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

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82.1 Introduction This chapter presents information found in the literature search for this project. Literature on multi-jurisdiction arrangements for service provision was examined in the transportation literature as well as in the literature of comparable sectors (such as the Appalachian Regional Commission). The literature is quite sparse when it comes to examining multi-state agreements and partnerships, especially with respect to transportation. The literature falls into two major categories: (1) the identification of theoretical concepts and frameworks and (2) the examination of existing multi-state arrangements and lessons learned. 2.2 Theoretical Concepts and Frameworks Much of the academic literature on inter-organizational behavior focuses on private firms and the degree to which multiple-organization behavior makes sense from the perspective of economic markets. Thus, one sees numerous articles and books on the mergers, joint ventures, and buy-outs that characterize the private market. This literature is not particularly relevant to this research. The most relevant body of literature is in the field of public administration, where a substantial amount of work was published in the 1990s about coordinated and collaborative undertakings among multiple public agencies. Two works that are representative of the field are How Organizations Act Together: Interorganizational Coordination Theory and Practice (Alexander, 1995); and Organizational Behavior (Bowditch and Buono, 2005). In How Organiza- tions Act Together, Alexander examines a variety of theories regarding the behavior of organiza- tions in joint efforts and provides case studies to illustrate this behavior. He identifies factors that are often part of the thinking process when entering into multi-agency initiatives, such as per- ceived relationships of the needs, benefits, and rewards of joint action; administrative consensus on undertaking the effort; loss of organizational integrity and thus a perceived interdependence; history of relations among the partner organizations; and the presence of boundary-spanning roles in each of the organizations. The most relevant discussion in Bowditch and Buono’s work (2005) focuses on “boundary- spanning” roles and “inter-organizational alliances.” Boundary-spanning roles are an attempt to position the organization so that organizational plans and actions can be more effectively coordinated and uncertainty reduced. Inter-organizational alliances, such as linkages between and among other agencies, are intended to “create unique advantages” to those organizations not in a position to implement an action individually. As noted, however, such linkages or relationships can often be fragile, with the following issues often becoming substantial chal- lenges: clash of organizational cultures, “we-they” conflicts, different management styles and expectations, unrealistic expectations about outcomes, and ineffectual leadership. C H A P T E R 2 State of the Practice

State of the Practice 9 “Investing in Megaregion Transportation Systems: Institutional Challenges and Opportunities” (Ankner and Meyer, 2009) and Megaregions: Planning for Global Competitiveness (Ross, 2009) examine the challenges faced by government agencies interested in establishing service or infra- structure partnerships with other agencies within megaregions. As Ankner and Meyer (2009) note, “organizational mission statements, study boundaries, problem definitions and most certainly funding allocations often stop at the border with neighboring jurisdictions. Trying to expand the scope of a transportation problem beyond the current mandate of a government agency (such as looking at a megaregion’s transportation needs) would most likely face significant obstacles.” The U.S. Interstate highway system was offered as a classic example of such cross-jurisdictional implementation and financing within a federal construct. Anker and Meyer (2009) also offer other examples of such cross-jurisdictional implementation and financing within a federal construct, such as the U.S. DOT programs on the Corridors of National Significance and Corridors of the Future, the I-95 Corridor Coalition, and the European Union’s (EU’s) investment in major transportation corridors. Ankner and Meyer recommend that states (1) work with other states to advocate, lobby, and develop multi-state national pro- grams aimed at megaregion transportation investment; (2) incorporate megaregion needs and respective roles of state agencies into the statewide transportation planning process; (3) develop strategic partnerships with other states that are part of the megaregion; (4) identify with their partners the transportation facilities and services that are significant from a megaregion perspec- tive; (5) create megaregion-wide investment strategies and programs aimed at improving the economic integration and position of the megaregion; and (6) incorporate freight infrastructure needs and freight flows more strategically in statewide planning and investment. 2.3 Examination of Existing Multi-State Arrangements Few studies have examined the institutional and organizational barriers to desired transportation infrastructure and services in corridors that cross jurisdictional boundaries and organizational responsibilities. In Moving Beyond Boundaries: Organizations Governing Cross-Boundary Transport Crocker (2009) examines a variety of multi-jurisdictional arrangements for major highways/ bridges, transit facilities, and cross-border high-speed rail in the United States and Europe. He found in his analysis of 20 large-scale projects and service arrangements three major types of agreements: (1) a contractual agreement, (2) creation of a third-party entity, and (3) paying a fee for a desired transportation service. Crocker also noted that some of these arrangements were used more often when special circumstances dictated the relationship. The key message from this work was clear—the implementation of transportation infrastructure and services that out of necessity cross multiple jurisdictional boundaries will only be as successful as the efforts to develop partnerships and/or institutional models that guide such investment and operations. Meyer et al. (2005) conducted case studies