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Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors (2010)

Chapter: Chapter 4 - Content of Shared-Use Access and Operating Agreements

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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
×
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
×
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
×
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
×
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
×
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
×
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Suggested Citation:"Chapter 4 - Content of Shared-Use Access and Operating Agreements." National Academies of Sciences, Engineering, and Medicine. 2010. Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors. Washington, DC: The National Academies Press. doi: 10.17226/14376.
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4.1 Introduction This section discusses the content of typical shared-use agreements between host and ten- ant railroads sharing a rail corridor. In many cases, the agreements must recognize the roles of all parties involved in providing passenger rail service over a rail corridor, such as Amtrak in the case of an intercity service or a train operations contractor in the case of a commuter service. This section is written from the perspective of a passenger rail agency implementing and developing an Amtrak intercity or commuter passenger rail service, but in most cases not planning to directly manage train operations. Passenger rail agencies must enter into multiple agreements with different parties to establish a service, and those parties often must enter into agreements with each other. Specifically this section covers shared-use agreements from the point of view of a state or regional passenger rail agency, such as the NNEPRA responsible for the Downeaster service, the California Joint Powers Authorities (JPAs) responsible for the Caltrain commuter service and the Capitol Corridor Amtrak services, or METRA commuter rail services in Chicago. Generally roles and responsibilities for an Amtrak-operated intercity service differ from those for a commuter rail ser- vice, thus separate discussions are provided. Also included are the roles of federal government agen- cies such as the FRA and the STB with regard to negotiations and agreements, not including detailed requirements for financial grant or loan applications to the FRA or the FTA. Section 4.2 discusses the overall framework of organizations and relationships needed to implement and operate a passenger rail service and some general points regarding the roles and responsibilities of the different parties. Section 4.3 discusses specific details for Amtrak intercity service, including the roles and responsibilities of Amtrak, the host railroad(s), and the passenger rail agency. This subsection also includes: • Definition of what services are to be provided by each party, especially including Amtrak’s responsibilities, and charges for each service. • Agreement contents relating to capacity improvements and track upgrades on the corridor to accommodate the planned passenger rail service. • Agreement contents relating to service-specific performance (journey times, OTP), including incentives and penalties. Section 4.4 discusses specific details for commuter rail services, including the roles of the com- muter rail agency, the host railroads, and O&M contractors. This subsection includes: • Definitions of what services are to be provided by each party, including their relationships with each other as well as with the commuter rail agency. 52 C H A P T E R 4 Content of Shared-Use Access and Operating Agreements

• Agreement contents relating to track improvements, additional capacity, and other capital investments to be accomplished before service startup and in subsequent years as ridership and the number of planned trips grows. • Agreements for day-to-day operations (including performance metrics, standards, and incentives and penalties) and any time-of-day operational restrictions to be observed by host or tenant. • Agreement on sharing of capital and O&M costs. Section 4.5 summarizes the provisions in passenger rail agreements concerned with managing change over time as demand for passenger and freight rail service evolves, and as funding for pas- senger rail capital and operations expenses varies. 4.2 Types of Agreements Needed to Implement Passenger Rail Service This section discusses the various agreements between participating parties involved in providing a passenger rail service. The discussion assumes that the proposed service is a new initiative for the passenger rail agency and host railroad and will operate over a route where there is no existing service of the same type. In many cases, this assumption will not be true— existing arrangements may be in place that can be modified or adapted for the new service. However, the completely new service on a new route is likely to be the most complex situa- tion for an agency to process. Figure 4-1 illustrates the different host–tenant pairings that can exist, each of which will require an agreement between the parties spelling out rights and responsibilities. Tables 4-1 and 4-2 expand on Figure 4-1 to identify all agreements that a sponsoring passenger rail agency must ensure are in place for a specific passenger rail service, including agreements with host passenger or freight railroads, Amtrak, and other providers of passenger rail O&M services. If an individual service travels over rail territory owned by more than one railroad, then a set of agreements specific to each host railroad will be required. The diversity of pos- sible relationships, combined with large variations in passenger and freight traffic levels, means that almost every shared-use situation is unique, and agreements must be negotiated for each particular set of circumstances. Content of Shared-Use Access and Operating Agreements 53 Amtrak Intercity Freight Railroad Host, Amtrak Tenant Freight Railroad Host, Passenger Tenant State- & Local- Owned ROW, Commuter Host, Freight and/or Amtrak Tenants State-Owned ROW, Amtrak, Freight Tenants Amtrak-Owned ROW, Freight, Commuter Tenants Amtrak-Owned ROW—Amtrak Host, Commuter, Freight Tenants Passenger Rail Services (all types) Commuter Figure 4-1. Passenger rail host–tenant relationships.

In almost all of these different arrangements, the passenger rail agency provides the glue that holds everything together but rarely takes direct responsibility for O&M of a rail service. The contractual relationships needed to provide a specific passenger rail service are a function of a number of factors that together determine which of the different contract arrangements sum- marized in Tables 4-1 and 4-2 apply. The overriding factor is whether the service will be an Amtrak intercity service or a commuter service. For commuter service, the factors that will help define the general contractual approach are: • Whether the commuter rail agency intends to set up an operating entity itself, or plans to contract with a service provider to operate and maintain the service. O&M services will include track and infrastructure maintenance if operating over track owned or leased by the agency. The O&M contractor could be Amtrak, the freight railroad, or an independent commercial firm. • Whether the commuter rail agency must invest in infrastructure upgrades to increase capacity, track quality, or signal system capabilities to support the desired passenger service frequency, journey times, schedules, and OTP. • Whether the commuter rail agency is considering contracting with the host freight railroad for services other than access, infrastructure maintenance, and dispatching. 54 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors Right-of-Way Owner (Host) Agreements with Freight Railroad Amtrak Agreements Agreements with Other Parties Freight Railroad Amtrak contracts with freight railroad for access to corridor, dispatching and infrastructure maintenance, relying on Amtrak rights and operating agreements. PRA1 may contract directly with freight railroad for capital improvements for capacity and performance, and added ROW maintenance contributions. With PRA for all O&M services for a defined service and fare structure. With Amtrak concurrence, PRA may provide equipment or pay for rehabilitation of out- of-service cars. Amtrak and PRA may need FRA safety approval for aspects of proposed service, e.g. to use non-FRA-compliant cars or locomotives. The infrastructure owner (freight railroad) would apply to the FRA for approval of PTC plans and installations for passenger service. PRA cannot contract with other parties for passenger railroad operations over freight track using Amtrak access rights. PRA may contract separately for equipment maintenance (rare) or “amenity” services, e.g., on-board food service, and station services. Amtrak Amtrak usually has agreements with freight RR to permit access for freight service on its territory (e.g., on NEC). PRA not usually involved. With PRA for all O&M services, including ROW access. With Amtrak concurrence, PRA may provide equipment or pay for rehabilitation of out- of-service cars. As above, except that theoretically a PRA could choose to contract for an intercity service independently, but then could not rely on Amtrak rights for freight railroad access. State and Local Agency PRA have access agreement with freight railroad for freight service over state or locally owned track Amtrak can exercise statutory right of access for existing services. PRA will normally contract with Amtrak for O&M for state-supported services. As above. 1 State, regional, or local passenger rail agency. Table 4-1. Types of Amtrak intercity rail service agreements.

