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APPENDIX B U.S. Railroad Legal and Institutional Arrangements Contents B.1 Introduction B-2 B.2 Amtrak Powers and Duties B-2 B.2.1 Right of Access B-3 B.2.2 The Surface Transportation Board View on Allocation of Costs and Liability as Decided for the Boston to Portland Downeaster Service B-4 B.2.3 Prevention of Facility Downgrading B-6 B.2.4 Power of Eminent Domain B-7 B.2.5 Limitation on Tort Liability B-8 B.2.6 Additional Significant Rights B-8 B.2.7 Enforcement of the Amtrak Statute B-8 B.2.8 Additional Surface Transportation Board Powers B-9 B.2.9 Summary B-9 B.3 Differences between Commuter and Intercity Service B-10 B.4 Injured Worker Compensation B-12 B.5 Labor Relations in the Railroad Industry B-12 B.6 Railroad Retirement Benefits B-13 B.7 Railroad Safety Laws and Regulations B-14 B.8 Role of the Surface Transportation Board B-15 B.9 Effect of Passenger-Related Investment on Freight Railroad Taxes and Financial Performance Measures B-16 B.10 Federal Transit Administration New Starts Grant Process B-17 B.11 1990 Americans with Disabilities Act and Level-Boarding Requirements B-17 B-1
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B-2 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors B.1 Introduction This appendix provides a description of legal and institutional arrangements that apply to the development and operation of intercity and commuter rail services. Many of these arrange- ments are regulations or statutes, not subject to negotiation and agreement between stakehold- ers but rather set ground rules for negotiations and for general railroad operations. Passenger rail officials need a good understanding of these issues when preparing for and conducting shared corridor negotiations to ensure plans and proposals are consistent with applicable requirements. For several decades at the end of the 19th and beginning of the 20th century, railroads were one of the nation's largest industries and included several of the largest individual private businesses in the country. In addition, they had a near monopoly of surface transportation over much of the United States. This situation led to a range of industry-specific laws and regulations, as law- makers attempted to balance the interests of railroads, shippers, railroad employees, and the gen- eral public. Most of the economic regulations (especially of freight rates and service obligations) were swept away in the efforts to revitalize the railroad industry in the 1970s and 1980s, as described in Appendix A, but many other industry-specific federal laws remain in effect. Likewise, some state laws, such as requiring "full crews" for trains and cabooses on freight trains, became obso- lete and have been repealed. However, federal laws concerning labor and management issues remain, and differ markedly from later legislation that applies to other private industries and com- merce. There are also numerous railroad safety regulations developed and enforced by the Federal Railroad Administration (FRA), which are regularly updated and enhanced to reduce risks of acci- dents and injury to employees, passengers, and the public at large. The railroad-specific laws and regulations apply to rail services operated on the general rail system of the United States. With a few exceptions, they do not apply to urban rail transit services operated on dedicated lines that do not connect to the general rail system. Specific issues discussed in this appendix are: · Amtrak's powers and duties, especially its right of access to the railroad network and its basis for compensating rail line owners for track use. · Differences between the intercity and commuter services regarding right of access and com- pensation of the track owner for track use. · Compensation for railroad employee injuries. · Labor relations in the railroad industry. · Railroad retirement benefits. · Railroad safety regulations. · Functions of the Surface Transportation Board (STB) relating to rail passenger services. · Effects of passenger-related investment on freight railroad finances and taxes. B.2 Amtrak Powers and Duties During the late 1960s, intercity rail passenger service in the United States reached the lowest level of the past century. The Transportation Act of 1958 had conferred train discontinuance juris- diction upon the Interstate Commerce Commission (ICC), and many railroads had used that statute to discontinue large numbers of passenger trains. As connections between trains became more difficult, passenger counts declined, and the Post Office Department gradually diverted profitable mail traffic to air and highway transport. When Penn Central notified the ICC of its intent to discontinue all passenger service west of Harrisburg, Pennsylvania and Buffalo, New York, Congress realized some drastic action was needed to save the remaining intercity rail sys- tem from total collapse.
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B-4 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors However, Amtrak has never attempted to exercise these rights on behalf of a commuter rail agency for which it is the contract operator, and such an attempt might be highly contentious. B.2.2 The Surface Transportation Board View on Allocation of Costs and Liability as Decided for the Boston to Portland Downeaster Service Amtrak's legal rights to obtain services and the use of facilities recently were tested when Amtrak and the Northern New England Passenger Rail Authority (NNEPRA) desired to reestab- lish rail passenger service between Boston, Massachusetts and Portland, Maine. Guilford Rail System, owners of the railroad facilities in New Hampshire and Maine, resisted, and Amtrak then applied to the STB for an order to compel the use and fix the compensation. In its decision, the STB resolved many disputes as to what should be considered "incremental costs." (Application of the National Railroad Passenger Corp. Springfield Terminal Railway Company, Boston & Maine Corporation and Portland Terminal Company, STB Finance Docket No. 33381, decided May 28, 1998.) Because this is the most recent case on the subject, it is worthy of detailed analysis. The main issues and their resolution are set forth below: Liability Costs A. Amtrak was willing to assume responsibility for injury, death, or property damage incurred by Amtrak employees, passengers (including "meeters and greeters"), Amtrak property and equipment, and grade crossing collisions. It proposed to pay Guilford on the basis of $0.0734 per train mile for the "residual liability" (i.e., damages Guilford might incur for injury/death of trespassers, environmental damage, and injury or death of Guilford employees). The STB pointed out that this rate could not be sustained as it would result in an annual payment of only $17,000, whereas a single incident could cost Guilford far more than that. Therefore, the STB ordered Amtrak to either fully indemnify Guilford for these residual liabilities or obtain appropriate insurance to cover them. B. Guilford also requested indemnification for punitive damages that might be based on Guilford's gross negligence, recklessness, or wanton or willful misconduct. The STB did not require such indemnification because Guilford, operating under the federal statutory scheme, is required to operate safely, and public policy disfavors requiring one party to be responsible for another's gross negligence. C. Guilford also requested that Amtrak be required to purchase insurance or security for its obli- gations (on the grounds of its alleged precarious financial condition) and that any order for access be conditioned upon the enactment of legislation in the three affected states to limit lia- bility in excess of insurance coverage. The STB declined to impose any security requirement and pointed out that Amtrak's statutory right of access cannot be denied by holding Amtrak hostage to legislative initiatives. Maintenance-of-Way Costs The parties had agreed that the track should be maintained to FRA Class 4 level but could not agree on the incremental costs. Amtrak proposed to pay an incremental maintenance-of-way (MOW) cost of $0.117 per locomotive and car mile based on an ICC determination in an earlier case involving Conrail. They argued that there would be little need for track maintenance for the first 68 years after a $39 million rehabilitation project sponsored by the State of Maine. Guilford proposed that payment based on the difference between actual costs under Amtrak operation and the costs recorded during a historic 2-year period. Concluding that neither party had presented sufficient evidence to enable an accurate estimate of the incremental MOW costs, the STB imposed the Amtrak proposal on an interim basis subject to reopening once the parties have had some experience with Amtrak operation over the line.
