Application of the National Railroad Passenger Corporation Under 49 U.S.C. 24308(a)Union Pacific Railroad Company and Southern Pacific Transportation Company

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 33469]

Application of the National Railroad Passenger Corporation Under

49 U.S.C. 24308(a)--Union Pacific Railroad Company and Southern Pacific

Transportation Company

AGENCY: Surface Transportation Board, DOT.

ACTION: Order and request for comments.

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SUMMARY: The Board is seeking comments from interested persons on the

application of the National Railroad Passenger Corporation (Amtrak)

under 49 U.S.C. 24308(a), formerly section 402(a) of the Rail Passenger

Service Act (the Act), for an order determining under the law the

nature and extent of the duty of the Union Pacific Railroad Company

(UP) and its affiliate, Southern Pacific Transportation Company (SP)

(collectively, UP/SP), to allow Amtrak to use UP/SP's tracks and

facilities for the carriage of express. The Board is also ordering UP/

SP to continue to make its tracks and facilities available to Amtrak,

as directed herein, while this proceeding is pending.

DATES: Written notices of intent to participate are due by October 14,

1997. Shortly thereafter, we will serve a preliminary service list and

request for written corrections. By October 31, 1997, we will serve any

necessary corrections to the service list. Opening comments are due by

November 10, 1997. Reply comments are due by November 25, 1997.

ADDRESSES: Send an original and 10 copies of notices of intent to

participate and comments, referring to ``STB Finance Docket No.

33469,'' to: Surface Transportation Board, Office of the Secretary,

Case Control Unit, 1925 K Street, N.W., Washington, DC 20423. Opening

and reply comments must be served on the persons identified as

``parties of record'' on the service list.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 565-1600.

[TDD for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: This proceeding raises questions about the

definition of ``express'' traffic and the extent to which freight

railroads are required to allow Amtrak to use their facilities to carry

express. Freight railroads must permit Amtrak to operate over their

lines. The provisions of 49 U.S.C. 24305(a)(1) and 24305(c)(2)

authorize Amtrak to operate intercity

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and commuter rail passenger transportation and to transport mail and

express. In addition, the provisions of 49 U.S.C. 24306(a) and

24101(c)(1)(B) direct Amtrak to seek to increase its revenues from the

transportation of mail and express. The statute, however, does not

define ``express.''

Historically, in addition to its passenger service, Amtrak has

carried what it and UP/SP appear to agree is express traffic. In recent

months, however, Amtrak has taken steps that it indicates are necessary

to improve its financial condition by carrying additional volumes of

freight that it describes as express. Amtrak's financial condition is

well known.

UP/SP has resisted Amtrak's efforts to expand its freight

operations. UP/SP's position is that the type of traffic that Amtrak

contemplates now handling falls into the category of general freight

rather than express as intended under the law. UP/SP also argues that

the expanded freight operations that Amtrak contemplates would create

operational and logistical problems for the railroads over whose tracks

Amtrak operates, as well as the towns and cities through which Amtrak

operates. The recent operational difficulties that have been

experienced by UP/SP are well known, as are the concerns of many towns

and cities about train traffic in general.

Because Amtrak and UP/SP could not resolve the issue privately, by

application filed September 16, 1997, under 49 U.S.C. 24308(a),

formerly section 402(a) of the Act,1 Amtrak seeks an order

that: (1) requires UP/SP to continue to make available to Amtrak the

facilities necessary for it to continue to transport express on its

trains while this proceeding is pending; and (2) establishes a

procedural schedule ``leading ultimately to entry of a final order

determining that Amtrak's transport of express traffic is necessary to

carry out the purposes of the Act, and requiring UP/SP to make

available to Amtrak the facilities and services needed to allow Amtrak

trains to transport express.''

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\1\ Section 402(a) was originally codified at 45 U.S.C. 562(a).

In Pub. L. No. 103-272, 108 Stat. 745, enacted on July 5, 1994,

section 402(a) was recodified in its present form as 49 U.S.C.

24308(a). In section 205 of the ICC Termination Act of 1995, Pub. L.

No. 104-88, 109 Stat. 803, enacted December 29, 1995, references to

the ``Interstate Commerce Commission'' in this and other statutory

provisions were replaced with references to the Surface

Transportation Board.

