Amtrak works with many State DOTs, understands that States have to undertake projects and negotiates in good faith towards completion. Generally, the “business” parts of the project agreements are agreed to relatively quickly. The issues that lead to more challenging negotiations are liability, indemnification, the assignment of environmental and other risks and the associated payments.
Even in the limited number of State comprising Amtrak’s Northeast Corridor, this research found little in the way of “typical” projects and associated real estate agreements. Projects ranged from construction of a bus way on Amtrak ROW through construction of new stations, to replacement of highway bridges over Amtrak right of way. Types of transactions generally involved temporary and permanent easements although some did involve a fee acquisition. While some States had extensive recent experience in dealing with Amtrak on ROW issues, others could only provide a limited set of past projects. The example projects involving Amtrak and the SDOTs noted by the interviewees are discussed below.
The main project discussed by Connecticut Department of Transportation (ConnDOT) was the development of a Bus Rapid Transit line. The project involved a 9.5 mile corridor for the planned New Britain-Hartford Bus way and involved temporary and permanent easements. Other projects related to new Amtrak stations involve acquisition of private property not Amtrak property.
Amtrak sold Rhode Island Department of Transportation RIDOT the property for the garage for a new commuter rail station in Wickford, and provided an easement to build the platform. For an intermodal facility at T .F. Green Airport in Warwick, they negotiated a series of easement agreements to allow building over the track and adjacent station, with a series of engineering force agreements to allow the work to take place.
The Pennsylvania Department of Transportation (PennDOT) noted that they had about 20-30 projects involving Amtrak at various stages of negotiation and implementation. PennDOT has experience with design/construction agreements for crossings, closings, and bridge replacements. A station reconstruction project in Lancaster, Pennsylvania involves permanent and temporary easements, as well as fee simple acquisitions.
The Massachusetts Department of Transportation (MassDOT) did not discuss any specific projects. Because the Massachusetts Bay Transportation Authority (MBTA) is a division of MassDOT and owns the Northeast Corridor ROW in Massachusetts, the real estate agreement process with Amtrak is different than in other States.
The remaining States had no current projects involving Amtrak but shared their experience from the recent past.
The Maryland Department of Transportation (MDOT) last dealt with Amtrak in 2007. In this project, MDOT wanted a permanent easement for aerial rights in order to fix an existing bridge over Amtrak ROW. MDOT already had an easement for the bridge. Amtrak did not want to grant a perpetual agreement and wanted to keep total control of their property. In order to complete the project they negotiated a right of entry agreement. No exchange of money took place.
While the New Jersey Department of Transportation (NJDOT) did not have any recent projects involving Amtrak, they did have past experience with Amtrak. The main interaction with Amtrak involved bridge replacements over Amtrak tracks. The projects were a viaduct replacement and a bridge replacement. Both projects were in the same general area, and both crossed over the Northeast Corridor main line. The ROW activity occurred in the late 90’s and early 2000’s and actual construction occurred around 2007. NJDOT also reported that they had acquired land from Conrail in 2008 but that there were no rail tracks involved.
The New York Department of Transportation (NYSDOT) provided examples of recent agreements with Amtrak. None of these takings involved an active rail line and there were no service interruptions. These included a temporary easement initiated in 2000, a fee acquisition initiated in 1994, and a fee acquisition and two permanent easements for transportation enhancement initiated in 2000. NYSDOT has also acquired property for Amtrak, e.g., ROW for a third track in upstate New York and also for stations.
There does not appear to be a “typical” State DOT approach or organizational structure for dealing with rail ROW projects at least in the limited number of States lying within the NEC.
In Connecticut, the ROW division is responsible for negotiation, acquisition, and relocation across the State for any transportation-related needs. The office does not serve a legal function; instead, the legal arm is the State Attorney General’s office, whose involvement is limited to condemnation and litigation. The office is located in the State Department of Transportation in the Highway Bureau, but deals with all transportation ROW issues. Transit projects are also handled by the highway group because the transit group in ConnDOT does not have its own ROW group
In Maryland, districts are responsible for acquisitions from private parties (homeowners, companies, etc.). Part of the headquarters group called “special acquisitions” deals with railroads, public utilities, and other government entities.
In Massachusetts there are two offices for real estate in MassDOT, and one office for MBTA. One of the MassDOT offices normally works with acquisitions for highways (acquiring property for bridge, roadway, and traffic mitigation). This office normally works on highway projects, but has recently been tasked more with rail. The other office serves more of a development/property management role. Most people involved in negotiations involving rail-related real estate transactions are MassDOT and rail road lawyers with a few MassDOT and rail road operating people. The MBTA real estate office utilizes a consultant.
