Guidebook for Intercity Passenger Rail Service and Development (2016)

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57 The responsibilities of a sponsoring public agency planning intercity passenger rail do not end after planning, design, and construction are complete. Providing oversight, performing service qual- ity assurance functions, and acting as a liaison between the traveling public (individual citizens) and the operator continues throughout the life of a service arrangement. Sponsoring agencies must initially define an operations structure and desired features, including detailed aspects (e.g., onboard amenities). This chapter discusses decisions about operations contracting, ROW maintenance, and rolling stock considerations. Contracting for Passenger Rail Service Amtrak is the primary provider of intercity passenger rail services within the United States. With passage of PRIIA, the federal role for intercity passenger rail services is evolving to require sponsoring states to assume most costs and much of the management associated with state- sponsored trains. PRIIA Section 209, in particular, assigns most variable costs associated with such services to sponsoring states. As part of this new structure, however, states are granted flexibility in contracting out some or all of the elements of intercity train operations. Amtrak is only one of the potential contract suppliers of train crews, rolling stock, onboard services, and so forth. As a practical matter, it is difficult for most states to assume the management roles historically handled by Amtrak. This section of the guide discusses potential contracting best practices and performance management of contract services. Appendix B contains relevant related discussions on the practical application of PRIIA Section 209 formulas with respect to cost transparency and granularity. Contracting Best Practices Since the first full year of introduction of PRIIA Section 209 implementation, beginning in late FY 2014, states and other (multistate) contracting entities have had an opportunity to contract out some or all of the menu of services formerly provided by Amtrak (either grandfathered operations from the historic basic-system network or previously contracted services under the 403(b) act, in which only partial subsidy reimbursement was required). As of late 2015, no state has fully outsourced its service to a non-Amtrak provider other than in test or pilot cases. Amtrak’s unique statutory rights of access to the lines of private freight rail carriers give sponsoring agencies a powerful incentive to maintain at least some level of Amtrak involvement in current and future services. In the first arrangement of its type, Indiana DOT has contracted with Iowa Pacific Holdings (IPH) for most of the service elements of the tri-weekly Chicago-Indianapolis Hoosier State train. C h a p t e r 6 Operations and Maintenance: Service Planning

58 Guidebook for Intercity passenger rail Service and Development IPH provides rolling stock, onboard service and amenities, and marketing support for the train. The operations crew (engineer and conductor) remain as Amtrak employees, and trains operate over the lines of various track owners and dispatch territories under pre-existing Amtrak contract provisions. The new service structure began August 2, 2015. Few additional states have contracted out specific service elements and taken advantage of the newly available unbundled procurement approach. Specifics of these outsourced agreements are discussed in detail in Appendix B. With each subsequent year, following the recent completion of the first full (fiscal) year of unbundled procurement under PRIIA Section 209 provisions, it will become evident what works well and what does not. At least some of the successful, long-standing contracting practices proven in operation of North American commuter rail service will be explored and emulated by state DOTs and other implementing agencies for short-distance inter- city passenger rail. Several of the contract operators of commuter rail have publicly expressed interest in potentially bidding for specific state-sponsored intercity passenger rail services. One large contractor was close to formalizing such a deal with a state, even before the effective start of the new PRIIA Section 209 rules, but was unsuccessful. Among current observed best contracting practices discussed in Appendixes A through E are the following: • NNEPRA’s use of an independent onboard food and beverage service provider, including provision of unique foods and its own service employees, thereby eliminating the cost of Amtrak commissary services and Amtrak OBS attendants. • Washington State and Oregon DOTs’ joint contract with Talgo to provide and maintain unique Spanish-designed tilting trainsets (for complex legal reasons, this contract is administered technically as a subcontract to their Amtrak contract). • North Carolina DOT’s purchase of secondhand equipment and custom remanufacturing to its own specifications, including provision of a one-of-a-kind cafe car with specialized food and beverage vending machines, thereby eliminating the rental cost of an Amtrak cafe car and the costs of Amtrak commissary services and OBS attendants. • CCJPA’s use of dedicated (employed by parent agency Bay Area Rapid Transit [BART]) call center