Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs (2016)

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1 1.1 Background The evolution of the U.S. intercity passenger rail industry reflects the political mandates, economic market forces, and technology advancements that influence where and how such service is provided. The formation of the National Railroad Passenger Corporation, better known as Amtrak, authorized in 1970 with operations beginning in 1971, was one of the most important events in this history. The Passenger Rail Investment and Improvement Act of 2008 (PRIIA) could also be considered an important benchmark in the ongoing structuring of intercity passenger rail in the United States. PRIIA initiated several efforts that have changed the institutional model for intercity passenger rail in the United States (FRA, 2009): • FRA and Amtrak, in consultation with others, were to develop metrics and minimum standards for measuring the performance and service quality of intercity passenger train service (§207). • Amtrak was required to evaluate and rank each of its long-distance trains according to its overall performance, then develop performance improvement plans for its long-distance passenger routes and implement those plans for the worst performing routes (§210). • With respect to the Northeast Corridor (NEC), Amtrak had to prepare a capital spending plan for infrastructure projects needed to return the railroad right-of-way, facilities, stations, and equipment of the NEC main line to a state of good repair (§211). • States were to establish or designate a state rail transportation authority that would develop statewide rail plans to set policy involving freight and passenger rail transportation within their boundaries, establish priorities and implementation strategies to enhance rail service in the public interest, and serve as the basis for federal and state rail investments within the state (§303). • Amtrak, in consultation with U.S. DOT, the governors of each relevant state, and the Mayor of the District of Columbia (or entities representing those officials), was required to develop and implement a single, nationwide, standardized methodology for establishing and allocating the operating and capital costs of providing intercity rail passenger service among the states and Amtrak for trains operated on designated high-speed rail corridors (outside the NEC), short- distance corridors, or routes of not more than 750 miles, and services operated at the request of a state, a regional or local authority, or another person (§209). These requirements, especially those found in Sections 207, 209, and 210, have raised important questions about how multi-jurisdictional cooperation and collaboration could occur to support intercity passenger rail in the context of PRIIA (see the “Reports and Documents” section on the Amtrak website for the reports that have been submitted in response to PRIIA requirements, https://www.amtrak.com/servlet/ContentServer?c=Page&pagename=am%2FLayout&cid= 1241245669222). C H A P T E R 1 Introduction

2 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs One of the basic tenets of the effective implementation of any new initiative is having the institutional capability to initiate, manage, and nurture the proposed changes. “Institutional” in this sense means more than just a focus on organizations; it also includes procedures, financial arrangements, legal and regulatory requirements, and other components of any relationship among different organizations. The literature of organization theory and organizational behav- ior includes many studies and examples of different strategies and characteristics of effective institutional models, mostly involving private firms (examples of early studies include Inter- organizational Relations [Evan, 1978] and How Organizations Act Together: Interorganizational Coordination Theory and Practice [Alexander, 1995]). Although this literature provides useful insights on the effectiveness of institutional models, very little research has occurred on the characteristics of successful multiple transportation agency action. Even less research has been undertaken on multi-state institutional models for developing and providing intercity passenger rail networks and services. As noted in Moving Beyond Boundaries: Organizations Governing Cross-Boundary Transport (Crocker, 2009), most examples of successful intercity passenger rail infrastructure and corre- sponding services require some form of institutionalized cooperation among a variety of agen- cies. This observation was also one of the conclusions of a Government Accountability Office (GAO) report, which concluded that defining the roles of government agencies and other par- ticipants was one of the major challenges facing intercity passenger rail transportation services in the United States (GAO, 2009). Many of the existing and proposed intercity rail passenger initiatives cross state boundaries (FRA, 2009; Hagler and Todorovich, 2009). Two-thirds of the FRA-funded investment plans cross state boundaries, and just over 75 percent of the corridors having the greatest market potential are multi-state corridors. It has been noted that in the context of national development patterns, in particular the evolution of megaregions, substantial challenges could be associated with providing intercity transportation services among states (Ross, 2009; Ankner and Meyer, 2009). Different institutional models might have to be applied to a variety of service and infrastructure sectors that cross state boundaries. However, intercity passenger rail services that cross state lines have some unique challenges, including the following: • Acquiring and managing shared infrastructure and equipment among multiple states. • Reconciling distinct state-specific regulatory/legal requirements. • Collaborating within the traditional federal framework. • Sharing costs and funds across state lines. • Working with stakeholders for multi-state intercity passenger rail projects that extend beyond partner states. 1.1.1 Acquiring and Managing Shared Infrastructure and Equipment Among Multiple States Putting in place reliable infrastructure and providing compatible rolling stock to make the network operate effectively often requires multi-state agreements relating to a range of issues: responsibilities for the provision of infrastructure (including construction phasing that provides the most efficient network development), purchase of rolling stock, operations, maintenance, assumption of liability, joint decision-making authority, sharing of revenues, and representa- tion to other agencies, to name a few. This particular challenge has led the FRA to set a goal of developing equipment ownership, maintenance, and management plans that ensure appropriate management and allocation of equipment across state lines and allow for adjustments in equipment deployment as passenger rail service demand changes over time.

