The great "Hoosier State" fiasco

Posted by Fred Frailey
on Sunday, March 8, 2015

I came down from the clouds today after finishing a difficult story assignment to discover two-day-old news: Indiana has thrown the Hoosier State to the boneyard. Quickly, the background: The Hoosier runs between Chicago and Indianapolis on the four days of the week that the Chicago-Washington Cardinal does not. The Cardinal is a long-distance train and part of the national system; the Hoosier State is a short-distance train, and Indiana must underwrite essentially all of its losses. Indiana decided that if it has to pay for this train, it would find a different operator than Amtrak and try to provide better service at lower cost.

Indiana asked for proposals and chose a Chicago-based company to take over the Hoosier State. For a host of reasons, including the serious illness of the key Indiana government employee, that fell through. Then the state entered talks with Iowa Pacific Holdings, the short line conglomerate that has a long history of operating passenger trains on its affiliates. That seemed to be going well until this past week, when everything went nuclear.

On Friday, Karl Browning, the commissioner of the Indiana Department of Transportation, revealed the existence of a letter written on January 26 to a lawyer representing the state, from Robert Lauby, the Federal Railroad Administration’s chief safety officer. In it, Lauby said FRA considers INDOT to be the “principal entity of record for purposes of ensuring compliance with Federal railroad safety requirements.”

Now, that’s an odd statement. Here is what Lauby means: Indiana contracts for the service, and any number of contractors and subcontractors might provide it—train operation, equipment maintenance, station services, food sales and so on. He goes on to say that any or all of them “could be considered a railroad for the limited purposes of FRA’s safety jurisdiction.” But Lauby concludes that FRA decided it has to be the State of Indiana.

At this, Browning blew his stack. His language was businesslike, but between the lines of his letter to U.S. Department of Transportation Secretary Anthony Foxx on Friday you could almost see the smoke coming out of his ears. “Our position is there is a distinction between contracting for railroad services and providing train service. INDOT cannot agree to become a railroad or a railroad carrier as that would require a significantly higher commitment of resources, the assumption of additional liability, and uncertainty over employment practices.” He also said, for good measure: “You should be aware that this will receive major media attention in Indiana,” and cc’ed every member of the state’s congressional delegation regardless of party, plus the mayors of every Indiana city served by the train.

For selfish reasons I’m sure you will understand, I yelped for joy and did a little jig beside the kitchen sink on my arthritic knee. I just love a good story on my sleepy railroad beat, and this is not just a good story but a great story. Big Government as bully: I’m from Washington and I’m here to beat the crap out of you. Sincere but slow-witted state bureaucrats continually fumbling balls. Amtrak in the background, saying stick with us and you won’t have this problem (Joe Boardman, Amtrak president, issued just such a statement, although not in those exact words; one wag on calls Boardman “the second gunman on the grassy knoll.”). So now the story gets elevated to blackmail, Washington versus Indianapolis.

Okay, let’s calm down and introduce a few more facts. The FRA tried this with North Carolina in 2008, got sued by the state, and dropped the idea. This time around, Indiana is the test bed. According to INDOT’s web site: “This burdensome interpretation exposes states to significant increases in cost, paperwork and liability, including (1) Liability for the actions of passenger rail providers up to $200 million for each occurrence of injury, death or property damage, (2) Hiring new staff to monitor plans and programs in compliance with federal rules, and (3) Interpretation that state employees are rail employees, subject to retirement and employer liability rules and limits.”

Scuttlebutt I’ve picked up is that Sun Rail, the new commuter-train authority in Orlando, set this off. It started service but neither Sun Rail nor its contracted service providers are registered as a railroad. So FRA told Sun Rail it had to be the railroad. Now it is going state to state, starting with Indiana, and will say the same thing to every state supporting Amtrak service.

Meanwhile, Ed Ellis, the president of Iowa Pacific, tells me he has already designated IPH subsidiary San Luis & Rio Grande as the railroad to provide all Hoosier State services to Indiana, and that lower-level FRA officials had accepted this. But it appears they got stepped on from on high.

Plus, the way I see it, Boardman’s statement to the contrary, Amtrak does not appear to be in collusion. If FRA gets its way, many states will just drop their passenger train support and walk away, so it’s hard to see how Amtrak wins. In fact, a mass exodus of the states would quickly bankrupt Amtrak.

There are two ways to resolve this problem and achieve an adult outcome. One would be for Secretary Foxx to slap some sense into the FRA and tell the agency to quit embarrassing him. The other, equally effective solution would be for the U.S. Senate to insert language into the new Amtrak authorization legislation (approved last week by the U.S. House of Representatives) prohibiting states that subsidize passenger trains from being made to become railroads.

Otherwise we’ve got a huge mess on our hands, and this dandy little story will give me fodder for blogs almost every week into infinity.—Fred W. Frailey

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