• If contracting for O&M, whether to bundle all services in a single contract or to contract sep- arately for each kind of service (e.g., train operations, equipment maintenance, and track maintenance). For intercity service, the factors that will help define the general contractual approach are: • Whether the passenger rail agency must invest in infrastructure upgrades to increase capacity, track quality, or signal system capabilities to support the desired passenger service frequency, journey times, schedules, and OTP. • Whether the passenger rail agency expects or is able to rely on Amtrak to supply equipment for the service or must purchase or lease passenger cars independently. Once the passenger rail agency has selected a general approach to the provision of the service within the constraints applicable to the type of service and host railroad, the agency can move for- ward with developing the specific agreements. The following paragraphs provide an introduction to the principal relationships, concentrating on those where a freight railroad will host a proposed passenger service. Content of Shared-Use Access and Operating Agreements 55 Right-of-Way Owner (Host) Agreements with Freight Railroad Amtrak Agreements Agreements with Other Parties Freight Railroad Contract with CRA1 for access, dispatching, and ROW inspection and maintenance. CRA may contract with freight railroad for train crew and other O&M services if both parties so desire. O&M services if CRA selects Amtrak as the contract operator. Amtrak would not be involved in developing agreements between a CRA and a host freight railroad, even if Amtrak is the selected contract operator. CRA may contract for train crew, on-board services, and equipment inspection and maintenance with a single or multiple commercial firms. CRA normally contracts with a car builder for provision of equipment (cars and locomotives) for the proposed service. In some cases, contract includes ongoing equipment maintenance services. Amtrak Amtrak may have agreements with freight railroad to permit access for freight service on its territory (e.g., on NEC). CRA not usually involved, but could affect capacity. CRA must contract with Amtrak for access and infrastructure maintenance. CRA may select Amtrak for train operations and/or equipment maintenance services. Amtrak would not be involved in agreements with other parties, unless Amtrak subcontracts selected O&M services to other parties. CRA normally contracts with a car builder for provision of equipment (cars and locomotives) for the proposed service. In some cases, contract includes ongoing equipment maintenance services. State and Local Agency Agreement between CRA and freight railroad to permit access for freight service in state- and local- owner territory. CRA may contract with freight railroad for selected O&M services if both parties so desire. CRA may select Amtrak to be O&M contractor, or contractor for selected O&M services by mutual agreement. CRAs frequently contract for O&M services with commercial firms (i.e., other than Amtrak or a host freight railroad) for all O&M services, including track maintenance. A single “bundled” contract may be used or separate contracts with different parties for each service. 1 State, regional, or local commuter rail agency. Table 4-2. Types of commuter rail service agreements.

4.2.1 Introduction to Amtrak Intercity Service Intercity service must be operated by Amtrak to benefit from Amtrak’s right of access to the national railroad network; dispatching priority; and incremental cost pricing for access, infrastruc- ture maintenance, and dispatching. After completing a thorough feasibility study in cooperation with Amtrak, as described in Chapter 2, using analysis and modeling as described in Chapter 3, the passenger rail agency must conclude an agreement with Amtrak to operate the service. Amtrak will negotiate with the host railroad to implement the proposed service under its operating agreement with that railroad. If there is no existing agreement, Amtrak will negotiate a new agreement. The passenger rail agency may agree with the host railroad (usually freight) to fund all or part of capi- tal improvements to increase capacity and/or reduce journey time as well as to ensure adequate OTP. In addition, the passenger rail agency may agree to provide ongoing funding to the host rail- road for track maintenance and dispatching resources, to assure high service quality and reliabil- ity. These expenditures supplement normal Amtrak payments for access and OTP. Although the host railroad is usually a freight railroad, similar access agreements must be established where a commuter railroad is the host. These arrangements with Amtrak and the host railroad take care of track access and train oper- ations. The final area in which agreement is required concerns provision of equipment (passenger cars and locomotives). Amtrak may or may not be able to provide suitable cars and locomotives for a proposed new service. The passenger rail agency must explore equipment options with Amtrak and reach agreement as to responsibility for equipment supply. If the passenger rail agency is purchasing cars and/or locomotives, Amtrak must agree that the cars are suitable for the pro- posed operation and that maintenance and servicing arrangements are practical. In most cases, the parties involved in implementing and operating an intercity passenger rail service are the state, local, or regional passenger rail agency; Amtrak; and the host railroad. Other parties may be involved in minor roles, such as providing services at stations (sometimes devel- oped and owned by the host community) and providing on-board food service. 4.2.2 Introduction to Commuter Service Amtrak’s access rights cannot be exercised for commuter service, and a commuter rail agency must negotiate at arm’s length with the individual host freight railroads. The agency must also negotiate access with Amtrak if Amtrak lines are used. Amtrak owns little main-line track outside the NEC but operates and maintains several big-city passenger terminals used by commuter ser- vices (such as Washington Union Station, Los Angeles Union Station, New York City Penn Station, and Chicago Union Station). If the commuter rail agency owns or leases the ROW, then there is no access issue for commuter service, but a former freight railroad owner may require access as a condition of the sale or lease to provide ongoing local or through freight service. The agency may also have to accommodate exist- ing or new Amtrak service, under Amtrak’s access rights. In rare cases, two commuter agencies may agree to share infrastructure. An example is where NICTD trains from Indiana locations access downtown Chicago over tracks owned by METRA and used by METRA trains. As well as basic access, a commuter rail agency, whether host or tenant, will have to work out agreements among all users to share infrastructure inspection and maintenance costs, dispatching costs, and the cost of capital investment for capacity and service performance. In most cases, the agency will also have to arrange contracts for O&M services with qualified suppliers and for the acquisition of rolling stock. If the service is generally operated over track owned by a host freight railroad or Amtrak, then the host will likely have to approve the proposed contractor and equip- ment as acceptable for the proposed service. 56 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

4.3 Amtrak Intercity Service 4.3.1 Introduction This section describes the principal items that should be included in agreements for an intercity passenger rail service operated by Amtrak. As described elsewhere in this Guidebook, Amtrak inter- city services are those for which Amtrak can exercise its right of access to the U.S. railroad network at incremental cost. Appendix B discusses the definitions of commuter and intercity service, which in essence state that intercity services operate over routes exceeding 100 miles in length and are used primarily by intercity travelers rather than regular commuters. The following factors also influence the content of agreements for Amtrak intercity service: • Amtrak’s rights to access and incremental costing are of major advantage in implementing intercity passenger service on freight railroad corridors. No passenger rail agency to date has attempted to initiate this type of service without working through Amtrak and having the ser- vice operated by Amtrak. Note that Amtrak sometimes acts as a contract operator for com- muter rail agencies but in this situation cannot exercise its access rights. • Amtrak maintains liability agreements with freight railroads (the Amtrak umbrella) that relieves the passenger authority of the need to negotiate liability issues with the freight rail- road for each individual service. However, separate liability agreements may be needed for station activities. • Either Amtrak or the passenger rail agency may supply rolling stock for the proposed service, depending on car and locomotive availability in Amtrak’s fleet and service requirements. For example, California purchased bi-level passenger cars and low-emission locomotives for cor- ridor services and North Carolina purchased rebuilt Heritage (pre-Amtrak) cars for state- supported services. • In principal, Amtrak has broad rights of access at incremental cost to any rail corridor in the United States, including railroad owned by state agencies and commuter systems as well as freight railroads. In practice, the service requirements of new state-supported services (which usually increase service frequency and seek to reduce journey times) have involved investment in railroad infrastructure and sometimes ongoing additional expenditure to maintain passenger- level track quality and signal system performance. Passenger rail agencies implementing a new or expanded intercity service have often found such investments to be essential to achieving high-quality services. The involvement of Amtrak means that a three-way set of consistent agreements between the passenger rail agency, the host railroad, and Amtrak are required, as illustrated in Figure 4-2. Content of Shared-Use Access and Operating Agreements 57 Host Railroad Passenger Rail Agency Capital Funding for Route Improvements, Service Parameters – No. of Trips, Journey Time, on-time performance Access to Route at Incremental Cost for Proposed Service Agreement Specifying Service Parameters, Provision of Rolling Stock and other Services. Amtrak Figure 4-2. Primary contract relationships for Amtrak intercity service.

