Commuter Rail
Information and Guidance Could Help Facilitate Commuter and Freight Rail Access Negotiations Gao ID: GAO-04-240 January 9, 2004Commuter and freight rail services have the potential to play increasingly important roles in the nation's economy and transportation system as demand for these services increases. Because the cost of building new infrastructure can be costprohibitive, commuter rail agencies typically seek to use existing infrastructure--which is primarily owned by private freight railroads. Consequently, commuter rail agencies must negotiate to purchase, lease, or pay to access the existing infrastructure from freight railroads. GAO was asked to examine (1) the challenges commuter rail agencies and freight railroads face when negotiating and sharing rights-of-way, (2) the actions that help facilitate mutually beneficial arrangements between commuter rail agencies and freight railroads, and (3) the role the federal government plays in negotiations between commuter rail agencies and freight railroads.
Freight railroads and commuter rail agencies face a number of challenges when negotiating agreements and sharing access to the same rights-of-way, including reaching agreement on compensation, capacity, and liability issues. For instance, in negotiating the agreements, freight railroads typically require that the commuter rail agency contractually indemnify them from any liability in the event of a commuter rail accident and procure a certain level of insurance coverage. Officials from freight railroads said they seek these provisions to protect their shareholders from the potential costs associated with commuter rail accidents. However, accepting these liability terms--notably the expense of maintaining a high level of insurance--can be problematic for the commuter rail agencies. In 1997, Congress limited the aggregate damages that may be awarded to all passengers from claims from a particular rail accident to $200 million and permitted providers of rail transportation to enter into indemnification agreements. However, we found some confusion within the commuter and freight rail community as to whether the liability cap applied to commuter rail agencies, which could result in problems during negotiations. After reviewing the legislation, we have concluded that the liability cap applies to commuter rail operations. Although there is no exact formula for success, officials from commuter rail agencies and freight railroads identified actions that can help facilitate mutually beneficial arrangements--understanding each other's position, identifying and using incentives to leverage cooperation, securing adequate and flexible funding, and establishing good lines of communication. Although commuter rail agencies and freight railroads agreed on actions that could help facilitate win/win arrangements, they disagreed on the appropriate role for the federal government in negotiating access or resolving disputes between commuter rail agencies and freight railroads. The Federal Transit Administration (FTA), Federal Railroad Administration, and Surface Transportation Board (STB) have responsibility for different aspects of rail transportation. For example, FTA helps fund the planning and development of eligible commuter rail projects. However, none of the three agencies play a role in commuter rail access negotiations. Therefore, they have not provided any guidance or information to commuter rail agencies or freight railroads to facilitate and inform negotiations.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-04-240, Commuter Rail: Information and Guidance Could Help Facilitate Commuter and Freight Rail Access Negotiations
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Report to the Ranking Democratic Member, Committee on Transportation
and Infrastructure, House of Representatives:
United States General Accounting Office:
GAO:
January 2004:
Commuter Rail:
Information and Guidance Could Help Facilitate Commuter and Freight
Rail Access Negotiations:
GAO-04-240:
GAO Highlights:
Highlights of GAO-04-240, a report to the Ranking Democratic Member,
Committee on Transportation and Infrastructure, House of
Representatives
Why GAO Did This Study:
Commuter and freight rail services have the potential to play
increasingly important roles in the nation‘s economy and
transportation system as demand for these services increases. Because
the cost of building new infrastructure can be cost-prohibitive,
commuter rail agencies typically seek to use existing infrastructure”
which is primarily owned by private freight railroads. Consequently,
commuter rail agencies must negotiate to purchase, lease, or pay to
access the existing infrastructure from freight railroads. GAO was
asked to examine (1) the challenges commuter rail agencies and freight
railroads face when negotiating and sharing rights-of-way, (2) the
actions that help facilitate mutually beneficial arrangements between
commuter rail agencies and freight railroads, and (3) the role the
federal government plays in negotiations between commuter rail
agencies and freight railroads.
What GAO Found:
Freight railroads and commuter rail agencies face a number of
challenges when negotiating agreements and sharing access to the same
rights-of-way, including reaching agreement on compensation, capacity,
and liability issues. For instance, in negotiating the agreements,
freight railroads typically require that the commuter rail agency
contractually indemnify them from any liability in the event of a
commuter rail accident and procure a certain level of insurance
coverage. Officials from freight railroads said they seek these
provisions to protect their shareholders from the potential costs
associated with commuter rail accidents. However, accepting these
liability terms”notably the expense of maintaining a high level of
insurance”can be problematic for the commuter rail agencies. In 1997,
Congress limited the aggregate damages that may be awarded to all
passengers from claims from a particular rail accident to $200 million
and permitted providers of rail transportation to enter into
indemnification agreements. However, we found some confusion within
the commuter and freight rail community as to whether the liability
cap applied to commuter rail agencies, which could result in problems
during negotiations. After reviewing the legislation, we have
concluded that the liability cap applies to commuter rail operations.
Although there is no exact formula for success, officials from
commuter rail agencies and freight railroads identified actions that
can help facilitate mutually beneficial arrangements”understanding
each other‘s position, identifying and using incentives to leverage
cooperation, securing adequate and flexible funding, and establishing
good lines of communication. Although commuter rail agencies and
freight railroads agreed on actions that could help facilitate win/win
arrangements, they disagreed on the appropriate role for the federal
government in negotiating access or resolving disputes between
commuter rail agencies and freight railroads.
The Federal Transit Administration (FTA), Federal Railroad
Administration, and Surface Transportation Board (STB) have
responsibility for different aspects of rail transportation. For
example, FTA helps fund the planning and development of eligible
commuter rail projects. However, none of the three agencies play a
role in commuter rail access negotiations. Therefore, they have not
provided any guidance or information to commuter rail agencies or
freight railroads to facilitate and inform negotiations.
What GAO Recommends:
GAO recommends that the Department of Transportation (DOT) and STB
determine whether it would be appropriate for them to provide guidance
and information, such as best practices and information on the
applicability of the federal liability cap, to commuter rail agencies
and freight railroads. DOT and STB generally agreed with the report‘s
findings, conclusions, and recommendation.
www.gao.gov/cgi-bin/getrpt?GAO-04-240.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact JayEtta Z. Hecker at
(202) 512-2834 or heckerj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Commuter Rail Agencies and Freight Railroads Face Numerous Challenges
in Negotiating and Sharing Rights-of-Way:
There Is No Template for Success, but Certain Actions Can Help
Facilitate Good Relationships:
Federal Government Currently Does Not Play a Role in Commuter Rail
Access:
Conclusions:
Recommendation:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: Federal Legislation Addresses the Major Liability
Concerns, but Other Issues Remain:
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Acknowledgments:
Tables:
Table 1: Type of Rights-of-Way Arrangement by Commuter Rail Agency:
Table 2: Names and Locations of Existing and Proposed Commuter Rail
Agencies and the Class I Freight Railroad Companies:
Figures:
Figure 1: Map of Existing and Proposed Commuter Rail Systems:
Figure 2: Map of Class I Rail Lines:
Figure 3: Example of Capacity Enhancement:
Figure 4: Photograph of a Segment of Burlington Northern Santa Fe
Right-of-Way in the State of Washington:
Figure 5: Identified Actions Can Help Lay Foundation for Win/Win
Arrangements:
Figure 6: Burlington Northern Santa Fe's (BNSF) Guiding Principles for
Commuter Rail Service:
Abbreviations:
ARAA: Amtrak Reform and Accountability Act of 1997:
AAR: Association of American Railroads:
APTA: American Public Transportation Association:
BNSF: Burlington Northern Santa Fe Railway Company:
CSX: CSX Transportation:
DOT: Department of Transportation:
FRA: Federal Railroad Administration:
FTA: Federal Transit Administration:
ICC: Interstate Commerce Commission:
STB: Surface Transportation Board:
UTA: Utah Transit Authority:
United States General Accounting Office:
Washington, DC 20548:
January 9, 2004:
The Honorable James L. Oberstar: Ranking Democratic Member:
Committee on Transportation and Infrastructure:
House of Representatives:
Dear Mr. Oberstar:
As highways become increasingly congested, communities are looking to
different forms of public transit for relief. An increasingly popular
choice is commuter rail--passenger trains operating on railroad tracks
to provide regional rail service. For instance, 18 transit agencies
currently provide commuter rail service[Footnote 1] in the United
States, and an additional 19 commuter rail projects are in various
stages of planning or development in communities across the nation. An
attractive feature of this type of transit service for communities is
that commuter rail can operate on existing railroad rights-of-way,
eliminating the need to build a new rail corridor, which could be cost
prohibitive. However, the majority of existing rail rights-of-way in
the United States are owned by private freight railroads. Consequently,
commuter rail agencies--which have no statutory rights of access to
freight railroads' tracks--must often negotiate with the freight
railroads to purchase, lease, or pay to access their rights-of-way.
As demand for commuter rail services is increasing in communities
across the country, the demand for freight transportation services is
also growing. For example, the Department of Transportation (DOT)
estimates that freight rail tonnage will increase by about 50 percent
from 1998 to 2020.[Footnote 2] The rail network, like other modes of
transportation, has capacity limitations--that is, only a certain
amount of rail traffic can be efficiently and safely accommodated by
existing infrastructure. When commuter rail trains use freight-owned
rights-of-way, the amount of capacity, or the number of train "slots,"
available for freight trains may be reduced. Thus, freight railroads
must balance requests by commuter rail agencies to purchase or use
their tracks against their ability to serve their current freight
customers as well as their efforts to grow their freight business in
the future.
As you requested, this report discusses (1) the challenges freight
railroads and commuter rail agencies face when negotiating agreements
and sharing access to the same rights-of-way, (2) the actions that help
facilitate mutually beneficial arrangements between freight railroads
and commuter rail agencies, and (3) the role the federal government
plays in access negotiations between freight railroads and commuter
rail agencies. To address these objectives, we visited 8 commuter rail
agencies and 4 Class I freight railroads[Footnote 3] across the nation.
During these site visits, we interviewed senior level management;
toured operation, dispatching, and maintenance facilities; and/or
traveled on the commuter rail system. We conducted structured
interviews with officials from the other 29 commuter rail agencies--
both existing and proposed--and the remaining 3 Class I freight
railroads. We also interviewed officials at the Federal Transit
Administration (FTA), Federal Railroad Administration (FRA), Surface
Transportation Board (STB), and the National Railroad Passenger
Corporation (Amtrak) as well as representatives from a variety of
industry associations. Additionally, we reviewed federal laws and
regulations; court cases and research related to the rail industry; and
internal documents of federal agencies, commuter rail agencies, and
freight railroads. We conducted our work from June through November
2003 in accordance with generally accepted government auditing
standards. (See app. I for a more detailed discussion of the report's
scope and methodology.):
Results in Brief:
Freight railroads and commuter rail agencies face a number of
challenges when negotiating and sharing access to the same rights-of-
way. However, reaching agreement on compensation, capacity, and
liability issues present the most problems when negotiating agreements,
according to both commuter rail and freight railroad officials. For
example, freight railroads generally do not want to allow commuter rail
service on their rights-of-way unless they are protected from the
potential liability associated with passenger rail accidents. As a
result, freight railroads typically require that the commuter rail
agency contractually indemnify them from any liability in the event of
a passenger accident and procure a certain level of insurance coverage
to guarantee their ability to pay the entire allocation of damages.
