Railroads and direct recipients of the federal aid (mostly state departments of transportation) must agree to on-time targets for affected passenger trains. If a railroad fails to meet those targets for reasons attributable to that railroad for any calendar month, it must spend whatever amount of money is necessary to achieve compliance within two months. If that fails, a state agency can take the matter to arbitration. Ultimately, if standards are still not met, then the railroad must give back the federal government's investment, based on a sliding 20-year scale — the sooner the failure, the more the railroad must pay.The standards run afoul of a classic common-property problem. At current, recessionary traffic levels, pathing passenger trains among the freight trains is simpler than it will be once economic growth picks up.
One Class I railroad already has negotiated contracts with two state DOTs for significant high speed projects targeted for federal grants. It reports that the performance standards stipulated in both agreements have already been rejected by the FRA as inadequate.
According to the guidelines, any train capacity created by federal high speed investments that is not immediately consumed must be reserved in part for future passenger train use. The guidelines recommend that railroads and recipients agree upon a 30-year plan for use of the capacity. This idea is complicated by the fact that freight traffic over some of the affected lines remains as much as 30 percent below pre-recession levels. One rail executive is given to believe that future capacity allocations between freight and passenger service will hinge on growth rates starting with today's depressed levels of freight traffic.Capacity allocations can be grounds for negotiation. Union Pacific, for all its hostility to passenger trains, is willing to run scoots anywhere Metra builds a third track for them. Schedule keeping is sometimes another matter. But it should come as no surprise that capital grants come with conditions.