Amtrak Barred From Regulating Freight Railroads on Delays

Amtrak, the U.S. long-distance passenger railroad, lost its power to assess blame when its trains are delayed and to have a say in whether freight railroads causing those holdups are penalized.

The U.S. Court of Appeals in Washington yesterday ruled the taxpayer-supported service is a private company to which Congress improperly gave regulatory power over freight railroads such as Union Pacific Corp. (UNP) and Warren Buffett’s Burlington Northern Santa Fe.

The court threw out a law passed to enforce a requirement, dating to Amtrak’s creation in 1970, that freight trains give priority to passenger trains on tracks they share, which they do in most of the U.S.

“If freight railroads perceive they no longer face penalties for giving freight trains priority over passenger trains, and the passenger-train delays are extensive, the result could be a de-facto imploding of Amtrak,” said Frank Wilner, a transportation economist and author of “Amtrak: Past, Present and Future,” published last year.

The case involves on-time performance standards and enforcement mechanisms established under the Passenger Rail Investment and Improvement Act of 2008.

Amtrak, based in Washington, tracks and publishes, in monthly reports on its website, how many minutes its trains are delayed each month and assigns causes. It cited freight-train interference as the most common type of delay over the past 12 months.

During April, it said, such interference was responsible for about 55,000 minutes of delays, or 14.9 percent of the total.

Canadian National Railway Co. (CNI) was held responsible for the most delays in the 12 months ending in April.

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If Amtrak trains don’t meet the on-time performance standards set by the company and its regulators, the U.S. Surface Transportation Board can investigate the railroads whose tracks they use and assess damages.

The court ruled the law unconstitutional for giving Amtrak a say in setting the metrics that could lead to penalties. U.S. Circuit Judge Janice Rogers Brown said that was akin to the government giving General Motors Co. (GM) the power to regulate automobile manufacturers.

“It appears that the current metrics and standards are invalid until Congress rewrites the law,” said Ross Capon, president of the National Association of Railroad Passengers, a Washington-based advocacy group, in an interview.

Steve Kulm, a spokesman for Amtrak, declined to comment.

Delays Reduced

The U.S. Federal Railroad Administration, which wrote the standards, said they’ve been a useful tool to reduce Amtrak delays.

“Since the establishment of the metrics and standards in 2010, delays have been reduced each successive year, culminating in a historic best for Amtrak in 2012,” said Kevin Thompson, a spokesman for the agency. “But there is still need for additional improvement.”

The Transportation Department inspector general in 2008 found Amtrak’s on-time performance of 30 percent on long-distance routes in 2006 reduced the railroad’s revenue and increased the demand for taxpayer subsidies.

The Association of American Railroads, whose members include freight railroads and Amtrak, sued the U.S. Transportation Department in 2011 arguing that the standards, which Amtrak drafted with Federal Railroad Administration, forced freight railroads to substantially alter their business operations, at times by delaying their own freight traffic.

Bilateral Contracts

The rail association, based in Washington, hailed the ruling.

“Freight railroads recognize Amtrak wants to run trains on time, and they work closely with Amtrak to help make this happen,” Ed Hamberger, the group’s chief executive officer, said in an e-mailed statement.

“However, freight railroads believe setting and measuring schedules and on-time performance metrics should not be done through a one-size-fits all approach at the federal level, but addressed jointly through private bilateral contracts that take into account the facts and circumstances of particular routes.”

The case is Association of American Railroads v. U.S. Department of Transportation, 12-5204, U.S. Court of Appeals for the District of Columbia (Washington).

To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net; Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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