BILL ANALYSIS                                                                                                                                                                                                    Ó



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          SENATE THIRD READING
          SB 1225 (Padilla)
          As Amended  August 24, 2012
          Majority vote

           SENATE VOTE  :38-0  
          
           TRANSPORTATION      13-0        LOCAL GOVERNMENT    8-0         
           
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          |Ayes:|Bonnie Lowenthal,         |Ayes:|Smyth, Alejo, Bradford,   |
          |     |Jeffries, Achadjian,      |     |Campos, Davis, Gordon,    |
          |     |Blumenfield, Bonilla,     |     |Hueso, Norby              |
          |     |Buchanan, Eng, Furutani,  |     |                          |
          |     |Galgiani, Wagner, Norby,  |     |                          |
          |     |Portantino, Solorio       |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           APPROPRIATIONS      12-5                                        
           
           ----------------------------------------------------------------- 
          |Ayes:|Gatto, Blumenfield,       |     |                          |
          |     |Bradford, Charles         |     |                          |
          |     |Calderon, Campos, Davis,  |     |                          |
          |     |Fuentes, Hall, Hill,      |     |                          |
          |     |Cedillo, Mitchell,        |     |                          |
          |     |Solorio                   |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Harkey, Donnelly,         |     |                          |
          |     |Nielsen, Norby, Wagner    |     |                          |
          |     |                          |     |                          |
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           SUMMARY  :  Authorizes, until June 30, 2015, the California 
          Department of Transportation (Caltrans) to enter into an 
          interagency transfer of services agreement (ITA) with the Los 
          Angeles-San Diego-San Luis Obispo (LOSSAN) corridor agency for 
          the provision of intercity passenger rail service.  
          Specifically,  this bill  :  

          1)Makes various findings and declarations regarding the 
            importance of intercity rail as an element of the state's 








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            transportation system, the state's historical investment in 
            capital improvements and operation support for intercity rail 
            service, and the importance of protecting that investment.  

          2)Makes various statements of legislative intent.  

          3)Requires the Secretary of Business, Transportation and Housing 
            Agency (Secretary) to establish through the annual budget 
            process the level of funding for the LOSSAN corridor 
            operations and allocated in accordance with the ITA that 
            includes agreed upon rail services as well as funds for 
            marketing and administration.  

          4)Authorizes the LOSSAN corridor agency or regional entities to 
            augment service or to fund shortfalls when agreed upon 
            performance standards are not reached but prohibits a mandate 
            for them to do so.  

          5)Authorizes the LOSSAN corridor agency or local or regional 
            agencies to identify and secure new supplemental sources of 
            funding for the purpose of expanding or maintaining intercity 
            rail passenger service levels, including state and federal 
            intercity rail resources.  

          6)Authorizes local resources to be available to fund operating 
            deficiencies only if the local resources are dedicated by a 
            vote of the local agency providing the funds, with the 
            concurrence of the LOSSAN corridor agency.  

          7)Authorizes Caltrans to provide support services as agreed upon 
            by it and the LOSSAN corridor agency.  

          8)Requires operating costs to be controlled by using the Amtrak 
            cost allocation formula and the ability to contract out to 
            Amtrak or other rail operators.  

          9)Requires the Secretary to establish performance standards by 
            June 30, 2014, and to modify the standards by December 31, 
            2015, or the effective date of the ITA, whichever comes first. 
             Requires the Secretary to have the LOSSAN corridor agency 
            demonstrate its ability to meet the performance standards.  

          10)Authorizes Caltrans, pursuant to the Secretary-approved ITA, 
            to transfer to the LOSSAN corridor agency responsibility for 
            administering the state-funded intercity passenger rail 








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            services.  Requires Caltrans to retain responsibility for 
            developing budget requests for the corridor through the state 
            budget process.  

          11)Establishes a deadline of June 30, 2015, for execution of the 
            ITA.  

          12)Specifies the provisions of the ITA to:   

             a)   Include the date and conditions of transfer, including 
               the annual funding level.  

             b)   Cover the initial three-year period and allow for the 
               level of funding to be extended upon mutual agreement.  

             c)   Identify the funds to be transferred with the amounts 
               adjusted annually for inflation and in accordance with the 
               business plan.  

             d)   Specify the level of service to be provided, the 
               Caltrans methods to ensure coordination of services with 
               other rail passenger services including feeder bus 
               services, and the methods for the annual review of the 
               business plan and annual funding and appropriation 
               proposals.  

             e)   Describe the terms for transferring the car and 
               locomotive train sets and other equipment and property.  

             f)   Describe auditing responsibilities and process 
               requirements as well as reimbursement and billing 
               procedures.  

