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

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94 5.1 Introduction This chapter provides a practitioners’ guide for using the results of this research to understand the different types of decision models that can be applied to develop institutional capability for intercity passenger rail transportation. The guidance, in the form of a decision tree and a question template, is designed to allow transportation officials to find useful information no matter where in the process of developing institutional capacity they are with respect to intercity passenger service. 5.2 Decision Trees A decision tree reflecting some of the key decisions that must be made in implementing inter- city passenger rail services is the foundation for practitioner guidance. The research has identified primary, secondary, and tertiary questions that correspond to the decision tree levels. In other words, the primary questions occur at the beginning of the decision tree process and provide two possible paths through the decision tree. For example, Figure 14 shows a decision tree for the primary question of whether the institutional model is to be used for planning/visioning or for project implementation. Secondary questions then relate to the degree to which participants will jointly or individually benefit and whether there is likely to be a role for the federal government. A tertiary level of question is provided for distinguishing those states that have made progress internal to their own state. These questions are identified according to the case study focus issues presented in the conceptual framework for passenger rail (shown in Figure 4) and are derived based on findings from the case studies and the experience of the research team. 5.2.1 Primary Questions • During what phase(s) of development is the model intended to be applied? • How many states are involved in the passenger rail effort? • What is the willingness of the private sector to participate in the service? Is the proposed effort favorably received? • Can cooperation be achieved without the use of Amtrak’s powers? 5.2.2 Secondary Questions • What is the desired role for the federal government? • Does one state clearly benefit more than others in the effort? • Is there interest in establishing a formal entity and/or contractually binding agreement(s)? • What amount of risk is each state partner willing to assume? • Are there overall liability caps that would cover the service? C H A P T E R 5 Practitioners’ Guidance

Practitioners’ Guidance 95 • Will federal funding be sought? • Do state partners have dedicated funding streams that could be utilized for the service? • Do states have any restrictions on funding sources (e.g., appropriation cycles) that need to be reconciled? • Can the state operate state-owned assets in another state? Can it own assets located in other states? Can it share ownership with other states? 5.2.3 Tertiary Questions • What is the nature of current passenger rail operations (if any)? • Do all state partners have the same level of interest and desire to participate? • To what degree have state partners collaborated in the past? On passenger rail engagement, in particular? • To what degree will entities at the local level need to be involved? • Do the state partners have the authority to enter into legal agreement with other states for passenger rail planning and/or implementation? If not, would securing this authority be a non-starter? • Is there interest/need in establishing a formal decision-making process? Note that the level of question could vary according to the context of the institutional model. Thus, in some instances, the question “Will federal funding be sought?” would be a primary-level question, not a secondary one, as shown above. Figures 15 through 17 show some other decision trees using some of the questions listed above. 5.3 Question Template Another way of organizing the questions that can help practitioners develop appropriate institutional models is by relating the questions directly to key elements of the conceptual frame- work. The following template could be used by practitioners both for thinking about the larger Figure 14. Decision tree for planning and implementation of decision-making.

Is the model to address planning or implementation activities? PLANNING Is there interest in a formal and structured entity? NO Single State Agency YES Is there state interest in establishing a formal decision-making process? YES Coordinated State Efforts Multi-State Commission NO Single State Agency IMPLEMENTATION Is there interest in a formal and structured entity? YES Multi-State Commission Coordinated State Efforts NO Public-Private Partnership Are states allowed to enter into interstate agreements? NOYES Primary Question Secondary Questions Tertiary Questions Figure 15. Decision tree for planning and implementation, formal decision-making structures. How willing is the private sector to participate? GREAT INTEREST What amount of risk are the states willing to accept? MINIMAL MAJOR Coordinated State Efforts Multi-State Commission LITTLE INTEREST Do states have restrictions on funding of multi-state projects? YES Multi-State Commission Coordinated State Efforts NO Single State Agency Coordinated State Efforts Maybe Primary Question Secondary Questions Public-Private Partnership Public-Private Partnership Figure 16. Decision tree for private-sector interest in intercity rail.

