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Obtaining Railroad Operating Agreements Early

Title:  Chief Operating Officer

Phase(s):  Preliminary Engineering through Revenue Service 

Category:  Project Management

Date:  April 21, 2009

1. Background

Date:                          April 15, 2011

Project Name:           Central Florida Commuter Rail Transit (CFCRT) Project

Abstract:                    Obtaining Railroad Operating Agreements Early in a Project’s Life

Project Phase(s):       Pre-Preliminary Engineering (Pre-PE) through Final Design

Category:                   Project Management

1. Background

The Florida Department of Transportation (FDOT) is planning to construct a commuter rail transit system to serve communities in Central Florida.  The Central Florida Commuter Rail Transit (CFCRT) Project (also known as SunRail) is a 61-mile new commuter rail system, which will serve 17 stations (Full-Build Alternative).  The Project will operate along the existing CSX Transportation (CSXT) A-Line corridor, which FDOT is purchasing from CSXT.  The SunRail system will operate entirely at-grade, sharing track with freight service provided by CSXT and Florida Central Railroad, as well as intercity passenger rail service provided by Amtrak.  Therefore, operating agreements with these rail service providers is necessary.

The Initial Operating Segment (IOS) of the CFCRT Project, or Phase 1, is a 32-mile corridor consisting of 12 stations.  Phase 1 includes the purchase of seven diesel electric passenger locomotives, nine cab cars and five coaches; approximately 18-miles of additional second track being added to the existing 11-miles of double track; a new railway wayside signal and communication system; grade crossing upgrades; station platforms and canopies at all 12 stations; park-and-ride lots at seven stations; construction of a Vehicle Storage and Maintenance Facility (VSMF); an operations control center; and other elements.

In order to be considered for a Full Funding Grant Agreement (FFGA) on Phase 1 of the CFCRT Project, FDOT was required to have executed railroad operating agreements with CSXT and Amtrak, as well as close on the sale of the CSXT railroad corridor.

In November 2007, FDOT and CSXT completed negotiations and signed/executed the Central Florida Operating and Management Agreement, Transition Agreement, and Contract of Sale and Purchase.  However, the closing of the sale of the corridor was contingent upon the passing of legislation by the Florida State Legislature regarding insurance provisions for the CFCRT system.  It was initially thought that this legislation would be passed by the Legislature during its 2008 session, but this did not occur.  Subsequently, the legislation was defeated again during the next legislative session in 2009.  Local politics and special interests played a part of the non-passage of this legislation during both the 2008 and 2009 legislative sessions.  In early December 2009, this legislation was finally passed during a special session held by the Florida Legislature, and was signed into law on December 16, 2009 by Florida’s Governor.  FDOT closed in escrow on the corridor on December 22, 2010andwill take control upon award of the FFGA.

In July 2008, FDOT executed a Memorandum of Understanding (MOU) with Amtrak that addressed the following items: (1) bus bridge service; (2) service interruptions; (3) negotiation of a Contractual Services Agreement with Amtrak for servicing and maintaining the CFCRT rail fleet at the Amtrak’s AutoTrain facility; (4) design of the jointly shared stations; and (5) negotiation of an Operating Agreement for Amtrak service over State property.  However,Amtrak and FDOT reached a stalemate in negotiations of the Operating Agreement primarily with regard to insurance.  Subsequently, Amtrak terminated the MOU with FDOT in late February 2010 since this issue had not been resolved to Amtrak’s satisfaction.  As a result, the project’s schedule for receiving an FFGA was significantly impacted since this agreement was required to be in place and executed prior to award of the FFGA.  In December 2010, Amtrak and FDOT completed negotiations for the Operating Agreement.  This agreement was signed by Amtrak on January 25, 2011, with FDOT to sign and execute the agreement in the near future prior to award of the project’s FFGA.