          1)Requires the LOSSAN corridor agency to describe how it will 
            use the state funds allocated annually in its business plan 
            that is to be submitted to the Secretary for review and 
            recommendation by April 1 of every year.  Deems the business 
            plan accepted by the state when approved by the Secretary.  
            Prescribes the requirements for the business plan.  Requires 
            the LOSSAN corridor initial business plan to be consistent 
            with the immediately previous State Rail Plan as developed by 
            Caltrans.  

          2)Requires the Secretary to allocate state funds annually to the 
            LOSSAN corridor agency based upon the annual business plan and 








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            appropriation by the Legislature.  Indicates that any 
            additional funds that are needed to operate the passenger rail 
            service may be provided by entities within the LOSSAN corridor 
            that receive service.  Authorizes cost savings or farebox 
            revenues to be used for service improvements related to 
            intercity service.  Requires the LOSSAN corridor agency to 
            report the fiscal results of the previous year's operations as 
            part of its annual business plan.  

          3)Requires that the level of service funded by the state to be 
            no less than the number of intercity round trips operated at 
            the effective date of the ITA, for a minimum three-year 
            period.  

          4)Establishes the level of funding provided by the state for 
            feeder bus service at substantially the same number of route 
            miles as the current feeder system at the effective date of 
            the ITA.  Prohibits the ITA from not allowing the LOSSAN 
            corridor agency from reducing the number of feeder bus route 
            miles upon its determination that a route is not cost 
            effective.  

          5)States that the bill's provisions do not preclude expansion of 
            state-approved intercity passenger rail service.  

          6)Deems the LOSSAN corridor agency as an entity of the state, 
            allowing it to be a direct recipient federal public 
            transportation grants.  

          7)Requires the contractor operating the LOSSAN Corridor 
            services, as a contractual condition, to agree to abide by 
            federal railway labor laws.  

          8)Repeals provisions authorizing the Southern California 
            Regional Rail Authority (SCRRA) to be a party to the ITA and 
            replaces it with the LOSSAN corridor agency.  

          9)Stipulates that this bill is only operative if the members of 
            the LOSSAN corridor agency enter into an amended joint powers 
            agreement to expand the authority of the existing agreement.  

           EXISTING LAW  :  

             1)   Authorizes Caltrans, in cooperation with local 
               transportation officials, to develop guidelines to 








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               implement the intercity rail program and defines the 
               intercity rail corridors within which rail projects are 
               eligible for funding, and requires Caltrans to develop a 
               comprehensive statewide rail passenger and freight system 
               plan.  

             2)   Authorizes Caltrans to contract with Amtrak for 
               intercity rail passenger services and provides funding for 
               these services from the Public Transportation Account.  

             3)   Authorizes, until December 31, 1996, Caltrans, subject 
               to approval of the Secretary, to enter into an ITA under 
               which a Joint Powers Agency (JPA) assumed responsibility 
               for administering a state-funded intercity rail corridor 
               service.  Authorized an expanded SCRRA, a JPA of five 
               member agencies representing the counties of Los Angeles, 
               Orange, Riverside, San Bernardino and Ventura, to be a 
               party to an ITA for assuming operational authority for 
               intercity rail passenger services in southern California.  

             4)   Establishes the terms of the ITA to include various 
               elements, including the date and conditions of transfer; 
               the funds to be transferred; the level of service to be 
               provided and Caltrans' methods for coordination of 
               services, annual review of the business plan, annual 
               proposals on funding and appropriations; the terms for 
               transferring car and locomotive train sets; and, auditing 
               and other procedures.  

             5)   Provides for the allocation of state funds by the 
               Secretary to a JPA under the terms of the ITA and based on 
               the annual business plan that includes the level of service 
               to be operated.  As provided in the ITA, authorizes the JPA 
               to provide any additional funds that are needed to operate 
               the passenger rail service during a fiscal year from 
               jurisdictions that receive service.  