of 25 multi-jurisdictional projects and program implementation and developed guidance for those interested in fostering collaborative action. In this research, the major barriers to successful collaborative partnerships were found to be (1) organizational mission, (2) organizational motivation, (3) standardized practice or standard operating procedures, (4) organizational culture, (5) organizational inertia, (6) professional mindset, (7) language barriers, and (8) uneven “playing fields” in the institutional environment. Rutzen and Walton (2011) reviewed how foreign governments have developed their railroad systems and identified key factors contributing to successful implementation. Factors such as organization structure, operation, administration, development, and type of funding were iden- tified as being common to each of the projects and were used to identify potential locations and opportunities for high-speed rail projects in the U.S. Southwest region. The international case studies showed that strong government policies, regulation, and involvement were important

10 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs elements in the success of high-speed rail. Even newer programs that directly involved the private sector through commercial concessions had crucial participation from the government in terms of the sharing of risks and financial support. In Advancing High-Speed Rail Policy in the United States, Ashiabor and Wei (2012) review international experience with high-speed rail projects and recommend a high-speed rail policy framework for the United States. The report examines the role of the EU in fostering cooperative and collaborative partnerships among member nations in developing a coherent passenger rail network. The report recommends that for projects spanning multiple states, one of the initial efforts must be to negotiate the level of financial responsibility each will bear. The report also recommends that the federal government designate a key lead agency and a dedicated funding source and develop regulations and specifications for high-speed rail design and construction. The report also notes, “States that embark on high-speed rail projects should start with formal legislation and put in place structures to ensure sustained political support throughout the plan- ning and construction of the project.” 2.4 Agency Studies Most of the studies commissioned in recent years with respect to multi-state institutions have focused largely on freight investments and highways. Several types of multi-state institutional models have been documented in the literature, with voluntary coalitions and entities established through interstate compacts cited most frequently. Specific challenges noted in implementing multi-state institutions include establishing the role of the federal government, particularly as related to funding; securing dedicated external funding; establishing cost-sharing arrangements; and reconciling legal and other differences among participants. Sources providing specific guidance to practitioners on implementing multi-state institutions generally note the importance of clearly defining the purpose of the multi-state institution and the roles and responsibilities of the various parties. With respect to applied research on passenger rail specifically, the GAO conducted a study of the effect of high-speed rail on the national transportation network (2009). The report examined three factors: the economic viability of high-speed rail, the challenges of developing and financing high-speed rail, and the federal role in developing high-speed rail networks. With respect to institutional relationships, the GAO noted that the lack of an established institutional framework in many corridors made decision-making among various stakeholders particularly difficult. The report identified interstate compacts and commissions as a means to formalize decision-making, but noted that implementation can be difficult and would involve dealing with issues such as deciding what type of service to provide, how to distribute financial contributions, and what happens if and when one or more states do not meet their financial or other responsibilities. A study of the 11 federally designated high-speed rail corridors yielded a series of key findings on the factors inhibiting high-speed rail developments, the benefits of developing high-speed rail, the common elements necessary for high-speed rail corridors, and the overall lessons from those corridors most advanced in implementation (Amtrak, 2008). The study noted that the scale of high-speed rail projects can “strain the effectiveness” of typical multi-state institutional models such as compacts or multilateral agreements. In characterizing the progress made in the federally designated corridors, the study observed that one state generally takes the lead role, and, in many cases, while states share funding for planning efforts, they apply state resources only to capital projects within their respective state. The study emphasized the particular impor- tance of federal involvement in multi-state corridors. It noted that future progress on multi-state corridors would require state and federal legislative and administrative acceptance of pooled state funds and state allocations of federal funds for use in projects outside any given state’s

State of the Practice 11 boundaries. The study also noted that federal laws, regulations, and customs needed to be flexible enough to accommodate and encourage various types of multi-state arrangements. Appendix A presents a compendium of multi-state institutional models. The listing is not meant to be exhaustive, but rather a representative inventory of the type of multi-state arrangements that currently exist in various sectors. The inventory is organized by implementation mechanism including federal legislation, state legislation, multi-state agreement, voluntary partnership, and interstate compact. 