At Caltrain’s board meeting today, staffÂ announced a majorÂ deal with freight operator Union Pacific to accept electrification, and for Caltrain to take over intercity and freight rights for the SF-SJ corridor.

The national freight carrier’sÂ approval was needed for electrification and the blended system with High Speed Rail to move forward – the deal removes a potential barrier.

Opening the freight service on the Peninsula to bidding by third party, short-haul freight operator has major potential benefits for costly improvements on the corridor, including grade separations and track changes to support faster high-speed rail service. Â A short-haul operator could conceivably run equipment that could tolerate slightly higher grades and tighter curves, which could dramatically reduce the cost of these expensive capital projects.

For example, Palo Alto’s preliminary studies suggest that the cost of a trenched grade separation of Charleston, Meadow, and Churchill with a 1% grade currently required by “Class 1” heavy freight would be $1 Billion, but if the trains could take a 2% grade, the cost would be $500Million. Â Major savings would allow more grade separations and speed improvements to be done for the same budget.

Based on earlier conversations with the Peninsula Freight Users Group, the companies that ship freight in the southern portion of the corridor, a change to a short-haul operator would be very welcome. The reason the group was originally formed was to advocate for this change, because the $20+ Billion national operator, with 32,000 miles of service and 8,500 locomotives understandably did not provide attentive service to the local needs for two trains per day.

Owning the passenger rights would also give Caltrain more flexibility to potentially bring in additional operators to run new service, for example service that ran across the Dumbarton corridor and onto the main line.

Also part of the deal, UP has agreed with Caltrain about changes to be made in the tracks at South San Francisco. The changes will allow Caltrain to upgrade the station to make safety improvements to prevent passengers from crossing the tracks when there are trains approaching. Â These improvements will allow Caltrain to eliminate the “holdout rule” which fore safety reasons prevents two trains going in opposite directions from stopping in the station at the same time. Â This will improve service efficiency as well as safety, and is required for eventual high-speed service.

The deal does not involve any money changing hands, other than Union Pacific paying $1-$2million in back maintenance payments that were held up in the overall negotiations. Â Union Pacific was not making a profit on this infinitesimal part of its service area, and therefore they agreed to step away.

Around the state, there are many locations where freight and passenger services are competing for shared tracks. Â It is conceivableÂ that UP’s agreement to walk away from its Peninsula rights could be part of some larger statewide deal to overall separate and improve freight and passenger service, but if so, that wasn’t disclosed at Caltrain’s board meeting.

Overall, this is seems like a very good result eliminating potential barriers to electrification and the blended system, and opening the door to improved passenger service and lower-cost capital projects.