             6)   Authorizes Caltrans and any entity that assumes 
               administrative responsibility for passenger rail services 
               through an ITA to contract with specified entities for the 
               use of tracks and other facilities and for the provision of 
               passenger rail services.  

             7)   Requires a JPA to submit an annual business plan which 
               is the basis of a budget request for service.  








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             8)   Pursuant to federal law:  

             a)   Authorizes states or state-created entities to contract 
               with Amtrak for intercity passenger rail service.  

             b)   Beginning in October 1, 2013, 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.  Interstate 
               service is exempt from this provision.  

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, one-time special fund cost to Caltrans in the range 
          of $200,000 to implement a transfer agreement with the LOSSAN 
          corridor agency, including supporting the transition of 
          Caltrans' equipment and facilities.  Caltrans also indicates a 
          one-time payment of $300,000 to $400,000 would be made to the 
          LOSSAN corridor agency associated with the transfer of 
          operational and capital projects. Caltrans would thereafter 
          realize ongoing administrative savings of about $300,000.  

           COMMENTS  :  The 351-mile-long LOSSAN rail corridor (San Diego to 
          Los Angeles to San Luis Obispo) is the second busiest passenger 
          rail corridor in the nation, second only to the 
          Boston-to-Washington D.C. Northeast Corridor.  More than nine 
          million passenger riders make trips on LOSSAN corridor commuter 
          and intercity trains annually.  The corridor runs through a 
          six-county area, connecting major metropolitan areas of Southern 
          California and the Central Coast.  The LOSSAN rail corridor 
          includes 41 stations and more than 100 daily passenger trains.  
          Since the 1970s, the state has provided more than $1 billion in 
          improvements to the corridor, Amtrak has contributed $220 
          million, and local passenger rail agencies have contributed $400 
          million.  

          There are three passenger rail carriers along this route, 
          Amtrak's intercity Pacific Surfliner and the Metrolink and 
          Coaster commuter lines:  

          1)Amtrak operates both the long distance intercity Coast 
            Starlight and the Pacific Surfliner passenger trains.  The 
            Pacific Surfliner route (essentially comprising the LOSSAN 
            rail corridor), under the administration of Caltrans, is 








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            wholly within California and operates between San Diego and 
            San Luis Obispo.  It receives financial support from Caltrans 
            that pays 70% of Pacific Surfliner costs above fare revenue.  
            Amtrak contributes the remaining 30% of the operating deficit 
            as the service is considered a part of Amtrak's basic 
            intercity service.  More than 2.8 million intercity rail 
            passengers annually use the Pacific Surfliner service.  
            Amtrak's other long-distance service, Coast Starlight, 
            provides daily service connections between Seattle and Los 
            Angeles, passing through Portland, Sacramento, the San 
            Francisco Bay Area and Santa Barbara.  

          2)Metrolink is the Los Angeles area commuter rail service, 
            operated by the SCRRA.  The Metrolink operations encompass six 
            rail lines and 55 stations using 512 miles of track.  The 
            system operates within the counties of Los Angeles, Orange, 
            Riverside, San Bernardino, San Diego, and Ventura.  It 
            connects with the Metro Rail system which serves Los Angeles 
            County, with the San Diego Coaster and Sprinter commuter rail 
            services which serves San Diego County, and with Amtrak's 
            Pacific Surfliner, Coast Starlight, Southwest Chief and Sunset 
            Limited intercity rail services.  

          3)Coaster commuter rail service, between the City of Oceanside 
            and the City of San Diego, is operated by the North County 
            Transit District (NCTD).  The Coaster operations include seven 
            locomotives covering the 41-mile route.  It reports about 1.4 
            million boardings annually.  The Sprinter commuter rail 
            service also operates within the corridor with a station 
            located at Oceanside continuing eastward to Escondido.   

          These rail passenger 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 (Metro), 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 transport provided by UP and BNSF, commuter rail service 
          by Metrolink in Los Angeles, Orange, San Diego, and Ventura 
          counties and by the Coaster in San Diego County, and Amtrak's 








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          intercity long-distance Coast Starlight service as well as its 
          Pacific Surfliner service.  