Introduction 3 1.1.2 Reconciling Distinct State-Specific Regulatory/ Legal Requirements The nature of state governments and the constitutional and legal constraints under which they operate provide significant challenges. Some of these challenges include the following: • Constitutional and other legal restrictions on the use of revenues for certain types of investments or for projects outside state boundaries; • Political pressure about disproportionate burdens placed on the state’s financial support compared to what other states are paying; • Significant restrictions on the assumption of liability for services and operations provided by others; • By themselves, states not having a market presence to negotiate appealing service arrangements with service providers; and • Increasingly in recent years, serious constraints in the level of funding that can be allocated for most types of transportation investments. Coordinating passenger rail service across state lines must address differing legal requirements and find regulatory consistency in the areas most critical to delivering projects. This was very much the case for the states of North Carolina and Virginia, as they collaborated to establish a bi-state compact, and these states continue to face challenges in trying to plan the Southeast High Speed Rail Program. A similar issue is found in the Cascades Corridor, where Washington and Oregon have found it difficult to shape a common program. Careful consideration must also be given to establishing governance mechanisms that have minimal overlapping responsibilities with state organizations already in practice. 1.1.3 Collaborating Within the Traditional Federal Framework Putting such partnerships within a federal framework also limits collaborative action because federal investment is typically allocated on a state-by-state basis; seldom are federal funds provided to a multi-state compact or partnership. Even when this is done, there is no incentive for states granted funds to work together, and it is usually the responsibility of a lead state to accept and manage the federal funds. This latter arrangement is one that has been effective for advancing intercity passenger rail projects in the Midwest and New England. In the Midwest, the Illinois Department of Transportation (DOT) is designated as the lead agency in the Chicago- St. Louis project, and, in New England, Maine has lead responsibility for the Northern New England Passenger Rail Authority (NNEPRA), managing the budget, contracts, promotion, and customer services associated with the Downeaster passenger rail service, which links 10 com- munities in 3 states. In cases where there is no clear lead state to accept and manage federal funds, existing multi-state governance models include federally chartered corporations and federal/state commissions. However, trade-offs usually have to be made in this type of arrangement, most often in the structure of the decision-making process. 1.1.4 Sharing Costs and Funds Across State Lines In addition to the challenges associated with sharing federal funds across state lines, there are often concerns expressed by state and local politicians about spending state funds on services that benefit other states. There is also debate over whether state transportation funds should go to intercity passenger rail service (especially given the large costs/subsidies associated with it) or whether these funds should be used for other state transportation needs. The geographic loca- tion of investments in a corridor may be concentrated disproportionately in one state, while the

