Report to Congressional Requesters

United States Government Accountability Office

GAO 

COMMUTER RAIL

Many Factors 

Influence Liability and 

Indemnity Provisions, 

and Options Exist to 

Facilitate Negotiations

February 2009 

GAO-09-282 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

February 2009

COMMUTER RAIL

Many Factors Influence Liability and Indemnity 

Provisions, and Options Exist to Facilitate 

Highlights of GAO-09-282, a report to Negotiations

congressional requesters 

The National Railroad Passenger 

Corporation (Amtrak) and 

commuter rail agencies often share 

rights-of-way with each other and 

with freight railroads. Negotiating 

agreements that govern the shared 

use of infrastructure can be 

challenging, especially on issues 

such as liability and indemnity. As 

requested, this report discusses 

(1) the liability and indemnity 

provisions in agreements among 

passenger and freight railroads, 

and the resulting implications of 

these provisions; (2) federal and 

state court opinions and Surface 

Transportation Board (STB) 

decisions related to contractual 

liability and indemnity provisions 

of passenger and freight railroad 

agreements; (3) factors that 

influence the negotiations of 

liability and indemnity provisions 

among passenger and freight 

railroads; and (4) potential options 

for facilitating negotiations of 

liability and indemnity provisions. 

GAO obtained information from all 

existing and proposed commuter 

rail agencies, Amtrak, and major 

freight railroads through site visits 

or telephone interviews. GAO 

analyzed the liability and indemnity 

provisions in agreements between 

commuter rail agencies, Amtrak, 

and freight railroads. GAO also 

reviewed federal and state laws, 

STB decisions, and court cases 

related to liability and indemnity 

provisions. The Department of 

Transportation and STB had no 

comments on the report. Amtrak 

provided technical comments, 

which we incorporated where 

appropriate. GAO is not making 

recommendations in this report. 

The liability and indemnity provisions in agreements between commuter rail 

agencies and freight railroads differ, but commuter rail agencies generally 

assume most of the financial risk for commuter operations. For example, 

most provisions assign liability to a particular entity regardless of fault—that 

is, commuter rail agencies could be responsible for paying for certain claims 

associated with accidents caused by a freight railroad. The provisions also 

vary on whether they exclude certain types of conduct, such as gross 

negligence, from the agreements. The provisions also require that commuter 

rail agencies carry varying levels of insurance. Because commuter rail 

agencies are publicly subsidized, some liability and indemnity provisions can 

expose taxpayers as well as commuter rail agencies to significant costs. 

Federal statutes, STB decisions, and federal court decisions are instructive in 

interpreting liability and indemnity provisions, but questions remain. In 

response to industry concerns, Congress enacted the Amtrak Reform and 

Accountability Act of 1997 (ARAA), which limited overall damages from 

passenger claims to $200 million and explicitly authorized passenger rail 

providers to enter into indemnification agreements. However, questions 

remain about the enforceability and appropriateness of indemnifying an entity 

for its own gross negligence and willful misconduct. A federal court of 

appeals, in a recent decision regarding Amtrak, overturned an earlier court 

opinion, holding that it was against public policy to indemnify for gross 

negligence and willful misconduct because this could undermine rail safety. 

STB, however, has held, when setting the terms of agreements between 

Amtrak and freight railroads, that it is against public policy to indemnify an 

agency against its own gross negligence or willful misconduct. 

Several factors influence the negotiations of liability and indemnity 

provisions, including the freight railroads’ business perspective, the financial 

conditions at the time of negotiations, the level of awareness or concern about 

liability, and federal and state laws. For example, some freight railroad 

officials told us they are requesting more insurance coverage for new 

commuter rail projects than what they had required in some past agreements, 

in part, because ARAA’s liability cap has not been tested in court and does not 

cover third-party claims. Statutes governing Amtrak also influence the 

negotiations between Amtrak and other railroads. 

Options for facilitating negotiations on liability and indemnity provisions 

include amending ARAA; exploring alternatives to traditional commercial 

insurance; providing commuter rail agencies with more leverage in 

negotiations; and separating passenger and freight traffic, either physically or 

by time of day. For example, officials from commuter rail agencies and 

freight railroads suggested amending ARAA to expand the scope of the 

liability cap to include third-party claims. Although each of these options 

could facilitate negotiations on liability and indemnity provisions, each option 

has advantages and disadvantages to consider. 

To view the full product, including the scope 

and methodology, click on GAO-09-282. 

For more information, contact Susan A. 

Fleming at (202) 512-4431 or 

flemings@gao.gov. 
Contents 

Letter 1

Results in Brief 5

Background 8 

Liability and Indemnity Provisions in Agreements Differ, but 

Commuter Rail Agencies Generally Assume Most of the 

Financial Risk for Their Operations 14 

Federal Statutes, STB Decisions, and Federal Court Decisions Are 

Instructive in Interpreting Liability and Indemnity Provisions, 

but Questions Remain 19 

Various Factors, Such as Financial Conditions and Federal and 

State Laws, Influence Negotiations of Liability and Indemnity 

Provisions 23 

Commuter Rail Agency, Amtrak, and Freight Railroad Officials 

Identified Several Options for Facilitating Negotiations 31 

Concluding Observations 39 

Agency Comments 40 

Appendix I Scope and Methodology 41 

Appendix II Summary of Liability and Indemnity Provisions in 

Commuter Rail Agency and Freight Railroad 

Agreements 47 

Appendix III Summary of Liability and Indemnity Provisions in 

Commuter Rail Agency and Amtrak Agreements 51 

Appendix IV Summary of Key Case Law Addressing Liability and 

Indemnity Provisions 53 

Appendix V GAO Contact and Staff Acknowledgments 66 

Page i GAO-09-282 Commuter Rail 
Tables 

Table 1: Types and Examples of State Laws That May Affect 

Liability and Indemnity Negotiations 28 

Table 2: Names and Locations of Existing Commuter Rail Agencies, 

Proposed Commuter Rail Agencies, Intercity Passenger 

Railroads, Class I Freight Railroads, and State 

Departments of Transportation That We Interviewed 42 

Figures 

Figure 1: Overview of Commuter Rail Agency Reliance on Amtrak 

for Rights-of-Way and Services 9 

Figure 2: Overview of Commuter Rail Agency Reliance on Freight 

Railroads for Rights-of-Way and Services 10 

Figure 3: Amtrak Network, by Track Ownership 12 

Abbreviations 

AAR Association of American Railroads 

Amtrak National Railroad Passenger Corporation 

APTA American Public Transportation Association 

ARAA Amtrak Reform and Accountability Act of 1997 

DOT Department of Transportation 

FRA Federal Railroad Administration 

FTA Federal Transit Administration 

NEC Northeast Corridor 

STB Surface Transportation Board 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately. 

Page ii GAO-09-282 Commuter Rail 
United States Government Accountability Office

Washington, DC 20548 

 

February 24, 2009 

The Honorable James L. Oberstar 

Chairman 

Committee on Transportation and Infrastructure 

House of Representatives 

The Honorable John W. Olver 

Chairman 

Subcommittee on Transportation, Housing and 

 Urban Development, and Related Agencies 

Committee on Appropriations 

House of Representatives 

The Honorable Kathy Castor 

House of Representatives 

The Honorable James P. McGovern 

House of Representatives 

Freight rail and passenger rail services are important to the nation’s 

mobility and economy. Freight railroads play a critical role in the 

movement of freight throughout the United States, carrying over 40 

percent of domestic intercity freight (as measured by ton-miles), including 

bulk commodities; intermodal freight (e.g., containers and trailers); and 

hazardous materials. Demand for freight rail service has increased over 

the last 25 years and is expected to continue growing in the coming 

decades. For example, according to Department of Transportation (DOT) 

estimates, freight rail tonnage will increase to 3.5 billion tons, or by about 

88 percent, from 2002 to 2035.1

 As the demand for freight rail services 

increases across the country, demand for passenger rail services, including 

intercity passenger rail and commuter rail, is also growing.2

 For example, 

the National Railroad Passenger Corporation (Amtrak), the nation’s 

intercity passenger rail provider, has reported 6 consecutive years of 

 

1

U.S. Department of Transportation, Freight Facts and Figures 2007. 

2

Commuter rail is a type of public transit that is characterized by passenger trains operating 

on railroad tracks and providing regional service (e.g., between a central city and adjacent 

suburbs). Commuter rail agencies are typically owned and operated by state and local 

governments. 

Page 1 GAO-09-282 Commuter Rail 
 

growth in ridership, with almost 29 million passengers in fiscal year 2008. 

Similarly, commuter rail is an increasingly popular choice for communities 

as they look to different forms of public transportation for relief from 

highway congestion. Twenty-one commuter rail agencies now operate in 

communities across the country, and 5 more commuter rail systems are 

expected to initiate service within the next 5 years. 

Both Amtrak and commuter rail agencies often share rights-of-way with 

each other and with freight railroads.3

 Because Class I freight railroads 

own the majority of existing railroad rights-of-way in the United States, 

Amtrak and commuter rail agencies must often negotiate with freight 

railroads to purchase, lease, or pay to access their rights-of-way.4

Commuter rail agencies generally must also negotiate with Amtrak to use 

Amtrak-owned rights-of-way. As we have previously reported, negotiating 

agreements that govern the shared use of rights-of-way can be challenging, 

especially on issues such as liability and indemnity.5

 Although the 

passenger rail and the freight rail industries maintain good safety records, 

mixing passenger and freight trains on the same rights-of-way entails 

certain risks, as the deadly September 2008 crash involving a Metrolink 

commuter rail train and a freight train in Chatsworth, California, 

illustrates. Consequently, as a condition for using their rights-of-way, 

freight railroads seek certain liability protections from the costs and risks 

associated with potential passenger rail accidents. For example, a freight 

railroad might require that the commuter rail agency contractually 

indemnify the railroad from any liability in the event of a passenger 

accident and procure a certain level of insurance coverage to guarantee its 

ability to pay the entire allocation of damages. Amtrak also sometimes 

 

3

Rights-of-way include the fixed infrastructure required for train operations, including 

tracks and signals. 

4

Class I freight railroads are the largest railroads, as defined by operating revenue, and 

account for the majority of U.S. freight rail activity. The Surface Transportation Board 

designates the class of railroad and defined Class I railroads as railroads with operating 

revenues of $346.8 million or more in 2006. Currently, seven Class I freight railroads—CSX 

Transportation, BNSF Railway, Union Pacific Railroad Company, Norfolk Southern, Kansas 

City Southern Railway Company, Canadian National Railway Company, and Canadian 

Pacific Railway—are operating in the United States. 

5

Liability is the legal obligation to pay claims arising from injuries to people or damages to 

property. Indemnity is a contractual provision under which one party agrees to protect the 

other party against loss or damages that it may sustain in connection with the contract. 

Through an indemnity provision, the parties may allocate financial responsibility for 

claims. See, GAO, Commuter Rail: Information and Guidance Could Help Facilitate 

Commuter and Freight Rail Access Negotiations, GAO-04-240 (Washington, D.C.: Jan. 9, 

2004). 

Page 2 GAO-09-282 Commuter Rail 
 

requires certain liability protections when hosting commuter rail 

operations. Accepting such liability and indemnity terms can raise a 

number of issues for the commuter rail agencies. As a result, contract 

negotiations between commuter rail agencies and freight railroads can 

stall or fail. 

Three federal agencies—the Federal Railroad Administration (FRA), the 

Surface Transportation Board (STB), and the Federal Transit 

Administration (FTA)—are responsible for different aspects of passenger 

rail and freight rail services in the United States. In particular, FRA 

administers and enforces the federal laws and related regulations that are 

designed to promote safety on railroads, such as track maintenance, 

inspection standards, equipment standards, and operating practices.6

Freight railroads, Amtrak, and commuter rail agencies are subject to FRA 

regulations. STB is responsible for the economic regulation of interstate 

surface transportation, primarily freight railroads, within the United 

States. STB has jurisdiction to resolve compensation and access issues 

between freight railroads and Amtrak in the event of an impasse in 

negotiations. In addition, the Passenger Rail Investment and Improvement 

Act of 2008 authorizes STB to provide nonbinding mediation between 

public transportation authorities, including commuter rail agencies, and 

host carriers in the event of an impasse in negotiations regarding trackage 

use.7

 Unlike FRA and STB, FTA is not principally a regulatory agency. 

Rather, FTA is the primary source of federal financing for locally planned, 

implemented, and operated transit capital investments. As a form of public 

transit, commuter rail projects are eligible for FTA funding. 

You asked us to undertake a comprehensive study of the liability and 

indemnity provisions governing passenger and freight rail services. This 

report addresses the following questions: 

• What are the characteristics of liability and indemnity provisions in 

agreements among passenger and freight railroads, and what are the 

resulting implications of those provisions? 

 

6

FRA exercises jurisdiction over all areas of railroad safety under title 49, chapter 201, of 

the United States Code. 

7

49 U.S.C. § 28502. 

Page 3 GAO-09-282 Commuter Rail 
 

• How have federal and state courts and STB interpreted the contractual 

liability and indemnity provisions of passenger and freight railroad 

agreements? 

• What factors influence the negotiations of liability and indemnity 

provisions among passenger and freight railroads? 

• What are potential options for facilitating negotiations of liability and 

indemnity provisions among passenger and freight railroads? 

To address these questions, we obtained information from all existing and 

proposed commuter rail agencies and Class I freight railroads through site 

visits or telephone interviews.8

 Specifically, we conducted semistructured 

interviews with officials from the 21 existing commuter rail agencies, 5 

proposed commuter rail agencies, and the 7 Class I freight railroads. We 

also visited 3 existing commuter rail agencies, 2 proposed commuter rail 

agencies, and 2 Class I freight railroads. We used a variety of criteria to 

select these entities for site visits, including the number of contracts each 

freight railroad maintains, data on the ridership levels of existing 

commuter rail agencies, and whether proposed commuter rail agencies 

plan to purchase or lease freight-owned rights-of-way. We also obtained 

and analyzed the liability and indemnity provisions in agreements between 

commuter rail agencies, Amtrak, and freight railroads.9

 In some cases, a 

commuter rail agency could have more than one agreement with Amtrak 

or a freight railroad or could have agreements with multiple railroads if its 

service extends onto tracks owned by more than one railroad. We also 

interviewed Amtrak, FTA, and FRA officials; STB staff; as well as selected 

state departments of transportation officials, representatives from a 

variety of industry associations, and a law firm representative who has 

served as a consultant to commuter rail agencies. Additionally, we 

reviewed federal and state laws, STB decisions, and court cases related to 

liability and indemnity provisions.10 We conducted our work between July 

2008 and February 2009. See appendix I for detailed information about our 

scope and methodology. 

 

8

For the purposes of this report, we define “proposed commuter rail agencies” as agencies 

that plan to initiate commuter rail service within the next 5 years. 

9

We obtained and reviewed agreements between commuter rail agencies and Amtrak, 

commuter rail agencies and Class I freight railroads, and Amtrak and freight railroads. 

10The court cases and STB decisions that we reviewed are summarized in appendix IV. 

Page 4 GAO-09-282 Commuter Rail 
 

The liability and indemnity provisions in agreements between commuter 

rail agencies and freight railroads differ, but commuter rail agencies 

generally assume most of the financial risk for commuter operations. For 

example, most liability and indemnity provisions assign liability to a 

particular entity regardless of fault—that is, a commuter rail agency could 

be responsible for paying for certain claims associated with an accident 

caused by a freight railroad. The reverse is also true—a freight railroad 

could be responsible for certain claims associated with an accident caused 

by a commuter rail agency. For example, a freight railroad could 

indemnify a commuter rail agency by assuming liability for freight rail 

equipment and track maintenance, even if the commuter rail agency is 

solely responsible for causing an accident. In contrast, a fault-based 

agreement assigns responsibility for an incident to the party that caused 

the incident. Provisions in about one-third of the no-fault agreements 

exclude certain types of conduct—such as gross negligence, recklessness, 

or willful misconduct—from the agreement, while in some of the 

remaining agreements, provisions specifically allow for such conduct in 

the no-fault arrangement. In these instances, the commuter rail agency is 

responsible for certain claims from an accident that is caused, for 

example, by gross negligence or recklessness on the part of the freight 

railroad. In addition, the liability and indemnity provisions require that 

commuter rail agencies carry certain levels of insurance to guarantee their 

ability to pay for the entire allocation of damages. These levels of 

insurance range from $75 million to $500 million. Because commuter rail 

agencies are publicly subsidized, some liability and indemnity provisions 

can expose taxpayers as well as commuter rail agencies to significant 

costs. For example, officials from some proposed commuter rail agencies 

told us they anticipate spending a substantial portion of their operating 

budgets on insurance, with officials from one proposed commuter rail 

agency anticipating spending 20 percent of the agency’s operating budget 

on insurance premiums. 

Federal statutes, STB decisions, and federal court decisions are instructive 

in interpreting liability and indemnity provisions, but questions remain. In 

response to industry concerns, Congress enacted the Amtrak Reform and 

Accountability Act of 1997 (ARAA), which limited overall damages from 

passenger claims to $200 million and explicitly authorized passenger rail 

providers to enter into indemnification agreements.11 However, the 

enforceability and appropriateness of indemnifying an entity for its own 

Results in Brief 

 

11Pub. L. No. 105-134, 111 Stat. 2570 (1997). 

Page 5 GAO-09-282 Commuter Rail 
 

gross negligence and willful misconduct remain an issue. In addressing an 

accident involving Amtrak, a federal court of appeals ruled in 2008 that a 

provision in ARAA that authorizes a provider of passenger rail service to 

enter into contracts that allocate financial responsibility for claims 

preempted (superseded) a state law that prohibited indemnification in 

cases of negligence.12 STB, however, based on its statutory authority to 

prescribe contract terms if Amtrak and freight railroads cannot agree on a 

contract, has held, when setting the terms of agreements between Amtrak 

and freight railroads, that it would be contrary to public policy (e.g., good 

government) to indemnify an agency against its own gross negligence or 

willful misconduct. Specifically, STB has held that it would be contrary to 

provisions in the federal government’s rail transportation policy, which 

require STB, among other things, to promote a safe and efficient 

transportation system and operate facilities and equipment without 

detriment to public health and safety. In addition, some officials have 

questioned whether ARAA preempts state sovereign immunity provisions, 

which generally prevent a state from being sued, except to the extent the 

state allows.13 The 2008 federal court of appeals opinion is very recent, and 

it will take time to see how it is interpreted and applied to indemnity 

provisions in agreements between commuter rail agencies and freight 

railroads. 