staff to provide specialized Capitol Corridor train information and reservations, thereby eliminating the allocated shared cost of Amtrak reservations and sales personnel. Performance Management of Contract Services Among the states (or other designated entities) that contract with Amtrak for provision of short-distance intercity passenger rail under the general provisions of PRIIA Section 209, approaches and degrees of in-house capability vary widely. Several of the states or designated contracting agencies, especially those with long-standing services and contract agreements, have developed sizable staffs, with solid institutional knowledge on how best to manage (and evaluate the effectiveness of performance) in such contracts. Some of the newer, or smaller, state-sponsored programs, have limited resources and, hence, limited staffing available to over- see and measure performance. These states or entities typically have to be either more accepting of Amtrak’s own offering of performance measures or, alternatively, seek long- or short-term outside technical assistance, from experienced consultants. In addition to the actual train financial- and service-related quantitative performance measures typically included in a quality index (e.g., on-time performance [OTP], ridership, passenger revenue, subsidy requirement, and stated customer satisfaction), the sponsoring state or agency also manages and measures many broader contract performance issues (e.g., degree of Amtrak management attention to the specific corridor, responsiveness and availability of Amtrak when technical or administrative problems arise, and degree to which Amtrak is perceived as flexible

Operations and Maintenance: Service planning 59 in response to special requests by the sponsoring entity). Since the full operational net cost of service has become the sole responsibility of the state under the PRIIA Section 209 formula, several states anticipate an increasing need to actively manage, with continued cooperation from Amtrak, to find ways to improve productivity while reducing net cost to the state. Risk Management Risk management for intercity passenger rail operations entails developing a safety program, investigating accident and injury claims, controlling claims and litigation, and determining the types of insurance to be procured and the levels of coverage. Safety must be the primary consideration in all railroad operations. Some operators have a department devoted to safety issues and reporting to a vice president or chief executive officer. Those charged with handling claims must work closely with the safety staff; some operations have one department perform both functions. A railroad claims department deals with accident investigation and the settlement of claims for personal injury or property damage by passengers, third parties, or trespassers. Claims department personnel must understand how a railroad functions, be able to interact well with the company’s employees at all levels of the organization, and have the following: expertise with investigation techniques, sensitivity to injuries suffered by claimants, and ability to negotiate fair settlements. Finally, personnel must be able to organize the company’s evidence and assist litigation counsel for those cases that cannot be settled and must go to trial. In many organizations, the risk management area also is responsible for placing or recommend- ing insurance coverage. This can include decisions on how large of a deductible (self-insured retention) the agency can support and the maximum level of coverage desired. Once those deci- sions have been made, the risk management staff will recommend the various layers of coverage and the extent to which each layer should be handled by commercial insurance, self-insurance, or an insurance captive or pooling arrangement. Resiliency Planning One of the key elements of developing an operational plan for an intercity passenger rail project is to ensure that the operations are robust enough to continue when faced with obstacles (e.g., bad weather, failure of rolling stock, or switching or other track problems). Seemingly minor events (e.g., the failure of an air conditioning unit on a passenger car on a hot summer day or a heater during the winter months) can have a large effect on future ridership and service use. Having plans in place to handle such contingencies is essential to building passenger con- fidence and commitment to continue riding even after an adverse event occurs. Appendix C presents material on the need for resiliency in planning and operation of intercity passenger rail service and has sections on the following topics: • Defining resiliency in the context of passenger rail service • Planning resilient service • Managing resiliency In each of these sections, factors are discussed in detail. For example, in the section on defining resiliency, the effects of weather factors, track failure, rolling stock failure, and grade crossing/ trespasser incidents are described. The section then describes the need for intercity passenger rail agencies to anticipate various potential responses in each type of scenario and be ready to respond/maintain/recover service quickly. The need for coordination with other emergency management agencies in responding to events that affect rail service is also discussed.

