Just days after the Surface Transportation Board (STB) granted Metra’s application for terminal trackage rights to continue commuter rail service over three Union Pacific-owned lines in Chicagoland, UP has filed a lawsuit against Metra in federal court seeking compensation, according to media reports.
Regional/commuter rail operator Metra and host freight railroad UP have been negotiating the transfer of commuter rail service on the three lines—the Union Pacific North, Northwest, and West—for several years. UP has historically provided service for Metra under a PSA (Purchase of Service Agreement), which has been extended several times while the railroads negotiate a new agreement.
Approximately 39% of Metra’s annual ridership (13.7 million out of a total 35 million passengers) is associated with the three lines owned, used and dispatched by UP (see map, below). Those lines were once operated by the Chicago & North Western Railway: the West Line to Elburn, the Northwest Line to Harvard and McHenry, and the North Line to Waukegan, with limited service to Kenosha, Wis. Metra has eight other lines; one of which, the historic Chicago, Burlington & Quincy line to Aurora, runs on right-of-way owned by BNSF, which still operates it under contract with Metra.
UP and Metra‘s most recent PSA extension “ended at midnight on June 30, 2025, and UP was not amenable to another extension,” the STB reported in its Sept. 2 decision granting Metra terminal trackage rights (download below). “Instead, UP presented Metra with a unilateral document termed ‘Condition of Entry’ (COE) to govern Metra’s use of the UP Lines, beginning July 1, 2025, pending the conclusion of this proceeding. Metra, however, objects to the COE on multiple grounds. … Metra states that it ‘has informed UP that it will continue to operate on the Lines after expiration of the existing agreement at midnight on June 30, 2025’ but that it ‘does not agree to and will not consent to the terms of the COE.’”
The STB reported that it “expects and encourages Metra and UP to undertake a concerted, good faith effort to reach agreement on terms and compensation for Metra’s use of the UP Lines.” While the Board did not set a deadline to complete negotiations, it requested a status report from the parties (either jointly or separately) by Nov. 3, 2025, that state “whether they have reached agreement, require additional time, or are unable to agree.” If additional time is required, the STB said, further status reports should be filed every 60 days. “If or to the extent the parties are unable to agree, either party may request the Board to establish compensation and/or conditions of use,” it noted. “The request must identify the disputed issue(s) and be accompanied by a proposed procedural schedule for the Board’s consideration to govern the process for resolving any remaining issues pertaining to compensation or conditions of use. The other party may file a written response to the request within 20 days.”
On Sept. 8, UP filed a lawsuit against Metra in the U.S District Court Northern District of Illinois Eastern Division seeking “to collect overdue compensation owed under a binding contract” (download below, courtesy of the Evanston RoundTable).
The freight railroad explained that “[g]iven the parties could not reach agreement on a long-term contract, Union Pacific’s position has been that Metra could keep operating on the UP Lines—on Union Pacific’s terms.” UP said it issued a COE that “set various basic terms, including requiring market-level compensation,” and “provided that Metra would accept and be bound by these terms if Metra’s trains ‘[a]ccess[ed] Union Pacific’s Rail Lines’ after the PSA expired at midnight on June 30, 2025.”
In the lawsuit, UP reported that while the “STB granted Metra trackage rights under federal law to operate on the UP Lines without Union Pacific’s consent,” its decision “does not affect the COE’s validity or enforceability from July 1 to September 3.” Until the STB issued its decision, “the COE was the sole source of Metra’s right to operate on the UP lines,” UP reported. “And the STB did not set any terms and conditions to govern Metra’s operations, much less retroactively to July 1. The COE thus remains valid and enforceable—and the parties still have a live dispute—at least as to the period between July 1 and September 3.”
The sticking point in UP and Metra’s PSA negotiations has been compensation, UP reported in the lawsuit. “The PSA’s expiring compensation arrangement was set fifteen years ago, in 2010,” according to the freight railroad. “Since then, both the market for providing rail capacity for passenger service and the Chicago-area real estate market have changed significantly.” In May 2025, Union Pacific said it “proposed that the franchise access fee under a post-PSA contract—essentially, the rental component of compensation—should be $18.50 per train mile. This compensation arrangement was captured in a draft operating agreement Union Pacific proposed to Metra. By contrast, Metra proposed compensation be set at $6.7 to $16.9 million annually, or approximately $3.05 to $7.68 per train mile.”
Consistent with the May 2025 proposal, the COE set the compensation fee for access at $18.50 per train mile, according to UP. The freight railroad told the Court that this is “commercially reasonable.” For example, it said, the Illinois Department of Transportation pays UP “a per-mile train access fee greater than the $18.50 proposed.”
UP also told the Court that Metra in July paid it $7,735,681.76, reflecting “the pricing under the expired PSA—$2,287,529.89 less than what Metra owes under the COE.”
In sum, UP said “[t]he Court should declare the COE a valid contract; declare that Metra is estopped from challenging the COE’s validity because it has accepted benefits thereunder; and award Union Pacific damages based on the difference between what Metra owes and what it has paid. Alternatively, the Court should hold that Metra is unjustly enriched by paying below-market rates to operate on Union Pacific’s lines and award Union Pacific damages based on reasonable value for the service it is providing.”
Metra spokesperson Michael Gillis ”declined to comment on the lawsuit filed by UP,” according to a report in The Chicago Tribune.
In a statement, UP spokesperson Kristen South told The Tribune “the railroad ‘has always been committed to ensuring that the commuter service provided to millions of Chicago riders will continue’ and that it ‘looks forward to working with Metra on a fair and reasonable resolution to the matter.’”
Further Reading:
- STB Denies Metra’s Request for Temporary Injunction
- Metra to STB: Ensure Passenger Service on UP Lines ‘Continues Uninterrupted’
- UP, Metra Move Closer to Service Transfer
- STB Orders Mediation for UP, Metra
- Judge Pronounces Common Carrier Obligation for ‘Commuter Rail’ Dead
- Report: RTA Redirects Funds From Metra, Pace to Prevent CTA Service Reductions