Several factors influence negotiations of liability and indemnity provisions 

among passenger and freight railroads, according to officials from 

commuter rail agencies, Amtrak, and freight railroads. First, the freight 

railroads’ business perspective influences the negotiation’s starting 

position between commuter rail agencies and freight railroads. Freight 

railroads are not required to share their infrastructure with commuter rail 

agencies, and freight railroad officials said they are unwilling to assume 

any additional risk from passenger rail service, noting that the additional 

 

12The opinion by the U.S. Court of Appeals for the Second Circuit, entitled O&G Industries 

v. National Railroad Passenger Corp., 537 F.3d 153 (2d Cir. 2008), petition for cert. filed 

(U.S. Jan. 14, 2009) (No. 08-895) found that section 28103(b) preempts state law, even if the 

contractual indemnification is for Amtrak’s reckless conduct. The Second Circuit opinion 

concluded that Congress’ intent in enacting section 28103(b) was to “supersede” the effect 

of a 1988 district court opinion holding that it was against District of Columbia public 

policy to enforce an Amtrak indemnity agreement for losses caused by Amtrak’s gross 

negligence. See O&G, 537 F.3d at 166-67, citing National Railroad Passenger Corp. v. 

Consolidated Rail Corp., 698 F. Supp. 951 (D.D.C. 1988), vacated on other grounds, 

892 F.2d 1066 (D.C. Cir. 1990). 

13However, a federal district court held in a January 2009 memorandum of decision that 

49 U.S.C. § 28103(b) preempted Pennsylvania’s sovereign immunity statute. 

Page 6 GAO-09-282 Commuter Rail 
 

risk would not exist without (but for) the commuter rail service. In 

addition, other factors—including freight railroads’ financial health, the 

level of awareness or concern about liability, and views on sufficient 

amounts of insurance—have influenced negotiations. For example, some 

freight railroad officials told us that they are requesting more insurance 

coverage for new commuter rail projects than what they had required in 

some past agreements. However, officials from two proposed commuter 

rail agencies told us that it could be challenging and costly to obtain 

insurance coverage for the amount of insurance the freight railroads are 

requiring them to obtain. Additionally, a variety of state laws can influence 

the liability and indemnity provisions to which commuter rail agencies can 

agree. For example, some state laws prohibit a public agency, such as a 

commuter rail agency, from agreeing to indemnify a private party. Statutes 

governing Amtrak also influence the negotiations of liability and indemnity 

provisions between Amtrak and freight railroads as well as between 

Amtrak and commuter rail agencies. Specifically, Amtrak officials noted 

that because Amtrak is prohibited from cross-subsidizing commuter rail 

agencies and freight railroads on the Northeast Corridor (NEC), Amtrak 

cannot assume additional liability for these parties in its agreements for 

shared use of infrastructure. 

Commuter rail agency, Amtrak, and freight railroad officials identified 

several options for facilitating negotiations of liability and indemnity 

provisions, including changing existing legislation, exploring alternatives 

to traditional commercial insurance, providing commuter rail agencies 

with more leverage in negotiations, and separating passenger and freight 

traffic. For example, although ARAA addressed many liability concerns, 

some commuter rail agency and freight railroad officials have questioned 

whether ARAA’s liability cap applies to commuter rail agencies and have 

expressed concern that ARAA does not cover third-party claims. As a 

result, commuter rail agency and freight railroad officials suggested 

(1) amending ARAA to clarify that the $200 million liability cap applies to 

commuter rail agencies and (2) expanding the scope of the liability cap to 

include third-party claims as a way to reduce the cost of insurance. In 

addition, commuter rail agency, Amtrak, and freight railroad officials 

identified alternatives to commercial insurance options, such as pooled 

insurance programs, that could increase the availability and affordability 

of insurance coverage as well as provide a mechanism to ensure that 

claims are paid to those involved in a high-cost incident. Some commuter 

rail agency officials also identified options that could improve their 

leverage in negotiations with freight railroads, such as providing 

commuter rail agencies with statutory access to freight-owned 

infrastructure. Finally, a few commuter rail agency and freight railroad 

Page 7 GAO-09-282 Commuter Rail 
 

officials identified separating passenger and freight infrastructure as an 

ideal, but costly, option for eliminating exposure to liability risk. 

Although we make no recommendations to DOT, STB, or Amtrak in this 

report, we provided these entities with a draft copy for review and 

comment. Amtrak provided technical comments, which we incorporated 

where appropriate. DOT and STB had no comments on the draft report. 

Most commuter rail agencies use rights-of-way that are owned by Amtrak 

or freight railroads for at least some portion of their operations. 

Specifically, 9 commuter rail agencies operate over Amtrak-owned rightsof-way. Twelve commuter rail agencies operate over rights-of-way owned 

by freight railroads. In addition, most commuter rail agencies rely on 

Amtrak and freight railroads for some level and type of service, including 

the operation of commuter trains; maintenance of equipment (i.e., 

locomotives and train cars); maintenance of way (i.e., track and related 

infrastructure); and train dispatching. Specifically, 13 commuter rail 

agencies rely on Amtrak for some type of service. Fourteen commuter rail 

agencies rely on freight railroads for some type of service. (See figs. 1 and 

2 for an overview of these relationships.) 

Background 

Page 8 GAO-09-282 Commuter Rail 
 

Figure 1: Overview of Commuter Rail Agency Reliance on Amtrak for Rights-of-Way and Services 

Note:This figure does not include Amtrak-owned or -operated stations and platforms or other 

services, such as traction power, ticketing, or security services provided by Amtrak to commuter rail 

agencies. For information about those relationships, see GAO, Commuter Rail: Commuter Rail Issues 

Should Be Considered in Debate over Amtrak, GAO-06-470 (Washington, D.C.: Apr. 21, 2006). Also, 

the grayed-out icons in this figure indicate that these services or infrastructure are not provided to the 

commuter rail agency by Amtrak. 

Sounder

Caltrain

Coaster

Metro-North

Metra PENNDOT SLE

Rail Runner TRE Music City Star Tri-Rail VRE

MARC

SEPTA

NJT

LIRR

NICTD MBTA

ACE

Metrolink

FrontRunner

Sources: GAO; MapArt (map).

Train operations

Maintenance of equipment 

Maintenance of way

Dispatching

Services

Infrastructure 

Amtrak-owned rights-of-way

No dependence

No dependence

No dependence

No dependence No dependence No dependence

No dependence

No dependence

Commuter rail agency abbreviations

ACELIRRMBTANICTDNJTSEPTASLETREVREAltamont Commuter Express

MTA Long Island Rail Road

Massachusetts Bay Transportation Authority

Northern Indiana Commuter Transportation District

New Jersey Transit Corporation

Southeastern Pennsylvania Transportation Authority

Connecticut Department of Transportation Shore Line East

Trinity Railway Express

Virginia Railway Express

Page 9 GAO-09-282 Commuter Rail 
 

Figure 2: Overview of Commuter Rail Agency Reliance on Freight Railroads for Rights-of-Way and Services 

Note: The grayed-out icons in this figure indicate that these services or infrastructure are not 

provided to the commuter rail agency by a freight railroad. 

Sounder

Caltrain

Coaster

Metro-North

Metra PENNDOT SLE

Rail Runner TRE Music City Star Tri-Rail VRE

MARC

SEPTA

NJT

LIRR

NICTD MBTA

ACE

Metrolink

FrontRunner

Train operations

Maintenance of equipment 

Maintenance of way

Dispatching

Freight-owned rights-of-way

Services

Infrastructure 

Sources: GAO; MapArt (map).

No dependence No dependence

No dependence

No dependence No dependence

No dependence

Commuter rail agency abbreviations

ACELIRRMBTANICTDNJTSEPTASLETREVREAltamont Commuter Express

MTA Long Island Rail Road

Massachusetts Bay Transportation Authority

Northern Indiana Commuter Transportation District

New Jersey Transit Corporation

Southeastern Pennsylvania Transportation Authority

Connecticut Department of Transportation Shore Line East

Trinity Railway Express

Virginia Railway Express

No dependence

Page 10 GAO-09-282 Commuter Rail 
 

Historically, America’s rail corridors have been used for bo

passenger purposes. At one time, private railroads operated b

th freight and 

oth 

passenger and freight services. In general, freight services were more 

profitable, but federal law required the private railroads to maintain their 

passenger service. However, by the 1970s, U.S. freight railroads were in 

serious financial decline. Congress responded by passing the Rail 

Passenger Service Act of 1970, which created Amtrak to provide intercity 

passenger rail service and relieve the existing railroads of the requirement 

to provide unprofitable passenger service.14 In return, Amtrak gained the 

statutory right to operate over tracks owned by freight railroads.15 (See fig. 

3.) Specifically, federal law requires freight railroads to give Amtrak trains 

priority access and to charge Amtrak an incremental cost—rather than the 

fully allocated cost—associated with the use of their tracks.16 Freight 

railroads also provide dispatching and maintenance-of-way services for 

Amtrak trains operating on their tracks. 

 

14Pub. L. No. 91-518, 84 Stat. 1327 (1970). 

15Amtrak operates over 95 percent of its 22,000-mile network on freight railroad tracks and 

o

and Washington, D.C. In fiscal year 2001, an average of 38 freight trains used the NEC

ay. 

wns about 655 route miles of track, primarily on the NEC between Boston, Massachusetts, 

 each 

d

1649 U.S.C. § 24308(a)(2)(B), (c). 

Page 11 GAO-09-282 Commuter Rail 
 

Figure 3: Amtrak Network, by Track Ownership 

Unlike Amtrak, commuter rail agencies do not possess statutory rights of 

access to freight railroads’ tracks and generally do not possess statutory 

rights of access to Amtrak’s tracks. Since commuter rail agencies typically 

operate on infrastructure owned by another entity, commuter rail agencies 

must negotiate with the owner to purchase, lease, or pay to access the 

owner’s rights-of-way. If the two parties reach agreement, there are often 

multiple documents detailing this agreement, including the purchase, 

lease, or access agreement and the shared-use agreement.17 These 

rties involved, the location, and the 

 

Memphis

Chicago

Milwaukee

St. Paul / Minneapolis

Oakland

San Diego

Los Angeles

Houston

San Antonio

Dallas

Ft. Worth

Albuquerque

Sacramento

Portland

Vancouver

Seattle

Salt Lake City

Atlanta

New Orleans

Tampa

Miami

Jacksonville

Cleveland

Indianapolis

St. Louis

New York Pittsburgh

Baltimore

Washington

Philadelphia

Toronto

Boston

Montreal

Grand

Rapids

Bakersfield Oklahoma City

Spokane

Harrisburg

Charlottesville

Newport News

Richmond

Springfield

Rutland

Pontiac Albany

Port

Huron

St. Albans

Portland

Kansas City Denver

Source: Amtrak.

Amtrak-owned

Freight- or commuter-owned

agreements can also vary by the pa

structure of the agreement. For example, one commuter rail agency may 

 

The shared-use agreement documents how the rights-of-way will be operated—for 

-upon dispatching rules. 

17

example, it will outline the agreed

Page 12 GAO-09-282 Commuter Rail 
 

have 

and capit

separate contracts with Amtrak for services, infrastructure access, 

al investment, whereas another commuter rail agency might have 

 1987 district court decision that 

’ 

one contract with Amtrak that bundles several services and access fees 

together in a fixed price. Similarly, one commuter rail agency may have an 

agreement with a freight railroad for various bundled services, while 

another commuter rail agency may have contracts with more than one 

freight railroad because its service extends onto tracks shared with more 

than one freight railroad.18 The contents of these agreements also may 

vary, but they are likely to address a number of important issues, including 

liability and indemnity provisions that allocate responsibility for risk in the 

event of an accident. However, these provisions cannot be considered in 

isolation because they are negotiated in the context of broader 

negotiations for the shared use of infrastructure that address train 

dispatching, maintenance of rights-of-way, capital improvements, and 

access fees. Hence, the agreements govern how the two parties operate on 

the rights-of-way they share. The period of time covered by the agreements 

and the amount of time required to negotiate the agreements also vary. For 

example, some commuter rail agencies have reached agreement with 

Amtrak or freight railroads within months, while other commuter rail 

agencies have negotiated with Amtrak or freight railroads over a period of 

years. Although Amtrak has statutory access rights to freight-owned rightsof-way, Amtrak must still negotiate the terms and conditions of this 

access. 

In 1997, Congress enacted ARAA in response to concerns from freight 

railroads, commuter rail agencies, and Amtrak about the liability issue and 

the difficulties the parties were having in negotiating the shared use of 

freight railroads’ rights-of-way, and a

addressed a catastrophic accident between an Amtrak train and a Conrail 

train. Section 161 of ARAA limits the overall damages from passenger 

claims from a single rail accident to $200 million and also authorizes the 

providers of passenger rail transportation to enter into contracts allocating 

financial responsibility for claims.19 In enacting this legislation, Congress 

intended to facilitate agreements on the shared use of the freight railroads

rights-of-way. 

 

18For example, the Northeast Illinois Regional Commuter Railroad Corporation, which 

serves the Chicago area, operates on shared rights-of-way with six Class I freight railroads 

rak and has separate agreements governing each of these relationships. 

C. § 28103. 

and Amt

19Pub. L. No. 105-134, title I, § 161 (1997), codified at 49 U.S.

Page 13 GAO-09-282 Commuter Rail 
 

Liability and indemnity provisions in agreements between commuter rail 

agencies and freight railroads differ, but commuter rail agencies generally 

assume most of the financial risk for commuter operations. For example

most liability and indemnity provisions assign liability to an entity 

regardless of fault—that is, a commuter rail agency could be responsi

for paying for certain claims associated with an accident caused by a 

freight railroad. The reverse is also true—freight railroads are sometimes 

responsible for certain claims associated with accidents caused by 

commuter rail agencies. These types of agreements are referred to as nofault agreements. In addition, about one-third of these no-fault agreements 

exclude certain types of conduct, such as gross negligence, recklessness, 

or willful misconduct, from the agreements. Some of the remain

fault agreements specifically allow for such conduct, that is, the com

rail agency is still responsible for certain claims caused by, for example

the gross negligence or recklessness of a freight railroad. The liability and 

indemnity provisions also require that commuter rail agencies carry 

certain levels of insurance to guarantee their ability to pay for the entire 

allocation of damages. 

Although liability and indemnity provisions in agreements between 

commuter rail agencies and freight railroads differ, commuter rail ag

generally

, 

ble 

ing nomuter 

, 

encies 

 assume most of the financial risk for commuter operations.20

With two exceptions, liability and indemnity agreements between 

road 

, 

t-based agreement assigns responsibility for an incident to 

the party that caused the incident. Of the 33 commuter rail agency and 

freight railroad agreements we reviewed, 21 were no fault, 10 contained a 

commuter rail agencies and freight railroads are primarily no-fault 

arrangements—that is, responsibility for specific liability in any incident is 

assigned to a particular entity, regardless of fault. For example, in a nofault agreement, a commuter rail agency might indemnify a freight rail

by assuming liability for commuter equipment damage and passenger 

injury in a derailment, regardless of whether the freight railroad’s 

maintenance of the tracks could be blamed for a given incident. Similarly

a freight railroad could indemnify a commuter rail agency by assuming 

liability for freight rail equipment and track maintenance, even if the 

commuter rail agency was solely responsible for causing an accident. In 

contrast, a faul

 Commuter Rail 

 ht 

railroads and did not obtain information from the few short-line railroads that have 

Liability and 

Indemnity Provisions 

in Agreements Differ, 

but Commuter Rail 

Agencies Generally 

Assume Most of the 

Financial Risk for 

Their Operations 

Liability and Indemnity 

Provisions of Passenger 

Rail Agreements Differ in 

their Allocation of 

Financial Responsibility 

20We only analyzed agreements between commuter rail agencies and Class I freig

agreements with commuter rail agencies. 

Page 14 GAO-09-282 
 

combination of no-fault and fault provisions, and 2 were premised on a 

fault-based allocation of risk.21

Although most of the agreements between commuter rail agencies 

freight railroads are no-fault arrangements, the liability and indemnity 

provisions vary regarding the type of conduct allowed. For example, 9

the 31 agreements with all or some no-fault provisions explicitly exclude 

certain types of conduct from the no-fault arrangement.

and 

 of 

ent 

 agreement includes coverage for punitive 

damages, or damages that are caused by the reckless or willful acts of a 

rugs. 

ee. 

 law, 

 

22 Excluded 

conduct is any type of conduct specifically identified in the agreement as 

conduct beyond simple negligence and can be defined in a number of 

ways, including willful and wanton misconduct, gross negligence, or 

conduct that might result in punitive damages.23 For example, 1 agreem

specifically excludes conduct that is taken with conscious disregard for or 

indifference to the property or safety or welfare of others. Another 10 of 

the 31 agreements with all or some no-fault provisions, in contrast, 

explicitly include conduct that exceeds simple negligence as covered

under the no-fault provisions.24 For example, 1 agreement explicitly states

that the indemnification

party, while another explicitly states that the parties agree to indemnify 

each other even if a train engineer in an incident is using alcohol or d

Finally, the remaining 12 agreements are silent on excluded conduct, and 

discuss indemnification of negligence without explicit regard to its degr

Often, in these cases, the degree of negligence will depend on state

 ments 

23Punitive damages are damages awarded in a lawsuit in addition to actual damages when 

the defendant acted with recklessness, malice, or deceit, and are assessed to penalize the 

rongdoer or make an example to others. 

n and include it for liability above $5 million. 

21These agreements are based on the number of distinct liability and indemnity agree

between a commuter rail agency and a freight railroad. Therefore, if 2 entities have 

multiple contracts with the same liability and indemnity provisions, they are counted as a 

single agreement. 

22This includes an agreement in which the liability and indemnity provisions exclude 

certain conduct for liability up to $5 million and include it for liability above $5 million. 

w

24This includes an agreement in which the liability and indemnity provisions exclude

certain conduct for liability up to $5 millio

Page 15 GAO-09-282 Commuter Rail 
 

and a determination concerning the enforceability of the provision may 

require litigation.25

Freight railroads often set a requirement for a certain level of 

indemnification in the agreements and corresponding insurance 

requirements to ensure that the commuter rail agency will have the 

resources to pay for claims. The required level of insurance in existing 

commuter rail agency and freight railroad agreements ranges from $

million to $500 million. Agreements vary on the exact requirements for 

insurance, such as what level of liability can be absorbed by the comm

rail agency—referred to as a self-insured retention—before the railroa

must use commercial insurance. For example, some agreements that we 

analyzed set the level at which the commuter rail agency must purchase 

insurance for risk at above $5 million, while other agreements set the leve

at $1 million. Twelve of the 33 agreements between commuter rail 

agencies and freight railroads are silent on the exact level of insurance

required. Appendix II contains a table summarizing the apportionment of 

liability in commuter and freight rail agreements. 

Similar to the agreements with freight railroads, commuter rail agencies’

agreements with Amtrak also are generally no fault. Specifically, 14 of the 

17 agreements we reviewed between commuter rail agencies and Amtrak 

allocate liability on a no-fault basis, while 2 contain a combination of faultbased and no-fault provisions. The remaining agreement is fault-based. 