2.5 International High-Speed Rail Efforts Most of the high-speed rail projects in the world are focused within a country, with development spearheaded by the national government. However, some of these systems could provide relevant lessons for the United States. In Japan, for example, where the national government led develop- ment of the Shinkansen railway system, the construction costs of many lines were shared between the national government and the municipalities through which individual lines passed. In the United States, cost sharing is a challenge for multi-state arrangements. In Europe, projects crossing national borders have often resulted in unique institutional relation- ships, often motivated by the Trans-European Transport Network (TEN-T) program of the EU. Funding, planning, and constructing projects across traditional national boundaries have been highlighted in interviews for NCRRP Project 07-02 as one of the most important challenges to completing the TEN-T program. The EU has turned in large part to public-private partner- ship ventures to finance the construction of the TEN-T with projects such as the Oresund Fixed Link between Denmark and Sweden, the new Brenner Rail Tunnel between Austria and Italy (part of a Berlin–Milan rail line), and the rail connection between France and Spain over the eastern Pyrenees. The EU is interested in using the European Investment Bank to increase the completion rate of the TEN-T projects; this has led to the development of specialized financial instruments such as the “TEN Investment Facility,” specifically designed to strengthen development of the Trans-European Network and increase private-sector participation, although since most of those projects are cross-boundary projects, many of the new PPPs, particularly those involved in TEN-T projects, have faced cross-boundary challenges. High-speed rail corridors such as Eurostar, Réseau ferré de France (RRF), and Administrador de Infraestructuras Ferroviarias (Adif) provide a glimpse of the types of institutional relationships that are found in the EU and are discussed below. Eurostar operates high-speed rail serving London, Paris, and Brussels. Trains use the Channel Tunnel between the United Kingdom and France, which is separately owned and operated by Eurotunnel, a private corporation founded to construct, finance, and operate the Channel Tunnel. Eurotunnel also operates freight service through the Channel Tunnel via its subsidiary, Europorte. Since 2010, Eurostar has been structured as a single corporate entity owned by London and Continental Rail, Societe Nationale des Chemins de Fer de France (SNCF, a French national rail company), and NMBS/SNCB (the Belgian national rail company). Prior to 2010, these companies jointly operated Eurostar. Eurostar service reaches speeds of 186 mph in the Channel Tunnel and shares services on the network with French and Belgian high-speed rail operators, TGV and Thalys, respectively. RRF is a French state-owned company that owns the track for intercity passenger rail includ- ing high-speed rail. RRF was created in 1997 to comply with EU rules that separated national railway companies into operators and infrastructure managers. SNCF operates the passenger rail program. Different consortia, such as Eurostar and Thalys, in partnership with SNCF, operate international long-distance, high-speed rail services. High-speed rail first developed in France in 1981 with the opening of the TGV (synonymous with high-speed rail) line from Paris to Lyon

12 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs and has grown to 1,180 miles running at a top speed of 199 miles per hour. Until 2010, SNCF was the sole provider of high-speed rail service in France. Since 2010, France has opened up the market to allow public and private competitors to operate trains over RRF’s lines. Adif is a Spanish state-owned company under the purview of the Ministry of Public Works and Transport that manages the majority of the country’s railway infrastructure, including the provision of high-speed rail. Together with Red Nacional de los Ferrocarriles Españoles (Renfe), the national passenger and freight rail operator, Adif has been administering high-speed rail in Spain since 1992 and provides service to 31 stations using 300 high-speed trains daily. Adif was created in 2005 due to the EU requirement to split national rail monopolies into rail operators and infrastructure managers. While Renfe handles rail operations, Adif administers track, stations, and freight terminals; manages rail traffic; distributes capacity to operators; and collects terminal fees. Spain has 438 km of high-speed performance line in operation, the most in Europe and second in the world to China. Crocker (2009) found three main types of arrangements that are used in cross-border infra- structure construction in the EU. With regard to construction of high-speed rail infrastructure, each country is responsible for constructing and maintaining the infrastructure located on its territory, but has no responsibility for operations over the infrastructure. There are two types of operations over these pieces of infrastructure: (1) two or more national operators partner to create a third operational entity or (2) an operator maintains its identity and pays the infrastructure owner user charges for the use of its track. Table 1 shows the types of institutional models found for different types of facilities and services. 2.6 The Amtrak Model The prevailing model for U.S. intercity passenger rail, the National Railroad Passenger Cor- poration (Amtrak), was authorized by Congress in 1971 as a government-owned corporation. While the advantages and disadvantages of the Amtrak model have been debated, the system remains the sole provider of intercity passenger rail service on a national scale and in many Institutional Model Location Third-party agency with board representing geographical area • Oresund Bridge, Oresund Konsorteit • Channel Tunnel, Eurotunnel Separate construction on territory • Paris-Brussels Axis, SNCF, and Infrabel • Brussels-Amsterdam, Infrabel, and High Speed Alliance • Brussels-Cologne, Infrabel, and Deutsche Bahn (DB) Distinct operation with shared funding • PBKA Operations, Thalys • PBL Operations, Eurostar Operations—Independent operator paying fees • France-Brussels Service, TGV service by SNCF to Brussels • Germany-Brussels Service, ICE service by DB to Brussels • The Netherlands-Belgium Service, High Speed Alliance to Antwerp and Brussels • Channel Tunnel, Freight service in Channel Tunnel • Oresund Bridge, Sale of railway operation rights Source: Moving Beyond Boundaries: Organizations Governing Cross-Boundary Transport (Crocker, 2009). Table 1. Institutional models for European infrastructure projects.