          To coordinate the interconnected rail passenger intercity and 
          commuter services of the above three entities within the Pacific 
          Surfliner corridor, a JPA was formed in 1989.  Metro, Orange 
          County Transportation Authority, NCTD, San Diego Association of 
          Governments, San Diego Metropolitan Transit System, San Luis 
          Obispo Council of Governments, Santa Barbara County Association 
          of Governments, Ventura County Transportation Commission, and 
          Caltrans are voting members of the JPA.  The Southern California 
          Association of Governments, Amtrak, and the California 
          High-Speed Rail Authority are non-voting, ex-officio members of 
          the JPA.  Further, there are four additional non-voting 
          technical advisory committee members on the JPA representing the 
          BNSF, the California Public Utilities Commission, SCRRA, and UP. 
           

          The LOSSAN corridor agency advises Caltrans, as administrator of 
          the corridor, on Amtrak services and facility improvements 
          within the corridor.  Legislation enacted in 1996 provided an 
          opportunity for the LOSSAN corridor agency to create a JPA to 
          assume responsibility for the LOSSAN intercity passenger service 
          by December 31, 1996.  An agreement with Caltrans could not be 
          reached because the local agencies were unable to reach a 
          consensus on the structure of the corridor agency.  Accordingly, 
          the responsibility for the service remains with Caltrans.  This 
          bill is the second attempt for the separate agencies to reach 
          consensus on a joint powers agreement.  

           State-supported intercity rail passenger services  :  In 
          California, there are three state-supported intercity rail 
          passenger services within three distinct corridor routes.  In 
          addition to the LOSSAN corridor described earlier, the state has 
          funded Amtrak service from Bakersfield to Oakland via Stockton 
          and Martinez since 1979 (San Joaquins), and the state contracted 
          with Amtrak to operate service from Sacramento to Oakland/San 
          Jose in 1991 (Capitol Corridor).  The management of the latter 
          service was transferred to the Capitol Corridor Joint Powers 
          Agency (CCJPA) in 1998 by an ITA.  

          Prior to 1976, Amtrak supported three round trips along the 
          present Pacific Surfliner route from San Diego to Los Angeles.  
          Under Caltrans management since 1976, the Pacific Surfliner 
          route has been expanded to current service level of 11 daily 








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          round trips from San Diego to Los Angeles, five daily round 
          trips continuing to Santa Barbara, and two daily round trips 
          continuing to San Luis Obispo.  The current LOSSAN farebox 
          recovery ratio (ratio of revenues to expenses) in state fiscal 
          year 2010-11 was 54%.  In contrast, the farebox ratio for the 
          San Joaquin service was 49%, and the Capitol Corridor, under 
          transferred administration from the state since 1998, was 39%, 
          the lowest of the three intercity passenger train services.  

           LOSSAN board  :  In January 2010, the LOSSAN corridor agency 
          outlined a series of short- and long-term strategies that they 
          indicated would have a direct, positive impact on passenger rail 
          service between San Diego, Los Angeles, and San Luis Obispo, 
          including a proposal to change the existing institutional and 
          organizational structure of the existing LOSSAN rail corridor 
          agency.  The overall goal of the governance change was to 
          transform the existing state-supported Pacific Surfliner 
          intercity rail service, currently operated by Amtrak and managed 
          by Caltrans, into a service under local management that was 
          believed by some to be more responsive to local needs, issues, 
          and consumer desires.  The proposed structure was to be modeled 
          after the CCJPA, which is responsible for managing the 
          Amtrak/Caltrans-supported service between San Jose, Oakland, and 
          Sacramento.  

          At the August 2011 LOSSAN board meeting, members discussed 
          options for establishing a new, locally-controlled JPA that 
          would assume administrative responsibilities for the 
          state-supported Pacific Surfliner service and agreed unanimously 
          to the plan in concept.  The LOSSAN board reiterated that 
          initial governance changes should focus only on the 
          state-supported intercity rail service and should not consider 
          modifications to the Metrolink or Coaster governance structure.  


           Section 209, Passenger Rail Investment and Improvement Act of 
          2008  :  The federal Passenger Rail Investment and Improvement Act 
          of 2008, Section 209, requires states to pay 100% of the costs 
          of short-distance intercity Amtrak services and capital costs 
          starting October 1, 2013.   Currently, for the Pacific Surfliner 
          services, Amtrak pays 30% of the operating deficit (about $25 
          million per year) and Caltrans pays the remaining 70% operating 
          deficit over fare revenues.  As the bill establishes January 1, 
          2014, upon which the state funding level amount is to be 
          maintained for a three-year period, the amount of Section 209 








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          funding by the state as indicated in the 2013-2014 state fiscal 
          year budget will determine the state's minimum allocation.  