75 

uter 

d 

l 

Regarding excluded conduct, 8 of the 17 agreements explicitly exclude 

certain conduct; the remaining agreements are silent concerning whether 

any conduct is excluded. Amtrak also sometimes requires certain levels of 

indemnification and corresponding levels of insurance to ensure that the 

 ify 

ity and Massachusetts Bay Commuter 

Railroad Co. v. CSX Transportation Inc. and Cohenno Inc. (Super. Ct. Civ. Action No. 

25For example, Massachusetts case law states that it is against public policy to indemn

for gross negligence. A Massachusetts court recently held that provisions in a 1985 

agreement that indemnified a freight railroad against all liability were unenforceable based 

on Massachusetts common law, to the extent the contractual provisions indemnified the 

freight railroad against its own gross negligence or reckless or intentional conduct. See 

Massachusetts Bay Transportation Author

2008-1762-BLS1) (Memorandum and Order on Defendant CSX Transportation, Inc.’s 

Motions to Dismiss). 

Page 16 GAO-09-282 Commuter Rail 
 

commuter rail agency will have the resources to pay for claims.26 Append

III contains a table 

ix 

summarizing the apportionment of liability in 

commuter rail agency and Amtrak agreements. 

lly nont on 

t 

e 

ause 

ecause of the costs of 

investigating accidents. These officials said that a no-fault agreement was 

s. 

ght 

the industry, and that these agreements are similar to agreements freight 

railroads use for access to each other’s infrastructure. 

 

Amtrak’s agreements with Class I freight railroads are also genera

fault arrangements.27 In addition, these agreements are generally sile

excluded conduct. Furthermore, all of Amtrak’s agreements with freigh

railroads are silent on the amount of insurance Amtrak must carry to us

freight-owned rights-of-way. ARAA requires Amtrak to maintain a 

minimum coverage for claims through insurance or self-insurance of least 

$200 million per accident.28 However, Amtrak officials stated that Amtrak

carries more insurance than is required by this statute. 

Freight railroad, commuter rail agency, and Amtrak officials told us that 

no-fault agreements are the easiest way to settle liability claims bec

they avoid the need for additional litigation to try to ascertain blame. 

Officials in Florida, for example, said a fault-based agreement would be 

much more expensive than a no-fault agreement b

the best way to compensate litigants quickly. Furthermore, officials at a 

freight railroad said that an accident can have multiple causes and an 

investigation may not settle which party was at fault; therefore, a faultbased approach can result in disputes between commuter rail agencies 

and freight railroads over which party is responsible for paying for claim

These officials also said that contrary to some views, passenger and frei

railroads have strong incentives to operate safely, even if they may not be 

liable for some accidents that they cause. Finally, Amtrak and freight 

railroad officials noted that no-fault agreements are fairly standard across

26In addition, insurance coverage may protect the indemnified party, even if the conduct 

itself cannot be indemnified. For example, a commuter rail operator agreed to indemnify 

 for 

Amtrak for any liability, except that which was caused by the gross negligence of Amtrak.

A federal district court held that while an arbitration panel found Amtrak’s actions to be 

grossly negligent, the commuter rail operator was responsible for providing Amtrak with 

the insurance coverage it had purchased in the agreement. See Maryland Transit 

Administration v. National Railroad Passenger Corp., 372 F. Supp. 2d 478 (D. Md. 2005). 

27When freight railroads access Amtrak infrastructure, 12 of Amtrak’s 13 agreements

hosting freight railroads are no fault. 

2849 U.S.C. § 28103(c). 

Page 17 GAO-09-282 Commuter Rail 
 

The liability and indemnity provisions in commuter rail agency agreements 

with freight railroads have cost implications because premiums va

the levels of insurance required. Eleven commut

ry with 

er rail agencies reported 

paying from $700,000 to $5 million in insurance premiums, representing 

’ 

n 

il 

l 

mple, officials at a 

proposed commuter rail agency anticipated spending more than 20 

o 

r 

-

parties, to the 

commuter rail agencies. In the remaining 11 agreements, freight railroads 

could be responsible for assuming some liability for passenger claims 

resulting from a collision. 

less than 1 percent and up to about 15 percent of commuter rail agencies

operating budgets.29 Newer and smaller (as defined by ridership) 

commuter rail agencies typically spend more of their operating budgets o

insurance premiums, in part because they do not have an established 

claims record, which factors into the premiums that a commuter ra

agency must pay to cover its potential risk. Officials at proposed 

commuter rail agencies told us that they anticipated spending a substantia

portion of their operating budgets on insurance. For exa

percent of their operating budget on insurance premiums. However, these

premiums could decrease once the commuter rail agency has an 

established claims record, particularly if the commuter rail agency has no 

accidents over several years of service. Because commuter rail agencies 

are publicly subsidized, the premium costs for commuter rail agencies als

represent a cost to taxpayers. Furthermore, the potential for high premium

costs may impede or stop the development of new or expanded commute

rail services, according to commuter rail agency officials. 

According to commuter rail agencies officials, certain liability and 

indemnity provisions expose commuter rail agencies to significant risks 

and, therefore, to potential costs. Although no-fault liability agreements 

are the norm, most assign more liability to commuter rail agencies than to 

freight railroads. Specifically, of the 31 agreements with all or some no

fault provisions we analyzed, 13 assign all liability for passengers to the 

commuter rail agencies and 7 assign all liability for passengers, as well as 

all liability for freight equipment, employees, and third 

 

g 

 disaggregated from the other services. In addition, 

some commuter rail agencies do not have commercial insurance or have not yet obtained 

osed service. 

Liability and Indemnity 

Provisions Have Cost 

Implications for Commuter 

Rail Agencies and 

Taxpayers 

29Only 11 commuter rail agencies were able to provide information on the insurance 

premiums for their commuter rail operations. The primary reason the other commuter rail 

agencies could not provide this information is that they are part of a transit agency that 

operates other modes of transit, such as light rail or bus services, and the transit agency 

obtains commercial insurance to cover all of their services. As a result, the cost of insurin

the commuter rail service could not be

insurance for their prop

Page 18 GAO-09-282 Commuter Rail 
 

When accidents do occur, commuter rail agencies use both their selfinsured retention and commercial insurance to pay for claims. Similar to 

the deductible on individual insurance policies, the self-insured retention 

is the amount specified in the liability insurance policy that the commute

rail agency must pay before the insurance company pays for claims. For 

example, a commuter rail agency with a $2 million self-insured re

must pay for all claims that are $2 million or less, while claims above $2 

million would be covered by the insurance company. In most cases, th

self-insured retention is per incident, that is, a commuter rail agency 

would pay each time a claim fell within the self-insured retention,

can be costly if there are many such claims in a given period. However, in 

most cases, these types of claims are fairly predictable for commuter rail 

agencies that have an established loss record, allowing the agencies

better plan and budget for costs they are likely to incur. Although most 

commuter rail agencies have commercial insurance policies to co

claims from a potentially catastrophic incident, most commuter rail 

agencies stated that they had never exceeded their self-insured retention 

and, thus, had never filed a claim with an insurer.

r 

tention 

e 

 which 

 to 

ver 

s about the 

enforceability of contractually negotiated indemnity provisions.31 Some 

muter 

30

ARAA capped liability for damages and addressed concern

railroad officials question, however, whether the act applies to com

rail agencies and the types of contractually negotiated conduct that are 

enforceable. As a result, some freight railroads are hesitant to rely on the

$200 million cap on passenger claims when negotiating insurance 

requirements with commuter rail agencies. 

 Commuter Rail 

 

r to section 161. 

Federal Statutes, STB 

Decisions, and 

Federal Court 

Decisions Are 

Instructive in 

Interpreting Liability 

and Indemnity 

Provisions, but 

Questions Remain 

30Claims resulting from the recent Metrolink accident have not yet been determined, but 

could exceed the self-insured retention carried by the Southern California Regional Rail 

Authority. 

31The liability provisions set forth in ARAA are contained in section 161. All references to 

ARAA that we make in this report refe

Page 19 GAO-09-282 
 

ARAA introduced tort32 reform measures that limit the overall damage

passenger claims to $200 million, including punitive damages to the exten

permitted by state law, against all defendants arising from a single 

accident or incident. ARAA also authorizes providers of passenger rail 

transportation to enter into contracts allocating financial responsibility fo

claims. Congress introduced these measures in 1997 in response to 

concerns from freight railroads, commuter rail agencies, and Amtrak 

about the difficulties the parties were having in negotiating the use of 

freight railroads’ rights-of-way by Amtrak and the commuter rail agen

These concerns were heightened after a 1988 district court decision put in

doubt the enforceability of contractually negotiated indemnity 

provisions.

s for 

t 

r 

cies. 

g, 

n 

any of the cases 

brought against Conrail and Amtrak alleged that Conrail or Amtrak, or 

oth, had committed reckless, wanton, willful, or grossly negligent acts 

r 

e were 

e, recklessness, willful and 

wanton misconduct, intentional misconduct, or conduct so serious that it 

arranted the imposition of punitive damages. The court found that public 

policy would not allow the enforcement of indemnification provisions that 

ppear to cover such extreme misconduct, because serious and significant 

disincentives to railroad safety would ensue. 

 

33 That decision involved a catastrophic collision in 1987 of an 

Amtrak train and a Conrail train in Chase, Maryland, that resulted in 16 

deaths and over 350 injuries. A Conrail engineer admitted, among other 

things, that the Conrail crew had recently used marijuana, was speedin

and was operating a train in which an audible warning device had bee

intentionally disabled. The engineer pleaded guilty to manslaughter and 

was given the maximum penalty. The plaintiffs in m

b

and asserted entitlement to compensatory as well as punitive damages.

Amtrak brought an action before the trial court seeking a declaration of 

the rights and obligations of the parties concerning the indemnification 

agreement, which required that Amtrak defend and indemnify Conrail fo

any claims and damages arising out of the Chase accident. The trial court 

held that Amtrak was not required to indemnify Conrail where ther

allegations and a showing of gross negligenc

w

a

32A tort is a civil (as opposed to a criminal) wrong that causes injury, other than a breach of 

bruary 26, 2003. 

. 1990). 

ARAA Addresses Many 

Liability Concerns, but 

Railroad Officials Question 

the Applicability of the 

Statute’s Liability Cap 

contract, for which the victim may sue to recover damages. See, Congressional Research 

Service, Federal Tort Reform Legislation: Constitutionality and Summaries of Selected

Statutes, Fe

33National Railroad Passenger Corp. v. Consolidated Rail Corp., 698 F. Supp. 951 (D.D.C.

1988), vacated on other grounds, 892 F.2d 1066 (D.C. Cir

Page 20 GAO-09-282 Commuter Rail 
 

We have previously concluded that the $200 million cap on passenger 

claims arising from a single rail accident applies to all commuter rail 

operators34 as well as to Amtrak, based on the plain language of the 

statute.35 The act creates a $200 million cap for passenger injuries arisin

“in connection with any rail passenger transportation operations over or 

rail passenger transportation use of right-of-way or facilities owned,

leased, or maintained by any high-speed railroad authority or operator

commuter authority or operator, any rail carrier, or any State.”

g 

, any 

ncluded 

s 

n 

 been 

s to 

to 

 

36

Additionally, the act defines a claim, in part, as “a claim made against 

Amtrak, any high-speed railroad authority or operator, any commuter 

authority or operator, any rail carrier, or any State.”37 We also co

that the cap does not apply to third-party claims—that is, claims by partie

other than passengers.38 Some commuter rail agencies, however, have 

expressed uncertainty regarding whether the cap applies to them. In 

addition, some freight railroad officials have stated that although they 

believe the cap does apply to commuter rail agencies, they will not rely o

the cap in determining the level of insurance that a commuter rail agency 

must carry until the cap’s applicability to commuter rail agencies has

tested in a court of law. No courts have decided whether the cap applie

commuter rail agencies. 

In addition to establishing the $200 million cap on liability, ARAA states 

that “a provider of rail passenger transportation may enter into contracts 

that allocate financial responsibility for claims.”39 As we noted in our 2004 

report, this language forms the statutory underpinning for the 

indemnification agreements that the passenger and freight railroads use 

 

34We use the term “commuter rail operator” to be consistent with the language in ARAA. In 

these cases, a commuter rail operator may be a commuter rail agency, but it could also be 

another entity operating the commuter service on behalf of the commuter rail agency. 

35GAO-04-240. 

36

aim for personal injury to a passenger, death of a passenger, 

damage to property of a passenger.” 49 U.S.C. § 28103(a)(1). 

Questions Remain 

Regarding Indemnification 

for Gross Negligence and 

Willful Misconduct 

49 U.S.C. § 28103(a)(1). 

3749 U.S.C. § 28103(e)(1). 

38The cap is restricted to “a cl

or 

3949 U.S.C. § 28103(b). 

Page 21 GAO-09-282 Commuter Rail 
 

allocate liability between the two parties.40 ARAA’s allocation of financ

responsibility for claims was not addressed in a court of law until July

2008, when a federal court interpreted the language in the act that 

authorizes providers of passenger rail transportation to allocate financial 

responsibility for claims. The opportunity for interpretation arose when 

the United States Court of Appeals for the Second Circuit addressed t

consolidated claims resulting from an accident involving Amtrak.

ial 

wo 

oad 

AA 

ter 

a 

cy 

ederal district court held in a January 2009 

memorandum of decision that 49 U.S.C. § 28103(b) preempted 

ennsylvania’s sovereign immunity statute.44 The 2008 federal court of 

n 

 

41 In 2008, 

the Second Circuit held in the O&G Industries v. National Railr

Passenger Corp. opinion that 49 U.S.C. § 28103(b), the provision in AR

that authorizes a provider of rail passenger transportation service to en

into contracts that allocate financial responsibility for claims, preempted 

Connecticut statute that prohibited agreements that indemnify a party for 

its own negligence.42 The court stated, in addition, that the provision 

superseded the opinion concerning the 1987 Chase, Maryland, accident in 

which the district court found that it was a contravention of public poli

to indemnify for gross negligence, recklessness, or willful misconduct. 

Some commuter rail agencies have questioned whether this 2008 opinion 

would apply to commuter rail agencies. In addition, some officials have 

questioned whether ARAA would preempt state sovereign immunity 

provisions.43 However, a f

P

appeals opinion is very recent, and it will take time to see how the opinio

is interpreted and applied to indemnity provisions in agreements between 

commuter rail agencies and freight railroads. 

40An indemnification provision is a contractual provision under which one party agrees to 

protect the other party against loss or damages it may sustain in connection with the 

contract. 

41The Second Circuit consists of all federal courts within Connecticut, New York, and 

43 Court cases reflect the U.S. Supreme Court’s fairly recent shift toward 

 sovereign immunity against federal legislation waiving a state’s immunity 

y: Seminole Tribe of Florida v. Florida, 571 U.S. 44 (1996), 

s cannot rely on the Commerce Clause to abrogate the Eleventh 

t states enjoy from suit by a private party in a federal court, and 

Alden v. Maine, 527 U.S. 706 (1999), which holds that Congress cannot force unconsenting 

Deweese v. National Railroad Passenger Corp., 2009 WL 222986, 2009 U.S. Dist. LEXIS 

emorandum of Decision). 

Vermont. 

42537 F. 3d 153 (2d Cir. 2008), petition for cert. filed (U.S. Jan. 14, 2009) (No. 08-895). 

Two Supreme 

protecting state

from suit by a private part

which holds that Congres

Amendment immunity tha

states to be sued by a private party in their own state courts. 

44

6451 (E.D. Pa. 2009) (M

Page 22 GAO-09-282 Commuter Rail 
 

While the Court of Appeals stated in the O&G Industries opinion that it 

was the intent of Congress to permit indemnity agreements regarding a

claims against Amtrak, STB, when setting the terms of agreements 

between Amtrak and freight railroads, has held that it is against public 

policy to indemnify an entity against its own gross negligence or willful 

misconduct.

ny 

ould 

B 

pective, 

s 

s may be an important 

factor in influencing liability and indemnity provisions between a 

commuter rail agency and a freight railroad in one agreement, they may 

have little to no influence on the negotiations of liability and indemnity 

ons. However, other factors that might be considered influential, 

 

45 For example, in a 2006 decision, STB held that an indemnity

provision could not be used to indemnify a freight railroad against its own 

gross negligence or willful misconduct, since such an interpretation w

“contravene well-established precedent that disfavors such 

indemnification provisions” and would be contrary to provisions in the 

federal government’s rail transportation policy46 that requires STB to 

“promote a safe and efficient transportation system” and “operate facilities 

and equipment without detriment to the public health and safety.”47 ST

staff told us that they could not speak for the board, but because the O&G 

Industries opinion involved preemption of a state statute, they were not 

sure that the opinion would have any effect on future STB decisions. 

Commuter rail agency, Amtrak, and freight railroad officials identified

several factors that influence negotiations of liability and indemnity 

provisions. These factors are the freight railroads’ business pers

the financial conditions at the time of negotiations, increased awarenes

or concern about liability and insurance requirements, and federal and 

state laws. The influence of each of these factors on liability and indemnity

provisions varies. For example, while state law

provisions in another agreement. Similarly, the effects of any of these 

factors also vary, and each of them has the potential to delay or stall 

negotiati

 Commuter Rail 

such as commuter rail ownership of infrastructure, were generally 

 

(2006), at 1-2. 

Various Factors, Such 

as Financial 

Conditions and 

Federal and State 

Laws, Influence 

Negotiations of 

Liability and 

Indemnity Provisions 

45The Rail Passenger Service Act of 1970 provides that Amtrak and the freight railroads may 

contract for Amtrak’s use of the facilities owned by the freight railroads. If the parties 

cannot agree on a contract, STB may order access and prescribe the terms and conditions 

of the contract, including compensation. 

4649 U.S.C. § 10101(3), (8). 

47Boston and Maine Corp. and Springfield Terminal Railway Co. v. New England 

Central Railroad, STB Finance Docket No. 34612 

Page 23 GAO-09-282 
 

reported as having little effect on negotiations of liability and indemnity 

provisions. 

Freight railroads’ business perspective. In negotiations between 

commuter rail agencies and freight railroads, the freight railroads’ 

business perspective influences their starting position for negotiations of 

liability and indemnity provisions. Commuter rail agencies do not have 

statutory access to freight-owned rights-of-way. Rather, as o

infrastructure, freight railroads can decide whether to allow commuter r

agencies to use their rights-of-way. Officials from freight railroads told

that they are willing to share their infrastructure with commuter rail 

agencies when sharing makes business sense and does not impinge on 

their freight operations. From the freight railroads’ perspective, commuter 

rail agencies’ compensation offers for the use of freight-owned rights-ofway are often inadequate, and when they are not compensated for all of 

the costs incurred from hosting a commuter rail train, the result is that the 

•

wners of the 

ail 

 us 

eight railroads subsidize the commuter rail service. In addition, freight 

ht 

m 

t is 

e 

ain 

ir 

To protect themselves from additional liability, freight railroads typically 

require that commuter railroads purchase liability insurance that covers 

both parties. Officials from several commuter rail agencies told us that 

that they currently carry even if the freight railroad did not require them to 

encies said they purchase more 

 that 

ir agreements. 