In the New Jersey cases, the project manager negotiated the right of entry with the Amtrak engineering department. The agreement was signed off on by the project manager at DOT headquarters and an Amtrak vice president and Chief Engineer. At NJDOT, the Director of ROW and Access Management has the right of approval, but the Attorney General is required to review all “contracts” between the DOT and others.
NYSDOT has 11 regional offices each with a ROW group and its own negotiation section. The offices start and often complete the ROW acquisition process. Only “stickier” projects go to headquarters, and are elevated as needed if not handled at regional level. At headquarters this involves the ROW group, and the AG. The Attorney General is the official lawyer for the DOT, and also has its own rail property group.Force accounts are handled through the “rail” group in NYSDOT, not by the ROW group.
There is significant coordination across offices within Amtrak. Offices involved are legal, real estate, engineering, risk management, finance, and planning among others.
Internally, the legal counsel takes the lead and drafts the agreements. Legal and real estate offices work together to ensure the real estate and engineering agreements are consistent. Throughout the process, the appropriate offices are given opportunity to comment. For the real estate agreement, the Amtrak legal office signs off as approved to form and legality, not always for content.
Connecticut
Process
For the bus way project, engineering was the primary focus, though utilities and legal issues were also involved. Because of the complicated nature and engineering of the project, those responsible at the ROW office decided that a team approach would be the best approach to negotiations, and put together a team including engineering, utilities, and legal (staff attorney from commissioner’s office) representatives. ConnDOT believed that this approach was an appropriate response to Amtrak’s approach to the conveyance documents. Complicated engineering led to a complicated ROW negotiation process.
Agreement Documents
The conveyance document was primarily an operating agreement. Amtrak preferred the ROW conveyance and operating agreements to be in one document, while ConnDOT preferred them to be separate. The conveyance documents contain detailed information on project activities on Amtrak’s property. Amtrak wanted it recorded and on the land record as a permanent document. Amtrak wanted to retain all ownership rights so the property transactions involved only easements, which simplified the ROW problems.
Easements are either temporary or permanent and vary by location within the corridor. The permanent easements have been executed, but the temporary easements are still in progress. The original approach of ConnDOT was to combine all easements into one transaction and conveyance document, while Amtrak preferred that the temporary and permanent easements be separated. Currently, the two parties are in the process of developing the temporary easement instrument, which is very similar to the permanent easement one, but does not contain information on compensation.
Fees and Compensation
All payments to Amtrak (those associated with both the permanent and temporary easements) are assigned to the permanent easement documents.
Schedule
The ROW acquisition process started in Oct 2008. The actual agreement was reached in 2010, and signed in April 2011. ConnDOT formally filed the final conveyance documents and provided compensation in November 2011. The temporary easement agreement was still pending at the time of the interview in December 2011. There is a temporary easement for the construction period. The timeline is part of what they’re working on right now. The temporary easement agreement included some of what would normally be in the force account agreement. There are aspects of the project where ConnDOT needs to access property to do things on their own behalf. Amtrak wants to have control of certain part of construction. It is not just an issue of flagmen, since there are instrument panels, signal control boxes, etc. that need to be moved out of the way during construction.
A lot of time was spent determining both the operational language and legal language, because the operational and conveyance documents were combined into one. Amtrak sought an agreement that would have no impact on their operations or liability. Reciprocity became a major issue. Amtrak wanted certain protections, and ConnDOT also wanted to guarantee those protections for the State. ConnDOT indicated that the agreement might have been completed more quickly if it were only a ROW agreement, as coupling the ROW agreement with an operating agreement involved a large number of reviewers on each side. For example, on the Amtrak side, real estate, legal, engineering and operations were involved. If they were to repeat the experience, they would have facilitated the process by having a smaller group. They noted that a key decision maker from Amtrak wasn’t always available at various points in the process, resulting in delays.
Maryland
Process
The construction department notifies the real estate group of the area needed and the dates needed for construction. They will also notify them if the project will require access to railroad property.
The Office of Plats and Surveys develops maps (plot plans) and gives them to the Office of Real Estate. The Office of Real Estate puts out a bid for appraisers, selects the lowest bidder, and has them conduct a full appraisal to use in the offer to Amtrak or other railroad.
MDOT stated that the vast majority of the time, Amtrak does not agree and says no to an agreement involving property interests (easements, fee exchange), and prefers entry agreements to easements.
MDOT does not negotiate in-person with Amtrak; all communication is handled by mail, email or telephone. Special acquisitions handles the negotiations, the other parties involved are the Legal Department and director of the Office of Real Estate.
Agreement Documents
MDOT has never bought land from any railroad, but rather they rely on easements or entry agreements. Since Amtrak prepares the entry agreement, MDOT perceives the conditions to generally be more favorable towards Amtrak. Also, as the State is seeking something from Amtrak (or railroad in general), MDOT perceives the power and leverage to lie with the railroad. It is not mandatory for Amtrak to sign the entry agreement. Maryland never starts a project without a signed agreement.
