United States: STB Nudges Parties Toward Settlement Of Chicago Union Station Dispute

Last Updated: September 18 2018
Article by Paul R. Hitchcock

Paul Hitchcock is a Senior Policy Advisor in the Jacksonville office

A federal agency has, for the time being at least, refused to intervene in a dispute between Amtrak and Metra over Metra's use of Chicago Union Station.

Back in April, this blog  reported on a budding conflict between Amtrak and Chicago's Metra commuter system over use of Chicago Union Station. Amtrak is the owner, but Metra is by far the largest user. The lease expires in April 2019 and the two passenger operators are trying to work out a new agreement for Metra to use the station.

The extent of the dispute came to public light when Metra filed a petition at the US Surface Transportation Board (STB). Metra asked the agency to issue a declaratory order finding that it has the right under federal rail regulatory law to compel Amtrak to allow it to use Union Station. Metra stopped short of asking the STB to rule on whether or how it can operate in Union Station. Pretty clearly, Metra was motivated by a desire to even out the negotiating leverage of the parties as they try to strike a new agreement.

On August 22, the STB issued a decision declining the request to issue a declaratory order, but providing guidance on what the parties should address if a similar petition or actual request for operating authority should be filed. In other words, the agency avoided making a decision that would bind its hands for the future, but with its "guidance" gently prodded both sides toward a private settlement.

Under 49 USC Sec. 11102, the STB has the authority to require that a "terminal facility" owned by "a rail carrier providing transportation subject to the jurisdiction of" the STB be used by another "rail carrier." It also allows the agency to establish the "conditions and compensation" for that use. Particularly important for two publicly funded passenger operators, the agency also can conduct non-binding mediation between a "public transportation authority" and a "rail carrier."

This approach is an astute step by the STB. There is essentially zero chance that Metra would actually be forced to stop operating in and out of the Station. Both Metra and Amtrak are publicly funded, and while there will be much posturing, neither will actually let it come to a cessation of operations. But legal and political conflicts are certainly very real possibilities. So, the STB's non-decision now keeps both parties guessing. Uncertainty breeds compromise.

To that end, the STB offered "guidance on issues" the parties should address if it comes to litigation before the agency.

For Metra, the STB said that it must show that the company that once owned the Station — and later merged into Amtrak — was a regulated "rail carrier." Over the years case precedents sometimes referred to the prior owning company as a "rail carrier", but sometimes didn't. Each party argued about what that implied. The STB injected further uncertainty by brushing aside all the precedent. It said the issue hadn't really been contested, so what the owner was called in prior decisions is not binding.

The STB also cautioned Metra that it would have to prove that it is entitled to invoke the terminal use rules. Transportation provided by "a local government authority" is not automatically subject to the STB's powers. Under the limited exceptions, Metra would have to show that it qualified as a "rail carrier" in 1995.

Amtrak has a statutory exemption from much of the STB's jurisdiction. Metra will have to show that those exemptions don't apply here. 

The STB then turned to Amtrak. As noted, Amtrak has statutory exemptions from much of the STB's authority  but not all. The STB noted that this dispute is not about Amtrak's fares, or how Amtrak serves its customers, thus hinting that perhaps it would find that the Amtrak exemptions don't apply. Further, the STB said, Amtrak would have to show that the exemption allowed it to convert the prior operator from a "rail carrier" (if Metra wins that point) into an unregulated entity through the merger into Amtrak that took place just last year. The STB pointed out to Amtrak that its position implies that Amtrak could lawfully bring about an abandonment of its former subsidiary's rail carrier status through that merger — but without the agency's approval. That would go to a core power of the agency to review abandonments, and one that has wide ranging public policy implications. In other words, Amtrak's position challenges a central authority of the regulator. The unspoken hint is that any Beltway observer knows how hard a case that is to win.

So, while providing guidance to the parties, the STB has judiciously refrained from deciding the issues until later and simultaneously injected sufficient uncertainty into the legal backdrop behind the give and take of the Metra-Amtrak negotiations, to artfully give both parties a not-so-gentle nudge toward talking reasonably and coming to a deal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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