Several Factors Influence 

Negotiations of Liability 

and Indemnity Provisions 

fr

service is the freight railroads’ core business, and their ability to efficient

move freight through their systems must be protected. As a result, freig

railroad officials said they are unwilling to assume any additional risk fro

allowing commuter rail agencies to use their rights-of-way. 

Understandably, freight railroads want to minimize their exposure to 

liability from any potentially large damage awards and associated costs 

that may result when they allow commuter rail agencies to operate on 

their rights-of-way. As a result, freight railroads have adopted wha

referred to as the “but for” philosophy—that is, but for the presence of th

commuter rail service, the freight railroad would not be exposed to cert

risks; therefore, the freight railroad should be held harmless. Freight 

railroad officials stated that they must take this position to protect the

businesses and shareholders from potential lawsuits that could financially 

ruin their company. 

ly 

they recognize and understand the freight railroads’ viewpoint. Nearly half 

of commuter rail agency officials acknowledged insurance as a cost of 

doing business, and eight mentioned that they would purchase the amount 

do so. Officials from five commuter rail ag

insurance than is required in their agreements because they recognize

potential claims may exceed the amounts stated in the

Page 24 GAO-09-282 Commuter Rail 
 

•

il agencies and freight railroads said that the financial health 

of the freight railroads at the time of their negotiations affected the 

ability and indemnity provisions. For example, officials from one 

lity and 

that 

at 

try 

•

ad officials 

that 

rms 

 not 

 agreements. Freight railroads also expressed 

concern about changes in how courts interpret gross negligence and about 

Financial conditions at the time of negotiations. Officials from several 

commuter ra

li

commuter rail agency said they were able to secure favorable liabi

indemnity provisions by providing revenue to two freight railroads 

were struggling financially in the early and mid-1990s. Officials from 

another commuter rail agency said that the terms of their agreements th

originated from freight railroad bankruptcies in 1983 are more favorable to

the commuter rail agency than the agreements they have subsequently 

negotiated with other freight railroads. Over the last 25 years, freight rail 

traffic has significantly increased and the financial health of the indus

has improved. As a result, hosting commuter rail service is not a 

significant source of revenue for freight railroads. For example, officials 

from one freight railroad said that revenue from commuter rail agencies 

does not compensate for the associated capacity loss. Furthermore, 

officials from another freight railroad said that no amount of revenue from 

commuter rail agencies could sufficiently compensate them for the risk in

assuming liability for passenger claims. 

Increased awareness or concern about liability and insurance 

requirements. Eight commuter rail agency and freight railro

also said that the level of awareness or concern about liability issues has 

grown over time. For example, one commuter rail agency official said 

negotiations have become more difficult, in part, because both freight 

railroads and commuter rail agencies are more knowledgeable about 

liability issues—that is, freight railroads are now more precise in the te

they require, and commuter rail agencies are more aware of the 

implications of these agreements. Officials from four of the five freight 

railroads that host commuter rail operations said that they now would

agree to some terms that they had agreed to in the past. In some cases, 

these railroads are trying to renegotiate the liability and indemnity 

provisions in existing

the application of punitive damages. In particular, freight railroads 

expressed concern that what juries once viewed as normal negligence, 

they may now view as gross negligence; therefore, they want commuter

rail agencies to indemnify them against both negligence and gross 

negligence. For example, one freight railroad views a new project as a 

“nonstarter” if the commuter rail agency refuses to indemnify the freight 

railroad for incidents involving gross negligence. Additionally, if a railroad 

is found guilty of gross negligence, a jury may award punitive damages; 

therefore, one freight railroad is trying to renegotiate its insurance 

Page 25 GAO-09-282 Commuter Rail 
 

provisions in a 25-year-old agreement to include coverage for punitive 

damages. 

Additionally, views on sufficient amounts of insurance have change

time. Specifically, freight railroads are requiring more insurance coverage 

for new commuter rail projects than what they had required in some pas

agreements. For example, officials from one freight railroad said that

million seemed sufficient when the railroad signed an agreement with a 

commuter rail agency in 1992. However, these same officials stated that 

they now seek much higher levels of coverage to use their rights-of-way

citing concerns about potential lawsuits and large settlements awarded by

juries. Similarly, officials from other freight railroads told us that, to the 

extent possible, they seek between $200 million and $500 million 

insurance when negotiating new agreements or renewing existing ones. 

Officials from two proposed commuter rail agencies noted that they 

anticipate it could be challenging and costly to obtain insurance cove

for the amount of insurance the freight railroads are requiring them to 

obtain. Officials from freight railroads and commuter rail agencies also 

questioned how claims from the recent M

a

d over 

t 

 $100 

, 

in 

rage 

etrolink accident will affect the 

mount of insurance required and the accessibility of insurance. For 

• ty 

at all 

y 

h 

hom 

cies, a 

t 

nts 

rance 

 

example, officials from one commuter rail agency stated that the 

Metrolink accident and current economic conditions could cause their 

insurance premiums to spike, and they are, therefore, exploring options to

stabilize their insurance costs. 

Federal and state laws. While ARAA has addressed many major liabili

concerns, some freight railroads and commuter rail agencies are reluctant 

to rely on some of its provisions. We have previously reported th

commuter rail authorities or operators, as well as Amtrak, are covered b

the $200 million cap on awards for claims by or on behalf of rail 

passengers resulting from an individual rail accident.48 However, althoug

a majority of the freight railroads and commuter rail agencies with w

we spoke told us that the liability cap applies to commuter rail agen

majority of freight railroads and a few commuter rail agencies expressed 

concern because the statute has not been tested in court. One freigh

railroad has addressed this concern by including a clause in its agreeme

that would reopen negotiations if the ARAA cap were overturned by a 

court or amended. Other freight railroads seek higher levels of insu

coverage to mitigate their concerns about the ARAA cap. Officials from

one commuter rail agency told us that the freight railroad wants to 

 

GAO-04-240. 48

Page 26 GAO-09-282 Commuter Rail 
 

increase the level of insurance in their existing agreement from $250 

million to $

th

$500 million in insurance, in part, because the cap has not been tested in 

court and because the cap does not cover third-party claims. For example, 

as we have reported, claims from third parties affected by a hazardous 

material release that might occur as a result of a commuter-freight 

collision would not be capped at $200 million. Officials from several 

freight railroads and commuter rail agencies said that the applicability of

the $200 million liability cap to commuter rail agencies will likely be teste

in court as a result of the recent Metrolink accident. 

Amtrak’s statutory rights influence the negotiations of liability and 

indemnity provisions in agreements between Amtrak and freight railroad

as well as between Amtrak and commuter rail agencies. For example

because Amtrak has statutory access rights to freight rail infrastructure, 

Amtrak and freight railroads must reach an agreement for the shared us

of freight-owned infrastructure, or, in the event of an impasse, STB will 

resolve the outstanding issues. Although the provisions in agreements 

between Amtrak and freight railroads vary, freight railroad officials sa

that their negotiation processes were fairly standardized as a result of 

Amtrak’s statutory access rights. In addition, Amtrak officials noted that 

Amtrak is prohibited from cross-subsidizing commuter rail agencies and 

freight railroads on the NEC for

500 million, which has been a sticking point in renegotiating 

e agreement. Officials from this freight railroad told us they are seeking 

d 

s 

, 

e 

id 

 some costs.49 According to Amtrak 

 

officials, these statutes influence their negotiations with freight railroads 

and commuter rail agencies, and Amtrak cannot assume any additional 

liability for these parties in its agreements for the shared use of 

infrastructure. Specifically, Amtrak officials stated that Amtrak cannot 

assume liability for commuter rail agencies when allowing commuter rail 

agencies to use Amtrak’s infrastructure. As a result, Amtrak’s negotiations 

with commuter rail agencies generally result in no-fault liability and 

indemnity provisions in which the commuter rail agency assumes most of 

the liability. 

Commuter rail agency, freight railroad, and Amtrak officials also identified 

various types of state laws that influence negotiations of liability and 

indemnity provisions.50 The following information briefly describes 

 

4949 U.S.C. § 24904(c)(1). 

50The state laws identified by commuter rail agency, freight railroad, and Amtrak officials 

do not represent the universe of state laws that could influence the negotiations of liability 

and indemnity provisions. 

Page 27 GAO-09-282 Commuter Rail 
 

examples of the different types of state laws that can influence 

negotiations. See table 1 for examples of these types of laws. 

Liability caps for railroads or transit agencies. Some state laws limit 

commuter rail agencies’ liability exposure for accidents. 

Sovereign immunity laws or tort caps. These laws limit the types o

claims that may be filed against public agencies and limit the amount

liability to which a public agency can be exposed. 

Prohibition against public indemnification of priva

•

• f 

 of 

• te entities. Some 

state laws prohibit a public commuter rail agency from agreeing to any 

• ce. 

•

r 

re 

Table 1: Types and Examples of State Law

indemnification provisions. 

Prohibition against indemnification for negligence or gross negligen

Some state laws prohibit indemnification of an entity against its own 

negligence or gross negligence. 

State laws addressing punitive damages. Some state laws prohibit 

insuring against punitive damages. Additionally, in some states, commute

rail agencies are immune from paying punitive damages because they a

public entities. 

s That May Affect Liability and Indemnity Negotiations 

Type of state law Example of state law in select states 

Liability caps for railroads or transit agencies RAA; 

 a 

r 

 North Carolina set its liability cap at $200 million to mirror the amount in A

however, the North Carolina statute caps all liability, including third-party claims, in

commuter rail incident. 

A Massachusetts statute limits claims to the amount of insurance, which is $75 

million, and applies to the commuter rail agency, its contract operator, and othe

entities that provide commuter rail services. 

Sovereign immunity laws or tort caps ia law caps most claims filed against the Southeastern Pennsylvania 

Transportation Authority at $250,000 per person and $1 million per incident. 

rvice in 

2008 legislative session extending sovereign immunity to contractors for the 

proposed SunRail service in Central Florida.a

 

Pennsylvan

Florida law caps payments for tort claims against the state and its agents at 

$100,000 per person or $200,000 per incident. Although the sovereign immunity

provisions have been extended to commuter rail contractors for the Tri-Rail se

Southern Florida, the Florida legislature was unable to pass legislation during the 

Page 28 GAO-09-282 Commuter Rail 
 

Type of state law Example of state law in select states 

Prohibition against public indemnification of 

private entities 

idizing a 

private entity and, as a result, prohibits indemnification of a private entity. State laws 

g 

is statute could still 

be invalidated by the state constitution. Sovereign immunity laws in New Mexico 

r 

demnifying a private 

company for exposure that the private company could face in the event of a 

orthstar to provide indemnification and to procure 

insurance that would protect both itself and BNSF. The statute authorizes 

The New Mexico constitution prohibits the state government from subs

were changed to allow the state to purchase insurance covering BNSF Railway’s 

(BNSF) liability associated with New Mexico Rail Runner Express’s service by listin

them as a named-insured. However, some concerns exist that th

have also resulted in Amtrak’s assumption of more liability than it assumes unde

some agreements with other commuter rail agencies. 

In Minnesota, state law prohibited a public agency from in

catastrophic loss. To facilitate the negotiations between Northstar and BNSF, the 

state passed legislation that treats the planning, operation, and maintenance of 

commuter rail facilities and services as governmental functions serving a public 

purpose. The statute allows N

indemnification for all types of claims or damages. 

Prohibition against indemnification for 

negligence or gross negligence ifying this prohibition. Negotiations between the 

ority (MBTA) and CSX Transportation (CSX) 

A) 

ce or 

Massachusetts case law prohibits indemnification against gross negligence; 

however, there are no statutes cod b

Massachusetts Bay Transportation Auth

have stalled over the general issue of how to allocate risk. The public side (MBT

has stated that it cannot indemnify the private side (CSX) for its gross negligen

intentional acts, and CSX officials say they do not anticipate changing their position 

on indemnification provisions for willful misconduct and gross negligence.c

State laws addressing punitive damages inois Tort Immunity Act does not give the Northeast Illinois Regional 

Commuter Railroad Corporation (Metra) sovereign immunity protections, the act 

protects Metra from punitive damages. According to Metra officials, local government 

h indemnification is 

llowed in lawsuits against government 

Although the Ill

entities cannot indemnify for punitive damages because suc

considered against public policy. 

In California, punitive damages are not a

entities, such as the Joint Powers Board that operates the Caltrain commuter rail

service. The board does not indemnify the Union Pacific Railroad Company for any 

punitive damages. Furthermore, in California, punitive damages are not insurable. 

Sourc

a

The

Dec

b

See

Tran m and 

Orde

c

CS

inde

Mas

the t to 

do s

e: GAO analysis of state laws. 

 proposed SunRail commuter service was known as Central Florida Commuter Rail until 

ember 2008. 

Massachusetts Bay Transportation Authority and Massachusetts Bay Railroad Co. v. CSX 

sportation Inc. and Cohenno Inc. (Super. Ct. Civ. Action 2008-1762-BLS1) (Memorandu

r on Defendant CSX Transportation, Inc.’s Motions to Dismiss). 

X believes that the preemptive nature of ARAA negates any state prohibition of MBTA 

mnifying for gross negligence. MBTA officials stated that they believe ARAA does not preempt 

sachusetts state case law, but even if the act is preemptive, the authority is only permissive (i.e., 

act would allow a party to contractually indemnify for gross negligence, but would not require i

o). 

Page 29 GAO-09-282 Commuter Rail 
 

Several factors that might be considered influential, such as commuter rail 

ow ving 

litt

• Com

age e 

ter r 

rail

rail t 

rail ific 

liab is 

cur

ser y 

doe s. 

Off negotiations for the 

pur ost for 

the

one

wit

bill

agr ht 

rail

• Ex

host freight railroad’s infrastructure, which can be measured by such 

metrics as the number of trains or ridership, does not generally influence 

the

off y 

reli

rance brokers with whom we spoke 

r, however, a change in one of these metrics may 

ot affect the insurance premium unless the change is significant—for 

•

provements do not compensate for the liability risks associated with 

llowing passenger railroads to use freight infrastructure. However, 

nding for infrastructure improvements may have other effects, such as 

influencing freight railroads’ initial willingness to enter into overall 

Other Factors Generally 

s of Liability 

and Indemnity Provisions 

nership of shared-use infrastructure, were generally reported as ha

le effect on liability and indemnity negotiations. 

muter rail agencies’ ownership of infrastructure. Commuter rail 

ncies that own their infrastructure are not necessarily able to set th

ms of their agreements with freight railroads. A majority of commute

 agencies that own their infrastructure purchased it from freight 

roads. In general, as a condition of the sale of infrastructure, freigh

roads maintain rights for continued freight use and require spec

ility and indemnity provisions. For example, a commuter rail agency

rently seeking to purchase a segment of freight track to expand its 

vice, but negotiations have stalled because the commuter rail agenc

s not want to agree to certain liability and indemnity provision

icials from one freight railroad said that in 

chase of rail lines, the liability terms are a trade-off for a lower c

 infrastructure. For example, in this freight railroad’s negotiations with 

 commuter rail agency, the price for purchasing the right-of-way 

hout attached liability and indemnity provisions would have been $1.3 

ion; rather, the parties settled on a price of $150 million, with an 

eement for continued freight operations that included the freig

road’s required liability and indemnity provisions. 

tent of use. The extent of a tenant commuter rail agency’s use of the 

 liability and indemnity provisions. For example, one freight railroad

icial said that the number of planned commuter trains is not specificall

ed upon in determining the amount of insurance required in the 

Have Little Effect on 

Negotiation

agreement. However, two of the insu

said that such metrics may be used to help calculate insurance premiums. 

According to one broke

n

example, an increase from 100,000 to 200,000 daily passengers. 

Funding of improvements on freight-owned infrastructure. Commuter 

rail agencies’ funding of infrastructure improvements, such as track 

upgrades, on freight infrastructure does not generally affect liability and 

indemnity provisions. Officials from one freight railroad said that such 

im

a

fu

Page 30 GAO-09-282 Commuter Rail 
 

negotiations for shared use or securing priority dispatching for commuter 

trains. 

• Advanced safety technologies. Employing advanced safety technologies 

s 

iums 

d 

ernatives to 

 ways 

 

does not necessarily affect negotiations over liability and indemnity 

provisions. Although improved safety may not influence the liability and 

indemnity provisions, officials from three freight railroads or commuter 

rail agencies mentioned that improved safety could reduce insurance

premiums. Similarly, two of the insurance brokers with whom we spoke

said that a railroad’s safety program can influence the calculation of 

insurance premiums because improved safety reduces the likelihood of 

accidents and, therefore, decreases the likelihood that the insurance 

company will suffer a loss. However, according to Amtrak officials, 

although such technologies may reduce the incidents of smaller claim

that fall within the self-insured retention, they may not reduce prem

for liability insurance until the long-term loss history for the rail agency 

improves. 

Commuter rail agency, Amtrak, and freight railroad officials identifie

several options for facilitating negotiations of liability and indemnity 

provisions, including amending ARAA, establishing alt

commercial insurance, increasing commuter rail agencies’ leverage in 

negotiations with freight railroads, and separating passenger and freight

rail infrastructure.51 While each of the options could facilitate negotiations

on liability and indemnity provisions, each option has advantages and 

disadvantages to consider. The discussion that follows is not intended to 

endorse any potential option, but instead to describe some potential

to facilitate negotiations. 

 Commuter Rail 

 

rovisions in the future. 

Commuter Rail 

Agency, Amtrak, and 

Freight Railroad 

Officials Identified 

Several Options for 

Facilitating 

Negotiations 

51The options that we identify in this section of the report are based on information we 

obtained from our interviews with commuter rail agency, Amtrak, and freight railroad 

officials. Not all of these officials identified each of these as options for facilitating 

negotiations of liability and indemnity provisions. Therefore, our intent is not to focus on 

the frequency with which the officials identified each option, but to inform the reader 

about the various options that could facilitate negotiations of liability and indemnity

p

Page 31 GAO-09-282 
 

Officials from commuter rail agencies, Amtrak, and freight railroads cited 

amendi

in

ng ARAA as an option for facilitating negotiations on liability and 

demnity provisions. In particular, officials from commuter rail agencies 

t 

cials 

o make it clear that it applied to commuter rail 

gencies and covered nonpassenger claims, freight railroads would be less 

d 

e 

freight 

ns 

pt some state laws, such as those that cap 

damages for commuter rail claims at an amount lower than $200 million. 