4 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs benefits of those investments may accrue to multiple states along the corridor. Additionally, a “pass-through” state between major origin and destination cities with few or no intermediate stops may have limited incentive to plan for or invest in that corridor. For example, interviews conducted in this research with leaders of many of the regional rail initiatives revealed that in the absence of a formal governance mechanism, states tend to focus on investments that primarily benefit themselves. Corridors with benefits more broadly dispersed, and thus with more challenging cost-sharing arrangements, have been slower to develop. Even finding funds to travel across state lines to work with out-of-state partners presents a major challenge. PRIIA recognized the challenges that the new policy environment might create by creating the Next Generation Equipment Committee that was to analyze the institutional issues and options associated with developing a multi-state passenger rail equipment pool. 1.1.5 Working with Stakeholders for Multi-State Intercity Passenger Rail Projects that Extend Beyond the Partner States Further complicating the establishment of governance structures for a multi-state corridor is the inclusion of stakeholders additional to the state governments, such as Amtrak, freight railroads, corridor cities, and the public. Multi-state intercity passenger rail programs can be impeded by a failure to adequately answer such fundamental questions as “Who to work with?” “Who has authority?” and “Who is in charge?” It can be particularly challenging to find an appropriate role for all of the stakeholders. The NEC Infrastructure and Operations Advisory Commission (NEC Commission) is a prime example of how a governance mechanism for intercity passenger rail services can encompass the full range of stakeholders. Created in 2008, the NEC Commission comprises 18 representatives from the U.S. DOT, Amtrak, the District of Columbia, and the eight states served by Amtrak along the NEC spine. Another five states, four freight railroads, and one commuter agency are represented on the Commission as non-voting representatives. While the NEC Commission is still a fairly new governance entity, it has already begun to provide a forum for state members, most of whom are state DOT secretaries or deputies, to more fully understand the dynamics of the NEC and play a role in addressing challenges and shaping the NEC’s future. In cooperation with FRA, the NEC Commission is currently participating in the NEC FUTURE Study, a rail investment plan for the NEC. The program includes extensive dialogue with key cities along the corridor. Creating institutional models for managing all of the issues discussed above will be increasingly important to implementing improvements to intercity rail passenger networks. In the absence of a formal governance mechanism, states will remain incentivized to make investments that primarily benefit themselves. 1.2 Research Objective The objective of this research was to create practical models for the multi-state institu- tions needed to develop and provide intercity passenger rail networks and services. The issues addressed by this research were wide-ranging and include the following: • Existing and evolving legal, financial, and administrative requirements; • Competing federal, regional, state, and local responsibilities and interests; • Potentially competing needs of intercity passenger, commuter, and freight rail in shared corridors; • Eligibility and flexibility to receive and invest public and private funds;

Introduction 5 • Evaluating and sharing costs, benefits, and risks among multi-state institution participants; • A framework for setting project priorities; • Overall management responsibility for corridor operations and services and for facilitating project delivery; • Enabling seamless connections to other modes; and • Identifying and resolving jurisdictional overlaps among multi-state institutions and other affected entities. 1.3 Research Approach The research approach for this project was divided into three phases (see Figure 1). Phase 1 involved obtaining background information on intercity passenger rail and establishing the state of the practice of multi-state institutional models for intercity rail passenger services. This was done primarily through an in-depth review of the literature and augmented by current work on intercity passenger rail institutional models. A conceptual framework was developed as a way of viewing multi-state institutional models, factors that are critical to consider when putting such models in place, and leverage points for assessing the effectiveness of institutional models. A focus group of leading practitioners experienced with multi-jurisdictional rail provided input and feedback on the conceptual framework. The primary purpose of the focus group was to provide practitioner input throughout the project. A methodology and protocol were developed for the case studies conducted in Phase 2. Phase 2 was the primary information collection phase and consisted of conducting case studies of different institutional models. Conducting the case studies was the core of the research effort. Case study results were synthesized and assessed, with particular attention given to the barriers to implementing each type of institutional model, including those associated with the expendi- ture of federal and state dollars. The focus group established in Phase 1 provided input into the synthesis and assessment. Phase 2 also included recommending practical models for developing and providing multi-state intercity passenger rail programs. In Phase 3, the final research report and a presentation on the research results were developed. HSIPR = High-speed intercity passenger rail Phase 3 – GuidancePhase 2 - Multi-State HSIPR Institutional ModelsPhase 1 - Conceptual Framework Task 1: Literature Review of Multi- Institutional Arrangements Task 4: Focus Group on Multi-Jurisdictional Passenger Rail Experience Task 5: Phase 1 Report Focus on different institutional structures within context of Task 3 conceptual model; strengths/weaknesses Task 2: Develop Case Study Methodology Task 3: Develop Conceptual Framework for Intercity Passenger Rail Task 6: Detailed Case Studies of Institutional Structures and Assessment of Barriers in Expending State/Federal Dollars Task 7: Develop Practical Multi-State Governance Models for Intercity Passenger Rail Task 8: Phase 2 Report Focus on recommended models, including recommended strategies to overcome impediments and steps to instituting institutional capacity for multi-state partnerships in past service provision Panel Review(s) and Teleconference Meeting(s) Task 9: Final Report & Presentation Materials Figure 1. Research approach.

