Case Overview, Requiring Commercial Railroads to Grant Unpaid Concessions to Commuter Rail Services

This document provides background information and summarizes the debate over Commuter Rail Subsidies. The links to the left will lead you to public documents that we have found.

           Although competition is a critical foundation of any market economy, there are some goods and services for which competition is so wasteful or so destructive that it is better not to have it. For example, we wouldn't want electricity distributors to build competing power lines in the same areas. Power lines are unsightly, dangerous, and siting them likely means using eminent domain to take land away from owners. For that reason, we have one electrical grid. The same is true of railroads. Even in the heyday of railroads, when they were the primary means of transit for both travelers and freight, it made no sense to have more than one set of rails on any one route between cities.
           Railroad companies transporting freight have survived into the 21st century and have a well-established means of coordinating their shared usage of rail lines. What remains of intercity passenger rail service has fallen to Amtrak, a government-subsidized corporation. By law Amtrak is allowed to use freight line tracks to run its passenger trains on. Moreover, Amtrak does not have to pay full cost to use those lines, as the responsibility to build and maintain the lines falls to the freight railroads. The freight railroads provide this subsidy as part of an agreement with the federal government that allowed the rail companies to shift what passenger rail service they still offered, virtually all of which lost money, to Amtrak.
           A third type of rail service is commuter rail. Commuter rail should not be confused with subway or light rail systems like the Metro in Washington, D.C., or the "T" in Boston. Rather, commuter rail uses regular railroad cars for short hauls between outlying suburbs and central city train stations. These systems may own all their own tracks or share some of them with other rail companies. For some commuter rail systems, plans to expand their reach in their metropolitan area, possibly to more distant suburbs, is dependent on sharing tracks with a freight line. Although any given stretch of railroad track has a train traversing it only at limited times during the day, one requirement of commuter rail is that it have access to its tracks at commuting time in the early morning and late afternoon. That, in turn, is a significant part of a working day and a real problem for freight haulers.
           Legislation was introduced in the 106th Congress by Rep. Bob Clement (D-TN) to require freight lines to bill commuter rail at the same rate it charges Amtrak, and to give commuter rail trains the right of way during the busy morning and afternoon commuting periods. Such requirements would be a challenge to freight lines, which would have to pull their trains off the tracks during these periods. A spokesperson for the railroad companies said, "What would we do with our freight trains and what do our freight customers do when we have to hold up freight operations? Put them in a siding or leave them in a yard somewhere and delay operations to all of our customers?"
           This bill had little chance for passage and it may have been Rep. Clement's real intent to provide commuter rail lines with more leverage in their negotiations with freight lines. Clement was particularly upset because a rail project in his home town of Nashville had been held up by what he saw as an intransigent attitude on the part of a private freight company. Said one congressional observer, "You don't have to pass something to have an impact." Nevertheless, the bill did not pass and the project in Nashville remained stymied.