Amtrak is suing SEPTA to raise its yearly rent from $1.00 to $1.5 million

SEPTA has paid Amtrak a dollar a year for the last 32 years to use land along the East Coast’s busiest railroad tracks, which also double as routes for three Regional Rail lines.

Now Amtrak wants to raise the rent to $1.5 million, and is suing to get the money.

The dispute began as a lease renegotiation but escalated, hinging on questions about what control Amtrak can exert along lines used by 11,000 SEPTA customers a day, and whether it can boot SEPTA and its 46 stations off its land. SEPTA is arguing that Amtrak can’t do so, and that the rail carrier’s position violates federal law.

The disagreement is over the lease of the land alongside the tracks, not SEPTA’s use of the tracks themselves.

The case, first covered in the magazine Railway Age, was filed in February in federal court in the District of Columbia, and this month SEPTA filed the latest motion, asking U.S. District Judge Trevor McFadden to dismiss it. No date has been set for the judge’s decision.

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Here are the important questions about the legal battle.

Why is SEPTA paying rent to Amtrak? The agreements go back to the 1970s, when the federal government was trying to find a way to keep passenger rail alive. Through a long, winding route, Amtrak ended up owning much of the track that today makes up the Northeast Corridor, the busiest rail route in the country, and the land abutting it.

In 1987, SEPTA entered into a 30-year lease for that land, placing on it stations and parking lots. A dollar a year, sounds like a good deal, but SEPTA also pays a $50 million annual operating fee to Amtrak and covers maintenance of the sites and any upgrades. The transit agency estimated it has spent $4 million in three years keeping up properties on the land, according to a document filed with the U.S. Surface Transportation Board (STB), and $228 million in capital improvements over the last 15 years.

Amtrak uses six of the SEPTA stations along those routes but doesn’t contribute to their maintenance.

The leasing issue doesn’t apply to NJ Transit, which also runs Northeast Corridor trains. That agency has an agreement with Amtrak that does not require it to pay for land it uses along that route, a spokesperson from NJ Transit said.

What does Amtrak say? Amtrak’s claim on the easements along the Northeast Corridor dates to 1982, when it acquired the land from Conrail. SEPTA and Amtrak have been in negotiations for a new lease since 2015. Amtrak wants to charge the full market rate, according to the lawsuit. That’s $1.5 million a year and an annual 2 percent increase, according to the document SEPTA filed with the STB. If a new lease can’t be reached, Amtrak states in the complaint, it could evict SEPTA and develop or sell the easements.

The current agreement, Amtrak argues, allows it to “terminate immediately all access and services provided to SEPTA” if the transit agency doesn’t make its payments to Amtrak.

Amtrak wouldn’t comment on the suit and declined to answer any questions about whether similar leasing agreements were under negotiation elsewhere along the Northeast Corridor.

What does SEPTA say? Amtrak doesn’t have the right to develop or sell the easements, SEPTA says. It cites two federal laws and a federal railroad operation plan, all dating from 1973 to 1981, that guarantee SEPTA’s rights to operate passenger service on the Northeast Corridor right-of-way. If Amtrak followed through on selling or developing the land along the tracks, that would hinder SEPTA’s ability to run its railroad, the agency argues.

“Ejecting SEPTA from the stations, limiting SEPTA’s use of the stations, reducing or eliminating commuter parking at the stations, or requiring SEPTA to pay rent in excess of the cost SEPTA incurs to operate the stations would violate the governing law,” SEPTA wrote in the document submitted to the STB.

Why does this matter? Both Amtrak and SEPTA move enormous numbers of people, but always lurking for both agencies is the threat of unstable funding. SEPTA has a $1.5 billion operating budget, and paying $1.5 million more to use the land along the tracks isn’t going to break the bank, but the agency is concerned about that 2 percent annual increase, and the precedent of establishing Amtrak’s uncontested control of the land. SEPTA is earning less fare revenue due to shrinking bus ridership, and is looking ahead to 2022, when Pennsylvania must come up with a new way to fund transportation statewide.

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Amtrak wouldn’t comment on why it is pursuing the case, but it, too, is consistently underfunded. The agency earns about $3.4 billion in revenue, but still relies on federal support. Amtrak requested $1.8 billion for the coming fiscal year.

Jim Mathews, president and CEO of the Washington-based Rail Passenger Association, said there are signs Amtrak is under pressure to come up with revenue to make it less dependent on government support.

“They’re struggling to run a railroad, literally,” said Mathews, who professed no knowledge of the suit. “What I do see is an Amtrak that is under pressure from the Trump administration or the [Department of Transportation] to break even or make a profit.”

A 2018 five-year plan from Amtrak addressed the agency’s real estate assets, including rights-of-way, and recommended it seek ways to capture “untapped value."

What now? Amtrak’s complaint states the agency wants to keep leasing the land to SEPTA, and is asking a judge to make it clear that the track easement belongs to Amtrak and SEPTA is not free to use it without reaching a leasing agreement. The STB has ordered that any changes to how the easements are used wait until the federal suit is resolved or the two agencies come to a settlement. SEPTA requested July oral arguments on its motion to dismiss the case, but no court date has been scheduled.