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APPENDIX D Case Studies of Passenger Rail Service Developments and Processes Contents D.1 Introduction D-2 D.2 Passenger Rail Developments and Processes in California D-2 D.2.1 Southern California--Metrolink, Coaster, and the Pacific Surfliners D-2 D.2.2 Northern California--Capitol Corridor, the San Joaquin, Caltrain, and the Altamont Commuter Express D-4 D.2.3 Capitol Corridor Growth and Service Quality Strategies D-5 D.2.4 Use of Bus Connections to Extend the Reach of California's Amtrak Intercity Services D-8 D.3 Passenger Rail Developments and Processes in the Pacific Northwest D-10 D.3.1 Background D-10 D.3.2 The Sounder Commuter Rail Service D-11 D.3.3 The Cascades Intercity Service D-11 D.4 Passenger Rail Service Quality Monitoring on the Chicago Commuter Network D-14 D.4.1 Background D-14 D.4.2 The BNSF Approach D-15 D.4.3 Program Development D-16 D.5 Development of a Short Interstate Passenger Rail Corridor-- The Downeaster Service D-18 D.5.1 Background D-18 D.5.2 An Unlikely Corridor D-18 D.5.3 Downeaster Chronology D-19 D.5.4 The Northern New England Passenger Rail Authority (NNEPRA) D-21 D.5.5 Early Negotiations and Service Startup D-21 D.5.6 Service Development Since Startup D-22 D.6 A Synthesis of Approaches to the Negotiation Process Introduction D-26 D.6.1 Setting the Stage D-26 D.6.2 Define the Business Structure D-27 D.6.3 What Other Elements Can Be Leveraged? D-28 D.6.4 A Vision of the Future D-29 D.7 A Synthesis of Approaches to Fees and Incentives D-29 D.7.1 Background D-29 D.7.2 Two Scenarios D-29 D.7.3 Freight Railroads Are in the Business of . . . Moving Freight D-30 D.7.4 Performance Incentives--Pathway to Perfection? D-30 D.7.5 Cost Escalation D-30 D.7.6 Intercity Passenger Rail D-31 D.7.7 Commuter Operations D-32 D-1

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D-2 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors D.1 Introduction This appendix contains six case studies that illustrate how effective processes have been applied in successful passenger rail developments. The case studies are of two types. One type describes the development of passenger rail services on a single corridor or region, combining an overview of the history of the service(s) with a description or descriptions of processes that were influen- tial in the success of the service. The examples of successful practice selected for a case study are: Development of passenger rail services in California, highlighting two functional areas: use of connecting bus services to extend the reach of passenger rail services; and methods used to ensure adequate capacity and good service on a busy freight corridor. The role of establishing a vision and long-term planning on the development of intercity and commuter passenger rail services in Washington State. A process developed by the BNSF Railway for quality management of commuter rail services, initially applied in Chicago. The highly collaborative approach used by the NNEPRA in developing the Downeaster service between Boston and Portland, Maine with the participation of state and local governments, Amtrak and host railroads. The second type comprises two syntheses of successful processes in specific functional areas: the negotiation process and setting fees and incentives payable to the host railroad. The source for the information presented in the case studies were primarily interviews with agencies and railroads responsible for developing, managing and operating the services, supple- mented by information from reports, plans, federal, state and local government agencies, news articles and internet sources. It should be noted that the bulk of this material was gathered in 2008, prior to the passage of PRIIA and ARRA. D.2 Passenger Rail Developments and Processes in California There have been few large-scale passenger rail developments in the period since the late 1970s, where entirely new commuter and corridor-type intercity passenger services have been devel- oped throughout a region. All are on the west coast of the United States (U.S.): two in California and one in Washington State. This section discusses developments in California, focusing on the southern area of the state centered on Los Angeles and on the northern area centered around San Francisco and Sacramento. D.2.1 Southern California--Metrolink, Coaster, and the Pacific Surfliners After the abandonment of the Pacific Electric interurban rail network by 1961, passenger rail service in Southern California was limited to a few long-distance services operated by the freight railroads. After a gap of more than 20 years, local rail service re-started in southern California to help relieve ever-growing highway congestion. The first initiative was the construction of a light rail line between Los Angeles and Long Beach along a former Pacific Electric right-of-way, start- ing in 1985. Other light and heavy rail lines followed. At the same time, interest grew in expand- ing rail service to include commuter rail, culminating in the approval of dedicated sales taxes in five counties around Los Angeles (Los Angeles, Orange, San Bernardino, Ventura, and Riverside) and approval of State Bond Propositions 108, 111 and 116 for capital expenses, all in 1989 and 1990. A portion of the bond funds were used to purchase more than 200 miles of railroad right- of-way, mostly from Southern Pacific and the Santa Fe, with a smaller amount from the Union Pacific (UP), for a total cost of more than $500 million.

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Case Studies of Passenger Rail Service Developments and Processes D-3 The Southern California Regional Rail Authority (SCRRA) was established in 1991 as a Joint Powers Authority under California law to implement and operate commuter rail services in the five-county region. Services are marketed under the Metrolink name. Train operations started on three routes in 1992 and have grown steadily since through additional routes, stations, and train frequencies. In 2008, the system comprised seven routes, 388 route-miles and 54 stations, carrying more than 40,000 weekday passenger trips. SCRRA services run over a mix of freight railroadowned and county-owned tracks. The original owners of publicly owned lines retain the right to operate freight service. SCRRA negotiated access terms and fees for services operat- ing over freight railroadowned track. The other commuter rail service in southern California is a single line from San Diego to Oceanside where there is an end-to-end connection with a Metrolink service and to a new light rail line to Escondido that opened in March 2008. This service is contractor-operated on behalf of North County Transit District (NCTD). NCTD purchased this line, as well as the Escondido branch, from the Santa Fe railroad in 1994. The Amtrak intercity service in the area, known as the Pacific Surfliner, connects Los Angeles with San Diego and San Luis Obispo. The corridor, also known as the LOSSAN corridor, is owned by the county transportation authorities along the route between San Diego through Los Angeles to Moor Park, acquired from the Santa Fe and UP in 19911992 for SCRRA and NCTD commuter rail services, as described above. North of Moor Park the route belongs to the Southern Pacific, which was acquired by the UP in 1995. The Pacific Surfliner corridor, espe- cially the southern portion between Los Angeles and San Diego, has long been identified as one of the most promising high-speed corridors in the United States, and had been a priority for development. It is also Amtrak's second-busiest corridor after the Northeast Corridor. At the startup of Amtrak, there were only two round trips per day between Los Angeles and San Diego, operated as part of the core Amtrak network. One round trip was added in 1976 as one of the first state-supported services under what was then the 403b program. Further trips have been added since, all with state support, so that there are now 12 round trips between Los Angeles and San Diego. On the northern part of the corridor, service has grown to five round trips between Los Angeles and Santa Barbara with two trips extending to San Luis Obispo, plus the daily long- haul Coast Starlight between Los Angeles and Seattle. In cooperation with the commuter agencies, California DOT has continued to make invest- ments along the line, including on UP track. These improvements include installing CTC and more and longer sidings resulting in improved capacity and operating speed. Further develop- ments are in the planning stage. There is no single coordinating agency for these developments-- Caltrans and Amtrak plan the developments with inputs from committees of governments and rail service operators in the service area. In 1995 and 2002 California also purchased a fleet of passenger cars and locomotives for intercity passenger service, totaling 126 California Cars, and 15 F59PHI locomotives. These include cab cars for pushpull operation, that are used on the Surfliners and Capitol Corridor trains, together with converted F40 locomotives used as cab/baggage cars on the San Joaquin Service in northern California. The last factor in the region is investment directed at the freight network. The Alameda Corridor (another joint powers authority) has constructed a dedicated and fully segregated freight line from the ports of Los Angeles and Long Beach to the center of Los Angeles. This project provided a limited but valuable benefit for passenger service by building a flyover and improving track lay- out at Redondo Junction, just south of Los Angeles Union Station. A second investment pro- gram in the Alameda Corridor East will minimize grade crossings along the UP line east from Redondo Junction toward San Bernardino. The effect of these investments in both commuter services and the Pacific Surfliner Amtrak inter- city service has been massive increases in ridership. On Metrolink, the steady expansion of routes

