited what the STB could do in railroad regulation and passengers and LTL/LCL and Intermodal were left out.

 

 

This isn't entirely correct.  The ICC Termination Act (ICCTA) significantly reduced ICC/STB regulation of passenger operations, but didn't totally eliminate it.  For example, STB has recently taken jurisdiction over construction of the proposed Texas Central high speed rail line. 

But, as relevant to the Metra dispute, ICCTA did eliminate ICC/STB regulatory authority over passenger transportation provided by a local government authority (like Metra), and by an entity that provides this service under contract to such an authority (like UP), 49 USC 10501(c)(1).  This exclusion covers the statutory "common carrier obligation" (which only applies to transportation subject to STB regulation, see 49 USC 11101(a)). Logically, the entire life cycle of local government authority service - including the inception and termination of the service - should be encompassed in the "local government authority" exclusion.  We'll see what the court and/or the STB ultimately has to say about this.

ICCTA also eliminated state authority over passenger rail service by STB regulated railroads.  Prior to ICCTA, states had ICC type authority over intrastate passenger service, subject to ICC review.

Finally, ICCTA didn't eliminate ICC/STB authority over things like intermodal or LCL/LTL.  Rather, prior to ICCTA, the ICC itself eliminated regulation of these services under its authority to "exempt" rail services and transactions from regulation.  That authority dates back to the 1976 4R act and was expanded by the 1980 Staggers Rail Act.

Probably more than anyone wanted to know.  Just my little weakness.

 

    

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Posted by charlie hebdo on Tuesday, August 4, 2020 6:14 PM

Thank you!  It sounds like this will be very complicated if it actually gets to court. 

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Posted by Falcon48 on Wednesday, August 5, 2020 7:53 PM

One other thing.  Even if a court or STB held that UP had to resume commuter passenger operation on its own (based on a "common carrier obligation" or something else), UP would have a right to establish rates for the service to the maximum level permitted by STB maximum rate standards. 

Under STB's governing statute, a rate for transportation cannot be challenged if it produces a revenue/variable cost ratio less than 180%  Given the chronically poor economics of commuter rail transportation and the amount Metra is paying UP above and beyond the ticket revenue collected by UP, it's a safe bet that the existing Metra rates don't produce anything near a 180% R/VC ratio. 

Further, the statutory 180% R/VC standard isn't the ceiling on the rate a railroad can establish.  It's a floor on the rate STB can require.  Ths isn't the place to discuss the complexities of STB's maximum rate standards (they are based on a concept called "stand alone costs")   Suffice it to say that these standards can support rates substantially in excess of 180% R/VC.  Again, the size of the annual  payment Metra makes to UP over the ticket revenues UP collects is an indication of the level of rates that could be supported. 

Bottom line, if UP were forced to take over the commuter service, you're probably looking at a 100% fare increase or more.    The term "Pyrrhic Victory" comes to mind. 

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Posted by charlie hebdo on Thursday, August 6, 2020 11:12 AM

Thanks again,  Falcon.  Let's hope the two parties can settle.  I wonder if the UP would like to see some reductions in Metra service,  particularly in non-rush hour periods?  And a shorter rush hour segment?  I don't  commute anymore,  but I  think that could be managed without much impact on riders on the UP West line. 

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Posted by CMStPnP on Thursday, August 6, 2020 3:17 PM

charlie hebdo
Thanks again,  Falcon.  Let's hope the two parties can settle.  I wonder if the UP would like to see some reductions in Metra service,  particularly in non-rush hour periods?  And a shorter rush hour segment?  I don't  commute anymore,  but I  think that could be managed without much impact on riders on the UP West line. 

All UP wants to do is dump the employees.    They do not care about current levels of service and in the future agreement UP would retain ownership and dispatching on all the lines.    They do not want to carry the extra employees involved in train movement, ticket sales, maintenence or whatever and want METRA to take on the employees.     Their public reasoning is that brings the contract in line with other contracts they have external to Illinois.    My feeling is they projected out into the future the pension, health care, etc of the employees and figured out they were probably getting soaked financially by the METRA contract.   It reads like via the challenge that METRA can't afford the costs of the employees without a fare or subsidy increase.    Just my read based on METRA stalling the transfer.   

So potentially bad news for METRA and it's costs if UP wins the case and I predict UP will win the case just by showing the contracts in other states and how they are different in just that one area.   UP has a strong case for showing Metra is shifting it's costs to UP.

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Posted by CMStPnP on Thursday, August 6, 2020 3:26 PM

highball6868

Chicago would shut down if UP stoped the N side Commuter rail...Now the case is before the STB. MY prediction is that METRA will buy out the 3 lines and then run themselves or under contract like Kelois or First Transit. Seemed to work well for MBTA and few other places. MBTA bought out the former NYC Boston and Albany Former Conrail btwn Boston and Worchester MA.