60 Guidebook for Intercity passenger rail Service and Development Contracting for Operations Several options exist for operation of a new intercity passenger rail service. Public agencies have the theoretical choice of • Contracting with Amtrak to operate the service • Contracting with a freight railroad or other private passenger rail operating company • Self-operating the service either directly or through a subsidiary As described in Chapter 2 and Appendix B, there have been frustrations involved in establishing PRIIA Section 209 Amtrak cost formula granularity in determining the total cost charged to states for services, and choosing an appropriate contract operator may be even more complex than in the past. During early PRIIA Section 209 implementation, a few states (or multistate/ alternate purchasing entities) were considering ways to maintain their level of service, but at a cost lower than could be offered by Amtrak under the new standard formula full-costing arrangement. Conversely, the one or two states that have attempted to unbundle and contract for only portions of their service from alternate (i.e., non-Amtrak) service providers have experienced unanticipated (and limiting) regulatory constraints from FRA or others. Regarding the option of the freight rail owner operating the intercity passenger rail service, there is little recent indication of interest or even willingness among any of the Class I railroads to become a direct contract operator of intercity passenger rail. The likelihood of states or similar entities attempting to directly operate intercity passenger rail, especially on lines owned by others and shared with freight, appears to be low, due to both liability and existing (and likely expanded) FRA regulatory requirements for operator safety requirements and certification. Contracting with Amtrak Contracting with Amtrak provides numerous advantages. First, the carrier operates a nation- wide rail passenger service and has the expertise to plan and operate passenger trains. It also has the legal right to use freight railroad facilities on an avoidable cost basis and has the expertise to negotiate business terms with the Class I railroads. Other advantages of using Amtrak as the service provider include a nationwide information and reservation system, an online ticket pur- chasing system, a liability insurance program, its ownership of heavy equipment repair shops for rolling stock, and the support organization needed for operation of rail passenger service. As an existing rail carrier, Amtrak is familiar with and in compliance with the unique federal statutes applicable to railroads and the requirements of various regulatory agencies. In some situations, Amtrak may be able to furnish equipment, although this is rare today due to a shortage of new equipment resulting from previous years of limited federal passenger rail funding. As funding increases and new equipment is purchased by Amtrak, this may become more of a possibility. In some cases, sponsoring agencies and Amtrak have had conflicts. Examples include allocation of overheads and cost of operations, leading to attempts to find alternative management and operat- ing arrangements such as contracting with a willing freight railroad or alternate operator such as Herzog or Connex. A freight railroad, such as BNSF Railway, may be willing to operate passenger service over its own lines. This would provide an experienced operator with qualified employees to conduct the actual operations while allowing the sponsoring agency to establish fare and other policies, sell the tickets, and arrange for contracting out some aspects of the service. Contracting with an Alternative Service Provider/Private Operator A private passenger rail operator can furnish many aspects of a passenger service while allowing the sponsor to set the policies. The South Florida Regional Transportation Authority (Tri-Rail) operation presents an example of how a service can be unbundled. Tri-Rail contracts

Operations and Maintenance: Service planning 61 with one entity to operate the trains, another to handle ticket sales and station functions, another to maintain the locomotives and coaches and clean the cars, and another to maintain the tracks and signals. Thus, a rail service can be performed by one entity or divided among several organizations with coordination by the sponsor. However, unless it owns or leases the rail line, the sponsor will have to obtain trackage rights from the infrastructure owner, and this must be completed by arms-length negotiation given that only Amtrak has the statutory right to use rail lines. Direct Operation of Passenger Rail Service Direct operation presents another alternative. When Congress mandated that Consolidated Rail Corporation (Conrail) exit the passenger rail business, most of the large eastern commuter rail service agencies (e.g., Southeastern Pennsylvania Transportation Authority [SEPTA], New Jersey Transit [NJ Transit], and New York’s Metropolitan Transportation Authority [MTA]) had a choice of direct operation or contracting with an Amtrak subsidiary. Although such large operations can undertake direct operation, this is a questionable alternative for a smaller operation. An entity contemplating direct operation must consider the complications of becoming a rail carrier. These include compliance with the unique statutes applicable to railroads (e.g., the Railway Labor Act, Railroad Retirement Act, Federal Employers’ Liability Act and numerous rail safety statutes, and