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D-4 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors and daily trips from the beginning in 1992 has resulted in steady growth in annual passenger trips from zero in 1992 to 4.6 million in 1995, 8.1 million in 2000, 10.3 million in 2005 and 12.2 mil- lion in 2008. The San Diego to Oceanside commuter service experienced similar steady growth to 1.7 million trips by 2008 from its startup in 1995. The Surfliner Amtrak has also experienced rapid growth after 2000 after a period of level ridership in the 1990s. The initial service expan- sion on this route occurred earlier, between 1976 when the first state supported trips were intro- duced to supplement services provided as part of the basic Amtrak network. Growth has been massive after 2000, growing from 1.66 million trips to 3.10 million in 2008. Aside from varying economic conditions, much of this growth has been due to a steady pro- gram of well-planned investments to remove operating constraints, reduce journey times and add capacity--daily round trips and additional cars on trains--all built around a regularly updated planning process. This illustrates the benefits from steady long-term support from all levels of government. High quality and well patronized rail services cannot be built on a one-time quick fix investment. It takes time to plan and execute investments and to build a loyal customer base. Another factor for the Pacific Surfliner services is a network of connecting bus services to link train stations to communities that would otherwise be difficult to serve by rail. California's con- necting bus program is described in detail after the general discussion of northern California services below. D.2.2 Northern California--Capitol Corridor, the San Joaquin, Caltrain, and the Altamont Commuter Express There are four distinct passenger rail services in Northern California, two intercity corridors operated by Amtrak and two commuter operations. The intercity corridors are the Capitol Corridor between San Jose, Oakland, and Sacramento, and the San Joaquin Corridor between Oakland and Bakersfield. The Commuter operations are Caltrain between San Francisco and San Jose and the Altamont Commuter Express (ACE) between Stockton and San Jose. The ACE is unusual in that it does not provide service to the core cities of Oakland and San Francisco. Together with connecting bus routes, these services provide a substantial regional network of rail services. The Capitol Corridor is the name given to the Amtrak operated service between San Jose, through Oakland and Sacramento to Auburn. The entire route is over UP track. The Capitol Corridor did not exist when Amtrak was formed in 1971 and has always been a fully state- supported service. It was initiated in 1991 with direct support for operating expenses and selected capital improvements from California DOT using funds from Proposition 116 rail bonds. Initial service was three round trips daily, increased to four in 1998. The Capital Corridor Joint Powers Authority (CCJPA) was established in 1996 as a partnership of six local transportation agencies to share in the management of the service. CCJPA took over direct management of the service in 1998 and embarked on a vigorous program of route and service improvements. In nearly a decade of CCJPA management, more than $400 million of public funds have been invested in the Corridor, frequency has grown to 16 round trips daily, and ridership has nearly quadrupled from 463,000 in 1998 to 1.76 million in 2008. Over the same period, freight traffic has grown from nine to 28 trains daily. This corridor is one of the best examples in the U.S. of the successful management of a rapidly growing shared freight and passenger corridor on a principal freight railroad main line. The other example is the Cascades service between Seattle, Washington and Portland, Oregon. A more detailed description of the approaches used to build this service on a busy shared corridor is described in a following subsection. The San Joaquin Corridor between Oakland, Sacramento, and Bakersfield currently (2008) offers six round trips daily, two of which originate in Sacramento and four which originate in

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Case Studies of Passenger Rail Service Developments and Processes D-5 Oakland. The service was initiated with Amtrak funding in 1974, and California DOT has pro- vided funding since 1979, growing from an original single round trip to the present service. Infrastructure investments on this route have been limited, mostly grade crossing improvements. The character of this route is somewhat different from the other two California corridors, being considerably longer with fewer commuters and short-trip business travelers. Caltrain is the name given to a commuter service between San Francisco and San Jose. This is the only long-standing commuter service operating west of Chicago, and has a history resem- bling that of the eastern commuter rail systems. Originally operated by the Southern Pacific Railroad, California DOT, with support from local jurisdictions, took over financial responsi- bility for the service in 1977 to forestall abandonment, retaining Southern Pacific as a contract operator. Service improvements and new equipment followed and the service set on the path to growth. Ten years later, the Peninsular Corridor Study Joint Powers Board (later PCJPB) was established to put the corridor on a sound long-term foundation, leading to purchase of the cor- ridor from Southern Pacific in 1991 for $220 million. "Study" was dropped from the name shortly after. The Southern Pacific and successor UP retain the right to provide freight service along the route. The PCJPB has pursued a continuous program of service improvements to the present day, with infrastructure investments to increase capacity and service reliability, and has added a lim- ited stop express service (the Baby Bullets) and doubled train frequency. Ridership has grown from fewer than 5 million per year in 1991 to nearly 13 million in 2008. Investments in plant and equipment over 16 years have been on the order of $400 million. The second commuter rail service in the region, the ACE, grew out of a grass-roots effort by local governments to improve transportation in that region of San Joaquin County. County tax- payers voted a $0.005 sales tax for transportation in 1990 and identified the ACE as a top prior- ity. In 1995, a Joint Powers authority, the San Joaquin Regional Rail Commission (SJRRC), was established to implement the rail plan, and using $50 million of sales tax funds and contribu- tions from other local government entities, worked to implement the service. Service started in October 1998 over UP tracks with two trains daily each way. The ACE service was initially viewed as a demonstration project that would be discontinued after 2 years if there was insufficient rider- ship. Cars and locomotives had been ordered before it was clear that a service could be imple- mented, on the assumption they could be sold to other agencies if ACE did not continue beyond the demonstration period. The access agreement with UP stipulated that ACE would make capac- ity investments if the service continued past the demonstration period. These arrangements enabled a low-risk low-cost startup period during which critical public support for heavier expen- ditures to follow could be built. The service was a success, building to four round trips daily in 2006, with more than 800,000 annual riders in 1998. However, the UP has stated that they will not permit any further increase, citing expected freight traffic growth. Mention should also be made of Bay Area Rapid Transit (BART) which provides an extensive network of rail rapid transit services in the area, with connections to all the passenger rail ser- vices described above. This connectivity greatly expands the potential utility of the passenger rail services. D.2.3 Capitol Corridor Growth and Service Quality Strategies Background Negotiations with SP in 19931994 led to an agreement by Caltrans to invest around $57 mil- lion in the OaklandSacramento alignment, enabling the track to be re-laid with continuous welded rail along with new ties, ballast, and double track. In exchange Caltrans obtained the per- petual right to operate up to twenty passenger train round-trips per day between the two cities. Initial capital work was completed in 1997.

