PRIIA Section 209 State Working Group December 1-2, 2010 Meeting Summary

The S209 SWG met with Amtrak on December 1 and 2 at the Amtrak offices in Washington DC to discuss progress on PRIIA Section 209 (S209). Participants:

  • David Kutrosky/Capitol Corridor-CA, Beth Nachreiner/WI, Kevin Page/VA, Patricia Quinn/Downeaster-ME, and Pat Simmons and Susan Howard/NC from the S209 SWG
  • Stephen Gardner, John Bennett and Max Johnson from Amtrak
  • Shayne Gill and Andy House from AASHTO

Based on the feedback provided from states through their surveys and discussions with S209 SWG members, the meeting focused on 3 major elements: Direct Costs, Shared Costs, and Capital Charges.

DIRECT COSTS & SHARED COSTS:

The S209 SWG expressed to Amtrak that most states, in concept, agree with the principle that States should pay 100% of the Direct Costs of operating their services, however the states lack the confidence that the direct costs provided to them adequately reflected the costs of operating their services. It was further expressed that the current methodology of allocating Shared Costs was difficult to understand, difficult to relate to specific services and provided no mechanism for cost containment.

Amtrak agreed to work with a S209 SWG subcommittee, chaired by Patricia Quinn, to review all Direct and Shared Cost categories, refine/expand/explain their definitions, and properly assess which costs are actually direct, which costs are actually shared, and how those charges should be communicated and assessed to states – including a formula based assessment of shared costs. The goal is to provide a better, more accurate verification of costs which reflects the level of service and reduces risk of cost increases that are not clearly tied to service increases. To further assist in these cost definitions, Amtrak will provide to the S209 SWG and appropriate member states the APT costs for FY2010. Other members of the S209 SWG Subcommittee on Direct/Shared Costs include Beth N./WI and Pat S./NC.

Regarding third-party direct costs (Host RR MoW, Host RR Performance and Fuel), Amtrak agreed to isolate these costs in their statements and to explore ways of including states in negotiation processes, to better verify these charges to states so that states understand the correlation between payments made and services received.

CAPITAL CHARGES

Amtrak agreed to evaluate charging states only for assets used to directly support their services. They will also explore the concept using the PRIIA Section 301 program[1] to fund the states’ Amtrak capital charge. Under this approach, the Section 301 program would include a pre-determined amount off-the-top, representing 80 percent of the Section 209 states’ annual Amtrak capital charge. States would need to annually provide the remaining funds with 20% non-federal match. Amtrak will provide a one-page summary of this concept to the SWG by December 10, 2010. The SWG agreed to evaluating Amtrak’s concept on this issue but had several questions about whether this approach could work without authorizing legislation, among other issues.

States should be receiving their capital charges no later than December 31, 2010. If any state has not received this information by that time, they need to contact Max Johnson at Amtrak to schedule a meeting to review these charges. The Cost S209 SWG Committee will also include the definition and application of appropriate Capital Charges and financing mechanisms as proposed by Amtrak.

OTHER MANAGEMENT ISSUES

A Contractual Costs and Performance Guarantees sub-committee, chaired by David Kutrosky (with Kevin P./VA) , was formed to work with Amtrak on performance guarantees and other contract-related issues. One of the outcomes of this subcommittee isto assist states in their development of future operating contracts/agreements. Components of such contracts could include: performance guarantees, multi-year contracts, penalties for late or no payments, and a simplified billing/invoicing process.

TIMELINE/DELIVERABLES

The second day of the two-day meeting focused on developing a schedule to meet the April 16, 2011 deadline for agreement on the S209 policy. The attached matrix provides the details on this aggressive timeline. Currently, two meetings are proposed for the S209 SWGand Amtrak in January, including a national meeting between States and Amtrak at the S4PRC/AASHTO meeting in late January. There are two opportunities to schedule meetings in March 2011, one coinciding with the AASHTO-SCORT meeting. The next meeting between the S209 SWG and Amtrak will be on January 5, 2011.

[1] The Intercity Passenger Rail Service Corridor Capital Assistance Program