Fees and Compensation
If money is involved it is placed in an escrow account. The railroad or utility can choose whether or not to accept it. Usually the State does not have to pay for reviews or legal fees as part of the project process.
Schedule
The process is iterative and takes approximately 6 to 18 months in general–usually around 6 with Amtrak. But MDOT tries to facilitate the process by remaining in communication with Amtrak about what needs to be done. MDOT feels the process is sometimes lengthened because there can be gaps where progress is not made. The process and time required has not changed over the years for better or worse.
Massachusetts
Process
The Real Estate Office would initially approach MBTA, but most of the coordination would be between the highway department and Amtrak. They would coordinate with Amtrak for scope, so Amtrak can estimate the cost to support the particular construction activity. Because MBTA owns the ROW, Amtrak does not have the ability to say no.
Amtrak is a tenant but provides dispatching, and maintenance of ROW, and has a need to know. MassDOT works with MBTA who hires Amtrak as a “contractor”. Amtrak would handle all the details related to the construction project from the rail side. If Amtrak operations would be affected, MassDOT would take that into consideration and would look to minimize disruption to rail operations, as disruption would also affect MBTA’s operations.
MassDOT finds that the process goes smoother when the design engineers involve the rail group early, or if the design engineers themselves have rail experience. Having someone who understands railroads needs saves time because they don’t have to deal with proposals that aren’t necessarily in the best interest of Amtrak or another railroad. Any time there’s a negotiation about railroad ROW, Amtrak or freight, it is important to have someone with railroad knowledge and experience to stop the State from asking for something that would be adverse to the railroad.
For a repair of two railroad bridges that they initially thought would require the shutdown of Amtrak Downeaster service, along with freight railroad service, early coordination lead to a solution that didn’t require a service shutdown for 7 days, as originally proposed, and saved $2 million.
Agreement Documents
With CSX, most recent agreements have been long-term leases for access to passenger stations for construction activity. Most of their dealing with CSX on ROW issues has involved building stations on CSX ROW. These have included leases, easements and acquisition/ownership. Most recent activity has involved leases.
Compensation for long-term leases is determined as a monthly payment. The leases are normally something that happens early on in the process, with the appraisal likely done by someone hired by the MBTA real estate division.
Fees and Compensation
Overall, this issue is not as applicable for Massachusetts because MBTA owns Northeast Corridor ROW. There are advantages to owning the ROW. As an example, for flag protection, MBTA and Amtrak would reach an agreement and MBTA would then hire Amtrak. There are two levels of cost structure Amtrak can use for this. Generally, MBTA indemnifies Amtrak for a number of things and pays a lower compensation price for flagmen than what would be paid for by a third party, because Amtrak would otherwise add insurance.
New Jersey
Process
For the example projects considered, the project manager negotiated the right of entry with the Amtrak engineering department. The agreement was signed off on by the project manager at DOT headquarters and an Amtrak Vice President and their Chief Engineer. The engineering details of the agreement were Amtrak’s driving concern. At NJDOT, the Director of ROW and Access Management has the right of approval, but the Attorney General is required to review all “contracts” between the DOT and others. The final document was a joint effort, the result of an iterative process between NJDOT /Amtrak lawyers and engineers.
Appraisals are conducted using either in house or contractor appraisers and are not a barrier to the process. For NJDOT, negotiating the engineering agreement is the primary challenge to the process. Once the engineering aspects are ironed out ROW is not a problem, and the dollars and cents generally work out simply.
Agreement Documents
NJDOT does not have a “standard” agreement document. In general, NJDOT only gets easements (temporary and permanent).
Fees and Compensation
NJDOT pays for Amtrak to review construction plans and pays for flagmen, security, etc. This is considered as a cost of doing business. These costs are negotiated by the project manager, not by the ROW people and most costs are not real estate costs. There were no rental fees for easements.
Schedule
NJDOT had had a project with CSX that did involve a fee taking. This required a 1 ½ to 2 year process of engineering discussions and design. The ROW negotiations fell within this window.
New York
Process
New York is an “appropriation state”, a power rooted in the State constitution. New York “appropriates” property via a map. They file a plot map showing the property and type of interest to be appropriated at the county clerk’s office and then NYSDOT acquires it. There is no court procedure as in eminent domain takings, it is a ministerial action. The same procedure applies for a temporary easement, permanent easement or fee acquisition. Any contest to the appropriation goes through the New York State Court of Claims.4
NYSDOT provides a copy of the “map”, the notice of appropriation, and a full set of design plans, if requested, to Amtrak for each project. In the case of the two projects noted above the property was taken (maps were filed) and money for payment placed on deposit, but payment was not taken by Amtrak. Amtrak is more amicable to friendly appropriation. Sometimes, they go through purchase rather than appropriation.
