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ATCHISON, TOPEKA & SANTA FE RY. v. NAT. R.R. PASS.

November 22, 1982

ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, ET AL., PLAINTIFFS,
v.
NATIONAL RAILROAD PASSENGER CORPORATION, DEFENDANT, AND THE UNITED STATES OF AMERICA, INTERVENOR-DEFENDANT.



The opinion of the court was delivered by: Decker, District Judge.

MEMORANDUM OPINION AND ORDER

Plaintiffs Atchison, Topeka and Santa Fe Railway Company; Burlington Northern, Inc.; Chesapeake and Ohio Railway Company; Baltimore and Ohio Railroad Company; and Union Pacific Railroad Company ("the railroads") have sued the National Railroad Passenger Corporation ("Amtrak") to relieve themselves of their federal statutory obligation to reimburse Amtrak at a specified rate for free or reduced-rate rail transportation services provided by Amtrak to present and retired railroad employees and their dependents ("pass riders"). The railroads seek a declaratory judgment that the federal statutes in question, Public Law 92-316 and Public Law 96-73 (together, Section 405(f) of the Rail Passenger Service Act ("RPSA"), as amended), 45 U.S.C. § 565(f), are unconstitutional. Because the constitutionality of federal statutes has been called into question, the United States of America ("United States") has been permitted to intervene as a defendant. All parties have moved for summary judgment, agreeing that no questions of fact are in dispute in considering the constitutionality of the reimbursement requirement. The railroads' motion for summary judgment is partial, contending that the constitutionality of the formula for reimbursement (as distinct from the reimbursement requirement itself) does turn on a disputed issue of material fact.

The genesis of this controversy is the long-standing practice of the railroads, beginning in the nineteenth century, of providing free or reduced-rate rail transportation service to their current and former employees and their families. Such railroad passengers came to be known as "pass riders" because the employer railroads issued them passes which entitled them to the subsidized service on a space-available basis. No statute, Interstate Commerce Commission (ICC) regulations, or collective bargaining agreement obligated the railroads to provide this service; the parties agree that it was a purely voluntary undertaking.

In 1970, Congress enacted the Rail Passenger Service Act (RPSA), 45 U.S.C. § 501, et seq. The RPSA created a private corporation, the National Railroad Passenger Corporation, known as Amtrak, to take over the passenger rail service which the railroads had previously been required by ICC regulations to provide despite its unprofitability. Specifically, the RPSA authorized Amtrak to enter into a contract (called a "Basic Agreement") with each railroad:

  "On or before May 1, 1971, the Corporation is
  authorized to contract and, upon written request
  therefor from a railroad, shall tender a contract to
  relieve the railroad, from and after May 1, 1971, of
  its entire responsibility for the provision of
  intercity rail passenger service. . . . Upon its
  entering into a valid contract (including protective
  arrangements for employees), the railroad shall be
  relieved of all its responsibilities as a common
  carrier of passengers by rail in intercity rail
  passenger service under part I of the Interstate
  Commerce Act [49 U.S.C. § 1 et seq.] or any state or
  other law relating to the provision of intercity
  passenger service. . . .
  . . . In consideration of being relieved of this
  responsibility by the Corporation, the railroad shall
  agree to pay to the Corporation each year for three
  years [certain specified sums]."

45 U.S.C. § 561(a). Under the terms of the RPSA, the railroads explicitly retain certain responsibilities, among them:

(1) providing use of tracks and other facilities, 45 U.S.C. &sec 562,

(2) providing employees to operate and maintain the passenger trains, 45 U.S.C. § 545, and

(3) securing "protective arrangements" for railroad employees to insure that they are not adversely affected by the discontinuance of rail passenger service by the individual railroads, 45 U.S.C. § 565.

Finally, "[t]he right to repeal, alter, or amend [the RPSA] is expressly reserved." 45 U.S.C. § 541.

Pursuant to the RPSA, Amtrak did enter into a Basic Agreement with each of the plaintiff railroads. The Basic Agreement entered into with each railroad follows the RPSA guidelines. Section 2.1 of the Agreement states that, "[f]rom and after May 1, 1971, Railroad shall be relieved of its entire responsibility for the provision of Intercity Rail Passenger Service." The question of pass riders is specifically addressed by Section 7.5 of the Basic Agreement: "Transportation privileges, if any, with respect to business and personal travel of Railroad personnel shall be as determined by NRPC [Amtrak]."

On May 1, 1971, the RPSA and the Basic Agreements entered into thereunder went into effect, and Amtrak took over all passenger rail service from the railroads. Amtrak significantly reduced the pass ridership program from what the railroads had provided; passes were issued only to employees of those railroads which operated trains on behalf of Amtrak, and there were no free passes, only half-fare passes. In 1972, Congress decided to restore the pass rider program to the full scope with which it had operated under the railroads and to make the railroads pay for it. Congress amended the RPSA accordingly:

  "The Corporation [Amtrak] shall take such action as
  may be necessary to assure that, to the maximum
  extent practicable, any railroad employee eligible to
  receive free or reduced-rate transportation by
  railroad on April 30, 1971, under the terms of any
  policy or agreement in effect on such date will be
  eligible to receive, provided space is available,
  free or reduced-rate transportation on any intercity
  rail passenger service provided by the Corporation
  under this chapter, on terms similar to those
  available on such date to such railroad employee
  under such policy or agreement. . . . . The
  Corporation shall be reimbursed by the rail-roads by
  way of payment or offset for such costs as may be
  incurred in providing transportation services to
  railroad employees under any policy or agreement
  referred to in the first sentence of this subsection,
  including the costs of implementing and administering
  this section."

Pub.L. No. 92-316 (1972). Amtrak and the railroads failing to agree on a formula for reimbursement, the ICC, acting pursuant to the 1972 amendment, set the rate: $.00079 per passenger-mile of reduced-rate service (Amtrak's estimated variable costs), to be offset by any reduced-rate fares paid by pass riders. In fact, the offset turned out to be complete, so the railroads ended up paying only the costs of administering the pass rider program.

In 1979, Congress amended the passrider provision, revising the formula for reimbursement. By the terms of Pub.L. No. ...


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