Finance Docket
No. 33381
BEFORE THE
SURFACE TRANSPORTATION BOARD
Washington, D.C.
APPLICATION OF THE NATIONAL
RAILROAD PASSENGER
CORPORATION UNDER 49 U.S.C.
24308(a) -- SPRINGFIELD TERMINAL
RAILWAY COMPANY, BOSTON AND
MAINE CORPORATION, PORTLAND
TERMINAL COMPANY
MEMORANDUM OF POINTS AND AUTHORITIES OF SPRINGFIELD TERMINAL RAILWAY COMPANY, BOSTON AND MAINE CORPORATION, AND PORTLAND TERMINAL COMPANY IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT
Pursuant to 49 C.F.R. § 1117.1 of the Rules of the Surface Transportation Board, respondents Boston and Maine Corporation, Springfield Terminal Railway Company, and Portland Terminal Company (collectively, B&M ) respectfully request that the Board expeditiously resolve the matter of Amtrak's Application by ordering Amtrak and B&M to abide by the July 1995 Agreement between B&M and Amtrak which was negotiated by the parties (hereinafter referred to as the July 1995 Agreement ) and impose the terms of that agreement as the terms and conditions for Amtrak's operations on the line in question. B&M has already executed that agreement and has acknowledged its willingness to be bound by it. The requested relief is appropriate and necessary (1) to ensure that rehabilitation of the Plaistow-to-Portland line can commence with the 1997 construction season, thereby providing the state of Maine with passenger rail service by 1998; (2) in order to prevent Amtrak from benefitting from its recent course of bad faith and unfair dealing, all of which now appears to be part of a strategy to foreclose the implementation of this passenger rail service; and (3) to avoid an unnecessary, protracted, and expensive proceeding before the Board.
Statement of the Case
This proceeding flows from Congress' decision to fund the return of passenger rail service to the state of Maine. In the Intermodal Surface Transportation Efficiency Act of 1991, Congress authorized the use of $30 million to fund the capital improvements needed to begin commuter rail service in the Boston to Portland transportation corridor. Public Law No. 102-240, 105 Stat. 2135. The state of Maine and other local sources have contributed $9.58 million for capital work on the project. Between 1992 and 1995, Amtrak, Northern New England Passenger Rail Authority ( NNEPRA ) and B&M worked together to negotiate the agreements which would make a reality of Congress' and Maine's intent. As noted by Amtrak in its Application, B&M and NNEPRA have reached agreement on the terms of a contract for the rehabilitation of the B&M line over which Amtrak seeks to operate. Likewise, in July of 1995 B&M and Amtrak reached agreement on the terms and conditions for Amtrak's use of the B&M line. This matter is now before the Board because Amtrak desires to disavow the July 1995 Agreement and to use the Board as cover for this act of bad faith. Its application to the Board is simply another step in its effort to delay, and by delaying to kill, this project.
A. The July 1995 Agreement Negotiated by B&M and Amtrak
B&M operates the only rail line between Plaistow, NH and Portland, ME, and thus is an essential link to the establishment of passenger rail service between Boston and Portland. Amtrak approached B&M in 1992 about reaching an operating agreement to allow Amtrak to provide rail passenger service over the segment of the B&M between Plaistow, NH and Portland, ME ( Plaistow-to-Portland ). There was no disagreement over the broad points of the proposed relationship: B&M had no objection to Amtrak operating on its tracks, and Amtrak expressed its willingness to pay reasonable compensation to B&M. All that was left to the negotiations were the details. B&M has compiled and is presenting with this motion and memorandum in support (1) a Chronology of the Negotiations, (2) a five-volume set of documents ( Chronology Exhibits ) produced in connection with the negotiations, and (3) for ease of reference, a Document Appendix bound separately from this memorandum containing the Chronology of Negotiations and those documents that are specifically referenced in this memorandum.
The negotiations were arduous and necessarily drawn-out. In 1992 Amtrak's standard contract was rejected as inapplicable and inappropriate to this new service. Amtrak did not object to this approach and thereafter Amtrak and B&M negotiated from a common draft agreement to which each party made suggested changes and additions. Over three years, the disagreements were narrowed to only a few minor issues. There was agreement on the major points of Amtrak's operations: that Amtrak would have operating rights on the Plaistow-to-Portland line; the number of trains and schedule on which Amtrak would operate; the formula and amount of compensation to B&M for maintenance of its line; the allocation of liability between Amtrak and B&M; and the level of utility to be maintained on the Plaistow-to-Portland line.
