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300670 ENTERED Office of Proceedings May 27, 2020 Part Of HUNTON ANDREWS KURTH LLP 2200 PENNSYLVANIA AVENUE, NW WASHINGTON, D.C. 20037-1701 TEL 202 • 955 • 1500 FAX 202 • 778 • 2201 DIRECT DIAL: (202) 955-1674 EMAIL: [email protected] May 27, 2020 300670 ENTERED VIA ELECTRONIC FILING Office of Proceedings May 27, 2020 Ms. Cynthia T. Brown Part of Chief, Section of Administration Public Record Office of Proceedings Surface Transportation Board 395 E. Street S.W., Room 1034 Washington, DC 20423-0001 Re: Docket No. FD 36332 National Railroad Passenger Corporation – Petition For Proceedings Under 49 U.S.C. § 24903(c)(2) – Amtrak’s Opening Statement (PUBLIC VERSION) Dear Ms. Brown: This public filing follows the filing under seal submitted in the above-captioned proceeding on May 20, 2020. Now attached for filing are the following documents: 1. Amtrak’s Opening Statement (WITH REDACTIONS) a. Exhibits 1–7 – NON-CONFIDENTIAL 2. Verified Statement of Christine Suchy (WITH REDACTIONS) a. Exhibit 1 – NON-CONFIDENTIAL except for Pages 42–44 i. Pages 42–44 – CONFIDENTIAL AND FILED UNDER SEAL b. Exhibit 2 – CONFIDENTIAL AND FILED UNDER SEAL c. Exhibit 3 – NON-CONFIDENTIAL 3. Verified Statement of Nancy Miller (WITH REDACTIONS) a. Exhibits 1–18 – CONFIDENTIAL AND FILED UNDER SEAL 4. Verified Statement of Deputy Chief Joseph Patterson (WITH REDACTIONS) a. Exhibit 1 – NON-CONFIDENTIAL ATLANTA AUSTIN BANGKOK BEIJING BOSTON BRUSSELS CHARLOTTE DALLAS DUBAI HOUSTON LONDON LOS ANGELES MIAMI NEW YORK NORFOLK RICHMOND SAN FRANCISCO THE WOODLANDS TYSONS WASHINGTON, DC www.HuntonAK.com Ms. Cynthia T. Brown May 27, 2020 Page 2 b. Exhibit 2 – CONFIDENTIAL AND FILED UNDER SEAL c. Exhibit 3 – CONFIDENTIAL AND FILED UNDER SEAL d. Exhibit 4 – CONFIDENTIAL AND FILED UNDER SEAL 5. Verified Statement of Bethany Tiernan (WITH REDACTIONS) a. Exhibit 1 – CONFIDENTIAL AND FILED UNDER SEAL 6. Verified Statement of Thomas Moritz (WITH REDACTIONS) 7. Verified Statement of Philip A. Balderston (WITH REDACTIONS) Pursuant to the Parties’ agreement, and as stated in the Certificate of Service for each document, Amtrak is serving Metra with email copies of all documents. Should you have any questions or concerns regarding this filing, please do not hesitate to contact me. Respectfully submitted, ___________________________ Perie Reiko Koyama Neil K. Gilman HUNTON ANDREWS KURTH LLP 2200 Pennsylvania Avenue, N.W. Washington, DC 20037 [email protected] [email protected] (202) 955-1500 Counsel for Amtrak cc: Thomas J. Litwiler Bradon J. Smith Robert A. Wimbish Thomas J. Healey Counsel for Metra Parties of Record BEFORE THE SURFACE TRANSPORTATION BOARD _________________ STB Docket No. FD 36332 PETITION BY THE NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK) FOR PROCEEDINGS UNDER 49 U.S.C. § 24903(c)(2) _________________ AMTRAK’S OPENING STATEMENT William H. Herrmann Neil K. Gilman Christine E. Lanzon Perie Reiko Koyama National Railroad Passenger Corporation Hunton Andrews Kurth LLP (Amtrak) 2200 Pennsylvania Avenue, N.W. 60 Massachusetts Avenue, N.E. Washington, DC 20037 Washington, DC 20002 [email protected] [email protected] (202) 955-1500 Thomas R. Waskom Hunton Andrews Kurth LLP Riverfront Plaza, East Tower 951 East Byrd Street Richmond, VA 23219 [email protected] (804) 788-8200 Counsel for the National Railroad Passenger Corporation (Amtrak) TABLE OF CONTENTS I. INTRODUCTION ...............................................................................................................1 II. FACTUAL BACKGROUND ..............................................................................................5 A. Chicago Union Station .............................................................................................5 B. History of Chicago Union Station............................................................................6 C. The 1984 Agreement................................................................................................6 D. Policing at Chicago Union Station ...........................................................................8 III. PROCEDURAL BACKGROUND ....................................................................................10 A. Metra’s 2018 Petition for Declaratory Order .........................................................10 B. Amtrak’s June 2019 Proposed Agreement ............................................................10 C. The Board Proceedings ..........................................................................................11 IV. GOVERNING LEGAL PRINCIPLES ..............................................................................14 A. The Requirements of Section 24903 ......................................................................14 B. Determination of Compensation Under Similar Full-Allocation Statutes .............15 C. The Cost Areas and the Appropriate Allocation Factors .......................................18 D. Agreement Terms...................................................................................................20 V. THE BOARD SHOULD ADOPT AMTRAK’S PROPOSAL FOR DETERMINATION OF METRA’S SHARE OF OPERATING COSTS. .........................................................21 A. Amtrak Calculated the Costs Incurred for Metra’s Benefit Using an Objective, Verifiable Method. .................................................................................................21 B. Amtrak’s Proposed Factors for Determining Metra’s Share of Operating Costs Are Objective, Administratively Feasible, and Avoid Cross-Subsidization. .........25 C. Total Share of Operating Costs ..............................................................................37 VI. THE BOARD SHOULD ADOPT AMTRAK’S PROPOSAL FOR DETERMINATION OF METRA’S SHARE OF CAPITAL COSTS. ...............................................................38 VII. THE BOARD SHOULD IMPOSE ADDITIONAL TERMS FOR THE NEW AGREEMENT AS STATED IN the PROPOSED AGREEMENT ..................................41 VIII. CONCLUSION ..................................................................................................................53 i BEFORE THE SURFACE TRANSPORTATION BOARD _________________ STB Docket No. FD 36332 PETITION BY THE NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK) FOR PROCEEDINGS UNDER 49 U.S.C. § 24903(c)(2) _________________ AMTRAK’S OPENING STATEMENT Petitioner National Railroad Passenger Corporation (“Amtrak”) respectfully submits its Opening Statement in these proceedings under 49 U.S.C. § 24903(c)(2). Amtrak and the Northeast Illinois Regional Commuter Railroad Corporation and the Commuter Rail Division of the Regional Transportation Authority (collectively, “Metra”) (Amtrak and Metra collectively, “the Parties”) cannot reach agreement on all terms and compensation for a new contract allowing Metra to use Chicago Union. Amtrak therefore respectfully requests that the Board set the terms and compensation pursuant to the statute. I. INTRODUCTION Amtrak owns Chicago Union Station and uses it to provide intercity train service. Metra also uses Chicago Union Station for its Chicago-area commuter service under an agreement signed in 1984 (the “1984 Agreement”) (attached as Ex. A to Amtrak’s July 22, 2019 Petition). In fact, Metra is the primary user of Chicago Union Station. percent of all trains at Chicago Union Station are operated by Metra, and of all rail passengers at Chicago Union Station are Metra passengers. Metra’s use of Chicago Union Station has increased significantly since 1984. The 1984 Agreement, as extended by the Parties, expired in July 2019. Negotiations for a new agreement proved futile. Metra wants to continue to use Chicago Union Station, and agrees it must pay Amtrak significant amounts of money. But Metra does not want to pay what 1 is required by the statute. While Metra has largely refused to explain its position to Amtrak in discovery in this matter, see Letter from B. Smith to N. Gilman (Jan. 10, 2020) (attached as Ex. 1), and although Metra has agreed to Amtrak’s methodology for two key cost components, see Stipulation (filed on May 18, 2020) (“May 18, 2020 Stip.”), Metra may suggest that the Board adopt an incremental cost model for certain costs. But there can be no dispute that 49 U.S.C. § 24903 mandates a fully allocated cost model. The purpose of this proceeding is for the Board to apply that model and determine Metra’s appropriate share, as well as the terms for Metra’s continued use of Chicago Union Station. In this opening statement, Amtrak will explain its position on the key issues, including the amounts that Metra must pay. Metra currently pays approximately $9.66 million a year in base operating expenses.1 As explained in detail below, to avoid the cross-subsidization prohibited by Congress, Metra must contribute $15,318,019 in operating costs, $1,700,000 in Tier 1 capital costs, and an amount to be determined in Tier 2 capital costs, based on a process the Board should adopt. Amtrak made an offer to Metra in June 2019 (the “Proposed Agreement”) (attached as Ex. 1 to Suchy Stmt.).2 In its Petition Amtrak stated that it would present the Proposed Agreement to the Board and ask the Board to impose the terms included in the Proposed 1 In response to discovery requests on November 20, 2019, Metra reported that its 2019 year-to-date amount paid to Amtrak was $9,003,384.38, subject to a quarterly adjustment. See Metra’s Responses to Amtrak’s First Requests for Admission (No. 6) (attached as Ex. 2); see also Section Five of the 1984 Agreement. 2 Concurrently with its Opening Statement, Amtrak has filed six Verified Statements
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