Frequently Asked Questions Regarding the Draft Rail Service Operator Agreement

As the RTC considers entering into an agreement with Progressive Railway to replace the agreement currently in place with Iowa Pacific Holdings the following questions and answers are provided in order to assist informed community dialogue.

Does the RTC have an obligation to ensure that there is freight rail service on the rail line?

Yes, the RTC is required to have freight rail service on the rail line. The RTC, under conditions of approval by the California Transportation Commission (CTC), received $11 million from Prop 116 to purchase the Santa Cruz Branch Rail Line and $10 million from Public Transportation Account funds to purchase the rail line and make bridge repairs. The CTC adopted Resolution PA-10-06 in 2010 which states that the RTC must meet certain conditions, including “to be responsible for initiating recreational passenger rail service” and “to be responsible for continuing freight rail service for as long as would be required by the Surface Transportation Board.”

The resolution further states that, “In the case where the SCCRTC ceases to utilize the Branch Line for the original purpose as approved by the Commission, SCCRTC commits, via a board resolution, to reimburse the State the greater of either the amount allocated or the then present fair market value as determined by the State.”

Why is there an urgency to enter into an agreement with a new rail operator now and not wait until the Unified Corridor Study is completed?

In addition to the conditions listed in the question above, Iowa Pacific (IPH), the RTC’s current operator, has become a very unreliable provider of freight service. IPH continues to accumulate debt to the RTC by continuing to store cars on the rail line without paying the RTC and not addressing maintenance and repair needs on the rail line. Recent communications with the Federal Railroad Administration (FRA) have revealed that a number of track defects that have been identified by the FRA have gone unaddressed for months. These defects are the responsibility of IPH to correct, as per agreement. RTC staff has learned that one local business, Big Creek Lumber, is currently being affected by IPH’s inability to operate. With all of the challenges IPH is facing, it is in the best interest of the community (including local businesses) to provide a viable new operator for the rail line as soon as possible.

How will the results of the Unified Corridor Study affect a potential agreement with Progressive Rail?

The draft agreement is in two phases. Phase one engages Progressive Rail to provide freight service on the south end of the line to existing freight customers in Watsonville. Winter storm damage and a washout near Harkins Slough prevent access to the remainder of the line until repairs are made.

Phase two of the agreement activates after the RTC completes the Unified Corridor Study and makes a decision on future use of the rail line. If the RTC decides to keep the tracks in place and pursue potential passenger rail service (consistent with existing policy), then the agreement remains in place for 10 more years and will include the entire length of the 32-mile rail line. If the RTC decides to remove the tracks beyond the Watsonville area, then Progressive Rail has the option to pull out of the agreement.

Will Progressive Rail use federal exemptions to avoid following local and state requirements in developing its rail business?

Freight rail operations are governed by federal law through the Surface Transportation Board (STB) and Federal Railroad Administration (FRA), and federal law can supersede state and local laws. As part of its due diligence, the RTC has spoken with local leaders of communities and to public agency owners of rail lines where Progressive Rail operates. All have reported that Progressive Rail works with local communities to follow local laws as it develops business to increase freight rail service.

The draft agreement says that the “Commission may not materially interfere with Railway’s rights and operations.” Does this mean the rail operator could block the RTC from building a bicycle and pedestrian rail trail or implementing passenger rail? Will we need permission from the rail operator to do these things?

No, this does not mean that the operator would block the RTC from building a trail or implementing passenger service. This simply means that any new project or excursion train on the rail line that could impact freight operations must be coordinated with the freight operator. This language is also included in the existing railroad operations agreement as required by the Surface Transportation Board (STB). IPH worked with the RTC on the production of the Monterey Bay Sanctuary Scenic Trail Network Master Plan and was supportive of the rail trail plan. Progressive Rail has also expressed support for a trail along the rail line and for passenger service operations.

Are there any details on the proposed maintenance facility at Wrigley’s on the Westside that is mentioned in the draft agreement? What would be the impact to the neighborhood if it is constructed?

This language has been carried over since the rail operations agreement was first negotiated with Sierra Northern Railroad. Neither Sierra Northern nor IPH ever produced any concrete plans for such facilities. Progressive Rail has not expressed a need or desire for maintenance facilities at this location.