On July 27, 1995, there was a final meeting between B&M and Amtrak at which time an agreement in principle was reached and a final document was prepared. The July 1995 Agreement (1) provided for Amtrak to operate its trains on the Plaistow-to-Portland line , and (2) set Amtrak's compensation of B&M for its incremental costs. See Agreement between Amtrak and Springfield Terminal Railway Company (dated July 31, 1995). Doc. App. B. (Chron. Ex. 52 and 53) These two issues -- which are central to the jurisdiction of the Surface Transportation Board -- were not in dispute. An internal Amtrak memorandum dated July 31, 1995 acknowledged the conclusion of negotiations and stated that Amtrak and B&M had reached agreement on all issues except for two minor terms. See Interoffice Memorandum from Gary A. Reinoehl, Amtrak, to R.J. Harmon, Amtrak. Doc. App. C. (Chron. Ex. 92) Those two minor terms dealt with B&M's request that Amtrak protect B&M from any increased insurance cost that might occur notwithstanding Amtrak's indemnity, and B&M's ability to assign the agreement if the railroad was sold . These issues were subsequently resolved by B&M's accession to the language proposed by Amtrak. See Doc. App. D (Chron. Ex. 93)..
B. Amtrak's Delay in the Execution of the Agreement
After the July 27, 1995 meeting, a final revised agreement was sent to Amtrak on July 31, 1995. See Doc. App. B (Chron. Ex. 52 and 53). At that point, to the dismay of both B&M and the state of Maine, Amtrak ceased all contact with B&M. For the next eight months Amtrak gave no explanation for its silence, nor did it indicate to B&M or the state of Maine that it had any intention to do anything but honor the contract which it had negotiated.
During this time, B&M was simultaneously finalizing an agreement with Maine officials and NNEPRA to begin rehabilitation of the Plaistow-to-Portland line to prepare the tracks for passenger service. NNEPRA and B&M reached an agreement in principle on the rehabilitation of the line in early 1996 and have since finalized the form of that agreement. However, because the B&M/NNEPRA agreement can not be implemented until there is an operating agreement between Amtrak and B&M, Amtrak's inaction has blocked the implementation of the NNEPRA rehabilitation agreement and delayed the initiation of this project. Both NNEPRA and B&M are at the mercy of Amtrak and its bad faith tactics.
In order to provide the passenger service by mid-1997 as planned, rehabilitation of the Plaistow-to-Portland line had to begin with the 1996 construction season, commencing generally by mid-April in this part of New England. Amtrak, however, by maintaining its complete silence, thwarted efforts to have a signed operating agreement in place in time for the 1996 construction season. By the spring of 1996, out of sheer desperation and with the deadlines for ordering materials slipping away, NNEPRA and the State of Maine pressed Amtrak to resume contact with B&M and execute the July 1995 Agreement. Even Maine's governor and Congressional delegation were called upon to exert their influence on Amtrak. See, Doc. App. E. (Chron. Ex. 78 and 79). Amtrak remained uninterested in signing the July 1995 Agreement or in explaining why it refused to do so.
Finally, on April 2, 1996, when the 1996 construction season was beginning, Amtrak sent a letter to B&M stating, out-of-the-blue, that Amtrak was not prepared to sign the July 1995 Agreement and, instead, proposed that negotiations begin anew on entirely new terms and conditions to be proposed by Amtrak. See Letter from James L. Larson, Amtrak, to F. Colin Pease, Springfield Terminal Railway ( April 2 Letter ) Doc. App. F. (Chron. Ex. 80). It was apparent from this letter that Amtrak's aim was to postpone the day when it would have to operate passenger service to Maine and to blame the delay on B&M.