regulations of FRA and other agencies). Unless the sponsor owns or leases the rail line, arrangements will have to be made to secure operating rights from the owner. Direct operation is practical only for a relatively large operation, not for a service involving a few daily trains. Because of abuses regarding assistance and payments to railroads during the late 1800s and early 1900s, some states have laws that might be interpreted as prohibiting state operation of railroads. Another aspect of this is the state’s legal ability to indemnify a railroad operator from tort liability. If a state law is interpreted as preventing either direct operation or indemnification of railroad operations, these laws may need to be replaced or amended. New legislation may have to be enacted to enable the establishment of new passenger rail services, as recently implemented in both Minnesota and Florida. Working with Host Railroads A common feature of the best-performing U.S. intercity passenger rail operations is a resource commitment by service sponsors and host corridor owners to intensive monitoring and sharing of data as related to all aspects of train performance. The collection and sharing of data creates an objective foundation for root-cause analysis of recurring service problems, and avoiding having to rely on anecdotes when problems arise. The strength of the service partnership is a product of regular communication and interaction among the host carrier, the passenger service sponsor, and other important stakeholders. At the outset of a new service, significant time in face-to-face meetings may be required to develop trust; as the relationship matures, teleconferencing and other tools to share data and solve problems may suffice for most routine matters. Other steps that should be considered include the following: • Define the level, frequency, and nature of interface among organizations up front, as part of the initial contract to establish service. • Ensure that data collection on service performance is appropriate and transparent and that the means of collecting such data is vetted by all parties. A traditional source of performance reporting for Amtrak trains is the conductor delay report. Other parallel and complementary sources of service performance data are generally required to define the root cause of train service issues.

62 Guidebook for Intercity passenger rail Service and Development • Define, in advance, responsibilities for public communication and interface with the media to avoid conflicting story lines and public disputes that can carry over into the political arena. This is particularly important in the context of emergency response or other service disruption scenarios. • Publicly acknowledge the role of all partners in making the service work. These acknowledg- ments strengthen the sense of ownership in the quality of train operations and translate into higher levels of commitment throughout the organizations of the host railroad, train service operator (if different), and passenger rail sponsor. • Participate in formal joint planning of infrastructure renewal and upgrade programs, identifying opportunities to support a strong physical plant while minimizing effects on the traveling public. Shifting work from peak travel periods or choosing a given season of the year to perform track upgrades may reduce the overall passenger service impact of such programs. Freight carriers typi- cally do not plan capital work with passenger trains in mind; time invested by passenger service sponsors participating in the planning of such work is generally time well spent. The best-performing intercity corridors are backed up by a web of relationships, experiences, and trust that bridges the wide gap between the cultures of a for-profit entity and public trans- portation service providers. Such an environment speeds decision making; facilitates long-term planning; and ensures a timely, well-articulated response to emergent or unplanned service situations. Maintenance of Rights of Way One of the primary concerns of implementing agencies should be to ensure the proper main- tenance and safety of the ROW selected for the rail service, generally known as maintenance of way (MOW). In shared-use corridors, the owning or host Class I or shortline railroad typically retains the responsibility for MOW and is compensated by the implementing agency for additional maintenance costs incurred by adding of intercity passenger trains. In situations where the track and infrastructure are owned by the implementing agency, the MOW functions are typically handled in one of three ways: • Performing the MOW functions with trained, in-house personnel • Contracting the MOW functions to an independent third-party rail maintenance company • Contracting the MOW functions to the contracted operations company There are advantages and disadvantages to each of these potential methods; however, the administrative, management, and training costs of having in-house personnel and the expense/ time required to develop expertise in this area tend to drive state DOTs and other implementing agencies to contract for these functions with experienced private providers. Sometimes MOW is included in the operator’s bundle of services or can be broken out as a separate contract. Maintenance of Equipment To ensure a safe, comfortable ride and provide more reliable, on-time service, high-quality maintenance of equipment (MOE) is essential for ongoing passenger rail operations. Most state- sponsored services rely on Amtrak to provide and maintain their rolling stock (locomotives and passenger cars). One of the potential benefits of Amtrak equipment-pool sourcing is the likely greater ability to obtain replacement cars quickly if there is a problem with the initially assigned set, and also a reasonable opportunity to deploy extra cars for surges in demand or to meet the needs of special events. Unfortunately, much of the single-level fleet typically available is primarily Budd-built Amfleet cars that are up to 40 years old, while Bombardier-built Horizon cars are just