Practitioners’ Guidance 97 institutional model question and for “fine-tuning” the adopted institutional model. The template lists questions according to the following issues: • General • Stakeholders and lead agencies/group • Institutional relationships and contractual arrangements • Legal authority • Corridor ownership and relationship with host railroad or other providers • Role of regulatory agencies and oversight • Liability issues • Cost sharing and funding sources • Decision-making process • Political foundation • Compelling need • Marketing, customer service, branding, and safety standards • Coalitions The questions identified above for the decision tree analysis are indicated in bold in the template. General Questions • During what phase(s) of development is the model intended to be applied? • What are the most challenging issues to be addressed? • What is the nature of current passenger rail operations (if any)? How many states are involved? 3 OR LESS Is there a desired role for the federal government? YES Special Authority NO Coordinated State Efforts Multi-State Commission 4 OR MORE Is federal funding sought? YES Multi-State Commission Special Authority NO Single State Agency Coordinated State Efforts Maybe Do the states have the similar level of interest? Federal-State Commission YES NO Primary Question Secondary Questions Tertiary Question Public-Private Partnership Figure 17. Decision tree for number of state participants and the federal role.

98 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs Stakeholders and Lead Agencies/Group Questions • How many states are involved in the passenger rail effort? • What is the desired role for the federal government? • Does one state clearly benefit more than others in the effort? • Do all state partners have the same level of interest and desire to participate? • To what degree have state partners collaborated in the past? On passenger rail engagement, in particular? • To what degree will entities at the local level need to be involved? • What is the willingness of the private sector to participate in the service? Is the proposed effort favorably received? Institutional Relationships and Contractual Arrangements Questions • What are the anticipated roles for each of the stakeholders? • Is there interest in establishing a formal entity and/or contractually binding agreement(s)? Legal Authority Questions • Do the state partners have the authority to enter into legal agreement with other states for passenger rail planning and/or implementation? • If not, would securing this authority be a non-starter? Corridor Ownership and Relationship with Host Railroad or Other Providers Questions • Is the right-of-way to be used for service within an existing rail corridor? • How many host railroads are there in the corridor? • Is (Are) the host railroad(s) willing to engage in development efforts? • Can cooperation be achieved without use of Amtrak’s powers? Role of Regulatory Agencies and Oversight Questions • What milestones under the FRA’s project development process have been achieved? • Is there interest in establishing an oversight body? What state entities should be represented? Liability Issues Questions • What amount of risk is each state partner willing to assume? • Are there overall liability caps that would cover the service? • How does state law impact the ability to indemnify the host railroad for damages? Cost Sharing and Funding Sources Questions • Will federal funding be sought? • Do state partners have dedicated funding streams that could be utilized for the service? • Do states have any restrictions on funding sources (e.g., appropriation cycles) that need to be reconciled? • Can the state operate state-owned assets in another state? Can it own assets located in other states? Can it share ownership with other states? Decision-Making Process Questions • Is there an interest in/need for establishing a formal decision-making process? • Is there a need to establish a conflict resolution policy or procedure? Political Foundation • What political support does the service currently have? • Is there at least one recognized public champion for the service? • Can the multi-state organizational structure withstand changes in political and executive leadership?

Practitioners’ Guidance 99 Compelling Need • Has a strong need for the service been articulated? Marketing, Customer Service, Branding, and Safety Standards • Will these focus issues be addressed within the selected model? • Does the service delivery strategy address FRA accountability for safety? Coalitions • Are there any coalitions that could influence development? Should they be engaged? This guidance recognizes that every institutional model is going to be different and will most likely face a range of challenges. Although the decision tree and template processes suggest that one institutional model will surface from the analysis; in reality, variations of different models are likely to occur. However, this guidance does provide a foundation for looking at the strengths and weaknesses of different institutional models and determining which models do not make sense in terms of the service goals and vision. 5.4 Implementation Guidance The case studies conducted for this research identified numerous strategies used by multi-state entities to enhance the chances of successful implementation of intercity passenger rail service. The following suggested action(s) should be considered when implementing multi-state intercity passenger rail efforts. 5.4.1 Provide Early and Continuous Coordination A clear theme emerging from all of the case studies was the need for early and continuous coordination among all parties having a role in passenger rail development and finding a com- mon and unifying ground. Establishing and agreeing upon areas of common interest early on can minimize confusion and misunderstanding as project development advances. For example, by establishing two-way communication from the beginning and engaging a range of stakeholders early in the visioning process, the ARC was able to secure buy-in from a range of stakeholders, especially those who could potentially experience negative impacts from ARC programs and projects. In the NEC, the process of building relationships among federal, state, regional, and local government agencies; Amtrak; and the commuter rail operators took some time. According to those interviewed, as the NEC Commission has continued its work, members have experienced a common learning curve, and the process has benefited from it. In Virginia and North Carolina, the bi-state collaboration on the SEHSR Corridor has extended over a 20-year period and has evolved from a visioning effort to the implementation of four discrete project segments, one of which traverses the state line. Practitioners involved with the project agreed that the key lesson learned when two states collaborate on a project of this scope and scale is to establish agreement principles early on and stick to them. It is also essential to “get out ahead of yourself” and envision what the end product will be in order to encourage both states to agree on the outcome of their joint efforts. Once this occurs, they can begin to develop a roadmap that will allow them to achieve the vision. 5.4.2 Explore the Benefits of Centralized Coordination A centralized coordinating and/or oversight body emerged as a critical institutional foundation for successful multi-state collaboration. This is most evident in the case of the NEC Commission, which represents a paradigm shift in visioning and planning across the entire NEC. Bringing