6 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs 1.4 Case Study Methodology Case studies were the major means of collecting information on the different types of insti- tutional relationships involved in efforts to deliver intercity passenger transportation and the advantages and disadvantages of each. The case study approach relied on two major sources, document reviews and interviews: • For document reviews, the project team compiled and reviewed documentation of the various projects. Sources included environmental documentation and findings (e.g., Environmental Impact Statement [EIS] and Record of Decision [ROD]), industry papers and/or presentations on the project, and other relevant materials as appropriate. The document reviews were used as a starting point for answering the interview questions listed below. Findings were summarized and informed the questions posed during the phone interviews. • Interviews were conducted via telephone in order to gather further information on each of the case studies. The research team identified the key participants in each case study and prepared a set of questions that formed the basis for telephone interviews. Each participant was sent an introductory e-mail that outlined the purpose of the study and requested available times for a 20- to 30-minute interview. The interview questions focused on those aspects of multi-state arrangements providing the most relevant and credible input into the research, that is, challenges/barriers, topics/applications, strategies, and available data/information. For all of the case studies, a set of questions served as the basis for the interviews; other questions specific to each case study were asked depending on the circumstances of each case. The questions serving as the basis of the interviews were the following: • Describe the institutional arrangements your agency participates in relating to intercity passenger rail services. • What are the administrative, legal, and financial requirements associated with this arrangement? Who has overall management responsibility for corridor services? Planning? Project delivery? Procurement? Project priorities? • Have you had to balance competing needs of intercity passenger, commuter, and freight interests in your particular case? If so, what strategies or policies did you adopt to provide such balance? • What were the federal, regional, state, and local responsibilities that had to be faced in develop- ing your institutional arrangement? What strategies were used to deal with these competing responsibilities? • What have been some of the most important challenges in developing your institutional arrangement? Spending funds across state lines? Negotiating with the railroads? Legal constraints of individual states? Coordinating the timing of funding? The distribution of costs and benefits? Setting project priorities among different agencies? • How has risk for different participants in the arrangement been identified and dealt with? • To what extent has the issue of seamless connections to other modes been an issue? • How have overlapping jurisdictional responsibilities been resolved? • What lessons have been learned by your experience that would be of interest to others interested in establishing a multi-jurisdictional institutional arrangement for providing intercity passenger rail service? • Are there reports or internal memoranda that we could obtain to provide more background on this project/arrangement? A pilot case study was conducted on one of the recommended case studies to test the case study approach and to ensure that the methodology was sound and not confusing to those being interviewed. Both the pilot study and the focus group were used to pretest the interview questions.

Introduction 7 1.5 Report Organization The report is organized into six chapters. The next chapter describes the research approach followed in this project, as well as a description of the state of the practice. The major research tool for this study was the case study, and Chapter 3 describes the approach used for identifying potential case studies as well as the results of the case study analysis. Chapter 4 presents different decision-making models that emerged in the case study analysis and discusses the advantages and disadvantages of each. Chapter 5 offers a practitioners’ guide that can be used to identify the institutional capacity that can be used in each step of the intercity rail passenger project develop- ment process. Chapter 6 presents research conclusions and recommendations for further research. A companion document, NCRRP Web-Only Document 3: Documentation of Case Studies for NCRRP Project 07-02 (available on trb.org), presents all of the case studies conducted in this research.