BILL ANALYSIS Ó SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 1225 SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: padilla VERSION: 4/9/12 Analysis by: Art Bauer FISCAL: yes Hearing date: April 24, 2012 SUBJECT: Interagency transfer agreement DESCRIPTION: This bill authorizes the Department of Transportation (Caltrans) to enter into a transfer of services agreement with the Los Angeles-San Diego (LOSSAN) Corridor Agency for the provision of intercity passenger rail service in the corridor. ANALYSIS: Since 1976, Caltrans has been contracting with Amtrak for providing intercity passenger rail service in the LOSSAN Corridor. The initial service was between San Diego and Los Angeles and later extended to Santa Barbara and San Luis Obispo. The institutional environment in which the trains operate is complex. The trains operate over tracks that are owned by two public agencies in San Diego County, the Orange County Transportation Authority, the Los Angeles County Metropolitan Transportation Authority, the Union Pacific Railroad (UP), and the Burlington Northern Santa Fe (BNSF) Railroad. In addition, the Riverside County Transportation Commission (RCTC) acquired the passenger rail rights between Fullerton and Los Angeles from BNSF in the 1990s. This requires any passenger rail operator, except Amtrak, to secure RCTC's concurrence before initiating or increasing service in that segment of the corridor. Railroad services operating in the corridor include freight provided by UP and BNS, and commuter rail service by METROLINK in Los Angeles, Orange, San Diego, and Ventura counties and by the Coaster in San Diego County. In addition to the state-supported service, Amtrak operates interstate passenger rail services to Seattle beginning in Los Angeles. In the future, the segment of the corridor from Burbank to Los Angeles and Anaheim will include high-speed rail service. One segment of the corridor, Commerce to Fullerton, is among the most heavily used corridors in the country with over 100 trains daily traversing it. SB 1225 (PADILLA) Page 2 Currently, the number of passenger and freight trains is about equal. The LOSSAN Corridor is the second most heavily patronized Amtrak corridor in the country, after the Northeast Corridor between Washington-New York-Boston. About 6.7 million passengers travel in LOSSAN corridor annually. Of those passengers, 2.6 million use Amtrak, 2.4 million rely on Metrolink, and the Coaster carries 1.7 million. The travelers are very different. The users of Metrolink and Coaster are typically commuters. The average length of a commuter trip is 30 miles, the average fare is $6.69 and income of the commuters is $75,000 annually. The Amtrak rider is typically a leisure traveler, students, or a business traveler who uses the service intermittently. The average length of the trip is 90 miles, the average fare is about $21, and traveler's average income is $80,000 annually. In addition to the LOSSAN Corridor, the state has funded Amtrak service from Bakersfield to Oakland via Stockton and Martinez since 1979. In 1991, the state contracted with Amtrak to operate service from Sacramento to Oakland/San Jose. The management of the service was devolved to the Capitol Corridor Joint Powers Agency (CCJPA) in 1998 by an interagency transfer agreement. This bill is intended emulate the institutional relationship between Caltrans and the CCJPA in the LOSSAN Corridor. Existing state law: 1. Authorizes Caltrans to: a. Contract with Amtrak for intercity passenger rail service. b. Program in the State Transportation Improvement Program (STIP) 15 percent of the funds available for interregional transportation improvements to intercity passenger rail and grade separations. c. Enter into contracts with motor coach operators to provide feeder bus service to intercity passenger rail service, provided the service does not require an operating subsidy. d. Provide marketing services for the intercity SB 1225 (PADILLA) Page 3 passenger rail program, acquire passenger cars and locomotives, and take other actions to facilitate the operation of the service. e. Prepare a ten-year intercity passenger rail plan updated every two years to be adopted by the California Transportation Commission (CTC). 1. Authorizes Caltrans, subject to the approval of the Secretary of Business and Transportation Agency (Secretary), to enter into an agreement with a joint powers board transferring responsibility for administering intercity passenger rail service in a corridor. 2. Assigns Caltrans responsibility for operating intercity passenger service for trains operating up to 125 miles per hour. 3. Requires a joint powers board to submit an annual business plan which is the basis of a budget request for service. 4. Authorizes the Secretary to do the following: a. Establish the level of state funding available for operation of intercity passenger rail service in available in each corridor in which service operates. b. Allocate funds to a joint powers board consistent with an interagency agreement that includes, among other things, the level of service to be operated. 5. Authorizes joint powers agencies to augment state funds at their discretion to expand service, address funding shortfalls, or achieve agreed upon performance standards. Existing federal law: 1. Authorizes states or state-created entities to contract with Amtrak for intercity passenger rail service. 