Most commuter rail agencies use rights-of-way that are owned by Amtrak or freight railroads for at least some portion of their operations. Specifically, 9 commuter rail agencies operate over Amtrak-owned rights- of-way. Twelve commuter rail agencies operate over rights-of-way owned by freight railroads. In addition, most commuter rail agencies rely on Amtrak and freight railroads for some level and type of service, including the operation of commuter trains; maintenance of equipment (i.e., locomotives and train cars); maintenance of way (i.e., track and related infrastructure); and train dispatching. Specifically, 13 commuter rail agencies rely on Amtrak for some type of service. Fourteen commuter rail agencies rely on freight railroads for some type of service. (See figs. 1 and 2 for an overview of these relationships.) Liability and indemnity provisions in agreements between commuter rail agencies and freight railroads differ, but commuter rail agencies generally assume most of the financial risk for commuter operations. For example, most liability and indemnity provisions assign liability to an entity regardless of fault—that is, a commuter rail agency could be responsible for paying for certain claims associated with an accident caused by a freight railroad. The reverse is also true—freight railroads are sometimes responsible for certain claims associated with accidents caused by commuter rail agencies. These types of agreements are referred to as no- fault agreements. In addition, about one-third of these no-fault agreements exclude certain types of conduct, such as gross negligence, recklessness, or willful misconduct, from the agreements. Some of the remaining no- fault agreements specifically allow for such conduct, that is, the commuter rail agency is still responsible for certain claims caused by, for example, the gross negligence or recklessness of a freight railroad. The liability and indemnity provisions also require that commuter rail agencies carry certain levels of insurance to guarantee their ability to pay for the entire allocation of damages. Although liability and indemnity provisions in agreements between commuter rail agencies and freight railroads differ, commuter rail agencies generally assume most of the financial risk for commuter operations. With two exceptions, liability and indemnity agreements between commuter rail agencies and freight railroads are primarily no-fault arrangements—that is, responsibility for specific liability in any incident is assigned to a particular entity, regardless of fault. For example, in a no- fault agreement, a commuter rail agency might indemnify a freight railroad by assuming liability for commuter equipment damage and passenger injury in a derailment, regardless of whether the freight railroad’s maintenance of the tracks could be blamed for a given incident. Similarly, a freight railroad could indemnify a commuter rail agency by assuming liability for freight rail equipment and track maintenance, even if the commuter rail agency was solely responsible for causing an accident. In contrast, a fault-based agreement assigns responsibility for an incident to the party that caused the incident. Of the 33 commuter rail agency and freight railroad agreements we reviewed, 21 were no fault, 10 contained a combination of no-fault and fault provisions, and 2 were premised on a fault-based allocation of risk. Although most of the agreements between commuter rail agencies freight railroads are no-fault arrangements, the liability and indemnity provisions vary regarding the type of conduct allowed. For example, 9 of the 31 agreements with all or some no-fault provisions explicitly exclude certain types of conduct from the no-fault arrangement. conduct is any type of conduct specifically identified in the agreement as conduct beyond simple negligence and can be defined in a number of ways, including willful and wanton misconduct, gross negligence, or conduct that might result in punitive damages. For example, 1 agreem ent specifically excludes conduct that is taken with conscious disregard for or indifference to the property or safety or welfare of others. Another 10 of the 31 agreements with all or some no-fault provisions, in contrast, explicitly include conduct that exceeds simple negligence as covered under the no-fault provisions. For example, 1 agreement explicitly states that the indemnification agreement includes coverage for punitive damages, or damages that are caused by the reckless or willful acts of a party, while another explicitly states that the parties agree to indemnify each other even if a train engineer in an incident is using alcohol or d Finally, the remaining 12 agreements are silent on excluded conduct, and discuss indemnification of negligence without explicit regard to its degr Often, in these cases, the degree of negligence will depend on state law, rugs. ee. This includes an agreement in which the liability and indemnity provisions exclude certain conduct for liability up to $5 million and include it for liability above $5 million. and a determination concerning the enforceability of the provision may require litigation. Freight railroads often set a requirement for a certain level of indemnification in the agreements and corresponding