State of the Practice 13 regional markets. Amtrak operates a national rail network of approximately 21,000 route miles serving more than 500 locations across 46 states, the District of Columbia, and three Canadian provinces. In FY 2014, 30.9 million trips were made on Amtrak. 2.6.1 Early History of Amtrak By the mid-1900s, passenger rail service in the United States was in a steep decline due largely to the increasing use of automobiles for intercity and commute trips and the emergence of affordable air travel. By the 1970s, many freight railroads (which had been running much of the passenger rail service) were experiencing financial difficulties, and some were entering bankruptcy. The U.S. government intervened with several key pieces of legislation intended to salvage passenger and freight rail operations. The Rail Passenger Service Act of 1970 (RPSA) established the National Railroad Passenger Corporation (Amtrak) as a for-profit corporation under District of Columbia law, with oversight from a board appointed by the President and confirmed by the Senate. Amtrak was authorized to own, manage, operate, or contract for the operation of intercity passenger rail service and to carry mail and express freight. The RPSA also enabled Amtrak to conduct research and develop- ment related to its mission and to acquire by construction, purchase, use-contract, or gift, the physical facilities, equipment, and devices necessary to provide rail passenger operations. It was anticipated that after a startup period financed by a federal loan, the national passenger rail ser- vice would become financially self-sufficient (although many administration records and other period sources indicate that no one knowledgeable believed this to be true). Upon its creation, Amtrak assumed the passenger service obligations of 20 private railroads, with 4 remaining railroads opting not to join Amtrak and continuing their own private passenger operations. By the mid-1980s, all four railroads either ceased passenger service or transferred the service to the Amtrak system. Amtrak began operations on May 1, 1971, with the first train operating in the NEC between Philadelphia and New York. The initial network encompassed 21 routes serving 43 states. Most of the routes provided direct connections to New York or Chicago from various cities across the country. Rail service was divided into short-haul and long-haul trains, a distinction that remains in place today. Short-haul trains run up to 300 miles between intercity terminals, and long-haul trains cover distances greater than 300 miles. The RPSA authorized $40 million in federal grants and a federal loan guarantee of up to $100 million. The RPSA also required the railroads to contribute cash or equipment over a period of 3 years in return for being relieved of the obligation to provide passenger service. Inheriting old and worn infrastructure and equipment from its predecessor railroads, Amtrak was immediately faced with the need to restore and refresh its capital investments while main- taining core services, particularly in the NEC. During its initial years, Amtrak was also faced with the organizational challenge of integrating the passenger services of 20 disparate railroads into one entity. Despite declining service quality, ridership was boosted as a result of the 1973 and 1978 to 1979 OPEC oil embargoes. In Amtrak’s first decade, numerous subsequent pieces of legislation further refined Amtrak’s structure and operations and appropriated additional federal monies for capital and operating expenses. During this time, Amtrak also began to realize the benefits of the planned improvements, equipment acquisitions, and other initiatives, and ridership began to increase, spurred by the new equipment and faster schedules on the Washington, D.C.–New York Metroliner Service. Table 2 summarizes these early laws and their impacts on Amtrak. As passenger rail service rebounded during the 1990s, some states began to provide financial support in order to add new rail service within their states under Section 403(b) of the RPSA.

14 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs These state routes have grown to be a substantial part of the Amtrak system. Improvements to the NEC also boosted ridership between Washington, D.C., and Boston. With completion of electrification in 1999 and inauguration of 150-mph Acela service in 2000, the NEC has become one of the most financially successful corridors in the world, generating over $350 million in above-the-rail net revenue in 2014. In FY 2014, ridership on the NEC was 11.6 million, the highest to that point. At the same time, ridership on long-distance routes and state-supported services declined by 4.5 percent and 0.6 percent, respectively. 2.6.2 A Push for Amtrak Self-Sufficiency and the Amtrak Reform Council Since the creation of Amtrak, Congress has emphasized its expectation that Amtrak eliminate its need for federal financial support. The effort for operational “self-sufficiency” was reaffirmed by the Amtrak Reform and Accountability Act (ARAA) of 1997, which repealed the RPSA. ARAA created the Amtrak Reform Council (the Council), an independent and bipartisan federal com- mission of 11 members with a statutory mandate to make recommendations to Amtrak to help it reach operational self-sufficiency. ARAA required the Council to report annually to Congress on performance in several areas, and, if Amtrak was found to be unable to achieve the goal of operational self-sufficiency (now extended to 2002), the Council was required to submit to Congress a plan for a rationalized and restructured national rail passenger system. If such a finding were made by the Council, Amtrak would submit a plan for Amtrak’s liquidation to Congress. In November 2001, the Council made a formal finding that Amtrak would not be able to achieve operational self-sufficiency by the December 2002 deadline. That finding, along with Amtrak’s Legislation Provisions RPSA of 1970 Authorized creation of the National Railroad Passenger Corporation (Amtrak). Amtrak Improvement Act of 1973 Amended the RPSA to provide financial assistance to Amtrak. Regional Rail Reorganization Act of 1973 (known as the 3R Act) Authorized the United States Railway Association to take over the powers of the Interstate Commerce Commission with respect to allowing the bankrupt railroads to abandon unprofitable lines. Railroad Revitalization and Regulatory Reform Act of 1976 (the 4R Act) Established the basic outlines of regulatory reform in the railroad industry and authorized acquisition of the NEC tracks and facilities by Amtrak. Amtrak Improvement Act of 1978 Authorized appropriation of $755M in federal funds for Amtrak’s operating and capital expenses. The bill also authorized a study of Amtrak’s basic route structure for railroad passenger service. Amtrak Reorganization Act of 1979 Amended the RPSA to extend the authorization of appropriations for Amtrak for 2 additional years. Staggers Rail Act of 1980 Deregulated the American rail industry to a significant extent and replaced the regulatory structure that had existed since the 1887 Interstate Commerce Act. Northeast Rail Service Act of 1981 (NERSA) Required Amtrak and Conrail to agree on terms and conditions for the transfer to Amtrak of all Conrail commuter service in the NEC except for services transferred directly to a commuter authority. Rail Safety and Service Improvement Act of 1982 Made funds available for numerous projects on the main line of the NEC; amended the RPSA to transfer authority for the NEC coordination from the Board of Directors of Amtrak Commuter to the NEC Coordination Board. Amended the Northeast Rail Service Act of 1981 to revise certain bankruptcy provisions relating to the NEC. Table 2. Chronology of federal legislation affecting Amtrak, 1971–1982.