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U.S. Railroad Legal and Institutional Arrangements B-5 Line Rehabilitation Costs Although the parties had agreed on most of the necessary rehabilitation work, issues remained as to bridge rehabilitation and construction of a bypass track around the freight yard near Portland, Maine. With regard to the bridges, Guilford claimed $21 million worth of work was needed, while Amtrak's evidence showed the work could be performed for $2 million. The STB rejected Guilford's claim because it was founded upon the assumption of greater speeds than Amtrak proposed to operate. The STB also noted that several years earlier, Guilford had made a proposal to operate this very same service at the higher speeds without any bridge rehabilitation. Amtrak had proposed constructing a 2-mile yard bypass, while Guilford contended that the track needed to be about 3/4-mile longer. Based on the facts, the STB decided the 2-mile track would suffice and would not impair the freight operations. Performance Incentive Payments Although Guilford had requested some modifications, the STB imposed the normal Amtrak provision that monthly incentives begin when trains are operated 80 percent on time and that penalties become payable in any month that trains are operated less than 70 percent on time. This provision is in effect with nearly every other railroad. Administrative Costs The STB agreed with Guilford that Amtrak must assume responsibility for "incremental admin- istrative costs" that the freight carrier might incur because of the passenger train operation. Examples of such costs would be dispatching, accounting, and billing. Because the record did not suggest a methodology to calculate such costs, the STB left this to future negotiations. Future Incremental Costs Guilford asked that provision be made for future costs, such as freight service expenses, caused by a passenger train breakdown and costs to enhance facilities that would not be needed in the absence of passenger service. The STB noted that Amtrak had agreed to pay for non-routine ser- vices, including those associated with a passenger train breakdown, and that the carrier could petition for reopening of the case to address future disagreements regarding facility capacity. Indexing Guilford had proposed that costs be indexed based on the Consumer Price Index for all urban consumers. The STB agreed with Amtrak's proposal to use the Railroad Cost Recovery Index (RCRI), because that is more specifically related to the cost of providing railroad service and has been used to index costs in numerous other Amtrak cases. Jurisdictional Issues This subsection of the opinion deals with the STB's powers as well as the need to impose cer- tain conditions requested by the parties for future conduct. In view of the importance of these issues, some discussion of them is warranted. However, readers should note that these STB pro- ceedings predate PRIIA. In particular, the law empowering the Secretary of Transportation to issue orders requiring a host railroad to accommodate an increased number of passenger trains and to require track rehabilitation has been transferred under PRIIA to the STB: · Rehabilitation, Maintenance, and Initial Operations. Guilford argued that the STB lacked authority to require Guilford to upgrade or maintain its line to the level requested by Amtrak or to determine the number of trains Amtrak can initially operate. The basis for this position was that another section of law, 49 U.S.C. §24308(d) and (e), required that the Secretary of Transportation (now the STB) issue any order covering the number of trains to be operated or the maintenance and rehabilitation of the line. The STB rejected these contentions, pointing
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B-6 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors out that the cited provisions of law apply only to rehabilitation of or additional trains on a line where Amtrak already operates service, not where a new service is being developed. Because commencement of service is dependent upon the rehabilitation work and maintenance to allow passenger train speeds, the STB imposed both as requirements. Regarding maintenance, the STB observed, "Indeed, without a maintenance obligation, a host carrier could circumvent our prescription of access simply by allowing track to degrade." · Right to Convey or Lease the Line. Because the proposal entailed a $39.6 million investment of public funds in the line's rehabilitation, Amtrak asked that Guilford be prohibited from con- veying any property interest in it without the approval of Amtrak or the STB. The STB declined to impose this requirement because it already has general jurisdiction over the sale or lease of rail lines. Moreover, Amtrak could, if necessary, use its condemnation power under 49 U.S.C. §24311 (discussed below). Guilford also objected to a proposal that would have allowed Amtrak's "successors or assigns" to receive the access rights granted to Amtrak in the case. The STB agreed with Guilford on this point, stating: "We agree that the access rights that the Act allows us to grant to Amtrak belong only to Amtrak and may not be transferred to a third party "successor or assign" unless the Act . . . specifically provides otherwise. We see nothing in the access provisions of the Act that allows us to prescribe access terms for a party other than Amtrak, and our decision may not be construed otherwise." · Arbitration. Because Amtrak's agreements with other freight railroads require that disputes be submitted to arbitration, Amtrak asked that such a requirement be imposed. Guilford opposed this request, and the STB stated that it would resolve any future disputes rather than imposing arbitration. · Federal Transit Administration Boilerplate Restrictions. Amtrak had asked that Guilford be required to comply with certain requirements that normally would be imposed as a condition to the voluntary receipt of grants from the Federal Transit Administration (FTA). The objec- tions related to: (1) a statement that the parties "acknowledge" certain matters, (2) that Guilford agree that the funds it receives will not be used for lobbying, and (3) a requirement that Guilford comply with a host of statutes, U.S. Department of Transportation (U.S.DOT) reg- ulations, and state provisions that otherwise would be inapplicable to the railroad (e.g., state laws and regulations relating to civil rights, employment practices, and environmental mat- ters). The STB agreed with Guilford that its authority is limited to prescribing the facilities and services that host carriers must provide to Amtrak. It held that the law provides no basis for prescribing the uses to which carriers put the specific funds they receive for compensation or to require carriers to observe laws and regulations to which they otherwise would not be sub- ject. Accordingly, any such requirements in FTA Grant Agreements cannot be forced upon the operating railroad. Although the Guilford opinion is a good indication of how similar issues involving other par- ties would be resolved by the STB, some of the issues were decided based on the absence of proof by one or both parties. If concrete evidence had been presented on those issues, the outcome might have been different. B.2.3 Prevention of Facility Downgrading Amtrak also has the power to object to the proposed downgrading of any railroad facility it uses. In such case, the Secretary of Transportation is to determine the "avoidable costs," defined as " . . . those costs the rail carrier may avoid if it does not have to retain or maintain a facility in the condition Amtrak requests." Amtrak is required to pay such costs if it desires to continue main- taining the utility of the facility. See 49 U.S.C. §24309.
