Amtrak is looking to flex eminent domain privileges granted by the federal government to take control of the historic Union Station in Washington, D.C., in a lawsuit slated for oral arguments Tuesday.
The largest railroad service in the United States is seeking to seize full control of the property interest owned by Union Station Investco, bluntly arguing in court filings that Amtrak is better suited to manage and operate the station because of its decades of experience. Under federal code, Amtrak has the authority to seize property “necessary for intercity rail passenger transportation.”
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U.S. District Judge Amit Mehta will hear oral arguments in the case Tuesday and could decide soon whether to rule over Amtrak’s request for immediate possession of Union Station. Aside from seeking eminent domain, the core question at hand surrounds whether Amtrak, which has never generated a profit, can claim the “just compensation” for the Union Station property is $250 million, while Rexmark, the company that owns USI, appraises the station at $730 million.
The pandemic accelerated problems at Union Station, including rising crime at the complex and an exodus of retailers. The resulting decline in foot traffic has caused concern about the future of one of Washington’s most iconic properties.
Amtrak CEO Steven Gardner is candid about the company’s intentions with the lawsuit, saying the goal is “to take away that interference and distraction between us and instead have the control of the leased area,” according to a Sept. 15 court hearing transcript. The railroad service presently leases a small portion of Union Station, roughly 13.4%, from USI for its railroad operations.
“Mr. Gardner says he has big plans for more speedy Acela trains and other projects to increase ridership with the $66 billion Congress handed to him as part of the infrastructure bill, and the best of luck to him,” the Wall Street Journal’s editorial board published in an op-ed skeptical of Amtrak’s effort. “Maybe he can even make the trains run on time.”
Amtrak has filed a motion for immediate relief, or the possession of Union Station, before a ruling on the just compensation question in exchange for the property’s transfer to Amtrak, and a decision could be made in a matter of weeks. If Mehta rules in favor of Amtrak, the railroad company would receive 425,000 square feet of the station, which, aside from the parking garage, would include the entire property.
The railroad company further contends that federal code favors its argument to use eminent domain to acquire interests in property necessary for its long-planned concourse expansion and much-needed repairs to a tunnel for the railroad. Companies challenging Amtrak’s authority say the carrier has failed to meet requirements under U.S. law to prove the whole property is needed for its expansions.
Complicating the matter is the federal government’s 1985 authorization of the nonprofit Union Station Redevelopment Corp. to oversee the property. USI purchased its sublease rights through the USRC, and the defense in the case argues that original agreement cannot be ignored in Amtrak’s pursuit for full control of the historic station.
If Amtrak is allowed to take over Union Station, it would “effectively terminate the [existing] leases” at the station, including leases for stores and restaurants, Rexmark’s founder, Michael Rebibo, has argued. Additionally, defense attorney David Scharf told Mehta on Sept. 15 that none of the projects Amtrak cited in the lawsuit would be barred from progressing under the existing agreements.
Conversely, the nation’s largest railroad service argues that taking control of the leasing rights would essentially remove the middleman, USI, and allow Amtrak to negotiate directly with USRC about changes to Union Station, according to the Washington Post. Amtrak’s eminent domain case is also a response to rising numbers of vacancies inside the station, which is set to go through a $10 billion redevelopment spanning the next two decades.
“We need to advance some long-delayed state of good repair and capital projects so that we can improve the station and shore up the station infrastructure,” Dennis Newman, Amtrak’s executive vice president for strategy, planning, and accessibility, said in April 2022. “An improved Washington Union Station is really key to our mission.”
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Mehta will soon decide the tricky legal question about using the power of eminent domain to take property over an operating lease. According to the Union Station Redevelopment Act of 1981, Congress stated its intent was to task the Department of Transportation to rehabilitate the place for “historic preservation and improved rail use,” with “maximum reliance on the private sector and minimum requirement for Federal assistance.”
Oral arguments will begin in Mehta’s courtroom at 2 p.m., according to a late September order from the judge.
