Tuesday, February 16, 2010

Section 4.4 May 1, 1971 Agreement - Barrister's Field Day

At this topic, I would like to address a provision within the May 1, 1971 Agreement between Amtrak and the Railroads that likely caused more contention than any with which I was familiar. As likely has been surmised, I "worked with this stuff for a living' during 'Early Amtrak". The provision is simply titled Section 4.4 Jointly Owned Terminals and Joint Trackage.

First let us address that a Terminal Company is a railroad that is owned by one or more line-haul railroads to provide switching and industrial delivery services to the using (not necessarily an owner) roads in a non-competitive manner. In contemporary railroading, the largest coming to mind include the Belt Railway of Chicago, Indiana Harbor Belt, Kansas City Terminal Railway, and Terminal Railroad Association St Louis. Possibly, Conrail Shared Assets is organized as a Terminal Company, but since that was formed long after I had left the industry, I'll defer to others regarding that point.

An interesting facet of Terminal companies is that they keep books in accordance with (now) Surface Transportation Board rules of accounting in such a manner that the 'bottom line, i.e. Net Income is $0. All expenses are allocated to the using roads in accordance with the company's agreement amongst the roads regarding such and revenues are allocated amongst same (usually the owning roads, as distinct from any non-owning roads known as tenants, get a little 'favoritism" with regards to revenues - especially those generated from non-rail sources).

Now to address passenger Terminal companies. and as noted above gave rise to one of the most "hot button' issues of the Agreement and surely kept Amtrak lawyers (in fact I know so), both in-house and outside counsel, quite busy. This provision allowed railroads to pass the entire cost, including the trappings of a well-embedded bureaucracy, to Amtrak - even where there was only 'one a day' such as at Cincinnati. This was likely a confluence of two parties, namely one anxious to stop running train and the other equally anxious to start running trains, as well as signed by persons who did not understand the ramifications of what they were signing.

Suffice to say, likely long about A-Day+1, both sides knew that "something had to be done' - that Amtrak would 'see 'em at Foley Square' and that the roads knew these provisions were "unconscionable' to such extent that they were unenforceable. While I have no substantiation for such, I once "heard' that Santa Fe darned near stayed out of Amtrak, not for the usual bluster and bravado fans like th believe that 'we can run 'em better that they ever can', but rather because they were concerned about costs to access CUS on one hand that Amtrak would find unconscionable and not pay regardless of what a piece of paper said vs. being tho only user left at Dearborn (Wabash had already built a separate shack for the Orland Park commuter train) and by default responsible for all costs of that facility. Amtrak of course made arrangements to vacate these terminals as rapidly as possible with the worst of worst, Cincinnati, being the first. That was followed by Richmond, Jacksonville, Kansas City, St Louis, and Minneapolis. Amtrak lawyers 'saw 'em all at Foley Square' as well.

Those terminals, namely Boston, Washington, and Chicago, having a high volume of traffic, were comparative non-issues as there were enough trains over which the costs of such could be allocated. But Amtrak solved the matter, and I think wisely, by acquiring those Terminal companies. While Boston has been dissolved, the other two remain as wholly owned Amtrak subsidiaries.

Finally, note I have avoided any discussion of Los Angeles; this is simply because I do not know of how any disputes regarding this property were handled. While of course well used for railroad and mass transit today, and the property owned by a real estate concern, ProLogis/Catellus, on A-Day there were were only "three and a half a day".