Commuter Rail:

Information and Guidance Could Help Facilitate Commuter and Freight Rail Access Negotiations

GAO-04-240: Published: Jan 9, 2004. Publicly Released: Jan 30, 2004.

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Commuter and freight rail services have the potential to play increasingly important roles in the nation's economy and transportation system as demand for these services increases. Because the cost of building new infrastructure can be costprohibitive, commuter rail agencies typically seek to use existing infrastructure--which is primarily owned by private freight railroads. Consequently, commuter rail agencies must negotiate to purchase, lease, or pay to access the existing infrastructure from freight railroads. GAO was asked to examine (1) the challenges commuter rail agencies and freight railroads face when negotiating and sharing rights-of-way, (2) the actions that help facilitate mutually beneficial arrangements between commuter rail agencies and freight railroads, and (3) the role the federal government plays in negotiations between commuter rail agencies and freight railroads.

Freight railroads and commuter rail agencies face a number of challenges when negotiating agreements and sharing access to the same rights-of-way, including reaching agreement on compensation, capacity, and liability issues. For instance, in negotiating the agreements, freight railroads typically require that the commuter rail agency contractually indemnify them from any liability in the event of a commuter rail accident and procure a certain level of insurance coverage. Officials from freight railroads said they seek these provisions to protect their shareholders from the potential costs associated with commuter rail accidents. However, accepting these liability terms--notably the expense of maintaining a high level of insurance--can be problematic for the commuter rail agencies. In 1997, Congress limited the aggregate damages that may be awarded to all passengers from claims from a particular rail accident to $200 million and permitted providers of rail transportation to enter into indemnification agreements. However, we found some confusion within the commuter and freight rail community as to whether the liability cap applied to commuter rail agencies, which could result in problems during negotiations. After reviewing the legislation, we have concluded that the liability cap applies to commuter rail operations. Although there is no exact formula for success, officials from commuter rail agencies and freight railroads identified actions that can help facilitate mutually beneficial arrangements--understanding each other's position, identifying and using incentives to leverage cooperation, securing adequate and flexible funding, and establishing good lines of communication. Although commuter rail agencies and freight railroads agreed on actions that could help facilitate win/win arrangements, they disagreed on the appropriate role for the federal government in negotiating access or resolving disputes between commuter rail agencies and freight railroads. The Federal Transit Administration (FTA), Federal Railroad Administration, and Surface Transportation Board (STB) have responsibility for different aspects of rail transportation. For example, FTA helps fund the planning and development of eligible commuter rail projects. However, none of the three agencies play a role in commuter rail access negotiations. Therefore, they have not provided any guidance or information to commuter rail agencies or freight railroads to facilitate and inform negotiations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: STB could provide guidance to commuter rail agencies on negotiations with freight rail companies and has the statutory authority to do so. To date, no commuter rail agencies have sought information or guidance from STB on freight rail negotiations, although STB is ready to provide information and guidance if requested. STB is ready to discuss best practices in freight negotiations and provide commuter rail agencies with an understanding of the position of freight rail companies in sharing right-of-way.

    Recommendation: In order to facilitate and inform negotiations between commuter rail agencies and freight railroads, the Secretary of Transportation and the Chairman of the Surface Transportation Board should determine whether it would be appropriate and useful for them to provide guidance and information, such as tips for successful negotiations and information on best practices, availability of federal resources, and the applicability of the liability provisions in the Amtrak Reform and Accountability Act of 1997, to commuter rail agencies and freight railroads. If DOT and STB determine that it would be helpful for them to provide such information but that they lack the statutory authority to do so, DOT and STB should seek a legislative change to allow them to provide guidance and information to commuter rail agencies and freight railroads.

    Agency Affected: Department of Transportation: Surface Transportation Board

  2. Status: Closed - Not Implemented

    Comments: DOT considered GAO's recommendation and determined that their role should not include providing the recommended guidance. DOT does not believe that such guidance would be useful in helping to resolve these uniquely local situations. DOT notes that a large body of expertise is available across the country to assist local authorities in meeting negotiation and management requirements.

    Recommendation: In order to facilitate and inform negotiations between commuter rail agencies and freight railroads, the Secretary of Transportation and the Chairman of the Surface Transportation Board should determine whether it would be appropriate and useful for them to provide guidance and information, such as tips for successful negotiations and information on best practices, availability of federal resources, and the applicability of the liability provisions in the Amtrak Reform and Accountability Act of 1997, to commuter rail agencies and freight railroads. If DOT and STB determine that it would be helpful for them to provide such information but that they lack the statutory authority to do so, DOT and STB should seek a legislative change to allow them to provide guidance and information to commuter rail agencies and freight railroads.

    Agency Affected: Department of Transportation

 

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