Accepting these liability terms can be problematic for the commuter
rail agencies; therefore, negotiations could stall or fail. Recognizing
the freight railroad's potential exposure to liability when hosting
passenger trains on their rights-of-way, Congress enacted the Amtrak
Reform and Accountability Act of 1997 (ARAA), which limited the
aggregate overall damages that may be awarded to all passengers for all
claims from a particular rail accident to $200 million and permitted
providers of rail transportation to enter into indemnification
agreements allocating financial responsibility for passenger
accidents. However, in discussions with officials from commuter rail
agencies and freight railroads, we found some confusion as to whether
the liability cap established in the ARAA applied to commuter rail
agencies. After reviewing the legislation, we have concluded that the
liability cap applies to commuter rail operations based upon the plain
language of the statute and our review of the pertinent legislative
history. Given the growing demand for commuter and freight rail
services and financial pressures on the rail industry, reaching
agreement will likely become even more difficult in the future. In
addition to negotiation challenges, there are day-to-day or operational
challenges that the commuter rail agency and freight railroad have to
work through when sharing the same rights-of-way. Officials from
commuter rail agencies and freight railroads identified a number of
challenges in sharing the same rights-of-way; however, the most
commonly cited problems were associated with the dispatching of trains
(i.e., controlling the movement of trains) and maintaining the rights-
of-way.
There is not a defined formula for developing mutually beneficial
arrangements between commuter rail agencies and freight railroads. A
"cookie cutter" approach is not possible because every situation is
unique--from the parties involved to the needs and expectations for the
commuter rail system--requiring the agreements to be tailored to the
circumstances of the situation. The characteristics of the rights-of-
way, such as freight traffic density and the physical constraints of
each rail line, also vary from location to location, creating unique
negotiating environments. For example, the freight railroads would
likely be more willing to allow commuter rail trains on a lightly used
branch line (or secondary line) than a main line that is critical to
their freight network. Although there is not a formula for negotiating
and cultivating successful arrangements, officials from commuter rail
agencies and freight railroads identified conditions or actions that
can help facilitate mutually beneficial arrangements between commuter
rail agencies and freight railroads. The most frequently identified
actions include understanding each other's position, identifying and
using incentives to leverage cooperation, securing adequate and
flexible funding to help improve capacity and infrastructure, and
establishing good communication between both parties.
The federal government currently does not play a role in access
negotiations between commuter and freight railroads. Three federal
agencies, FTA, FRA, and STB, have responsibility for different aspects
of rail transportation. Specifically, FRA is primarily focused on
ensuring safe operation of railroads; FTA's primary role is providing
funding to transit projects, including commuter rail; and STB is
responsible for the economic regulation of railroads. For example, FTA
helps fund the planning and development of eligible commuter rail
projects--currently funding up to 60 percent of the total capital costs
of new projects through its New Starts program.[Footnote 4] According
to officials from FRA, FTA, and STB, these agencies do not have the
authority or responsibility for commuter rail access issues; therefore,
they do not currently act to facilitate negotiations or resolve
impasses between commuter rail agencies and freight railroads regarding
access to freight-owned rights-of-way. For instance, none of these
agencies have issued guidance or information on commuter rail access
issues, such as best practices for negotiations, to commuter rail
agencies or freight railroads. Commuter rail agencies and freight
railroads differ on the roles they would like to see the federal
government play in negotiations between commuter rail agencies and
freight railroads. In general, most commuter rail agencies would like
the federal government to play a more active role, such as serving as a
mediator; freight railroads do not want the federal government
involved, except for assuring the adequacy of funding for commuter rail
projects.
We recommend that the Secretary of Transportation and the Chairman of
the Surface Transportation Board determine whether it would be
appropriate and useful for them to provide guidance and information,
such as tips for successful negotiations and information on best
practices, availability of federal resources, and the applicability of
the liability provisions in the Amtrak Reform and Accountability Act of
1997, to commuter rail agencies and freight railroads. This information
and guidance would serve to facilitate and inform negotiations. If DOT
and STB determine that it would be helpful for them to provide such
information but that they lack the statutory authority to do so, DOT
and STB should seek a legislative change to allow them to provide
guidance and information to commuter rail agencies and freight
railroads. We provided draft copies of this report to DOT and STB for
their review and comment. DOT and STB officials generally agreed with
the report's findings, conclusions, and recommendation. They also
provided some technical comments on our draft, which we incorporated
where appropriate.
Background:
Commuter rail is a type of public transit that is characterized by
passenger trains operating on railroad tracks and providing regional
service (e.g., between a central city and adjacent suburbs).[Footnote
5] Commuter rail systems are traditionally associated with older
industrial cities, such as Boston, New York, Philadelphia, and Chicago.
However, over the past decade, commuter rail systems have been
inaugurated in such cities as Dallas and Seattle as communities sought
to ease congestion on their roads. Today, there are 18 commuter rail
agencies throughout the country. (See fig. 1.) In the first quarter of
2003, commuter rail systems provided an average of 1.2 million
passenger trips each weekday. Advocates of commuter rail contend that
it provides a number of public benefits, including reduced highway
congestion, pollution, and energy dependence. Moreover, commuter rail
service can operate on existing rights-of-way, which eliminates the
time and significant expense associated with constructing new
infrastructure. The potential benefits ascribed to commuter rail have
stimulated interest in this type of public transit in many communities
across the country; as a result, many communities are planning to
provide commuter rail service. Specifically, as figure 1 shows, 19
commuter rail projects are currently in various stages of planning or
development in communities across the nation. All of the proposed
commuter rail agencies have purchased or plan to purchase, lease, or
pay to access existing rights-of-way from freight railroads or other
entities.
Figure 1: Map of Existing and Proposed Commuter Rail Systems:
[See PDF for image]
[End of figure]
As demand for commuter rail services is increasing in communities
across the country, the demand for freight transportation services is
also growing. The nation's private railroads are important providers of
freight transportation services. Currently, 7 Class I railroads--CSX
Transportation (CSX), Burlington Northern Santa Fe Railway Company
(Burlington Northern Santa Fe), Union Pacific Railroad Company (Union
Pacific), Norfolk Southern, Kansas City Southern Railway Company,
Canadian National Railway, and Canadian Pacific Railway[Footnote 6]--
and over 500 short line and regional railroads[Footnote 7] are
operating in the United States. These railroads operate the nation's
freight rail system as well as own the majority of rail infrastructure
in the United States. (See fig. 2.) According to the Association of
American Railroads (AAR), freight railroads carried about 42 percent of
domestic intercity freight (measured by ton miles) in 2001. Railroads
are the primary mode of transportation for many products, especially
for such bulk commodities as coal and grain. In addition, railroads are
carrying increasing levels of intermodal freight (e.g., containers and
trailers), which travel on multiple modes and typically require faster
delivery than bulk commodities. The demand for freight rail service is
projected to increase in the future. For example, DOT estimated that
freight rail tonnage will grow by almost 50 percent from 1998 to 2020.
According to advocates for the freight rail system, transporting
freight by rail offers a number of public benefits, including reducing
congestion on the highways, lowering highway costs, increasing fuel
efficiency, and supporting military mobilization.
Figure 2: Map of Class I Rail Lines:
[See PDF for image]
[End of figure]
Historically, America's rail corridors have been used for both freight
and passenger purposes. At one time, both passenger and freight
services were operated by the private railroads. The private railroads
were required by federal law to maintain their passenger services.
However, by the 1970s, American freight railroads were in serious
financial decline. Congress responded by passing the Rail Passenger
Service Act of 1970, which created Amtrak to provide intercity
passenger rail service because existing railroads found such service
unprofitable. In creating Amtrak, Congress relieved freight railroads
of the requirement to provide passenger service. In return, Amtrak
operates primarily over tracks owned by freight railroads,[Footnote 8]
and federal law requires that freight railroads give Amtrak trains
priority access and charge Amtrak an incremental cost--rather than the
full cost--associated with the use of their tracks. Congress also
passed the Railroad Revitalization and Regulatory Reform Act of 1976
and the Staggers Rail Act of 1980, which reduced rail regulation and
encouraged greater reliance on competition to set rates. Since these
acts were passed, the railroad industry has become more stable, as
railroads continue to consolidate to reduce costs, become more
efficient, and improve their financial health.
Unlike Amtrak, commuter rail agencies do not possess statutory rights
of access to freight railroads' tracks. If a commuter rail agency wants
to use a freight railroad's existing infrastructure, it must negotiate
with the freight railroad to purchase, lease, or pay to access the
railroad's right-of-way. If the two parties reach agreement, there are
often multiple documents detailing this agreement, including the
purchase, lease, or access agreement and the shared use
agreement.[Footnote 9] The number and type of agreements vary by the
parties involved and location. The contents of these agreements may
also vary, but they are likely to address a number of important issues,
including dispatching trains, maintenance of rights-of-way, liability,
capital improvements, and access fees, among other things. Hence, the
agreements will govern how the two parties will operate on the rights-
of-way they share. The period of time covered by the agreements and
amount of time required to negotiate the agreements also varies. For
example, some commuter rail agencies and freight railroads reach
agreement in a manner of months; negotiations of other commuter rail
agencies and freight railroads can extend over a period of years.
As commuter rail agencies buy or lease rights-of-way from freight
railroads, they create unique and complex relationships with the
freight railroads. As table 1 shows, about half of the existing and
proposed commuter rail agencies lease or plan to lease rights-of-way
from freight railroads for their operations. An even greater number of
these agencies own or plan to purchase at least a portion of the
rights-of-way from freight railroads. (See tab. 1.) When the commuter
rail owns rights-of-way, there is a role reversal between the freight
railroad and the commuter rail agencies from the typical relationship-
-that is, if a freight railroad uses the commuter rail agency's rights-
of-way, the commuter rail agency is the host and the freight railroad
is the tenant. Moreover, as table 1 shows, a number of existing and
proposed commuter rail agencies may be both the host and tenant in
certain situations, creating a unique relationship with the freight
railroads with whom they interact.[Footnote 10]
Table 1: Type of Rights-of-Way Arrangement by Commuter Rail Agency:
Existing commuter rail agencies:
Name of commuter rail agency: Altamont Commuter Express;
Own or plan to own right-of-way: No;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Connecticut Department of
Transportation: Shore Line East line New Haven line;
Own or plan to own right-of-way: Yes[F];
Lease or plan to lease right-of-way from freight railroads: b.
Name of commuter rail agency: Maryland Transit Administration (MARC);
Own or plan to own right-of-way: Yes[E];
Lease or plan to lease right-of- way from freight railroads: Yes.
Name of commuter rail agency: Massachusetts Bay Transportation
Authority;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Metra;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: MTA Long Island Rail Road;
Own or plan to own right-of-way: Yes[A];
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: MTA Metro-North Railroad;
Own or plan to own right-of-way: Yes[A];
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: New Jersey Transit Corporation;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: North County Transit District (Coaster);
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Northern Indiana Commuter Transportation
District;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Peninsula Corridor Joint Powers Board
(CALTRAIN);
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Pennsylvania Department of
Transportation;
Own or plan to own right-of-way: No;
Lease or plan to lease right-of-way from freight railroads: b.
Name of commuter rail agency: Sound Transit;
Own or plan to own right- of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Southeastern Pennsylvania Transportation
Authority;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Southern California Regional Rail
Authority (Metrolink);
Own or plan to own right-of-way: Yes[A];
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Tri-County Commuter Rail Authority (Tri-
Rail);
Own or plan to own right-of-way: Yes[A];
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Trinity Railway Express;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Virginia Railway Express;
Own or plan to own right-of-way: Yes[E];
Lease or plan to lease right-of-way from freight railroads: Yes.