Commuter rail agency and freight railroad officials also cited several 

disadvantages to amending ARAA. Officials from one freight railroad 

stated that ARAA already applies to commuter rail agencies and limits the 

amount of liability insurance commuter rail agencies are required to 

obtain to $200 million. According to these officials, although there is some 

lack of clarity about the statute’s applicability to commuter rail agencies 

ive 

or 

lities. Similarly, although ARAA does not cover 

Commuter Rail Agency, 

Amtrak, and Freight 

Railroad Officials 

Suggested Amending 

ARAA to Address 

Concerns 

and freight railroads stated that the statute should be amended to make i

clear that the liability cap applies to commuter rail agencies, and offi

from commuter rail agencies, freight railroads, as well as Amtrak, stated 

that the statute should be amended to include nonpassenger claims. 

Officials from commuter rail agencies, Amtrak, and freight railroads cited

several advantages to amending ARAA. First, clarifying that the statute 

applies to commuter rail agencies would eliminate the uncertainty about

its applicability in the absence of a court decision. In addition, such a 

clarification, along with the inclusion of nonpassenger claims in the 

liability cap, could lower costs for commuter rail agencies by limiting the 

amount of insurance that freight railroads require commuter rail agencies

to carry. For example, officials from one commuter rail agency stated that

if ARAA were amended t

a

likely to seek insurance beyond the $200 million liability cap to cover 

claims to which the cap does not apply. Similarly, Amtrak officials state

that including nonpassenger claims under the liability cap could reduc

Amtrak’s need for excess liability insurance. Officials from several 

railroads also noted that such changes could facilitate future negotiatio

with commuter rail agencies. Officials from freight railroads also stated 

that a clear federal cap on liability for commuter rail agencies could 

eliminate the need to adapt to various state laws that can affect liability

and indemnity negotiations. For example, according to officials from two 

freight railroads, a uniform, standardized cap that applies to all commuter 

rail agencies would preem

and the statute does not cover all types of claims, these issues can be 

addressed by requiring the commuter rail agency to obtain comprehens

insurance coverage or through other provisions in the agreements. For 

example, adequate insurance coverage can mitigate the issues that may

arise from various and conflicting state laws by providing protection f

various kinds of liabi

Page 32 GAO-09-282 Commuter Rail 
 

liability claims resulting from a hazardous materials spill, an agreement 

can be structured in such a way that these claims are covered. According 

to these freight railroad officials, the provisions in ARAA provide adequate

protections for negotiating railroad liability and indemnity provisions. 

Furthermore, these officials told us it may be difficult to make some 

changes to the statute without opening up its entire liability section to 

reexamination. Finally, some commuter rail agency officials stated that 

amending ARAA could cause them to have less favorable liability 

00 

all 

•

al 

•

rent 

oup 

of 

•

Commuter Rail Agency, 

Amtrak, and Freight 

Railroad Officials 

Identified Alternatives to 

Traditional Commercial 

Insurance 

provisions than they currently enjoy. For example, officials from several 

commuter rail agencies told us that they carry less insurance than the $2

million cap. According to officials from one commuter rail agency, 

amending ARAA to clarify that the $200 million liability cap applies to 

commuter rail agencies could result in higher levels of insurance and

increased costs for this commuter rail agency. 

Commuter rail agency, Amtrak, and freight railroad officials and 

representatives from the insurance industry identified the following three 

alternatives to traditional commercial insurance options that could 

increase the availability and affordability of liability insurance coverage: 

Insurance pool. A group of organizations with similar characteristics, such

as a group of commuter rail agencies, pool their assets to obtain a single 

commercial insurance policy, rather than obtaining individual commerci

insurance policies. 

Captive insurance. A privately held insurance company that issues 

policies, collects premiums, and pays claims for its owners, but does not 

offer insurance to the public. This company may be either a single-pa

captive, which is owned by a single entity that insures the risks of its 

parent company, or a group captive, which is owned by multiple entities 

and the owners are also the policyholders. Usually, the owners of a gr

captive are fairly homogenous and have similar risks, such as a group 

commuter rail agencies, although this is not a requirement of a captive. A 

captive would allow a commuter rail agency or a group of commuter rail 

agencies to self-insure for liability or provide liability insurance for its 

members outside of the traditional commercial insurance market. 

Risk retention group. Similar businesses with similar risk exposures 

create their own liability insurance company to self-insure their risks as a 

group. Risk retention groups were established through the Product 

Liability Risk Retention Act of 1981, as amended by the Liability Risk 

Retention Act of 1986, which partially preempts state insurance laws by 

allowing risk retention groups to operate in states in which they are not 

Page 33 GAO-09-282 Commuter Rail 
 

domiciled.52 Commuter rail agencies, therefore, could form a risk retentio

group without having to consider the various state laws that could affect 

their liability negotiations with freight railroads. 

Commuter rail agency, Amtrak, and freight railroad officials identified 

several advantages to pooling insurance as a way to facilitate negotiatio

on liability. First, all of the industry insurance options identified would 

allow members to pool their assets, which could allow them to obtain 

more or cheaper insurance coverage than they could obtain 

independently. For example, a group of commuter rail agencies could 

form a captive to obtain coverage for their primary layers of insurance, 

which are the most expensive, given that most claims beyond the selfinsured retention would be expected to fall within these layers.

n 

ns 

ase 

els, which also would 

ain greater and more affordable coverage than 

histories of newer commuter rail agencies with those 

t 

s 

 

53 Second, 

pooled insurance coverage would spread out liability across a wider b

of commuter rail agencies, with varying risk lev

allow participants to obt

some individual commuter rail agencies could obtain independently in th

commercial insurance market. For example, officials from one commuter 

rail agency stated that forming a group captive with other commuter rail 

agencies could level out the insurance premiums paid by each commuter

rail agency participating in the captive, and that the agency plans to reach

e 

out to other commuter rail agencies to further explore this option. Third, 

pooled insurance options could make it easier for new or smaller 

commuter rail agencies with limited or no risk history to obtain affordable 

insurance coverage. Similarly, according to a captive insurance broker, by 

combining the loss 

of other commuter rail agencies, a group captive could better predic

potential claims than an individual insurance company could predict for a

commuter rail agency with no risk history. Finally, forming a risk retention

group could eliminate the challenges associated with various state law

that limit the types of indemnification and insurance options available to 

commuter rail agencies. Risk retention groups are required only to register

with the regulator of the state in which they intend to sell insurance, 

whereas traditional captives are subject to the licensing requirements and 

 

illion 

5215 U.S.C. §§ 3901-3906. 

53Commuter rail agencies’ insurance coverage is usually structured in layers of $25 m

beyond the self-insured retention, up to the total amount of insurance coverage (e.g., $200 

million). The lower layers are typically more expensive because claims are likely to fall in

these layers, rather than the layers covering the upper limits of the insurance coverage. 

Page 34 GAO-09-282 Commuter Rail 
 

oversight of each state outside of their state of domicile.54 Although no 

commuter rail agency or freight railroad currently participates in an 

insurance pool with other commuter rail agencies or freight railroads,55

e. 

ied 

l 

l 

y 

 

some commuter rail agency officials told us they are interested in 

exploring this option for facilitating negotiations. In addition, officials 

from two freight railroads said they would consider joining an insurance 

pool as a way to pool their risk with other railroads, and several freight 

railroad officials also stated they would accept pooled insurance from 

commuter rail agencies as a valid option for providing liability coverag

Commuter rail agency, Amtrak, and freight railroad officials also identif

several disadvantages to the various alternatives to traditional commercia

insurance options identified. First, some commuter rail agency officials 

stated that their commuter operations were already very safe; therefore, 

they would not benefit from an insurance pool with other commuter rail

agencies. Similarly, according to an insurance broker, larger commuter rail 

agencies, or those with a better risk profile, may not join a pool or might 

leave the pool if they could obtain cheaper insurance coverage on the 

commercial insurance market. Their decision not to participate in the poo

would lead to adverse selection, with only smaller or riskier commuter rail

agencies remaining in the pool, which could reduce some of the 

advantages that a pool would provide. Second, some commuter rail agenc

officials stated that they have not had problems obtaining insurance 

because of the soft, or competitive, insurance market. According to an 

insurance broker, pooling insurance during a soft market is likely more 

expensive than obtaining individual commercial insurance policies 

because of the administrative and capital costs of maintaining an 

insurance captive or risk retention group. In addition, some commuter rail 

agency officials stated that insurance pools can be difficult to administer 

and require decisions about who will participate, whether participation 

will be voluntary or mandatory, and what should be done if claims exceed 

54We previously have reported that traditional insurers, as well as nonrisk retention group 

captive insurers, are subject to the licensing requirements and oversight of each 

nondomiciliary state in which they operate, whereas risk retention groups are required to 

register only with the regulator of the state in which they intend to sell insurance and to 

provide copies of certain documents originally provided to domiciliary regulators. See, 

ps: Common Regulatory Standards and Greater Member 

ctions Are Needed, GAO-05-536 (Washington, D.C.: Aug. 15, 2005). 

GAO, Risk Retention Grou

Prote

55Two commuter rail agencies told us that they have single-parent captives that provide 

coverage for some of their other transit programs or part of their commuter rail operation. 

In addition, some freight railroad officials stated that they have single-parent captives. 

Page 35 GAO-09-282 Commuter Rail 
 

the pool’s reserves. However, if the insurance market became less 

competitive, pooling might provide a more affordable option, particu

for new or smaller commuter rail agencies that could have difficulty 

obtaining coverage.

larly 

l 

city, 

example, an insurance pool falls apart because it is undercapitalized—that 

 and 

e. 

s 

n Act 

odel, 

additional funding if an incident’s claims exceeded both the primary and 

secondary insurance coverage. Officials from one freight railroad stated 

that a Price-Anderson type of insurance program could address current 

 

56 For example, Florida set up an insurance poo

because of a severe shortage of catastrophe property reinsurance capa

stricter policy terms and conditions, and sharp increases in property 

catastrophe cover rates following Hurricane Andrew. Finally, one 

commuter rail agency official stated that it could be difficult for 

participating agencies to reenter the commercial insurance market if, for 

is, there is a risk for commuter rail agencies in ending their current 

insurance policies to join a pool. Amtrak officials also stated that these 

pooled insurance options are unlikely to be viable without federal 

financial backing or verifiable commercial reinsurance. Furthermore, 

officials from two freight railroads noted they would not likely join an 

insurance pool with commuter rail agencies because it is not in their 

business interests to help pay for claims involving passenger rail. 

Commuter rail agency, Amtrak, and freight railroad officials also identified 

several federal insurance options that could facilitate negotiations of 

liability and indemnity provisions. Specifically, several commuter

freight railroad officials identified catastrophic incident insurance 

programs as potential models for providing railroad liability insuranc

These insurance programs exist to cover risks that the private sector ha

been unable or unwilling to provide by itself. Commuter rail agency and 

freight railroad officials most frequently identified the Price-Anderso

as a model for providing railroad liability insurance.57 Under this m

commuter rail agencies would obtain primary insurance up to a certain 

amount and could pool their assets to obtain secondary insurance 

coverage for incidents with claims that exceed the primary insurance 

amount. The federal government could also be called upon to provide 

 

uired to purchase 

primary and secondary insurance, up to a cap. The act also provides a process by which the 

56During a hard market, insurance prices rise and insurers tend to narrow their coverage, 

tighten their underwriting standards, and withdraw from certain markets. 

57Under the Price-Anderson Act, licensees of nuclear power plants are req

Nuclear Regulatory Commission can ask Congress for additional funds if claims for 

damages from a nuclear incident exceed the pooled primary and secondary insurance 

coverage. 42 U.S.C. § 2210. 

Page 36 GAO-09-282 Commuter Rail 
 

limitations in the railroad insurance market because the act contem

appropriations if additional funding is needed, among other benefits. 

Similarly, insurance coverage provided under other federal governme

programs, such as terrorism insurance, also was cited as a potential m

for providing railroad liability insurance coverage. For example, officials 

from one freight railroad stated that the fund established to compensa

victims from the September 11, 2001, terrorism attacks could be us

considering how to compensate victims of a catastrophic railroad

Commuter rail agency and freight railroad officials identified several 

advantages of a federally backed insurance program for railroads. F

example, some of these officials stated that such programs could reduce

insurance premiums, could spread out risk among participating rai

and would ensure that claims could be paid to those affected by a high

cost, or catastrophic, incident. However, as we have previously reporte

such programs also could crowd out private insurers and reduce the 

private market’s ability and willingness to provide coverage.

plates 

nt 

odel 

te 

eful for 

 incident. 

or 

lroads, 

-

d, 

dition, 

a federal insurance program would expose the federal government to 

ge 

ies 

otherwise would not have commuter rail service. Officials from one 

commuter rail agency also stated that requiring freight railroads to allow 

ead, 

 

58 In ad

potentially significant claims on future resources, which could ultimately 

result in costs to taxpayers. 

Some commuter rail agencies identified options that would give them 

additional leverage in liability and indemnity negotiations with freight 

railroads. In particular, a few commuter rail agencies stated that statutory

access rights to freight-owned infrastructure, similar to Amtrak’s statutory 

access rights, could facilitate negotiations by forcing freight railroads to 

the negotiating table. However, although freight railroads might be 

required to enter into negotiations, they would not necessarily chan

their positions on the levels of liability and indemnification they would

require. In addition, providing statutory access to commuter rail agenc

could interfere with the freight railroads’ ability to make business 

decisions about their operations, particularly if the commuter rail 

operations would restrict the capacity of a major freight route that 

commuter rail agencies to operate on their infrastructure could make 

relationships with the freight railroads more acrimonious. Inst

 

, GAO-08-7 (Washington, D.C.: Nov. 26, 2007). 

Commuter Rail Agencies 

Identified Options That 

Would Increase Their 

Leverage in Negotiating 

Liability and Indemnity 

Provisions 

58GAO, Natural Disasters: Public Policy Options for Changing the Federal Role in 

Natural Catastrophe Insurance

Page 37 GAO-09-282 Commuter Rail 
 

incentives that encourage freight railroads to cooperate with commuter 

rail agencies, such as tax incentives or service expansions in other are

could do more to facilitate negotiations, according to these officials. 

Officials from a few commuter rail agencies also stated that having an 

independent entity mediate liability and indemnity negotiations between 

commuter rail agencies and freight railroads could be helpful if the parties 

reached an impasse. For example, officials from one commuter rail agency 

as, 

stated that a mediating body could facilitate negotiations by requiring the 

tions on liability and indemnity provisions. 

Commuter and freight traffic could be separated temporally, with 

ommuter rail agencies and freight railroads operating at different times of 

s 

ial for 

arating 

ts for 

ident 

ght 

er 

s able 

to purchase rights-of-way from Union Pacific, in most cases, purchasing 

 

freight railroad to consider the commuter rail agency’s position. A 

provision in the Passenger Rail Investment and Improvement Act of 2008 

recently extended STB’s role to mediate disputes between public 

authorities, including commuter rail agencies and host carriers.59 However,

the mediation is nonbinding—that is, if the dispute cannot be resolved, 

there are no additional mechanisms in place to compel a resolution. 

A few commuter rail agency and freight railroad officials identified 

separating passenger and freight traffic as an ideal, but cost-prohibitive, 

option for facilitating negotia

c

the day, or physically, with commuter rail agencies and freight railroad

operating on separate tracks either in the same corridor or in separate 

corridors. For example, the Utah Transit Authority purchased rights-ofway from Union Pacific and built new tracks in a parallel alignment with 

Union Pacific tracks. As a result, the commuter and freight operations do

not share the same track, with a small exception, limiting the potent

a collision. Similarly, officials from one freight railroad stated that in 

negotiations with an existing and new commuter rail agency, they are 

working to shift some of the freight operations onto different routes to 

minimize the interaction between commuter and freight trains. Sep

passenger and freight infrastructure also could lower insurance cos

commuter rail agencies because the potential for a catastrophic inc

would be significantly reduced. According to officials from a few frei

railroads, the potential for a catastrophic incident, although small, drives 

the indemnification provisions and insurance requirements of passeng

and freight rail agreements. Although the Utah Transit Authority wa

 Commuter Rail 

 

Commuter Rail Agency 

and Freight Railroad 

Officials Suggested 

Separating Passenger and 

Freight Traffic as an Ideal, 

but Costly, Option 

5949 U.S.C. § 28502. 

Page 38 GAO-09-282 
 

rights-of-way or constructing new tracks is cost-prohibitive and timeconsuming for commuter rail agencies. For example, officials from one 

commuter rail agency examined whether to build new tracks for initiating 

its service, but the costs were much higher than the costs of buying the 

ated 

es 

nt of 

people and goods by rail is an important part of the nation’s transportation 

ystem and is likely to play an even greater role in the future as companies 

ractive 

ely, 

re 

s, 

y 

considered so that one form of rail does not succeed at the expense of the 

other. 

Concluding 

tracks and sharing them with the freight railroad and paying the associ

insurance costs. In addition, capacity constraints, whether they are based

on future growth projections or geographic limitations, make it difficult to 

separate passenger and freight traffic—through either temporal or 

physical separation. For example, officials from one commuter rail agency

stated that the geography surrounding their commuter service mak

capacity expansions very difficult and costly. 

The expeditious flow of people and goods through our transportation 

system is vital to the economic well-being of the nation. The moveme

s

and communities look for ways to avoid highway congestion. An att

feature of both commuter rail and intercity passenger rail is that they can

operate on the same infrastructure as freight railroads. However, mixing 

passenger and freight traffic entails a certain level of risk. Fortunat

accidents are rare, undoubtedly due in part to the safety focus of 

passenger and freight rail operators, but they can be deadly, as evidenced

by the September 2008 Metrolink accident. 

As owners of most of the rail infrastructure in the United States, freight 

railroads determine whether to allow commuter rail operations on their 

infrastructure and set the terms and conditions, including the liability and 

indemnity provisions, of this access. To protect their business and 

shareholders, freight railroads understandably seek to shift the risks 

associated with allowing passenger traffic on freight-owned infrastructu

to the commuter rail agencies. By accepting some of the liability and 

indemnity provisions demanded by freight railroads, commuter rail 

agencies expose themselves, and ultimately taxpayers, to significant costs. 

Rejecting the liability and indemnity provisions sought by freight railroad

however, can cause negotiations to stall or fail, meaning that new 

commuter rail systems or expansions may not be realized. Different 

options exist to help facilitate negotiations over liability and indemnity. All

of these options have advantages and disadvantages that must be carefull

Observations 

Page 39 GAO-09-282 Commuter Rail 
 

We provided a draft of this report to DOT, STB, and Amtrak for their 

review and comment prior to finalizing the report. Amtrak provided 

technical comments, which we incorporated where appropriate. DOT and 

STB had no comments on the draft report. 

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from

report date. At that time, we will send copies to other interested 

congressional committees; the Secretary of the Department of 

Transportation; the President and CEO of Amt

 the 

rak; the Chief of Staff of the 

Surface Transportation Board; and other parties. The report is also 

vailable at no charge on the GAO Web site at http://www.gao.gov. 