100 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs disparate and territory-focused organizations together through the NEC Commission is leading to successful collaborative outcomes. In addition, having a centralized authority has provided an easier process (according to those interviewed) for developing the cost-allocation policy. The NEC case also notes the importance of having a governance entity that is independent with a high degree of transparency and that is viewed as a fair broker of disagreements over the long term. A governance entity that builds trust among major participants is more likely to be perceived as trustworthy by major stakeholders, who will then be more likely to see support of the entity’s projects as an effective investment of federal and state monies. The importance of a central coordinating entity is also reinforced by experience abroad. In 2010, three separate operating companies in Belgium, France, and the United Kingdom were replaced by Eurostar International Limited Inc., which unified management and employees under a board of directors of a commercial corporation. All personnel were brought into the new stand-alone company. Ridership and revenues have continued to increase under the stand- alone corporation (although the direct linkage between the reorganization and ridership has not been proven), and operating costs have become more manageable. The experience with train operations on the Brussels-Paris-London network demonstrates the benefits of a unified gover- nance, management, and personnel structure in the delivery of cross-border, intercity passenger service. Partner states have been encouraged to forego the temptation of controlling intra-state services and have been working collaboratively to ensure one multi-state passenger rail operation. Evidence suggests that multi-state passenger operations should have clear lines of authority and accountability reporting at both the management and board levels. There are also examples of how a lack of centralized coordination authority has created problems in furthering service goals. The SCHSRC, for example, lacks a multi-state leadership group directing and coordinating the passenger rail development efforts, which was noted by some as a key reason why passenger rail systems have not really become a reality in the region. The absence of a common vision and a corresponding set of objectives have resulted in the investment in individual corridor segments that have advanced in a fragmented and uneven manner. The states involved in the effort to develop passenger rail in the Midwest also lack a central body with responsibility for coordinating regional and long-term technical planning and developing the political support and educational outreach necessary for future regional passenger rail implementation. The MIPRC and MWRRI have worked fairly closely over the years to advance passenger rail in the region, but they are two distinct entities with no formal ties. Several policy initiatives in the intercity passenger rail policy environment will likely push some regional and corridor efforts to look more closely at a stronger centralized authority. A central coordinating entity will likely be needed for oversight and coordination of Next Generation equipment procurement, more uniformity in Section 209 pricing, and joint priority setting and cost sharing for major infrastructure improvements. 5.4.3 Share Funding Assumptions Early On The WMATA case demonstrated the importance of a commitment for shared funding no matter which portion of the system is under development at a particular point in time. A situation in which one partner has financial trouble is also an important consideration for multi-agency partnerships. Establishing the ability of one state to make investments in another state is an ability that could enhance the success of multi-state partnerships. Reaching early agreement on funding formulas can lead to a level of fairness and a continued commitment by all parties to build and operate a regional system over the long haul. However, a cautionary note from the NNEPRA/ Downeaster case study is to document the reasons for any negotiated cost-sharing arrangements