Proposed commuter rail agencies:
Name of commuter rail agency: Akron line[D];
Own or plan to own right- of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Alaska Railroad Corporation;
Own or plan to own right-of-way: Yes[A];
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Austin-San Antonio Intermunicipal
Commuter Rail District;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Charlotte Area Transit System;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Cumberland-Dauphin-Harrisburg Transit
Authority;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Dane County T2020 (Transport 2020);
Own or plan to own right-of-way: No;
Lease or plan to lease right-of- way from freight railroads: Yes.
Name of commuter rail agency: Delaware Department of Transportation[C];
Own or plan to own right-of-way: TBD;
Lease or plan to lease right-of- way from freight railroads: TBD.
Name of commuter rail agency: Eastern Corridor, Hamilton County
Transportation Improvement District;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Georgia Rail Passenger Program;
Own or plan to own right-of-way: TBD;
Lease or plan to lease right-of-way from freight railroads: TBD.
Name of commuter rail agency: Johnson County Transit;
Own or plan to own right-of-way: No;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Nashville to Lebanon Corridor Regional
Transportation Authority;
Own or plan to own right-of-way: Yes[A];
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: NeoRail line;
Own or plan to own right- of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: New Haven-Hartford-Springfield Commuter
Rail;
Own or plan to own right-of-way: No;
Lease or plan to lease right-of-way from freight railroads: b.
Name of commuter rail agency: Northstar Corridor;
Own or plan to own right-of-way: No;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Regional Transportation District;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Sonoma-Marin Area Rail Transit;
Own or plan to own right-of-way: Yes[A];
Lease or plan to lease right-of-way from freight railroads: No.
Name of commuter rail agency: Triangle Transit Authority;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Washington Country Commuter Rail;
Own or plan to own right-of-way: Yes[A];
Lease or plan to lease right-of-way from freight railroads: Yes.
Name of commuter rail agency: Utah Transit Authority, Commuter Rail;
Own or plan to own right-of-way: Yes;
Lease or plan to lease right-of-way from freight railroads: Yes.
Source: GAO.
TBD = To be determined.
Note: The proposed commuter rail agencies' plans to purchase or lease
rights-of-way are subject to change.
[A] The rights-of-way are owned by commuter agency's local or state
government or the agency's regional transportation authority.
[B] Commuter rail agency operates exclusively on Amtrak-owned rights-
of-way.
[C] Southeastern Pennsylvania Transportation Authority provides a
"turnkey," or contracted commuter rail service for the Delaware
Department of Transportation between Newark/Wilmington, Delaware, and
Philadelphia, Pennsylvania.
[D] The Akron line, which is proposed to run between Cleveland and
Canton, Ohio, was originally part of the NeoRail study, which has
several proposed lines out of Cleveland. Due to an opportunity to move
forward, the Akron line was separated as a distinct project for
planning purposes. The Akron and NeoRail lines may be integrated again
at some point in the future.
[E] The commuter rail agency owns a very limited portion of the rights-
of-way it uses. Most of the rights-of-way are owned by Amtrak or a
freight railroad.
[F] The New Haven line is operated by MTA Metro-North Railroad. The
state of Connecticut owns about 50 miles on which the Connecticut
trains operate.
[End of table]
Three federal agencies--FRA, FTA, and STB--are responsible for
different aspects of commuter or freight rail in the United States. In
particular, FRA administers and enforces the federal laws and related
regulations that are designed to promote safety on railroads, such as
track maintenance, inspection standards, equipment standards, and
operating practices.[Footnote 11] Freight railroads and commuter rail
agencies are subject to FRA regulations. FTA is the primary federal
financial resource for supporting locally planned, implemented, and
operated transit capital investments. As a form of public transit,
commuter rail projects are eligible for FTA funding. Unlike FRA and
STB, FTA is not a regulatory agency. STB is responsible for the
economic regulation of interstate surface transportation, primarily
freight railroads, within the United States. STB has jurisdiction to
resolve compensation and access issues between freight railroads and
Amtrak in the event of an impasse in negotiations. Proposed legislation
(H.R. 2192) would give STB the jurisdiction to order agreements between
freight railroads and commuter rail agencies that have reached an
impasse during negotiations.[Footnote 12] The legislation would also
grant commuter rail agencies the same right of access to freight
railroads' rights-of-way that Amtrak currently possesses. In May 2003,
the proposed legislation was referred to the Subcommittee on Railroads,
House Committee on Transportation and Infrastructure. As of December
2003, the proposed legislation has not been moved out of the
subcommittee.
Commuter Rail Agencies and Freight Railroads Face Numerous Challenges
in Negotiating and Sharing Rights-of-Way:
According to officials from commuter rail agencies and freight
railroads, negotiating and sharing access to the same rights-of-way can
be challenging. Although they cited a variety of challenging issues,
there was overall agreement among commuter rail agencies (both existing
and proposed) and freight railroads that reaching agreement on
compensation, capacity, and liability issues presents the most problems
during negotiations. For example, commuter rail agencies and freight
railroads may disagree as to whether there is adequate capacity
available to accommodate commuter trains and/or what capacity
enhancements (e.g., additional tracks) are needed to accommodate the
commuter rail service. Until the commuter rail agencies and freight
railroads reach agreement, the commuter rail project may not move
forward. If the parties successfully reach agreement and the commuter
rail service begins operations, there are yet more day-to-day
challenges that the commuter rail agency and freight railroad will have
to work through when sharing the same rights-of-way. Officials from
commuter rail agencies and freight railroads described a number of
challenges in sharing the same rights-of-way; however, the most
commonly cited problems were issues associated with dispatching trains
and maintaining the rights-of-way.
Negotiating Mutually Beneficial Agreements Is Difficult:
Officials from commuter rail agencies and freight railroads cited a
variety of challenges in negotiating agreements. However, there was
overall consensus about the most significant challenges. These
challenges can be grouped into three issues: compensation, capacity,
and liability. Depending on how long it takes the commuter rail
agencies and freight railroads to resolve these and other issues, the
amount of time required to negotiate agreements can range from months
to years. Given the growing demand for commuter rail and freight rail
services and financial pressures on the rail industry, reaching
agreement will likely become even more difficult in the future.
Agreeing to a Price Can Be Challenging:
Officials from both commuter rail agencies and freight railroads
reported that negotiating a mutually agreeable price for the freight-
owned rights-of-way is challenging. Like other transactions, there is
often a natural tension between the seller and buyer--that is, the
seller wants to obtain the most money from the transaction possible,
and the buyer wants to keep the price as low as possible. In addition
to this natural tension, the commuter rail agencies and freight
railroads cited reasons why they believe the other party's compensation
offers or demands can be too high or low, making it difficult to reach
agreement.
From the freight railroads' perspective, the commuter rail agencies'
compensation offers are often inadequate. Officials from freight
railroads and AAR commented that a common misconception is that rail
infrastructure is public property. According to these officials, this
misconception leads people to assume that the public should be able to
use the railroads for a minimal cost. In reality, most rail
infrastructure in the United States is owned by private freight
railroads that must generate sufficient profits to survive. This can be
difficult given the intense competition within the transportation
marketplace and the capital-intensive nature of railroads. According to
AAR, the financial health of the freight railroads has improved since
the enactment of the Staggers Act; however, overall the freight rail
industry does not earn its cost of capital, and the railroads must
borrow money from commercial sources for much of their capital
expenditures. It is with this financial backdrop that freight railroads
negotiate with commuter rail agencies. Hence, when negotiating a
purchase agreement for their rights-of-way, freight railroads typically
expect the price to reflect the fair market value, which is a function
of the limited commodity and the high demand for its use. Similarly,
when negotiating a lease or access agreement, freight railroads
generally want to be compensated for all operating, capital, and other
costs associated with hosting commuter rail trains. This would include
both direct costs, such as costs of dispatching trains and maintaining
the rights-of-way, and indirect costs, such as opportunity costs. For
example, when a commuter train fills a train slot, the freight railroad
loses the opportunity to use the slot for its own purposes or to lease
it to another freight railroad at a premium price. According to freight
railroads, when they are not compensated for all of the costs incurred
from hosting a commuter rail train, the result is that the freight
railroads subsidize the commuter rail service. Although the freight
railroads recognized the potential public benefits of commuter rail
service, they argued that they should not be forced to bear the costs
of providing such benefits.
In contrast, from the commuter rail agencies' perspective, freight
railroads' compensation demands are often too high. Officials from
commuter rail agencies stated that they have limited financial
resources. Notably, commuter rail agencies usually rely on public funds
to bridge the gap between operating and capital costs and farebox
revenue. Officials from APTA and a commuter rail agency also suggested
that the price should reflect all of the benefits commuter rail
agencies bring to the table. For example, commuter rail agencies could
invest in and improve the freight-owned rights-of-way through projects
designed to accommodate commuter rail trains, such as improving grade
crossings and adding tracks. These projects would benefit the freight
railroad's operations as well as the commuter rail service. Finally, if
the right-of-way is not fully utilized, the commuter rail service
serves as a stream of revenue that the freight railroad would not have
otherwise received.
Capacity Issues Are Also Problematic during Negotiations:
Another challenge in negotiations is the issue of capacity. The number
of trains that can pass over a line of track is limited. If the line is
full, or at capacity, additional trains cannot be accommodated unless
enhancements are made to increase the capacity of the line. Capacity
enhancements can range from adding new tracks to increasing height
clearances of tunnels.[Footnote 13] (See fig. 3 for an example of a
capacity enhancement.) The amount of capacity available varies by line
of track. Determining whether capacity is available and/or what
capacity enhancements are needed to accommodate additional trains on a
particular line is a subjective exercise. For example, depending on the
assumptions used, capacity studies of the same line can produce
different results. Consequently, capacity issues can become contentious
during negotiations.
Figure 3: Example of Capacity Enhancement:
[See PDF for image]
[End of figure]
From the freight railroads' perspective, freight service is their core
business, and their ability to efficiently move freight through their
systems must be protected. Thus, officials from the freight railroads
insist that they must protect their systems' capacity to handle today's
freight traffic as well as tomorrow's anticipated traffic growth.
According to the AAR, some rail lines do not currently have capacity
available for commuter rail operations, or expected increases in
freight traffic will consume the available capacity unless capacity is
expanded. In determining what capacity enhancements are needed to
accommodate commuter rail service, officials from the freight railroads
generally argue that the commuter rail agency must "keep them whole"--
that is, their ability to serve their freight customers must not be
degraded or impinged upon because of the presence of the commuter rail
service. Freight railroads also consider the need for additional
capacity enhancements in the future when negotiating with commuter rail
agencies. In particular, a freight railroad official noted that when
adding capacity, it is common practice in the rail industry to "pick
the low hanging fruit"--that is, construct the cheapest and most cost-
effective enhancement. If the cheapest and most cost-effective
enhancements are built for the commuter rail service, any future
capacity enhancements needed for freight operations will come at a much
higher cost, according to freight railroad officials.
From the commuter rail agencies' perspective, freight railroads are too
conservative when estimating available capacity and/or overly
optimistic about projected freight traffic growth. Consequently,
officials from some commuter rail agencies and APTA argue that freight
railroads set excessive demands for capacity enhancements. For example,
officials from one commuter rail agency told us that a freight
railroad's cost estimate of capacity enhancements needed to accommodate
the commuter rail service was $75 million more than the commuter rail
agency's estimates. This difference in estimates has contributed to
challenges during the negotiations. Even if the commuter rail agencies
believe the freight railroads demands are unreasonable, they have
little recourse. Because the freight railroads own the infrastructure,
the freight railroads' assessment of capacity is the final word,
according to commuter rail agencies.
