The Amtrak Nonsense

One of the more bizarre and disturbing aspects of the CN/EJ&E deal involves the status and future of a portion of track near downtown Chicago known as the St. Charles Air Line.

This trackage runs along the far edge of Chicago's South Loop neighborhood, crossing the south branch of the Chicago River to join BNSF tracks around Halsted Street. Its official name is the St. Charles Air Line Railroad, originally completed in 1856, and now owned 50% by Canadian National, with the remaining 50% split between BNSF and Union Pacific.

A number of CN freight trains operate on this route today, as well as Amtrak's long-haul City of New Orleans, plus a pair of short-haul trains between Chicago and Carbondale, IL subsidized by the Illinois Dept. of Transportation. Once the EJ&E is acquired by CN it's anticipated that CN freight trains will no longer use this route, leaving only the Amtrak passenger trains operating here. It's not known at this time what if any plans co-owners BNSF and Union Pacific might have for this route after the CN/EJ&E deal is consummated.

As far as we can tell the only issue here is money, or rather the lack thereof. Once the freight trains are removed from this route, and Amtrak becomes the sole tenant or customer on the line, Amtrak would probably be expected to cover the full costs of maintaining it. And Amtrak says this would be unfair and the Illinois Dept. of Transportation says this would be unfair, and Illinois Senator Dick Durbin says this would be unfair. And do you know why? Simply because no one has any money to pay for it. So all these folks came up with a brilliant solution; have the shareholders of Canadian National pay for it.

What this really comes down to is a conspiracy by the State of Illinois and Amtrak, aided and abetted by the state's senior United States Senator, to confiscate private property for public use without adequate compensation. (Have I missed anything?)

Now to his credit, Canadian National CEO Hunter Harrison has already publicly promised Amtrak President Alexander Kummant and Senator Durbin that CN will do everything it can to assist Amtrak during this transition. No repeat of Meigs Field here. But CN is a publicly-traded company, and Harrison has a fiduciary responsibility to his shareholders, something Amtrak President Kummant should appreciate since he was once a senior executive with Union Pacific. I've been told that the current contract between CN and Amtrak does not expire until 2010, and CN has every intention of honoring that contract as well they should.

However, once the contract expires Canadian National has the right, like every good private business under our free enterprise system, to re-evaluate market conditions and make whatever modifications it wants to that contract. If CN and Amtrak cannot come to terms on a new price for using the St. Charles Air Line, Amtrak has the right to petition the Surface Transportation Board (STB) to adjudicate the dispute and set a price that is binding on both parties.

If at some point in the future CN, and the other Air Line owners, decided to file to abandon the line, then under existing STB procedures any responsible party would be allowed the opportunity to purchase the line and continue to use it for rail service. Seems like plenty of options to continue rail passenger service on this route, assuming that all parties involved act like responsible adults.

The ultimate long-term solution, that virtually everyone agrees on, is to build a track connection between the Canadian National and Norfolk Southern mainlines at a location on the far south side of Chicago known as Grand Crossing. The Amtrak trains would operate on the NS between Chicago Union Station and Grand Crossing, and connect with the CN mainline using the new connection. The only problem is that this would be a very expensive connection, with a recent price tag of about $70 million.

This project was included in the original CREATE Plan as Project P-4. But we all know what happened with CREATE. The Illinois Congressional delegation, led by the aforementioned Senator Durbin, proved to be totally impotent when it came to getting CREATE funded. Durbin's solution today is to have CN's shareholders provide the $70 million that Dick and the gang couldn't get out of Washington three years ago.

But to paraphrase Alice in Wonderland, this story just gets curiouser and curiouser. There are not one but two potential Federal funding sources available today for the Grand Crossing Connection, both buried in the back of the current Federal surface transportation reauthorization bill, SAFETEA-LU.

Section 9001, High Speed Rail Corridor Development, authorizes $70 million per year for capital projects, and Section 9002, Capital Grants for Rail Line Relocation Projects, authorizes $350 million per year. The Grand Crossing project appears to be eligible for funding under both programs. Seems like we need to ask our elected officials why they can't get the job done (again).

The larger, and really scary, issue this raises is what exactly is the policy of the Federal government when it comes to operating the nation's intercity passenger trains. In 1970 Congress passed the Rail Passenger Act of 1970. One of the specific provisions of that legislation was to relieve freight railroads, like Canadian National, of their financial responsibility (or burden) for operating the nation's intercity passenger trains.

For those of you too young to remember, between 1950 and 1970 the nation's freight railroads were almost totally destroyed by the massive financial burden of being forced to operate money-losing passenger trains. Passenger train deficits were a major contributing factor in the Penn Central bankruptcy.

But now Messrs. Durbin, Kummant, et al have decided to turn back the hands of time and once again start forcing freight railroads to pay for the costs of operating intercity passenger trains, shareholders be damned. Their action would seem to violate the spirit if not the letter of the 1970 Act. It's been said that those who do not learn from history are condemned to repeat it. These gentlemen are proposing we start down a slippery slope with no idea of how, when or where to stop the slipping and sliding.

We would like to invite our good friend Rick Harnish, Executive Director of the Midwest High Speed Rail Association to weigh in on this one, and as well as Amtrak's ubiquitous and always informative spokesman Marc Magliari.