Court: Penalties for Poor Amtrak Handling Unconstitutional

In response to a suit brought by the Association of American Railroads, a three judge panel of the US Court of Appeals in Washington DC unanimously found the portion of Passenger Rail Investment and Improvement Act of 2008 that set Amtrak on-time performance standards on freight railroads unconstitutional. This ruling prohibits Amtrak, considered by the court a private corporation, from being the party that sets the standards, measures the performance against the standards, and then benefits from penalties resulting from enforcement of the standards.

Bloomberg

I understand both sides, but Amtrak was created largely because the fright railroads did not want to operate passenger trains. They still are free to retake over passenger operations if they want.

Time to add a little more padding into the schedules ;-) ??

UP will Love this One! The Sunset Ltd. and Eagles can start looking @ worse OTP Records now! :angry:

Here is the decision of the court.

AAR vs USDOT

the_traveler said:

I understand both sides, but Amtrak was created largely because the fright railroads did not want to operate passenger trains. They still are free to retake over passenger operations if they want.

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But not free to discontinue hosting entirely? Freight railroads are a for profit business, that loses money running Amtrak trains. If they actually made money, they'd be lining up to host passenger trains, but, in the present environment, being forced to host trains that don't pay enough to justify the expense, and then double dipping by allowing them to measure and assess fines to the private company for not moving a train that doesn't belong to them....I kinda have to agree with the AAR here.

I think the problem was with Amtrak as a private entity being the setter of the standard, measurer of compliance and the enforcer too. If the standards were set, compliance measured and enforced by an independent body I think the court might have been more sympathetic.

jis said:

I think the problem was with Amtrak as a private entity being the setter of the standard, measurer of compliance and the enforcer too. If the standards were set, compliance measured and enforced by an independent body I think the court might have been more sympathetic.

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But what independent body would be able (much less willing) to set the standards?

RobertB said:

jis said:

I think the problem was with Amtrak as a private entity being the setter of the standard, measurer of compliance and the enforcer too. If the standards were set, compliance measured and enforced by an independent body I think the court might have been more sympathetic.

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But what independent body would be able (much less willing) to set the standards?

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I'm just wondering out loud. In the good old days when each railroad operated their on trains, who set the standards then? :huh:
An example I'm thinking of is something like Chicago to LA. UP ran SLC-LV-LA while ATSF ran FLG-LAX. Both operated down Cajon Pass, but Santa Fe owned the tracks. Both are private companies. So who "ran the show" if one was late? :huh:

Well Amtrak will be running later now that the railroads can get there jollys off playing the delay Amtrak at all costs game without penalty.

If only there were some group in the Federal government charged with Administering the Railroads that could step in and fill the gap.

If that won't work, maybe some organization that could manage Surface Transportation (maybe a Board or something?)?

Nah, that'll NEVER work.

Ryan said:

If only there were some group in the Federal government charged with Administering the Railroads that could step in and fill the gap.
If that won't work, maybe some organization that could manage Surface Transportation (maybe a Board or something?)?

Nah, that'll NEVER work.

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But, but, that (FRA or STB performing that role) might make sense, or something, maybe.

Shortline said:

the_traveler said:

I understand both sides, but Amtrak was created largely because the fright railroads did not want to operate passenger trains. They still are free to retake over passenger operations if they want.

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But not free to discontinue hosting entirely? Freight railroads are a for profit business, that loses money running Amtrak trains. If they actually made money, they'd be lining up to host passenger trains, but, in the present environment, being forced to host trains that don't pay enough to justify the expense, and then double dipping by allowing them to measure and assess fines to the private company for not moving a train that doesn't belong to them....I kinda have to agree with the AAR here.

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I disagree.

(Climbing on soapbox)

When freight railroads do not get any taxpayer, (federal/state/local) dollars, or exceptions to existing laws, then they will truly be private for profit businesses.

They CHOSE to participate in Amtrak, which was created by Congress in the Rail Passenger Service Act of 1970 and incorporated in the District of Columbia in 1971, assuming the common carrier obligations of the private railroads (which found passenger service to be generally unprofitable) in exchange for the right to priority access of their tracks for incremental cost.