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D-6 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors The Capitol Corridor Joint Powers Authority (CCJPA) was established in 1998 to develop and manage passenger rail services from San JoseOakland and OaklandSacramento. CCJPA is a partnership among the six local transit agencies in the eight-county service area which shares the administration and management of the Capitol Corridor. The San Francisco Bay Area Rapid Transit District (BART) provides day-to-day management support to the CCJPA. Between 1998 and 2008 service grew from 4 to 16 daily round trips; ridership increased from 462,000 to 1.7 million. Fare box recovery jumped from 30 percent to 53 percent. Improved fre- quency has boosted ridership per train trip as more potential customers incorporate the service into their travel routines. This is a major factor in increasing revenue per train trip and overall financial performance. Train operations and compensation to UP are pursuant to Amtrak's national agreement with the carrier. By statute, the operating compensation to freight carriers for Amtrak intercity trains is limited to "avoidable costs" and is not intended to provide an economic return on fixed invest- ment for the route in question. As a result, Capitol Corridor has sought to create a business partner- ship with the freight owner (SP, and now UP) by participating in a fair but robust sharing of required capital upgrades and improved track maintenance in the OaklandSacramento corridor. Keeping the Trains Moving One unique aspect of the Capitol Corridor service is a contractual "20/40" rule, wherein the freight carrier is guaranteed a 40-minute window for freight operations following the scheduled movement of a passenger train. From an operations process perspective this protocol appears to work reasonably well in this corridor. Passenger trains, operating at higher speeds but with numerous stops, have an average forward velocity consistent with that of well-powered mer- chandise freight trains. As will be noted below, track quality standards are maintained above that strictly required for the 79-mph passenger operations and this, in turn, allows freights to move at higher speeds, more flexibly levering train slot availability. CCJPA observes that one important contributor to the success of their relationship with UP is the delegation of significant operations and liaison authority to UP's local operations exec- utives in Roseville, California. The Vice President of Regional Operations sets the tone for UP's dealings with Amtrak and CCJPA in northern California and has made clear the railway's desire to operate in a pragmatic, problem-solving mode. The frequency of both passenger and freight operations on the shared track requires all parties to perform in a disciplined, pre- dictable fashion to preserve the quality of service for all users. Including the long-distance Coast Starlight, there are now 32 passenger trains and up to 20 freights daily in the Sacramento Oakland corridor. Planning the Future Corridor operations and infrastructure are coded into an RTC (Berkeley Software) modeling platform to test proposals for new service and alternative capital investment scenarios. The ups and downs of public facility capital from year-to-year challenge the CCJPA and UP alike. Rather than continue reacting to "one-off" service proposals the railroad and CCJPA agreed in 2002 to develop a master "Vision Plan" that outlines long-term service goals for the corridor. Under the Vision Plan structure CCJPA staff develops and delivers a service improvement proposal to UP. UP tests the proposal with RTC modeling, defines needed capital improvements, and develops engineering cost estimates. Construction contracts are then signed under a master Construction and Maintenance Agreement to perform the needed work. Each individual work effort moves the corridor in the direction of the Vision Plan and is required to be consistent with the long-term evolution of the corridor.

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Case Studies of Passenger Rail Service Developments and Processes D-7 The master Construction and Maintenance Agreement enables track improvements to be exe- cuted as simple work orders when funds become available. Under the old regime a funding pack- age would have triggered an entire new round of negotiations between the parties. State-funded investments become the property of UP once they are installed; the state, in return, receives a minimum number of train slots and track maintenance guarantees from UP. The parties have identified specific major bottlenecks that must be addressed at some point in the future for the continued growth of both freight and passenger operations. A Sacramento River bridge crossing just outside the downtown area and a single-span lift bridge crossing San Pablo Bay at Martinez, California will each need to be replaced to accomplish the long-range service goals of the Vision Plan. A collaborative approach to planning and funding of these efforts is essential, deep- ening the rationale for continued growth in the collaborative structure of the alignment. Raising the Bar on Maintenance The impact of irregular service is far greater for passenger and commuter operations than for typical rail freight service. Track used to support freight-only operations is generally programmed to receive major investment every few years, making best use of expensive trackwork equipment and crews by replacing or renewing significant volumes of rail, ties, and ballast over a long section of track. The Capitol Corridor service territory, for example, might be programmed for major work every 5 or 6 years. Service during this renew program would suffer major adjustments, including lengthened schedules, reduced frequencies, and greater likelihood of unplanned delays. The CCJPA investigated alternative approaches for track maintenance in order to minimize impacts on passenger train service. The new protocol, adopted in 2002, includes an approxi- mately equal volume of work performed each year as opposed to more typical maintenance "blitzes" every few years. Work is generally performed in February and March of each year. This is seasonally a period of surplus track maintenance labor on UP's service network, thanks to win- ter conditions throughout much of their territory. Fifteen route miles of the Capitol Corridor double-track main are renewed each year. To minimize service impacts during peak commuter hours, CCJPA proposed a "nighttime only" schedule for track work. UP was successful in negotiating such an arrangement with labor, subject to a $1 per hour labor differential which is passed through to the CCJPA. Another innovation that supports highly reliable service in the corridor is the practice of main- taining a higher track quality standard than is required by FRA regulation, to support the cur- rent 79 mph passenger train speeds. The Federal Railroad Administration (FRA) establishes maximum allowable speeds that are in turn tied to minimum standards for tie, rail, and surface conditions for all carriers. The Capital Corridor had been maintained to FRA Class 4 until 2002 when the new capital and maintenance regime was established. In addition to track work "load leveling" and regular seasonal scheduling of major track renewals, CCJPA agreed to fund an additional 12-month maintenance crew, making possible an upgrade of the route to FRA Class 5. Passenger service speeds remain at 79 mph, but the higher track standard provides a "buffer" against routine defects discovered as part of the regular inspection process. Regular maintenance issues can be addressed as it is convenient to do so without impacting service speeds in the interim. Freight operating speeds have been increased, improving the compatibility of freight and passen- ger operations during the daylight hours. Capitol Corridor spokesmen have noted that the entire package of incentives and capital sup- port for the UP-owned alignment has not been cheap, averaging more than $40,000 per track mile per year. High on-time performance, growth of ridership, and improved service frequen- cies are the rewards of "doing things right" from a facility management perspective in the West Coast's busiest mixed-use corridors.

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D-8 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors D.2.4 Use of Bus Connections to Extend the Reach of California's Amtrak Intercity Services Background A significant challenge faced by advocates of intercity passenger rail service is the need to draw ridership from broad geographic regions, with clients far dispersed from initial station locations. California, with a large and growing population base, faces this issue as many more sparsely pop- ulated areas due to sprawling patterns of development, much of which is beyond comfortable "commute" distances to intercity rail service nodes. Much of Caltrans' success with state-supported rail in its three corridors (Pacific Surfliner, Capitol and San Joaquin) is due to its coordination with connecting modes. Of particular note are the Amtrak-branded, high-quality bus services directly connecting trains. Connecting the Gaps Caltrans support for passenger rail service goes back to 1976, with the startup of the first 403b train service over Santa Fe Railway lines between San Diego and Los Angeles (LA). In subsequent years Caltrans acquired additional equipment for the trains, enabling three daily round-trips by 1980. Ridership soared. Today the Pacific Surfliners carry three million annual riders; it is the second most-heavily traveled intercity rail corridor in the country. In the late 1970s Caltrans also started to provide funding for trains operating in the San Joaquin corridor between Bakersfield and Oakland. This service, operated over Santa Fe Railway tracks, stopped short of key destinations at either end of its route. Passengers wishing to connect north- ward to Sacramento or south into the LA basin needed a convenient, reliable option for com- pleting their journeys. The rail route south from Bakersfield terminus of the San Joaquin trains to Los Angeles passed over the tortuous but scenic Tehachapi loop, and was very slow and indi- rect. The lack of a direct connection into LA also meant that San Diego passengers traveling north to the Bay Area lacked good options for continuing their journey beyond LA. Caltrans addressed the connectivity issue with dedicated, high-quality bus connection ser- vices. The first such route connected Los Angeles to Bakersfield which is much quicker than a rail connection over the Tehachapi loop, and continues to account for around 60 percent of all riders on the San Joaquin trains. This initial bus route was considered an essential element of Caltrans' rail service development plan and was put in place without major cost-benefit assess- ments or justification. The second such service connected San Joaquin riders with Sacramento. OaklandSacramento service (the Capitol Corridor) was still several years away. After the success of these two initial connecting service corridors other routes were initiated on a trial and error basis. Developing such connectors is a relatively low-risk approach to testing mar- ket demand without major commitments of long-term resources. Today, ridership assessments incorporating bus connection activity are incorporated into overall Caltrans rail service modeling through agreements with Amtrak. In addition to the "gap filling" role described above, Amtrak- branded bus services extend the effective reach of the intercity network to communities that will never enjoy direct rail service due to cost, right-of-way availability or ridership potential. In other circumstances the buses have proven so successful that investments to provide direct rail are seen as justified and have been incorporated into Caltrans' long-term rail service development plans. Caltrans works closely with Amtrak to set service standards and secure operating agreements with the various bus service providers providing Amtrak Thruway service. Standards include lux- ury coach specifications, cleanliness, customer service demeanor, station hygiene, etc. Caltrans pays for 100 percent of the service, including the salaries of Amtrak officers who serve as bus ser- vice supervisors. In late 2008, seven bus operators provided dedicated connecting service around the state.