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U.S. Railroad Legal and Institutional Arrangements B-7 B.2.4 Power of Eminent Domain Amtrak enjoys the right to acquire property interests by eminent domain. Section 24311 empowers Amtrak, inter alia, to acquire interests in property necessary for intercity rail passen- ger transportation. Although property of a rail carrier, a state, political subdivision, or govern- mental authority is exempt from the general authority, Section 24311 confers specific authority to condemn property interests from rail carriers. This provision authorizes Amtrak to apply to the STB for an order establishing the need of Amtrak for the property interest and requiring con- veyance of the property interest on reasonable terms, including just compensation. The statute requires that such property interest be "necessary for intercity rail passenger trans- portation." It mandates that the requested conveyance be ordered no later than 120 days after fil- ing unless the STB finds that: (1) the conveyance would impair significantly the ability of the carrier to carry out its common carrier obligations [i.e., impair its freight service], and (2) Amtrak's inter- ests can be adequately protected by acquiring an alternative property interest. Such an interest could be one of a lesser stature, such as a lease, or the fee to some other property. Interestingly, the statute makes no provision for use of this power to acquire property to be used for commuter rail transportation. Amtrak's eminent domain powers were upheld by the U.S. Supreme Court in another case involving Guilford (National Railroad Passenger Corp. et al. v. Boston & Maine Corp. et al., 503 U.S. 407 ). That case arose when segments of Guilford's line used by the Montrealer passenger train fell into such disrepair that some of the line was restricted to a speed of 5 mph. When requests for better maintenance were unsuccessful and Boston and Maine Railroad (B&M) spurned a purchase offer, Amtrak entered into an agreement with the Central Vermont Railroad (CV) pursuant to which Amtrak would condemn a 48.8-mile segment of Guilford trackage between Brattleboro and Windsor, Vermont. Upon acquisition, Amtrak would recon- vey the segment to CV, which would maintain it to proper standards and grant Guilford track- age rights to serve its customers. Amtrak would contribute $3.1 million toward the rehabilitation costs with CV funding the balance. The ICC authorized the condemnation, holding that Amtrak had no alternative route for the Montrealer trains and that Guilford would be protected by the proffered trackage rights and would receive just compensation, fixed at $2,373,286. Guilford petitioned for review in the U.S. Court of Appeals for the D.C. Circuit, which held that Amtrak is not authorized to condemn property which it intends to reconvey to another railroad. Therefore, Amtrak's needs could be satisfied by an easement or trackage rights. Shortly thereafter, Congress amended the Amtrak statute to specif- ically authorize the subsequent conveyance of condemned railroad property. Nevertheless, the D.C. Circuit denied rehearing. While recognizing that the new amendment applied to this case, the Court's majority panel held that Amtrak had not established that the property was "required for intercity rail passenger service." The U.S. Supreme Court reversed, holding that the Court of Appeals' interpretation would limit Amtrak's condemnation authority to property that was necessary, in the sense of indispen- sable, to Amtrak's operations. Citing an early case in American jurisprudence, which interpreted the word "necessary" to mean "convenient or useful," the Court found "plausible if not prefer- able," the ICC's interpretation that Amtrak can find that an acquisition is required when it is a useful and appropriate way to accomplish its goals (McCulloch v. Maryland, 4 Wheat. 316 ). Because there was no dispute that Amtrak intended to use the condemned trackage for the Montrealer service, the ICC had held such use to be sufficient to satisfy the statutory command that condemned property be "required for intercity rail passenger service." This was held to be a reasonable interpretation.
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B-8 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors B.2.5 Limitation on Tort Liability Several years ago, Congress enacted a limitation on rail passenger transportation liability for per- sonal injury to, or death of, a passenger or damage to a passenger's property. This provision, cod- ified at 49 U.S.C. §28103, applies to any rail passenger operation, including commuter operators, Amtrak, or any rail carrier. The statute limits the aggregate allowable awards to all passengers against all defendants for all claims arising from a single accident or incident up to $200 million. It also authorizes rail passenger service providers to enter into contracts to allocate financial respon- sibility for claims, and it mandates that Amtrak maintain minimum liability insurance coverage of $200 million. Finally, the statute contains limitations on punitive damages and provides that any such damages shall be included within the $200 million maximum. This law is relatively new and has yet to be tested in the courts. It could prove valuable in fix- ing the upward limit of exposure for the specified losses for all regularly scheduled passenger rail operations B.2.6 Additional Significant Rights The Amtrak Statute also grants special rights to Amtrak regarding exemption from federal or state regulation of rates, routes, and services, from certain state and local taxes, as well as from state laws regulating the size of train crews, pay periods, or paydays. B.2.7 Enforcement of the Amtrak Statute Review of the powers and duties conferred upon Amtrak gives rise to the question of whether a state, municipality, or other aggrieved party can sue: 1) Amtrak for failure to discharge its duties, or 2) a freight railroad for alleged failure to comply with the law (e.g., for giving freight trains pref- erence over Amtrak's passenger trains). For example, who can sue if Amtrak attempts to dis- continue a route without following the statutory procedures, or if a rail carrier consistently delays Amtrak's trains by running freight trains ahead of them? The answer is found in that section of the Amtrak Statute presently codified at 49 U.S.C. §24103. This provides that except for certain employee matters, " . . . only the Attorney General may bring a civil action for equitable relief . . ." when Amtrak or a railroad refuses or neglects to discharge its duties under [the Amtrak Statute], engages in, or adheres to an action, practice or policy inconsistent with the statute or obstructs or interferes with an activity authorized by the statute. A further provision specifies that only the U.S. Attorney General can seek judicial review of any service discontinuance or reduction by Amtrak. More than 30 years ago, the U.S. Supreme Court passed upon this provision in the case of National Railroad Passenger Corp. et al. v. National Association of Railroad Passengers, 414 U.S. 453 (1974). This case arose out of the discontinuance of passenger service by the Central of Georgia Railway Co. (C of GA), a subsidiary of the Southern Railway Company. Although the C of GA entered into an Amtrak agreement, its parent did not. Nevertheless, the C of GA sought to drop its passenger trains, and the National Association of Railroad Passengers com- menced a lawsuit in the U.S. District Court for the District of Columbia to enjoin the discon- tinuance on the grounds that the Amtrak statute precluded the discontinuance, because the parent corporation had not entered into an Amtrak agreement and was continuing to operate its own trains. The District Court dismissed the action on the grounds that the passenger organization lacked standing in view of the provision that only the Attorney General can seek to enforce the statute. An appeal was taken to the Court of Appeals, which reversed, holding that the plaintiffs had standing