The content of each of the three agreements shown in Figure 4-2 must be consistent with each other and in combination include all the elements needed to ensure a successful passenger rail service. The specific contents of the agreements are described in the following paragraphs. 4.3.2 Inputs to and Preparations for Finalizing the Agreements Chapters 2 and 3 have discussed preparations for negotiations with Amtrak and the host rail- roads and the main points of negotiation that must be addressed. In addition, Chapter 3 describes the types of analysis of train performance, rail corridor capacity, and capital O&M costs that may be needed to support negotiations and capital investment decisions. The key points covered in previous sections are summarized in the following subsections. Long-Term Vision Plan The passenger rail agency should have a long-term vision plan for the development of rail- road services in the state or region. Ideally the plan should include both freight and passenger rail services and have been prepared by the agency in consultation with other state agencies having an interest in transportation, as well as with providers of rail and related services of all types. With regard to passenger service, the plan should describe the long-term goal for pas- senger rail developments and the principal steps in developing services between the present and the goal. The PRIIA now requires state agencies to prepare such a plan as a precondition to accepting capital grants for intercity passenger rail service under the various programs administered by the FRA. Feasibility Study A thorough feasibility study for the proposed intercity passenger rail service should be prepared in cooperation with Amtrak and preferably the host railroad(s) on the corridor. As noted previ- ously, some host freight railroads prefer to be deeply involved in feasibility studies to make sure that their concerns are addressed early in the process, while others prefer only limited involve- ment. The feasibility plan differs from the vision plan in that it focuses on one corridor and ser- vice, rather than a whole state or region, but both should be long term, covering a period that reflects the service life of infrastructure investments. Almost all passenger rail projects involve investment in railroad infrastructure, including ROW, track and signal improvements, station and terminal investments, and sometimes purchase or lease of the ROW. These investments have a service life of at least 20 years, and the long-term plan is essential to ensure that benefits from the investments are fully realized. The feasibility study starts with the goals for the service at each stage in its development, such as: • Target journey times, station locations, and train departure times. • Desired number of daily trips. • Planned accommodations on train. The results of the study are the actions needed to accomplish the planned service at each development stage, including: • Proposed physical infrastructure investments (track upgrades, sidings and double track, signal systems, etc.). • Estimated cost of infrastructure investments. • Expected service performance. • O&M requirements and the associated costs, including where specific maintenance activities are required to ensure planned service quality. • Passenger car and locomotive requirements, and plans for acquisition and maintenance of suitable equipment for the planned service. 58 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

Because there will be considerable uncertainty regarding markets for passenger and freight rail services and the availability of funding for passenger rail capital and operating expenses, the plans must be flexible and structured to respond to unexpected developments. Provision for regular reviews and updates is essential. The penalties for not planning ahead can be substantial. Focusing on just the short term— thinking “just get the service started and then worry about the long term later”—can lead to missed opportunities. When further development is needed to meet increasing patronage, agen- cies without a basic long-term framework agreed upon with the host and other users have found it very difficult or costly to take the next step. Making Access Agreements and Contracts Detailed, Unambiguous, and Consistent with Long-Term Plans As illustrated in Figure 4-2, a three-way set of agreements must be put into effect for Amtrak intercity service on a rail corridor. Each of these agreements should embody the same service spec- ification as developed in the feasibility study and as further negotiated with Amtrak and the host railroad(s). The agreements must provide a long-term framework to give all parties assurance that their future business and service development will not be compromised and that benefits from infrastructure investments can be fully realized. Because the future is inherently unpredictable, the agreements must include a process by which service changes can be negotiated to accommodate changes in performance and traffic levels, within agreed-upon limits. For example, if the long-term plan envisions starting with four round trips per day for a given passenger service, increasing to twelve round trips as demand grows and funding becomes available, then the agreement should reflect that and agree on what investments are required to make service increases possible. If the freight operator wants to assure the availability of a given capacity at different points over the term of the agreement, then the agreement should specify what passenger service levels are consistent with meeting that goal, what investments are needed to make this possible, and how the costs will be shared. Experience has shown it is unwise to leave some matters for future discussion or agreement or to accept verbal assurances that, for example, additional passenger trains can be accommodated at some point in the future. Negotiators who meet for a later round of discussions are unlikely to be different from those that negotiated the original agreement. Any understandings or assurances that were not explicit in the original agreement will not be enforceable, and changes in personnel, pol- icy, or external circumstances could mean that non-binding assurances have been forgotten or will no longer be honored. Experience also has shown that the agreements should be highly explicit and cover all aspects of operating needs of corridor users. Lower-probability scenarios should be considered and provided for in the agreements, if possible. For example, one passenger authority purchased a rail corridor from a freight railroad, which retained trackage rights for freight service on the corridor. Fifteen years later, the passenger authority is now facing difficulties because the freight railroad wants to operate more freight trains than either party envisioned when the original agreement was signed. The original agreement lacks any provision to address this situation, thus a broad renegotiation of the agreement is required. Flexibility, Renegotiation Periods, and Dispute Resolution All agreements should contain procedures both for periodic revision or renegotiation of contracts and a mechanism to resolve disputes. Given the inherent uncertainties in demand for freight and passenger rail service and in funding availability for passenger rail develop- ments, many agreements provide for renegotiation on request by either party. Other agree- ments provide for reviews at regular, often 5-year intervals with provisions for intermediate Content of Shared-Use Access and Operating Agreements 59

adjustments where necessary. Several parties commented that shorter intervals tended to pro- duce an inefficient and frustrating state of continuous negotiation. Some contract elements, such as access and maintenance costs, may be subject to annual adjustment based on an agreed cost index. For Amtrak-operated services, disputes between a host and tenant railroads can be taken to the STB or the NAP for resolution. The NAP was created by Amtrak and host railroads to resolve dis- putes and most Amtrak operating agreements require disputes to be submitted to NAP in the first instance. Reference to the STB would be used in the absence of an agreement to use the NAP. There is a significant case history of past decisions and other legal proceedings related to Amtrak service, and the likely outcome of referring a dispute to the NAP or the STB is somewhat predictable. This predictability tends to simplify negotiations, and disputes often can be resolved relatively easily. Appendix B, Section B.2.2, describes in detail how a number of disputes between Amtrak and GuilfordGuilford Rail System that arose during implementation of the then-new Downeaster serv- ice were resolved by the STB. These disputes were resolved before implementation of PRIIA, but the process and outcomes would have been little changed by that legislation, except that the pow- ers to require a host railroad to accommodate increased speeds and the number of trips on an exist- ing Amtrak corridor were transferred from the U.S. Secretary of Transportation to the STB (see Appendix B, Section B.2.8). 4.3.3 Agreements between Amtrak and the Freight Railroad The agreement between Amtrak and the host freight railroad covers the access to the host railroad’s tracks for the proposed service; the required performance of the service, such as OTP; and payments by Amtrak to the host for the incremental costs incurred by the host rail- road in operating the specified Amtrak service. In many cases, the specific agreement for an individual service is based on an existing Amtrak operating agreement with the same railroad, with amendments as required for the specific features of the proposed service. The specific content may include: • The specification for the service—number of daily trips, departure times, journey time, and OTP requirements. These details may be defined by reference to the agreement between the host railroad and the passenger rail agency, where the railroad agrees that a specific set of investments in the track and signal system will support the required corridor capacity and train performance. • Payments by Amtrak to the railroad for operating the proposed service. These payments are typically expressed as a payment per train-mile or sometimes per car and locomotive-mile for track maintenance and payments for administrative coordination costs incurred directly on behalf of the passenger service. Agreed-upon unit costs will reflect the need to maintain passenger-quality track and the costs of maintaining signal and train control investments where these are triggered by passenger service requirements, less an allowance for capital investments by the passenger rail agency. • An agreement for incentives and penalties for OTP. In the past, these agreements have typically specified performance payments based on system-wide OTP for a specific rail- road. Such an agreement means a single poorly performing service can result in a system- wide performance below the bonus threshold, removing any incentive for a freight railroad to maintain good OTP on other routes. More recently, Amtrak has been implementing alternative corridor-by-corridor OTP measures, such as limits on total monthly delay min- utes, which provide a more effective framework for achieving adequate OTP. These enforceable metrics may be linked to infrastructure investments and financial support for track maintenance funded by the responsible passenger rail agency. This approach is dis- cussed in more detail in Section 4.3.5. 60 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