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Case Studies of Passenger Rail Service Developments and Processes D-9 Caltrans surveys of train riders found that many such patrons harbor serious doubts about motor carrier service and are particularly unwilling to contemplate bus rides of more than one hour. For these reasons special effort has been made to brand the buses as "Amtrak connec- tors." Stations have been designed to support that image and include shade/rain canopies for riders and other amenities. Driver uniforms, name tags, and other symbols further support efforts to overcome any bias against buses and distinguish the connectors from other intercity bus offerings. The Thruway buses have guaranteed connections to their targeted trains; Caltrans will hold a train departure a reasonable amount of time to ensure that the connection is made. If a connec- tion fails, Caltrans will either put passengers on the next available train or will bus them all the way to their destination. The relatively short-haul nature of the motor carrier runs supports retention of an experienced and highly qualified labor base; drivers always return home at night, which is often not the case for general intercity bus driver assignments. Caltrans management views the motor carrier connections as an integral part of the state's intercity service offerings. Total costs and revenues for passengers on both the rail and bus sides of specific trips are combined to assess the viability of a given service. For some heavily traveled "gap filling" routes, such as San Luis Obispo to San Francisco, the apparent overall "operating ratio" of the connecting service is approximately 200 percent. The Greyhound Growls Greyhound bus lines successfully lobbied the California legislature to limit perceived compe- tition from Caltrans-contracted bus service, even in those alignments where no common carrier operates today. The restrictions preclude residents from using Caltrans bus services except to connect to or from an Amtrak train; "bus-only" riders are prohibited. The restrictions have effec- tively eliminated common carrier passenger service of any type in many communities. Local res- idents have become frustrated when they see Caltrans buses in their communities but are precluded from using them to the next city en route. Caltrans has suggested an alternative pro- tocol that would have Caltrans buses exit any route where a private operator stepped up to offer service, but Greyhound and its lobbyists have held their ground. Bus riders must tender their Amtrak paper ticket in order to board the throughway service. If a reservation has been made electronically, a rider must surrender his or her driver's license or other secure document. The license will then be returned to them upon boarding the connecting train. Other Connecting Services Caltrans also negotiates annual or multi-year inter-agency agreements with seventeen local transit operators around the state. Agreements include coordination protocol for transfer from rail to local transit and some state funding incentives to the local bodies. Success in negotiating these deals is inversely proportional to the size of the local system. No such agreements are in place, for example, with the San Diego or Los Angeles transit agencies. Scheduling protocol is more critical in smaller communities with bus-centered, long-headway local service. Connections to higher-frequency, fixed route systems such as the Sacramento LRT are less important due to the modest (15 minute) headways between LRT trains. While the inte- gration agreements have worked reasonably well, Caltrans admits there is always room for improvement. Larger local systems view Caltrans, at times, as a competitor for ridership and are sometimes leery of the joint promotion/information aspects of the coordination agreements.

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D-10 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors Seamlessness in the South One major success in local coordination has been the "Rail 2 Rail" agreement negotiated between Caltrans and the Southern California Regional Rail Authority (SCRRA) in 2002. SCRRA is the operator of LA Metrolink, a wide-flung network of commuter rail services, tying distant suburbs to downtown LA. The "Rail 2 Rail" coordination program includes joint advertising, cooperative fare setting, and transferability of tickets purchased for one entity on the services (over the same shared corridor) of the partner agencies. Thus a Metrolink ticket holder travel- ing south over the shared Surfliner route south of the city can board the Amtrak train if and when it is more convenient to do so. The program has been wildly successful, with around 45,000 monthly pass holders taking advantage of the "Rail 2 Rail" program. The success of "Rail 2 Rail" on the Metrolink systems prompted the North San Diego County Transit District (NCTD) to follow suit with a similar arrangement in 2004. NCTD operates the popular Coaster trains from Oceanside southward into downtown San Diego. Another contributor to multi-modal success in southern California and elsewhere is Caltrans' investment in marketing and education campaigns to help the traveling public understand transit connections and alternatives. Website data is comprehensive and easy to use. The "Rail 2 Rail" pro- gram has its own dedicated site: www.railtorail.org. More generally, the www.amtrakcalifornia.com site has easy-to-use section headings that index station names and locations as well as all con- necting mode information for those destinations. Complementary service providers have begun to market "rail-specific" packages and have linked their offerings to the site, providing further incentives for residents and visitors alike to try the services. Kimpton Hotels and Marriott have each provided special rates for those taking advantage of Amtrak's service offerings. Summary The skeletal geographic nature of intercity passenger rail service in most of the nation implies that coordination with other modes is an essential part of building ridership. Caltrans has demonstrated the potential success of such programs by leveraging a wide range of client education, branding, and service coordination tools. Public transportation leaders have long recognized that the rail mode enjoys special powers of attraction when convincing the public to abandon their private vehicles. Motor carrier extensions of rail service must be therefore carefully branded and managed as a "premium" service offering, distinct from other intercity bus operations. The overlap of rail services between commuter and intercity trains over shared alignments gives rise to new ways to improve service and ridership. Ticket sharing, joint marketing, and schedule coordination has been shown to build loyalty and ridership. Simplifying rail access dra- matically reduces perceived barriers for those new to public transportation. For another example of bus to intercity rail cooperation see Section D.5 on the Downeaster service between Boston, Massachusetts and Portland, Maine. D.3 Passenger Rail Developments and Processes in the Pacific Northwest D.3.1 Background Along with California, the Pacific Northwest region and specifically Washington State has been a pioneer in investing in passenger rail service to provide public transportation alternatives to highway mode. The first initiative described is the Cascades intercity service between Seattle, Washington and Portland, Oregon, with more limited service northward to Vancouver British

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Case Studies of Passenger Rail Service Developments and Processes D-11 Columbia and southward to Eugene, Oregon. The second service is the Sounder commuter rail route from Everett through Seattle to Tacoma, in Washington State. Because both services share the same route, BNSF Railway's main northsouth line from Everett through Seattle to Tacoma, Washington, all planning has to include both services as well as BNSF's freight business. A focus of this case study is how Washington State DOT planned and implemented the Cascades inter- city service in cooperation with county transportation agencies around Seattle that developed the Sounder commuter service and BNSF Railway. D.3.2 The Sounder Commuter Rail Service The Sounder commuter services operate over a 66-mile route from Everett in the north through Seattle to Tacoma in the south. Prior to implementation of the Sounder service attempts to intro- duce transit alternatives to the Seattle region had floundered, in spite of severe highway conges- tion. With the constricted geography through Seattle itself, it is almost impossible to expand highway capacity, and voters in the region finally authorized a $3.9 billion funding proposal to improve transit alternatives. In addition to the Sounder service the proposal included light rail between Tacoma, SeaTac Airport and Seattle and bus improvements. Sounder commuter rail service began in 2000 with two daily round trips on the southern sec- tion between Seattle and Tacoma. This service grew steadily to nine round trips by 2009. Service started on the northern section in 2003 after Sound Transit purchased a permanent easement from BNSF Railway for commuter service between Seattle and Everett. The agreement obliges BNSF Railway to provide capacity for a maximum number of commuter trips, to an agreed schedule and trip time, but leaves responsibility for the specific investment in track capacity and quality to meet the performance targets to the BNSF Railway. South of Seattle route improvements for commuter service were shared with investments for the Cascades intercity service and for State grants to improve freight railroad service, especially to the ports of Seattle and Tacoma and to add capacity on congested main lines to the east. An example of a shared investment was a re-design of the southern approaches to King Street sta- tion in Seattle. When Sounder was in the planning stage, the approaches to the station were oper- ated under "yard rules" with hand operated switches and no signals, which added several minutes to the journey time of all trains. A series of improvements included CTC signaling, and a new track layout that could accommodate all passenger services, as well as separating passenger movements as far as possible from through freight trains. In a separate project, King Street sta- tion itself is undergoing (2008) a massive renovation. Finally a route extension from Tacoma to Lakeview was under construction in 2008. This segment requires upgrade and partial replace- ment of a BNSF branch line, and will be further extended to provide a quicker and less congested route for Cascades intercity trains to Portland, Oregon. The net result from all this effort is that between its inception in 2000 and 2008 ridership on Sounder commuter services grew to 2.67 million. D.3.3 The Cascades Intercity Service Increased interest in intercity passenger rail service in Washington State took root in the late 1980s. A modest level of passenger train operations had survived the divestiture of such services by private carriers in 1971, with two daily SeattlePortland trains and a single daily Coast Starlight between Seattle and Bakersfield serving as the baseline from which improvements could be considered. In 1991 the State Legislature directed Washington DOT (WSDOT) to conduct a comprehensive feasibility assessment for high speed ground transportation in the state. Concern was growing over congestion on I-5, the main thoroughfare between Portland and Seattle, and demographic/travel

