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63 Exchange information that will facilitate shared under- Railroad Incentives standing and lead to establishing and meeting common expectations. Cooperation between highway agencies and railroads in devel- Discuss issues and resolutions about current and previous oping project agreements occurs continuously, as was docu- year's projects. mented by the discussions, surveys, and interviews summarized Discuss legal issues faced and any that are expected in the elsewhere in this report. All the Class I railroads devote con- coming year, along with resolutions. siderable staff resources to accommodating reviews and to Discuss processes and resolve any issues related to insurance, responding to state highway agency requests. Any discussion billing, or reimbursements. of incentives to increase cooperation should not be construed Discuss lessons learned and best practices from within the to indicate that little cooperation already exists. agency and the railroad. Despite the institutional efforts to cooperate with public Discuss lessons learned and practices from other states or projects, delays do commonly occur and disagreements arise other railroads that are applicable and could be beneficial. over project costs, scopes, and schedules. The delays that occur Examples include the following: with project agreements indicate that some types of projects Simple agreement and lump sum payment for rehabilita- and some types of agreement processes are more successful tion projects as used by Iowa DOT; than others. The best practices to reduce such delays were dis- Conducting preconstruction meetings and inviting sur- cussed earlier as were the federal regulations that can hamper rounding businesses and community for briefing on proj- the agreement process. ect and impacts, if any; In this section of the report, the issue of incentives for rail- Processes for collaboration on rehabilitation projects; and road companies to collaborate with highway renewal projects Simple two-page standard agreement for rebuilding and is examined. In summary, many of the incentives for collabo- rehabilitation of at-grade crossings. ration are very closely related to the best practices and process Discuss and make revisions to escalation procedures as nec- innovations cited earlier. The incentives for cooperation tend essary. If an escalation procedure is not in place, this could be to be very similar to the practices, agreement provisions, atti- a forum to start the discussion about an escalation process. tudes, and communication strategies that already have been Review and refine any dispute resolution process that is identified as streamlining the review process. currently in use. If none exists, then share information and Providing incentives for the railroads to collaborate requires brainstorm about such processes used in other states and approaching the agreement process from the railroads' per- start the conversation for adoption in the state. spective. Projects and processes that complement the rail- Share information about major initiatives and major projects road's operations, reduce their risk, preserve their assets, and that either party will be involved with in the coming year. enhance their capacity are most often cited by the railroads as Share information about any expected legislation, ordi- inducing their collaboration. nances, or regulations that will have an impact on projects Railroads are privately held companies that survive only if or operations. shareholders are rewarded financially through increased stock Provide an opportunity to discuss any issues or questions value or dividends, providing customer service that is reliable about master agreements currently being used by the agency and cost competitive, reducing their operating expenses, and railroad. increasing profit while reducing the operating ratio, and oper- Share master agreements from other states, the adoption of ating in a safe manner. Any incentives would have a positive which will improve the project and processes for both effect in these areas. sides. If possible, have someone from the state and railroad Attractive incentives for collaboration generally lie in three using the agreement either attend or, using video or phone, areas: safety and liability, capacity, and reduced operating costs. participate in the meeting to share their perspectives and answer questions. Safety and Liability Discuss issues with existing project management processes. Update and refine the process based on feedback and Safety and liability are of overriding importance to a railroad. discussion. The railroad is interested in the safety of their trains, their Discuss any impacts to funding of projects. This could be employees, their cargo, anyone who ventures on to their prop- increases or decreases in funding, along with changes to any erty, and the surrounding communities through which they processes related to funding. pass. The exposure to current and future liability is a major risk for the industry. As noted, railroads are required to provide Legal, financial, institutional, or other constraints to imple- transportation for hazardous materials. Whenever a contrac- menting this process: None, except for the staff and travel time tor is working on or near the tracks, the possibility of a cata- involved. strophic hazardous material release that could cause deaths,