Liability Is a Major Challenge for Negotiations:
Liability was the most frequently identified challenge by proposed and
existing commuter rail agencies and freight railroads. If a passenger
rail accident should occur, injured passengers may sue the
transportation provider for their damages. Freight railroads have been
traditionally sheltered from this exposure when they haul freight.
However, when a freight railroad allows a commuter rail service to
operate over its rights-of-way, the freight railroad becomes exposed to
these risks as passengers may sue the commuter rail provider and owner
of the track. Hence, freight railroads do not want to allow commuter
rail service on their rights-of-way unless they are protected from
liability.
Freight railroads generally want the commuter rail agency to assume all
risks associated with the presence of the commuter rail service. This
is often referred to as a "but for" arrangement--that is, but for the
presence of the commuter rail service, the freight railroad would not
be exposed to certain risks; therefore, the freight railroads should be
held harmless. Officials from freight railroads stated that they must
take this position in order to protect their businesses and
stockholders from potential lawsuits. As a result, freight railroads
typically require that the commuter rail agency contractually indemnify
them from any liability in the event of a passenger accident, and
procure a certain level of insurance coverage to guarantee the commuter
rail agency's ability to pay for all of the damages. The amount of
insurance required can range significantly--for example, we heard
insurance coverage requirements of $100 million to $500 million.
Several commuter rail agency and freight railroad officials commented
that the amount of insurance required has increased in recent years.
For instance, officials from one commuter rail agency told us that
during negotiations for their new agreement (their previous agreement
expired), the freight railroad informed the agency that it must carry
$500 million in insurance--double the amount the agency was required in
its previous agreement with the freight railroad. This has contributed
to stalling the negotiations between the commuter rail agency and
freight railroad. Accepting these liability terms can be financially
problematic for the commuter rail agencies. The premiums on the
commercial insurance coverage becomes an operating expense for the
commuter rail agencies--and these expenses can be significant. For
example, officials from one commuter rail agency told us that their
annual premium for their $125 million insurance coverage is $1.5
million. These officials also noted that the freight railroad they
share the rights-of-way with is seeking to increase the amount of
insurance the commuter rail agency must maintain from $125 million to
$500 million, which would significantly increase its annual premium.
Officials from another commuter rail agency estimated that their
insurance premiums would account for 20 percent of their annual
operating budget.
Recognizing the freight railroads' exposure to liability when hosting
passenger trains on their rights-of-way, Congress established liability
provisions in the Amtrak Reform and Accountability Act of 1997 (ARAA).
Specifically, the act limits the aggregate overall damages that may be
awarded to all passengers for all claims (including punitive damages)
from a particular rail accident to $200 million. The act also permits
Amtrak and other providers of rail transportation to enter into
indemnification agreements allocating financial responsibility for
passenger accidents. In discussions with officials from commuter rail
agencies and freight railroads, we found some confusion as to whether
the liability cap established in the ARAA applies to commuter rail
agencies. After reviewing the legislation, we have concluded that the
liability cap applies to commuter rail operations on the basis of the
plain language of the statute and our review of the pertinent
legislative history. However, there are limitations to the protection
the legislation provides. The legislation does not limit damages for
claims brought by nonpassengers. For example, the legislation would not
apply to claims brought by adjacent property owners or populations that
may be harmed in a hazardous materials spill or an accident at a rail
crossing. Further, because the application of this liability cap has
been untested in court, many freight railroads and commuter rail
agencies are hesitant to rely upon this statute to cover the full
extent of their potential liability. (See app. II for a more detailed
discussion of the applicability and limitations of the ARAA.):
Challenges Also Exist in Sharing Rights-of-Way:
In addition to the challenges in negotiating agreements, officials from
commuter rail agencies and freight railroads identified a number of
challenges in the day-to-day operations of shared use rights-of-way.
The challenges cited by officials from commuter rail agencies or
freight railroads ranged from dealing with the public's concern about
additional train traffic to safety concerns. The most frequently
mentioned challenges, however, can be grouped into two categories:
dispatching and maintenance issues.
Officials from freight railroads and commuter rail agencies frequently
identified issues associated with the dispatching of trains as an
important challenge in sharing the rights-of-way. Dispatching controls
the movement of trains through the rail network. The owner of the
rights-of-way generally dispatches all trains on those rights-of-way.
For instance, when Virginia Railway Express trains are traveling on
CSX-owned rights-of-way, CSX dispatches the Virginia Railway Express
trains. Because dispatching controls and directs rail traffic, it is
key to the on-time performance of commuter and freight trains. The
success of a commuter rail service is largely dependent on its
reliability. If commuter rail passengers cannot count on the train to
be on time, they will stop using the service. Freight railroads are
increasingly providing "just-in-time" delivery for their customers. If
the freight trains carrying time-sensitive freight do not arrive on
schedule, the freight railroads run the risk of losing customers and/or
incurring financial penalties. Thus, officials from commuter rail
agencies and freight railroads want their trains to run on time.
Keeping both commuter and freight trains consistently on time, however,
can be difficult due to the amount of traffic on a corridor as well as
unexpected events, such as severe weather, which disrupts normal
operations.
Officials from commuter rail agencies and freight railroads also cited
issues associated with maintenance-of-way as a significant challenge in
sharing rights-of-way. A frequently cited challenge was finding time in
the schedule for maintenance-of-way work. As traffic on the rights-of-
way increases, scheduling and performing maintenance become more
difficult. For example, if a commuter rail agency provides morning and
evening rush hour service as well as mid-day service and the freight
trains operate at night, the windows of opportunities for maintenance
work are limited. If maintenance is deferred, the tracks may
deteriorate from a state of good repair, resulting in speed
restrictions for the tracks. Reducing the speed of the traffic can
further complicate efforts to keep commuter rail trains on time.
Another maintenance-of-way challenge identified was handling the
different track maintenance requirements for passenger and freight
trains. Because of the speed of passenger trains, the tracks used by
these trains must be maintained at a higher standard compared with
tracks used solely by freight trains. In addition, freight trains
create more wear and tear on the tracks because of their weight. In
combination, these differences create the need for more maintenance on
tracks shared by passenger and freight trains, compounding the problem
of finding time to schedule and perform maintenance work.
There Is No Template for Success, but Certain Actions Can Help
Facilitate Good Relationships:
According to industry representatives and officials from commuter rail
agencies and freight railroads, there is no single approach or "cookie
cutter" formula for developing mutually beneficial arrangements between
commuter rail agencies and freight railroads. A cookie cutter approach
is not possible because every situation is unique--from the parties
involved to the needs and expectations for the commuter rail system--
requiring the agreements to be tailored to the circumstances of the
situation. The characteristics of the rights-of-way, such as freight
traffic density and the physical constraints of each rail line and
whether the tracks are a main or branch line, also vary from location
to location, creating unique negotiating environments. An example of
how the characteristics of the rights-of-way can affect negotiations is
Sound Transit's efforts to extend service from Seattle to Everett,
Washington. In particular, the right-of-way from Seattle to Everett is
a main line of the Burlington Northern Santa Fe, which experiences
heavy freight traffic and serves as a critical link from the Pacific
Northwest seaports to the markets in the midwest and on the east coast.
Amtrak also uses the corridor, adding to the level of traffic on the
right-of-way. Moreover, the right-of-way is physically constrained--
Puget Sound is on one side of the right-of-way and steep terrain is on
the other side, which can be prone to mud slides. (See fig. 4.) The
high level of traffic and physical constraints along this corridor have
made adding passenger trains to the existing infrastructure or adding
capacity difficult and, therefore, made negotiations between Sound
Transit and Burlington Northern Santa Fe challenging.[Footnote 14]
Figure 4: Photograph of a Segment of Burlington Northern Santa Fe
Right-of-Way in the State of Washington:
[See PDF for image]
[End of figure]
Although there is no template for success, officials from commuter rail
agencies and freight railroads identified conditions or actions that
can help facilitate mutually beneficial arrangements between commuter
rail agencies and freight railroads. The officials identified a number
of actions, ranging from capacity improvements strategies to
legislative initiatives. Although the officials discussed a range of
ideas related to these themes, there were several recurring
suggestions, including understanding each other's position,
identifying and using incentives to leverage cooperation, securing
adequate and flexible funding to help improve capacity and
infrastructure, and establishing good communication between both
parties (see fig. 5).
Figure 5: Identified Actions Can Help Lay Foundation for Win/Win
Arrangements:
[See PDF for image]
[End of figure]
* Understanding each other's position: Although commuter rail agencies
and freight railroads are both in the rail business, they differ in
many respects. Commuter rail agencies want to have fast and predictable
service for their customers, which can clash with the railroads' desire
for flexible scheduling and need for trains of varying lengths and
speeds to meet their customers' shipping demands. Also, freight
railroads have shareholders while commuter rail agencies have
stakeholders--that is, freight railroads are private companies that
seek to generate profits to benefit their stockholders, and commuter
rail agencies are usually public entities that provide service to the
public. In addition, commuter rail agencies are usually concerned with
relatively small, defined portions of the right-of-way. In contrast,
freight railroads own and operate rail networks that span thousands of
miles and multiple states. These differences, as well as others, result
in freight railroads and commuter rail having very different agendas
and goals for the negotiations. For example, commuter rail agencies may
want to get through the negotiation process as quickly as possible
because of public pressure to begin service; however, such a rush to
reach agreement does not necessarily benefit freight railroads'
shareholders. Freight railroads will likely want to examine how the
proposed commuter rail service will affect their entire network, not
just the specific location of the proposed service. To help commuter
rail agencies better understand their position, several freight
railroad companies have developed guiding principles that they provide
to commuter rail agencies that are interested in using freight
railroads' rights-of-way. (Fig. 6 lists Burlington Northern Santa Fe's
guiding principles for commuter rail service.) Several commuter rail
agency officials also stressed the importance of having people with
freight railroad knowledge and expertise on their teams. According to
these officials, having railroad expertise on their teams during
negotiations helps commuter rail agencies better understand the
challenges faced by the railroads, speak and understand railroad
terminology, and establish credibility with the railroads.
Figure 6: Burlington Northern Santa Fe's (BNSF) Guiding Principles for
Commuter Rail Service:
[See PDF for image]
[End of figure]
* Identifying and using incentives to leverage cooperation: Officials
from commuter rail agencies told us that identifying and using
incentives to leverage freight railroads' cooperation can help
negotiations. According to both commuter rail agency and freight
railroad officials, using an incentive or "carrot" can make the freight
railroads more amenable to commuter rail service by making the
opportunity to host commuter rail service more attractive. There is a
range of incentives commuter rail agencies may be able to offer, from
lobbying for rail infrastructure funding with the railroad, to seeking
local tax relief, to investing in railroad infrastructure. According to
several commuter rail officials, the key is identifying something the
freight railroad wants or needs. For example, the Utah Transit
Authority (UTA) in Salt Lake City was interested in purchasing a
portion of a right-of-way owned by Union Pacific. However, the purchase
of this right-of-way would significantly diminish the ability of Union
Pacific to operate its downtown freight intermodal transfer yard. In
order to spur negotiations, UTA offered to pay the cost of relocating
Union Pacific's facility to a site that allowed Union Pacific to
upgrade its support operations and provide for future growth
opportunities. According to UTA officials, adding this incentive helped
UTA and Union Pacific reach agreement on UTA's purchase and lease of
Union Pacific rights-of-way. In another example, the state of Delaware
financed the reconstruction of a bridge that will provide access to an
alternative freight route. In exchange, Norfolk Southern agreed to
grant Delaware's Department of Transportation free access to all of its
Delaware rights-of-way for its commuter rail service for a 20-year
period.