Read UP's side of the story in the PRESS RELEASE section of the UPRR website.   Does not sound like they want to sell any of the lines.    Sounds like they want METRA to operate and take partial responsibility for line maintence and full responsibility for crewing the lines and full responsibility for ticket sales.

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Posted by Falcon48 on Thursday, August 6, 2020 4:28 PM

I read it the same way.  I don't have any inside information.  But it appears to me that UP wants to get out of any responsibility for running, crewing or otherwise managing or supporting the commuter operation (except for dispatching) and wants Metra to manage and run the operation essentially like a trackage rights tenant.  That's not really unreasonable, since commuter operations established in modern times over freight railroads typically follow this model - for example, Metra's commuter operations over CN (ex WCL) to Antioch, IL

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Posted by blue streak 1 on Thursday, August 6, 2020 8:46 PM

The problem of wall street's only looking at a RR's operating ratio is why IMHO UP wants to dump the service.  If UP is making say 5% profit on the commuter service that causes the OR to get higher.  So even though UP is adding to the profit per share that figure is being ignored by wall street.

As has been posted elsewhere chasing a lower OR makes it very tempting for a RR to defer track maintenance.

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Posted by Falcon48 on Thursday, August 6, 2020 8:59 PM

If I were a senior UP executive (I wasn't), I would have gotten out of running the commuter service a long time ago.  You have no idea of how much management attention has to be paid to this service, not to mention the support services UP has to provide (for example, UP lawyers and claims personnel have to handle all of the personal injury and property damage claims the commuter service generates).  It is far in excess of the support Amtrak gets from its host railroads

UP isn't in the passenger service business - this is Metra's business. The proper way for it to be structured is for Metra to be treated as a trackage rights tenant responsible for its own services and everything that entails.

To my knowledge, UP isn't deferring track maintenance on the commuter lines.  They are in excellent condition.

 

 

     

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Posted by charlie hebdo on Thursday, August 6, 2020 10:16 PM

Definitely no deferred maintenance on UP West.  In fact,   I see some track crew vehicles weekly. 

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Posted by daveklepper on Friday, August 7, 2020 7:15 AM

I take UP's position in this case.  And Metra already has the management and supervisory strucure, not something starting from scratch for them.

A very different situation would be when a primarily-bus transit system adds a commuter operation on one railroad line.

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Posted by CMStPnP on Friday, August 7, 2020 9:14 AM

blue streak 1

The problem of wall street's only looking at a RR's operating ratio is why IMHO UP wants to dump the service.  If UP is making say 5% profit on the commuter service that causes the OR to get higher.  So even though UP is adding to the profit per share that figure is being ignored by wall street.

As has been posted elsewhere chasing a lower OR makes it very tempting for a RR to defer track maintenance.

If I had to guess, UP inherited this from C&NW and C&NW wanted to run this like a subsidiary operation and charge for it's full cost plus reasonable profit (5-7%).   I think what happened over time was health care costs and pension benefits and costs escalated faster than what they could do with the contract price and now UP views it as a major financial hit unless they restructure it to be UP not carrying the cost of the employees.

Also, I think UP is fortunate that the old Northwestern Station in downtown Chicago was already taken care of instead of tranferred over to UP.   That would have been another financial albatross for UP to deal with.

Also, I think BNSF should do the same.   While it is nostalgic to see Chicago Rail Commutter Cars labled BNSF RAILWAY or in some cases still BURLINGTON.   I think they are in the same boat as UP and need to transition all that stuff over to METRA.

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Posted by daveklepper on Friday, August 7, 2020 10:12 AM

The difference between BNSF and UP might be:

UP has a real public relations team with its steam program and more.

BNSF may regard a high-class commuter service as good public relation with a public that it wishes to reach, and the labeling of the equipment with whatever losses are involved in the provision of the service and the payments received, are considered an advertising-public-relations expense.

Also, one line instead of several.

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Posted by charlie hebdo on Friday, August 7, 2020 1:57 PM

Metra owns the rolling stock on the BNSF Metra line.BNSF owns and dispatches the RoW. Trains are operated by BNSF under a purchase of service agreement dating back to BN. 

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Posted by Falcon48 on Friday, August 7, 2020 4:10 PM

Falcon48

If I were a senior UP executive (I wasn't), I would have gotten out of running the commuter service a long time ago.  You have no idea of how much management attention has to be paid to this service, not to mention the support services UP has to provide (for example, UP lawyers and claims personnel have to handle all of the personal injury and property damage claims the commuter service generates).  It is far in excess of the support Amtrak gets from its host railroads

UP isn't in the passenger service business - this is Metra's business. The proper way for it to be structured is for Metra to be treated as a trackage rights tenant responsible for its own services and everything that entails.