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U.S. Railroad Legal and Institutional Arrangements B-9 and that the law did not bar an action by a private party who allegedly was aggrieved (See 475 F.2d 325 [D.C. Cir. 1973]). The U.S. Supreme Court reversed with six justices voting for the majority opinion, one justice concurring, one dissenting, and one not participating. After reviewing the details of the legislative history, the majority concluded that the question of private actions to enforce the law was specif- ically considered and rejected by the House Committee. The majority also noted that inferring a private right of action could result in a barrage of lawsuits in all judicial districts through which a particular train operates with the possibility of conflicting results and heavy monetary losses while the cases wound their way through the courts. Hence, the court held that the section in question provides for a suit by the U.S. Attorney General as the exclusive remedy. Justice Brennan concurred in the result. He would have left open the question of whether a pri- vate suit for mandamus could be brought against the U.S. Attorney General in the event of his alleged failure to enforce the statute. Justice Douglas dissented. His opinion pointed out that aggrieved passengers are the most obvi- ous complainants, are in the zone of interests protected by the Amtrak Statute, and that they deserve to be heard. He cited other cases where a grant of jurisdiction to the U.S. Attorney General was not held to deprive individual citizens of standing to sue. Thorough legal research has failed to find any other decision that would supersede this case. Therefore, this case, decided in 1974, remains the law of the land. Although the specific section of law at issue therein has been recodified, the substantive provisions are nearly identical. Accordingly, in view of what was a 7-1 decision on the issue of "standing to sue," it is abundantly clear that under present law, only the U.S. Attorney General may sue to enforce the rights and obligations imposed by the Amtrak Statute. In response to further queries on this issue, thorough research indicates that not a single case has been decided under this statute in any federal court subsequent to the Supreme Court's 1974 deci- sion. The research found but one lawsuit against a railroad to enforce Amtrak's priorities over freight service. That case was bought by the Department of Justice (on behalf of Amtrak) against the Southern Pacific Railroad. Because there was no reported opinion, the matter must have been decided out of court. B.2.8 Additional Surface Transportation Board Powers The Passenger Rail Investment and Improvement Act of 2008, enacted in October 2008, has given the STB an additional responsibility to monitor Amtrak OTP. If performance falls below the standards specified in Section 207 of the legislation, then the STB may initiate an investiga- tion. If the investigation determines that the host carrier is at fault, then the STB may impose penalties or other relief on that carrier. Further details of this provision are discussed in Section 2.8 of the Guidebook and in Appendix C. As of March 2009, the STB was holding hearings and devel- oping procedures to implement this responsibility. In addition, the powers formerly exercised by the U.S. Secretary of Transportation to require a host railroad to accommodate additional trains on an existing Amtrak service, and to upgrade track to increase speed were transferred to the STB (per Section 213 of PRIIA) B.2.9 Summary Congress has given Amtrak broad powers to use railroad facilities and to have services provided on an "incremental cost" basis. Amtrak also enjoys numerous other powers, including the right of property acquisition by eminent domain, exemption from certain taxes, as well as from federal
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B-10 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors and state laws governing rates, routes and services, and numerous others. Federal law also imposes a ceiling on railroad tort liability arising out of a single accident. Although the statute appears to permit use of Amtrak's rights for commuter rail operations, such power, if it exists, has not been exercised to any great extent. In the event of dispute, allocations of costs and responsibilities between Amtrak and a freight railroad generally would be in accordance with the Guilford decision regarding intercity rail passenger service between Boston, Massachusetts and Portland, Maine. Finally, under present law, only the U.S. Attorney General may bring a lawsuit against Amtrak or a rail carrier for an alleged failure to comply with a provision of the Amtrak Statute. Of all the rights conferred upon Amtrak, the most significant appears to be the right to have rail services provided on an incremental cost basis, a right which is exclusive to Amtrak. The liability ceiling and related insurance program and the freedom from some federal and nearly all state reg- ulation also are of significance. B.3 Differences between Commuter and Intercity Service There is a sharp distinction between intercity passenger rail services operated by Amtrak and non-Amtrak services (usually commuter) in all matters pertaining to passenger rail operations on shared corridors. Amtrak's right of access as discussed in Section B.2 do not apply to non-Amtrak services, greatly affecting access terms and other aspects of the relationship between host and ten- ant railroads. In many cases it is obvious whether a service is commuter or intercity, but cases arise par- ticularly on shorter corridors where the distinction is less obvious. In these cases it is impor- tant to understand the specific factors that determine whether a given rail passenger operation should be classified as "intercity" or "commuter." Unfortunately, the quest for clear defini- tions of these services has proved elusive. The primary reason is that the two types of rail ser- vice overlap in many respects, especially in the rail corridors of highly populated areas. For example, such intercity services as the Northeast Corridor, Downeaster, Pacific Surfliner, and Capitol Corridor transport riders who travel regularly along short portions of the route, some of whom utilize reduced fare multiple ride tickets. Likewise, there are "commuter" trains that carry large numbers of "intercity" travelers. Examples of the latter are the Long Island Rail Road service between New York City and Montauk, New York [127 miles] and the combina- tion of New Jersey Transit (NJT) and Southeastern Pennsylvania Transportation Authority (SEPTA) services used by many for economical travel between New York City and Philadelphia, Pennsylvania. The Amtrak Statute contained a provision that any railroad entering into an agreement with Amtrak could discontinue all its intercity passenger train service effective May 1, 1971. In seeking to define intercity service, Congress provided that: "Intercity rail passenger service means all rail passenger service other than (A) commuter and other short- haul service in metropolitan and suburban areas, usually characterized by reduced fare, multiple ride and commutation tickets, and by morning and evening peak period operations; and (B) [auto-ferry service]." Thus, rather than stating what intercity service is, Congress declared what it is not. As the May 1, 1971 date for commencement of Amtrak operations neared, the importance of properly labeling each service became critical as any "intercity" train operated by a railroad that had contracted with Amtrak would be discontinued unless Amtrak assumed its operation.
