FRA intends to make changes to stakeholder agreements for High Speed Rail grants

Earlier this summer the Federal Railroad Administration’s (FRA) so-called “Stakeholder Agreements” between state Departments of Transportation and Class I railroads participating in the federal High Speed Rail Program was met with skepticism by Class I executives.

These agreements focused on how the state DOTs and Class I’s will govern the shared-use-freight-passenger rail service in corridors receiving federal aid in the HSR program. Within them, the FRA proposed to impose penalties on freight railroads for failing to meet on-time performance standards for passenger traffic, as well as specific quantitative performance measures stipulating that freight railroads and the grant recipients (in most cases state DOTs) agree to measurable service outcomes for the number of daily trips, trip-time and on-time performance for the proposed passenger rail service.

Also included in the original agreements, according to a report from Ken Orski, editor of Innovation Newsbriefs, was a stipulation that if a railroad fails to meet those targets, it must “at its sole expense” take all necessary corrective measures to achieve compliance within two months. If failure to achieve the stipulated outcomes continues over the long term, Orski said the railroad must repay a pro-rated share of the federal grant. And to protect the public investment, the FRA is calling for any new capacity created by the federal grant to be reserved for future passenger train use and may not be used to increase freight carrying capacity.

But since those directives were issued—and subsequently met with negative feedback from Class I executives—the FRA has decided to remove these components of the stakeholder agreements, according to an FRA spokesperson. What’s more, various reports indicate that the stakeholder agreements did not have a sufficient amount of negotiations between the FRA and Class I executives prior to being released.

The FRA spokesperson told LM that the FRA is working with Class I railroads and the Association of American Railroads to create new guidance within the stakeholder agreements. He said meetings among all parties have been occurring on a regular basis and new guidance is anticipated in the coming months. But he cautioned that is a “moving” document and could see different changes if necessary, adding that the process is being viewed as a collaborative effort.

“Guidance is not mandatory for good-faith negotiations to take place, but is simply a tool to help assist in the process,” said FRA Administrator Joseph C. Szabo. “We don’t want to inhibit the parties’ creativity by being prescriptive, but rather, provide them flexibility to achieve the performance outcomes that are required by law.   Any questions by the states can be answered by the assigned FRA customer service agent, or if requested, FRA is willing to sit in with the parties to assist them in achieving the necessary results.”  

According to the FRA, agreements between Class I’s and state DOTs must:
-achieve the necessary balance to protect private and public interests;
-achieve and maintain quantifiable performance outcomes based on objective, mutually-agreed upon analysis and modeling, including operating slots/frequencies, trip times, and reliability to the extent it is under a party’s control; and
-HSIPR grants are for the benefit of existing or future intercity passenger rail service and will fund the infrastructure improvements necessary to ensure a high level of performance.

As part of the White House’s American Recovery and Reinvestment Act, $8 billion in federal grants were awarded to 31 states and 13 major corridors in the U.S. for high-speed and intercity passenger rail (HSIPR) projects. And earlier this month, Department of Transportation Secretary Ray LaHood announced that the FRA has received 77 applications from 25 states for the most recent round of HSIPR grant funding. Application requests, according to the FRA, total more than $8.5 billion and will be considered for funding from more than $2.3 billion appropriated in Fiscal Year 2010. Of these applications, 20 came from ten states for $7.8 billion towards high-speed rail corridor development programs, along with 57 applications from 18 states totaling $700 million for smaller, individual projects within rail corridors that are ready to begin construction.

While it is clear there are issues to be ironed out in the HSR program, there are myriad benefits of future HSR development for freight railroads and shippers, too.
Some of these benefits include taking trucks off the road, easing highway congestion, and lowering greenhouse gas emissions, according to Association of American Railroads President and CEO Edward R. Hamberger.

In an interview with LM earlier this year, Hamberger said that the $8 billion in federal grants show how the White House fully understands that passenger rail cannot be built at the expense of freight rail.