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64 debilitating injuries, and even mass evacuations increases. zones, which the railroads may support in cases where the Some of the materials the railroads are required to transport zones provide greater protection than what currently exists. include airborne and flammable toxic chemicals whose release The Federal Railroad Administration has established new could create significant loss of life and property, as well as dis- rules for quiet zones, and not in all cases will railroads sup- ruptions to homes and businesses. port the implementation of them. The railroads generally do The Class I railroads provide a greater institutional focus on not want to increase their liability by eliminating horns, nor safety than is typical within the average state highway agency. do they want the additional costs associated with gating all Safety is not simply a slogan, but a way of operation practiced crossings to eliminate the need for horns. intensely throughout the industry. Old track-circuit technology still exists at many grade cross- From a project-approval perspective, projects that improve ings whereby the circuit does not have the ability to sense the rail safety or reduce railroad liability are more likely to be well- movement or speed of the train and, consequently, the lights received and more quickly approved, according to the rail offi- and gates at grade crossings may be activated long before the cials interviewed for this study. The following are examples of train reaches the grade crossing. New technology that mea- these projects: sures train speed to activate the lights and gates within approx- imately 30 seconds of the train passing over the crossing is Closing of highway grade crossings; more effective and results in fewer accidents at grade cross- Consolidating grade crossings; ings. With such "active warning," the liability to the railroad Constructing grade separations, particularly overhead; is reduced. This is because many crashes are caused by im- Safety improvements to highway grade crossings; patient drivers driving around closed crossing gates. Sealed grade crossing improvements, such as four-quadrant Renewal projects that secure the railroad's right-of-way, gates; such as adding fencing along a limited-access freeway, can Installation or upgrades for automatic flashing light signals increase benefits to the railroad. The benefits are limited, but and gates; and they reduce exposure to the railroad and the highway agency. Securing pedestrian access on rights-of-way through fenc- Safety is not limited to projects, but to the implementa- ing or other means. tion of the projects themselves. Before a project commences, some railroads insist that the contractor's employees go A major goal of every railroad and the Federal Railroad through safety training specifically designed by the railroad Administration is to reduce the number of highwayrailroad company. Preconstruction meetings are held before anyone grade crossings. The liability that exists with motorists trav- has access to the freight corridor. The railroad wants to min- eling across freight or passenger rail grade crossings is signif- imize any exposure to accidents and liability that could be icant, and the only way to reduce the railroads' full exposure caused by the contractor on the site. While this alone never is by eliminating the crossing itself. Projects that are initiated ensures that an accident will not occur, it reduces the chances with grade crossing reduction will be supported by the indus- of one. Highway agencies that support the safety programs try and may lead to financial contribution from the railroad. of the railroad will have greater success working with the Corridor projects whereby a host of contiguous at-grade cross- railroad industry. ings are evaluated with the target of closing grade crossings and As mentioned, the current federal limits for insurance are improving the safety at the remaining crossings are well sup- $2 million for an individual event and $6 million cumulative ported by the railroad industry. annually. The railroads frequently insist on much higher lim- Grade separation projects that eliminate at-grade crossings its, because the current ones were set in 1982. The railroads are also well received. The rail industry prefers overhead to note that their liability has increased substantially since 1982 undergrade structures because the maintenance of the over- because of increased rail traffic, greater populations near rail head structure is almost always the responsibility of the state lines, and an increase in hazardous materials shipped. FHWA or local government, not of the railroad. will allow federal funds to be used to pay for higher limits, but Safety improvement initiatives at existing grade crossings it generally requires individual, project-by-project approval. where either the technology of the grade crossing protection Some states, such as Illinois, Ohio, and Florida, routinely is increased or additional protection such as the implementa- incorporate higher liability limits as a standard provision in tion of four-quadrant gates is provided are good candidates their agreements with railroads and in their specifications for for gaining the railroads' cooperation. Four-quadrant gates contractors bidding on such projects. These and other states seal off a vehicle's ability to cross over the tracks. In design- have reached accommodations with the local FHWA division ing four-quadrant gates, the highway agency should ensure office to routinely approve the higher limits, thereby provid- that the potential for trapping vehicles between the gates is ing the railroads the higher insurance protections their attor- eliminated. Four-quadrant gates are associated with quiet neys require. These steps increase the railroad's likelihood of