2. The Lesson 

There are several lessons that can be learned from the CFCRT Project:

  • Politics and special interests can impact the timely execution of railroad agreements.  This should be taken into consideration and included in the project’s schedule.  If possible, a “Plan B” should be developed in case a situation arises that could significantly (or indefinitely) delay and/or kill the project as a result of being unable to obtain the necessary railroad agreements.  FDOT encountered this situation with both their operating agreements with CSXT and Amtrak.
  • Since a MOU is not a binding document, either party (i.e., railroad or grantee) could rescind without legal implications.  Grantees should strive to negotiate and execute all necessary railroad agreements as early as possible in a project’s life, rather than rely on a MOU to bridge the gap until the agreement is completed.
  • Having an executed railroad agreement signed by both parties early in the project’s life (i.e., prior to approval to enter Final Design) could prevent significant delays, as well as increases to the project costs.  However, this does not guarantee negotiations will be completed according to the grantee’s schedule.  FDOT started its negotiations with Amtrak in 2007 while the project was in PE, but did not complete negotiations until late December 2010.

3. Applicability

The lesson is applicable to Grantees with projects in which railroad agreements are necessary for operation.

4. Contact Person(s)

PMOC:

Ms. Teresa Stein, PE

Task Order Manager

Hill International, Inc.

30 South 15th Street, 13th Floor

Philadelphia, PA 19102

(215) 557-3253

Grantee:

Ms. Tawny Olore, PE

SunRail Program Management

FDOT – Orlando Urban Office

133 South Semoran Boulevard

Orlando, FL  32807

(407) 482-7879

 

Grantees that are developing either new rail commuter projects or other rail transit projects which will interface with railroads can benefit from the early appointment of an experienced railroad manager to interface with the railroads and with the safety oversight agencies. 

During the risk workshop at the Pre-PE review, the PMOC identified a significant risk to the project if it proceeded into the next phase without staff versed with technical knowledge of rail operations.  One of the primary recommendations was that Florida Department of Transportation (FDOT) retain the services of an experienced railroad manager as Chief Operating Officer (COO) to provide operational input for planning and design activities, to develop an operational plan for the construction phase, to coordinate with the other railroad operators (CSXT, Amtrak), and to develop a plan to meet the Federal Rules & Regulations administered by the Federal Railroad Administration (FRA). 

The CFCRT project will first purchase a segment of line from a railroad.  FDOT will become responsible for maintenance of the right-of-way and all fixed facilities on this line segment including track, bridges, and signal systems.  All of these systems are governed by FRA regulations; two freight railroads and Amtrak will continue to operate on the line segment.

The PMOC’s recommendation was accepted and a COO was retained.  The result is that FDOT has prepared a plan for assuming operations and maintenance of the corridor once ownership is transferred from CSXT to FDOT.  In addition, the COO has identified design issues that will affect future operations, developed operating agreements with other carriers, and has established a working relationship with regional FRA staff.

2. The Lesson

FDOT is developing the CFCRT project as the FTA Grantee.  FDOT does not have experience as a railroad operating authority.  The PMOC recognized the grantee had an organizational weakness when the PMP review was performed.  During the risk workshop, it was determined that this lack of expertise represented a project risk.  The PMOC recommended that FDOT retain an experienced railroad manager as COO for the Project.  FDOT advertised for these services among their General Engineering Consultants.  A firm was selected to provide the service and an individual was seconded to support FDOT.

Some of the tangible results of this action are:

  • Operating rules were developed in a timely manner for the FDOT line segment in coordination with the railroads to be consistent with the railroad’s operating rules.  This will enhance safety by reducing confusion and FRA is in agreement with this approach.
  • Protocols for dispatcher hand-over of trains between the CSXT and FDOT line segments were developed.  This required a modification to the signal layout at the ends of the line segment; but since the design was at a PE stage of development, the change did not result in a cost or schedule impact.
  • The COO was available to have input to the Rail Fleet Management Plan and on rail vehicle procurement to represent the needs of the future operating management.
  • FRA regional staff is being apprised of all activities on the project which impact safety or are subject to FRA regulations.

3. Applicability

The appointment of a Chief Operating Officer is applicable to all Grantees that seek to operate rail commuter services or light rail transit on shared trackage (temporal separation) with freight railroad operations.  Other projects which have extensive interface with railroads may also benefit from this type of expertise.  Unless the Grantee is a rail commuter operating entity  and already has a COO as part of its organization, this position would be part of the Grantee’s Project Development organization and the responsibilities of the COO continue through the start of revenue service on the transit line.

4. References

Ms. Tawny Olore, PE
Project Manager
FDOT – Orlando Urban Office
133 S. Semoran Blvd.
Orlando, FL  32807
(407) 482-7879

Updated: Tuesday, May 24, 2016
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