Those who have followed my postings know that I believe that the concept of open access is unrealistic. However, since its proponents believe that it will solve problems as varied as too-high rates and capacity constraints, I feel that they are entitled to their day in court.
How would open access be established, legally and constitutionally?
How would it be administered fairly, in view of the constraints imposed by track capacity?
How would user fees (trackage rights charges) be determined?
The only way to make it work is for the Feds to purchase the right-of-way - all of the railroad right-of-way - nationally and also each individual railroad. Then open the tracks to “owner-operator” “rail transport companies” on a ton-mile basis similar to what is charged by the various states.
This hasn’t worked well in Britain, so why should it work here? It’s sort of like Minneta’s remarks about Amtrack - Bust up Amtrack like Bush wants and Amtrack will get 1.2 billion $$$ to run the trains that won’t be there.
http://www.railcompetition.org/index2.htm - look under “Railroad Regulation: Changes in Railroad Rates and Service Quality Since
1990 (Chapter Report, 04/16/99, GAO/RCED-99-93)”
The only thing I would add is my belief that a private open access operator would not be viable without an “equalization” with other modes ROW taxation and funding, which means elimination of the ROW property taxes, an extension of the shortline maintenance tax credit to all open access operations regardless of Class, and an eligibility for funding under an Infrastructure Trust Fund.
When have we ever emulated the British regarding any industrial action? The only way we’d copy their example or worse is if the current Amtrak folks were put in charge of implementing open access here in the U.S.
If you apply the airline model, you end up with very busy corridors where owner/operators bid for the capacity. If the line needs more capacity, it will be built, or other ways will be found (alternate routing). On the other hand, little used branches would be subject to the same things that little used airports are - we still want our service, but we’ll need some help to keep it open.
It’s such a different paradigm that most people can’t wrap their heads around it. I’m not saying it would or wouldn’t work, but if it did happen, railroading as we know it would have to go. Not in the steel flanged wheel on rail arena, but in the operations arena.
Little used branchlines are already on the way out under the current system, so not much would change regarding their collective futures under open access.
You are correct that operations would see significant change. No more of this warehousing a car up and down the system until a buyer is found for the cargo, because all moves would be charged a fee, even repostitioning. You may see a return to the shorter/faster model aka D&RGW/Europe, since occupation of slots becomes a premium. Of course, no more 100% rate increases overnight fostered upon captive shippers, since there would be no more captive shippers. With an open market, you would see shippers return to the rails in droves. The subsequent demand for rail services would result in a reversal of the policy of retrenchment that has dominated railroading over the past century. And finally, with open access the incentive for deferring maintenance is eliminated, and the rail serive providers will have to find some other way to sex up the balance sheet.
One question that has not been answered: Since the concept of open access as predicated in this thread is based on government ownership of the rights of way, where would the money come from to accompli***his and how would the rights of way be purchased without a statutory basis for such purchase and without contravening the 5th Amendment?
Also, the Law of Unintended Consequences is still in effect. Since it is also held that the rights of way would be exempt from property taxes, how would the school districts which depend heavily on property tax revenue replace the revenue lost from such an exemption?
The Fed has all the authority they need in the interstate commerce clause. However, the must pay a “fair” value. Is a fair value the original cost, replacement cost, deprciated cost or something else?
The ROW wouldn’t necessarily have to be publicly owned. It could be either private or a public/private ownership. Vertical splits of corporations are not unheard of, and if the intent is to “equalize” rail ROW with that of other modes, it would make sense for the privately owned ROW to be run as a regulated utility to keep access charges reasonable, while the transporters would be unregulated to ensure market based competition and innovation. There’s also the possibility of an Interstate Highway-type of new rail corridor development, paid for primarily by an Infrastructure Trust Fund, and these new Interstate rail corridors would either supplement or supplant the current proprietary rail grid. The concepts put forth for HSR are logical examples of open access, given the now obvious national detriments of the proprietary rail systems we have now e.g. massive retrenchments, monopolistic pricing, et al.
It is doubtful that property taxes on railroad ROW’s have that much impact on the overall property tax base used by school districts, especially if open access results in positive unintended consequences such as new commercial development or reduced road damage due to publicly perserved branchlines. Indeed, public entities have the right and finacial access to purchase branch lines to p
I can’t speak to constitutional law, so I won’t try. On the other hand, we’re breaking new ground here. Let’s consider making the purchaser of the ROWs not the government, but a quasi-government “authority.” After all, somebody has to manage this thing, and theoretically it’s going to have to at least break even in the end.