Amtrak's lack of interest in reaching an operating agreement was apparent when it put forward a proposed contract that it knew would be entirely unacceptable to B&M . Indeed, Amtrak admitted that it was taking an entirely different agreement that it had negotiated with Illinois Central, under entirely different circumstances, and was trying to force it upon B&M. See April 2 Letter at 1. Doc. App. F (Chron. Ex. 80). Moreover, that contract did not even included any terms of compensation to B&M. Amtrak simply ignored the fact that there was already a negotiated contract between Amtrak and B&M containing terms of compensation and that Amtrak and B&M had agreed to every single significant term in that contract, including those relating to compensation and liability.
B&M was not distracted by Amtrak's heavy-handed tactics, but worked with NNEPRA to bring Amtrak back to the table to complete the July 1995 Agreement and to address any problems that might subsequently have arisen that caused Amtrak to walk away from its prior agreement. Several meetings were held among B&M, NNEPRA and Amtrak in the wake of the April 2, 1996 Letter. It was apparent there that Amtrak was not negotiating with the intent of actually reaching an agreement. In fact, after the meeting of July 31, 1996, Amtrak once again withdrew from contact and made absolutely no attempt to negotiate, in good faith or otherwise, with B&M. It was not until almost seven months later, on February 7, 1997 -- perhaps not coincidentally, after Amtrak had informed B&M that it was filing an application with the Surface Transportation Board -- that Amtrak finally presented its new proposed terms and conditions. Those terms and conditions restructured the entire method of determining and reimbursing B&M's costs in a manner that had been discarded by both parties in reaching the July 1995 Agreement. Thus, B&M's efforts to achieve another agreement with Amtrak after the April 2, 1996 Letter have been to no avail because Amtrak has refused to engage in serious negotiations.
ARGUMENT
Amtrak brought this proceeding to the Board without any statutory or factual support for its position. First, its Application does not identify a single disagreement in its negotiations with B&M that the parties have not, at one time or another, resolved. Indeed, it cannot identify such a disagreement, because it is plain that there is none. Instead, Amtrak requests that the Board set a procedural schedule for resolution of certain outstanding issues -- issues which it has failed to specify. Apparently, at some later time and at its convenience, Amtrak will identify those certain outstanding issues for the Board's and B&M's consideration. See Application at 3.
Amtrak's request that the Board resolve issues under 49 U.S.C. 24308 (a), see Application at 4, is, thus, entirely disingenuous. A Board order is unnecessary to force B&M's agreement because Amtrak -- not B&M -- is the only obstacle to an agreement. In the July 1995 Agreement, B&M specifically agreed to make its line available to Amtrak, and Amtrak and B&M agreed to the terms of Amtrak's use of the line and to the terms of compensation. The only disagreement is the one Amtrak recently has concocted in order to present its Application to the Board in the hope that it can now use the Board to undo what it negotiated between 1992 and 1995. Amtrak's Application lends further weight to B&M's surmise that Amtrak's real intention is to put off commencement of the Boston-to- Portland service for another year. The 6-month procedural schedule suggested by Amtrak will serve this strategy of delay because it will prevent any rehabilitation of the B&M line until, at the earliest, the 1998 construction season, with passenger rail service deferred until mid or late 1999.
The Board has jurisdiction to direct a rail carrier to make its tracks and facilities available to Amtrak and to set the terms of compensation for Amtrak's use thereof if: (1) the parties cannot agree, and (2) the Board finds it necessary to carry out Part C. 49 U.S.C. 24308(a). As we have outlined above, after three years of negotiations among B&M, Amtrak, and the state of Maine, B&M and Amtrak reached agreement on July 27, 1995 on the terms and conditions for Amtrak's use of B&M's Plaistow-to-Portland line. In light of this history, where B&M and Amtrak ha ve actually reached an agreement after long and detailed negotiations, B&M believes the Board would have adequate ground to find that it lacks jurisdiction under 49 U.S.C. 24308(a). However, in view of the enormous expenditures of time and effort by B&M, the state of Maine and Amtrak, and for the reasons set forth in more detail below, B&M believes that the more efficient approach to this matter would be for the Board to enter an order imposing the the July 1995 Agreement as the terms and conditions for Amtrak's operation on B&M's lines. B&M hereby expressly consents to the imposition of the terms and conditions contained in the July 1995 Agreement.