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U.S. Railroad Legal and Institutional Arrangements B-11 Although the statute did not specify what tribunal should make this determination, the ICC undertook the task in the case of Penn Central Transp. Co. Discontinuance, 338 ICC 318 (1971). Therein the commission stated that commuter and other short-haul service would "likely" include some or all of the following criteria: 1. The passenger service is primarily being used by patrons traveling on a regular basis either within a metropolitan area or between a metropolitan area and its suburbs; 2. The service is usually characterized by operations performed at morning and evening peak periods of travel; 3. The service usually honors commutation or multiple-ride tickets at a fare reduced below the ordinary coach fare and carries the majority of its patrons on such a reduced fare basis; 4. The service makes several stops at short intervals either within a zone or along the entire route; 5. The equipment used may consist of little more than ordinary coaches; and 6. The service should not extend more than 100 miles at the most, except in rare instances; although service over shorter distances may not be commuter or short haul within the mean- ing of the exclusion. Penn Central's bankruptcy judge referred disputes involving three train services to the ICC for advisory opinions. The services at issue were: (1) New York City and Chatham, New York [127 miles], (2) New York City and Philadelphia, Pennsylvania [91 miles], and (3) Philadelphia and Harrisburg, Pennsylvania [104 miles]. The Commission found the New York to Philadelphia ser- vice to be "commuter" based on the shorter distances involved and that many passengers traveled to or from the midpoint of Trenton. Likewise, the Harrisburg service was deemed "commuter" as it was said to really constitute two separate services that went "back-to-back" at Lancaster. The Chatham, New York service was held to be intercity; although its trains had many characteristics of "commuter or other short haul" operations, there was no midpoint with any volume of rider turnover and the 127 mile run was simply too long to be deemed a commuter train. After receipt of the ICC's advisory opinion, the bankruptcy judge declined to further enjoin the discontinuance of the Chatham trains, and various parties appealed. In an opinion discussing the history of the Amtrak statute and the criteria used by the ICC, the Third Circuit Court of Appeals upheld the district judge's refusal to issue a preliminary injunction (Matter of Penn Central Transportation Company, et al., 457 F.2d 381 [3d Cir., 1972]). Subsequently, the ICC's recommen- dations were confirmed by the district court, thereby ending the judicial inquiry into the matter (Matter of Penn Central Transportation Company, Debtor, In re Discontinuance of Intercity Passenger Service, 370 F. Supp 22 (E.D.PA 1974]). Based on the confirmation by federal courts, it is reasonable to conclude that the ICC's criteria would be applied to resolve any question as to whether a given service is "intercity" or "commuter or other short haul." Those criteria also would be applied to any proposed new service, based on such matters as length of the operation, distance between stations, types of tickets sold, projected ridership characteristics, and equipment employed. As indicated, some commuter services have characteristics of intercity service and vice versa. The determination would turn on application of the criteria and consideration of the overall objective (i.e., is the operation being planned prima- rily to transport commuters or long-distance passengers). It is important to note that the definitions of commuter and intercity passenger rail service used to determine whether a service would enjoy Amtrak's access rights may differ from other defini- tions. Most importantly, definitions used to establish eligibility for capital grants from FTA grant programs do differ in some respects. However, these definitions have no bearing on right of access to the general railroad system.
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B-12 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors B.4 Injured Worker Compensation Railroad employees are covered by a unique law, Federal Employers' Liability Act (FELA), con- cerning compensation for on-the-job injuries and occupational health problems. This statute gov- erns the tort liability for injury or death sustained by railroad employees while on duty. It dates from the early 1900s, an era when railroading was a very dangerous occupation and long before the enactment of no-fault workers' compensation laws. FELA is not a "no-fault" law; liability is based on the negligence of the employer railroad, its agents, and employees. Contributory neg- ligence by the injured or deceased employee does not bar recovery but, rather, serves to reduce the damages by the proportion of negligence chargeable to the employee. However, contrib- utory negligence is ignored when the injury results from violation of a federal safety statute or FRA safety regulation. Apart from any cost impacts, a significant disadvantage of FELA is that it sets up an adversarial process between management and the injured employee that can dam- age employee relations. Some studies have shown that use of state workers' compensation schemes would be less costly than the often protracted litigation resulting from claims under FELA. In recent years, passenger rail interests such as the American Public Transportation Association (APTA), Amtrak, and others have made efforts to amend, repeal, or exempt certain entities, such as commuter railroads and Amtrak, from FELA. The freight railroads and the Association of American Railroads (AAR) have also expressed interest in replacing FELA in the past, but appear to have lost interest in this issue in recent years. Lacking united industry pressure, there has been no progress with changing FELA, and it still applies to passenger and freight railroads operating on the general railroad system of the United States. B.5 Labor Relations in the Railroad Industry Labor relations between trade unions representing railroad employees and management are governed by the Railway Labor Act (RLA), originally passed in 1926 (U.S.C. 1926). This statute governs labor relations between railroads and their employees, and differs in a num- ber of ways from the National Labor Relations Act (NLRA) that governs industrial relations for private-sector employees elsewhere in the economy. Although it often is criticized as being outmoded, the law has served its purpose in maintaining stability and preventing strikes in the railroad and airline industries (Title II of RLA makes the statute also applicable to the airline industry). It guarantees the right of employees to join labor organizations and pro- vides the methodology for recognizing bargaining representatives and the orderly settlement of disputes. Contracts between railroads and unions do not "expire." Rather, they contain a date after which requests for changes in pay rates, work rules, or working conditions can be served by either party. These are so-called "major disputes," and the requests for change are referred to as "Section 6 notices." No changes can be implemented by either party, and the employees cannot strike until the statutory mechanism has been exhausted. Only then can the carrier impose its requested changes and the union strike if it so chooses. The law empowers either party to a major dispute to request the services of the National Mediation Board. There follows a lengthy time period (sometimes in excess of 1 year) during which the Board meets with the parties and attempts to bring about a settlement. The Board may proffer arbitration, but either party can refuse. Once the Board is convinced that its medi- atory efforts have failed, it will release the parties from mediation, and the parties can resort to self-help 30 days later, unless an emergency board is created. In order to prevent a substan- tial interruption of interstate commerce, the Board may suggest that the President create an