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D-22 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors of the track upgrade work. It is clear from contemporary reports and later recounting of the sit- uations that developed, that this process was frustrating for all concerned. The factors that seem to have fed this frustration include: Stonewalling by Guilford Rail System, which threw up numerous legal roadblocks to imple- menting the service, each one of which had to be opposed and overcome by appeals to the STB and the courts. It is not clear that the public officials appreciated that behind the confrontational tactics lay the legitimate concerns that all freight railroads have, that hosting a passenger opera- tion will limit their freedom to grow and adapt the freight service to meet customer needs. In this case, the attitudes of the Guilford management at the time were such that legal fights were probably inevitable, regardless of the approach taken by public officials. Expectations by many stakeholders (en-route municipalities, public advocacy groups, public at large) that once funding was secured, all that needed to be done was to carry out the track upgrades. There was a presumption that with Amtrak's right of access and the funding in place, the freight railroad would simply get on with the work. This presumption may have been shared by the public officials. Municipalities and communities expecting to host a station had to put their plans on hold. Advocacy groups and editorial writers in local newspapers expressed their frustrations in print, often critical of Guilford, Maine DOT officials, and the general progress. Missteps in negotiations with MBTA about access over their track from Haverhill, Massachusetts to Boston North Station, primarily relating to the issue of capacity on some single track sec- tions of route and in the North Station area during peak hours. NNEPRA had no funds for capacity improvements in MBTA territory, but was arguing for more flexibility in scheduling than MBTA was prepared to grant at the time. Access to MBTA track relied on Amtrak's right of access privileges. A general lack of interest in this rail service on the part of New Hampshire officials, and active opposition in some quarters. Part of the opposition originated with the operator of the C&J bus service between Dover and Boston, who viewed the rail service as unfairly subsidized competi- tion and actively lobbied New Hampshire legislators and officials to oppose funding for the train service. However, municipalities hosting stations were able to obtain funding for station area developments such as platforms, shelters and parking lots. Maine had to raise funds for track improvements to the New Hampshire portion of the route. Once construction had started, use of "time and materials" contracts for work by the railroad proved cumbersome, leading to a lot of paperwork and a tendency for NNEPRA to micro- manage construction and quibble about details. With this experience, NNEPRA later moved to fixed price contracts for an agreed scope of work, with escalation clauses for materials costs. In spite of these difficulties, construction work was largely complete by the end of the 2001 work season, and operations with four round trips daily started in December 2001. D.5.6 Service Development Since Startup After a spike in the first season of operation, attributed to the novelty effect of a new service, there was little growth in ridership in the first 3 years of operation, through late 2004. Ridership was also significantly below pre-service forecasts. Reasons for low ridership included: Extended trip times due to the 60 mph speed limit imposed by Guilford. The limit was finally increased to 79 mph in August 2004, after all Guilford's objections were overcome. Ongoing work to complete outstanding track improvement projects, which also lengthened journey times. Scheduling that was not well suited to customer requirements, partly due to operating con- straints imposed by host railroads, and partly due to NNEPRA's other priorities at the time. The relatively late arrival of the first morning train in Boston and the early departure of the last train of the day were often mentioned as a factor.

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Case Studies of Passenger Rail Service Developments and Processes D-23 With most of the earlier problems resolved and speeds increased to 79 mph, ridership grew rapidly in 2005 and later. A marketing coordinator with travel industry experience appointed in mid 2005 helped to focus marketing efforts and identify the keys to growing ridership In the period from its founding to 2004, NNEPRA focused on getting the train service up and running with less focus on refining the service. Some stakeholders may have felt neglected or taken for granted, if they were not involved in the immediate problems. Finally, the lackluster ridership threatened to increase the need for operating funds. Federal government CMAQ fund- ing provided operating support in the early years, but in 2009 this support will have to be replaced by state and local funds. The funding request would be a hard sell with the state legis- lature, if there was a growing gap between expenses and revenue. The approach taken by NNEPRA is to view the Downeaster service as a business. Both the present executive Director of NNEPRA and the Board have a largely business background. The business succeeds if it attracts riders and earns revenue that meets or exceeds plans and expecta- tions. This success indicates that the service delivers on the expectations of the public and stake- holders in Maine and New Hampshire and the local, state, and federal government agencies which supported and funded the service. It also creates a favorable climate for future growth of passenger rail service in the region. The service characteristics that attract ridership are well known: convenient schedules, con- sistent and reliable service, clean and attractive trains, good on-board amenities, and convenient access to services, both physical access at stations and with connecting services and access to information about the service. NNEPRA succeeds in delivering on these service requirements through a mixture of local choice of some service elements and carefully nurturing partnerships with other stakeholders to deliver on the others. Specific approaches follow. Scheduling Convenient schedules have been delivered by working on the relationships with the host rail- roads and Amtrak. The host railroads have become familiar with the operation and have been more flexible in considering schedule requests. NNEPRA holds regular meetings with the rail- roads to review any operational issues and to explore schedule changes when required. NNEPRA reassures the hosts that it respects their need to serve their primary business needs, and works con- structively and co-operatively to understand those needs and find solutions that meet the needs of Downeaster service without interfering with the host railroads' activities. NNEPRA also makes a point of meeting regularly, even when there are no pressing concerns. Good relationships must be built before problems arise in order to encourage support from stakeholders when it is needed. Service Reliability The same cooperative relationship with the host railroads and Amtrak yields service reliabil- ity, although some problems are beyond immediate control. If a problem is identified that can be corrected with a minor schedule change, this can be done. If a modest infrastructure invest- ment will correct a source of unreliability, then NNEPRA is willing to seek funds to help address the problem. In the case of a major problem that is outside NNEPRA control, it will do all it can to advise its customers, make temporary schedule changes if appropriate, and take similar actions to minimize impact on its business. As a recent example, major structural work on a large bridge spanning the Merrimac River near Boston was well-publicized to Downeaster customers along with expected impacts to train schedules and performance. Shorter Journey Times From a longer term perspective, NNEPRA identifies opportunities to shorten the overall jour- ney time between Portland and Boston, and to take advantage of federal grant programs to real- ize these opportunities. For example, NNEPRA obtained a $500,000 grant from the FRA fiscal