B&M is ready and willing to implement immediately the July 1995 Agreement and to begin rehabilitation of the Plaistow-to-Portland line. Amtrak, for its own reasons, wants to prevent this. If the Board accepts the procedural schedule suggested by Amtrak -- Amtrak will once again have succeeded in its strategy of delaying the resumption of passenger rail service to Maine. Thus, the only Board action necessary within the meaning of 49 U.S.C. 24308(a)(2)(A), is to pre-empt Amtrak's procedural schedule and to impose immediately the terms of the July 1995 Agreement between Amtrak and B&M.
I. SUMMARY JUDGMENT IS APPROPRIATE AND WARRANTED IN THIS CASE
The Board is authorized to rule on motions for summary judgment under the miscellaneous petitions provisions of its rules. 49 C.F.R. 1117.1. See Farmland Indus., Inc. V. Gulf Cent. Pipeline Co., Slip Op., F.D. No. 4041 (served Dec. 27, 1993). Under prior ICC practice, the Commission found it appropriate in several matters to issue summary judgment in certain circumstances without holding a hearing. Cf. Zoneskip, Inc. V. UPS, Inc., 8 I.C.C.2d 645, 649 n.6, 650 (June 26, 1992) (Proper to issue judgment without holding an evidentiary hearing where the issues involved were essentially legal ) (citing National Small Shipments Traffic Conf. V. United States, 887 F.2d 443 (3rd Cir. 1989)).
Because the Board does not have formal summary judgment rules, to define a legal standard it looks for guidance to Rule 56 of the Federal Rules of Civil Procedure. See Farmland Indus., supra, at 7 n.6. Thus, the Board must issue summary judgment if there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Celotex Corp. V. Catrett., 477 U.S. 317,322 (1986); Harding v. Gray, 9 F.3d 150, 154(D.C. Cir. 1993). Summary judgment is especially appropriate in a case which involves the construction of a contract. See American First Inv . Corp. V. Goland, 925 F.2d 1518, 1520 (D.C. Cir. 1991); Horn & Hardart Co. V. National RR Passenger Corp., 793 F.2d 356,359 (D.C. Cir. 1986). Here, B&M asks simply for the Board to rule on the lawfulness under the Act of the July 1995 Agreement and to impose the terms of that agreement as the terms and conditions for Amtrak's operation on the Plaistow-to-Portland line. This is solely a legal determination and requires no factual development. Because there is no genuine dispute as to any material fact, B&M is clearly entitled to judgment as a matter of law.
II. THE JULY 1995 AGREEMENT COMPLIES WITH THE REQUIREMENTS OF THE STATUTE.
Under 49 U.S.C. 24308(a)(2)(B) the freight railroad is entitled to compensation for the incremental costs resulting from Amtrak's passenger operations on its lines, and the Board is required to consider quality of service as a major factor when determining whether and the extent to which the amount of compensation to a freight railroad will be greater than the incremental cost of using the facilities and providing the services that Amtrak needs. The July 1995 Agreement satisfies with this statutory standard. The July 1995 Agreement is structured to compensate B&M for the incremental costs resulting from Amtrak's passenger operations. Compensation above that level is provided through on-time performance incentives which are clearly related to quality of service.
A. The July 1995 Agreement Compensates B&M For Its Incremental Costs.
There is no dispute that a rail carrier subject to a Board order under 49 U.S.C. 24308(a) is entitled to compensation for the incremental costs it incurs as a result of Amtrak's operations. Metropolitan Tans. Auth. v. I.C.C. , 792 F.2d 287, 297 (2nd Cir. 1986). The determination of those incremental costs, however, has led to protracted disputes before the Board, most recently that between Conrail and Amtrak regarding incremental maintenance costs. See Finance Docket 32467, National Railroad Passenger Corporation and Consolidated Rail Corporation -- Application Under Section 402(a) Of The Rail Passenger Service Act For An Order Fixing Just Compensation, 1995 Lexis 192, served July 25, 1995. (Conrail) Similarly, disputes have arisen regarding the appropriate compensation for incremental liabilities incurred by the freight railroad. See In re Minnesota Transfer Railway Co., F.D. 28533, 354 I.C.C. 552 (1978). In this case, B&M and Amtrak have negotiated and agreed to the terms of compensation for both incremental maintenance costs and incremental liability that B&M would experience as a result of Amtrak's passenger operations.