4.3.4 An Agreement between the Passenger Rail Agency and Amtrak With a few exceptions, a state or regional passenger rail agency funds capital and O&M costs of a passenger rail service on an intercity corridor. The exceptions are those services that were part of Amtrak’s core network and historically have been fully funded by Amtrak. However, under Section 209 of PRIIA, state support will be required for all short-haul services including those historically funded by Amtrak, except for NEC services. In addition, the passenger rail agency often provides capital funds for track and signal upgrades to accommodate additional trips and shorter journey times and to improve service quality. The involvement of state or regional passenger rail agencies means that an agreement between the agency and Amtrak must be negotiated to set out the details of services to be provided by Amtrak, the compensation to be provided to Amtrak for these services, and commitments by the agency to take other actions (such as the provision of passenger station facilities and services and funding and contracting with the host railroad for track and signal upgrades) that will make the planned service feasible. The agreement between Amtrak and a state passenger rail agency for a state-supported service will typically include the subject areas described in the following three subsections. Definition of the Services to be Provided by Amtrak Term of the Agreement and Adjustment Period. The term of the agreement depends on both the long-term goals of the service and the characteristics of funding sources. Usually a long-term (20 years or more) framework agreement should be used, with provisions for reg- ular adjustments to funding formulas and the service specification. The rationale for a long- term agreement is to ensure that the agency can realize the benefit from long-life infrastructure investments, while the adjustment provisions allow for the agency and Amtrak to respond to traffic demand and the availability of funding for both planned infrastructure investments and for O&M expenses. A Mutually Agreed-upon Specification for the Service. The specification for the service includes frequency and schedules, fare levels, capacity (seats), planned journey time, etc. If the ser- vice will be implemented in stages as demand and funding permit, these stages and a prospective timetable will be included. Specific Services to be Provided by Amtrak. These services usually include access to the freight corridor; train crew; on-board services including food service; use of Amtrak’s ticketing and reser- vation system; provision of station services (including staffing for ticketing and baggage service, if required) or provision of Amtrak’s “QuickTrak” ticketing machines; and provision, maintenance, and servicing of equipment (passenger cars and locomotives). In some cases, the state agency may make independent arrangements or be involved in the selection of a food service provider, station services, and equipment acquisition in cooperation with Amtrak. State Financial Support to Amtrak for Operating and Maintenance Costs Amtrak states that, in the recent past, it has been reimbursed for approximately 70 percent of fully allocated O&M costs for a typical state-supported service. This reimbursement includes all direct costs and a contribution toward shared and overhead costs. Costs are estimated from an analysis of cost data from Amtrak’s cost allocation system, less farebox revenue. Amtrak’s posi- tion now is that state passenger rail agencies should bear the full direct cost of these services. However, state passenger rail agencies have often disputed Amtrak’s cost allocation calculations and have asked for more transparency in Amtrak’s accounting systems and cost allocation cal- culations. To address this issue, PRIIA (Section 209) includes a requirement that Amtrak develop new standardized methodology for cost allocation in cooperation with passenger rail agencies Content of Shared-Use Access and Operating Agreements 61

that support Amtrak services. If the parties cannot reach agreement, the STB may be asked to help resolve the issue. The agreement should also cover any penalties or bonuses for service performance. In part, these will reference and be consistent with agreements between Amtrak, the host railroad, and the passenger rail agency. The agreement must set expectations for performance metrics in Amtrak’s control, specifically Amtrak-caused delays and provision of the planned seating and on-board services on each trip. There are few opportunities to obtain federal grants to cover all or part of intercity O&M costs. Amtrak’s regular annual funding covers the O&M cost of core services and the difference between state support and actual total O&M costs on state-supported services. However, some services located in air quality non-attainment areas (such as the Downeaster) have been able to obtain sup- port from Congestion Mitigation and Air Quality (CMAQ) Improvement Program funds. FRA grants are available for capital projects, as discussed in the following subsection. Provision of Equipment (Cars and Locomotives) Historically, Amtrak had enough spare equipment to support new services and would provide this equipment without charging for capital expenses or major overhauls. In recent years, how- ever, all Amtrak’s useable equipment was fully committed to existing services, and Amtrak lacked funds to overhaul unserviceable cars or purchase new ones. State passenger rail agencies were expected to provide new or secondhand equipment or to fund rehabilitation of unserviceable cars or locomotives. More recently, the situation has eased. Equipment rehabilitation is an eligible use of intercity passenger rail funding authorized in PRIIA and ARRA, and Amtrak has initiated a rehabilitation program for suitable out-of-service cars. Plans to purchase new cars and locomo- tives are also being developed, with support from PRIIA and ARRA funds, to provide a near-term boost to the available fleet and replace life-expired equipment. Given this background, passenger rail agencies must develop an agreement with Amtrak regarding the source of equipment and arrangements for equipment maintenance. One choice is to agree to operate the planned service with equipment provided by Amtrak, out of the expanded fleet of cars and locomotives that will become available from Amtrak’s developing equipment pro- gram. The alternative is to acquire equipment independently from a manufacturer. Agencies choosing this route must provide themselves with adequate technical resources to manage such a procurement, especially if the cars or locomotives are of a novel design (such as the updated Talgo trains under consideration by some agencies) or the cars or a proposed operation are not fully compliant with FRA safety regulations. The FRA will want to review the train design and proposed operation to ensure it is safe, and Amtrak will want to ensure the trains are suitable for the pro- posed service and are safe and reliable. Amtrak and the agency will also need to ensure that inspec- tion and maintenance arrangements for the new cars are put in place, including any staff training, special maintenance equipment that may be required, and a spare parts supply. An alternative (used for Talgo trains operating the Cascades service in the Pacific Northwest) is to contract with the manufacturer for maintenance and servicing. 4.3.5 Agreement between the Passenger Rail Agency and the Host Railroad(s) Agreement with the Host (Usually Freight) Railroad for Capital Improvements Experience in recent years has shown that introduction of a new or expanded quality passen- ger rail service is rarely possible without capital investments in the corridor. Investments are typ- ically needed to increase capacity and to upgrade track and signals to passenger service standards 62 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