2. Requires states, according to a national cost allocation process adopted by the Service Transportation Board, to pay the full operating and capital cost for intercity passenger rail service in which the service is less than 750 miles in length beginning in October 1, 2013. Interstate service is SB 1225 (PADILLA) Page 4 exempt from this provision. This bill : 1. Authorizes the LOSSAN Corridor Agency to enter into an interagency transfer agreement with Caltrans for assuming all responsibility for administering state funded intercity passenger rail service in the corridor on or before December 31, 2013. 2. Requires the Secretary to report to the Legislature on or before January 31, 2014, in the event that an acceptable agreement has not been executed, with an explanation of the reasons that the agreement was not reached and recommendations for developing an acceptable agreement in the future. 3. Specifies that the term of the transfer agreement with the LOSSAN Corridor Agency will be for five years, but may be extended by mutual agreement. 4. Prohibits the state from requiring a corridor agency to use local funds to augment service or to fund shortfalls when agreed upon performance standards are not reached. 5. Requires that cost for categories of service shall be controlled by the cost allocation procedures established by Amtrak in accordance with the federal Passenger Rail Investment and Improvement Act of 2008. 6. Stipulates that this bill is only operative if the members of the LOSSAN Corridor Agency amend the joint powers agreement to expand the agency's authority to enter into an interagency agreement. COMMENTS: 1. Purpose . The LOSSAN Corridor Agency is proposing to become an agent of the state by entering into an interagency transfer agreement with Caltrans to manage the operation of Amtrak services with existing state resources in order to better coordinate schedules and other operating matters with the commuter rail services provided by Metrolink and Coaster. The author points out that the LOSSAN corridor parallels two of Southern California's most SB 1225 (PADILLA) Page 5 heavily congested freeways, Interstate 5 and Highway 101, through six counties: San Diego, Orange County, Los Angeles, Ventura, Santa Barbara and San Luis Obispo. The line provides an alternative to driving these corridors and benefits southern California in terms of increased mobility, congestion relief, and decreased greenhouse gas emissions. 2. Background . In the last 35 years, the number of intercity trains funded by the state resources operating in the LOSSAN Corridor has increased from 1 to 11 round trips between Los Angeles and San Diego on weekdays, of which 5 are extended to San Barbara. Two of the Santa Barbara trains provide round trip service to San Luis Obispo. There are also five round trips daily from Los Angeles to Santa Barbara. Since the beginning of service, $1.152 billion has been invested in the corridor. Of that amount, $746 million, or 65 percent of the investment, has been state funds. The next largest investor in the corridor has been local governments, with $188 million, about 16 percent of the funds. The remaining 20 percent of the investment has been from federal sources, Amtrak, and the private railroads. Caltrans has been responsible for managing the investment program. Even with the investments in the corridor, the track and signaling system in the corridor from Ventura County to San Luis Obispo is antiquated. In San Diego County, there are segments of the corridor that remain single track. Lack of double track and inadequate signaling reduces system capacity and reliability of service. 3. LOSSAN Corridor Agency . The LOSSAN Corridor Agency is currently made up of nine members: Caltrans, Los Angeles County Metropolitan Transportation Authority, North County Transit District, Orange County Transportation Authority, San Diego Association of Governments, San Diego Metropolitan Transit System, San Luis Obispo Council of Governments, Santa Barbara County Association of Governments, and the Ventura County Transportation Commission. The agency advises Caltrans on Amtrak services and facility improvements for the corridor. Legislation enacted in 1996, provided an opportunity for the LOSSAN Agency to create a joint powers group to assume responsibility for the LOSSAN intercity passenger service by December 31, 1996. An agreement with Caltrans could not SB 1225 (PADILLA) Page 6 be reached, because the local agencies were unable to reach a consensus on the structure of the corridor agency. The responsibility for the service remains with Caltrans. This bill establishes a deadline of December 31, 2013 for the LOSSAN Agency to enter into an agreement with the state to devolve the service. 4. Caltrans' role . Caltrans' Division of Rail is the largest state rail agency in the country. It has earned this distinction by managing the largest state-contracted Amtrak service. Caltrans has managed the $2.8 billion statewide capital improvement program for the intercity passenger rail program. About eight percent of the STIP funds are dedicated to interregional rail, for which Caltrans is responsible for programming. Caltrans funded and is managing the design and construction in collaboration with BNSF of a third new track and signal system, costing $165 million, between Los Angeles and Fullerton. This will significantly improve system capacity and reliability for both passenger and freight service. With funds provided from Proposition 116, the Clean Air and Transportation Improvement Act of 1990, Caltrans managed the development and design of a bi-level (double deck) intercity passenger rail car. Last year, the Federal Railway Administration designated that car, referred to as the "California" car, as