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U.S. Railroad Legal and Institutional Arrangements B-13 emergency board to address the matter. If such a board is constituted, it must investigate and make its report in 30 days, and there can be no unilateral self-help until 30 days after the report has been rendered. As indicated above, the emergency board procedure adds another 60 days to the time frame. But even more time is allowed for disputes between a union and, as the statute states, "a publicly- funded and publicly-operated carrier providing rail commuter service. . . ." In such situations, the following steps are enumerated: (A) In the event the President does not appoint an emergency board, any party or the Governor of any state served may request the establishment of such a board, and the President is required to appoint one. No change (or strike) can take place until 120 days following the appointment. (B) Following the 120-day period, any party or the Governor may request appointment of a second emergency board. In that event: (1) The President must establish a second emergency board; (2) Within 30 days after establishment, the parties shall each submit a final settlement offer; (3) Thirty days later, the board must report on which offer is the most reasonable; (4) No change (or strike) can take place until 60 days after the board has made its final report; (5) If the board selects the railroad's final offer as the more reasonable and if the union strikes after the 60-day period, the employees shall not be eligible to collect unemployment insur- ance benefits; and (6) If the board selects the union's offer as the more reasonable, the railroad refuses to accept it and the employees strike after expiration of the 60-day period, the railroad may not obtain any benefits from a program it may have with other carriers to obtain "work stoppage" benefits. Disputes regarding grievances or the interpretation or application of an agreement are deemed "minor disputes" and are handled through a prescribed arbitration process. Employees cannot strike over such issues. Although the RLA's provisions are cumbersome, for the most part they have succeeded in maintaining a stable labor situation, especially for com- muter railroads. B.6 Railroad Retirement Benefits Retirement benefits for railroad employees are governed by the Railroad Retirement Act (RRA). The RRA, originally enacted in 1934, provides a retirement benefits scheme that is in effect the railroad industry's version of Social Security plus an occupational pension (U.S.C. 1974). Although the benefits are more generous, the program is more costly both to employ- ers and employees. As with FELA, there have been legislative attempts to modify the statute and to remove certain employees from its scope, but these have not met with success. One rea- son for the stalemate is that as freight railroads have become more efficient over the years, their employment has drastically declined. Passenger railroads are more labor intensive and have been expanding. Thus, the contributions of the growing number of passenger employees are being used to help pay the retirement benefits of the large number of retirees from the freight railroads. The RRA in its current form (after major amendments in 1974) provides for two tiers of bene- fits. One tier provides benefits that are similar to and replace Social Security benefits, including dis- ability and family benefits. The other tier provides benefits similar to a private occupational pension plan. The RRA applies to all employees of railroads and railroad industry associations, except " . . . any street, interurban, or suburban electric railway unless such railway is operating as a part of the general diesel railroad system of transportation. . . ." The STB is empowered to determine whether a particular operation falls within the purview of the exemption. The Railroad Unemployment Insurance Act is a companion statute that provides a system of unemployment benefits to railroad employees.
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B-14 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors B.7 Railroad Safety Laws and Regulations Over the years, Congress has enacted a series of laws intended to promote safety in all aspects of railroad operations. Examples are the Safety Appliance Act, originally passed in 1893, which required power (air) brakes on freight trains and handholds and steps on railroad cars, and the Hours of Service Act, originally passed in 1907. Both these early laws and many of the current regulations are primarily concerned with railroad employee safety, prompted by the extremely high casualty rate among railroad employees in the late 19th and early 20th centuries. Regulations explicitly concerned with the passenger safety have also been developed in recent years. These safety laws and regulations are codified in Title 49 of the U.S.C., with the detailed regulations published in 49 Code of Federal Regulations (CFR) Parts 200-299. In addition, Memoranda of Agreement between the FRA and the Occupational Safety and Health Administration (OSHA) define the boundaries between the responsibility of OSHA and the FRA regarding employee safety. In general, requirements concerning employee activities on or near moving railroad equipment are covered by FRA regulations, and those away from moving equipment (for exam- ple, in maintenance workshops or while working on structures such as bridges) are covered by OSHA regulations. These safety-related laws and regulations, as stated in Section 20102 of Title 49 of U.S.C., apply to any form of non-highway ground transportation that runs on rails or electromagnetic guide- ways excepting " . . . rapid transit operations in an urban area that are not connected to the gen- eral railroad system of transportation." Thus, all commuter rail and Amtrak operations are covered. Selected regulations are also applicable to urban rail transit operations where conven- tional rail services and urban transit share tracks and corridors. Individual states may not adopt or enforce laws or regulations on any subject once the appropriate federal agency (Secretary of Transportation, the FRA, or Department of Homeland Security) has adopted regulations on the subject. However, states are permitted to adopt more stringent safety laws or regulations when: (1) necessary to eliminate or reduce an essentially local hazard; (2) not incompatible with a federal law or regulation; and (3) does not unreasonably burden interstate commerce. The provisions impose requirements and either mandate or authorize the Secretary of Transportation to promulgate detailed regulations to implement them, and individual regu- lations can be complex. All passenger operations on shared corridors must comply with FRA regulations regarding to track, signal systems, rolling stock, and operations. If an operator wishes to depart from those regulations, it must obtain a waiver from the FRA Office of Safety. Where appropriate, such as for a new dedicated high-speed route that does not use conven- tional U.S. railroad technology, the FRA will develop a "Rule of Particular Applicability" in cooperation with the operator that specifies safety requirements for infrastructure, vehicles, and operations. Appendix C provides details of FRA safety regulations of most importance to passenger oper- ations on shared corridors, including where new or changed regulations will be introduced in response to the Railroad Safety Improvement Act (RSIA) of October 2008. In addition to the formal federal regulations, there are numerous technical engineering stan- dards applicable to railroad plant and equipment to ensure safe and reliable operation, and inter- operability of systems and components throughout the industry. These standards have been developed by professional engineering societies and industry associations such as AAR, APTA, the American Railway Engineering and Maintenance Association (AREMA), the Institute of Electrical and Electronic Engineers (IEEE), and the American Society of Mechanical Engineers (ASME), and are almost universally applied.