so that the desired service performance can be achieved. Amtrak has limited funds for capital investments outside of the NEC, so the state passenger rail agency must assemble the funding. Typical sources are state transportation bonds, a variety of state and local grant programs, and occasionally federal funds from the FTA or the Federal Highway Administration (for grade cross- ing improvements). Recently, substantial funding has become available through the FRA from PRIIA and ARRA. In some cases, a state will link passenger and freight funding programs in one improvement package. Note that the funding source has no influence on whether the service is classified as commuter or Amtrak intercity. The agreement with the freight railroad for capital improvements will reiterate the service spec- ification, including staged development, where planned. Then, the passenger rail agency and the railroad will agree on the specific improvements required to support a specified service— number of trips, journey times, and OTP. For a staged development, the agreement will define each stage by the service specification and the corresponding infrastructure improvements. It is essential to link specific improvement projects (1) to specific train frequencies, journey times, and punctuality metrics, properly supported by analysis results and accepted by the host freight railroad, Amtrak, and the passenger rail agency, and (2) with defined actions to be taken by the host railroad in the event of non-compliance. Table 4-3 shows illustrative service perfor- mance metrics that experience has shown to be successful in achieving good service quality. Absent an enforceable agreement, there is a serious risk that infrastructure investments will fail to yield the expected benefits. The state or regional passenger rail agency should execute a master agreement with the freight railroad covering the basic linkage between improvement projects and passenger train trips, jour- ney time, and service performance, plus a “task order” mechanism for executing individual proj- ects. The passenger rail agency normally contracts with the freight railroad to carry out the project. The railroad will carry out the project with its own maintenance forces or using contractors at its discretion. Usually, freight railroad labor agreements contain provisions for use of contractors, and the railroad will have to abide by these agreements. Experience has shown that a fixed-price contract Content of Shared-Use Access and Operating Agreements 63 Phase No. Description (Upon Completion of Listed Projects) Round Trips per Day Scheduled Trip Time (A to B) Delay Ceiling2 (Maximum Host- Responsible Delay Minutes3 per Trip) 1 Baseline – Current Service 2 3h 30m 17 2 Specified Operating Improvements 2 3h 30m 14 3 Specified Maintenance Improvements 2 3h 30m 12 4 Projects 1 and 2 3 3h 30m 11 5 Projects 3 and 4 3 3h 15m 9 6 Projects 5, 6, 7, and 8 4 3h 15m 8 7 Projects 9 and 10 4 3h 0m 7 1 The performance metrics should be negotiated and accepted as feasible by all parties before being put into effect, supported as necessary by operations simulation analysis as described in Chapter 3. 2 Delay Ceiling: Average host-responsible delay for all trips over a 1-month period (total delay minutes in 1 month divided by the number of trips operated). Temporary adjustments to the delay ceiling may be agreed upon for major track or structures maintenance projects. 3 Host-Responsible Delay Minutes: Obtained from Amtrak’s Conductor Delay Reports for delays due to interference from other trains (freight, commuter, other intercity passenger trains), routing delays, slow orders, signals, maintenance-of-way work, and detours from the normal route. Note: If in any calendar month, actual average host-responsible delay minutes between points A and B exceeds the delay ceiling, the host railroad will make, at its sole expense, operational, maintenance, or capital improvements necessary to reduce average delay minutes to below the delay ceiling within 2 calendar months after the initial failure to comply with delay requirements. Table 4-3. Illustrative service performance metrics1 and agreement for an Amtrak intercity service.

with the railroad for each project is the best approach, giving the railroad flexibility and an incen- tive to manage the project efficiently. Time-and-materials or other cost reimbursement approaches are less successful, resulting in extra work with limited benefits for the passenger rail agency. Agreement with the Host Railroad for Operations and Maintenance Cost Support As well as capital improvements, a state or regional passenger rail agency may agree to provide O&M funds to ensure high-quality service, in addition to the normal payments under Amtrak’s operating agreement. A well-known example of this approach is used on the Capitol Corridor in California, where the passenger rail agency funds an additional track maintenance gang and pays a premium for night-time work so that maintenance can be performed outside passenger train service hours. This arrangement avoids much of the need to take track out of service for mainte- nance during passenger service hours. Track is also maintained to one FRA track class higher than that needed for current operating speeds, to reduce the chance that a track defect will result in a slow order and maintenance-related delays. As with capital projects, it is critical that the agreement between a passenger rail agency and the host freight railroad specify in detail the obligations of each party to the agreement: • For the passenger rail agency to pay the agreed-upon fee for the services provided. • For the host railroad to meet service requirements for the passenger train journey time, num- ber of daily trips, and maximum acceptable delay minutes, following the format shown in Table 4-3. Agreements between the host railroad and Amtrak and between Amtrak and the passenger rail agency must reference the same service parameters. On more complex corridors, operations simulations will likely be needed to demonstrate that the agreed-upon service performance is feasible with the proposed O&M practices and to give all parties confidence to enter into the agreements. 4.4 Commuter Service (Non-Amtrak Intercity) 4.4.1 Basic Structure of a Commuter Rail Service on Shared Track The primary difference between commuter and Amtrak intercity service is that with commuter service there is no entity comparable to Amtrak with access rights and, in many cases, existing agreements with prospective host railroads. The two primary scenarios are that the commuter rail agency purchases the ROW from the freight railroad, allowing the railroad to continue to provide freight service under specified conditions, or the commuter rail agency negotiates access to an active freight corridor. A third alternative is to purchase or lease a portion of the existing ROW for an exclusive passenger track parallel to the existing freight line. Separate from ROW acquisition and access agreements, commuter rail agencies usually contract for O&M services. The primary exceptions are a group of long-established commuter rail agencies in the NEC and in Chicago, which operate services directly. Almost all recently established com- muter service has followed this practice—with one exception, all are operated by a contractor. This project focuses on access issues and is not directly concerned with commuter O&M contracts, but such contracts will be described because the commuter rail agency’s contract with the operator may contain requirements that must be consistent with the agreement between the commuter rail agency and the host railroad. Figure 4-3 illustrates the relationships between the host or tenant railroad, the commuter rail agency (which may also be the host if it owns the ROW), and a contract operator. 64 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

The contractual relationships for commuter service differ from those required for an Amtrak- operated intercity service specifically as described: • Commuter rail agencies often purchase the corridor from a former freight railroad owner. In this case, the former freight railroad usually negotiates an operating agreement to allow con- tinued freight service in the corridor, often with time-of-day and other restrictions. • If the freight railroad retains ownership of the corridor, the commuter rail agency has to nego- tiate an operating agreement with the freight railroad. Unlike Amtrak intercity service, the com- muter rail agency lacks Amtrak’s access rights and must negotiate at arm’s length. However, if the parties in a commuter rail access negotiation are unable to reach agreement, they can request non-binding mediation under Section 401 of PRIIA. • The contract operator’s primary relationship is with the commuter rail agency. However, the passenger service operator must comply with any agreements with a host freight railroad con- cerning passenger rail operations (for example, to maintain safe operations) and for agreed- upon freight operations if the commuter rail agency owns the corridor. These contract provisions are incorporated into the contract operator’s agreement with the commuter rail agency. There is no agreement between the contract operator and the host railroad, if the host is not the commuter rail agency. The contract operator simply provides services for the com- muter rail agency and must comply with the terms of the agency’s agreement with the host railroad. 4.4.2 Inputs to and Preparations for Finalizing Commuter Rail Operating Agreements The inputs and preparations for finalizing commuter rail operating agreements are gener- ally similar to those for intercity passenger rail service. The major differences are that there is no entity that plays a role similar to Amtrak and that it is much more common for the com- muter rail agency to purchase the ROW before initiating service, thereby reversing the rela- tionship between the commuter rail agency and a railroad providing freight service in the corridor. Long-Term Vision Plan The commuter rail agency should have a long-term vision plan for the development of railroad services in the state or region. Ideally the plan should include both freight and passenger rail ser- vices and have been prepared by the agency in consultation with other state agencies having an inter- est in transportation, as well as with providers of rail and related services of all types. With regard to passenger service, the plan should describe the long-term goal for passenger rail developments— commuter and intercity—and the principal steps in developing services between the present and the goal. Because all types of rail service often need to operate over shared ROWs, the vision plan will Content of Shared-Use Access and Operating Agreements 65 Host or Tenant Railroad Passenger Rail Agency Operating Agreement for Tenant Access to Host’s Corridor for Specified Service. If passenger Service is Tenant, Capital Funding for Route Improvements Agreement Specifying Service Parameters, Service Quality, Charges, Fare Collection Procedures, etc. Operations and Maintenance Contractor(s) Figure 4-3. Primarycontractrelationships forcommuter service.

