Amtrak Reform and Accountability Act of 1997
The National Railroad Passenger Corporation, otherwise known as Amtrak, was created in 1971 by the Rail Passenger Service Act. Until then, freight rail had shouldered much of the passenger rail but was losing money doing it. Using government grants and loans, the aim was to have Amtrak take on that service and be self-sufficient in two years. By the 1990s, however, Amtrak was still receiving large amounts of federal funding and was on the verge of bankruptcy.
The Amtrak Reform and Accountability Act (ARAA) was passed in 1997 to try to legislate the company into becoming more economically viable. The bill spelled out several actions Amtrak could or could not take to rely less on the government to sustain its operation.
The bill had a profound effect on rail law as one of the provisions specifically limited Amtrak’s liability, imposing a $200 million cap on the amount the company would have to pay in both damages and punitive penalties.
The aggregate allowable awards to all rail passengers, against all defendants, for all claims, including claims for punitive damages, arising from a single accident or incident, shall not exceed $200,000,000.
The effect, essentially, was that judges and juries were stripped of their ability to determine a fair settlement amount in cases where liability is clearly proven, including both compensatory and punitive damages. While $200 million may seem substantial, in disasters involving mass casualties, when the award is divided amongst every victim or family, the recovery amount can potentially be insufficient.
One thing to note, however, in the event there were any federal workers on the train, the limit does not include claims awarded to them under the Federal Employer’s Liability Act.
In 2008, a Metrolink commuter train collided with a freight train near Chatsworth, California. The casualties were astounding. Twenty-five people lost their lives, and another 135 were injured. Metrolink is operated by Amtrak under a contract with the Southern California Regional Rail Authority and so is subject to the limits of the AARA. The trial judge who was charged with parceling out the award amongst the victims estimated the true cost of damages could have been as high as $350 million.
Following a tragic Amtrak derailment in Philadelphia in May of 2015 that killed eight people and injured over 200 others, it was again found that the maximum amount of compensation would not be enough to properly cover each individual leading to a call to raise the cap.
Kreindler attorney David Cook represented several victims of the Philadelphia derailment, and Amtrak eventually settled for $265 million, one of the largest settlements for a train-related accident. Congress raised the liability limit to $295 million, which is still in effect today.