State of the Practice 15 worsening financial situation, led to a number of proposals for reform, ranging from letting Amtrak go bankrupt to boosting annual federal funding for passenger rail nearly tenfold. Some proposals would have kept Amtrak’s corporate structure essentially intact, whereas others would have broken the company into separate components. The Council’s own proposal was to split Amtrak into two companies (one to own and maintain tracks and facilities in the Northeast and the other to run trains) and to create a new organization that would oversee planning and financing for passenger rail. In January 2002, the Council approved basic elements for Amtrak’s restructuring plan, including a reorganization of Amtrak with train operations under one subsidiary and its real property infrastructure under another. It was intended that Amtrak introduce competition into the national rail passenger system by entering into contracts with other train-operating compa- nies for the operation of a particular route or routes. It was also envisioned that Amtrak could exercise its franchise authority to operate passenger trains at the request of a state or an interstate compact. The Council’s plan met strong opposition in Congress, and financial support for Amtrak continued as before without implementing any of the Council’s major recommendations. In 2005 and 2006, controversy over a plan proposed by the Bush Administration for splitting the NEC apart from the rest of Amtrak’s network sparked a national debate on the future of America’s passenger rail system. During this time, Amtrak’s financial condition continued to worsen. It soon became clear that a new arrangement would be necessary to improve Amtrak’s finances and operating performance; the result was PRIIA, passed in 2008. PRIIA has had a substantial impact on Amtrak’s operations through its reauthorization of Amtrak funding at increased levels and also through tasking Amtrak, U.S. DOT, FRA, states, and other stakeholders to improve service, operations, and facilities. These efforts have ranged from establishing performance improvement plans for Amtrak’s long-distance routes and capital debt restructuring, to implementing performance measures and standards (performance measures and standards that were later invalidated by the U.S. Court of Appeals for the D.C. Circuit), to authorizing private entities to take over service on individual routes. Key elements of PRIIA set in motion processes requiring states to share any losses generated on short-distance routes and develop a methodology for sharing the cost of operating and maintaining the NEC. Directly following the passage of PRIIA, the American Recovery and Reinvestment Act (ARRA) of 2009 appropriated $1.3 billion to Amtrak for capital investment, including $850 million to rebuild and modernize infrastructure, equipment, and business systems. 2.6.3 The Current Amtrak Model The current Amtrak model for intercity passenger rail service includes a governance structure that is mandated by federal law and uses different means of providing passenger rail services in different markets in the United States. Governance Amtrak is governed by a board of directors. The Amtrak Board of Directors (the Board) oversees the management team and the strategic direction of the corporation. The Board is composed of nine members appointed by the President, by and with advice and consent from the Senate. The Secretary of Transportation and the President of Amtrak are members of the Board, and the other seven are to be individuals with “general business and financial experience, experience or qualifications in transportation, freight and passenger rail transportation, travel, hospitality, cruise line, or passenger air transportation businesses, or representatives of employees or users of passenger rail transportation or a state government” (49 U.S.C. 24302).