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D-24 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors year 2008 grant program toward Portland area track improvements. A fifth daily round trip was also added in 2007. An important constraint at present is that NNEPRA cannot consider fund- ing infrastructure improvements on MBTA territory and has to work around capacity con- straints on some single track sections and in the North Station area in Boston. Trains and On-board Amenities For trains and on-board amenities, NNEPRA relies on Amtrak-provided equipment and has no plans to acquire its own vehicles. NNEPRA is very involved in the choice of cleaning services and arrangements with a private firm for on-board food service. The food service has been very well received, and although it operates at a loss it is considered an essential amenity to attract ridership. Access to Stations and Information NNEPRA relies heavily on partnerships for physical access to stations and for access to infor- mation about the service. These relationships include: Strong relationships with the six municipalities in New Hampshire and Maine that host pas- senger stations, including Old Orchard Beach (seasonal), Saco and Wells in Maine, and Dover, Durham and Exeter in New Hampshire. All the municipalities have invested heavily in sta- tions, using local, state, and grant funding, and have linked other transportation and property developments to the stations. For example, in Saco, station improvements are linked to com- mercial and residential redevelopment of nearby old mill buildings, and have even included a 75 kW windmill. In Durham, the recently renovated station and transportation is close to the University of New Hampshire campus, and connects to the extensive bus service operated by the University. The partnerships are nurtured by bi-monthly meetings between NNEPRA staff and municipal representatives, hosted by the municipalities on a rotating basis. The advocacy group partners help with marketing and support future rail developments. They are also not shy about speaking out when events are not to their liking. Examples of activ- ities by these groups include a volunteer on-train and station host program organized by TrainRiders Northeast, and rail-facilitated bicycle touring events organized by the Bicycle Coalition of Maine. Key partnerships have been developed with two regional intercity bus operators. Concord Coach operates services from Boston through Portland (sharing a terminal with the Downeaster) to major inland and coastal Maine communities beyond Portland. C&J Bus Lines, an early opponent of the Downeaster, now provides coordinating service between southeastern New Hampshire towns and Boston. Arrangements include ticket interchangeability on selected parallel services and showing each others' services in schedules. Experience has shown that parallel bus and rail services help each others' ridership by providing more travel options rather than competing for a fixed number of travelers. NNEPRA relies heavily on Amtrak for a number of services. As the operator of the service Amtrak has the primary relationship with host railroads and is responsible for day-to-day operations. NNEPRA is only involved if there is a systematic problem that may require nego- tiation of schedule changes, and investment or similar action. NNEPRA relies on the Amtrak national brand for marketing beyond the local area and for the reservation system. NNEPRA provides the Downeaster Web site and local marketing. Interstate Relationships Interstate relations proved to be a minor factor in developing and operating the Downeaster service. In Massachusetts, the MBTA is a host railroad on a similar basis to other host railroads over which Amtrak operates service. Massachusetts transportation agencies are not involved with the Downeaster beyond this role and have other pressing issues to address. Until recently, New Hampshire state transportation agencies and legislators had little interest in passenger rail transportation and would not contribute any funding or apply for grants to sup-

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Case Studies of Passenger Rail Service Developments and Processes D-25 port the service. NNEPRA and the State of Maine did everything, except the activities under- taken by towns along the route. Since 2006, however, there has been a change in attitude. Opposition from the bus operator C&J ended with an agreement to cooperate on ticket inter- changeability and scheduling. New Hampshire contributed the cost of a passing siding in Exeter needed for a fifth daily round trip from CMAQ funds. Overtures have been made about a con- tribution to annual operating costs, when these become a state responsibility in 2009, but there has been no agreement. New Hampshire has appointed an official responsible for passenger rail within the state DOT, but primary interest is centered on extending commuter rail service from Lowell and/or Lawrence, Massachusetts to Manchester, rather than the Downeaster route. Observations and Summary Developing a new passenger rail service is a lengthy and complex process requiring the par- ticipation of many parties. Not all activities are able to proceed at the same pace, and delays are almost inevitable. The sponsoring agency needs to identify all stakeholders, make sure all are aware of a realistic timescale, and make sure they are kept as fully informed as possible. This should be done without revealing confidential information about negotiations or being negative about the actions of any one group. The Downeaster development had some rough patches aris- ing from unrealistic expectations of how quickly the service could be implemented and because various stakeholders felt they were not being properly informed of progress or left out. NNEPRA benefits from having considerable independence from State government agencies, with more responsibilities and control over the details of the service than is usual for agencies that oversee state-sponsored intercity passenger rail services. NNEPRA puts great emphasis on maintaining close contacts with all stakeholders, holding regular meetings, and being respectful of the concerns and positions taken by the stakeholders. It feels that there is nearly always a mutually acceptable solution to a problem, and finding and implementing that solution builds trust all round. Making critical remarks about a stake- holder is unacceptable. Maintaining good relationships with state agencies and legislators are especially important. The combination of solid financial performance and regular contacts builds trust and allows NNEPRA to maintain its independence. With a very small staff of six people, NNEPRA cannot get involved in a lot of detail. It devotes part of its resources to basic performance tracking (ridership, revenue, on-time performance) and concentrates on a very small number of critical projects at one time. NNEPRA tries to avoid micromanaging its projects and is prepared to share project risk with its partners (especially the host railroad). NNEPRA takes a pragmatic view of factors it cannot change or influence. For example, it would like New Hampshire to contribute to operating costs, and many would agree that it is unfair for Maine to bear the whole cost of a service given the number of New Hampshire pas- sengers. But practically, NNEPRA knows it has no formal standing in New Hampshire, and in-state officials and interest groups in that state have to make the decisions themselves. Another example is the RRIF loan process, which can be tedious and bureaucratic, requiring a lot of apparently irrelevant information. However, instead of arguing, NNEPRA's attitude is just give them what they want and quickly, as the most effective way of getting rapid approval. In the event, the RRIF application was unsuccessful, and NNEPRA is pursuing funds through PRIIA or ARRA programs. The limitations of the Downeaster example are that it is a very simple service serving a com- pact geographical area, and there is little need for complex capacity or cost modeling or service quality monitoring. Analysis and recordkeeping do not require much more than conventional spreadsheet methods. The structure of New England government is that many functions are the responsibility of individual towns and cities, which means that the Downeaster needs strong

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D-26 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors relationships with those entities. In other states with different governance structures, county, state and MPO authorities may play a larger role. D.6 A Synthesis of Approaches to the Negotiation Process Introduction Initiatives to develop new passenger rail service can be complex, given the mix of interests between transit agencies, other levels of government, and private rail corridor owners. Building a true long-term partnership between public and private interests is essential to address the changes that inevitably impact joint use of a rail corridor; goals of each side must include the ability to work through challenges in this dynamic environment, instead of simply "reaching an agreement" that permits the first stage of service to begin. This case study is a synthesis of information about the negotiation process learned during interviews with passenger rail agencies and other stakeholders. The information from these inter- views formed the foundation for Sections 2 and 4 in the Guidebook. However, the reader should note that the interviews and this synthesis were prepared before the passage of PRIIA, thus some statements may be out of date. However, almost all the content is considered to be useful and relevant to post-PRIIA conditions. As noted elsewhere in this report, the rights of access and negotiating leverage associated with "intercity" passenger rail are significant. Commuter rail proponents, by contrast, must depend solely on the willingness of a corridor owner to provide access. There is no direct recourse if, in the final analysis, the freight railroad elects to refuse new operations on their property. The dis- cussion here relates to commuter rail startups. An intercity startup is more fully described in the description of multi-state corridor development in Section D.5. It might be noted that the des- ignation of the NNEPRA's service as "intercity" was essential to getting the train operations in place. Under today's legal framework a commuter operation, using these same tracks, would likely have been impossible given the original stance of the freight operator. Most freight railroads want to be advised from the earliest point of interest that a corridor is under consideration for joint use. These initial contacts are often through the railway's public or government affairs offices. After an initial meeting, these railway officials may or may not elect to engage other officers from within the carrier organization, depending upon the seriousness attached to the public agency request. If the commuter service inquiry appears to be highly spec- ulative or lacks any specific funding source, the carrier may elect to wait for a second, more seri- ous stage of investigation to begin. From the outset it should be noted that freight carriers view engagement in these discussions as a public interest or franchise protection activity--and they may be reluctant to commit serious resources until such time as a real prospect of passenger ser- vice is apparent. D.6.1 Setting the Stage Passenger service proponents and freight carriers often enter discussions about joint use with sets of priorities that work against each other: Passenger rail agencies may be anxious to demonstrate the viability of the rail mode and to initiate a minimum "core" service offering at least cost to build support and political momen- tum. Developing a "long-term vision" with at least scoping-level costs may be viewed as pre- mature and time-consuming. Long-term cost estimates may be used by service opponents as evidence that an agency is opening the door to a financially ruinous set of infrastructure investments.