1. The July 1995 Agreement on Incremental Maintenance.
Determining the incremental maintenance cost resulting from Amtrak's operations presents two unique problems in this case. B&M operates a freight railroad that it elects to operate at speeds between 25 and 40 mph. Amtrak wants to operate its passenger trains at 60 mph with a comfortable passenger ride quality. In order to meet Amtrak's requirements, the track will have to be maintained to a higher quality than B&M would do simply for its own operations. Moreover, as a private business, B&M's expenditures on track maintenance are driven, in part, by economic conditions. Simply put, B&M must adjust its overall maintenance effort to meet its available resources. If the resources aren t available, B&M accepts a lesser degree of track quality and, consistent with safety, consequently slower train operations. The July 1995 Agreement addressed both of these points to the satisfaction of the applicable statute, B&M and Amtrak.
Specifically, the agreement began by determining what the parties called B&M's Freight Maintenance Expenditure Base ( FMEB ). See Appendix IV to the July 1995 Agreement. (Doc. App.B) (Chron. Ex. 52 and 53). The FMEB is part of a direct measure of what B&M would spend on the Plaistow-to-Portland line in the absence of Amtrak's passenger operations. The FMEB was calculated by looking at B&M's average annual maintenance expenditures on the Plaistow-to-Portland line over a five year period. It was determined and agreed between B&M and Amtrak that B&M had spent $1.2 million per year on maintenance of the line ($15,345.27 per mile) and that this level of expenditure was consistent with those on the other main line portions of B&M's system. Under the July 1995 Agreement B&M was required to contribute the FMEB annually for maintenance of the Plaistow-to-Portland line, subject to adjustment if B&M's maintenance expenditures on its other main lines (excluding the Plaistow-to-Portland line) increased or decreased over historical levels in subsequent years. The parties agreed that if B&M did not actually expend an amount equal to the FMEB as adjusted, then the difference would be banked against future years and, where appropriate, credited against the contribution to be made by Amtrak in those years. Amtrak worked extensively to refine the FMEB concept and formula. See, Doc. App. H, I, J, K, L.(Chron. Ex. 18, 27, 30,34,44). Amtrak even sent its auditors to review B&M's accounts, the result of which was the parties agreement on the specific $1.2 million figure as the first FMEB.
The July 1995 Agreement also provided for B&M annually to prepare, in consultation with Amtrak, a proposed work plan and budget for maintenance needed to maintain the Plaistow-to-Portland line at the speeds specified in the Appendices to the agreement. To the extent that the budget exceeded the FMEB, it was agreed to be avoidable (incremental) and Amtrak's responsibility. Amtrak could decide on an annual basis what portion of the incremental maintenance cost it would fund, and if less than the budgeted amount was funded, the adjustments in speeds, if any, that would be needed. See Section 3.1A of the July 1995 Agreement. (Doc. App. B) (Chron. Ex.52,53).
As the Board will appreciate, this is a direct approach to determining the incremental maintenance cost, not an indirect approach such as was at issue in Conrail. The FMEB as adjusted is a measurement of what B&M would spend on the line for its own purposes in the absence of Amtrak's passenger service--based on B&M's historical maintenance expenditures on the Plaistow-to-Portland line, adjusted by proportionate increases or decreases in B&M's maintenance expenditures on its other main lines. Amtrak is thereby assured that B&M will make the maintenance effort it would have made in Amtrak's absence. Any track quality that Amtrak wants above that which B&M would have bought in Amtrak's absence, Amtrak must pay for. This direct incremental cost approach to maintenance fully meets statutory requirements.
2. The July 1995 Agreement on Incremental Liability.
The operation of passenger trains on B&M's line exposes B&M to additional potential liability. Simply stated, the presence of Amtrak's passenger trains creates a universe of potential accidents, damages and claims that would not exist if those trains were not operating on B&M's line. Indeed, these risks do not presently exist anywhere on B&M's system. They are therefore the very definition of an incremental expense, because B&M would incur neither the liability nor the expense of protecting against the liability were it not for the presence of the Amtrak passenger service.