the only bi-level car in the country eligible for federal funding. Caltrans is managing a $552 million project for the procurement of 135 bi-level cars. Depending on the final bid, Caltrans will acquire about 40 cars. The rest are for Illinois, Iowa, and Missouri. Next year, Caltrans will manage the procurement of 27 locomotives, of which 6 are for California. The total value of this acquisition is expected to be $130 million. This bill shifts operating responsibility to the LOSSAN Corridor Agency, but maintains the state's responsibility for STIP preparation for the rail program and equipment acquisition. The committee may wish to amend the bill to require that conventional intercity passenger rail equipment be uniform throughout the state. This ensures that there is common pool of intercity equipment throughout the state, which can SB 1225 (PADILLA) Page 7 facilitate maintenance and equipment utilization. This proposed amendment does not affect local decisions regarding commuter equipment. 5. Commits state to funding LOSSAN service . This bill requires the state to continue funding the LOSSAN Corridor Amtrak trains at the service level agreed to in a transfer agreement with the LOSSAN Corridor Agency for five years. At the current appropriation level, this is about $27 million annually. It shifts, however, the responsibility for managing the contract with Amtrak to the LOSSAN Corridor Agency. Existing law requires the LOSSAN Corridor agency to submit its annual budget request to Caltrans, which in turn prepares a budget change proposal to the Department of Finance for inclusion in the state budget. 6. State rail network versus regional rail network . Caltrans operation of the LOSSAN Corridor has ensured the service is integrated into a statewide rail network. Because there is no intercity passenger rail service across the Tehachapi Mountains, Caltrans provides connecting bus service from Los Angeles to Bakersfield, where there is a connection to the San Joaquin Valley trains. There are about 30 round trips daily between the 2 cities, with the service providing about 400,000 trips a year. These trips are integral to the success of the San Joaquin service. To ensure that the LOSSAN Corridor Amtrak service continues to be part of the statewide rail network, the committee may wish to amend the bill to prevent the termination of bus service contracted for by Caltrans to connect LOSSAN Corridor service with the other state-provided Amtrak service, unless the bus service no longer conforms with the performance requirements of existing law. Existing law prohibits an operating subsidy and requires the bus fares to cover the operating costs. 7. Goal of LOSSAN Corridor Agency . The goal of the LOSSAN Corridor Agency is to improve the overall performance of the corridor to the benefit of both commuter and intercity services. This is to be achieved by integrating the Amtrak and the commuter services, principally through schedule coordination. If not managed carefully, there is a potential risk of the Amtrak service being subsumed into the commuter program. Amtrak service has been very successful, in part, because of the constraints on SB 1225 (PADILLA) Page 8 operating subsidies. Caltrans has emphasized maintaining as high a revenue yield per passenger as possible. To this end, the state-supported Amtrak service secures about 60 percent of its operating cost from fare revenues. This compares to 42 percent for Metrolink and about 25 percent for Coaster. To protect the economic viability of the Amtrak service, the committee may wish to amend the bill to require the Amtrak service to maintain a ratio of fare revenues to operating cost of no less than 58 percent. 8. Issues of management . The success of the Capitol Corridor service, in the opinion of many observers, has been due to a staff that is experienced with managing passenger rail services and that recognizes the concerns freight railroads have with passenger services using the same facilities. To this end, the committee may wish to amend the bill to require that the LOSSAN Corridor Agency retain an individual to manage the contract with the state with previous experience operating or managing intercity or commuter passenger rail services. 9. Incorrect intent language . Beginning on page 3, line 18, there is intent language written as operative language. Specifically paragraphs (b) (1), (b) (2), and (b) (5) include operative language. It is unnecessary to convert these paragraphs to operative because existing law addresses the subject in the paragraphs. The committee may wish to delete these paragraphs from the bill and to amend paragraphs (b) (3) and (b) (4) as conventional intent language. 10. Technical amendments . The following technical amendments are requested by the sponsors: a. Page 5, line 7, add a cross reference to section 14031.8 (g). b. Page 5, lines 26 to 27 change December 31, 2013 to June 30, 2014 and January 31, 2014 to June 30, 2014. c. Page 8, line 23, delete "not precluded" and add "authorized under". d. Page 9, line 15, strike "comprised" and added "composed" e. Page 9, line 17, correct name of the LOSSAN Corridor. SB 1225 (PADILLA) Page 9 POSITIONS: (Communicated to the committee before noon on Wednesday, April 18, 2012) SUPPORT: LOSSAN Rail Corridor Agency (sponsor) Amtrak Los Angeles County Metropolitan Transportation Authority Orange County Transportation Authority Sacramento Regional Transit District San Joaquin Regional Rail Commission San Valley Regional Policy Council Ventura County Transportation Commission OPPOSED: None received.