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14 advise the railroads. If a local agency faces the need for an When highway agencies hire design firms, they routinely infrequent project review, it should obtain and use standard pay more than $100 per hour for basic design and review agreements and designs already in place between the DOTs costs. Railroads incur similar costs either when they conduct and the railroads. reviews in-house or when they contract them out to engi- Most of the Class I railroads offer standard legal agree- neering firms. It has become routine in recent years for rail- ments for various types of projects. Pipe and wire crossings, roads to bill these costs back to highway agencies. Sometimes grade crossings, grade separations, right of entries for studies, the contract arrangement comes as a preliminary engineer- drainage improvements, or parallel encroachments all tend ing agreement in which both partners agree to escrow review to have standard agreements. These agreements have been funds at the start of a project. In other cases, the railroads bill vetted by railroad attorneys, which eliminates the needs for the agencies after the reviews. Regardless of the details, the additional legal reviews, and consequently reduces the time process of billing for reviews is a given. for approval. Railroads' Approach Provide Insurance Correctly to Agreements Railroads typically require both General Business Liability The Class I railroads have developed over the decades formal, Insurance and Railroad Protective Liability Insurance, in official processes by which they review proposed highway proj- amounts from $2 million to $10 million. The need for indem- ects that interact with their facilities. These processes generally nification is absolute, although the insurance amounts required are intended to "matriculate" a proposed project through a varies by railroad and occasionally by project type and dura- variety of internal reviews, each of which reflects a major con- tion. The railroads and engineering firms frequently cite sideration of the railroad. These reviews evaluate projects in examples where local project sponsors resist indemnification, terms of their effects on the following: seldom with success; resistance leads to project delays. Con- tractor indemnification should be considered as a given. In The minimization of train delays during the course of the cases where governments have statutory provisions prevent- construction; ing them from indemnifying third parties, the contractors The railroad's long-term track needs; generally are required to accept the indemnification. Any nearby industrial development the railroad may One national engineering firm that conducts project reviews envision; for railroads estimates that 20% of its effort is spent on acquir- The safe operation of trains during construction; ing basic, accurate, and timely information from insurance Long-term maintenance needs, such as maintaining drain- providers. The lack of details on appropriate corporate names, age, communication devices, or structures; indemnified parties, and even addresses causes repeated delays. Internal workforce needs, such as when to schedule in-house BNSF Railway and some other railroads simplify the insur- crews to do necessary work related to the project; ance process by allowing states or construction companies The cost of rights-of-way or easements that may be necessary; to buy riders on their existing policy. This saves time and The scheduling of engineering and other reviews; money, allowing firms to buy policies for short periods dur- Reimbursement for engineering reviews, in-house mainte- ing construction. nance crew's work, rights-of-way, or easements; and Legal review of draft and final agreements. Expect to Pay for Reviews and Permits The number of these considerations and their complexity Highway agencies offer advice and time to local communities varies by the complexity of the project. Minor highway resur- without charge--at least without direct charges. As a result, facing projects conducted at crossings are often addressed with local project sponsors and some highway agencies object to simple letter agreements that do not require extensive reviews. being charged for railroad reviews, permits, and agreements. Large projects, such as new grade separations or realignments They are accustomed to not charging local communities and of tracks, involve all these areas of concern. they expect similar treatment from the railroads. However, The railroads generally have different processes for the var- when the Ohio DOT adopted a cost-accounting system, it ious types of projects. Among the common categories of proj- determined that its typical highway engineer cost up to $150 per ects the railroads have developed are the following: hour when all overhead costs were considered. Although Ohio does not bill these costs to communities directly for Pipe and wire crossings of tracks or yards; project consultation, the state does so indirectly through fuel Short-term maintenance work that requires temporary taxes, which cover its operation. access to railroad property;