Practitioners’ Guidance 101 because it can be difficult to negotiate changes at a later point, particularly if one state requests more funds from partners at a later time. 5.4.4 Define Clear and Transparent Roles Having a clear mission and vision at the outset allowed representatives from WMATA juris- dictions to find common ground in agreeing to the multi-state compact. WMATA’s mission was clearly stated in its compact. Finding common political ground among the various par- ticipating agencies and recognizing the strength of regional coordination, as opposed to acting individually, played a key role in building a consensus that survived the early years of WMATA development. The PNWRC case study is a good example of establishing clear and transparent roles in the development of enhanced passenger rail service. In 2013, the Washington State DOT and Oregon DOT established the Cascades Rail Corridor Management Workplan. Not only did the Workplan outline a vision, goals, objectives, and actions, it also described the roles and responsibilities of the various parties, and how they should work together in the corridor management team structure. Dispute-resolution procedures, highly structured meetings, and succinctly written correspondence were also developed to address negotiations-, operations-, or service-related issues. The Workplan also established several interagency “functional groups” focusing on specific subject areas. The Workplan also accounted for coordination with freight railroads. 5.4.5 Allow for Sufficient Time and Resources In establishing agreements, sufficient time is needed to account for each state’s policies and procedures and their potential impact in project development. For the Chicago-Detroit/Pontiac Corridor, various issues relating to agreements, procurement, management, professional services, and so forth required review from multiple agencies, slowing the project down. The importance of providing enough time in overall project schedules for developing and executing the agreements necessary to implement passenger rail should not be underestimated. In addition, one of the key issues raised in the case studies was the impact of individual state procurement, planning processes, and timelines. Delays caused by agreements have the potential to drastically slow project progress, possibly putting projects at financial risk. Sponsoring agencies should be aware of the time commitment and the staff expertise needed to draw up agreements and provide for sufficient legal reviews. From the case studies, it was seen that as intercity passenger rail projects moved closer to construction and implementation, the number and complexity of agreements increased. State DOTs or other implementing agencies should have an understanding of the expertise needed (either in-house or hired) to complete the project. 5.4.6 Consider Various Institutional Models for Different Project Phases The states involved in the development of the Midwest passenger rail system have worked since 1995 on developing a vision for regional travel that will be accomplished with regional passenger rail service. The creation of the MWRRI helped unify the states’ interests to ensure that the region received a fair share of federal funding and laid the foundations for the corridor- level execution of various segments of the vision. Generally, in the planning and visioning stages of the passenger intercity rail development process, partner states create some structure or forum where issues can be resolved and common cause can be portrayed (such as when federal funding is being sought). As a project approaches actual implementation, the state benefitting most from

102 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs the project usually takes the lead. This development is troublesome, however, in the procure- ment process, where a state might be taking the lead in purchasing an asset (e.g., rail cars) that will be used outside the boundaries of the state. 5.4.7 Capitalize on Existing Federal Requirements as a Starting Point for Coordination The Washington State DOT and Oregon DOT as well as the states involved in the development of the Midwest passenger rail system have made use of state rail plans as a means of coordinating long-term plans and investments across state lines. The case studies also demonstrate the value of FRA’s requirements for funding and corridor planning in providing a helpful framework for coordination and for balancing the competing interests of various project stakeholders. Initiating work on Service Development Agreements for bi- or multi-state high-speed rail projects early in the planning process can aid in securing upfront buy-in on strategic issues, many of which will shape the definition of the project including the SDP and required through-put. 5.4.8 Obtain Cooperation from Railroads by Protecting Their Basic Needs The case studies demonstrate that providing a clear benefit to freight railroads is a key to negotiating host railroad involvement in passenger rail. Freight railroads take a very long-term view of right-of-way requirements. This can be frustrating to those who want to add passenger rail service and tracks, but freight railroads have proven steadfast in their resolve to protect right-of-way and operations capacity for potential use in the future. Virtually no passenger rail service expansion in the United States in recent times has avoided the issue of preserving and protecting the ability of the freight railroad owner to grow at some unspecified time in the future. Agreements with freight railroads for the creation of mixed-use corridors will likely be one of the most important factors in implementing intercity passenger rail services in the future. For example, of the three host railroads in the Downeaster service corridor, Pan Am Railways is the only entity that is paid by the operator for utilizing its infrastructure. Amtrak pays the trackage access costs in Maine and New Hampshire directly to Pan Am Railways and passes on these costs to NNEPRA via the annual service fee. Without the payment and other infrastructure improvements to Pan Am Railway’s track infrastructure, Amtrak access may never have been granted. 5.4.9 Consider Use of a Mediator if Negotiations Are Going to Fail Private railroads’ primary goal is moving freight efficiently to maximize profitability. This goal can be at odds with state agencies who desire to safely, quickly, and reliably move passengers between cities. These differing and competing goals make negotiating with the railroads inherently complex. Passenger rail project sponsors in the Midwest all stated the importance of engaging with the railroads early, maintaining an open dialogue, and being clear about the project goals from the outset. In cases where negotiations with freight railroads are deadlocked, as seen in the case of Amtrak/ NNEPRA and Pan Am Railways, the use of a third-party mediator to resolve disputes can be effective in the early stages of corridor development and in navigating later critical impasses. The points of contention for NNEPRA included liability costs, maintenance expenses, capital expenditures, payment of on-time performance incentives, administrative costs, and future incremental costs. In this case, the STB served as the mediator between the host freight railroad