Agency Comments 

a

If you or your staffs have any questions about this report, please contact 

me at (202) 512-4431 or flemings@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix V. 

Susan A. Fleming 

Director, Physical Infrastructure Issues 

Page 40 GAO-09-282 Commuter Rail 
Appendix I: Scope and Methodology 

To address our objectives, we obtained information from all existing a

proposed commuter rail agencies, Class I freight railroads, and the 

National Railroad Passenger Corporation (Amtrak). To identify the 

universe of existing and proposed commute

nd 

r rail agencies, we obtained a 

list of such rail agencies from the American Public Transportation 

e 

d 

osed 

freight 

ited 

our scope to Class I freight railroads because they own the majority of all 

ts 

to commuter rail operations or initial start-up work. (Table 2 lists the 

names and locations of the railroads and the state departments of 

transportation we contacted as part of our review.) We also obtained 

information through interviews with officials from Amtrak, the Federal 

Railroad Administration (FRA), and the Federal Transit Administration 

(FTA); Surface Transportation Board (STB) staff; and representatives from 

industry associations, including AAR and APTA. We also interviewed a 

representative from the law office of K&L Gates, who has served as a 

consultant to commuter rail agencies. 

ucted 

sting 

cies, proposed commuter rail agencies, Class I freight 

 of transportation. We asked 

about the liability and indemnity provisions between railroads, the 

 

Association (APTA). Using publicly available information, we narrowed 

the list of proposed commuter rail agencies to those that plan to initiate 

service within the next 5 years because these commuter rail agencies wer

more likely to have entered into negotiations with another railroa

regarding liability. We then refined our list of existing and prop

commuter rail agencies to 21 existing commuter rail agencies and 5 

proposed commuter rail agencies.1

 We also obtained a list of Class I 

railroads from the Association of American Railroads (AAR). We lim

rail lines in the United States and, therefore, are likely to have more 

interaction with commuter rail agencies than short-line or regional 

railroads. We subsequently interviewed officials at four state departmen

of transportation that commuter rail agency officials identified as integral 

To gather information pertaining to our objectives, we cond

semistructured interviews with officials from all identified exi

commuter rail agen

railroads, Amtrak, and state departments

1

APTA’s list identified 22 existing commuter rail operators. We excluded 1 commuter 

agency from our universe, the Alaska Railroad Corporation, because it is mostly a tourism 

operation. In addition to those proposed commuter rail agencies that we eliminated from 

our scope on the basis of publicly available information, we eliminated 2 proposed 

agencies when we contacted them and learned they either did not plan to initiate service 

within the next 5 years or did not consider themselves a commuter rail agency. For 

purposes of the laws that FRA and FTA administer or enforce, this list of existing and 

proposed commuter rail agencies is not necessarily reflective of what each agency would 

identify as commuter rail agencies. 

Appendix I: Scope and Methodology 

Page 41 GAO-09-282 Commuter Rail 
Appendix I: Scope and Methodology 

financial impact of these provisions, how the courts had interpreted these

provisions, the factors that had influenced negotiations, and ways to

facilitate negotiations. 

Table 2: Names and Locations of Existing Commuter Rail Agencies, Proposed Commuter Rail Agencies, Intercity Passenger 

Railroads, Class I Freight Railroads, and S

Name 

tate Departments of Transportation That We Interviewed 

Location 

Existing commuter rail agency 

Altamont Commuter Express Stockton, CA 

Connecticut Department of Transportation Shore Line East New Haven, CT 

Maryland Transit Administration (MARC) Baltimore, MD 

Massachusetts Bay Transportation Authority (MBTA) Boston, MA 

MTA Long Island Rail Road New York, NY 

MTA Metro-North Railroad New York, NY 

New Jersey Transit Corporation Newark, NJ 

New Mexico Rail Runner Express Albuquerque, NM 

North County Transit District (Coaster) Oceanside, CA 

Northeast Illinois Regional Commuter Railroad Corporation (Metra) Chicago, IL 

Northern Indiana Commuter Transportation District Chesterton, IN 

Peninsula Corridor Joint Powers Board (Caltrain) San Carlos, CA 

Pennsylvania Department of Transportation (PennDOT)aHarrisburg, PA 

Regional Transportation Authority Music City Star Nashville, TN 

Sound Transit, Central Puget Sound Regional Transportation Authority Seattle, WA 

South Florida Regional Transportation Authority (Tri-Rail) Pompano Beach, FL 

Southeastern Pennsylvania Transportation Authority (SEPTA) Philadelphia, PA b

Southern California Regional Rail Authority (Metrolink) Los Angeles, CA 

Trinity Railway Express Irving, TX 

Utah Transit Authority (FrontRunner) Salt Lake City, UT 

Virginia Railway Express Alexandria, VA 

Proposed commuter rail agencies 

Charlotte Area Transit System Charlotte, NC 

Georgia Rail Passenger Program Atlanta, GA 

Northstar Minneapolis, MN 

SunRail c Orlando, FL 

TriMet Westside Express Service Portland, OR 

Intercity passenger railroad 

National Railroad Passenger Corporation (Amtrak) Washington, D.C. 

 

Page 42 GAO-09-282 Commuter Rail 
Appendix I: Scope and Methodology 

Name Location 

Class I freight railroad 

BNSF Railway Fort Worth, TX 

Canadian National Railway Company (Grand Trunk Corporation)dMontreal, Canada 

Canadian Pacific Railway (Soo Line Railroad Company)dCalgary, Canada 

CSX Transportation Jacksonville, FL 

Kansas City Southern Railway CompanyeKansas City, MO

Norfolk Southern Norfolk, VA 

Union Pacific Railroad Company Omaha, NE 

State departments of transportation 

Delaware Department of Transportation (DELDOT)bWilmington, DE

Florida Department of Transportation (FDOT) Tallahassee, FL 

New Mexico Department of Transportation (NMDOT) Santa Fe, NM 

North Carolina Department of Transportation (NCDOT) Raleigh, NC 

Source: GAO. 

Note: The entity names in italics indicate the sites that we visited 

ins for commuters, which PennDOT su

 regular commuter rail service, SEPTA provides “tu cted commuter 

rvice, for the Delaware Department of Transportation (DEL ark/Wilmington, 

delphia, PA. Information on SEPTA’s use of Amtrak structure for the 

vice are included in Amtrak and SEPTA data; theref sider DELDOT 

parate commuter rail agency. 

r service was known as the Cent er Rail until 

. 

Canadian National Railway Company and Canadian Pa ms are not 

ads. However, the U.S. portions of these railroads (e nd 

Soo Line Railroad Company) meet the U.S. regulatory criteria an railroads. 

e

The Kansas City Southern Railway Company does not have any enger rail 

operators. 

We conducted site visits to three existing commuter rail agencies, two 

proposed commuter rail agencies, and two Class 

selected existing commuter rail agencies that ha ts for access to 

rights-of-way, maintenance-of-way, and mainten ent or 

operations with a Class I freight railroad and also had contracts with 

Amtrak. We also selected existing commuter rai at had 

agreements with different freight railroads to de rmine if agreements 

 across Class I freight railroads. (Because ilroads 

generally own infrastructure in particular region of the country, we also 

found that this criterion gave us geographic diversity for our site visits.) In 

during our review. 

a

Amtrak runs additional tra bsidizes. 

b

In addition to its rnkey,” or contra

rail se DOT) between New

DE, and Phila

Delaware ser

 services and infra

ore, we did not con

as a se

c

The proposed SunRail commute ral Florida Commut

December 2008

d

The entire 

Class I railro

cific Railway syste

.g., Grand Trunk Corporation a

d are Class I 

 agreements with pass

I freight railroads. We 

d agreemen

ance-of-equipm

l agencies th

te

varied Class I freight ra

s 

Page 43 GAO-09-282 Commuter Rail 
Appendix I: Scope and Methodology 

addition, we selected existing commuter rail agencies on the basis of their 

ridership levels to ensure that we visited at least one commuter rail agency 

in the top third of ridership, middle third of ride tom third of 

cted proposed commuter rail

enter into contracts with different Class I freight railroads in 

tion, we selected sites to 

visit at least one commuter rail agency that prop se Class I 

freight tracks and at least one commuter rail age es to lease 

freight tracks. Finally, we chose to visit Class I freight railroads with the 

highest number of contracts with commuter rail

ntify liability and indemnity provisions in agreements among 

mmuter rail agencies, freight railroads, and A esulting 

ions of those provisions, we requested and analyzed the liability 

ty sections of agreements between c cies 

ter rail agen

nd freight railroads. We analyzed and organized the provisions in 

not have 

greements with either a Class I freight railroad or Amtrak.3

 In addition, 

rail agencies in our 

nalysis because their agreements with freight railroads were final.4

till preliminary and subject to change. To ensure the reliability of the 

l agencies, Amtrak, and Class I freight railroads. For 

y 

d 

tate court cases, and STB decisions that related to contractual liability 

 

rship, and bot

ridership.2

 We sele agencies to visit that are 

planning to 

the next 5 years. In addi ensure that we would 

oses to purcha

ncy that propos

 agencies. 

To ide

co mtrak and the r

implicat

and indemni

and Class I freight railroads, commu

ommuter rail agen

cies and Amtrak, and 

Amtrak a

these contracts and excluded commuter rail agencies that did 

a

we included agreements from two proposed commuter 

a

However, we did not include information from the other proposed 

commuter rail agencies because they either did not have an agreement 

with a Class I freight railroad or Amtrak or because the agreements were 

s

information we obtained, we corroborated information provided by 

commuter rai

example, we compared agreements received from a commuter rail agenc

with agreements received from the freight railroad to ensure that the 

agreements were consistent. 

We conducted legislative research to identify federal statutes, federal an

s

and indemnity provisions of passenger and freight railroad agreements.

 er 2

We used APTA data on ridership for 2007 to determine the ridership levels of commut

rail agencies. 

3

Commuter rail agencies that did not have liability agreements with Amtrak or a Class I

freight railroad were the Regional Transportation Authority Music City Star and the 

Northern Indiana Commuter Transportation District. 

4

The SunRail agreement was contingent on legislative approval. 

Page 44 GAO-09-282 Commuter Rail 
Appendix I: Scope and Methodology 

We also asked Amtrak, STB, the commuter rail agencies, and the freight 

railroads for assistance in identifying these types of cases. In addition, we 

asked commuter rail agencies and state departments of transportation for 

state statutes that had an impact on the negotiation of contractual liability

and indemnity provisions. We then synthesized and summarized the 

information that we obtained. 

To identify factors that affect negotiations of liability and indemnity 

provisions among passenger and freight railroads, we conducted a conten

analysis of the information we collected from our semistruc

t 

tured 

interviews and site visits. This content analysis captured the extent to 

encies, 

s 

and 

d 

iated 

tions and the potential impact of some of 

the options identified on the federal role. Furthermore, we interviewed 

g 

insurance mechanisms that could be applied to the railroad industry. We 

which representatives from existing and proposed commuter rail ag

freight railroads, and Amtrak identified particular factors that affected 

their negotiations and the associated effects. In addition to determining 

the factors that were most commonly cited, this analysis enabled us to 

determine whether certain factors reportedly had little effect on the 

negotiations. We also interviewed four state departments of 

transportation, referred to us by commuter rail agencies, about state law

that apply to liability and indemnity provisions and the effects of such 

laws on liability and indemnity provisions. 

To identify potential options for facilitating negotiations of liability 

indemnity provisions among passenger and freight railroads, we 

conducted a content analysis of the information we collected from our 

semistructured interviews and site visits. This content analysis capture

potential options mentioned by the entities we interviewed, the assoc

advantages and disadvantages from the perspectives of the entities

interviewed, and the change in the federal role needed to execute the 

options. We also asked FRA and FTA officials and STB staff about the

federal role in railroad negotia

three insurance brokers who represented commuter rail agencies in 

obtaining liability insurance to provide context for the process of securin

insurance, the process of calculating premium costs, and alternative 

Page 45 GAO-09-282 Commuter Rail 
Appendix I: Scope and Methodology 

also reviewed prior GAO reports on insurance markets for catastrophic 

incidents to identify comparable models for railroad liability insurance.5

We did not examine the liability and indemnity provisions in agreements 

between commuter rail agencies and non-Class I freight railroads, no

we look at agreements among c

r did 

ommuter rail agencies. However, we did 

analyze information provided about the factors affecting negotiations 

 also 

e the 

y 

ns 

 

between commuter rail agencies and non-Class I freight railroads; we

analyzed information from commuter rail agencies in these relationships 

about options for facilitating negotiations. We also did not examin

merits of Amtrak’s statutory access rights to freight-owned rights-of-wa

or the costs and benefits of extending these rights to commuter rail 

agencies because this was beyond the scope of our review. Finally, we 

relied primarily on testimonial evidence to identify state laws and court 

decisions related to railroad liability and indemnity provisions and, 

therefore, did not analyze the universe of state laws and court decisio

related to liability and indemnity provisions. 

5

GAO, Terrorism Insurance: Status of Efforts by Policyholders to Obtain Coverage, 

GAO-08-1057 (Washington, D.C.: Sept. 15, 2008); Risk Retention Groups: Common 

Regulatory Standards and Greater Member Protections Are Needed, GAO-05-536 

(Washington, D.C.: Aug. 15, 2005); and Nuclear Regulation: NRC’s Liability Insurance 

Requirements for Nuclear Power Plants Owned by Limited Liability Companies, 

GAO-04-654 (Washington, D.C.: May 28, 2004). 

Page 46 GAO-09-282 Commuter Rail 
Appendix II: Summary of Liability and 

Indemnity Provisions in Commuter Rail 

Agency and Freight Railroad Agreements 

Dollars in millions 

Commuter rail 

agency Class I railroad O

f 

 that 

wnershipa

 

Is contract faultbased or nofault? 

What are 

provisions for 

freightcommuter 

collision?b 

Are specific 

types of 

conduct 

excluded or 

explicitly 

included? 

What is the

level o

insurance

is requiredc

Altamont Commuter 

Express (ACE) 

Union Pacific 

Railroad 

Company (UP) 

FreightdNo fault No fault: each 

covers own (third 

parties shared) 

Excluded $100

Peninsula Corridor 

Joint Powers Board 

(Caltrain) 

UP Shared Combination 100 eNo fault: each 

covers own (third 

parties faultbased) 

Excluded 

North County 

Transit District 

(Coaster) 

BNSF Railway Commuter Fault-based 75 f Fault-based N/A 

Utah Transit 

Authority 

(FrontRunner) 

UP Shared 

corridorg 

No fault Silent Excluded 100 

Maryland Transit 

Administration 

(MARC) 

CSX 

Transportation 

Freight No fault No fault: 

commuter covers 

all liability 

Bothh 500 

Massachusetts Bay 

Transportation 

Authority (MBTA) 

CSX 

(Boston to 

Framingham) 

Commuter Combinationi No fault: each 

covers own (third 

parties and 

passengers are 

fault-based) 

Silent Unspecified 

 MBTA CSX 

(Worcester to 

Framingham) 

Freight No fault No fault: 

commuter covers 

all liability 

Includedj 75 

Northeast Illinois 

Regional Commuter 

Railroad 

Corporation (Metra) 

 BNSF Freight Combinationk Fault-based Silent 200

 Metra Canadian 

National Railway 

Company (CN) 

(Illinois Central 

Line) 

Freight No fault No fault: each 

covers own (third 

parties shared) 

Silent Unspecified

 Metra CN (Wisconsin 

Central Line) 

Commuter No fault No fault: freight Excluded Unspecified 

covers all liability 

 Metra CN (Wisconsin 

Central Line) 

Freight No fault No fault: 100

commuter covers 

all liability 

Excluded 

Appendix II: Summary of Liability and 

Indemnity Provisions in Commuter Rail 

Agency and Freight Railroad Agreements 

Page 47 GAO-09-282 Commuter Rail 
Appendix II: Summary of Liability and 

Indemnity Provisions in Commuter Rail 

Agency and Freight Railroad Agreements 

Dollars in millions 

Commuter rail 

agency Class I railroad Ownershipa

 

Is contract faultbased or nohat are 

provisions for 

Are specific 

pes of 

What is the 

level of 

insu

fault? 

W

freightcommuter 

collision?b 

ty

conduct 

excluded or 

explicitly

included? 

rance that 

is requiredc

 Metra Canadian Pacific Commuter h 

(third 

 

Railway (CP) 

Combinationl No fault: eac

covers own 

parties shared)

Silent Unspecified 

 Metra CSX Commuter No fault 

 

No fault: each Silent Unspecified 

covers own (third

parties shared)

 Metra Norfolk Southern 

(NS) 

Freight No fault 

third 

hared) 

No fault: each Included 100 

covers own (

parties s

 Metra UP Freight Combinationm Fault-based Included 200 

Southern Califo

Regional R

rnia 

ail 

trolink) 

BNSF Shared Fault-based Fault-based N/A 150 

Authority (Me

Metrolink UP Combinationn No fault: each 

covers own (third 

ltShared Excluded 100 parties fau

based) 

MTA Metro-North NS Freight No fault ch 

rd 

are 

No fault: ea Included Unspecified 

covers own (thi

parties and 

passengers 

fault-based) 

Metro-North CSX Commuter No fault 

n 

s 

No fault: each Silent Unspecified 

covers ow

equipment 

(passenger o shared)

Metro-North CP Commuter No fault No fault: freight 

covers own and 

50 percent of 

Excluded Unspecified 

other liability 

New Jersey Transit 

Corporation (NJT) 

Shared No fault 

parties shared) 

CSX Silent 100 p No fault: each 

covers own (third

NJT NS Shared No fault No fault: each Silent 100 

covers own (third

parties shared) 

New Mexico Rail 

Runner Express 

r, with 

freight 

easementq

BNSF Commute No fault No fault: 

commuter covers 

all liability 

Silent 250r

Page 48 GAO-09-282 Commuter Rail 
Appendix II: Summary of Liability and 

Indemnity Provisions in Commuter Rail 

Agency and Freight Railroad Agreements 

Dollars in millions 

Commuter rail 

agency Class I railroad Ownershipa

 

Is contract faultbased or nofault? 

What are 

provisions for 

freightcommuter 

collision?b 

Are specific 

types of 

conduct 

excluded or 

explicitly 

included? 