Operations and Maintenance: Service planning 63 under 30 years old. Despite multiple cosmetic and mechanical upgrades, they still are perceived by passengers (and the sponsoring state entities) as dated. Several of the larger operations, most notably California state-sponsored Amtrak service, are equipped with a modern, dedicated fleet of state-owned but Amtrak-maintained equipment. In the case of California, this includes a shared pool for the two northern California-based ser- vices, the Capitol Corridor and the San Joaquin, and a separate, dedicated pool for the southern California-based Pacific Surfliner. California and a group of Midwest states are awaiting a new fleet of Transportation Investment Generating Economic Recovery (TIGER)-funded, U.S.-built Siemens locomotives and Nippon Sharyo double-deck cars to expand (in the case of California) or replace (in the case of Illinois/Michigan/Wisconsin) existing equipment. It is likely that all of these new units will be maintained for the respective states at existing Amtrak-owned MOE facilities. Best Practices One best practice in maintaining equipment is to contract with a rolling stock provider to maintain its product after delivery and placement into service. By far the largest fleet of inde- pendently maintained rolling stock for state-sponsored intercity passenger rail service is the highly successful and well-liked Spanish Talgo train fleet, providing virtually all of the capacity for the Cascades route in Oregon and Washington State (Eugene/Portland/Seattle/Vancouver, British Columbia). The Talgo rolling stock is unique in many ways (e.g., the permanently cou- pled articulated equipment sets, patented passive tilt mechanism to allow comfortable passage through curves at speeds higher than conventional equipment, and single-axle wheelset sus- pension rather than typical two-axle trucks). Since the introduction of these sets, Washington State DOT (in conjunction with partner agency Oregon DOT) has entered into a successful lease-purchase-maintain contract with Talgo Industries to maintain these unique cars, given the greater expertise Talgo has in the peculiarities of this equipment. As part of the performance/reliability agreement, Talgo typically assigns a qualified mechanical person to each trainset during its operation to ensure full performance and to be able to make specific (relatively) minor repairs en route. Through rigid preventive maintenance, the Talgo trainsets have a high level of actual availability and are rarely pulled out of service. For institutional (and, more recently, legal) reasons, the Washington State and Oregon DOT contracts with Talgo are technically administered by Amtrak, with Talgo Industries being a subcontractor to Amtrak. From a regulatory and oversight perspective, the Cascades service in the Pacific Northwest can still be considered a fully bundled, rather than partially unbundled, service. Equipment Review/Evaluation Because any state-sponsored service is no better than the perception by riders of the comfort and reliability of its rolling stock, many sponsoring agencies pay constant close attention to the condition of their passenger cars and place high priority on maintaining good quality. In addition to the publicized new equipment delivery for California and a group of Chicago-hub Midwest states funded through a USDOT TIGER grant, several other state sponsors are exploring options to obtain either more modern/attractive or more cost-effective equipment to improve their services. Examples include • Oklahoma DOT, in conjunction with its Heartland Flyer co-sponsor Texas DOT, worked with Amtrak to convert this state-sponsored route’s locomotive to burn biodiesel rather than conventional diesel fuel. Separately, these states have explored the marketplace for new, short- distance-specific passenger cars to possibly replace the Amtrak-provided (and state-reimbursed) Superliner cars in use.

64 Guidebook for Intercity passenger rail Service and Development • Vermont DOT, lead state sponsor of the Vermonter service hosted by Vermont, Massachusetts, and Connecticut, considered procuring its own self-propelled DMU cars or DMUs to replace the conventional Amtrak-provided Amfleet rolling stock. Because DMUs are self-propelled and do not require a locomotive, they consume less fuel for short train lengths, and Vermont (along with its operator, Amtrak) envisioned the possibility of providing two daily round trips, instead of one, at little additional subsidy requirement. Although this deal was not implemented, in part because of the dwindling sales of the proposed manufacturer, there is some reconsidera- tion of the concept with the recent appearance on the North American market of FRA-compliant Nippon Sharyo DMU. This new car is in use on Toronto’s Union-Pearson Express premium airport-to-downtown rail line and will soon be introduced on the Sonoma-Marin Area Rail Transit (SMART) commuter line in California.