help ensure that interrelationships between services are considered in advancing plans for individ- ual services and projects. Such consideration is important to minimize the chance that decisions made for one service could limit options for other services. Feasibility or Planning Study A detailed plan and feasibility study for the proposed commuter rail service is required, pre- pared in cooperation with other rail corridor users, such as Amtrak and a freight railroad. As noted previously, some host freight railroads prefer to be deeply involved in feasibility studies to make sure that their concerns are addressed, and others prefer only limited involvement. The feasibil- ity plan differs from the vision plan in that it focuses on the one corridor and service, rather than a whole state or region, but both should be long term, covering a period that reflects the service life of infrastructure investments. Almost all commuter rail projects involve investment in rail- road infrastructure, including ROW, track and signal improvements, station and terminal investments, and often purchase or lease of the ROW. These investments have a service life of at least 20 years, and the long-term plan is essential to ensure that benefits from the invest- ments are fully realized. The feasibility study starts with the goals for the service at each stage in its development, such as: • Target journey times, station locations, and train departure times. • Desired number of daily trips. • Planned accommodations on train. The results of the study are the actions needed to accomplish the planned service at each devel- opment stage, including: • Approach to obtaining access to the corridor (purchase, long-term lease, permanent easement), as discussed in Section 4.4.3. • Proposed physical infrastructure investments (track upgrades, sidings and double track, signal systems, etc.). Implementation of infrastructure investments may be staged as patron- age grows. • Estimated cost of infrastructure investments and proposed funding sources. • Expected service performance—number of trips, station stops, trip time, OTP, and service quality. • O&M requirements and the associated costs, including where specific maintenance activities are required to ensure planned service quality. • Passenger car and locomotive requirements, and plans for acquisition and maintenance of suitable equipment for the planned service. Because there will be considerable uncertainty regarding markets for passenger and freight rail services and the availability of funding for passenger rail capital and operating expenses, the plans must be flexible and structured to respond to unexpected developments. Provision for regular reviews and updates is essential. The penalties for not planning ahead can be substantial. Focusing on just the short term— thinking “just get the service started and then worry about the long term later”—can lead to missed opportunities. When further development is needed to meet increasing patronage, agen- cies lacking a basic long-term framework that has been agreed to with other corridor users have found it very difficult or costly to take the next step. Making Access Agreements and Contracts Detailed, Unambiguous, and Consistent with Long-Term Plans The agreements between railroads sharing a rail corridor must provide a long-term frame- work to give all parties assurance that their future business and service development will not be 66 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

compromised and that benefits from infrastructure investments can be fully realized. Because the future is inherently unpredictable, the agreements must include a process by which ser- vice changes can be negotiated to accommodate changes in performance and traffic levels, within agreed-upon limits. For example, if a long-term commuter rail plan envisions start- ing only with four peak hour trips per day, increasing frequency and adding off-peak services as demand grows and funding becomes available, then the agreement should reflect that and agree on what investments are required to make service increases possible. If the freight opera- tor wants to assure the availability of a given capacity at different points over the term of the agreement, then the agreement should specify what passenger service levels are consistent with meeting that goal, what investments are needed to make this possible, and how the costs will be shared. Experience has shown it is unwise to leave some matters for future discussion or agreement or to accept verbal assurances that, for example, additional freight or passenger trains can be accom- modated at some point in the future. The negotiators who meet for a later round of discussions are unlikely to be different from those who negotiated the original agreement. Any understandings or assurances that were not explicit in the original agreement will not be enforceable, and changes in personnel, policy, or external circumstances could mean that non-binding assurances have been forgotten or will no longer be honored. Experience has also shown that the agreements should be highly explicit and cover all aspects of operating needs of corridor users. Lower probability scenarios should be considered and provided for in the agreements, where possible. For example, one commuter rail agency purchased a rail cor- ridor from a freight railroad, which retained trackage rights for freight service on the corridor. Fifteen years later, the commuter authority faced difficulties because the freight railroad wanted to operate more freight trains than either party envisioned when the original agreement was signed. The original agreement lacks any provision to address this situation, thus a broad renegotiation of the agreement is required. Flexibility, Renegotiation Periods, and Dispute Resolution All agreements should contain both procedures for periodic revision or renegotiation of con- tracts and a mechanism to resolve disputes. Given the inherent uncertainties in demand for freight and commuter rail service and in funding availability for passenger rail developments, many agree- ments provide for renegotiation on request by either party. Other agreements provide for reviews at regular, often 5-year, intervals with provisions for intermediate adjustments where necessary. Several parties commented that shorter intervals tended to produce an inefficient and frustrating state of continuous negotiation. Some contract elements, such as access and maintenance costs, may be subject to annual adjustment based on an agreed-upon cost index. The STB is not able to resolve disputes over shared commuter rail and freight service. However, under Section 401 of PRIIA, the STB does offer non-binding mediation if the parties are unable to resolve differences on their own. This function of the STB is new, and there is no experience of how the process will work out in practice. Prior to PRIIA, commuter rail shared-corridor agreements usually set out a process for resolving disputes, often ending with submitting the problem to an independent arbitrator when negotiations reach an impasse. 4.4.3 Access Alternatives Because commuter rail agencies cannot invoke Amtrak’s right of access to the U.S. railroad at incremental cost, they have to negotiate access at arm’s length with the owner of the rail corridor over which service is planned, essentially purchasing the rail line capacity required for the service. A variety of approaches to accessing capacity have evolved. Content of Shared-Use Access and Operating Agreements 67

Alternative 1: Commuter Rail Agency Purchases Right-of-Way from the Freight Railroad This approach is commonly used when the commuter rail service expects to be the dominant user of the corridor, and the freight railroad is willing to sell. The commuter authority purchases the ROW and gives the freight railroad long-term or perpetual operating rights to offer defined freight service in the shared corridor. This alternative gives the commuter authority the most con- trol and is strongly preferred where substantial capital investments in infrastructure are required. The commuter authority becomes responsible for track construction and maintenance, signals and train control systems, and dispatching and will typically contract for all these services. The agreement with the freight railroad should specify: • The geographical limits of the corridor included in the agreement. If a freight railroad is willing to make a sale, it may insist on selling more track than the commuter operator plans to use, so that it is not left with isolated track segments that are expensive and inconvenient to operate. • Any limits on freight service, such as maximum trains per day, times of day during which freight trains may operate (e.g., avoiding peak commute hours), and action to be taken if the freight operator wishes to increase traffic beyond agreed-upon levels (e.g., how planned and imple- mented and who is responsible for infrastructure investments where they are necessary, etc.). • Any size and weight restrictions on freight equipment (e.g., will 286,000 lb or even 315,000 lb freight cars be permitted) and clearances for freight vehicles. This factor can have a significant effect on platform heights and arrangements for ADA access to passenger trains. • Access fees for freight operations, usually expressed as payments per train- and/or car-mile. The fees should be representative of the equivalent expense a freight railroad would incur to provide comparable service on its own property. • Liability agreement. Usually, the freight operator will want “but for” protection, as discussed in Chapter 2. • As with all long-term agreements, provisions to review and renegotiate the agreement as circum- stances change and a mechanism to resolve disputes. Alternative 2: Negotiate Access to a Freight Railroad Corridor This is the primary alternative for commuter rail agencies where the freight railroad is unwill- ing to sell, often because the corridor is an important link in that railroad’s network and/or car- ries heavy freight traffic. Because commuter service does not enjoy a right of access comparable to that available to Amtrak intercity service, commuter rail agencies have to pay for the capacity used by the commuter service, distinct from a contribution to infrastructure maintenance, dis- patching, and administrative costs. This payment can be made in a number of ways, depending on the situation of the freight railroad corridor before the introduction of commuter service and the railroad’s expectations of freight traffic growth: • An investment in capacity sufficient to fully meet the needs of the passenger service, so that freight service capacity is unaffected at all times of day. This alternative is most likely to be used where freight growth is expected and spare capacity is limited. • A lump sum payment for long-term or perpetual access for a specified number of trips at a given performance level. Rather than being tied to specific capacity expansion projects, the freight railroad may use the payment anywhere on its system, provided the access agreement is honored. A commuter rail agency may prefer a lump sum agreement that can be funded by a capital grant or bond funding to annual access payments that would have to come from local government funds. • A per-train-mile or per-car-mile capacity access payment. The amount of the payment can vary widely with local circumstances, including the amount of related investment in the infrastruc- ture using commuter rail agency funds. 68 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

