Thank You, Fred Frailey.....

.....for your November TRAINS column.

I'm sure The Late Randy (NellieBly) Resor will feel the same as he reads it "topside" as I do here "down below".

In the column, the author lets his readers know just how much the impact of two Amtrak trains ("One a day") can have on a given segment on which, say, forty eight other trains will operate over a single track road.

Read Mr. Frailey's column to find out how the Amtrak trains can command far more than the 2/50'ths (4%) of the track's cost to operate than the "incremental" reportedly (it's a bilateral contract exempt from public disclosure) Amtrak pays the roads to handle their trains.

If such be the case, then it drives home the point that both Randy and I have continually made at this Forum that the roads made a "Faustian pact with the Devil", and that Amtrak "gets what they pay for".

The blog , pretty much word for word ,I think.
http://cs.trains.com/trn/b/fred-frailey ... lemma.aspx" onclick="window.open(this.href);return false;

I've long had the same position. Common sense dictates that a passenger train does not mix with heavy freight. One slogs along at 40mph continually, one sprints at 80mph and then stops once an hour. That's frustrating on double track, ridiculous on single track. Common sense would also dictate that if Amtrak paid anything near market rates for trackage rights, there wouldn't be a problem, because Amtrak would be a very good customer. Imagine a shipper offering UP or BNSF market rate for one unit train each day, guaranteed forever. That's probably a dream customer. The fact that Amtrak is treated as a nightmare customer indicates they are not worth the trouble, so they must not be coming anywhere near covering the true cost of their track slots.

"imagine a shipper offering UP or BNSF market rate ... guaranteed forever"
That's how UPS--and I presume J. B. Hunt and others--get premium service. Every year after the Christmas rush UPS rates the railroads it uses; they're all hustling to get a good rating because it's worth it to them. (Amtrak also rates its host railroads, but it doesn't have the same effect ...)

I have to question this solution of "Pay market rates." And for that, I have to refer back to the Rail Passenger Service Act of 1970, aka the law that created Amtrak.

You see, there's a clause that says if the railroad and Amtrak can't agree on a rate for carrying traffic, it gets adjudicated by the Interstate Commerce Commission; the ICC will set the rate. Today, since the ICC was abolished, it is set by the Surface Transportation Board should a "rate case" happen.

Is it a "taking" by the Fifth Admendment's Just Compensation Clause? More than likely, yes, because the Supreme Court ruled that preventing the full economical use of a property by a government organization is a "taking".

Two questions come to mind:

First, is Amtrak actually paying fair market rate right now? If so (which given any lack of court or regulatory action, seems to be the case), then the solution can't be "pay market rates" since we already are. The solution has to go back to the railroads, and increasing capacity (which as time grows is becoming to mean "lay down more track").

If it's "no" then the second question comes into play: Is the rate set by the STB considered 'just compensation' aka a 'fair market rate'?

That's the catcher, because right now the Supreme Court has a case where they're reconsidering if a person can appeal to the federal courts if a state went through a "fair process" to evaluate any "taking" by a state agency. I don't know if current federal law would have a federal judge defer to the STB and it's procedures on setting rates and dealing with rate cases, similar to that to existing case law.

I mention this because I can really see a case go through the court system, and there's so many "outs" from the Supreme Court that it would start to be cost prohibitive to pay the lawyers and laying down more track is looking really cheap in comparison (plus it allows for more freight traffic! WIN WIN!).

The USA is the only country in the world where private companies own the major Railroads. So its a unique situation, difficult to draw parallels too. The concept of paying for your slot is in use on many countries railroads, I know on Britain's network, causing delays can cost hundreds per minute.
I don't know if the primary function of a railroad changes, whether it is privately or publicly owned. I think in most other countries, railroads are viewed as there to serve the public good , by providing efficient transportation, whether that is done by private, public , or partnership operation is more what is viewed as the best way to provide that transportation, sometimes by ideology.
In the USA the primary purpose of the railroads (from the railroads point of view), is to make money. No different from a private operator anywhere else. Where it gets messy is when the government decides to provide public good , in this case Amtrak. There is no real mechanisms to do that . Hence , the likes of Amtrak .
It seems many now think Amtrak may not have the support of the majority of representatives, to ensure its survival . I think that's wishful thinking, more than anything.

Not true, Mr Benton

Mexico
Canada

Both originally government owned.

David Benton wrote:Both originally government owned.

Not Canadian Pacific (though it had significant portions built by the government.)

We're straying way off topic (as often happens) but I feel the need to point out that most of Canadian National was originally privately constructed and only became government property after the original owners (Intercolonial, Canadian Northern, Grand Trunk, etc.) went bankrupt.

As we're British Railways. I was thinking more of the period when passenger trains became unprofitable.

The creation of Amtrak relieved the railroads of entire responsibility for the provision of intercity run passenger service (RPSA Title IV Sec 401) - it wasn't something for nothing and indeed the railroads were obliged to pay a consideration for being so relieved. Every legislative action after that can be seen as an extension of that reality. If the railroads wanted to challenge Amtrak access as an unlawful taking, well, that could happen given the current state of the U.S. judicial branch, but does that result in freight operators being told reinstate the passenger services Amtrak assumed, a requirement presumably constitutional then and now?

In a theoretical suit, I could see the Court finding that the original RPSA contract has been fulfilled (ie the value of trackage & equipment roundly equals the value of deferred passenger obligations between 1970 and 20xx and government contributions to the railroads). Rather than address the governmental takings issue, I suspect a court would just relieve all parties of the contract and put Amtrak at square one rate-wise with the railroads. Unless the Supremes really want to make a point, I don’t see them relieving railroads from providing Amtrak access, only from providing below-market-rate access.

Disclaimer: I am not a lawyer or economist, but have studied the judicial system and have some small insight.

I think Fred Frailey hits the nail on the head here. I also think that Fred Frailey is probably one of the best if not the best writer that Trains has ever had. His columns always are interesting to read and they make sense. Trains has come a long way since Morgan with some of his stuff and Kneiling with his stupid nonsense, I was actually at the verge of dropping my subscription at one time but today I am glad I have almost every issue published. Freight trains generally have to come first over one Amtrak train a day. Whether we like it or not I think passenger trains will see a big change in this country, some of which I might like if I live long enough to see them and some of which I will not like and find hard to accept.
Noel Weaver

mtuandrew wrote:In a theoretical suit, I could see the Court finding that the original RPSA contract has been fulfilled (ie the value of trackage & equipment roundly equals the value of deferred passenger obligations between 1970 and 20xx and government contributions to the railroads). Rather than address the governmental takings issue, I suspect a court would just relieve all parties of the contract and put Amtrak at square one rate-wise with the railroads. Unless the Supremes really want to make a point, I don’t see them relieving railroads from providing Amtrak access, only from providing below-market-rate access.

Disclaimer: I am not a lawyer or economist, but have studied the judicial system and have some small insight.

This still gets to my question: Is Amtrak paying below-market rates? Or at-market rates?