BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1225
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          Date of Hearing:   August 29, 2012

                        ASSEMBLY COMMITTEE ON TRANSPORTATION
                               Bonnie Lowenthal, Chair
                   SB 1225 (Padilla) - As Amended:  August 24, 2012

           SENATE VOTE  :   38-0
           
          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 administration 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 
            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, including 
            that:  

             a)   The Secretary of Business, Transportation and Housing 
               Agency (Secretary) has responsibility for the overall 
               planning, coordination, and budgeting of the intercity 
               passenger rail service;  

             b)   The Secretary is authorized to allow Caltrans to enter 
               into an ITA upon a determination that the transfer would 
               result in administrative or operating cost reductions;  

             c)   The intercity passenger rail corridor is to remain a 
               component of the statewide system of intercity passenger 
               rail corridors upon transfer from the state;  and

             d)   The level of state funding is to be maintained at a 
               level equal to at least the level of service funded by the 
               state as of the effective date of the ITA, for a minimum 
               three-year period.

          1)States that the following provisions apply only to the LOSSAN 
            corridor and only if the corridor is subject to an approved 
            ITA:  








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             a)   Requires the Secretary to establish through the annual 
               budget process the level of funding for the LOSSAN corridor 
               operations, including associated feeder bus services;   

             b)   Requires the Secretary to allocate funds in accordance 
               with the ITA for the mutually- agreed upon rail services as 
               well as funds for marketing and administration;  

             c)   Authorizes the LOSSAN corridor agency or local or 
               regional entities to augment state-provided resources or to 
               fund shortfalls when agreed upon performance standards are 
               not reached but prohibits a mandate for them to do so.  

             d)   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.  

             e)   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.  


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

             g)   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.  

             h)   Requires the Secretary to establish performance 
               standards by June 30, 2014, and, to the extent necessary, 
               to revise the standards by July 30, 2015, or the effective 
               date of the ITA, whichever comes first.  

             i)   Prohibits the termination of feeder bus services unless 
               the services are not cost-effective.  

          1)Authorizes Caltrans, pursuant to the Secretary-approved ITA, 
            to transfer to the LOSSAN corridor agency the responsibility 
            for administering the state-funded intercity passenger rail 
            services, including associated feeder bus service, within the 








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            corridor.  Requires Caltrans to retain responsibility for 
            developing budget requests for the corridor, consistent with 
            the annual business plan as approved by the Secretary, through 
            the state budget process.  Requires the budget request to be 
            developed in consultation with the LOSSAN corridor agency and 
            in coordinating with other intercity passenger services in the 
            state.  

          2)Establishes a deadline of June 30, 2015, for execution of the 
            ITA that is to cover an initial three-year period that may be 
            extended by mutual agreement.  Requires the Secretary to 
            report to the Governor and the Legislature by June 30, 2016, 
            if an agreement is not met by the deadline, explaining why 
            agreement was not reached along with specific recommendations 
            on how to develop and acceptable ITA.  

          3)Mandates the Secretary to require the LOSSAN corridor agency 
            to demonstrate its ability to meet the performance standards.  


          4)Requires the ITA to:   

             a)   Include the date and conditions of transfer, including 
               the annual funding level for the initial three years 
               following the transfer.   

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

             c)   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.  

             d)   Describe the terms of use by the LOSSAN corridor agency 
               for the car and locomotive train sets and other equipment 
               and property owned by Caltrans.    

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









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          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 and the January 2014 business plan developed by the 
            California High-Speed Rail Authority (Authority).  

          2)Requires the Secretary to allocate state funds annually to the 
            LOSSAN corridor agency based upon the annual business plan and 
            appropriation by the Legislature.  Pursuant to the ITA, 
            indicates that any additional funds that are needed to operate 
            the passenger rail service during a fiscal year are required 
            to 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)Authorizes the use of local resources to offset any 
            redirection, elimination, reduction, or reclassification by 
            the state of state resources for operating intercity rail 
            services 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.








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          7)Authorizes Caltrans and the LOSSAN corridor agency to 
            contract, through competitive bids, with Amtrak or with 
            organizations authorized to provide intercity rail services.  
            Deems the LOSSAN corridor agency as an entity of the state, 
            allowing it to be a direct recipient federal public 
            transportation grants.  

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

          9)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.  

          10)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 
               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 








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               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.  

             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 








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          realize ongoing administrative savings of about $300,000.  

           COMMENTS  :  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 indicates that, despite its vital importance to 
          California, "current law has stifled corridor improvements.  A 
          JPA modeled after the highly successful Capitol Corridor JPA 
          would allow for greater administrative, procurement and 
          operational efficiencies that come with integration."  

          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.  

          Within the LOSSAN corridor, there are three passenger rail 
          carriers along this corridor, Amtrak's intercity Pacific 
          Surfliner and the Metrolink and Coaster commuter lines as 
          follows:  

          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 
            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 








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            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.   

          To coordinate these various passenger rail services within the 
          LOSSAN 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. 
           

          This 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.  As 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, the 
          responsibility for operating the rail passenger service within 








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          the corridor remains with Caltrans

          This bill is the second attempt for the separate agencies to 
          reach consensus on forming a joint powers agreement and to 
          become an agent of the state by entering into an ITA with 
          Caltrans to manage the operation of Amtrak services.  Upon 
          formation, it is envisioned that the LOSSAN corridor agency will 
          be able to better coordinate schedules and other operating 
          matters with the commuter rail services provided by Metrolink 
          and Coaster.  

           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 Capitol Corridor service from Sacramento 
          to Oakland/San Jose in 1991.  The management of the latter 
          service was transferred to the Capitol Corridor JPA (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 
          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.  

           State's remaining role in intercity rail passenger services  :  
          This bill requires, upon implementation of the ITA, Caltrans to 
          continue coordinating 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 








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          separate services?  

           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 
            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), could make statewide 
            coordination of scheduling and other operations difficult.  

          2)This bill makes several changes to the original legislative 
            statutes (SB 457 (Kelley), Chapter 263, Statutes of 1996), 
            relative to transferring operations of a state-supported route 








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            to a JPA.  If the current authorizing statutes have proven 
            adequate as evidenced with transfer of the Capitol Corridor to 
            a JPA, why are changes as proposed by this bill necessary?  
            Furthermore, some of the proposed changes in the bill may be 
            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 funding operating 
            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 if local entities choose not to fund operating 
            deficiencies.  

          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 
            corridor operations.   
          
           Proposed amendments  :  The author is proposing amendments to make 
          the bill's provisions non-specific to a particular rail corridor 
          by removing references to LOSSAN.  Also, the amendments will 
          align this bill's provisions with AB 1779 (Galgiani, 2012), 
          currently pending hearing on the Senate floor.  Lastly, the 
          amendments will restore intent language pertaining to LOSSAN 
          rail corridor operations maintaining a 58% farebox recovery 
          ratio that was inadvertently deleted.    

          Support  :  

          LOSSAN rail corridor agency (co-sponsor)
          Los Angeles County Metropolitan Transportation Authority 
          (co-sponsor)
          Orange County Transportation Authority (co-sponsor)








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          California Transit Association  
          CH2M HILL
          Los Angeles County Business Federation
          Los Angeles Division of the California League of Cities
          Mobility 21
          Orange County Business Council
          Sacramento Regional Transit District
          San Joaquin Regional Rail Commission
          San Joaquin Valley Regional Policy Council  
          Santa Barbara County Association of Governments
          Southern California Association of Governments
          Ventura County Transportation Commission (support in concept)  

           Oppose  :  

          California Department of Finance
          North County Transit District (oppose unless amended)



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