What is the 

level of 

insurance that 

is requiredc

Southeastern 

Pennsylvania 

Transportation 

Authority (SEPTA) 

CSX Shared Combinations No fault: each 

covers own (third 

parties and 

passengers are 

fault-based) 

Silent Unspecified 

SEPTA NS Commuter Combinationt 

rd 

No fault: each Silent Unspecified 

covers own (thi

parties and 

passengers are 

fault-based) 

Sound Transit, ith 

muter 

easements 

ird 

parties shared) 

Central Puget 

Sound Regional 

Transportation 

Authority 

BNSF Freight, w

some com

No fault No fault: each

covers own (th

Included 200 

Trinity Railway 

Express (TRE) 

UP Commuter Combinationu 

d) 

Fault-based (third Excluded Unspecified 

parties share

TRE BNSF Commuter Combinationv ed (third 

 

Fault-bas Silent Unspecified 

parties shared)

South Florida 

Regional 

Transportation 

Authority (Tri-Rail) 

CSX Commuter, with 

freight 

easementsw 

No fault No fault: each Included 125 

covers own (third

parties shared) 

Virginia Railway 

Express (VRE) vers 

CSX Freight No fault No fault: 

commuter co

all liability 

Included 250 

 VRE NS Freight No fault No fault: Included 250 

commuter covers

all liability 

Proposed commuter rail agenciesx 

Northstar BNSF Freight, with 

r 

easement 

No fault 

rs 

Silent 200 

commute

No fault: 

commuter cove

all liability 

SunRail CSX Commuter 

nt on 

legislative 

approval)y

 

No fault 

rd 

Included 200 

(continge

No fault: each 

covers own (thi

parties shared) 

Source: GAO analysis

Note: Eac

governing 

 of commuter and freight rail lia n

h row of this table represents h there may be more than one contract 

this relationship. If the liability ity provisions are the same, the contracts are not 

disaggregated. In cases where liability and indemnity provisions are different for different sections of 

shared use, then they are so noted. This table does not include details on provisions for liability for 

the discharge of hazardous substances. 

bility and indemnity provisio

a relationship, althoug

 and indemn

s. 

Page 49 GAO-09-282 Commuter Rail 
Appendix II: Summary of Liability and 

Indemnity Provisions in Commuter Rail 

Agency and Freight Railroad Agreements 

a

Indicates which party owns the tracks. If a commuter rail agency owns some sections of track and 

the freight railroad owns other sections and each entity hosts each other, then the ownership column 

is marked as shared. 

b

This column only describes provisions for collisions between freight and commuter trains. For this 

column, “each covers own” generally refers to liability for employees, equipment, and property. In the 

case of commuter rail agencies, the term also refers to passengers, although the definition of 

“passenger” and “third party” varies by agreement. 

c

Insurance indicates minimum level of coverage, but does not address any self-insured retention the 

ter railroa use to w a vel. 

d

ACE owns 1,000 feet of track. 

e

Caltrain’s contract with UP is no fault fo llion and fault-based for liability 

levels above $25 million to $125 million

f

 on negligent. 

er an s for 4 em, they share a

each owns and exclusively uses its own

h

MARC is not liable for excluded conduc ut this conduct is explicitly included for 

liability above $5 million. 

i

TA for their ow pro less of fault, but liabili

assengers, a

ded only for CSX prop n the case of gross negligence. 

Provisions are generally no fault except in collision, but Metra covers all liability in excess of $2 

million. 

 prov ome s cating liabil

m

 are g excep

Metrolink’s agreements with UP are no ls up to $25 million and fault-based in 

ion or $125 m cks. 

ends on cir

tions are strictly through the Conrail. 

q

The New Mexico Department of Transportation is the owner. 

ce total in 0 million e unt. 

s

CSX and SEPTA take liability for their o roperty, regardless of fault, but liability 

for all other persons, including passeng d on the basis of fault. 

 SEPTA for their ow s and prop ess of fault, but liabilit

all other persons, including passengers, asis of fault. 

u

TRE indemnifies UP in a no-fault arran ssengers, and UP indemnifies TRE for 

accidents at crossings. 

nifie ccidents at 

r is the Florida Department o T). FDOT and CSX have an agreement 

urance limits to $200 mill e approval, as part of an agreement to 

additional tracks for the Central Fl mmuter Rail, described in note y. 

 t roposed co : Rail Passenger Program in 

tte Area Transit System lina, and TriMet Westside Express 

ES) in Oregon. However, the enger Program and CATS did not have 

ts for liability and indemnity, and WES had a contract with a non-Class I railroad. 

s. 

commu d may decide to cover losses belo

r liability levels up to $25 mi

. 

certain le

Fault is based which party is 

d UP share track g

FrontRunn .5 miles. On the rest o

 tracks. 

t up to $5 million, b

f the syst corridor, but 

CSX and MB

all other persons

take liability

, including p

n employees and

 is assigned on the b

erty and employees i

perty, regard

sis of fault. 

ty for 

j

Conduct is exclu

k

l

Fault-based

collision on the bas

isions apply to s

is of fault. 

ituations and could also result in allo ity in a 

Provisions

n

enerally no fault t in collision. 

 fault for liability leve

excess of $25 million up to $100 mill illion depending on the tra

cumstances. 

ir part ownership of 

o

Liability for third parties dep

p

CSX opera

r

Insuran cludes a $5 scrow acco

wn employees and p

ers, is assigne

t

NS and take liability n employee

 is assigned on the b

gement for pa

erty, regardl y for 

v

BNSF indem s TRE for a crossings. 

f Transportation (FDO

ion, pending legislativ

orida Co

w

The owne

to raise the ins

purchase 

x

We spoke with

Atlanta, Charlo

Service (W

finalized contrac

hree other p mmuter rail agencies

(CATS) in North Caro

 Georgia Rail Pass

 the Georgia

y

The owner will be FDOT, and CSX proposes to retain easement

Page 50 GAO-09-282 Commuter Rail 
Appendix III: Summary of Liability and 

Indemnity Provisions in Commuter Rail 

Agency and Amtrak Agreements 

Commuter rail agency Ownership d?

Is contract faultbased or no 

fault? 

What are provisions for Amtrakcommuter collision?a

Are specific types of 

conduct excluded or 

explicitly include b

North County Transit District 

(Coaster) 

Commuter No fault No fault: equipment and passengers Excluded 

shared, all other liability Amtrak 

except residual damage 

Connecticut Department of 

Transportation Shore Line East 

(SLE) 

Amtrak No fault No fault: commuter covers all liability Excluded 

except Amtrak employees 

Delaware Department of 

Transportation (DelDOT)c 

Amtrak No fault No fault under $300,000: commuter Excluded 

covers all liability except Amtrak 

employees and intercity trains

Florida Department of 

Transportation (FDOT)d

Commuter Combination Fault-based Silent 

MTA Long Island Rail Road Amtrak No fault No fault: liability shared equally Silent 

Maryland Transit Administration 

(MARC) 

Amtrak No fault No fault: commuter covers all liability Excluded 

except Amtrak commuter employees 

Massachusetts Bay Transportation 

Authority (MBTA) 

Shared o fault N No fault: commuter covers all liability Excluded e

except Amtrak employees and 

Amtrak intercity operations 

MBTA Commuter No fault No fault: Amtrak covers all liability Excluded 

Northeast Illinois Regional 

Commuter Railroad Corporation 

(Metra) 

AmtrakfCombination Combination Excluded 

Metra Commu

residual 

ity shared 

ter No fault No fault: commuter covers own Silent 

equipment, employees and 

passengers and other 

damage, all other liabil

Southern California Regional Rail 

Authority (Metrolink) 

Commuter No fault No fault: each covers own, commuter Excluded 

covers third parties 

MTA Metro-North Commuter No fault No fault: each covers own (third Silent 

parties covered by Metro-North) 

New Jersey Transit Corporation Amtrak No fault: commuter covers all liability 

loyees 

No fault Silent 

except Amtrak emp

New Mexico Department of 

Transportation (NMDOT)g 

Commuter Fault-based Fault-based Silent 

Rhode Island Public Rail 

Corporationh

Amtrak No fault No fault: commuter covers all liability Silent 

Southeastern Pennsylvania 

Transportation Authority (SEPTA)c

Amtrak No fault No fault: commuter covers all liability 

except Amtrak employees 

Silent 

Virginia Railway Express (VRE) Amtrak 

exchange for risk fee except for VRE 

property 

No fault No fault: Amtrak covers all risk in Silent 

Source: Amtrak. 

Appendix III: Summary of Liability and 

Indemnity Provisions in Commuter Rail 

Agency and Amtrak Agreements 

Page 51 GAO-09-282 Commuter Rail 
Appendix III: Summary of Liability and 

Indemnity Provisions in Commuter Rail 

Agency and Amtrak Agreements 

a

This column only describes provisions for collisions between commuter and Amtrak trains. For this 

column, “each covers own” generally refers to liability for employees, passengers, equipment, and 

property. 

b

u w tion

T rnkey” servi D Amtrak for 

liability up to $300,000 and pa bility above $300,000. 

d

FDOT ks in South F

e

Amtrak is responsible for all liability above $75 million to $200 million. MBTA assumes liability for its 

employee pment, and pa result of A s sole 

eglig ission. 

f

Amtrak owns about 2 miles o and has a fault-based contract for 

en . On th track, excluded conduct is ut. 

g

NMDO ver wh

MBTA rnkey” servic k-owned lines. 

“Excl ded conduct” means illful or wanton misconduct explicitly men ed in contract. 

c

SEP A runs a “tu ce for DelDOT on Amtrak-owned lines. Del

ys a risk fee so Amtrak will absorb lia

OT indemnifies

 owns trac lorida on which Tri-Rail and Amtrak operate. 

s, equi

ence or om

ssengers, except when an incident is the 

f track around Chicago Union Station

mtrak’

n

incid ts at the station e Amtrak-owned carved o

T owns tracks o ich Rail Runner and Amtrak operate.

h

 runs a “tu e for the Rhode Island Public Rail Corporation on Amtra

Page 52 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

National Railroad Passenger Corp. v. Consolidated Rail Corp., 69

F. Supp. 951 (D.D.C. 1988), vacated on other grounds, 892 F.2d 1066 (D.C

C

8 

. 

ir. 1990) 

onclusion: A U.S. District Court ruled that the indemnification provisions 

nforced where there were allegations and a showing of gross negligence, 

l misconduct, or 

onduct so serious as to warrant the imposition of punitive damages. 

ed the segment of the Northeast Corridor that runs 

etween Washington, D.C., and New York. Conrail used the Northeast 

e Conrail freight 

comotives that had entered the path of the high-speed Amtrak passenger 

before crossing over onto the track being used by the Amtrak train, the 

Conrail engineer and brakeman in control of the Conrail locomotives had 

failed to heed a series of slow and stop signals at or before a track 

juncture near Chase, Maryland. The Conrail engineer admitted to the 

following: that the Conrail crew had recently used marijuana, was 

speeding, was operating a train in which the cab signal had been rendered 

inoperative because the light bulb had been removed from it, and was 

operating a train in which an audible warning device had been 

intentionally disabled. He also admitted that he had failed to call signals to 

his brakeman, as required by applicable safety regulations, that he had 

failed to maintain a proper lookout, and that he had not adhered to the cab 

signals or the wayside signals. The engineer pleaded guilty to 

manslaughter and was given the maximum penalty for manslaughter, 5 

years imprisonment and $1,000 in fines. The plaintiffs in many of the cases 

brought against Conrail and Amtrak alleged that Conrail or Amtrak or both 

committed reckless, wanton, willful, or grossly negligent acts and asserted 

entitlement to compensatory as well as punitive damages. 

Amtrak brought this action before the court seeking a declaration of the 

rights and obligations of the parties with respect to the indemnifications of 

the freight operating agreement. 

C

in an operating agreement between Amtrak and Conrail could not be 

e

recklessness, willful and wanton misconduct, intentiona

c

Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity 

Provisions 

Federal Cases 

Addressing 

Enforceability of 

Liability and 

Indemnity Provisions 

Facts: Amtrak own

b

Corridor pursuant to a freight operating agreement. 

In January 1987, an Amtrak train collided with thre

lo

train. The accident resulted in 16 deaths and more than 350 injuries. Just 

Page 53 GAO-09-282 Commuter Rail 
Appendix IV: S

A

ummary of Key Case Law 

ddressing Liability and Indemnity Provisions

Page 54 GAO-09-282 

The operating agreement provided in part as follows: 

“Amtrak agrees to indemnify and save harmless Conrail and Conrail Employees, 

irrespective of any negligence or fault of Conrail or Conrail Employees, or howsoever the 

h 

irrespective of any negligence or fault of Conrail or Conrail Employees, or howsoever the 

h 

y 

tent at 

s 

to apply 

orcement 

ety 

ingly, the 

ere 

Apfelbaum v. National Railroad Passenger Corp., No. 00-178, 2002 

nnsylvania Transportation Authority 

SEPTA) entered into a contract in which it indemnified Amtrak against 

ny and all liability arising from the use of 30th Street Station in 

Philadelphia. Under Pennsylvania law, a party may bring a claim against 

e Commonwealth of Pennsylvania only if the basis for the claim falls 

within one of the exceptions to immunity enumerated in the Pennsylvania 

same shall occur or be caused, from any and all liability for injury to or death of any 

Amtrak Employee, or for loss of, damage to, or destruction of the property of any suc

Amtrak Employee. 

“Amtrak agrees to indemnify and save harmless Conrail and Conrail Employees, 

same shall occur or be caused, from any and all liability for injuries to or death of any 

Amtrak Passenger and for loss of, damage to, or destruction of any property of any suc

passenger.” 

The issue presented in the case was “whether Amtrak must indemnif

Conrail for any damages—compensatory, punitive or exemplary—arising 

out of the Chase accident that are founded upon reckless, wanton, willful,

or grossly negligent acts by Conrail.” 

The court found that the parties did not clearly manifest a mutual in

the time they executed the freight operating agreement, or any previou

agreement between the parties, for the indemnification provisions 

to accidents caused by gross negligence, recklessness, or wanton and 

willful misconduct warranting the imposition of punitive damages. In 

addition, the court found that public policy would not allow enf

of indemnification provisions that appear to cover such extreme 

misconduct because serious and significant disincentives to railroad saf

would ensue. Under District of Columbia law, contractual provisions may 

be invalidated when they are contrary to public policy. Accord

court ruled that Amtrak was not required to indemnify Conrail where th

were allegations and a showing of gross negligence, recklessness, willful 

and wanton misconduct, intentional misconduct, or conduct so serious as 

to warrant the imposition of punitive damages. 

WL 32342481, 2002 U.S. Dist. Lexis 20321 (E.D. Pa. 2002) 

Conclusion: The Southeastern Pe

(

a

th

 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

Sovereign Immunity Act. The U.S. District Court for the Eastern District of 

Pennsylvania found that the claim by the plaintiff did not fall within one of 

 that 

elf 

ted by the legislature. 

eet 

 liability arising from or in connection with the use or 

occupation of 30th Street Station. The plaintiff named several defendants, 

ible 

 indemnify Amtrak. Under 

Pennsylvania law, the Commonwealth of Pennsylvania enjoys immunity 

s 

aused by the gross 

negligence of Amtrak. An arbitration panel found Amtrak’s actions to be 

h the insurance 

coverage specified in the agreement notwithstanding the first arbitration 

ation and 

n 

the statutory exceptions to immunity. Accordingly, the court found

the contractually negotiated indemnity agreement was unenforceable, 

stating that a Commonwealth agency could not waive its sovereign 

immunity by any procedural device, including a contract, and expose its

to liability preven

Facts: An individual alleged that she slipped and fell in the 30th Str

Station in Philadelphia, Pennsylvania. The 30th Street Station is owned by 

Amtrak and a portion is leased to SEPTA through a lease agreement. As

part of the lease agreement, SEPTA agreed to indemnify Amtrak against 

any and all

including SEPTA, Amtrak, and the cleaning service companies respons

for maintaining the station. SEPTA moved for summary judgment claiming

sovereign immunity. The other defendants argued that SEPTA waived its 

sovereign immunity when it agreed to

from suit except when the General Assembly has, by statute, expressly 

waived the immunity. The court found that because the alleged dangerou

condition resulting in injury was not caused by a defect in the property 

owned by Pennsylvania, the claim did not fall within any of the nine 

exceptions to immunity enumerated in the Pennsylvania Sovereign 

Immunity Act. Accordingly, the court found that the indemnity agreement 

was unenforceable. 

Maryland Transit Admin. v. National Railroad Passenger Corp., 

372 F. Supp. 2d 478 (D. Md. 2005) 

Conclusion: Pursuant to an operating agreement between the Maryland 

Transit Administration (MTA) and Amtrak, MTA had agreed to indemnify 

Amtrak for any liability except that which was c

grossly negligent. The court, however, upheld a second arbitration panel’s

ruling that MTA was responsible for providing Amtrak wit

panel’s finding that Amtrak was grossly negligent. 

Facts: An Amtrak passenger train proceeded through a stop indic

collided with a commuter train, causing significant damage. An arbitratio

panel found that an Amtrak engineer was guilty of gross negligence in 

causing the collision, and on the basis of language of the operating 

Page 55 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

agreement, determined that MTA was relieved of any responsibility to 

indemnify Amtrak. The agreement essentially provided that MTA agreed to 

indemnify Amtrak for any liability that would not have arisen but for the 

existence of the commuter rail service, except for any liability that was

caused by the gross negligence of Amtrak. 

A second arbitration panel independently found that MTA was responsible 

for providing insurance coverage to Amtrak notwithstanding the fact that 

3 

ent 

ability Act of 1997 that states that a provider of 

passenger rail transportation may enter into contracts that allocate 

The jury in the lower-court case found that Amtrak’s conduct was not 

 The 

Facts: O&G, a commercial construction company, contracted with the 

. The 

Amtrak was found to be grossly negligent by the first arbitration panel.

Amtrak sought confirmation from the United States District Court that 

MTA was required to provide insurance coverage to Amtrak 

notwithstanding the Amtrak engineer’s gross negligence, and MTA

petitioned to vacate this award. 

The court confirmed the arbitration panel’s finding regarding MTA’s 

responsibility to provide insurance to Amtrak. 

O&G Industries v. National Railroad Passenger Corp., 537 F.3d 15

(2d Cir. 2008), petition for cert. filed (U.S. Jan. 14, 2009) (No. 08-895) 

Conclusion: The United States Court of Appeals for the Second Circuit 

held that a Connecticut statute that nullifies indemnity agreements 

insulating a party from its own negligence was preempted to the ext

that it conflicted with 49 U.S.C. § 28103 (the provision of the Amtrak 

Reform and Account

financial responsibility for claims). 

reckless and Amtrak was not required to pay punitive damages, but the 

court held that even if the jury had found Amtrak’s conduct to be reckless,

O&G Industries (O&G) would still be required to indemnify Amtrak.

court stated that it was the intent of Congress to allow Amtrak to enter 

into indemnity agreements with respect to any claims against Amtrak. The 

court also held that Amtrak could be indemnified against third party as 

well as passenger claims. 

