A draft of the findings of the most recent phase of the multi-agency "Access to the Region's Core" (ARC) project concludes that the best way to meet regional rail needs is a new Hudson River tunnel (Secaucus-Penn Station) and underground link between Penn Station and Grand Central Terminal.

The draft report says that, if robust ridership response to NJ Transit's "Midtown Direct" Morris & Essex Line service is any indicator, new rail links in New Jersey will overwhelm Penn Station's ability to handle rail commuters. Even with platform and track improvements now planned or foreseen, demand for rail service to Penn Station will significantly exceed capacity in 2020, according to the paper. By that time, even with a major diversion of LIRR riders to the east side via the anticipated LIRR-Grand Central connection, LIRR service to Penn Station is also expected to be up from today's levels.

New cross-Hudson tunnel capacity, NJ Transit access to Grand Central and some yard improvements could give regional rail service and Manhattan job markets room to grow well into the 21st Century. Still, the report says that, short of the complex, multi-billion dollar mega-project that would entail, it's critical to begin work on short-term Penn Station capacity improvements now.

A next phase of the ARC project, which the MTA, Port Authority and NJ Transit are reportedly developing an agreement to undertake, would look at these issues, as well as whether the big-scale rail tunnel project could be divided into discrete phases.