On the subject of property taxes, even if the “rail authority” is tax exempt, the enabling legislation could easily include some method of “payment in lieu of taxes” (or PILOT). I’ll be optomistic and suggest that a system-wide formula could be determined that would make the taxes fair and equitable (ie, track “downtown” is worth more than that on the prairie). Properly done it would both create a situation where a local municipality couldn’t gouge the track owner (as has been suggested sometimes happens), yet the income from said taxes would still be there, albeit adjusted somewhat.
This does raise the possibility that “landing fees” in some areas would be higher than others, dependent on a lot of factors.
An offsetting factor to the reduced income from property taxes, as received from the RRs, might be the growth futuremodal suggests will occur, which would increase property tax revenue, and very possibly other tax revenue (ie, sales tax).
How does open access ensure the rates will be lower? It requires an entire additional layer of management (the entity that controls the track) that has to be financially supported, it requires duplication of facilities and services (switching, storage, crews, engine facilities, inspection locations engine and car repair) or if one railroad will have to contract with another to use its facilities. If railroad A contracts to use the facilities of railroad B, you know railroad B is going to attatch a certain level of profit to it. All in all I can’t see where it will be cheaper to operate the physical plant if you separate it from the railroads. So if you raise the costs and reduce the revenue (because that’s what this is really all about isn’t it, getting cheaper rates for the shippers) that means the railroads rate of return would drop even further than it is now.
Railroad companies are already divided into MOW divisions along with the other divisions, with open access (the privatized version) you’re just splitting the MOW division from the rest of the company and treating it as an independent company, so there’s no new layer of management.
You wouldn’t necessarily see lower rates with open access unless some of the current ROW costs are ameliorated under separate ownership, such as property taxes, surcharges for track damage from flat spots on wheels, MOW tax credits (now available to shortlines), etc. One thing you’d never see under regulated open access is defered maintenance, since the access charge is based in part on attributable usage costs, and since the past usage of deferred maintenance by Class I’s was usually used to sex up the balance sheet to attract a merger partner or attract new investment. Remember, the point of implementing open access is to equalize the infrastructure playing field among railroads, highways, and waterways, so that shipping choices will be based on e
Several points which I have observed in this thread:
There is an assumption that multiple service providers will seek to operate on all lines. Nowhere is there a guarantee that this will occur or that a service provider will even seek to operate on a given line, especially a branch in Montana that sees traffic only when the wheat crop is harvested.
Many of the benefits touted for open access seem to be based on “Field of Dreams” wishful thinking: “If you build it, they will come”.
The issue of fair value will probably wind up being determined in court in a condemnation proceeding, which could take a long time.
How would the qualifications of service providers be established and who would make this determination? You can’t let anybody with an old GP7, a few covered hoppers and no operating experience run a grain train on some branchline in North Dakota.
The experience of the airlines under dereg is revealing. You have a situation similar to open access and while some rates are cheaper, the overall rate structure seems to have no rhyme or reason. Some smaller cities do not have multiple airlines serving them. You have a lot of smaller carriers starting up and then discontinuing service a few years later, often leaving passengers stranded. There are also a lot of airliners parked in the Arizona desert when the carriers who were leasing them folded.
One can make a reasonable calculation that the dynamics of an open access rail system will emulate the open access characteristics of highways and waterways to some degree. True, not all rail lines will host multiple carriers, that will be determined by business strateties and free market forces. Not all areas of the country are served by all the major truck lines, and in these cases you typically have a local carrier or independent taking up the slack. In a branch line rail case, you would probably have a local carrier deliver carloads to a major junction for the major carriers to pick up, if they so choose. You wouldn’t likely have all seven Class I’s serving every major rail market, but in areas like LA and Chicago you might see all seven. Similar to the low cost air carriers (who are all doing quite well), you may very well have similar startups in the Class I market, guys who see a market niche or who innovate a better way of carriage, and these guys might actually trump the current Class I field.
To characterize the actions of the free market as just a “Field of Dreams” is to underestimate the power of consumer choice in enhancing overall GDP. The market will do what it does, all we need is to level the playing field and let it do what it does.
For me anyways, I always thought that open access lines should be run by the railroads and who ever operates the most trains is responsible for the upkeep and dispatching and other operations of the line. The other “tenents” would simply provide rent and would be subjected to a lease agreement.
Rent Control maybe introduced if necessary but generally would be private cooperation between the interested parties whether they are big like UP or small like RJ Corman R.R. As long as they have a legitamate cause to use that line and have the motive power and equipment to keep the line operational and avoid delays (alco breaks down and fouls the line and shortline doesn’t have anything else to get the train moving), it would work.
It is something that should be almost a partnership agreement like NATO where there are senior members which has special privilages and junior members which has basic privlages.