Chicago's commuter rail system Metra has asked an Illinois federal judge to toss Union Pacific's lawsuit alleging Metra owes more than $2.3 million for the use of three Union Pacific-owned lines amid an ongoing contract dispute, saying a federal rail regulator still needs to determine any owed compensation.

Metra, known officially as the Commuter Rail Division of the Regional Transportation Authority, on Monday filed a motion to dismiss Union Pacific Railroad Co.'s lawsuit seeking to enforce a "condition of entry" governing Metra's operations from July 1 to Sept. 3. That's the period from when the parties' previous contract expired June 30 and the Surface Transportation Board granting Metra's request for trackage rights on the three lines.

"Metra has consistently maintained that the [condition of entry] is unenforceable and that it breaches both Metra's statutory rights and UP's contractual commitments to Metra," Metra said in its dismissal bid.

It argued that Union Pacific is entitled to disagree with the STB order, and it may seek judicial review via the review provisions of the Hobbs Act.

"UP, in fact, has already petitioned for review in the Eighth Circuit," it said. "What UP may not do is file litigation that collaterally challenges the STB order."

Yet that is precisely what Union Pacific has done here with this federal lawsuit, Metra argued.

"UP's complaint hangs on the allegations that '[t]he STB's decision does not purport to apply retroactively in any way,' and 'it does not affect ... Metra's obligation to pay the full amounts owed ... for the period between July 1 and September 3.' Those allegations contradict and misstate the STB order," Metra maintained.

The Surface Transportation Board is the independent adjudicatory board that exclusively regulates railroad rates, service disputes, mergers, line abandonments and other economic rail matters. Metra and Union Pacific this year hit an impasse in long-running negotiations over access fees for the three lines, so Metra asked the STB to intervene and grant Metra the trackage rights given "the importance of Metra's service to the economic well-being and quality of life in the communities located along the UP Lines."

The STB on Sept. 3 sided with Metra, granting its emergency request for trackage rights on the UP North, UP West and UP Northwest lines, which serve thousands of riders in the Chicago area.

Metra contends that Union Pacific's federal lawsuit should be dismissed for lack of jurisdiction, or stayed until the STB wraps up proceedings to determine how much compensation might be owed.

"UP's complaint contradicts the relief ordered by the STB: that the parties are to negotiate, and, if necessary, the STB will set compensation retroactive to July 1," Metra argued. "UP asks the court to disrupt that process and impose the court — rather than the STB — as the final arbiter of compensation, without the negotiation process the STB ordered nor leaving room for the STB to set compensation, as it said it would."

Meanwhile, Union Pacific in late September petitioned the Eighth Circuit to review the STB's decision.

Metra owns the commuter trains that run on the three lines, which account for 39% of Metra's total annual ridership. Union Pacific owns the tracks, and for years, its employees operated and maintained the commuter trains for Metra and performed administrative duties, such as selling tickets and collecting fares.

The parties' 2010 so-called purchase of services agreement, which laid out the terms of operating payments and in-kind benefits, expired years ago. Metra and Union Pacific signed a series of short-term extensions of that agreement.

Then, in 2019 Union Pacific said it wanted Metra to take over the commuter operations of those three lines or find someone else to handle it starting in 2020. Metra insisted that Union Pacific couldn't just pull out of operating the service, so they duked it out in court.

Union Pacific won that earlier battle. An Illinois federal judge ruled in September 2021 that Union Pacific had no common carrier obligations to provide commuter passenger service under the Interstate Commerce Commission Termination Act of 1995, and the Seventh Circuit affirmed the decision in July 2023.

The Seventh Circuit rejected Metra's efforts to invoke various clauses in the since-expired contract to lock Union Pacific into continuing to operate passenger service on the three lines.

Union Pacific and Metra have been trying to hammer out a new agreement ever since but can't agree on an appropriate "interest rental," or access fee, for the UP lines, according to court documents. Meanwhile, the most recent extension of their agreement expired June 30.

Both parties agree that the PSA that was drafted to govern the parties' former contractual relationship is "outdated and unworkable," according to court documents.

Union Pacific representatives could not be immediately reached for comment Wednesday. The company said in a previous statement to Law360 that it is "committed to ensuring commuter service in Chicago will continue uninterrupted."

"Granting Metra immediate trackage rights without setting the access terms has created significant uncertainties for both Union Pacific and Metra," Union Pacific said of the STB's decision. "These filings are needed to resolve those uncertainties while the disagreement between the parties is still pending."

Union Pacific is represented by Raymond A. Atkins, Allison C. Davis, Tobias S. Loss-Eaton, Stephen S. Laudone, Ogemdi Maduike, Bruce R. Braun, Charles K. Schafer and Andrew F. Rodheim of Sidley Austin LLP.

Metra is represented by Paul W. Hughes, Mary H. Schnoor, Emmett Witkovsky-Eldred and Matthew Madden of McDermott Will & Schulte LLP.

The case is Union Pacific Railroad Co. v. Commuter Rail Division of the Regional Transportation Authority, case number 1:25-cv-10785, in the U.S. District Court for the Northern District of Illinois.