Practitioners’ Guidance 103 and Amtrak. Arbitration should never be the first option for a future operator. In the Midwest a key to reaching agreement with host railroads was to discover early in the project planning stages any “red flags” or “deal breakers” for the railroads. 5.4.10 Promote Opportunities for Agencies and Organizations that Provide “Last Mile” Services and Amenities to Participate in Service Planning Successful intercity passenger rail service includes not only the line haul portion of the trip, but also getting passengers to and from stations. Connectivity to the local transportation system will often be the responsibility of many different agencies or organizations (e.g., transit agencies, state or local transportation agencies, and improvement districts). The institutional models examined in this research focused primarily on the higher level institutional models for providing intercity passenger service, but the need for safe and effective connections to intercity stations should be part of the decision tree analysis presented earlier. In such an analysis, questions might include the following: • Which agencies and organizations have responsibility for providing connections to an intercity passenger station? • Do these agencies have funding and a willingness to provide enhanced connectivity to these stations? • What type of partnerships can be developed to implement improved last mile connectivity? 5.4.11 Consider an Incremental Approach to Implementation Multiple case studies demonstrate the success of employing an incremental approach to devel- oping projects. Service improvements for Amtrak’s Cascades service, for example, have taken place in increments since the early 1990s. More recently, the corridor program was divided into three service blocks or groupings of specific projects that together provide incremental benefits, such as an increased number of trips between Seattle, Washington, and Portland, Oregon, and reduced travel time. This planning approach has worked well and has kept the corridor team committed to achieving long-term goals, while also demonstrating visible improvements and benefits to its service area, as shown through the increase in ridership over the years. Incremental project delivery can also contribute to overall project success by building project momentum. Since the Downeaster service first began in 2001, NNEPRA has continued to make incremental improvements to the service and its infrastructure. This type of approach to corri- dor development has allowed the region to demonstrate its desire for passenger rail to the federal government, despite its lack of dedicated funding. The scale of the corridor improvements and the multibillion dollar capital cost also necessitates a phased implementation approach in the Chicago-Detroit/Pontiac Corridor. It is not anticipated that the envisioned service of 10 daily round trips will be fully realized until 2035. 5.4.12 Consider the Interdependency of Segments when Prioritizing Projects Decisions made regarding one corridor can fundamentally affect the actions taken relative to unbuilt corridors, as well as current and future operations within existing corridors. From a network perspective, uncoordinated decisions often create a suboptimal operating environment and can potentially undermine the purpose, need, and viability of existing corridors, as well as those remaining to be developed. Interdependency of segments should be considered when prioritizing projects and establishing the most appropriate institutional models.

104 Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs 5.4.13 Be Aware that Direct Monetary Compensation Is Not Always Required Whereas all other operating agreements in the Downeaster service involve an exchange in money, the MBTA, as an established transit agency with extensive infrastructure, participates in the partnership in exchange for non-monetary benefits, such as the ability to claim the passenger miles carried over its trackage and the opportunity to generate additional ridership at the MBTA stations served by the Downeaster. Over the long-term, the arrangement with NNEPRA allows the MBTA to better position itself to compete for federal capital improvement grants and operating subsidies, as seen in the partnership for the MBTA Track Improvement Project. 5.4.14 Consider Independent Researchers when Establishing Staff Arrangements One of the unique features of the ARC’s organizational structure is the presence of support staff and researchers who are neither federal nor state employees. These employees report directly to the Executive Director who is appointed by the ARC Board. The ARC staff is charged with producing quantitative measures and analyses that are then used by the ARC Board and the co-chairs to assess the benefits and consequences of ARC’s programs and proposals. It is assumed that this structure, in which employees are not directly governed by a party that has a particular leaning (e.g., one that is sympathetic to federal versus state interests), provides estimates of a pro- gram’s value that are as unbiased as possible. The NEC Commission staff is structured similarly. 5.4.15 Link Goals to Clear Performance Measures and Establish a Process for Assessing Progress Regularly WMATA has developed indicators by which to regularly assess whether its performance meets Board-established service criteria. Establishing clear goals linked to specific performance measures helps WMATA achieve its goals and allows the WMATA partnership to continue in its provision of quality transit services. Establishing clear goals linked to specific performance measures can also help with transparency and demonstrating progress to a range of stakeholders. A related approach is that of the ARC, which regularly publishes a status report of the development highway network on its website. 5.4.16 Provide Guidance for Governing Boards WMATA provides a helpful model for guidance to boards. Several recommendations based on the WMATA governing board experience should be considered and adapted if a governing board is to be established: • Be clear on the roles and responsibilities of the board. • Coordinate a process for appointing board members and a chair, including staggered terms and a uniform compensation policy. • Conduct a regular self-assessment of the board’s effectiveness. • Improve the strategic planning process by actions such as increasing the board’s involvement in the process and updating the agency’s performance metrics. • Develop an orientation process for board members.