Now they want to continue to be rid of the common carrier obligations, with nothing in exchange. I say BOO-HOO, somebody call the waaaambulamps for them.

They should take it all, or take none of it. This lack of corporate citizenship is what is wrong with our economy. I say screw 'em. They don't like the rules, they must go back to honoring their OWN common carrier obligations, not foisting them off on the taxpayers.

(climbing down from soapbox now)

Here's the summary of the pertinent part of PRIAA:

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Rail Passenger Service Quality

FRA and Amtrak, in consultation with the Surface Transportation Board (STB), Amtrak’s host railroads, States, Amtrak’s labor organizations, and rail passenger associations are to develop metrics and minimum standards for measuring the performance and service quality of intercity passenger train service [§207]. FRA is to publish quarterly reports on a variety of performance and service quality factors including cost coverage, train delays, and on-board services. STB may investigate on its own initiative or upon receipt of a complaint from Amtrak, an intercity rail passenger operator, a host freight railroad over which Amtrak operates, or an entity for which Amtrak operates intercity passenger rail service of poor on time performance or other service quality deficiencies of intercity passenger rail based on the new standards to determine whether and to what extent delays or failure to achieve minimum standards are due to causes that could reasonably be addressed by the host freight railroad, Amtrak or other intercity passenger rail operators [§213]. If the STB determines that delays or failures to achieve minimum standards are attributable to a rail carrier’s failure to provide preference to Amtrak over freight transportation, it could award damages to be paid by the host freight railroad to Amtrak or the service sponsor. The awarded damages would be used by Amtrak or the service sponsor for capital or operating expenditures on the route to help achieve the minimum standards. The STB will set up its process for receiving and addressing complaints. Following issuance of the metrics and standards, Amtrak is to develop and implement a plan to improve on-board service in accordance with the metrics and standards [§222].

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Admittedly it's just the summary, but I don't see that it empowers Amtrak to do anything more than participate in setting up the rules. STB is clearly given the responsibility to decide if the RR's have misbehaved.

And, don't the existing contracts already allow for penalties?

WellTrained said:

Here's the summary of the pertinent part of PRIAA:------------------------------------------

Rail Passenger Service Quality

FRA and Amtrak, in consultation with the Surface Transportation Board (STB), Amtrak’s host railroads, States, Amtrak’s labor organizations, and rail passenger associations are to develop metrics and minimum standards for measuring the performance and service quality of intercity passenger train service [§207]. FRA is to publish quarterly reports on a variety of performance and service quality factors including cost coverage, train delays, and on-board services. STB may investigate on its own initiative or upon receipt of a complaint from Amtrak, an intercity rail passenger operator, a host freight railroad over which Amtrak operates, or an entity for which Amtrak operates intercity passenger rail service of poor on time performance or other service quality deficiencies of intercity passenger rail based on the new standards to determine whether and to what extent delays or failure to achieve minimum standards are due to causes that could reasonably be addressed by the host freight railroad, Amtrak or other intercity passenger rail operators [§213]. If the STB determines that delays or failures to achieve minimum standards are attributable to a rail carrier’s failure to provide preference to Amtrak over freight transportation, it could award damages to be paid by the host freight railroad to Amtrak or the service sponsor. The awarded damages would be used by Amtrak or the service sponsor for capital or operating expenditures on the route to help achieve the minimum standards. The STB will set up its process for receiving and addressing complaints. Following issuance of the metrics and standards, Amtrak is to develop and implement a plan to improve on-board service in accordance with the metrics and standards [§222].

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Admittedly it's just the summary, but I don't see that it empowers Amtrak to do anything more than participate in setting up the rules. STB is clearly given the responsibility to decide if the RR's have misbehaved.

And, don't the existing contracts already allow for penalties?

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Well, I scanned the opinion and the problem seems to have been that the law empowered Amtrak (and IIRC the rr's)to reject any rules agreed upon by everyone else, and to require STB to submit the issue to arbitration, potentially by a private party.