The July 1995 Agreement takes a direct approach to compensating B&M and protecting it from incremental liability resulting from Amtrak's passenger operation. Under Section 5.1 E of the agreement, Amtrak indemnifies B&M against all liability suffered by Amtrak, B&M and third parties arising out of Amtrak's operations under the agreement. Under Section 5.1 F, B&M indemnifies Amtrak against liabilities where the trains, employees or passengers of Amtrak are not directly involved. Finally, under Section 5.1 G Amtrak is relieved of its indemnity obligation where the loss is caused by the gross negligence, or intentionally reckless or wanton conduct of B&M.
The July 1995 Agreement's approach to liability is both incremental and direct. Amtrak agrees to indemnify B&M for liabilities it would not be exposed to if Amtrak's trains were not on the line. B&M agrees to indemnify Amtrak against liabilities that do not directly involve Amtrak's trains, employees or passengers. An alternative to the direct incremental approach is not feasible in this case. In the absence of a full Amtrak indemnity such as is contained in the July 1995 Agreement, B&M would have to purchase insurance against the incremental liability resulting from Amtrak's passenger operations. Such insurance is expensive and is available only with a large self-insured retention which would, in any event, have to be covered by an Amtrak indemnity.
B. Other Compensation
The July 1995 Agreement contains a provision for Amtrak to pay $0.45 per train mile to compensate B&M for all other incremental costs imposed by Amtrak's operations. See Section 3.1 B. The agreement contains a provision for Amtrak to pay additional compensation for on- time performance which is comparable to similar provisions that Amtrak has in agreements with other freight railroads. See Section 3.1 E and Appendix V. Both of these provisions comport with the statute. The provisions of Section 3.1 B relate to a liquidation of a wide variety of incremental costs, and the provisions of Section 3.1 E relate to additional payments related to quality of service, as permitted by the statute.
III. IMPOSITION OF THE JULY 1995 AGREEMENT IS IN THE PUBLIC INTEREST AND WILL FURTHER THE OBJECTIVES OF PART C.
A. Imposition of the July 1995 Agreement Will Permit Construction to Begin in 1997 And Passenger Rail Service to Commence In Mid-1998.
The voters in the state of Maine decided in 1991 that instead of widening the Maine Turnpike and risking further environmental degradation in their state, they would require the state first to alleviate traffic congestion by other means, including the restoration of rail service between Boston and Portland. Negotiations began in 1992 between the state of Maine and B&M for a rehabilitation agreement whereby B&M's Plaistow-to-Portland line would be rehabilitated to accommodate passenger service. B&M and the state of Maine have reached a final agreement on rehabilitation and are prepared to move ahead with rehabilitation of the line as soon as an operating agreement can be finalized between Amtrak and B&M or the Board imposes terms and conditions pursuant to 49 U.S.C. 24308(a).
Simultaneously, in 1992 negotiations began between Amtrak and B&M for an operating agreement. Three years of intense negotiations led to the July 1995 Agreement. See Reinohl Memorandum, Doc. App. C. (Chron. Ex. 92) Since that date, Amtrak has acted as if it has no interest in operating passenger rail service in Maine. For example, instead of executing the July 1995 Agreement, Amtrak simply did nothing for eight months. Indeed, it required the intercession of the Maine Congressional delegation to obtain any action at all from Amtrak. When Amtrak's response appeared on April 2, 1996 (eight months after the final meeting which produced the July 1995 Agreement), however, its suggestion was to throw three years of work into the wastebasket and to begin over again-- with no explanation why or what had changed in the intervening eight months.
Several meetings were held following Amtrak's April 2, 1996 Letter, but Amtrak abandoned even the pretext of trying to reach an agreement in July of 1996. Indeed, it was not until February 1997 that Amtrak presented to B&M a concrete proposal that it wished to substitute for the July 1995 Agreement. This Application followed with Amtrak's extraordinary request for an extended procedural schedule.
