Open access, safety don't necessarily mix

A few weeks ago, BBC Radio invited me to join experts from Britain, Belgium, and Australia in a discussion of railroad safety. That discussion grew out of a high speed derailment at Hatfield, just north of London, on Oct. 17 that killed four and injured 30. It was the U.K.'s third major passenger rail accident in three years, and it was blamed on a broken rail. One of my observations on the BBC broadcast had to do with a safety issue U.S. railroads face-involving such hazards as broken rail-as they move to implement communications-based train control. Broken rail detection is a built-in safety benefit of tried-and-true track circuits, and it's generally agreed here that it's a benefit we cannot afford to lose. How to achieve broken rail detection without track circuits is a subject of much debate, one that will undoubtedly be raised at our biannual "International Conference on Communications-Based Train Control" May 8-9, 2001, in Washington, D.C., which is co-sponsored by Parsons Transportation Group.

Safety doesn't come cheap, and the investment demands on systems like Railtrack, which operate a large number of passenger trains, are great. Railtrack operates 10,000 route-miles of track in the U.K., a system about one-tenth the size of that operated by U.S. Class I railroads. Yet Railtrack over the next five years will invest more than $4 billion annually in track, signaling, and related improvements, almost as much as the Class I's invest in their primarily-freight system. Following the Hatfield accident last month, Railtrack announced a revised five-year investment program containing an additional $266 million a year for safety. Specifically earmarked for broken-rail repairs is $222 million over the five years.

The Hatfield wreck grimly illustrates what could happen when infrastructure is separated from operations. British Rail's complex, problematic privatization generated a two-tiered penalty system: Train operators that cause delays must pay a penalty to Railtrack. If Railtrack causes a delay-like conducting unscheduled maintenance or imposing a slow order-it must pay a penalty to the affected operator. So there's almost a financial incentive to defer needed maintenance. Indeed, Railtrack Chief Executive Gerald Corbett himself told BBC Radio that "the railway was ripped apart at privatization, and the structure that was put in place was designed, if we are honest, to maximize the proceeds to the [British] Treasury."

If Britain's experience isn't a glaring red signal to those who advocate open access in this country, I don't know what else is.

Pole vaulting or limbo? Since the release of the Surface Transportation Board's proposed new merger guidelines a few weeks ago, critics, mainly shippers, have said that the rules do little to "raise the bar" for railroads seeking to merge.

In a late-October conversation, STB Chairman Linda Morgan shared her views on some of the perceptions surrounding the new rules, which are scheduled to take effect next June. "Some people are saying that they preclude all mergers, good and bad, and that the Board is trying to control what the industry should look like in the future too much," she told me. "Others are saying the rules changed nothing and are not specific enough, even if the intentions were good. Obviously, they can't all be right. I don't think any of the comments really reflect our intentions."

Yes, the bar has indeed been raised, the STB's often-criticized leader said. "Applicants will have a heavier burden to show that a merger proposal is in the public interest." As to enhancing competition, it's "a benefit we think will outweigh harm. We're going to seek more regarding service assurance. We're asking for more to be presented with regard to downstream effects. We're asking for much more accountability from the beginning, so I don't know how anyone can think that the bar has not been raised."

Morgan told me that merger policy will shift away from "rationalization as a reason for mergers." Previously, STB looked at using its conditioning power to mitigate harm directly. "Now, we're indicating that there could be harm that cannot be specifically mitigated because of the size of a transaction or the risk of service problems," she said. "So we're looking at enhancing competition as a general offset to whatever general harm might result. The Board is there as a backdrop, and we make that clear in the context of how we will use our conditioning power. Our role is not to determine whether there should be any more mergers. Rather, it's how we should determine whether a future merger proposal is in the public interest."

Linda Morgan is not a proponent of open access, something she feels could ultimately damage the railroad network. For some insight, read Luther Miller's story beginning on p. 27.