Connecticut Department of Transportation to perform work related to I-95 

as it passed over Amtrak’s tracks in East Haven. Amtrak and O&G entered 

into a contract that permitted O&G to enter onto Amtrak property to 

perform the work. In the contract, O&G agreed to indemnify Amtrak

Page 56 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

indemnity agreement stated essentially that O&G would indemnify Amt

irrespective of its negligence or fault from any and all losses and liabilities 

“arising out of in any degree directly or indirectly caused by or resulting 

from activities of or work performed by [O&G].” The agreement also 

stated that O&G would not indemnify Amtr

rak 

ak where the negligence or 

fault of Amtrak was the sole causal fault of Amtrak, except for injury or 

n 

the bridge. 

 argued that 

ecticut 

nnecticut public policy. The statute, 

based on public policy considerations, bars indemnification agreements in 

 permits Amtrak to enter 

into indemnification agreements, preempted the Connecticut statute. 

compensatory damages and not punitive damages. The jury also found, 

g O&G 

mnify 

e 

e indemnification agreement, and 

that O&G was legally obligated to indemnify Amtrak. The lower court 

s 

 

death of employees of Amtrak and its contractors. 

An Amtrak train struck and killed an O&G employee who was working o

Amtrak brought a suit against O&G for indemnification. O&G

Amtrak’s claim for contractual indemnification was barred by Conn

General Statute § 52-572k and Co

construction contracts that shield a party from its own negligence.1

Amtrak responded that 49 U.S.C. § 28103, which

The jury found that Amtrak was not reckless and so only had to pay 

however, that Amtrak had breached a material term of the contract by 

failing to safely operate its train in the area of the work site, relievin

from an obligation to indemnify Amtrak. 

Amtrak moved for a judgment as a matter of law that O&G must inde

it. Amtrak stated that notwithstanding the jury verdict, the facts of th

accident fell within the wording of th

agreed and required O&G to indemnify Amtrak. 

O&G appealed its case to the United States Court of Appeals for the 

Second Circuit. The court held that the Connecticut statute that nullified 

indemnity agreements that insulated a party from its own negligence wa

preempted to the extent that it conflicted with federal law, and the facts of 

 

d not 

1

On appeal, Amtrak claimed that the Connecticut statute applied only to construction 

contracts, and that the contract at issue was not a construction contract. Because Amtrak 

did not contest the applicability of the Connecticut statute during the lower-court 

proceedings, the Second Circuit held that Amtrak had waived that argument and coul

raise it on appeal. 

Page 57 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

the accident fell within the wording of the indemnification agreement so 

that O&G was legally obligated to indemnify Amtrak. 

In addition, the court held that even if the jury had found Amtrak’s 

conduct to be reckless, O&G would still be required to indemnify Amtra

The court stated that 49 U.S.C. § 28103(b), the provision in the Amtrak 

Reform and Accountability Act of 1997 that authorizes a provider of rail 

k. 

passenger transportation service to enter into contracts that allocate 

ilroad Passenger Corp. v. Consolidated Rail Corp. 

(“Conrail”), 698 F. Supp. 951 (D.D.C. 1988) (invalidating an agreement to 

lified 

language in § 28103(b) leaves no doubt as to the specific intent of Congress to sanction 

ms 

 (Memorandum of Decision) 

. SEPTA has argued that it 

did not have the power to waive its sovereign immunity and that this issue 

did not have the power to waive its sovereign immunity and that the issue 

had been fully litigated, but instead argued that the sovereign immunity of 

financial responsibility for claims, legislatively overruled the opinion in 

National Ra

indemnify for losses caused by the indemnitee’s gross negligence, as 

contrary to District of Columbia public policy), vacated on other grounds, 

892 F.2d 1066 (D.C. Cir. 1990). The court stated the following: 

“As Judge Dorsey correctly noted in granting summary judgment to Amtrak, it was 

precisely the doubts cast by the Conrail decision over the validity of indemnity agreements

by railroad parties that prompted Congress to enact § 28103(b) . . . . The broad, unqua

indemnity arrangements between Amtrak ‘and other parties’ with respect to any clai

against Amtrak. See S.Rep. No. 105-85, at 5 (1997).” 

Deweese v. National Railroad Passenger Corp., 2009 WL 222986, 

2009 U.S. Dist. LEXIS 6451 (E.D. Pa. 2009)

Conclusion: The U.S. District Court for the Eastern District of 

Pennsylvania held that 49 U.S.C. § 28103 preempted Pennsylvania’s 

sovereign immunity statute. The court upheld the validity of the 

indemnification agreements between Amtrak and the Southeastern 

Pennsylvania Transportation Authority (SEPTA)

was previously litigated in favor of SEPTA and against Amtrak in 

Apfelbaum v. National Railroad Passenger Corp., 2002 WL 3234281, 2002

U.S. Dist. Lexis 20321 (E.D. Pa. 2002), and collateral estoppel precluded 

Amtrak from litigating it again.2

 Amtrak conceded that the Commonwealth 

 ed 2

Collateral estoppel is a doctrine barring a party from relitigating an issue determin

against that party in an earlier action, even if the second action differs significantly from 

the first one. 

Page 58 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

the Commonwealth had been preempted by 49 U.S.C. § 28103(b). The 

court agreed with Amtrak and against SEPTA. 

Facts: The plaintiff, Deweese, went to the Crum Lynne train station 

Ridley Park, Pennsylvania to board a SEPTA train bound for Philadelphia. 

When he arrived at the station, he learned that he had to board the train

from the tracks on the opposite side of where he had entered the station.

He attempted to cross the tracks and was struck by an Amtrak train, 

resulting in serious injuries. Amtrak owned the Crum Lynne station and 

SEPTA leased the station from Amtrak. The railroad tracks at the

were owned by Amtrak as well. As part of the lease agreement between 

Amtrak and SEPTA, SEPTA agreed to indemnify Amtrak for all liabilit

which would not have occurred but for the existence of the commuter 

service provided by SEPTA. The agreement for access to the ra

in 

 station 

y 

ilroad 

tracks contained a similar provision. 

and held that a Maryland 

statute (which provides that an indemnification in a contract pertaining to 

provisions in procurement contracts. Accordingly, the Mass Transit 

uck a 

ttled. 

building, structure, appurtenance, or appliance for damages arising from 

the negligence of the party indemnified is against public policy and is void 

and unenforceable. 

SX. The court stated that the Maryland statute applies only to 

State Cases Mass Transit Administration v. CSX Transportation Inc., 708 A.2d 

298 (Md. 1998) 

Conclusion: The Court of Appeals of Maryl

construction is void and against public policy if the party indemnified is

negligent) applies only to construction contracts, not to indemnification

Addressing 

Enforceability of 

Liability and 

Indemnity Provisions 

Administration (now the Maryland Transit Administration) was required to 

indemnify CSX Transportation (CSX). 

Facts: A Maryland Rail Commuter (MARC) train operated by CSX str

backhoe that was performing maintenance on the track. The operator of 

the backhoe was a CSX contractor. No one was injured. The backhoe 

operator sued CSX for the value of the backhoe, and the parties se

CSX then claimed indemnification from MTA, of which MARC is a part. 

MTA argued that the indemnification provision in the commuter rail 

passenger service agreement between CSX and MTA was void based on 

the Maryland statute that provides that an indemnification in a contract 

pertaining to the construction, alteration, repair, or maintenance of a 

The Court of Appeals of Maryland held that MTA was required to 

indemnify C

Page 59 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

construction contracts, not to indemnification provisions in procureme

contracts, and the contract did not become a co

nt 

nstruction contract 

because of the collision between a train and a backhoe. 

d 

 this case, but the case is relevant in 

that it holds if a state law prohibits indemnification for certain types of 

onduct, insurance provisions still must be honored if this type of conduct 

hat occurred on a railroad crossing owned by Conrail 

during a road construction project carried out by the Delaware 

d as a 

, once issued, could not be held 

unenforceable against the indemnified party, even where the party was 

etts 

or 

e 

Pacific Insurance Co. v. Liberty Mutual Insurance Co., 956 A.2d 

1246 (Del. 2008) 

Conclusion: The Supreme Court of Delaware held that the insurance 

policy providing Conrail with coverage would not violate a Delaware 

statute providing that public policy precludes contractual indemnification

for a party’s own negligence. The court held that the insurance purchase

to protect Conrail, once issued, could not be held unenforceable against

Conrail. 

Facts: Conrail is the only rail entity in

c

occurs. This case involved an insurance coverage dispute that arose from 

fatal accidents t

Department of Transportation. Two wrongful death actions were file

result. These actions were settled, but a dispute over coverage under two 

insurance policies remained. One of the insurance companies argued, 

among other things, that it was not required to provide the contractual 

coverage because of a state statute that precluded contractual 

indemnification for a party’s own negligence. The court held that the 

insurance purchased to protect Conrail

found to be negligent. 

Massachusetts Bay Transportation Authority and Massachus

Bay Commuter Railroad Co. v. CSX Transportation Inc. and 

Cohenno Inc. (Super. Ct. Civ. Action 2008-1762-BLS1) (Memorandum and 

Order on Defendant CSX Transportation, Inc.’s Motions to Dismiss) 

Conclusion: The Business Litigation Session of the Massachusetts Superi

Court held that provisions that indemnify CSX are unenforceable on th

basis of the Massachusetts common law to the extent that the contractual 

provisions indemnify CSX against its own gross negligence or reckless or 

intentional conduct. 

Page 60 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

Facts: In March 2008, a freight car that had been delivered by CSX to a 

shipping depot rolled down the siding at the top of a hill, where it cr

into a commuter train with roughly 300 passengers, injur

ashed 

ing many. 

uthority (MBTA) and CSX states that MBTA will 

indemnify CSX “irrespective of any negligence or fault . . . from any and all 

jury 

 to 

. 

 a motion to dismiss for failure to state a claim. 

ess 

s case 

lid 

 to the 

 

The 1985 trackage rights agreement between the Massachusetts Bay 

Transportation A

liability, damage, or expense of any kind” arising out of damages or in

to any MBTA employee or other contractor of MBTA or out of damage

MBTA property.3

 MBTA, and its contractor MBCR, filed a lawsuit with the 

Business Litigation Session of the Massachusetts Superior Court seeking a 

declaration that CSX was liable for the damages arising from the accident

CSX filed

The court held that under Massachusetts common law, contracts that 

relieve a party of responsibilities in cases of gross negligence or willful 

misconduct are against public policy and are not enforceable. The court 

stated that it was governed by controlling appellate authority holding that 

a party may not shield itself from liability for gross negligence or reckl

or intentional conduct.4

 The court, however, citing Massachusett

law, stated that it is not contrary to public policy to exempt a party from 

its own simple negligence.5

 The court stated that a party, in the absence of

unconscionable conduct, can contractually exempt itself from liability 

from negligence. Accordingly, the court held that the agreement was va

to the extent that it indemnified CSX for negligence, and invalid

extent that it indemnified CSX for gross negligence or reckless or 

intentional conduct. 

 

3

The agreement also provides that the party whose negligence caused injury to any person 

s 

ional Insurance & Risk Brokerage, 71 Mass. App. Ct. 1127 

Pursuant to Rule 1:28) (2008). 

5

See Cornier v. Central Mass. Chapter of the National Safety Council, 416 Mass. 286, 

287-289 (1993). 

will indemnify the other party. CSX contended that this issue had not yet become ripe. The 

court disagreed but did not determine as part of this proceeding, which party, if either, wa

negligent. 

4

See Zavras v. Capeway Robers Motorcycle Club, 44 Mass. App. Ct. 17, 18-19 (1997); HR 

Knowledge, Inc. v. Profess

(Memorandum and Order 

Page 61 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

The Rail Passenger Service Act of 1970 provides that Amtrak and freigh

railroads may contract for Amtrak’s use of the freight railroads’ facilities. 

If the parties cannot agree upon a contract, the Surface Transportat

t 

ion 

Board (STB) may order access and prescribe the terms and conditions of 

for certain 

standard risks. STB determined that other residual damages arising out of 

basis, 

 to indemnify the host railroad against liability 

resulting from any damages that occur to Amtrak employees, equipment, 

nd passengers, regardless of fault, and the host railroad agrees to 

indemnify Amtrak against any liability resulting from damages to the host 

railroad’s employees or equipment, regardless of fault. 

In the proposed agreement at issue in this case, Amtrak agreed to assume 

full responsibility for the following types of damages: (1) injury or death to 

roperty of Guilford and of its employees) 

Surface 

the contract, including compensation. 

Application of the National Railroad Passenger Corp. under 49 

U.S.C. 24309(a) — Springfield Terminal Railway Co., Boston and 

Maine Corp. and Portland Terminal Co., 3 S.T.B. 157 (1998) 

Conclusion: Amtrak petitioned STB to set terms and compensation for 

Amtrak’s use of track owned by the freight railroads in the Guilford Rail 

System. Amtrak agreed to indemnify the freight railroads 

Transportation Board 

Decisions Addressing 

Enforceability of 

Liability and 

Indemnity Provisions 

Amtrak’s operations were an incremental cost for which Guilford was 

entitled to compensation. In addition, STB refused to require Amtrak to 

reimburse the freight carriers from damages due to the freight carriers’ 

gross negligence, recklessness, or wanton or willful conduct. 

Facts: Amtrak petitioned STB to set the terms and compensation for 

Amtrak’s use of freight carriers’ lines to provide passenger service 

between Boston and Portland, Maine. 

Amtrak asked STB, in prescribing the terms and conditions, to adopt 

Amtrak’s standard liability agreement with freight railroads, known as 

section 7.2. This section essentially allocates liability on a no-fault 

that is, Amtrak agrees

a

Amtrak employees or damage to their property, (2) injuries or death to 

Amtrak passengers and damage to their property, (3) damage to Amtrak 

equipment or property, and (4) injuries or death to any person or damage 

to property (other than p

proximately caused as a result of a collision of a vehicle or a person with

an Amtrak train at a grade crossing. 

Page 62 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

Amtrak proposed that the freight carriers assume liability for the followin

types of damages that could occur because of Amtrak’s presence on the 

tracks, in return for a payment of approximately $17,000 per year: 

injury to trespassers and licensees; 

g 

•

• injuries or death to Guilford employees or damage to their property or to 

f 

• s it 

•

ed 

• combine the first two methods (by, e.g., purchasing insurance with a 

or 

e operations safely. 

It also stated that public policy generally disfavors requiring one party to 

 

•

general indirect damages, such as environmental damage to houses near

the tracks; and 

the property of Guilford. 

STB found that the liability for these “residual damages” arising out o

Amtrak operations was an incremental cost for which the carriers were 

entitled to compensation. STB directed Amtrak to either 

fully indemnify the freight railroad for the residual damage categories, a

had agreed to do for other damage categories; 

purchase insurance to cover the freight carrier’s assumption of liability for

all such costs (i.e., without deductibles or low caps, even if that requir

the purchase of more than one policy); or 

deductible or low cap, but agreeing to indemnify the freight railroads f

damages that were subject to the deductible or cap). 

In addition, STB would not require Amtrak to reimburse the freight 

carriers from damages due to the freight carriers’ gross negligence, 

recklessness, or wanton or willful conduct. STB stated that statute 

requires that compensation levels reflect safety considerations,6

 and thus 

the freight carriers should be encouraged to conduct th

be responsible for another’s gross negligence or willful and wanton 

misconduct. 

 

), (8) (part of the federal government’s rail 

transportation policy), which requires STB to “promote a safe and efficient transportation 

system” and “operate facilities and equipment without detriment to the public health and 

safety.” 

6

As an example of a statute requiring that compensation levels reflect safety 

considerations, STB cited 49 U.S.C. § 10101 (3

Page 63 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

Boston and Maine Corp. and Springfield Terminal Railway Co. v. 

New England Central Railroad, STB Finance Docket No. 34612 (2006) 

Conclusion: STB held that the indemnity provision in the operating 

ne (B&M) and the New England 

entral Railroad (NECR) could not be used to indemnify NECR, which 

d 

l-established precedent that disfavors such 

demnification provisions” and would be contrary to the rail 

d “operate facilities and equipment without 

etriment to the public health and safety.” 

rak subject to 

reement. 

concerning NECR’s 

ased 

interpretation of 

ection 7.1 was contrary to public policy because it would apportion all 

tion 

 

agreement between Boston and Mai

C

had been found to be grossly negligent, since such an interpretation woul

“contravene wel

in

transportation policy, which requires STB to “promote a safe and efficient

transportation system” an

d

Facts: Pursuant to a previous Interstate Commerce Commission (ICC)7

order, B&M conveyed its “Connecticut River Line” to Amt

Amtrak’s granting B&M trackage rights on the line. Amtrak transferred the 

line to the Central Vermont Railway, which subsequently was purchased 

by NECR. NECR also took over the trackage ag

A B&M train operating over the Connecticut River Line derailed. B&M 

sued NECR for breach of contract and tortuous injury due to gross 

negligence, recklessness, and willful misconduct 

alleged failure to maintain the line. NECR responded that any claims b

on the condition of the track were barred by section 7.1 of the trackage 

rights order issued by ICC.8

 B&M argued that NECR’s 

s

responsibility for the derailment to B&M even if the derailment was 

caused solely by grossly negligent, reckless, or willful misconduct by

NECR. STB was called upon to determine whether ICC intended sec

7.1 to indemnify for gross negligence. 

 decessor to STB. 

8

Section 7.1 of the Trackage Rights Order provides (6 I.C.C.2d at 564): “Save as herein 

otherwise provided, each party hereto shall be responsible for and shall assume all loss, 

damage or injury (including injury resulting in death) to persons or property, including the 

cost of removing any trackage, repairing trackage and correcting environmental damage, 

which may be caused by its engines, cars, trains or other on-track equipment (including 

ment of the 

, 

ions of Section 7.2 shall apply.” 

7

ICC was the pre

damage by fire originating therefrom) whether or not the condition or arrange

trackage contributes in any manner or to any extent to such loss, damage or injury, and 

whether or not a third party may have caused or contributed to such loss, damage or injury

and for all loss or damage to its engines, cars, trains or other on-track equipment while on 

said trackage from any cause whatsoever, except in the case of collision, in which event 

the provis

Page 64 GAO-09-282 Commuter Rail 
Appendix IV: Summary of Key Case Law 

Addressing Liability and Indemnity Provisions 

STB held that section 7.1 should not be construed to absolve NECR of 

gross negligence since such an interpretation would “contravene wellestablished precedent that disfavors such indemnification provisions” and 

t 

would be contrary to provisions in the federal government’s rail 

transportation policy that require STB to “promote a safe and efficien

transportation system” and “operate facilities and equipment without 

detriment to the public health and safety.”9

 

9

49 U.S.C. § 10101 (3), (8). 

Page 65 GAO-09-282 Commuter Rail 
Appendix V: GAO Contact and Staff 

Acknowledgments 

Susan A. Fleming, (202) 512-4431 or flemings@gao.gov 

In addition to the contact named above, Nikki Clowers, Assistant

Alana Finley; Brandon Haller; Hannah Laufe; Nancy Lueke; and Aron 

Szapiro made key contributions to this report. 

Page 66 GAO-09-282 Commuter Rail 

 Director; 

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

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