* Securing adequate and flexible funding: Several commuter rail
officials stressed the importance of treating the freight railroads as
true partners and acting as real customers. For instance, one commuter
rail agency official noted that commuter rail agencies should be
willing to fully reimburse the freight railroads and pay their fair
share. Officials from the freight railroads also echoed the importance
of commuter rail agencies bringing adequate funds to the negotiating
table to pay for the costs they impose. APTA suggests that commuter
rail agencies and freight railroads can work together to obtain
federal, state, or local funds for rail improvements that benefit both
parties. For example, Metra, the commuter rail agency in Chicago, is
partnering with the city of Chicago, the state of Illinois, and six
freight railroads to secure $1.5 billion in funds for rail improvements
in the Chicago area that will reduce the impact of freight traffic on
the region as well as benefit both freight and passenger
operations.[Footnote 15] In addition to adequate funding, officials
from several commuter rail agencies emphasized the importance of having
the flexibility to invest in capacity improvements outside the commuter
rail service area. Because freight railroads operate national networks,
delays on one part of the system are likely to cause ripple effects
throughout the entire network. Thus, according to several commuter rail
and freight railroad officials, sometimes the most effective way to
improve commuter rail operations or to accommodate additional trains on
a given corridor is to make improvements to the rail infrastructure 10
miles or even hundreds of miles away from the corridor. Having the
flexibility to invest funds outside the commuter service area allows
for the freight railroads and commuter rail agencies to implement the
most effective solution.
* Establishing good lines of communication: Officials from many
commuter rail agencies and freight railroads stressed the importance of
early, direct, and continuous communication. Officials from both
commuter rail agencies and freight railroads noted that freight
railroads should be notified early in the planning process about
proposed commuter rail systems or expansions on their rights-of-way
because the freight railroads can help the commuter rail agencies
develop realistic cost estimates. Moreover, many freight railroads
noted that hearing about such proposals through the media or other
sources sets a bad tone for negotiations. Officials from freight
railroads also commented that they prefer to work directly with the
commuter agency rather than being pressured through the media or
elected officials. As one freight railroad official noted, when
commuter rail agencies use elected officials to apply political
pressure, his company is likely to "dig their heels in" rather than bow
to the pressure. In addition to early and direct communication, a
number of commuter rail officials stated that continuous communication
with the freight railroads was important in order to identify and
resolve issues as they arise. One commuter rail official said that his
agency has daily monitoring and conference calls as well as quarterly
meetings with railroad contacts. Similarly, through the Chicago
Transportation Coordination Office, Metra works with the freight
railroads that travel through the Chicago area to coordinate freight
and passenger train movements and to address any problems as they
arise. Although there was general agreement that early communication is
important, a number of the commuter rail officials noted that the
freight railroads do not want to begin negotiations until they are sure
the project is funded and moving forward; however, the commuter rail
agencies cannot secure funding and move the project forward until they
reach agreement with the freight railroads. One official described this
situation as a "Catch 22.":
Federal Government Currently Does Not Play a Role in Commuter Rail
Access:
The federal government currently does not participate in access
negotiations between commuter and freight railroads. Three federal
agencies--FRA, FTA, and STB--have responsibility for different aspects
of rail transportation. FRA is primarily focused on ensuring safe
operation of railroads; FTA's primary role is providing funding to
transit projects, including commuter rail; and STB serves as the
freight rail industry's economic regulator. None of these three
agencies currently play a part in facilitating negotiations between
freight and commuter railroads. Commuter rail agencies told us that
they have few options if they reach an impasse with freight railroads;
as a result, they usually continue negotiations or elevate the problem
through the railroad's chain of command. Commuter rail agencies and
freight railroads disagree on the role they would like to see the
federal government play in resolving disputes between commuter rail
agencies and freight railroads. Specifically, most commuter rail
agencies would like the federal government to play a more active role;
freight railroads generally do not want the federal government involved
except for assuring the adequacy of funding for commuter rail projects.
FRA's Primary Focus Is on Rail Safety, Not Access Issues:
FRA has safety jurisdiction over all freight and passenger railroads in
the United States.[Footnote 16] FRA is responsible for promoting and
enforcing rail safety, administering railroad financial programs,
conducting research and development, and developing executive branch
policy on railroad industry issues. Both commuter rail agencies and
freight railroads are subject to FRA's oversight. According to an FRA
official, the agency's primary role in commuter rail issues is
promoting and enforcing safety--that is, ensuring that the commuter
rail system is safe. For example, FRA has issued regulations that
establish safety standards for passenger rail cars that are used by
commuter rail agencies.
FRA does not currently play a role in commuter rail access issues.
According to FRA officials, FRA has no specific statutory authority
over commuter rail access issues. FRA officials also stated that FRA
does not have responsibilities for negotiations between commuter rail
agencies and freight railroads. Consequently, FRA is not involved in
helping commuter rail agencies negotiate agreements with freight
railroads or resolving impasses between commuter rail agencies and
freight railroads. FRA also has not issued regulations related to
commuter rail access issues or issued any guidance to assist commuter
rail agencies in developing agreements with freight railroads.
FTA Provides Funding for Commuter Rail Projects but No Assistance on
Access Issues:
Since the early 1970s, the federal government has provided a large
share of the nation's capital investment in mass transit.[Footnote 17]
FTA is the primary federal funding source for commuter rail projects,
and much of the investment has come through FTA's New Starts program,
which helps pay for certain transit projects, including commuter rail,
through full-funding grant agreements. A full-funding grant agreement
establishes the terms and conditions for federal participation,
including the maximum amount of federal funds available for the
project.[Footnote 18] The New Starts program is an important source of
funding for many commuter rail projects. For example, FTA reports that
the commuter rail project in Johnson County, Kansas proposes to use New
Starts funds for 80 percent of the project's total capital cost of $31
million and the commuter rail project in Washington County, Oregon
proposes to use New Starts funds for 60 percent of the project's total
capital cost of $120 million.[Footnote 19] In making funding
recommendations to the Congress, FTA assesses the cost estimates for
the commuter rail projects, which would include payments to freight
railroads for purchasing, leasing, or accessing freight-owned tracks.
According to FTA officials, FTA will not award full-funding grant
agreements to commuter rail projects unless the commuter rail agency
and freight railroad have reached agreement on relevant access issues.
To obtain a full-funding grant agreement, a commuter rail project must
first progress through a local or regional review of alternatives,
develop preliminary engineering plans, and obtain FTA's approval for
final design. Projects may receive federal funds as they advance
through the planning, preliminary engineering, and final design
phases.[Footnote 20]
FTA does not currently play a role in commuter rail access issues.
According to FTA officials, FTA does not have authority over commuter
rail access issues. Consequently, FTA does not consider it appropriate
to help commuter rail agencies negotiate agreements with freight
railroads or resolve disputes between commuter rail agencies and
freight railroads. FTA officials state that because FTA has no specific
statutory responsibilities over commuter rail access issues, the agency
has not developed or issued any guidance to commuter rail agencies on
negotiating with freight railroads. Although FTA has not issued any
guidance, agency officials indicated that they encourage commuter rail
agencies to contact the affected freight railroads early in the
planning stages and to consult with the railroads as the project
advances through the stages of development. These officials stated that
getting the freight railroad's early buy-in and assistance in
developing realistic cost estimates is important to the successful
implementation of the commuter rail project. FTA does not have any
documented guidance, however, on when the commuter rail agency should
contact the freight railroad or why such consultation is important.
STB Has No Role in Negotiations between Commuter Rail Agencies and
Freight Railroads:
STB's mission is to ensure that competitive, efficient, and safe
transportation services are provided to meet the needs of shippers,
receivers, and consumers. Among other things, STB must determine
whether freight railroads may construct, acquire, or discontinue
service over individual rail lines, and whether proposed railroad
mergers and consolidations will be allowed. STB also adjudicates
complaints concerning the quality of freight rail service and the
reasonableness of certain freight rail rates.[Footnote 21] In making
these decisions STB considers a number of factors, including the
interests of affected shippers and the financial health of the
railroad(s) involved. In carrying out its duties, STB is charged with
providing an efficient and effective forum for the resolution of
certain disputes. Because Amtrak was specifically created to relieve
freight railroads of the requirement to provide passenger service, STB
has jurisdiction to resolve compensation and access issues between
freights and Amtrak in the event of an impasse in negotiations.
According to STB officials, STB's authority to adjudicate disputes or
provide a forum for the resolution of shipper disputes does not extend
to disputes over access between commuter rail agencies and freight
railroads.
STB officials stated that STB does not currently have a role in or
responsibilities for commuter rail access issues. In particular, STB
officials noted that STB is statutorily prohibited from assuming
jurisdiction over mass transportation provided by local government
authorities.[Footnote 22] STB officials said that STB's jurisdiction
may be extended to commuter rail in certain circumstances, including if
(1) the local government authority providing commuter rail services
meets the definition of a rail carrier;[Footnote 23] (2) the commuter
rail agency enters into a contract with Amtrak;[Footnote 24] or (3) a
commuter rail agency acquires control of a railroad and therefore meets
the definition of a rail carrier.[Footnote 25] STB officials stated
that because the Board does not have a specific statutory role in
commuter rail access issues, STB has not been involved in helping
commuter rail agencies and freight railroads negotiate agreements or
resolving disputes between commuter rail agencies and freight
railroads. Moreover, STB has not issued regulations related to commuter
rail access issues, nor has it issued any guidance to assist commuter
rail agencies in developing agreements with freight railroads.
Prior to the sun-setting of STB's predecessor, the Interstate Commerce
Commission (ICC) played a more active role in commuter rail access
issues.[Footnote 26] In particular, the ICC's Rail Services Planning
Office provided technical expertise and assistance to commuter rail
agencies and conducted national studies on such matters as rail and
port rates and rail mergers. The Rail Services Planning Office also
examined the U.S. Railway Association's plan to reorganize the
northeastern railroads after the Penn Central Railroad's bankruptcy and
assessed the impact of the plan on commuter rail agencies. According to
DOT officials, the roles and responsibilities of this office were not
transferred to STB when ICC was abolished in 1995.
Commuter Rail Agencies and Freight Railroads Have Differing Views on
the Appropriate Role of the Federal Government:
Commuter rail agencies and freight railroads do not agree on the
appropriate role for the federal government in commuter and freight
rail access issues. Although there was some difference of opinions
among individual commuter rail agencies, most commuter rail agencies
would like the federal government to take a more active role in access
issues. Officials from commuter rail agencies suggested a number of
roles the federal government could serve in negotiations or dispute
resolution between commuter rail agencies and freight railroads,
ranging from helping with the liability issue to giving commuter rail
agencies the same statutory rights as Amtrak. The most frequently cited
suggestions by commuter rail agencies were for the federal government
to serve as an arbitrator or mediator for disputes between commuter
rail agencies and freight railroads, provide additional funding for
commuter rail projects and railroad infrastructure, and provide
guidance and information. In contrast, officials from freight railroads
generally do not see a role for the federal government except for
assuring the adequacy of funding for commuter rail projects.
Officials from a number of existing and proposed commuter rail agencies
would like to see the federal government serve as an arbitrator or
mediator for disputes between commuter rail agencies and freight
railroads. Commuter rail officials often stated that commuter rail
agencies have little to no recourse if the freight railroads refuse to
negotiate, prolong the negotiations, or demand what they perceive as
unaffordable amounts of compensation or capacity enhancements.