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In its application, Amtrak states that its existing general

agreement governing its relationship with UP/SP, which was scheduled to

expire on September 30, 1997, has been extended through October 31,

1997. However, Amtrak asserts, UP/SP is unwilling to extend beyond

September 30, 1997, a ``provision in Amtrak's agreements with UP/SP

that gives Amtrak the right to carry express on Amtrak's trains to the

extent authorized by the Act.''

UP/SP filed a reply on September 23, 1997. In its reply, UP/SP

takes issue with Amtrak's contentions that the freight operations that

Amtrak contemplates are operationally feasible, and that they are

consistent with the express service provisions of the Act. UP/SP states

in that reply that it does not object to entry of an order preserving

the status quo while Amtrak's application is being reviewed, as long as

the order does not allow Amtrak to effect a ``blanket authorization for

unlimited expansion of its commodity-hauling operation.''

On September 26, 1997, Amtrak sought leave to file a tendered

response to UP/SP's reply, which UP/SP has opposed. Amtrak asserts that

it should be permitted to file the response because it could not have

reasonably anticipated the arguments that UP/SP would be advancing in

its reply. We do not find that assertion credible; indeed, given the

extensive relief that Amtrak has sought, UP/SP's reply raises the types

of arguments we would have expected it to present. Nevertheless, we

will accept and consider Amtrak's response, and UP/SP's opposition to

it, in the interest of developing a complete record.

Discussion and Conclusions

Under 49 U.S.C. 24308(a)(2), we have authority to prescribe the

terms and compensation for Amtrak's use of facilities owned by, or

receipt of services to be provided by, freight railroads in connection

with Amtrak's operation over their track, if (1) the parties cannot

agree and (2) such prescription is necessary to carry out the purposes

of the Act. Here, it is apparent that the parties cannot agree, as

Amtrak has asked us to declare the nature and extent of UP/SP's duty to

make its facilities available to Amtrak for the carriage of express,

which is an important issue that bears on the fundamental purposes of

the Act.

Accordingly, we are commencing a proceeding to resolve this

dispute.\2\ Because of the potentially broad impact of any ruling that

we might issue in this matter, we are publishing this notice in the

Federal Register soliciting comments from persons that may be affected:

other railroads and railroad employees, potential users, and,

particularly insofar as operational matters are concerned, cities and

towns and the Secretary of Transportation.

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\2\ After we resolve this matter, we may also be called upon to

address other issues relating to the facilities that UP/SP must

provide to Amtrak, such as the incremental cost of access and the

terms of payment. At this point, however, we are focusing only on

the narrow issue raised. We expect that any final compensation

methodology that we may prescribe would be made retroactive to

October 1, 1997.

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As noted, this dispute revolves around the meaning of the statutory

term ``express'' in the Act, and whether there are limits on the type

and quantity of freight traffic that Amtrak may carry consistent with

the statutory authorization to carry express. Amtrak argues that there

are no ``defined limits'' to its authority to transport express

(Response at 2),\3\ and that UP/SP is improperly taking the position

that: (1) The Act does not give Amtrak the right to transport carload

or truckload shipments of express; (2) certain commodities transported

by Amtrak do not constitute express; \4\ and (3) Amtrak may be

subjected to overall footage limits on individual trains carrying

express cars.

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\3\ Amtrak asserts that passenger trains historically operated

``with 30 to 40 mail and express cars,'' and that, ``As recently as

1959, intercity passenger trains derived as much as 46% of their

revenue from mail and express. * * *''

\4\ Amtrak asserts that Board precedent does not limit the

commodities that can qualify as express.

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UP/SP argues that Amtrak's efforts to solicit carload traffic (such

as carloads of beer), and to expand considerably the length of its

trains, are inconsistent with the statutory intent that transportation

of mail and express traffic be ancillary to Amtrak's provision of

passenger service. UP/SP also argues that expansion of Amtrak's non-

passenger services would produce serious operational and logistical

problems at the various cities and towns through which UP/SP

operates.\5\

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\5\ In its response, Amtrak asserts that its anticipated

expansion of operations will not produce operational problems.