NYSDOT tries to do permanent easements rather than fee taking. In New York ROW must be cleared before any project contracts can be let. NYSDOT works with the railroads to accommodate their needs. However, if Amtrak wants something extra beyond the basic project requirements, Amtrak would have to meet the extra costs.
Indemnification always comes up as an issue, but the basic engineering/design process itself is not a problem.
Agreement Documents
They do not use one general purpose agreement. “Clauses” are added/dropped as required for the specific project. They used the term “customized” standard agreement.
Fees and Compensation
The Amtrak review of plans is considered a legitimate project expense as it is part of the cost of acquisition, and is absorbed by NYSDOT. This is usually not an issue since the dollar value is only a small part of overall project cost.
“Force accounts” are used to fund flagman and other railroad personnel involved in a project. NYSDOT prefers to use force accounts and has not gone in the direction of using its own flagman although it has been suggested. Force accounts are handled through the rail group in NYSDOT not by the ROW group.
Schedule
The State Attorney General recommends a 12-month lead time for ROW issues if no relocation is involved, and 24 months if relocation is involved.
Pennsylvania
Process
The Chief of the Utilities and Right-of-Way Section and a legal staff person negotiate the real property-access agreements. The agreement gives PennDOT whatever interests it needs to construct, operate and maintain. In normal highway projects, the Public Utility Commission (PUC) can use their power to show a public interest in a property, condemn, set a price/value on a property, and then the owner can either accept it or sue. Usually it’s easy to reach agreement.
The agreement can involve an easement (temporary construction or aerial5), or a quitclaim deed. PennDOT does easements rather than acquisitions because of title problems in acquisitions. Transactions with Amtrak are almost all easements. They have never gone to court with Amtrak, but had to with CSX and Conrail.
The grade crossing engineer and a legal staff negotiate the project reimbursable agreement. The agreement is the construction contract. It covers all the project specifics, including payments, force accounts, insurance limits, known environmental issues and responsibilities, provisions for on-going inspection, maintenance and repair, and various access and indemnification terms to be covered in Amtrak’s contract with the State contractor that will be doing the work.
The indemnification issue can become somewhat contentious, but for the most part the negotiations can be characterized as a typical back-and-forth process over exact terms and language until a consensus is reached.
In addition and as specified in the project reimbursable agreement, the contractor doing the work negotiates and executes a right of access (entry) agreement that has insurance and indemnification provisions. There is also an agreement is between PennDOT and the contractor.
Amtrak requires two basic types of agreements to be in place In order for States to gain access to its property.
Amtrak would prefer to have everything in one master agreement. But generally progression is from a design review work agreement, then to a “force agreement.” Also, there are sometimes site access agreements or preliminary engineering agreements, which are done separately. The preliminary engineering agreements can be a way of allocating liability for cleanup if a discovery is made that requires remediation.
Amtrak requires contractors to sign a permit to enter, so they have direct contractual privity with the party out on the property completing the work. Also, while the above agreements give States the right to hire a contractor, Amtrak also enters into a direct agreement for entry, insurance and indemnity with contractors.
A force account agreement generally exists for Amtrak to be paid for its work. Amtrak provides an estimate for design phase/preliminary engineering agreement design review and receives compensation for reviewing plans through an executed agreement. The only engineering or real estate agreements for which Amtrak charges a fee are temporary permits to enter, which have an administrative and application fee of $750.
Once all of the offices have agreed, the agreements are sent to their counterparts at the State. The process is iterative. Once the State agrees the agreement gets sent through the Amtrak Executive Committee level. After an opportunity to ask and address questions, Amtrak performs sign off and sends the agreement(s) to the State for signature.
For real estate agreements, the party responsible for signing and approval varies. Sometimes the President of Amtrak signs, sometimes the Assistant Vice President of Real Estate. In almost all of projects the Assistant Vice President of Real Estate signs. Board approval may be required for major projects depending on the dollar amount.
Engineering agreements, except permits to enter, are signed by the President of Amtrak. Permits to enter are delegated to Deputy Chief Engineer of Construction.
A number of major topics surfaced during the course of the interviews. Some of these are points of contention, such as liability, indemnification and environmental issues. One may be as much a point of confusion as it is a point of contention. This is Amtrak’s status under a State’s eminent domain power. The other surprisingly enough appears to be a non-problem. This is reaching agreement on the property’s appraised value.
Appraisal6
ConnDOT reported that appraisal was an issue in the New Britain-Hartford Bus way project, but that this was not a major stumbling block for the project. Settling on the final figure did not seem to have been a contentious or acrimonious process.
During negotiation, ConnDOT made an offer for compensation. Amtrak had two appraisals prepared. ConnDOT reported that the Amtrak appraisal estimates included the value of damages associated with approximately 10 billboards. The billboards were on Amtrak property and collecting rent. This billboard assessment was the biggest point of difference.