Officials from most commuter rail agencies told us that they continue
to negotiate or elevate the problem through the railroad's chain of
command if they reach an impasse during negotiations. These officials
commented that it would be beneficial to have a forum in the federal
government that commuter rail agencies and freight railroads could use
if negotiations broke down. Commuter rail officials emphasized,
however, that the federal government agency that served as a mediator
or arbitrator must be viewed by the industry as having rail expertise
and being unbiased. Although a number of commuter rail officials
supported the idea of a federal government entity serving as a mediator
or arbitrator, a few commuter rail officials explicitly rejected this
role for the government because they were concerned it would only
further complicate negotiations.
According to some commuter rail officials, another potential role for
the federal government is providing additional funding for commuter
rail investments and railroad infrastructure. Commuter rail agencies
sometimes must pay freight railroads a significant amount of money to
use their rights-of-way. For example, one commuter agency agreed to pay
for approximately $350 million in capital improvements to a freight
railroad's rights-of-way in exchange for access. Obtaining the
necessary funds is not an easy task for the commuter rail agencies,
especially considering that their fare box revenues do not cover their
costs. Moreover, although the federal government provides funding for
capital improvements, many commuter rail agencies are prohibited from
using federal dollars for operating expenses, such as access fees.
According to commuter rail agencies, being able to come to the
negotiating table with additional funds would help them reach agreement
with the freight railroads. In addition, commuter rail agencies noted
that additional federal funding for freight railroads' infrastructure
would also benefit commuter rail negotiations. As discussed earlier,
negotiations between commuter rail agencies and freight railroads often
get hung up on capacity issues. According to commuter rail officials,
increased federal funding for rail infrastructure could help pay for
additional capacity; moreover, it could improve the infrastructure,
which would benefit commuter rail operations.
Officials from commuter rail agencies also repeatedly suggested that
the federal government provide guidance and information, such as best
practices, tips for negotiations, and technical expertise. Commuter
rail officials said it would be helpful if the federal government
provided information on such matters as what to expect during
negotiations and what data are needed for negotiations. Providing this
type of information would establish a framework for negotiations, which
could guide commuter rail agencies and freight railroads through the
negotiation process. American Public Transportation Association (APTA)
and Association of American Railroads (AAR)--trade associations that
represent commuter rail and freight railroad interests, respectively--
attempted to work together to develop a framework for negotiations
several years ago. According to representatives from APTA and AAR, both
associations believed a framework would be beneficial; however, the two
associations were unable to develop a framework and are no longer
actively continuing this effort. Commuter rail officials also said that
it would be helpful if the federal government identified and shared
best practices from past negotiations as well as provided technical
assistance. Officials from several commuter rail agencies told us that
in the past they had relied on ICC's Rail Services Planning Office for
technical expertise and assistance, which was helpful to their
agencies. A commuter rail agency official noted that since the Rail
Services Planning Office was abolished, there is no longer a source of
professional, accurate, and unbiased information that can be used
during negotiations.
In general, officials from the freight railroads we spoke to did not
believe the federal government should be involved in negotiations
between commuter rail agencies and freight railroads. There was
universal agreement among officials from all of the freight railroads
we spoke to opposing the federal government serving as an arbitrator or
mediator. According to freight railroad officials, negotiations over
the purchase or lease of rights-of-way should be private and at arms-
length. They said that limiting the negotiations to the affected
commuter rail agency and freight railroad helps to ensure that mutually
beneficial arrangements will be negotiated--that is, that they make
economic and business sense for both parties. Freight railroad
officials expressed concern that having the federal government serve as
an arbitrator or mediator would result in freight railroads being
forced to accept arrangements that do not make good business sense for
the railroads. Officials from a number of freight railroads we spoke to
also expressed opposition to the federal government granting commuter
rail agencies the same statutory rights of Amtrak--that is, giving
commuter trains priority access to freight-owned tracks at the
incremental cost. Freight railroad and AAR officials stated that giving
commuter rail agencies these statutory rights would force the freight
railroads to subsidize commuter rail operations and harm their freight
business. Moreover, officials from one freight railroad characterized
extending Amtrak's statutory rights to commuter rail agencies as the
"taking" of private property.
Rather than taking a direct role in negotiations, a number of officials
from freight railroads stated that the most appropriate role for the
federal government was serving as a source of funding for commuter rail
agencies. Freight railroad officials noted that commuter rail could
provide public benefits, such as reduced highway congestion and
pollution; therefore, the federal government, not freight railroads,
should pay for these benefits. In addition, officials from a couple of
freight railroads raised concerns that the federal funding process,
notably FTA's New Starts program, may skew communities' decision-making
about the implementation of commuter rail projects or create a
situation where the commuter rail service is unsustainable. For
example, officials from one freight railroad noted that there is a
significant amount of pressure on proposed commuter rail systems to
make "the numbers work" so that the commuter rail option is the
preferred alternative in the New Starts evaluation--that is, commuter
rail is chosen as the preferred public transit option.[Footnote 27]
According to these officials, this pressure can result in the costs of
proposed commuter rail systems being underestimated, which may create
funding shortfalls in the future. Officials from another freight
railroad also commented that the timing of FTA's New Starts program can
create problems. For example, local communities can use New Starts
funds for feasibility studies for proposed commuter rail projects,
which can result in increased public expectations; however, the funding
of these studies is not a guarantee that the federal government will
help pay for the proposed commuter rail system.
Conclusions:
The expeditious flow of people and goods through our transportation
system is vital to the economic well-being of the nation. The movement
of people and goods by rail is an important part of the nation's
transportation system and is likely to play an even greater role in the
future. To ensure that both commuter and freight rail reach their
potential, it is important that the success of one form of rail does
not come at the expense of the other. Striking the right balance is a
difficult task that the federal government, commuter rail agencies, and
freight railroads will wrestle with as demand for commuter and freight
services continues to grow.
Negotiating mutually beneficial arrangements between commuter rail
agencies and freight railroads is challenging. The negotiation process
can be lengthy and tedious as commuter rail agencies and freight
railroads try to reach agreement on a number of tough and critical
issues. To help tackle these issues, officials from commuter rail
agencies told us that information and guidance, such as best practices,
would be useful. Several commuter rail officials said that they had
relied on the Rail Services Planning Office in the former ICC for
technical assistance and expertise; however, this office was not
transferred to the STB when the ICC was terminated in 1995. The federal
government could act to help facilitate and inform negotiations by
providing guidance and information, such as best practices, tips for
negotiations, and information on the applicability and limitations of
the liability provisions in the Amtrak Reform and Accountability Act of
1997, to commuter rail agencies and freight railroads. Without
accurate, unbiased guidance and information, negotiations may stall,
issues (such as the applicability of the federal liability cap) may be
needlessly reexamined, and/or decisions may be made on the basis of
questionable data. The three federal agencies--FTA, FRA, and STB--
responsible for different aspects of commuter and freight rail have not
provided such guidance and information because they do not consider it
an appropriate role for them to play. The upcoming reauthorization of
the surface transportation legislation, however, provides an
opportunity for these agencies and the Congress to reexamine their
roles and responsibilities for commuter rail access issues, notably
their roles in providing guidance and information to commuter rail
agencies and freight railroads to better inform negotiations. As long
as the federal government is funding the planning and development of
individual commuter rail projects, it may be appropriate for the
government to provide guidance and information to help facilitate
negotiations between commuter rail agencies and freight railroads and
thereby help to ensure that federal dollars are efficiently used.
Recommendation:
In order to facilitate and inform negotiations between commuter rail
agencies and freight railroads, we recommend that the Secretary of
Transportation and the Chairman of the Surface Transportation Board
determine whether it would be appropriate and useful for them to
provide guidance and information, such as tips for successful
negotiations and information on best practices, availability of federal
resources, and the applicability of the liability provisions in the
Amtrak Reform and Accountability Act of 1997, to commuter rail agencies
and freight railroads. If DOT and STB determine that it would be
helpful for them to provide such information but that they lack the
statutory authority to do so, DOT and STB should seek a legislative
change to allow them to provide guidance and information to commuter
rail agencies and freight railroads.
Agency Comments:
We provided draft copies of this report to DOT and STB for their review
and comment. On December 8, 2003, DOT and STB officials provided oral
comments on the draft. DOT and STB officials generally agreed with the
report's findings, conclusions, and recommendation. They also provided
some technical comments, which we incorporated into this report where
appropriate.
As we agreed with your office, unless you publicly announce the
contents of this report earlier, we plan no further distribution of it
until 30 days from the date of this report. We will then send copies of
this report to the Secretary of Transportation, the Chairman of the
Surface Transportation Board, the Administrators of the Federal
Railroad Administration and Federal Transit Administration, the
Director of the Office of Management and Budget, and interested
congressional committees. We will make copies available to others upon
request. In addition, this report will be available at no charge on our
Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact me on (202) 512-2834 or at heckerj@gao.gov. Individuals making
key contributions to this report are listed in appendix III.
Sincerely yours,
JayEtta Z. Hecker:
Director, Physical Infrastructure Issues:
Signed by JayEtta Z. Hecker:
[End of section]
Appendix I: Scope and Methodology:
To address our objectives, we contacted officials from all existing and
proposed commuter rail agencies and Class I freight railroads. To
identify the universe of existing and proposed commuter rail agencies,
we compiled a list on the basis of information published by the
American Public Transportation Association (APTA), the Federal Transit
Administration's (FTA) New Starts Project Profiles from fiscal years
2003 and 2004, and the 2001 National Transit Summaries and Trends
report.[Footnote 28] We reviewed our initial list with a representative
from APTA in order to identify potential changes in program status and
to confirm contact information for the commuter rail systems. Using
these sources, we identified 19 existing and 30 proposed commuter rail
agencies. We then contacted officials from the 49 commuter rail systems
to verify the status of each commuter rail service or project. On the
basis of information collected from these officials, we further refined
our list of existing and proposed commuter rail agencies--resulting in
the identification of 18 existing commuter rail systems and 19 proposed
commuter rail systems.[Footnote 29] To identify the Class I railroads,
we reviewed the January 2003 Surface Transportation Board (STB) Report
of Railroad Employment and information provided by the Association of
American Railroads (AAR). AAR also provided contact information for
each Class I railroad. We limited our scope to Class I railroads
because they own the majority of all rail lines in the United States
and therefore have more interaction with commuter rail agencies than
short line or regional railroads. (Table 2 lists the names and
locations of the 18 existing and 19 proposed commuter rail agencies and
the 7 Class I freight railroads.):
Table 2: Names and Locations of Existing and Proposed Commuter Rail
Agencies and the Class I Freight Railroad Companies:
Existing commuter rail:
Name of commuter rail agency and freight railroad:
Altamont Commuter Express;
Location: Stockton, CA.
Name of commuter rail agency and freight railroad:
Connecticut Department of Transportation (Shore Line East and New
Haven lines);
Location: New Haven, CT.
Name of commuter rail agency and freight railroad:
Maryland Transit Administration (MARC);
Location: Baltimore, MD.
Name of commuter rail agency and freight railroad:
Massachusetts Bay Transportation Authority;
Location: Boston, MA.
Name of commuter rail agency and freight railroad:
Metra;
Location: Chicago, IL.
Name of commuter rail agency and freight railroad:
MTA Long Island Rail Road;
Location: New York, NY.
Name of commuter rail agency and freight railroad:
MTA Metro-North Railroad;
Location: New York, NY.
Name of commuter rail agency and freight railroad:
New Jersey Transit Corporation;
Location: Newark, NJ.
Name of commuter rail agency and freight railroad:
North County Transit District (Coaster);
Location: Oceanside, CA.