I don't understand the issue entirely. Why can't the railroads and Amtrak write performance standards into their operating contracts, just like between any private companies that have private contracts, with measurement methodology and compliance requirements clearly specified within, including arbitration of claims of non-compliance?

Why does the government have to get involved at all?

edit... If Amtrak pays the railroads fair market value for expediting their trains, then they would have clear incentive to do so.....

The problem is that it isn't clear what "fair market value" would be, but based on some other figures and/or rumblings, I've heard figures of over $100/train mile might be "fair value" for slots on a crowded line. On the other hand, Amtrak pays only a few dollars per train-mile for the LD system.

tonys96 said:

I disagree.

(Climbing on soapbox)

When freight railroads do not get any taxpayer, (federal/state/local) dollars, or exceptions to existing laws, then they will truly be private for profit businesses.

They CHOSE to participate in Amtrak, which was created by Congress in the Rail Passenger Service Act of 1970 and incorporated in the District of Columbia in 1971, assuming the common carrier obligations of the private railroads (which found passenger service to be generally unprofitable) in exchange for the right to priority access of their tracks for incremental cost.

Now they want to continue to be rid of the common carrier obligations, with nothing in exchange. I say BOO-HOO, somebody call the waaaambulamps for them.

They should take it all, or take none of it. This lack of corporate citizenship is what is wrong with our economy. I say screw 'em. They don't like the rules, they must go back to honoring their OWN common carrier obligations, not foisting them off on the taxpayers.

(climbing down from soapbox now)

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My friend, I have the book for you: Atlas Shrugged.

It's about how Dagny Taggart, COO of the fictional Taggart Transcontinental Railroad, tries to keep her business alive and trains running despite all attempts by government to get a piece of her railroad and impose excessive regulation after putting all the other railroads out of business with the same sort of chicanery.

It would give you a different view on who is truly a good corporate citizen and who is not. For us train buffs, there are plenty of action-packed scenes from the grain debacle that causes Minnesota farmers to set their crops on fire, to the wealthy politician who insists his train be given precedence which causes the largest tunnel collapse in US history, all the way to the actions of the lowest track laborer.

"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs."

Ryan said:

"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs."

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I find this quote rather amusing. Rather than intellectually refute Ayn Rand's philosophy - which is actually classical liberalism built on top of Aristotle - this quote creates a strawman ad hominim argument, thereby proving the points Ayn Rand makes in the book.

It is the second bestselling hardback book of all time for a reason. Those with an open mind will find a lot to grapple with and carefully consider.

This isn't the place, and I don't have the inclination to have a deep philosophical conversation about the book with a guest poster.

The book is utter crap, and I regret the time that I spent trying to plow through it.

If you want to talk about real trains, I'm all ears.

Ryan said:

This isn't the place, and I don't have the inclination to have a deep philosophical conversation about the book with a guest poster.
The book is utter crap, and I regret the time that I spent trying to plow through it.

If you want to talk about real trains, I'm all ears.

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Interesting, an opinion stated as a fact.

While the book is certainly controversial, just because you didn't enjoy it doesn't mean others shouldn't read it. Those with open minds tend to find that while they don't necessarily agree with Rand on all points, she caused them to think critically and understand the purpose of life.

As far as this topic is concerned: if freight railroads find it difficult to make a profit, they will cease to exist. Thus, government regulation of railroads should be light. For instance, railroads suddenly find themselves required by law to install PTC. The benefits of PTC don't justify the high expense of installation, which diverts money from needed track and bridge work. This - in a nutshell - is an example of where Atlas would be shrugging.

Actually there is nothing that prevents two railroads, one of which is Amtrak, entering into a contract that includes performance clauses involving both penalties and rewards. This case was about the extent to which special mechanisms can be used to force the hands of one of the parties by the other.

Ryan said:

"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs."

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Love the quote. Where's it from?

Not my intention to contribute to shifting this thread to an increasingly off-topic discussion of Ayn Rand.

http://kfmonkey.blogspot.com/2009/03/ephemera-2009-7.html

Became more popular when Krugman quoted it about a year ago.

I love the continued implication that I'm closed minded because I happen to disagree with Mr. Guest.