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Commenters should address these issues. In addition to the

operational concerns and the commodity/train length issues raised by

UP/SP, commenters should address the legislative intent in enacting the

Act, and, in particular, the extent to which Congress intended that

Amtrak's express services be ancillary to its passenger services. We

must note that we expect all commenters to express their fully

developed positions in their opening comments, and not to back-load

their filings by reserving their major points to their reply comments.

Amtrak has asked us that, while this proceeding is pending, we

issue an interim order that will require UP/SP to

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continue to make its facilities available to Amtrak for handling

express traffic so that Amtrak will be able ``to continue to serve

shippers for whom it currently transports both carload and other

shipments, and for whom it has commitments to do so after October 1.''

Amtrak's objective is to expand its freight business so that it can

obtain increased revenues during the pendency of the proceeding. In its

application, Amtrak indicates that it wants us to facilitate this

objective by preserving the status quo, which, in Amtrak's view, means

accepting its position that there are not and have never been any

limits on its authority to carry what it determines to be express.

Response at 5-6.\6\ In its response, Amtrak indicates that it will

accept an interim 18-car train limit on the number of cars in its

trains, on the ground that UP/SP has already agreed that 18-car trains

are operationally feasible and have been typically operated in the

past. In its most recent filing, UP/SP disputes Amtrak's statements

about the feasibility of 18-car trains at certain locations, such as

Reno, Nevada, and Oakland, California.

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\6\ In support of its argument that the Board must order UP/SP

to open its facilities, on an interim basis, to whatever Amtrak

decides to characterize as express, Amtrak states that it has

already purchased or committed to obtain additional equipment, and

has entered into agreements with customers to carry additional

freight. The Board notes in this regard that any party that takes

action assuming in advance that a difficult legal issue will be

resolved in its favor assumes whatever risks are associated with

such action.

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We cannot, in an interim order, direct UP/SP to allow Amtrak access

for whatever traffic Amtrak declares is express. The limits on Amtrak's

freight traffic authority are precisely what we are being asked to

resolve in the case, and that is the issue on which we are now seeking

public comment. Typically in these proceedings,\7\ we require that the

parties maintain the status quo pending our resolution of the matter.

However, because of the variety of potential combinations in the Amtrak

operations that have been or might have been conducted in the past at

each of the numerous stations that Amtrak serves (regarding, for

example, train consist issues), an order simply directing the parties

to maintain the ``factual'' status quo would likely produce uncertainty

and continued litigation. Therefore, we will establish a numerical

equipment limitation for the interim that appears to be consistent with

the representations of both parties. Except where it is operationally

infeasible, UP/SP generally may not limit Amtrak's access to less than

18 cars. Consistent with Amtrak's representation that it does not need

to operate more than 600 feet of express cars during the interim

period, however, UP/SP may limit Amtrak to 9 express cars per train.

Thus, the trains that UP/SP must permit Amtrak to operate over UP/SP's

lines may be as long as 18 cars, and may contain as many as 9 express

cars. This interim order, we stress, is not intended to prejudge, in

any way, the matters on which we have sought comment, but is simply

designed as a practical solution while the case is pending.

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\7\ See Application of the National Railroad Passenger Corp.

Under 49 U.S.C. 24308(a)--Order to Require Service and Set

Compensation Terms, STB Finance Docket No. 32911 (STB served Apr.

30, 1996).

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This decision will not significantly affect either the quality of

the human environment or the conservation of energy resources.

It is ordered:

1. On or after September 30, 1997, UP/SP will preserve on an

interim basis the current provisions in the parties' agreement

governing express and the practices thereunder as provided in this

decision and will provide services, tracks, and facilities to Amtrak in

accordance with those provisions and practices.

2. A proceeding is instituted to investigate the extent of UP/SP's

obligation under the Act to allow Amtrak to use UP/SP's lines and

facilities for the carriage of express.

3. Commenters shall comply with the procedural schedule set out

earlier.

4. Amtrak's request for leave to file its response is granted.

5. This decision is effective on its date of service.

Decided: September 29, 1997.

By the Board, Chairman Morgan and Vice Chairman Owen.

Vernon A. Williams,

Secretary.

[FR Doc. 97-26541 Filed 10-6-97; 8:45 am]

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