ConnDOT had no problems with the validity and methodology used by the Amtrak appraisers and said that it came down to a matter of opinion because the different estimates were based on different assumptions and adjustments. ConnDOT felt confident in the estimates prepared by both sides, and both parties agreed that compromise would be best.
The administrative settlement process involves thorough review. They noted that the settlement had to be approved by an independent review board in Connecticut (State Property Review Board).
Neither MBTA nor MassDOT raised appraisal as a contentious area of the real estate agreement process.
For NJDOT, negotiating the engineering agreement is the primary challenge to the process. Once the engineering aspects are ironed out the ROW component is not a problem, and the dollars and cents generally work out simply. Appraisals are conducted using either in house or contractor appraisers and are not a barrier to the process. The office of real estate will bid appraisers, select the lowest bidder, and have them conduct a full appraisal to use in the offer to Amtrak.
In New York an appraisal is used to determine a property’s full market value, its highest and best use. NYSDOT will use specialty appraisers if necessary, depending on the project. Sometimes they have to do two appraisals, depending on dollar value. There is a term agreement with a list of appraisers, but they can go off-list if a specialty appraiser is needed. If Amtrak is not satisfied with a monetary offer they can always go to the Court of Appeals. Money has not been an issue in acquiring property from Amtrak and Amtrak has never challenged NYSDOT in court.
In Pennsylvania settling on the payment for the easements seemed straightforward and not contentious. The typical appraisal process is used following standard, well-established practices for how to value different cases.
Liability Insurance7
For the most part the States responding on this issue indicated that they were self-insured.
MDOT is self-insured up to $1 million. They noted that Amtrak asks that agreements include provision that MDOT will provide insurance and pay for anything that happens during construction. MDOT felt that they had excess insurance.
NJDOT is self- insured so Amtrak insists that contractors working for the State have their own insurance.
New York State is also self-insured. The liability is taken off the property owner for temporary/permanent easements. NYSDOT has a “claims” unit that handles liability issues, while the AG handles any litigation. Each contractor working for the State has to have their own liability insurance.
Overall, this issue is not as applicable for Massachusetts because MBTA owns the Northeast Corridor ROW. However, they noted that there are provisions in the contracts between Amtrak and MassDOT that deal with the insurance requirements for the Mass Highways contractor. The insurance policy would name MBTA and Amtrak as additional insured parties, and in most cases, CSX because it also operates on the ROW.
Indemnification8
In Massachusetts, because MBTA owns the property, MBTA indemnifies Amtrak.
NYSDOT noted that indemnification always comes up as an issue.
PennDOT self-insures and is prohibited from agreeing to indemnification. The indemnification issue can become somewhat contentious, but for the most part the negotiations can be characterized as a typical back-and-forth process over exact terms and language until a consensus is reached.
PennDOT felt that Amtrak would like PennDOT to waive sovereign immunity.9 They noted that PennDOT does not want to follow the Rhode Island model on indemnification. They indicated that traditional language on indemnification, which used to work, is no longer acceptable to Amtrak.
In Rhode Island, indemnity was a major issue in gaining access for commuter rail to Amtrak-owned lines south of Providence. This was not directly an FHWA ROW issue, but the principles established seem to have carried over to FHWA ROW cases. The issue was recently settled after about 10 years. It required new legislation to create a “quasi-public agency” to indemnify Amtrak.
A letter of credit is being used for all permanent easements going forward. It applies the commuter rail indemnification agreement to all easement agreements with Amtrak (mostly bridges) and RIDOT needs to institute a new agreement with Amtrak for each new project to rehab a bridge. Amtrak wants RIDOT to provide a $200 million insurance policy to cover risks. It was noted that the P&W railroad has not asked for same level of indemnification as Amtrak.
Environmental Issues
For Connecticut, environmental risk was a major component of their negotiations with Amtrak. ConnDOT did an ESA (environmental site assessment) and found that there were no problems. ConnDOT assumed all responsibility for any existing contaminants, and has accepted the property as is.
Environmental contamination is handled on a case-by-case basis in Maryland. Generally, MDOT is responsible for anything they cause during construction. Amtrak would be responsible for preexisting contamination.
Environmental risk was not raised as an issue by Massachusetts. They own the right of way, so the issue is not applicable.
NJDOT stated that the owner of the property is responsible for cleanup costs of preexisting contamination. NJDOT noted that Amtrak wants the State DOT to assume the risk and pay for any environmental cleanup and indemnify Amtrak of all risk as part of any access agreement.
On environmental risk, NYSDOT stated that they will not assume liability for toxic substances outside of project boundaries. The Attorney General will not allow it. Amtrak has accepted this position on a case-by-case basis thus far, but does not accept it as a blanket position. If a site is risky NYSDOT will do a permanent easement rather than a fee taking.