           State's remaining role in intercity rail passenger services  :  
          This bill requires, upon implementation of the ITA, Caltrans to 
          continue coordinating LOSSAN rail corridor services with other 
          intercity passenger services in the state.  With the possible 
          transfer of state administration of all three state-supported 
          intercity rail passenger services - the San Joaquin (under 
          reauthorization pursuant to AB 1779 (Galgiani), of 2012), 
          Capitol Corridor, and the Pacific Surfliner - to 
          locally-approved JPAs, what will be the state's residual role in 
          overseeing the operations and interconnectivity of these 
          separate services?  

           Purpose of the bill  :  This bill would authorize a 
          locally-controlled JPA, the LOSSAN corridor agency, until June 
          30, 2015, to assume administrative responsibilities for the 
          state-supported LOSSAN rail passenger corridor.  The author 
          cites the LOSSAN corridor as one of the most important segments 
                                                   of California's rail system and, despite its vital importance to 
          California, "current law has stifled corridor improvements.  A 
          JPA modeled after the highly successful CCJPA would allow for 
          greater administrative, procurement and operational efficiencies 
          that come with integration."  

           Arguments in support  :  

          1)Proponents contend that placing passenger rail service in the 
            LOSSAN corridor under local management will result in a more 
            efficient and effective allocation of resources and decision 
            making related to service expansion, frequencies, extensions, 
            connectivity, and schedules.  They further contend that a 
            unified voice will be more effective at the state and federal 
            level when advocating on passenger rail issues, including 
            funding for capital improvements.  

          2)The author indicates that, to meet the demands of the region, 
            about $6-8 billion in capital improvements are needed by 2025 
            to modernize the LOSSAN corridor and by not providing for the 
            creation of a JPA, the future sustainability of the corridor 
            is uncertain.  

          3)Writing in support of this bill, Amtrak indicates that it 
            "will work collaboratively with the proposed JPA, provided the 








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            entity demonstrates an understanding of the criticality of 
            preserving, and enhancing, intercity utility along the entire 
            corridor.  Not only do the Pacific Surfliners provide vital 
            access to communities within the corridor, but the route is an 
            important part of Amtrak's national network, and the JPA's 
            actions must reflect this."  

          4)The terms of the ITA, as specified under existing law, serve 
            to protect the interests of the JPA as well as the state.  
            Further, as an element of the ITA, the requirement for the JPA 
            business plan will provide a roadmap on how the entity will 
            proceed and provide some level of confidence to state decision 
            makers.  

           Arguments in Opposition  :  

          1)Transfer of the management of this corridor to a JPA, along 
            with the similar potential transfer of the San Joaquin 
            corridor pursuant to AB 1779 (Galgiani), would make statewide 
            coordination of scheduling and other operations difficult.  

          2)This bill makes several changes to the statutes used to 
            establish an ITA with the CCJPA that are disadvantageous to 
            the state.  For example, existing law requires the JPA to 
            augment state funding to address operating funding shortfalls. 
             However, this bill requires local approval prior to local 
            funds being used for operating funding deficiencies.  Upon 
            transfer of the state-administered Pacific Surfliner route to 
            the LOSSAN JPA, should operating costs outpace revenues, it is 
            unclear how any shortfalls will be managed.  

          3)Although proponents cite the "highly successful" performance 
            record of the Capitol Corridor, actual farebox ratios of its 
            performance are below that of the currently state-administered 
            Pacific Surfliner and San Joaquin intercity rail passenger 
            services.  Therefore, the LOSSAN JPA will be tasked to 
            maintain the state's effective past management efforts.   

          4)Unlike the legislation forming the CCJPA, this bill would not 
            codify the structure or membership of the JPA that would 
            assume management of the LOSSAN rail corridor.  This raises 
            doubts about the capacity of the JPA to manage the corridor 
            because if its prospective members cannot even agree on the 
            representational makeup and structure of the JPA it is unclear 
            that they could effectively manage the more complex task of 








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            corridor operations.   

          
          Analysis Prepared by  :    Ed Imai / TRANS. / (916) 319-2093 


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