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U.S. Railroad Legal and Institutional Arrangements B-15 B.8 Role of the Surface Transportation Board The STB is a federal regulatory agency with general jurisdiction over rail carrier transportation, including construction, acquisition, operation, or abandonment. This jurisdiction is exclusive and preempts state and local authority even when the service or facility is located entirely within one state. The STB's creation and jurisdiction are founded upon the ICC Termination Act of 1995, which eliminated the ICC and transferred some of its powers and duties to the STB. The bulk of the STB's responsibilities relate to freight railroads and interstate trucking, but it also inherited ICC responsibilities concerning Amtrak's relationship with host railroads. These include: · Resolving disputes over calculating incremental costs for specific routes and operations, including where the STB has ordered that a railroad increase speeds for passenger service. This responsibility rested with the Secretary of Transportation before enactment of PRIIA in 2008. · Compelling use of a route for intercity passenger trains if the host railroad refuses to cooperate. · Resolving disputes regarding the necessity for and the cost of rail line improvements to support a given level of freight and passenger service. · Resolving questions regarding agreements for assigning liability, insurance, and indemnifica- tion agreements for intercity passenger service. · Reviewing and authorizing the condemnation of a rail line under Amtrak's right of eminent domain to acquire a rail line "required for intercity rail service". Many of the STB's responsibilities were exercised during the lengthy effort to restore passenger services between Boston, Massachusetts and Portland, Maine in the late 1990s. Absent new legis- lation, these events provide a good indication of how similar questions will be resolved in the future. Appendix A and Section B.2 of this appendix provide a detailed discussion of the STB actions in disputes between Amtrak and Guilford Rail System (the freight railroad) in these matters. Although the STB's powers with respect to commuter rail service are not entirely clear, this has not proven to be a problem. The statute [49 U.S.C. §10501(c)(2)] specifies that the STB does not have jurisdiction over mass transportation provided by a local governmental authority. However, a subsequent subsection provides that the STB does have jurisdiction over transportation provided by a local governmental authority if certain findings are made. The following section [49 U.S.C. §10502] is significant because it empowers the STB to exempt rail carrier transportation from its jurisdiction upon finding that its oversight is not necessary to carry out the national transportation policy and that the transaction or service is of limited scope. Accordingly, as a practical matter, local commuter rail operators have little contact with the STB except when the agency is called upon to resolve Amtrak-related matters. The normal procedure is for the sponsors of a proposed commuter rail construction and operation project to petition the STB for exemption from its jurisdiction, and the Board generally has granted such petitions to the extent of its legal authority to do so. Although the STB has significant responsibilities in disputes relating to Amtrak operations over freight railroads, it did not until recently have any responsibilities and powers to intervene in disputes between a freight railroad and a commuter agency. There are also no statutes relat- ing to commuter rail access to the rail network or concerning access costs that the STB could be tasked with interpreting or enforcing. However, PRIIA of October 2008 gave the STB an important power to assist with the arbitration of disputes between a freight railroad and a com- muter rail agency, and also further responsibilities concerning Amtrak cost accounting and enforcing OTP: · The STB may conduct non-binding arbitration between a rail carrier and a commuter rail or transit authority if the parties are unable to reach agreement for the access and use of freight railroad track for commuter operations or the acquisition of an interest in the carrier's ROW.
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B-16 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors · The STB may (and must if requested by Amtrak, the host carrier or a public agency funding a service) investigate poor OTP of Amtrak services (below 80 percent on-time or in violation of applicable agreements), determine causes, and make recommendations of reasonable actions to improve OTP. If the host carrier is at fault, the STB may impose damages or other relief on behalf of Amtrak. · The STB is to assist Amtrak in developing a standardized methodology for allocating capital and operating costs for state-supported services, and a new formula for allocating costs among users of the Northeast Corridor. Although these powers and responsibilities are new, and some time will have to pass before it is clear how they will be applied in practice, they should help address some of the more difficult prob- lems faced by agencies implementing new or expanded passenger rail service. B.9 Effect of Passenger-Related Investment on Freight Railroad Taxes and Financial Performance Measures This section discusses two technical financial issues that have sometimes arisen when a public authority is making an investment in a freight railroads infrastructure to accommodate passenger service. More general questions of whether a host freight railroad should contribute to the capital investment in recognition of benefits that the freight railroad will receive from the investment (such as reduced maintenance cost or quicker trip times), and ensuring that the passenger agency receives the expected benefits from the investment are discussed in the Guidebook. In a majority of passenger rail developments, a public agency (state DOT, commuter rail agency, etc.) will make an infrastructure investment on a private railroad to ensure access, and increase line capacity to achieve the desired level of service. The public agency does not usually retain owner- ship of the investment, except station buildings in some cases. Instead, the investment is transferred to railroad ownership as part of the payment for access to freight railroad tracks and for the level of service (i.e., speeds, train frequency, OTP) specified in the access agreements. In this case, the freight railroad becomes the owner of the infrastructure assets purchased with public funds and will include the value of the assets in its financial reporting. This has a number of consequences that may affect the commercial railroads' willingness to accept public investments, specifically: · The asset would be subject to property taxes levied by state and local government entities (coun- ties, towns, and cities). In a number of cases the passenger rail agency agrees to compensate the freight railroad for property taxes as part of its ongoing operations and maintenance payments. Different formulas are used depending on the individual state's tax structure. While state tax impacts do not seem to be a major problem, there have been instances of a railroad refusing to participate in a passenger-related investment for this reason. Clearly, tax impacts must be con- sidered and railroad concerns addressed in negotiations. In some cases, rail passenger agencies have included payments to offset these increased taxes in annual access fees. · The asset becomes part of the denominator used in Return on Investment (ROI) calculations in financial analysis and reporting. Generally, the railroad will not receive any return on the pub- lic investment, which is made by a public agency for a public purpose. As a result, the public investment dilutes (reduces) the railroad's apparent ROI. This could have a significant impact on the railroads' financial situation. ROI measures are typically used by the investment commu- nity in assessing the financial strength of the railroad, in valuing share prices, and in the STB assessments of revenue adequacy. To date, the impact of passenger-related investment on ROI has not been a major issue, mainly because public investments have not been large enough to distort ROI. With the potential for