It should be apparent to the Board that if this case takes the course that Amtrak requests, and assuming that the Board is satisfied with the case as presented at the end of August 1997 and can reach a decision on the record presented within 30 days, the earliest date on which it could establish terms and conditions for Amtrak's operations on the Plaistow-to- Portland line will be the end of September 1997. This effectively coincides with the end of the construction season in Maine. Thus, no work could begin on the rehabilitation project until April 1998, with the reality that construction would not be finished until sometime in mid-to- late 1999. Such a delay is not in the public interest and it is simply not necessary.
If the Board imposes the terms of the July 1995 Agreement-- terms that comport with the statute, that B&M is prepared to accept without further proceedings, and that Amtrak spent three years negotiating--B&M is prepared to begin work on the rehabilitation project within 30 days. Indeed, if the Board takes this course, little if any of the 1997 construction season will be lost. This course of action is clearly in the public interest. Indeed it is likely the only course that will realize Congress intent in funding the Portland-Boston passenger service this century.
B. Imposition Of The July 1995 Agreement Will Avoid Expensive And Protracted Litigation Before The Board And The Courts.
Because Amtrak has not chosen not to inform the Board of the terms and conditions it wants the Board to impose, the precise extent of the dispute between B&M and Amtrak is not clear. However, assuming that the draft terms and conditions Amtrak presented to B&M in February 1997 represent Amtrak's position, it is fair to say that the disputes are broad and deep.
B&M disagrees with Amtrak's February 1997 proposals regarding maintenance costs, level of utility requirements, liability allocation and compensation, dispute resolution, and several other matters. Basically, Amtrak's approach in the February 1997 draft was to lock B&M into a fixed level of performance and then to set a fixed payment which Amtrak asserts will cover the incremental costs resulting from passenger operations. For example, with respect to maintenance, Amtrak proposes to require B&M to maintain the Plaistow-to-Portland line to a specified level of utility, and to pay B&M a fixed amount per car-mile which Amtrak contends is the incremental cost. B&M will thereby bear the risk that Amtrak's estimate of incremental cost is wrong and if Amtrak is wrong, B&M will have to increase its own maintenance expenditures to maintain Amtrak's desired level of utility. With respect to liability, Amtrak proposes to shift to B&M responsibility for damage by Amtrak's passenger operation to B&M's equipment and employees and to certain third parties, all in exchange for a fixed payment of $0.0734 per train-mile. Amtrak's approach shifts to B&M the risk that the fixed compensation is inadequate to cover incremental liability costs as it surely is.
Where incremental costs can be directly determined, as is the case here, use of such an indirect and risky (for B&M) approach is unwarranted. Moreover, if the Board were to adopt Amtrak's indirect approach to incremental costs, it would have to investigate and determine the actual maintenance costs that will be required to maintain the level of utility Amtrak is seeking, and select and adopt complex and disputed formulas for allocating that cost between the freight and passenger service. Similarly, with respect to liability, if Amtrak attempts to make a fixed payment instead of indemnifying B&M for all passenger services related liabilities it will be necessary for the Board to investigate Amtrak's actual accident and loss experience, to determine the cost of insuring against the risks Amtrak proposes to shift to B&M, and then to determine an appropriate payment to meet the costs of insurance. Where the parties have already reached agreement on a direct approach to determining these incremental costs, Amtrak's proposed expensive, risky and indirect approach is unnecessary, unwarranted, and not in the public interest. The Board should reject it and impose the terms and conditions of the July 1995 Agreement between B&M and Amtrak without further delay.
Conclusion
For the foregoing reasons, Springfield Terminal Railway Company, Boston and Maine Corporation and Portland Terminal Company, respectfully request that the Board grant its motion for summary judgment and impose immediately the July 1995 Agreement as the terms and conditions for Amtrak's operation or the Plaistow-to-Portland line.
Respectfully submitted,
SPRINGFIELD TERMINAL RAILROAD COMPANY
BOSTON AND MAINE CORPORATION
PORTLAND TERMINAL COMPANY
By:______________________
One of their attorneys
John Broadley
Steven N. Berk
Douglas H. Hsiao
JENNER & BLOCK
601 Thirteenth Street, N.W.
Suite 1200
Washington DC 20005
(202) 639-6000
John R. Nadolny
Vice President - Law
Guilford Rail System
Iron Horse Park
Billerica MA 01862
(508) 663-1029
Dated: March 25, 1997