Name of commuter rail agency and freight railroad:
Northern Indiana Commuter Transportation District;
Location: Chesterton, IN.
Name of commuter rail agency and freight railroad:
Peninsula Corridor Joint Powers Board (CALTRAIN);
Location: San Carlos, CA.
Name of commuter rail agency and freight railroad:
Pennsylvania Department of Transportation;
Location: Harrisburg, PA.
Name of commuter rail agency and freight railroad:
Southeastern Pennsylvania Transportation Authority;
Location: Philadelphia, PA.
Name of commuter rail agency and freight railroad:
Southern California Regional Rail Authority (Metrolink);
Location: Los Angeles, CA.
Name of commuter rail agency and freight railroad:
Sound Transit, Central Puget Sound Regional Transportation Authority;
Location: Seattle, WA.
Name of commuter rail agency and freight railroad:
Tri-County Commuter Rail Authority;
Location: Pompano Beach, FL.
Name of commuter rail agency and freight railroad:
Trinity Railway Express;
Location: Dallas, TX.
Name of commuter rail agency and freight railroad:
Virginia Railway Express;
Location: Alexandria, VA.
Proposed commuter rail:
Name of commuter rail agency and freight railroad:
Akron Line, Northeast Ohio Corridors[A];
Location: Cleveland, OH.
Name of commuter rail agency and freight railroad:
Alaska Railroad Corporation;
Location: Anchorage, AK.
Name of commuter rail agency and freight railroad:
Austin-San Antonio Intermunicipal Commuter Rail District;
Location: Austin, TX.
Name of commuter rail agency and freight railroad:
Charlotte Area Transit System;
Location: Charlotte, NC.
Name of commuter rail agency and freight railroad:
Cumberland-Dauphin- Harrisburg Transit Authority;
Location: Harrisburg, PA.
Name of commuter rail agency and freight railroad:
Dane County T2020 (Transport 2020);
Location: Madison, WI.
Name of commuter rail agency and freight railroad:
Delaware Department of Transportation[B];
Location: Wilmington, DE.
Name of commuter rail agency and freight railroad:
Eastern Corridor, Hamilton County Transportation Improvement District;
Location: Cincinnati, OH.
Name of commuter rail agency and freight railroad:
Georgia Rail Passenger Program;
Location: Atlanta, GA.
Name of commuter rail agency and freight railroad:
Johnson County Transit;
Location: Johnson County, KS.
Name of commuter rail agency and freight railroad:
Nashville to Lebanon Corridor Regional Transportation Authority;
Location: Nashville, TN.
Name of commuter rail agency and freight railroad:
NeoRail Line, Northeast Ohio Corridors;
Location: Cleveland, OH.
Name of commuter rail agency and freight railroad:
New Haven-Hartford- Springfield Commuter Rail;
Location: Hartford, CT.
Name of commuter rail agency and freight railroad:
Northstar Corridor;
Location: Minneapolis, MN.
Name of commuter rail agency and freight railroad:
Regional Transit District;
Location: Denver, CO.
Name of commuter rail agency and freight railroad:
Sonoma-Marin Area Rail Transit;
Location: San Francisco, CA.
Name of commuter rail agency and freight railroad:
Triangle Transit Authority;
Location: Raleigh, NC.
Name of commuter rail agency and freight railroad:
Utah Transit Authority, Commuter Rail;
Location: Salt Lake City, UT.
Name of commuter rail agency and freight railroad:
Washington Country Commuter Rail;
Location: Portland, OR.
Class I Freight Railroad Companies:
Name of commuter rail agency and freight railroad:
Burlington Northern Santa Fe Railway Company;
Location: Fort Worth, TX.
Name of commuter rail agency and freight railroad:
Canadian National Railway (Grand Trunk Corporation)[C];
Location: Montreal, Canada.
Name of commuter rail agency and freight railroad:
Canadian Pacific Railway (Soo Line Railroad Company)[C];
Location: Calgary, Canada.
Name of commuter rail agency and freight railroad:
CSX Transportation;
Location: Jacksonville, FL.
Name of commuter rail agency and freight railroad:
Kansas City Southern Railway Company;
Location: Kansas City, MO.
Name of commuter rail agency and freight railroad:
Norfolk Southern;
Location: Norfolk, VA.
Name of commuter rail agency and freight railroad:
Union Pacific Railroad Company;
Location: Omaha, NE.
Source: GAO.
Notes:
The commuter rail agencies and freight railroad companies that we
visited are listed in italics.
A number of the existing commuter rail agencies are currently planning
expansion projects.
[A] The Akron line, which is proposed to run between Cleveland and
Canton, Ohio, was originally part of the NeoRail study, which has
several proposed lines out of Cleveland. Due to an opportunity to move
forward, the Akron line was separated as a distinct project for
planning purposes. The Akron and NeoRail lines may be integrated again
at some point in the future.
[B] Southeastern Pennsylvania Transportation Authority provides a
"turnkey," or contracted commuter rail service for the Delaware
Department of Transportation between Newark/Wilmington, Delaware, and
Philadelphia, Pennsylvania.
[C] The entire Canadian National Railway and Canadian Pacific Railway
systems are not Class I railroads. However, the U.S. portions of these
railroads (e.g., Grand Trunk Corporation and Soo Line Railroad Company)
meet the U.S. regulatory criteria and are Class I railroads.
[End of table]
We conducted site visits to eight commuter rail agencies across the
country and to the four largest U.S. Class I freight railroads. We
selected the eight commuter rail agencies on the basis of the type of
track arrangements (i.e., lease or own); representation of the four
largest U.S. Class I freight railroads; the system's maturity; and
geographic dispersion. (The commuter rail agencies and railroads that
we visited are listed in italics in table 2.) During the site visits,
we interviewed senior level management; toured operation, dispatching,
and maintenance facilities; and/or traveled on the commuter rail
system. In addition to the site visits, we also conducted
semistructured interviews with officials from the remaining existing
and proposed commuter rail agencies and Class I freight railroad
companies via teleconference or in-person meetings. We synthesized the
information we collected from the site visits and semistructured
interviews. We also performed a content analysis of the information to
identify major themes and commonalities and differences among proposed
and existing commuter rail agencies as well as between commuter rail
agencies and freight railroads. We did not observe significant
differences between the existing and proposed commuter rail agencies in
terms of the most frequently cited challenges in negotiating and
sharing rights-of-way, actions that could help facilitate mutually
beneficial arrangements, and possible roles for the federal government
in access issues.
We also conducted informational interviews with DOT, FRA, STB, and FTA;
and with representatives from industry associations, including AAR,
APTA, the National Industrial Transportation League, and the American
Short Line and Regional Railroad Association. We also interviewed
representatives from the law office of Kirkpatrick and Lockhart and
Woodside Consulting, who have served as consultants to commuter rail
agencies and freight railroads. Additionally, we reviewed statutory and
case law and federal and commuter rail agency regulations, guidance,
and internal documents as well as information from freight railroads,
including annual reports, ridership and traffic density reports, and
position papers. We also identified and analyzed rail-related research.
We did not examine FTA's process of reviewing commuter rail projects
for federal funding, the costs and benefits of individual commuter rail
projects, and the merits of Amtrak's statutory access rights to
freight-owned rights-of-way or the costs and benefits of extending
these rights to commuter rail agencies. Statistics presented in the
background section of this report about the freight and commuter rail
industries, such as freight ton-miles hauled and ridership, were
obtained from DOT, FRA, FTA, AAR, and APTA. This information was
presented for background and illustrative purposes only; consequently,
we did not assess the reliability of this information. We also did not
assess the reliability of the factual information provided by commuter
rail agencies, freight railroads, and industry associations because of
the abundance of corroborating evidence. Therefore, we determined that
the data we obtained were sufficiently reliable for the purposes of
this report.
[End of section]
Appendix II: Federal Legislation Addresses the Major Liability
Concerns, but Other Issues Remain:
The issue of managing risk and liability is a huge concern for commuter
rail operators and freight railroads when they negotiate agreements for
commuter rail operators to use the freight railroads' rights-of-way.
This concern has the potential to slow the expansion of commuter rail
services by delaying or preventing the signing of such "access"
agreements. Understandably, freight railroads want to minimize their
exposure to liability for any potentially large damage awards and
associated costs that may result when they allow commuter rail
operators to use their tracks. Accordingly, it has become customary for
freight railroads to require commuter rail operators to enter into
agreements with them that will hold the host freight railroads
harmless, indemnify the freight railroads from all liability, and
require the commuter rail operators to purchase commercial liability
insurance that will ensure a reliable funding source to pay the entire
amount of any damage awards. In some parts of the country, freight
railroads generally require commuter rail operators using their rights-
of-way to acquire up to $500 million in liability coverage. The
required premiums to obtain such a large amount of insurance coverage
are cost-prohibitive for many existing or proposed commuter rail
operators.
The issue of liability arising from rail accidents was addressed by
Congress when it enacted the Amtrak Reform and Accountability Act of
1997 (ARAA). Congress introduced tort reform measures within Section
161 of the ARAA in response to concerns from freight railroads,
commuter rail operators, and Amtrak about the liability issue and the
difficulties the parties were having in negotiating the use of
freights' rights-of-way by Amtrak and the commuter rail operators.
These concerns were particularly acute after a 1987 district court
decision that put in doubt the ability of private parties to deal
contractually with liability issues by entering into indemnification
agreements. That decision, National Railroad Passenger Corp. v.
Consolidated Rail Corp., 698 F. Supp. 951 (D.C. 1988), vacated, 892
F.2d 1066 (D.C. Cir. 1990), stemmed from the 1987 collision of Amtrak
and Conrail trains in Chase, Maryland, that left 16 people dead and
more than 350 injured.
The catastrophic Chase accident was caused by the gross negligence of
Conrail employees, including the engineer, who was under the influence
of illicit drugs. Amtrak asked the court to abrogate its
indemnification agreement with Conrail, which required that Amtrak
defend and indemnify Conrail for any claims and damages arising out of
the Chase accident, on the grounds that it violated public policy. The
trial court acted in Amtrak's favor and voided the indemnification
agreement. This decision had a ripple effect throughout the industry,
and as the House Committee reported, "[t]his avoided a large taxpayer-
funded expense in the short-term, but in the long run convinced the
entire freight industry that the indemnity agreements offered no real
legal protection." H.R. Rep. No. 105-251, at 21 (1997).
In 1997, Congress enacted Section 161 of the ARAA, which limited the
overall damages for passenger claims from a single rail incident to
$200 million and also authorized the providers of passenger rail
transportation to enter into contracts allocating financial
responsibility for claims. Pub. L. 105-134, § 161 (1997); 49 U.S.C. §
28103. Congress intended to facilitate the ability of freight railroads
and passenger rail operators to contract for the use of the freights'
rights-of-way, stating that without tort reform and liability
protection, "future passenger operations, whether commuter, high-speed
rail, or intercity rail, will be placed in jeopardy as freight
railroads resist taking on what is increasingly viewed as an
unacceptable and uncompensated liability exposure." H.R. Rep. No. 105-
251, at 22 (1997).
During the course of our work, questions arose about the proper
interpretation and application of the liability protections set forth
in the ARAA and related issues. In particular, questions were raised
about whether the liability provisions that are part of the ARAA apply
to commuter rail operators and whether the statute applies to all types
of rail incident damages claims. The ensuing discussion addresses the
interpretation and application of the ARAA and the limitations of this
legislation in resolving all of the concerns raised by commuter rail
operators and freight railroads.