The solution PennDOT has reached on indemnification is for PennDOT to take responsibility for clean-up of known problems and responsibility for unknown problems up to a relatively low dollar limit. Costs above the dollar limit are the responsibility of Amtrak, but PennDOT pays Amtrak a “risk fee” for assuming this responsibility. Some of the “risk fee” is refunded if no costs are incurred. The “risk fee” is not a reimbursable cost by FHWA. The Attorney General does not permit PennDOT to buy insurance, so the “risk fee” solution is a creative way to meet the needs of Amtrak and PennDOT given the legal constraints. The one concern PennDOT expressed is that Amtrak will not provide information on how the “risk fee” is set.
Rhode Island noted that Amtrak wants them to assume responsibility for all environmental concerns related to a project, and to be taken out of PRP (potentially responsible party) status.10 RIDOT indicated that Amtrak wants the States to be responsible for environmental cleanup and wants 100% risk transfer on acquisitions/easements even beyond the boundaries of the project. They also noted that FHWA will not pay for environmental risk fees and that no one knows how Amtrak determines the risk fee. They would like FHWA to pay for the risk fee.
Amtrak Status Under Eminent Domain
ConnDOT did not feel that they could acquire the property they needed from Amtrak for the bus way project through condemnation because of Amtrak’s status. Amtrak has to agree to allow their property to be acquired through condemnation. ConnDOT didn’t feel that they had concurrence from Amtrak to go about it in that fashion and didn’t want to pursue the issue in the courts.
ConnDOT’s position regarding their inability to condemn against Amtrak was predicated on the opinion of their legal counsel via the Connecticut Office of the Attorney General. It was determined that based on the level of impact on Amtrak’s property that Amtrak could and most likely would appeal the condemnation action for the bus way..
This appeal would likely be based on a claim that the condemnation action frustrates Amtrak’s ability to accomplish its Federal mandate of creating and maintaining a national passenger rail system. Case law appears to support this position (Union Ctr. Redevelopment Corp. v. AMTRAK, 103 F.3d 62 (8th Cir, 1997)). They have condemned against Amtrak in the past (without their objection) on smaller acquisitions.
MDOT never had an issue with Amtrak resulting in the need to use eminent domain. This has also never been an issue with other railroads, utilities or government entities.
In the case of MassDOT, because Amtrak is a tenant “Amtrak can’t say no.”
NYSDOT indicated that Amtrak does not recognize NYSDOT’s ability to appropriate for its highway projects. They noted that Amtrak does not seem to want to set a precedent on ceding their “Federal” authority and recognizing the State’s right to take their property. NYSDOT has not had similar problems in dealing with CSX on ROW access issues. Private railroads recognize the States’ authority to take land in the public interest. NYSDOT has consulted the FHWA division office regarding their doubts about Amtrak’s status.
The New Jersey Attorney General told NJDOT that it cannot condemn property of any railroad (e.g., CSX along with Amtrak) without their permission because of interstate commerce issues (the commerce clause), which implies a one way street in negotiations with rail roads.
In typical highway projects, the Pennsylvania Public Utility Commission (PUC) can use its power to show a public interest in a property, condemn, set a price on a property, and then the owner can either accept or challenge. In the past the PUC would “notice” Amtrak, and Amtrak would not oppose the PUC order. More recently, Amtrak has taken the position that Federal law preempts the PUC if there is an impact on operations. Amtrak claims to have acquired special rights when created giving Amtrak “Federal preemption.” This is the difference between Amtrak and the freight railroads. PennDOT now does not seek to use this approach, and as a result perceives itself to have less leverage in negotiating the various agreement terms. However, PennDOT perceives that it does have some leverage because Amtrak has requested its cooperation with agreements for projects involving the upgrading the Keystone Corridor between Harrisburg and Philadelphia.
Other Challenges
ConnDOT indicated that a lot of time was spent on the language of the operating agreement. Amtrak sought an agreement that would have no impact on their operations or liability. Reciprocity became a major issue. Amtrak wanted certain protections, and ConnDOT also wanted to guarantee protections for the State.
MDOT felt that the process takes too long because things tend to sit around on the back burner at the railroad since the project is usually not a top priority for the railroad.
One of the recommendations NJDOT provided was to get the railroad’s early involvement in the process in order to keep the project on schedule, e.g., can you build a bridge in 3 hour increments if Amtrak says that you can only work on the project between 3am and 6 am? NJDOT also believes that separating the real estate agreement from the engineering agreement would speed up the process.
RIDOT noted that even if an easement is in place, if a force account agreement is not executed, Amtrak will not allow RI DOT onto the property. Coordination is a problem.