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U.S. Railroad Legal and Institutional Arrangements B-17 increasing investment in the future, the issue may become more significant and may require con- sideration of new asset ownership, tax and financial reporting models. B.10 Federal Transit Administration New Starts Grant Process Commuter rail agencies may plan to use FTA New Starts grants to provide some of the funds needed for a new or expanded rail service. The process used by the FTA to review and accept appli- cations for grants is quite complex and affects how a commuter rail agency must conduct access negotiations with a freight railroad. Some commuter agencies have commented that the FTA's pro- gram requires that an agreement with the rail carrier be in place before the funding application can move forward. Because many railroads are unwilling to seriously discuss a proposed operation until funding is demonstrated, a "chicken and egg" situation is created. The underlying statute [49 U.S.C.§5309] requires that the Secretary of Transportation make cer- tain findings before approving a grant application. These mandated findings include: (1) The project is part of an approved transportation plan; (2) The applicant has or will have: (a) The legal, financial, and technical capacity to carry out the project; (b) Satisfactory continuing control over the use of the equipment or facilities; and (c) The capability and willingness to maintain the equipment or facilities. As required by the Transportation Equity Act for the 21st Century or "TEA-21," on December 7, 2000, the FTA published its Final Rule governing candidate project evaluation. The discussion of the Rule points out that the FTA intends to use the technical capacity fac- tor as an indicator of the ability of the sponsor to successfully implement a proposed new start as well as an indicator of project "readiness." The discussion goes on to say that by "readi- ness" is meant that there are no outstanding issues to be resolved before a funding commit- ment can be considered. The current statute, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) requires the FTA to publish "Policy Guidance" at periodic inter- vals. In addition, the FTA has published "Major Capital Transit Investment Fact Sheets" for guid- ance on various subjects. The Fact Sheet on Final Design states that, " . . . During final design, most third party agreements required for completion and/or operation of the project are negotiated and executed, including agreements with railroads. . . ." Once these steps have been completed, the FTA will begin negotiations toward a Full Funding Grant Agreement (FFGA). Based on the statute and the regulations, a grant cannot be approved until the applicant has demonstrated ability to build and operate the project. Clearly, if railroad facilities are to be used or a rail carrier is to operate the project, appropriate agreement(s) would have to be in place. Conversely, based on the FTA's guidance materials, such agreements would not have to be exe- cuted until the final design phase. The pragmatic approach to this problem for a passenger rail agency is to bring both the FTA processes and railroad negotiations along in parallel, ensuring that each is kept informed of the other's situations, and in particular making sure that the railroad understands the legal constraints that apply to the FTA FFGA process. B.11 1990 Americans with Disabilities Act and Level-Boarding Requirements All passenger rail operations in the United States are subject to applicable requirements of the 1990 Americans with Disabilities Act (ADA). A discussion of the details of that law and numerous regulations promulgated thereunder is beyond the scope of this project. However, there is one issue
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B-18 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors under these regulations that could have a significant bearing on access negotiations for passenger rail service on freight railroad tracks. This concerns level-boarding requirements for disabled access to passenger railcars. Current practice, where passenger cars with a conventional floor height are used and there is no full-length high platform level with car floors, is to provide short "mini-high" platforms for disabled access. Bridge plates are used to cover the cap between the platform edge and the car for wheelchairs. This arrangement means there is disabled access to at least one car of the train, but not necessarily to all cars. If the track is used by freight trains, disparities between the width of passenger cars at floor height and the clearance required for freight equipment means there is a considerable gap between platform edge and the car floor. Commuter rail operators have recently expressed concern over the Notice of Proposed Rule Making (NPRM) published by U.S.DOT on February 27, 2006. Among other things, this proposal would impose new requirements for level boarding and station construction, as well as for new commuter rail cars. Regarding "level boarding," the primary objections relate to the proposal to more precisely reg- ulate the vertical and horizontal gaps at boarding locations, to revise the requirement for bridge plates, and to require accessibility along the entire length of a train. The proposal would entail heav- ier and longer plates, which would have to be stored in locked boxes on the platforms and which would require two crew members to deploy. The proposal also would mandate that "level boarding" be provided for each accessible car on the train. Currently, only one such car is required to be equipped for level boarding or a bridge plate. If adopted, this would result in: (1) a series of bridge plates along high-level platforms, which causes delays as crew members deploy them manually at various cars, and (2) a series of mini-high platforms with bridge plates at low-level platform stations, again with resulting cost and delay time. The proposal recognizes that freight operations frequently impair the ability to construct full- length high-level platforms and suggests a series of mini-high platforms or the use of gauntlet tracks. Gauntlet tracks require a turnout at each end of the station with significant capital and main- tenance cost impacts, and additional signal and train control apparatus. Commuter rail operators oppose use of gauntlets because of the great expense, possible need for land acquisition, and envi- ronmental concerns. Anticipating disagreements between commuter and freight operators, the rulemaking discussion points out that the ADA requires facility owners to provide reasonable cooperation in making facilities accessible. Construction of gauntlet tracks could be a way of pro- viding such cooperation, albeit at great expense to the commuter agency. New York's Metropolitan Transit Authority estimates the cost of constructing gauntlets at a single commuter rail station, together with related signal and other changes, to approach $16 million. The passenger railroads submitted numerous other legal and technical comments in response to the NPRM. Those beyond the level boarding issue are beyond the scope of this report. The fact that the matter remains open more than 2 years after issuance of the NPRM suggests the complex- ity of the problems. Any passenger rail authority entering access negotiations with a freight rail- road must familiarize itself with the current status of ADA access requirements and address them in the negotiations.