Our examination of Section 161 of the Amtrak Reform and Accountability
Act of 1997 leads us to conclude that all commuter rail operators, as
well as Amtrak, are covered by the $200 million cap on awards for any
claims by or on behalf of rail passengers resulting from an individual
rail accident. The act creates a $200 million cap for passenger
injuries arising "in connection with any rail passenger transportation
operations over or rail passenger transportation use of right-of-way or
facilities owned, leased, or maintained by any high-speed railroad
authority or operator, any commuter authority or operator, any rail
carrier, or any State." 49 U.S.C. 28103(a)(1)(emphasis added).
Additionally, the definitions section defines a "claim" as "against
Amtrak, any high-speed railroad authority or operator, any commuter
authority or operator, any rail carrier, or any State." 49 U.S.C. 28103
(e)(1)(emphasis added). The plain language of the statute expressly
provides that commuter authorities or operators are protected by this
statutory cap.
The statutory language that specifically authorizes freight railroads
and commuter rail operators to enter into agreements allocating
financial responsibility for claims, which forms the statutory
underpinning for the indemnification agreements that protect freight
railroads, is embodied within 49 U.S.C. § 28103(b). That subsection
provides that "[a] provider of rail passenger transportation may enter
into contracts that allocate financial responsibility for claims." 49
U.S.C. § 28103(b). By enacting this provision, Congress intended to
protect commuter rail operators, as well as Amtrak, by establishing a
clear statutory basis for the enforceability of indemnification
contracts. In this respect, the Senate Committee's report on the
legislation states "[t]he bill contains a provision that would help
assure the enforceability of certain contracts between operators of
rail passenger services--some of which are state and local governments-
-and owners of rights-of-way and other facilities." S. Rep. No. 105-85,
at 9 (1997). Although we understand that the enforceability of
indemnification agreements entered into pursuant to this provision has
never been addressed in federal court, we believe the express statutory
language and clear legislative history suggest that such
indemnification agreements would be upheld.
Although Section 161 of the ARAA resolves the major concerns that have
been voiced by commuter rail operators and freight railroads with
respect to the liability issue, it does not address all potential
issues that have been raised. For example, the ARAA's liability
provision is limited in the scope of claims that it covers. The
liability limitation, which does include claims for punitive damages,
is restricted to "a claim for personal injury to a passenger, death of
a passenger, or damage to property of a passenger." 49 U.S.C. §
28103(a)(1). It does not cap personal and property third-party (nonrail
passenger) claims. Such potential plaintiffs could include adjacent
property owners or populations that may be harmed in a hazardous
materials spill or an accident at a rail crossing. Although the
original version of the bill (H.R. 2247, § 401, 105th Cong. (1997))
would have applied to all potential plaintiffs, it was not contained in
the legislation as enacted. H.R. Rep. No. 105-251, at 93-94 (1997). An
official of one freight railroad said that in this era of escalating
verdicts, they need to have adequate insurance to protect themselves in
the event of potential third-party claims, and they use the example of
an environmental spill and evacuation that may cause no human injuries
or deaths but nonetheless could amount to a very large damages award
against the freight railroad determined to be responsible. Because of
the limited nature of the liability cap in the ARAA, extensive arms-
length negotiation between the freight railroads and commuter rail
operators to address the concerns of both parties remains essential.
There are other concerns that compound the freight railroads' desire to
require commuter rail operators to obtain a high level of liability
insurance coverage for use of their rights-of-way. The concerns that
have been raised include potential state law claims and questions about
whether a court will uphold the liability limit established in the ARAA
as it has never been tested in federal court. Although many carriers
admit that they are being "super-cautious" in requiring such high
levels of insurance, they point to the Amtrak-Conrail decision as an
example of "judicial justice" as they seek to be protected from any
potential liability.
We find that the ARAA offers a good starting point for resolving many
of the most important issues that arise when commuter rail operators
use rights-of-way owned by freight railroads. However, it does not
eliminate the need for freight railroads and commuter rail operators to
consider individual circumstances and factors as they negotiate the
terms of these access agreements because of the potential liability
concerns that are otherwise not addressed by the statute.
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
JayEtta Z. Hecker (202) 512-2834 Susan Fleming (202) 512-4431:
Acknowledgments:
In addition to those named above, Alan Belkin, Nikki Clowers, Lindy
Coe-Juell, Michelle Dresben, Sharon Dyer, Amy Higgins, Kristen Massey,
and Stacey Thompson made key contributions to this report.
FOOTNOTES
[1] For purposes of this report, we refer to transit agencies that
provide commuter rail service as "commuter rail agencies."
[2] Department of Transportation, Freight Analysis Framework (October
2002).
[3] Class I railroads are the largest railroads, as defined by
operating revenue, and account for the majority of U.S. rail freight
activity. There are three classes of railroad. STB designates the class
of railroad and in 2002 defined Class I railroads as railroads with
operating revenues of $271.9 million or more.
[4] FTA's New Starts program provides funds to transit providers for
constructing or extending certain types of mass transit systems, like
commuter rail projects. Current law allows FTA to grant up to 80
percent of the estimated net project cost to individual transit
projects. However, on the basis of direction from Congress in the
conference report that accompanied DOT's fiscal year 2002
appropriations act, FTA instituted a preference policy to recommend
projects with federal shares that do not exceed 60 percent for funding.
The administration's proposed surface transportation reauthorization
legislation seeks to reduce the statutory federal share to no more than
50 percent of the net project cost.
[5] For more information about commuter rail, see FRA's statement of
policy concerning enforcement of railroad safety laws (49 CFR 209,
Appendix A).
[6] The entire Canadian National Railway and Canadian Pacific Railway
systems are not Class I railroads. However, the U.S. portions of these
railroads (e.g., Grand Trunk Corporation and Soo Line Railroad Company)
meet the U.S. regulatory criteria and are Class I railroads.
[7] Short line and regional railroads are small and medium-sized
railroads, respectively. Generally, short line railroads are Class III
railroads, and regional railroads are Class II railroads. STB defined
Class II railroads as railroads with operating revenues less than
$271.9 million but more than $21.7 million and Class III railroads as
railroads with operating revenues less than $21.7 million in 2002.
[8] Over 95 percent of Amtrak's 22,000-mile network operates on freight
railroad tracks. Amtrak owns about 730 miles of track, primarily on the
Northeast Corridor between Boston, Massachusetts, and Washington, D.C.
[9] The shared use agreement documents how the rights-of-way will be
operated--for example, it will outline the agreed-upon dispatching
rules.
[10] For example, the Southeastern Pennsylvania Transportation
Authority owns a portion of the rights-of-way it uses; and freight
railroads use these rights-of-way. In addition, the Southeastern
Pennsylvania Transportation Authority uses rights-of-way owned by CSX,
Amtrak, and the City of Philadelphia.
[11] FRA exercises jurisdiction over all areas of railroad safety under
title 49, U.S.C., chapter 201.
[12] In May 2000 a similar piece of legislation, Transit Rail Access
Improvement and Needs Act for the 21st Century (H.R. 4507), was
introduced and referred to the Subcommittee on Ground Transportation,
House Committee on Transportation and Infrastructure. The bill proposed
to designate STB as a forum for resolution of disagreements between
mass transportation authorities and freight railroads regarding access
to freight track and rights-of-way.
[13] Adding new tracks can include the construction of a new track to
existing single-track line allowing simultaneous operations in opposite
directions (double tracking) or the building of additional track(s) to
an existing multiple track line. Tunnel clearance enhancements are
necessary for the movement of "double-stack" freight trains and double-
deck passenger cars.
[14] As of November 2003, negotiations between Sound Transit and
Burlington Northern Santa Fe are ongoing.
[15] The identified sources of funding for the rail improvements
include Metra, the city of Chicago, the state of Illinois, the federal
government, and freight railroads. As of this date, the federal
government has not committed any funds to this project.
[16] Excluding urban rapid transit operations that are not connected to
the general railroad system of transportation.
[17] U.S. General Accounting Office, Mass Transit: FTA Could Relieve
New Starts Program Funding Constraints, GAO-01-987 (Washington, D.C.:
Aug. 15, 2001).
[18] Current law allows FTA to grant up to 80 percent of the estimated
net project cost to individual transit projects. However, on the basis
of direction from the Congress in the conference report that
accompanied DOT's fiscal year 2002 appropriations act, FTA instituted a
preference policy to recommend projects with federal shares that do not
exceed 60 percent for funding. The administration's proposed surface
transportation reauthorization legislation seeks to reduce the
statutory federal share to no more than 50 percent of the net project
cost.
[19] Federal Transit Administration, Annual Report on New Starts:
Proposed Allocations of Funds for Fiscal Year 2004 (Washington, D.C.:
Feb. 3, 2003).
[20] The alternatives analysis stage provides information on the
benefits, costs, and impacts of alternative strategies leading to the
selection of a locally preferred solution to the community's mobility
needs. During the preliminary engineering phase, project sponsors
refine the design of the proposal, taking into consideration all
reasonable design alternatives, which results in estimates of costs,
benefits, and impacts (e.g., environmental or financial). Final design
is the last phase of project development before construction and may
include right-of-way acquisition, utility relocation, and preparation
of final construction plans and cost estimates.
[21] Under the ICC Termination Act of 1995 (49 U.S.C. 10101), STB may
review the reasonableness of a rate only upon a shipper's complaint.
Moreover, STB may consider the reasonableness of a rate only if (1) the
revenue produced is equal to or greater than 180 percent of the
railroad's variable costs for providing the service and (2) it finds
that the railroad in question has market dominance for the traffic at
issue.
[22] 49 U.S.C. 10501(c)(2).
[23] A rail carrier is an entity providing common carrier railroad
transportation for compensation, but does not include street, suburban,
or interurban electric railways not operated as part of the general
system of rail transportation (49 U.S.C. 10102(5)). STB officials noted
that STB has not had an opportunity to interpret its jurisdiction
pursuant to this subsection within a ruling.
[24] STB officials noted that a commuter rail agency has never tried to
use STB's jurisdiction over compensation and access issues between
freights and Amtrak as a means to have STB resolve a dispute between
the commuter rail agency and freight railroad. Therefore, STB officials
were unsure as to the outcome of such an approach.
[25] 49 U.S.C. 10501(c)(3)(B).
[26] The ICC Termination Act of 1995 (49 U.S.C. 10101) terminated the
ICC, eliminated various functions performed by the ICC, transferred
licensing and certain nonlicensing motor carrier functions to the
Federal Highway Administration, and transferred remaining rail and
nonrail functions to the STB.
[27] There are three stages of the New Starts program--alternatives
analysis, preliminary engineering, and final design. The alternatives
analysis stage provides information on the benefits, costs, and impacts
of alternative strategies leading to the selection of a locally
preferred solution to the community's mobility needs.
[28] APTA does not consider the Port Authority Trans-Hudson (PATH) a
commuter rail service, therefore it was not included in our universe.
According to an APTA official, PATH's vehicles and services are more
characteristic of heavy rail rather than commuter rail. PATH is
regulated by FRA because it provides interstate service.
[29] Specifically, we eliminated 11 commuter rail agencies (1 existing
and 10 proposed) from the initial list because the agency no longer
provided commuter rail service or the agency was still considering what
type of transit service to provide. We combined 2 commuter rail
projects from the initial list of proposed commuter rail systems
because we found they were the same project. We also combined 1
proposed commuter rail system with an existing commuter rail system
because we found that the proposed system was merely an expansion
project of the existing commuter rail. Finally, we separated 1 commuter
rail project on the list of proposed commuter rail systems because we
found that it was 2 distinct projects.
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