• Any combination of the above, either in parallel or sequenced, in a staged project for develop- ment of a commuter rail service. Once the basic approach to securing or paying for the capacity used by the commuter service is agreed on, then the agreement must address the remaining elements, as with Alternative 1. These elements include: • The geographical limits of the corridor included in the agreement. • Any limits on freight service, such as times of day during which freight trains may operate (e.g., avoiding peak commute hours). • Any restrictions on minimum clearances that must be maintained for freight operations (e.g., at station platforms). • Liability agreement. Usually the freight operator will want “but for” protection as discussed in Chapter 2. • As with all long-term agreements, provisions to review and renegotiate the agreement as cir- cumstances change and a mechanism to resolve disputes. Alternative 3: Parallel Operations in a Shared Right-of-Way This option is similar to Alternative 1 in that the commuter operation purchases or leases its own ROW and becomes responsible for all O&M activities. There is little or no shared operation on the passenger track and only limited interaction with the freight railroad. A substantial capi- tal investment is required to acquire the ROW and to construct the passenger track. This alternative has been used where a high-frequency service is planned and where sufficient space is available in the existing freight railroad ROW for parallel services. This arrangement gives both the passenger and freight operators greater freedom to plan and operate their services independently, using sep- arate dispatchers, but there will still be a number of points of contact that have to be addressed in an agreement. These issues include dealing with points where freight operations cross passenger tracks, joint management of grade crossing systems where highways cross both tracks, coordinat- ing maintenance activities that may constrain operations on a parallel track, and developing com- munications links among dispatchers for both routine and emergency situations. 4.4.4 Agreement with the Host Freight Railroad The commuter rail agency planning to access a freight rail corridor (the foregoing Alternative 2) is in a similar position to Amtrak implementing an intercity service. Assuming an approach for paying for capacity has been agreed on, the agreement must specify service parameters (e.g., num- ber of trips, journey time, OTP) and the basis of charges from the freight railroad for infrastruc- ture maintenance, dispatching, and management. If the commuter rail agency owns the corridor, then these matters will be covered in the O&M services agreements described in the next section, and a freight railroad access agreement will be needed as described under Alternative 1. The specifics of the agreement between the commuter rail agency and the host freight railroad are presented in the following two subsections. Capital Improvements Introducing a new high-quality commuter rail service is rarely possible without capital invest- ments in the corridor. Investments are typically needed to increase capacity and to upgrade track and signals to passenger service standards so that the desired service performance can be achieved. Investment funds will be provided by the commuter rail agency to the freight railroad to complete agreed-upon investments in capital improvements. The agreement will reiterate the service specification, including staged development, where planned. Then, the commuter rail agency and the railroad will agree on the specific improvements Content of Shared-Use Access and Operating Agreements 69

required to support a specified service—number of trips, journey times, and OTP. For a staged development, the agreement will define each stage by the service specification and the corre- sponding infrastructure improvements. It is essential to link specific improvement projects (1) to specific train frequencies, journey times, and punctuality metrics, properly supported by analysis results from operations simulations and accepted by the host freight railroad and the commuter rail agency, and (2) with defined actions to be taken by the host railroad in the event of non-compliance. The approach illustrated in Table 4-3 is an example of how specific capital improvement should be linked to commuter rail service requirements, including a service speci- fication (number of trips, journey time, station stops, and delay metrics). The agreement must be enforceable. Absent enforceability, there is a serious risk that infrastructure investments will fail to yield the expected benefits. The commuter rail agency normally contracts with the freight railroad to carry out investment projects. Experience has shown that a fixed-price contract with the railroad for each project, with provision for adjustments for materials prices, is the best approach, giving the railroad flexibility and an incentive to manage the project efficiently. Time-and-materials or other cost reimburse- ment approaches are less successful, resulting in extra work with limited benefits for the com- muter rail agency. Ongoing Operations and Maintenance Services As well as capital improvements, the commuter rail agency’s agreement with the freight railroad must cover payments of O&M services, normally track and structures maintenance, signal system maintenance, and dispatching. Absent Amtrak’s right to be charged for these services at incremental costs, cost-charging calculations will include a component for a share of management, overhead, and capital costs. Additional charges may be agreed upon so that, for example, maintenance can be performed overnight or during specified off-peak hours so as not to interfere with commuter operations. The parties may make use of the kinds of oper- ating and maintenance cost analyses described in Chapter 3 to determine how costs are to be shared. As with capital projects, it is critical that the agreement between a commuter rail agency and the host freight railroad specifies in detail the obligations of each party to the agreement: • For the commuter rail agency to pay the agreed-upon fee for the services provided. • For the host railroad to meet service requirements for the passenger train journey time, num- ber of daily trips, and maximum acceptable delay minutes, following the format shown in Table 4-3. On more complex corridors, it is likely that operations simulations will be needed to demon- strate that the agreed-upon service performance is feasible with the proposed O&M practices and to give all parties confidence to enter into the agreements. 4.4.5 Operations and Maintenance Services Agreements Separate from access agreements and associated payments by tenants to host railroads for infra- structure maintenance and dispatching, a commuter rail agency will need to establish contracts for all other O&M services: • Services on host freight railroad tracks, including: – Train operations—provision of engineers, conductors, and other on-train personnel. – Equipment maintenance—routine servicing, daily inspection and maintenance, scheduled and emergency equipment inspection and maintenance, and major overhauls. – Services at passenger stations and terminal—cleaning, maintenance, ticket sales, etc. 70 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