16 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs Actions or items requiring Board approval include approval of Amtrak’s annual budget and strategic business plan, annual grant and legislative requests (which can be submitted without U.S. DOT review), operation of new routes or discontinuance of existing routes, sale or retirement of fixed assets (other than rolling stock/real estate) in excess of $1 million, revenue producing real estate transactions of $500,000 or more, and all development projects, among others. While Amtrak once operated at some distance from federal oversight, Congress and the U.S. DOT now increasingly oversee Amtrak’s stewardship of federal funds through grant agreements and appropriations provisions. Amtrak’s Board communicates with the federal government through monthly and annual reports as well as business and strategic plans. Amtrak also maintains an independent Office of the Inspector General. Amtrak’s Role in Intercity Passenger Rail While Amtrak has a central mandate for operating the national passenger rail network, its role in intercity passenger rail varies across markets. Amtrak has adopted three possible roles: (1) Amtrak as infrastructure owner and manager, (2) Amtrak as service provider, and (3) Amtrak as partner. Amtrak as Infrastructure Owner and Manager. Most Amtrak routes—72 percent of miles traveled—are located on tracks owned by host railroads. Five of the six largest railroads hosting long-distance Amtrak service are Class I railroads. However, the majority of Amtrak’s trains operate over trackage owned and maintained by Amtrak on the NEC. The 457-mile NEC— connecting Boston, New York, Philadelphia, and Washington, D.C.—supports both intercity trains and commuter rail service operated by eight commuter rail authorities across the region. Of the total mileage, 363 miles are owned by Amtrak. The additional 94 miles are owned by the states of Connecticut and Massachusetts and by Metro-North Railroad, a part of the New York Metropolitan Transportation Authority (MTA), with ownership and responsibilities as follows: • The New Haven Line between New Rochelle and New Haven is owned by MTA and Connecticut and operated/maintained/dispatched by the Metro-North Railroad. • The Main Line in Massachusetts is owned by the Massachusetts DOT and operated/maintained/ dispatched by Amtrak. In addition to significant portions of the NEC, Amtrak also owns the 60.5-mile Springfield line in Connecticut and Massachusetts, the Keystone Corridor in Pennsylvania between Philadelphia and Harrisburg, and a 96-mile segment of track in Michigan and Indiana (using the first high-speed positive train control system in revenue service outside of the NEC). For long-distance services, Amtrak operates 15 trains on a national network of routes ranging in length from 764 to 2,438 miles. These trains provide service at nearly half of the approximately 500 stations in the Amtrak system and are the only Amtrak trains in 23 of the 46 states in the network. Amtrak is the only intercity passenger transportation service in an increasing number of communities, filling a growing gap as intercity bus and airline operators cease to provide service to small and mid-sized cities. In FY 2013, the 15 long-distance routes served 4.8 million passengers, the highest combined ridership in 20 years. Amtrak-owned equipment includes 20 Acela Express High-Speed trainsets, two Talgo train- sets used in Eugene/Portland/Seattle Cascades service, and a fleet of passenger cars used in other services including Amfleet, Superliner, Viewliner, and other specialty cars totaling 1,292 cars plus 373 locomotives, 80 Auto Train vehicle carriers, and 64 baggage cars. Orders have been placed for 130 new long-distance, single-level cars, and 70 electric locomotives and a request for proposals has been issued for Tier III Next Generation High Speed Trainsets. Amtrak-operated, state-owned

State of the Practice 17 equipment includes 104 railroad passenger cars, 23 locomotives, and five Northwest Service trainsets. Station ownership varies across the country; in many cases Amtrak shares ownership of the station facility, parking lot, passenger platform, and train tracks with different entities. Amtrak owns heavy maintenance facilities in Wilmington, Delaware; Bear, Delaware; and Beech Grove, Indiana. Amtrak owns maintenance facilities as well in Washington, D.C.; New York City, New York; Rensselaer, New York; Niagara Falls, New York; Boston, Massachusetts; Hialeah, Florida; Chicago, Illinois; New Orleans, Louisiana; Los Angeles, California; Oakland, California; and Seattle, Washington. Amtrak as Service Provider. Amtrak receives funding from 18 states under 19 operating agreements for support of 29 short-distance routes (less than 750 miles). Section 209 of PRIIA required Amtrak and its state partners to jointly develop a cost-sharing methodology to equitably charge states for state-supported intercity passenger rail service. The PRIIA Section 209 meth- odology became effective in October 2013. Continued operation of state-supported routes is subject to annual operating agreements and state legislative appropriations as per Section 209. According to Amtrak, state-supported routes posted their best ridership year ever in FY 2013, with 15.4 million passengers. Amtrak currently provides either services and/or system access for 13 commuter agencies in the form of operational services, maintenance of way/dispatching, maintenance of equipment, and access to Amtrak right-of-way. In addition, eight states (Rhode Island, Connecticut, Delaware, Maryland, New Jersey, New York, Pennsylvania, and Virginia) make payments to Amtrak through transit agencies or state DOTs for commuter train use of Amtrak-owned NEC facilities. Amtrak as Partner. Both within the territory it controls and in operations on right-of-way under the jurisdiction of others, Amtrak relies on partnership agreements to support its intercity rail mandate. These can take a variety of forms depending on the particular activity. Examples include the following: • Discrete projects. Transit agencies and state DOTs often provide funding in the NEC for infrastructure and/or stations. Amtrak has agreements for access and/or maintenance where Amtrak trains operate over locally owned portions of the NEC in Connecticut, Massachusetts, and New York. • Project bundling. The Gateway Program has the potential to be a comprehensive bundle of major infrastructure improvements from Newark, New Jersey, to New York City, including a dual portal bridge, new Hudson River tunnels, and station improvements in New York City. This program was expanded and accelerated in late 2010 when the Access to the Region’s Core project was cancelled by the State of New Jersey. • Long-term lease agreements. In December 2012, a long-term lease agreement between CSX Corporation and Amtrak enabled Amtrak to take full control of the Hudson Line between Schenectady and Poughkeepsie. The contract ensured that passenger rail service has scheduling priority and paves the way for four significant rail improvement projects, totaling $181 million, to reduce congestion along the Empire Corridor from New York City to Niagara Falls, New York, and improve travel times and reliability for passengers and freight. It is important to recognize that the NEC is a critical part of Amtrak’s service and has resulted in a unique set of institutional relationships. The complex ownership and operational structure of the NEC is a result of the history of passenger and freight operations in the Northeast, which includes historic consolidations, bankruptcies, creation of a variety of public transit agencies and Amtrak, and record-breaking ridership and service expansion. Outside the NEC, Amtrak operates over track owned by other entities under shared-use arrangements with host railroads, principally Class I freight railroads.