insurance requirements to ensure that the commuter rail agency will have the resources to pay for claims. The required level of insurance in existing commuter rail agency and freight railroad agreements ranges from $ 75 million to $500 million. Agreements vary on the exact requirements for insurance, such as what level of liability can be absorbed by the comm rail agency—referred to as a self-insured retention—before the railroa must use commercial insurance. For example, some agreements that we analyzed set the level at which the commuter rail agency must purchase insurance for risk at above $5 million, while other agreements set the leve at $1 million. Twelve of the 33 agreements between commuter rail agencies and freight railroads are silent on the exact level of insurance required. Appendix II contains a table summarizing the apportionment of liability in commuter and freight rail agreements. Similar to the agreements with freight railroads, commuter rail agencies’ agreements with Amtrak also are generally no fault. Specifically, 14 of the 17 agreements we reviewed between commuter rail agencies and Amtrak allocate liability on a no-fault basis, while 2 contain a combination of fault- based and no-fault provisions. The remaining agreement is fault-based. Regarding excluded conduct, 8 of the 17 agreements explicitly exclude certain conduct; the remaining agreements are silent concerning whether any conduct is excluded. Amtrak also sometimes requires certain levels of indemnification and corresponding levels of insurance to ensure that the commuter rail agency will have the resources to pay for claims. Append III contains a table summarizing the apportionment of liability in commuter rail agency and Amtrak agreements. Amtrak’s agreements with Class I freight railroads are also genera fault arrangements. In addition, these agreements are generally silent on excluded conduct. Furthermore, all of Amtrak’s agreements with freight railroads are silent on the amount of insurance Amtrak must carry to use freight-owned rights-of-way. ARAA requires Amtrak to maintain a minimum coverage for claims through insurance or self-insurance of least $200 million per accident. However, Amtrak officials stated that Amtrak carries more insurance than is required by this statute. Freight railroad, commuter rail agency, and Amtrak officials told us that ause no-fault agreements are the easiest way to settle liability claims bec they avoid the need for additional litigation to try to ascertain blame. Officials in Florida, for example, said a fault-based agreement would be ecause of the costs of much more expensive than a no-fault agreement b investigating accidents. These officials said that a no-fault agreement was the best way to compensate litigants quickly. Furthermore, officials at a freight railroad said that an accident can have multiple causes and an investigation may not settle which party was at fault; therefore, a fault- based approach can result in disputes between commuter rail agencies and freight railroads over which party is responsible for paying for claim These officials also said that contrary to some views, passenger and frei railroads have strong incentives to operate safely, even if they may not be liable for some accidents that they cause. Finally, Amtrak and freight railroad officials noted that no-fault agreements are fairly standard across the industry, and that these agreements are similar to agreements freight railroads use for access to each other’s infrastructure. The liability and indemnity provisions in commuter rail agency agreements with freight railroads have cost implications because premiums vary with the levels of insurance required. Eleven commut paying from $700,000 to $5 million in insurance premiums, representing less than 1 percent and up to about 15 percent of commuter rail agencies operating budgets. Newer and smaller (as defined by ridership) commuter rail agencies typically spend more of their operating budgets o insurance premiums, in part because they do not have an established claims record, which factors into the premiums that a commuter ra agency must pay to cover its potential risk. Officials at proposed commuter rail agencies told us that they anticipated spending a substantia portion of their operating budgets on insurance. For exa proposed commuter rail agency anticipated spending more than 20 percent of their operating budget on insurance premiums. However, these premiums could decrease once the commuter rail agency has an established claims record, particularly if the commuter rail agency has no accidents over several years of service. Because commuter rail agencies o are publicly subsidized, the premium costs for commuter rail agencies alsl mple, officials at a represent a cost to taxpayers. Furthermore, the potential for high premium r costs may impede or stop the development of new or expanded commute rail services, according to commuter rail agency officials. According to commuter rail agencies officials, certain liability and indemnity provisions expose commuter rail agencies to significant risks and, therefore, to potential costs. Although no-fault liability agreements are the norm, most assign more liability to commuter rail agencies than to freight railroads.