• Additional services on commuter rail agency–owned corridors, including: – Dispatching and corridor operations management. – Track and structures maintenance. – Signal and train control system maintenance. – Contracting for major infrastructure projects. To provide these services, commuter rail agencies can elect to create an operating entity to perform O&M functions or contract out to an independent service provider. In practice, all newly established commuter services have elected to go the contracting route (with one exception), selecting a service provider from among qualified organizations. The exception is the Front Runner commuter service in Salt Lake City, where the Utah Transit Authority chose to operate the service itself, to ensure close control of service and financial perfor- mance. (The Utah Transit Authority also operates a light rail system.) Otherwise, only com- muter rail agencies taking over an existing service have elected to create an operating subsidiary, usually by taking over staff and management from the former provider. An example is the Northern Indiana Commuter Transportation District, which assumed operating responsibil- ity in 1979 for the service formerly operated by the Chicago South Shore and South Bend Railroad. The commuter rail agency normally selects a contractor using a conventional bidding process. Commercial firms, Amtrak, or the host railroad may be interested in providing contract O&M services, depending on local circumstances. Some examples of commuter rail agency contracting include: • The Sounder commuter services in the Seattle area are operated by the host railroad, BNSF. The service operates in part over busy freight corridors, and BNSF preferred to have full control over operations in the corridor. Equipment maintenance is provided by Amtrak, which has a suitable facility in the area. • In the Boston area, MBTA commuter rail services are operated by the Massachusetts Bay Commuter Railroad Company—a consortium that includes Veolia, a railroad operations con- tractor, and Bombardier, an equipment manufacturer. • MARC commuter rail services from Washington, D.C., to Maryland suburbs are operated by the two host railroads—Amtrak for services on the NEC and CSX for services on CSX freight lines. As is evident from these examples, a commuter rail agency can either contract for all ser- vices with one provider (the bundled approach) or let separate contracts for each service, including train operations, car and locomotive maintenance, and track and infrastructure maintenance. Advocates of the unbundled approach believe that the agency can get a lower cost, because there is more competition for each contract. Advocates of a bundled approach believe that one contract is easier to administer than multiple contracts and that better ser- vice is obtained when one provider is fully accountable and cannot blame another provider for any service shortcomings. Typical O&M contracts have a 5-year initial term, renewable for further terms if both parties agree, after which the contract is re-bid. Payment type is typically cost reimbursement with a vari- ety of incentives, both for good service performance (e.g., OTP, aggregate delays, provision of the agreed-upon number of cars on each train and functioning car equipment such as air condition- ing and heating, and customer satisfaction) and for cost reductions. In conclusion, there is no one best approach for obtaining contract O&M services. The path chosen depends on local circumstances, particularly which providers already have operations in the region, the interest level of a host railroad, and the size and complexity of the proposed operations. In all cases, however, the contract should include meaningful incentives both for Content of Shared-Use Access and Operating Agreements 71

high-quality service and for cost savings. The contracts must also allow for periodic cost adjust- ments to reflect inflation and for the commuter rail agency to adjust service where needed in response to travel demand or budget constraints. 4.5 Managing Change in Agreements This section discusses approaches to managing the service evolution over time in response to market and financial developments. As discussed in Chapter 5, recommended practice for passenger rail agencies is to negotiate a long-term master access agreement (20 years or more) to give security that a successful service will be able to continue but to arrange for periodic agreement revisions to accommodate changes to both host and tenant services. Likewise, Amtrak maintains operating agreements with all the host railroads, with the ability to modify these agreements to accommodate a new or changed service. In particular, Amtrak can demand that the host railroad accommodate additional trips and raise speeds. However, Amtrak (or a passenger rail agency) must fund track and signal improvements, if required to accommodate the planned changes. Typical revision procedures for access agreements used by passenger rail agencies and Amtrak for operations on a host freight railroad are presented in the following subsections. 4.5.1 Major Revision to Provide for a Substantial Increment in Capacity and/or Service Performance This type of revision should take place at intervals of several years, 5 years being a common choice. More frequent revisions can lead to a time-consuming and confusing state of continu- ous negotiation. The revisions should include changes that all users expect over the period to the next revision, including increases in passenger and freight traffic, capital investments in capac- ity, measures to reduce journey time, and any associated changes in cost-sharing formulas and agreements. The primary constraint on changes is that they should fall within the scope of the master agreement and long-term plan, unless all parties agree to amend this agreement and plan. The actual changes agreed to in the revisions would be implemented over the period to the next major revision. Not every service will warrant this level of revision. If services are limited in scope, or do not involve a major capital investment or expansion of service, then a formal revision is not required. In those circumstances, a less sweeping change, as described in the following subsection, is appropriate. Major revisions are often accompanied by an update to any capacity and cost analysis for the route, especially where the estimates and assumptions concerning traffic levels, track condition, etc., may have become outdated. 4.5.2 Minor Agreement Revisions to Provide a Limited Service Addition or Performance Improvement A minor revision could be used to implement an additional round trip or a reduction in jour- ney time by a few minutes or to add freight facilities, such as a new industry connection. Operations after the change would still be within the parameters agreed to in the master contract and the most recent major revision. Usually, minor revisions would not trigger any change to cost- sharing formulas agreed upon by host and tenant, or involve significant capital investments. Limited investments may be involved, for projects like adding a passing siding or improving curve geometry to increase speed. 72 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors

Smaller operations, such as the Downeaster service, may require only minor revisions over time. On that service, either the host or tenant can request a change at any time, which is then negotiated to reach a mutually acceptable resolution within the scope of the long-term access agreement. 4.5.3 Day-to-Day Service Variations This service level variation falls at the borderline between host–tenant routine contact to maintain service quality and actual planned service changes. Many situations can arise that call for service variations: • Planning for special trains for a one-time event. Most passenger rail agencies prefer to avoid special trains except in the most compelling circumstances. The time and efforts needed to com- plete arrangements and the potential for disrupting regular service outweigh any benefit. However, the agreement should provide for a right on the part of the passenger rail agency to operate such trains, subject to a test of undue interference with the host’s freight operations. There have been instances of a host railroad refusing to consider special trains because the orig- inal agreement did not reserve this right. • Planning for “regular” special trains, such as for fans traveling to home games at a sports venue. Several agencies report success with this kind of service. Once the routine is established, the trains are easy to arrange, and schedules are generally known well in advance. • Accommodating planned maintenance. Major maintenance efforts, such as rail, tie, or ballast replacement or a bridge replacement, will necessarily disrupt service. Some maintenance work can be done under traffic, by scheduling the work at night or by scheduling work “windows” between trains, but such scheduling can be inefficient and costly. A preferred approach increas- ingly used by railroads in the United States and overseas is to close a length of a route completely for several days and conduct a maintenance “blitz” to complete all work in the shortest time pos- sible. For a passenger line, blitzes are typically scheduled at a low-traffic season to minimize ser- vice disruption and require careful planning by the agency, host railroad, and operator. Customary practice is to add these events to the agenda of routine liaison meetings between host, tenant, and contract operators, with additional planning and monitoring meetings as required. 4.5.4 Managing Change with a Passenger Railroad Host and Freight Tenant Many commuter rail agencies and a few intercity passenger rail agencies have acquired rights- of-way, giving the previous owner long-term or perpetual rights to operate local or through freight service over the line. The trackage rights agreement may restrict freight operations by time of day (to avoid peak commute hours) and cap the total volume of freight traffic. There have been few problems with these arrangements in the past, and only minor revisions have been necessary over time. However, with growth in freight traffic, freight railroads may seek to expand previously agreed- upon rights and to negotiate for a higher share of capacity in new agreements. In the future, oper- ating agreements may have to allow for the likelihood of increased freight use and set up mechanisms for agreement revisions and investment in capacity expansion. These mechanisms will likely follow the same pattern of periodic major and minor revisions as described previously in the context of a forward-looking long-term plan. State agencies responsible for rail freight matters could be involved. Content of Shared-Use Access and Operating Agreements 73

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TRB’s National Cooperative Highway Research Program (NCHRP) Report 657: Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors is designed to aid states in developing public–private partnerships with private freight railroads to permit operation of passenger services over shared-use rail corridors.

The guidebook explores improved principles, processes, and methods to support agreements on access, allocation of operation and maintenance costs, capacity allocation, operational issues, future responsibilities for infrastructure improvements, and other fundamental issues.

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