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Case Studies of Passenger Rail Service Developments and Processes D-27 Freight carriers recognize the political appeal of passenger operations and are reluctant to enter- tain "startup" operations without a robust funding regime and vision of long-term needs on both sides. They recognize the limits of political promises and the risks attendant to the election cycle. As a confidence-building phase, both parties should acknowledge the other side's needs for a successful partnership: Passenger interests must understand the need for both passenger and freight service providers to have adequate capacity to serve their markets. Service to each is of equal importance. Freight carriers must acknowledge the goals of passenger interests, but do not wish the suc- cess of passenger operations to come at the expense of the freight franchise. All parties wish to create the safest possible operating environment. Costs for service and infrastructure should be shared "fairly" between the parties. An ideal management environment for shared use is grounded in a partnership vision that moves well beyond the "vendor/purchaser" structure of older commuter rail agreements. Rigid, one-dimensional "purchase of service" agreements are poorly suited to shared-asset environ- ments where the needs of both passenger authorities and freight interests are likely to change sig- nificantly over time. Passenger rail and DOT representatives from North Carolina, Washington State, and California in particular have noted the evolution of their relations with host freight railroads as a consequence of maturing relationships, higher levels of trust, and deepening of technical expertise on both sides of the table. Hallmarks of this evolution include: Sharing capacity modeling, work including transparency of model inputs and outputs. Creation and staffing by the public agency of positions that draw from railway engineering and operations experience. In some cases agency staff comes directly from the ranks of the host carrier. Development of a planning and management framework that permits more of the corridor- related work to be accomplished on a streamlined "task order" basis rather than as the object of new, formal negotiations. All of this, of course, takes time--months, years, or even decades. A clearly defined business structure, at the outset, will help launch the shared-use voyage in positive direction. D.6.2 Define the Business Structure A public agency dealing with passenger rail issues for the first time is likely to find itself over- matched when first entering discussions with a freight corridor owner. Creating a better balance may require that the agency bring in some external resources to help with the negotiations--a consulting firm, personnel from a sister agency, or officials from another government depart- ment that has experience in dealing with freight carriers. Officials from the large railways have dealt with requests for shared use in numerous and varied circumstances and are likely to pres- ent the agency with a specific list of conditions that is precedent, from the carrier's perspective, of serious negotiations taking place. The devil, they say, is in the details. One strategy to keep negotiations on track is to technically define, as clearly as possible, the tools and outcomes needed for a shared-use arrangement to move forward. Examples include: What is "capacity" and how is it measured? Is it a measure of daily throughput, ability to meet peak demand, or fluidity of operations during commute periods, and within what tolerances for on-time performance? How will changes in the physical plant and train operations be projected? What modeling tools are appropriate? What role do each of the parties play in confirming and reviewing the model inputs and outputs?

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D-28 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors How are forecasts for future demand (both passenger and freight) developed? What is the baseline physical condition of the property in question? How will improvements to the plant (unrelated to capacity) be funded and/or credited? What technical standards will apply to capital improvements? What mechanisms are appropriate for allocating ongoing capital and maintenance expense? What role will the freight carrier play in and around proposed station locations? What is the appropriate term of the shared use arrangement? Does the passenger agency require a permanent right to the alignment? Will shared use include consideration of shared title to property or a permanent easement? What level of future demand must be protected in the initial capital investment? How will service performance be measured and reported? What role will this data play in guid- ing future capital allocations? What are the limits of shared use? Are there specific break-points with regard to speed or ser- vice frequency that make clear the need for separate, dedicated trackage? Other, corridor-specific technical issues will likewise need to be addressed. Given the variety of conditions that apply to shared corridor development responses to the questions above, spe- cific examples will not be provided in this report. The relative weight and importance of the var- ious elements will differ from place to place. What is important, however, is that the definitions be fleshed out in advance of a specific cor- ridor analysis. Development of and access to these definitions should be kept as transparent as possible. Public agencies will have a solid rationale for their decisions and freight carrier inter- ests will have a strong footing from which they can defend their legitimate commercial interests. D.6.3 What Other Elements Can Be Leveraged? Public agencies and freight carriers alike should consider other, tangential areas of mutual gain that, while not essential to the corridor itself, may strengthen the underlying partnership. Observers in Washington State have noted that corridor improvements for the SeattlePortland Cascades service have occurred within a broader public rail context that includes support for BNSF Railway Company's (BNSF) freight service enhancements. These have included improved access to and from the Puget Sound ports and re-opening of BNSF's Stampede Pass route over the Cascades. Other elements of mutual interest may include: long-term strategies to address major rail bottlenecks such as tunnels or bridges; grade separation or elimination as a safety or quiet zone strategy; and public support for addressing environmental mitigation and regulatory requirements associated with freight rail improvements elsewhere in the state. State officials have become ever more aware that the rail mode can be leveraged to offset a por- tion of future intercity freight growth on the nation's highways; specific initiatives to encourage truck to rail or intermodal handling may, at times, be coupled to plans for passenger rail capac- ity enhancements. Opportunities to link such issues often lie beyond the immediate purview of a local sponsor- ing agency for passenger rail service. State DOTs, as partners in the development effort, may play an important facilitating role in such circumstances. Passenger rail agencies and several DOTs noted the importance of senior-level public sector officials and relationships with key railway executives in keeping a negotiations process in motion. Public officials charged with developing a specific corridor for passenger service may simply not be in a position to offer or discuss the trade-offs available to those who exercise influ- ence at state or federal levels. Developing such relationships and communications channels is best done well in advance of a specific project--food for thought to those who foresee a signifi- cant public rail agenda as part of their mobility strategy.

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Case Studies of Passenger Rail Service Developments and Processes D-29 D.6.4 A Vision of the Future Development of a long-term vision for shared use should be an important goal of corridor stakeholders to build confidence, to streamline improvement negotiations, and to alleviate con- cern from either side that their needs will be held hostage to physical or institutional restraints at some future point. While fleshing out such a vision would ideally take place before the first trains ever run, the uncertainty of public acceptance of a new passenger service and the time and energy involved in creating the long-term plan means that this work must often be completed as a second phase. Some agencies never create such a vision at all. A commitment to the time, staffing, and resources required for long-term planning should be made early in the discussions between the agencies and the corridor owners. The freight railroads must live within the constraints of a service network that, in most circumstances, will never move to new routes or alignments; this explains much of the conservatism such entities exhibit in pro- tecting their priorities over the use of those assets. Time and energy invested in creating a robust and transparent framework for future operations and investment (by all parties) is time well spent. D.7 A Synthesis of Approaches to Fees and Incentives D.7.1 Background Negotiation of fees for the shared use of any facility are often difficult, time-consuming, and a test of business relationships. This is true even of purely private negotiations between profit- seeking entities; it is even more difficult when a public agency and private firm are so engaged. Motivations of the two sides are very different, particularly in startup scenarios where a passen- ger agency is seeking to demonstrate the benefits of rail service at minimum cost. Freight rail cor- ridor owners are meanwhile trying to protect the value of their franchise and to ensure that, at minimum, the passenger operator does not burden the economics of the overall rail operation over the line in question. This section will describe the principal elements of a service fee arrangement for use of freight carrier-owned trackage by a passenger rail service provider. While other scenarios for shared use exist, such as between two passenger service agencies or, more rarely, for freight use of a publicly owned facility, the targeted scenario presents the situation for most future new start or expan- sion of passenger service operations. As with discussion in Section D.6 on the negotiation process, this discussion was prepared before the passage of PRIIA, and may be similarly out of date in some respects. However, almost all the content is considered to be useful and relevant in post-PRIIA conditions. D.7.2 Two Scenarios At the outset it should be recognized that the negotiations scenarios and resulting fee arrange- ments differ markedly between intercity passenger offerings and commuter rail operations. Amtrak's right to operate using freight carrier trackage is described in detail in Section B.2.1 of Appendix B, and serves as a point of departure for discussions with a freight carrier and Amtrak relating to shared use. Commuter operations, on the other hand, enjoy no special legal status and may effectively be refused outright by a rail corridor owner. In this latter scenario the freight rail- way can be expected to take a more aggressive approach on compensation because the logic of mov- ing forward, from their perspective, hinges on a contribution to the freight operator's bottom line. The distinction between and commuter and intercity operations may at times appear to be quite arbitrary--services operating under Amtrak's rights include Downeaster trains between