18 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs A critical benefit that Amtrak derives from the RPSA is the ability to operate on a host railroad at incremental cost. Host railroads typically charge those wanting to share its line the fully allocated cost of operating on the line, including dispatching, track maintenance, and recapitalization. Amtrak is charged for only the incremental cost of its operations, which typically is quite small. Amtrak also makes incentive payments to some freight railroads to enhance on-time performance. This benefit places Amtrak at an advantage over most other potential operators for service. Amtrak’s current strategic plan (FY 2014 through FY 2018) structures the organization around four business lines that focus on the overall performance of specific Amtrak products and services (Amtrak, 2014): 1. NEC Operations 2. Corporate Development 3. Long-Distance Services 4. State-Supported Services The intent of these business lines is to better respond to the needs and expectations of customer markets and improve financial performance. The 5-year strategic plan was designed to make progress toward strategic goals that focused on three key themes: 1. Safety and Security Goal: Set the standard for safety and security in the transportation industry to ensure that every passenger and employee goes home injury-free every day. 2. Customer Focus Goal: To acquire and retain the most satisfied customers of any travel company in the world. 3. Financial Excellence Goal: To be profitable on an operating basis (as defined by our operating ratio) and be good stewards of capital in order to secure our long-term viability as a company. 2.6.4 Assessment of Amtrak’s Current Model Amtrak’s longevity is a testament to its ability to provide a needed transportation service span- ning many states in the United States. The growth in ridership, particularly in the NEC, indicates that intercity passenger rail is a desirable transportation choice for millions of riders. Despite instability in federal funding from year to year, Amtrak continues to provide service in a variety of passenger rail markets and has ambitious plans for growth in the NEC. Figure 2 shows Amtrak’s $- $200,000,000 $400,000,000 $600,000,000 $800,000,000 $1,000,000,000 $1,200,000,000 $1,400,000,000 $1,600,000,000 $1,800,000,000 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12 20 14 Ridership Federal Grant Figure 2. Amtrak ridership and federal financial support, FY 1972–2014.

State of the Practice 19 ridership levels and federal appropriations from Amtrak’s inception (1972) to FY 2014. As can be seen, Amtrak’s ridership levels have seen a slow but steady growth, while federal appropriations for Amtrak have varied widely. The passage of PRIIA and ARRA afforded Amtrak the opportunity to address a long list of needed capital improvements, although nowhere near the entire list of capital needs identified by Amtrak. The partnerships enabled by PRIIA and ARRA and a clear articulation of common cause have been a hallmark of these acts. The quality and substance of these partnerships cannot be underestimated as the basis for future cooperation and action. The NEC Commission is an example of one such partnership. Authorized as part of PRIIA, the primary charge of the NEC Commission is to facilitate cooperation and integrated planning among the agencies and entities involved in intercity and commuter passenger rail service and freight use of the NEC. Given shifting legislative initiatives, the future for federal passenger rail funding is uncertain. For example, initially introduced in 2014 and reintroduced in 2015 as H.R. 749, the Passenger Rail Reform and Investment Act (PRRIA) of 2015 builds on the improvements accomplished by PRIIA 2008 and further attempts to improve rail infrastructure, reduce costs, leverage private-sector resources, create greater accountability and transparency, and accelerate project delivery. The law reduced Amtrak’s authorized funding by approximately 40 percent (but actually authorizes as much or more than recent appropriations), requires that Amtrak eliminate losses from food and beverage service, and mandates that Amtrak carry out a business case analysis for all major procurements. The legislation also allows for operating profits made on the NEC to be retained and reinvested in the NEC rather than supporting national intercity routes. PRRIA has provided a new framework for the allocation of roles and responsibilities among the entities charged with providing or supporting passenger rail services. For Amtrak, it estab- lishes a more predictable funding benchmark and budget transparency and provides substantial encouragement to leverage resources and encourage non-federal participation and partnerships in activities that complement Amtrak’s core mission. PRRIA empowers states to have a greater role in managing routes and makes them more equal partners in providing and paying for rail services and facilities. It will enable a clearer organizational focus on NEC operations, as well as target investments and retain profits in the NEC and potentially provide incentives for increased corridor investments. Importantly, cost sharing with states is forcing a new transparency in the cost of providing passenger rail service. However, given the number of partnerships and inter- dependencies associated with Amtrak’s budget, there is insufficient history with the law to deter- mine which aspects are most effective and sustainable. The current business line focus is relatively new, with the first detailed Amtrak budget created in this alignment for FY 2015. Despite the growth in Amtrak ridership, there continues to be political debate on whether, and how much, federal funding support should be provided. The lack of consistent, long-term federal funding has hindered Amtrak’s ability to plan for a longer term quality of service, with a majority of its future planning efforts in the 5-year range. Amtrak is focusing its efforts on replacing its existing infrastructure and fleet to bring it to a state of good repair, with some opportunities for an increase in service on the NEC and other heavily traveled routes. Funding uncertainty has also influenced Amtrak’s ability to plan for high-speed rail service, with the FRA currently leading several planning studies to advance high-speed rail in several corridors, including the NEC. Some states and regions are undertaking their own efforts to advance high-speed rail corridors. Nevertheless, there are continued opportunities for Amtrak to forge partnerships with states and other entities to collectively improve service on particular rail corridors. For example, Section 209 of PRIIA required Amtrak to work with the states to develop and implement a single national methodology for establishing and allocating the costs of providing intercity rail service