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65 more quickly accepting the insurance provisions within the agency counterparts to accept the documentation directly project agreements. from Amtrak's payroll and material purchases in order to Both Kansas City Southern Railway and BNSF offer "riders" reduce staff time. Although Amtrak still will be able to bill only on their insurance coverage to contractors. The contractors for actual costs, it should reduce the railroad's administrative can buy short-term coverage for projects that interact with expenses. these two railroads. This allows contractors to quickly iden- As cited earlier, the Iowa Department of Transportation has tify an insurance carrier and to work with a carrier who is an expedited agreement process and force account reimburse- familiar with and acceptable to the railroads. ment process for highwayrailroad resurfacing projects. Although the process was developed to expedite projects, it also provides an incentive for the railroads to cooperate on Capacity Constraints and Efficiencies re-surfacing projects. The railroads' administrative costs are One example where a railroad has a vested interest to cooper- reduced because the reimbursement is based on preapproved ate with a highway agency would be when the agency seeks to unit prices based on the number of feet of track affected. A repair or replace a bridge structure that limits both highway simple, routine agreement is used to promptly reimburse the and rail traffic. If the project allows the railroad to expand railroad for its costs. its tracks, it may be attractive for the railroad to participate in The Ohio Department of Transportation in 2000 sought funding the project. prompt reviews on approximately 30 grade-separation proj- A significant disincentive for a railroad is the creation of ects it wanted to build following the breakup of Conrail. As new highwayrailroad at-grade crossings. While this clearly the NS and CSX railroads absorbed the Conrail tracks, train increases safety and liability exposure to the railroad, it may volumes increased significantly on some Ohio lines as the also diminish the capacity of the rail corridor. For instance, if railroads consolidated their operations. To ensure progress a new grade crossing divides a segment of track that previ- on the large program, the Ohio DOT worked closely with CSX's ously was used to stage train movements, it diminishes the and NS's subcontracted engineering firms. The Ohio DOT railroad's capacity. Such constraints are not widely recog- received price proposals from the firms through the railroads nized by the agencies that may pursue new crossing projects. within 30 days of notice for preliminary engineering needs. In contrast, eliminating a highwayrailroad grade crossing The former ODOT rail-grade separation program manager and thereby allowing trains to be staged on the track would reported satisfaction with the timeliness of the reviews once give an operating benefit to the railroad. Grade-crossing elim- the DOT made it clear what its review needs would be and ination is not always a result of a new grade separation, but it that it would pay for those reviews promptly. can be part of a rail corridor project where at-grade crossings Also as noted, the Florida DOT lowers CSX's administrative are closed and consolidated. costs by using a standard master agreement for each new proj- ect. Then, subsequent approvals for individual reviews or re- imbursements for the project can be approved with one-page Administrative Costs addenda. The long-established practice reduces administrative One cost that the railroads cited in the interviews was losses costs for both the railroad and the highway agency. The Florida associated with public-project reviews. CSX reported that DOT railroad-coordination officials attribute the process to these losses are in the hundreds of thousands of dollars annu- ensuring railroad cooperation on project agreements. ally. The major reason for the loss is that some state and local agencies will not enter into agreements soon enough for the Direct Payments to Railroads railroad to capture all its costs associated with project coor- dination. In addition, railroads are incurring the review costs, No direct monetary strategies were found to be in use by high- with reimbursement coming only months or even years later. way agencies to provide incentives to the railroads to cooper- Such slow payment reduces their cash flow and working cap- ate on projects. The most common practice is to reimburse the ital. Any early or up-front payment would be viewed posi- railroad for project expenses such a project reviews, flagging, tively by the railroads. and force account work conducted on behalf of highway proj- Amtrak and Massachusetts transportation officials have ects. The railroads all insisted that they only charge enough to discussed reducing the additional staff time for the railroad to cover their actual costs, so it is debatable whether cost reim- produce the necessary documentation for project cost reim- bursement is an actual benefit as opposed to simple cost recov- bursement. In the past, it was necessary to complete the doc- ery. Such work is often audited and the review of expenses umentation on a specific form for employees of the railroad creates additional administrative costs for highway agencies, and for the equipment and material used. This is typical of the railroads, and ultimately FHWA, which covers project most state agencies. Amtrak will be working with its highway expenses.