Appraisal
Appraisal is generally not a contentious part of the negotiation. Any real estate transaction, whether for permanent or temporary easements (exclusive or non-exclusive), air space, or a fee exchange, is done at a fair market value that is determined by an independent fee appraiser. Established standards exist for appraisers to determine value of any type of property interest. Sometimes Amtrak will accept the State’s appraisal and not have its own conducted, other times it will also have an appraisal done. If both parties’ appraisals are different, a final number will be reached through reconciliation.
Liability
Amtrak discussed three areas of liability insurance that are relevant for a project construction phase.
1) State-provided insurance for State employees: There are liability issues related to active construction sites. Amtrak said that States are either self-insured or have sovereign immunity and therefore do not carry insurance. If a State has the authority to indemnify and is willing to use it, Amtrak has the State use that option, and Amtrak provides safety training.
If a State does not have legal authority to indemnify or has the authority but will not exercise it, Amtrak may limit access of State employees to occasional and accidental and require training and accompaniment by an Amtrak employee whose time would be paid for by the State. Amtrak’s reason for limiting access is if that State employee were to be injured, he or she could sue Amtrak for any amount.
2) Coverage for Amtrak forces: Amtrak generally self-insures for force account insurance up to $10 million. The cost is charged to the State as part of the cost of the project as a flat fee based on similar commercial insurance rates. Amtrak has excess insurance over that amount. The statutory liability on injuries to passengers of $200 million does not include workers or third parties.
3) Insurance for contractors/construction workers: Insurance for contractors of the State is handled through the permit to enter. Amount of insurance varies depending on size, type, and risk of the project and what is created but is not subject to negotiation. This is a line item in force account agreement. Amtrak noted past occasions where a State has hired contractors without enough insurance due to outdated contracts, contracts put out to bid before Amtrak estimate, etc.
The levels of insurance are not typically contentious. Generally, negotiating challenges relate to the broader issues of indemnification.
Indemnification
The sovereign immunity issue is a one of the major ones and of great concern to Amtrak. From Amtrak’s point of view, the project agreement process would be facilitated by every State having legislation enabling them to indemnify. Amtrak noted that Rhode Island created the Rhode Island Rail Corporation to take on liability that RIDOT can’t.
From Amtrak’s perspective the two fundamental problems for project agreements are really:
Environmental Issues
In the past, Amtrak did not protect itself from the environmental liability it would face if contamination were found when it allowed other parties on its property. If the contamination is buried on a property but is not known about, it is not a liability. However, if a contaminant is found, depending on the State, it may have to be reported to the State’s environmental protection agency. In some cases, the landowner may be responsible for cleanup, or even researching to figure out how far the contamination extends, and then developing a plan to remediate.
Amtrak noted that this has happened in the past and it is trying to develop a way to protect itself from this risk in the future. Recently an internal policy was developed and explained to all States. Amtrak believes that States are resistant to accepting this policy because they see it as a new cost that Amtrak is seeking to allocate completely or partially to them.
Amtrak’s perspective is that they are trying to allocate liability for real risk that has cost them money in the past. Some States don’t want to assume responsibility for cleanup, because they say it is Amtrak’s liability. Amtrak believes that it is a “but for” issue because “but for” the State’s activity the liability would not have existed.
Once, Amtrak was able to procure insurance for environmental liability, but contaminants were found and the insurance company had to pay. Since then, Amtrak has not been able to get this type of insurance.
Amtrak’s first choice would be for the State to indemnify Amtrak, which also works well for the State if nothing is found. The advantage of indemnification is that it avoids negligence-based allocations of liability. If there is a clear demarcation of liability that is not fault based, costs are reduced, litigation avoided, and matters resolved in less time.
For States that can’t or do not want to indemnify Amtrak for this risk, Amtrak has tried to come up with alternate tools to try to spread costs. The main tool is an environmental risk fee/risk cap that establishes an upfront cost in which the State will take the first $X in risk. Amtrak will take all liability above that for a one-time fee.11 Amtrak tries to set risk fees and caps based on prior experience with this type of risk and the cost of insurance that might cover that risk. However, Amtrak noted that insurance coverage of that sort doesn’t really exist.
Amtrak Status Under Eminent Domain
Amtrak believes it is exempt from State eminent domain based on U.S. District Court cases. (This was also noted by ConnDOT.) Amtrak is chartered under D.C. law, has considerable involvement from the Federal government, is performing congressionally mandated goals and services, and the Federal government has a mortgage on Amtrak property. It noted that if a State were able to condemn Amtrak property, it would interfere with Amtrak’s public service purpose.
Other Challenges
Amtrak and the State are both organizations with significant institutional policies and practices that can make institutional change or flexibility difficult. Amtrak has leverage legally but not politically. Sometimes the State and Amtrak may have conflicting policies or laws. Examples provided were that Amtrak might be asking for something that a State currently cannot legally do, or the State may provide a contract with boiler plate language that Amtrak may consider violates the Federal laws it must follow (e.g., Buy America Provision) or is a policy Amtrak does not want to agree to (e.g., agreement that any cases will be heard in a specific State’s court).