20 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs on state-supported routes. The proposed PRRIA legislation requires Amtrak to provide accurate updated costs and service information to the states, including projections, to ensure that states can properly manage the services for which they pay. The Amtrak model for national intercity passenger rail service offers the flexibility to provide service under a range of institutional models. Amtrak’s ability to access host railroads at incre- mental cost provides an important benefit and competitive advantage. Amtrak plays a critical role as the owner and operator of rail service on the NEC. For a truly national intercity passenger rail network, Amtrak provides an important reference for how such a network can be put in place and operate. 2.7 Overview of Relevant FRA Requirements for Rail Network Development To advance the development of high-speed/intercity passenger rail projects, the FRA has estab- lished a series of requirements for passenger rail projects receiving federal funding. Projects are con- sidered for funding through an application process, and selected projects enter into a cooperative agreement to develop a Passenger Rail Corridor Investment Plan (PRCIP) for the corridor. 2.7.1 Passenger Rail Corridor Investment Plan The process of completing a PRCIP consists of the preparation of (1) a Service Development Plan (SDP), a detailed plan that defines the service improvements, transportation network, and opera- tional and financial aspects for the passenger rail service alternative selected through the National Environmental Policy Act (NEPA) process, and (2) a NEPA environmental review in which the purpose of and need for the improvements are defined and alternatives are analyzed and compared based on their environmental, socioeconomic, and transportation impacts (see Figure 3). FRA established the PRCIP as a key development threshold for implementation funding under the PRIIA. The PRCIP is a foundation for future project development, including engineering design, project environmental reviews, environmental permitting, and construction. Service development planning is the technical analysis of new or improved intercity passenger rail service alternatives that are consistent with and address the NEPA Purpose and Need Statement that results in a progressive narrowing of alternatives to a smaller set that can best meet those needs. Each stage of development is tied to the program’s NEPA Purpose and Need Statement, and each development step reflects the available level of detail on alternatives from the supporting technical analysis. Service development planning involves the use of a number of technical tools to assess engineering feasibility, ridership, operational impacts, capital and operating costs, and public benefits. The level of technical scrutiny increases, and the tools become more detailed and sophisticated as the NEPA process advances to identification of a preferred investment program and after selection through the NEPA process. Source: “Kansas City-Wichita-Oklahoma City-Fort Worth Corridor Passenger Rail Service Development Plan” (Parsons Brinckerhoff, November 2011). Figure 3. FRA project development process.

State of the Practice 21 2.7.2 Service Development Plan The SDP identifies the different capital components of the project and describes how the rail project will operate. The SDP is an iterative document that becomes more detailed as work on the project advances. While the structure of the document is flexible, the following components are required: • Corridor Development Program Rationale • Service Plan • Capital Investment Needs Assessment • Financial Forecast • Public Benefits Assessment • Program Management Approach The SDP also provides an opportunity to review the multitude of decisions involved with implementing high-speed/intercity rail programs with all project stakeholders. In that it addresses costs and financial results, the SDP helps facilitate decision-making on cost-sharing issues. 2.7.3 Service-Level Environmental Assessment Following the SDP, typically the next step in the passenger rail development process is prepa- ration of a Service-Level Environmental Assessment (Service NEPA), as defined by NEPA. The Service NEPA is an environmental review of the project as a system. It evaluates the effects on the environment of alternative routes and locations, the service being provided, the technologies being employed, ridership levels, and any significant infrastructure components. The Project NEPA is a more detailed examination of the environmental impacts at the infrastructure project level. Preliminary engineering is required to develop the information necessary for the Project NEPA. Final design takes place following the preliminary engineering and approval of the Project NEPA, after which construction can begin. In many instances, FRA has encouraged combining the Service NEPA and Project NEPA analyses to reduce development costs and time. 2.8 Summary This chapter has described the current state of practice in intercity passenger rail service. Very few studies have examined different institutional models for providing such service, although the current model in the United States, Amtrak, does provide a point of reference for how such service can be provided. The evolution of Amtrak from its beginnings to today’s market-oriented service illustrates the challenges that occur when trying to develop a truly national system. How- ever, the Amtrak model of owner/manager, service provider, and partner, depending on the cir- cumstances, is one that fits well with the institutional environment found in the United States. The following chapter examines in more detail some of the institutional models that characterize intercity passenger rail service.