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D-30 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors Boston, Massachusetts and Portland, Maine as well as California's Capitol Corridor Oakland Sacramento operations. Each would appear, to a casual observer, to share more characteristics with a classic commuter operation than with long-distance Amtrak trains. Given the emphasis on medium-distance "corridor" passenger train investments by most states, it would appear that the number of services that operate in this "gray zone" will only grow in years to come. D.7.3 Freight Railroads Are in the Business of . . . Moving Freight No principle is more important in the design and management of a shared use corridor than the parties' mutual understanding that each has a right to exist and to protect their stakeholder interests. For passenger rail authorities it is the understanding that protecting the ability of a freight operator to serve their freight clients is and always will be the first criterion in judging the merit of any service or compensation scheme. On a given day the marginal contribution of fees from the movement of a passenger train will never compete with the revenue from use of that same capacity to move a freight train, no mat- ter how high the fees charged to the passenger operator. Therefore, the burden of capacity invest- ment to protect the integrity of a passenger operation always falls to the sponsoring passenger rail agency while ensuring that, at minimum, no harm is done the freight road's ability to serve its customers. The need for a passenger rail agency to provide service capacity is very similar for commuter and intercity service proposals. Amtrak's statutory "right of access" is qualified to not "unduly burden" freight service. When freight volumes were declining and capacity was easy to find, the marginal burden to initiate passenger service was low. When main freight corridors are operat- ing close to capacity, the burden of additional train frequencies can be severe. In main line service territory the requirement for up-front capital to improve capacity and ser- vice reliability may be substantial, easily totaling $23 million per mile. Much smaller investments are required where freight service is more modest. Some metro areas, such as Nashville, have dis- covered the value of first exploring service on short line freight operators for this very reason. D.7.4 Performance Incentives--Pathway to Perfection? Stakeholders on both sides of the shared use issue are consistent in emphasizing the need to first recognize and address the operational capabilities of a given physical alignment as an essen- tial foundation for high-integrity service. With such a foundation in place, a fee structure to reward performance does appear to support high levels of service reliability. Another way to view this is to recognize that once a good physical plant is in place the dispatch and operations disci- pline needed, at the margin, to earn the additional fees is well worth the compensation received. The flip side is that if valuable freight is delayed due to an inadequate plant, the performance incentives for passenger operations are not a sufficient offset for jeopardizing priority freight traf- fic. It is essential to deal with capacity constraints before high quality passenger service can be initiated BUT the capacity investment must be accompanied by a firm commitment from the railroad to provide an agreed level of service--number of round trips, journey time and limits on aggregate delays. D.7.5 Cost Escalation Several passenger authorities have noted the importance of carefully considering, in advance, the issue of cost escalation in long-term shared use agreements. The Association of American Railroads publishes a variety of Railroad Cost Adjustment Factors (RCAF) on a quarterly basis;

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Case Studies of Passenger Rail Service Developments and Processes D-31 these benchmarks offer a superior calibration of needed contract adjustments than more broadly recognized measures such as the Consumer Price Index. If selecting an RCAF for agreement modifications, it is important to consider the specific circumstances in play; one index includes fuel costs, another does not. Similarly there are "productivity adjustments" incorporated in some of the indices that may or may not be relevant to the operations of a given rail corridor. D.7.6 Intercity Passenger Rail As of March 2009, there were no serious efforts in play to replace Amtrak's role in providing intercity passenger services. Some states, members of Congress, and corridor advocacy groups have recognized the potential value in considering competitive bids for services, but the simple truth is that Amtrak's unique statutory access rights, liability caps, and experience in dealing with the major freight carriers give Amtrak leverage in delivering new services that cannot be matched by alternative providers. Even states with relatively mature and far-reaching state supported rail programs defer to Amtrak for negotiation with freight carriers of operating rights and fees for intercity trains. Until and unless a replacement structure is legislated, Amtrak will continue to play its present role in development and management of intercity services. Most interest in new services centers on routes in the 200400 mile range. Amtrak will charge the sponsoring state or states the direct costs not covered by revenues for new services. Amtrak charges vary widely, depending on corridor length, patronage, fares, and the specific services pro- vided by Amtrak, but passenger rail agencies report that typical charges often work out to between $1 million and $1.5 million per one way train trip (annually) in total charges payable by the state. States may be required to provide rolling stock for new service, as Amtrak itself has very limited surplus equipment even after rebuilds funded by ARRA, and is facing a replacement challenge internally due to the 26-year average age of its fleet. Enlisting the cooperation of the host freight railroad may require a public capacity investment that delivers mobility gains to the freight operation as well as the new passenger services. Some carriers define this investment explicitly as protecting the current level of freight service during the hours of passenger operation. That additional capacity, available to the freight carrier dur- ing the overnight periods is their effective incentive for collaborating on an intercity proposal. Other agencies underwrite capital and maintenance work in a given corridor to keep an align- ment at a higher standard than would otherwise be the case for freight-only operations. Slow orders are reduced and, in some cases, the cycle of track work is "leveled" to a steady-state, year- by-year approach that minimizes track work disruptions during hours of passenger operations. While public support for these activities is not really a "fee payment" in a traditional sense, it does represent a set of ongoing incentives that substitute, to some degree, for relatively low pay- ments by Amtrak to the host carrier. Amtrak does provide system-wide incentives to host freight carriers for on-time performance of trains operating over each freight network. If a large system routinely delivers performance below the incentive thresholds, the efforts to provide performance incentives by an individual cor- ridor sponsor may be frustrated. The Capitol Corridor Joint Powers Authority, faced with this dilemma, was able to negotiate specific incentive targets for its northern California operations: If trains are 92 percent on time, UP earns 50 percent of its maximum incentive the first month and 75 percent for each consecutive month thereafter. If trains are 96 percent on time, UP earns 75 percent of its maximum incentive and 100 per- cent for each consecutive month thereafter. When service falls below target levels, the incentive clock "re-sets" for incentive payments to again be in play.

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D-32 Guidebook for Implementing Passenger Rail Service on Shared Passenger and Freight Corridors D.7.7 Commuter Operations As for intercity passenger proposals, the "price of entry" for even beginning a serious conver- sation with freight carriers for shared use is a definition of proposed service. The proposed ser- vice may then be incorporated in capacity assessment that defines, in turn, the required initial public investment needed for the freight railroad to protect their existing freight clients. Public funding of new capacity above this level may also be considered or put forward by the corridor owner; the ultimate resolution of needed improvements is a product of the negotiating leverage and partnering strategy for the corridor in question. Once an agreement for funding of needed capacity is achieved, the passenger rail agency will face three additional cost elements related to use of the corridor: An access fee for a specified number of train slots, payable on a variable, annual, or capital- ized basis. Some recent agreements include a "perpetual easement" for a specified volume of trains. This latter approach may be attractive from a political perspective in that public funds are used on a one-time basis to secure an asset, but without the legal complexity attached to joint title or division of real property. Many agencies also prefer to capitalize a higher proportion of total project obligations as an easier political sell than higher levels of ongoing financial support. An operations fee payable on a variable basis to the host carrier, generally on a train run or train mile basis. Depending on the structure of the service, this fee may include most opera- tions expenses associated with the service (if the host carrier is operating the trains) such as crewing, equipment maintenance, fuel, etc. In nearly all circumstances the fee is intended to cover the basic "management" of a given train operation such as signal maintenance, com- munications, and dispatching. The range of operating fees for commuter operations varies widely, even for similar cover- age of cost elements. One explanation for this wide variation is the differing approach to cap- ital investment from one corridor to another. A freight railroad may, for example, be willing to forgo higher operating fee revenue in exchange for a substantial public injection of new infrastructure capital that solves a freight operations bottleneck. An infrastructure maintenance fee or allocation. In some cases this factor is estimated by the host carrier and quoted to the passenger service provider in advance. In other circumstances actual capital and maintenance expenditures are apportioned to corridor users on a gross-ton- mile basis. This fee is intended to cover all ongoing maintenance and may or may not include an accrual for long-term capital renewals. In all cases it is desirable that engineering records be shared and kept transparent to engender a level of trust among the stakeholder groups as they share risks and opportunities for future use of the corridor assets. While these steps have been described sequentially, assessing the viability of an entire service package requires simultaneous and somewhat iterative treatment of all these cost factors. Service frequency drives ridership and the required up-front capital investment as well as the ongoing fees for operation of the service. Each scenario will likely need to be fleshed out to provide at least a scoping-level estimate of required capital and operating support. Finally, the inclusion of federal funds as part of a commuter new-start package requires substantial up-front agreement with the host freight carrier for release of FTA planning monies at various stages of the project.