To my knowledge, UP isn't deferring track maintenance on the commuter lines.  They are in excellent condition.

 

 

     

 

I neglected to mention the most visible example of a "trackage rights tenant" relationship between a passenger provider and a freight railroad  - Amtrak.  Where Amtrak runs its passenger trains over a freight railroad, its relationship with the owning railroad is essentially that of a trackage rights tenant.  The owning frieght railroad has nothing to do with the marketing, crewing, ticketing or other support services for the Amtrak trains.  True, the underlying agreement may have standards for the host railroad's dispatching and other such matters, but so do many freight railroad trackage rights arrangements.

With respect to BNSF's purchase of service reationship with Metra, that is also historical (like UP's)  I think they are watching what happens with UP.  If UP is successful in divesting itself of responsibility for running their commuter service, I predict BNSF will be next, when its current PSA expires.  I'm sure Metra realizes this.  

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Posted by Electroliner 1935 on Friday, August 7, 2020 10:24 PM

Who provides the commuter operations on the UP and BNSF tracks in California? 

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Posted by Falcon48 on Saturday, August 8, 2020 12:52 AM

Electroliner 1935

Who provides the commuter operations on the UP and BNSF tracks in California? 

 

On most (maybe all)  of the former SP commuter routes in California, the commuter authorities own the railroad - UP is tenant. This is a legacy arrangement  UP inherited from SP.  SP  sold the lines as part of its desparate efforts to raise cash to stay afloat, and UP inherited these arrangements when it merged with SP.  UP would never have sold segments of important freight lines to a commuter authority. Anyone in UP who seriously suggested such a thing would likely have spent the rest of their careers tossing tacos in Calexico, NM.

The California situation is different than the Chicago area,  In California, the commuter services on lines used by UP freights are mostly provided by commuter authorities which own the lines (due to SP's strategy of sellng lines to commuter authorities to stay afloat as previously described). In these cases UP is the tenant, 

In contast, in Chicago, UP owns and controls the UP lines used for commuter serice.  In its purchase of service agreement (PSA) with Metra, UP has contractually agreed to provide specified commuter services to Metra fpr a specified period.   Absent court or STB intervention, any contractual obliigation UP might have would not survive the expiration of the PSA.

I have no knowledge of how California commuter operations on BNSF are structured.   But I doubt that BNSF has sold any strategically  important freight lines to any California commter authorities.

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Posted by BaltACD on Saturday, August 8, 2020 8:55 AM

Did ATSF even have any commuter services in California before it became a part of BNSF?  I think not.

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Posted by blue streak 1 on Saturday, August 8, 2020 12:17 PM

Was the AT&SF LAX - San Diego ever considered commuter service ?  How is the ownership of that line now divided ?

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Posted by charlie hebdo on Saturday, August 8, 2020 1:50 PM

Back to the thread

 

https://trn.trains.com/news/news-wire/2020/08/07-stb-defers-decision-in-metra-union-pacific-dispute

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Posted by BaltACD on Saturday, August 8, 2020 3:49 PM

blue streak 1
Was the AT&SF LAX - San Diego ever considered commuter service ?  How is the ownership of that line now divided ?

While the LA - SD corridor had frequent service in the ATSF days  - looking at the schedules I have seen, I would not consider it as being commuter in nature.

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Posted by CMStPnP on Saturday, August 8, 2020 6:26 PM

BaltACD
While the LA - SD corridor had frequent service in the ATSF days  - looking at the schedules I have seen, I would not consider it as being commuter in nature.

Totally agree that is a corridor, it skips past a lot of station stops if your riding Amtrak.

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Posted by CMStPnP on Saturday, August 8, 2020 6:27 PM

Last I checked LA Metrolink was provided by Herzog rail contracting.

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Posted by Falcon48 on Saturday, August 8, 2020 6:42 PM

To my knowledge  (which may not be entirely accurate) here is the situation on the former ATSF line between LA and San Diego:

1.  Amtrak provides "Surfliner" intercity service between LA and San Diego.  It is well patronized - one of Amtrak's success stories.

2.  Metrolink (an LA commuter agency) provides commuter service between LA and Oceanside.

2.  Another commuter agency (the name escapes me) provides "Coaster" commuter service between SD and Oceanside

I don't know the current underlying ownership interests on the LA-SD line. But I vaguely recall that all or part of it was sold to a government agency some time ago.  Someone else may have more info on this.

 

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Posted by charlie hebdo on Friday, August 21, 2020 10:00 AM

Unions and passenger groups join in supporting Metra's position against UP. 

https://trn.trains.com/news/news-wire/2020/08/19-unions-passenger-groups-offer-support-to-metra-in-dispute-with-up

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