Another example provided was of one State that had a written policy that the State DOT could not pay a consultant more than $20 per hour and would include that clause in contracts. For flagging typically it was fine, but if Amtrak would have to hire consultants for design review it would become a problem. Amtrak was successful in having the State remove it for that particular agreement; however, the State policy is still in place and could potentially become an impediment for a future agreement.
Finally Amtrak noted that there may be delays or no communication from States for months and then Amtrak may hear from the State that it needs a fast turnaround for some aspect of the project, which can make a smooth process more challenging.
Once a SDOT has obtained ROW for its project purposes, it is responsible for any environmental remediation that may be required. This is noted in NCHRP’s Studies in Transportation Law.12
After contamination of a construction site is discovered, the transportation agency may, for both practical and regulatory reasons, need to remediate the site to complete its project. Remediation could require paying for the cost of removing contaminated substances from a site or treating or containing contaminated substances at the site. Both the type of contamination and applicable Federal and State remediation requirements will guide how the contaminated substances are handled.
When a transportation agency is required to remediate a site to construct a transportation improvement, an environmental agency may require additional excavation beyond the limits of the originally planned area needed for transportation purposes. To the extent that more contaminated soil is exposed as a result of this expanded site work, further remediation may be required. The need to "chase" additional contamination outside the bounds of the planned transportation improvement to satisfy regulatory cleanup obligations may add significantly to the cost of a project and delay its completion.
Under current Federal regulations environmental cleanup costs are reimbursable and considered a legitimate project expense. To be eligible for Federal-aid reimbursement, the costs must be allowable under the Federal cost principles. The key in this case is that they must be allocable to the project; the cleanup work must have a benefit to the Federal-aid project and be necessary for constructing the project. Costs would have to be “reasonable and necessary.” There are no dollar limits. Limits would be based on programmed cost for the project or lack of additional funding
The SDOT may pursue identified PRP’s in order to recover remediation costs. This is the source of the major point of contention in SDOT dealings with Amtrak since Amtrak would be the PRP. The issue of who is responsible would go back to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Superfund Amendments and Reauthorization Act (SARA). Other State laws may assign responsibility to the polluting entity for cleanup costs within the project boundaries and beyond the project boundaries. The SDOT would recoup these costs from the polluter where laws exist to allow this. Any environmental cleanup cost that couldn’t be avoided would be a typical project cost.
Requirements for liability insurance for State agency contractors are specified in 23 CFR 646 Subpart A – Railroad-Highway Insurance Protection. Contractors who work on railroad rights-of-way are required to have public liability and property damage insurance to cover not only the railroad but also any other damages that may occur as a result of the project (23 CFR 646.105). Types of coverage are discussed in §646.109 with amount of coverage discussed under §646.111. Cost of coverage is a legitimate project expense subject to limits as described in §646.111. Higher dollar amounts of coverage for which premiums will be reimbursable from Federal funds shall be allowed. These larger amounts will depend on circumstances and shall be written for the individual project in accordance with standard underwriting practices upon approval of the FHWA. (§646.111(b))
In 23 CFR 646.111(a), the liability limit is set at $2 million per occurrence, with an aggregate amount of $6 million for aggregate damages in a year. The Code of Federal Regulations indicates these limits were last updated in 1982. Railroads routinely demand much higher liability limits from highway agencies. This creates several issues. The highway agency must use State funds to pay for the coverage or it must seek case-by-case Federal exemption to pay the higher limits. The case-by-case exemption can add additional time to the project-development process, especially if the highway agency or FHWA believes the insurance requests to be excessive. It is generally agreed that the 1982 limits in 23 CFR 646 are low by current insurance standards.
Insurance coverage for the SDOT is not addressed in 23 CFR 646 Subpart A. State laws may provide for “self-insurance” and most states have “sovereign immunity” laws so cost of coverage for liability insurance for the State itself is not an issue.
Congress also established liability provisions in the Amtrak Reform and Accountability Act of 1997 (ARAA). Specifically, the act limits the aggregate overall damages that may be awarded to all passengers for all claims (including punitive damages) from a particular rail accident to $200 million. The act also permits Amtrak and other providers of rail transportation to enter into
indemnification agreements allocating financial responsibility for passenger accidents.
However, there are limitations to the protection the legislation provides. The legislation does not limit damages for claims brought by non-passengers. For example, the legislation would not apply to claims brought by adjacent property owners or populations that may be harmed in a hazardous materials spill or an accident at a rail crossing. (Pub. L. 105-134, § 161 (1997); 49 U.S.C. § 28103)13
