STATEMENT OF THE
AMERICAN PUBLIC TRANSPORTATION ASSOCIATION
PRESENTED TO THE
Ex Parte No. 582
*******
FEBRUARY 28, 2000
Presented By
American Public Transportation Association
1201 New York Avenue, N. W.
Washington, DC 20005
(202) 898-4000
APTA is a nonprofit international association of over 1,270 member organizations including transit systems; planning, design, construction and finance firms; product and service providers; academic institutions; transit associations and state departments of transportation. APTA members serve the public interest by providing safe, efficient and economical transit services and products. Over ninety percent of persons using public transportation in the United States and Canada are served by APTA members.
Overview
The American Public Transportation Association (APTA) is pleased to
submit this testimony to the Surface Transportation Board (STB) on major rail
consolidations and the present and future structure of the North American rail industry.
APTA’s testimony will also comment specifically on the proposed merger of the
Burlington Northern Santa Fe (referred to collectively as BNSF) and Canadian National
Railroad Company, Grand Trunk Western Railroad Incorporated, and Illinois Central Railroad
Company (referred to collectively as CN). This testimony is presented on behalf of the
nation’s public transportation industry, which in many instances uses the track or
right-of-way of various freight railroads throughout North America.
The Staggers Act of 1980 is rightfully credited with helping bring
about a resurgence in America’s freight railroads. At the same time, the past two
decades have also seen a significant consolidation and downsizing of America’s
railroad network, resulting in a reduction in the number of Class 1 rail systems from 36
to eight (possibly soon to be seven). Certain shippers and economic interests have claimed
that the Staggers Act and the ICC Termination Act have gone too far in deregulating the
railroad industry. In a similar vein, commuter and rail transit agencies are concerned
that a shrinking, overburdened track network will be inadequate in serving a growing rail
transportation industry.
The proposed BNSF/CN merger will directly affect many thousands of
daily rail passengers on the Metra commuter rail system in metropolitan Chicago, and will
affect the negotiating posture of many other communities seeking to initiate commuter rail
operations in the near future, including communities in Minnesota, Washington, Missouri
and California. APTA urges STB to protect current and prospective passenger services by
establishing, as a condition of the proposed merger, a minimum five-year oversight
condition during which STB will monitor events to assure there are no merger-related
impacts on rail passenger services.
About APTA
APTA is a nonprofit international association of over 1,270 member
organizations including transit systems; planning, design, construction and finance firms;
product and service providers; academic institutions, and state associations and
departments of transportation. APTA members, including commuter railroads and rail transit
systems, serve the public interest by providing safe, efficient and economical public
transportation services and products.
STB Rulings on Conrail and Union Pacific – Questions Remain
On July 23, 1998, STB approved, with conditions, the sale of Conrail to
CSX and Norfolk Southern. Among other things, STB established a five-year oversight
condition during which it will monitor events to assure there are no transaction-related
impacts on "regional rail passenger operations" and on Amtrak. The STB decision
regarding Conrail came in the aftermath of the Union Pacific - Southern Pacific merger
(referred to collectively as UP), where rail passenger service was given low priority,
resulting in widespread service problems. Similar problems have been encountered in the
wake of the Conrail breakup as well.
As a condition of approving the Conrail sale, the STB required the
railroads to report performance information to the Board. Unfortunately, that requirement
did not, initially, include reporting on passenger operations impacts. When passenger
reporting was subsequently required, it was limited to specific sections of the CSX and NS
territories. It was not until significant service complaints surfaced that passenger
impacts were considered relative to performance reporting, and even then the requirement
did not extend to the full system.
While some may argue that there have been no impacts on passenger
service as a result of the Conrail sale, a recent Washington Post article (February
22, 2000) pointed out the negative impact on MARC’s commuter operations. The article
highlights the fact that on-time performance dropped from 90% or better prior to the sale
(the actual number was 95%), to as low as 73% following the sale. A specific review of
on-time performance for MARC’s Camden and Brunswick lines, both of which are operated
and dispatched by CSX, reveals that performance is still considerably worse than it was
before June 1, 1999. Even VRE’s commuter operations, which have received a higher
level of attention from their host freight railroads, saw its on-time performance levels
drop to 85% in June, 1999 and 90% in July, compared to 95% in April.
In our June 3, 1998 testimony to the Board regarding the Conrail sale
we stated that:
In the case of the recent Union Pacific merger, widespread passenger
rail problems have arisen. Dispatching and coordination problems have gone unresolved,
on-time performance has deteriorated and communications in general have been difficult as
the freight railroad has focused on its own freight problems. Rail passenger service has
had very low, or no, priority and passengers have suffered through unnecessary delays and
degradations in the quality of service that they receive.
Schedule interference, dispatching, and maintenance procedures are
critical to assessing the impact of the Conrail acquisition. As a condition for approval,
we strongly recommend that STB require assurances that rail passenger providers will be
able to provide reliable and high quality service without adverse affects resulting from
consolidation.
Based on this experience with the Conrail and UP transactions, it can
be expected that without mitigating actions by the STB, similar results could follow a
BNSF/CN. The five-year oversight provision required in the Conrail case needs to be
continued and strengthened in order to insure that the communities affected by a BNSF/CN
merger do not experience the problems that have resulted from the Conrail and UP cases.
If a BNSF/CN merger occurs, the importance of monitoring passenger rail
impacts cannot be overstated. Past experience suggests a reduced level of attention on
passenger operations following mergers as the rail freight carriers confront the myriad of
merger-related freight operations issues that inevitably arise. Absent a meaningful
oversight condition, this will again cause serious disruption to passenger rail service.
The Board needs to ensure that attention is given to system-wide
impacts, and not just to the new territories affected by the merger. In the case of the
Conrail acquisition, the passenger service problems were generally in the established
portions of the system. Reporting requirements need to be established at the beginning of
the process and need to be monitored on a continuing basis. Of particular concern to APTA
members are instances when freight volumes projected prior to the merger - which are
analyzed for their impact on passenger operations - are exceeded after the merger occurs.
APTA would like to emphasize that the geographic area served by BNSF
and CN is an area that includes many growing communities with a significant number of New
Start projects. In many instances these projects have been under consideration and public
review for a number of years.
Passenger Rail: Preparing for a Future of Growth
Across America, rail passenger service is in the midst of a rebirth.
The Transportation Equity Act for the 21st Century (TEA 21) alone authorizes
over 200 new rail projects, about half of which are likely to use existing rail freight
corridors. STB’s examination of the future of America’s railroads must take into
account this growth trend.
Unfortunately, a shortcoming exists in the current framework in which
these new rail projects move forward: specifically, a process for helping resolve
disagreements which may arise when parties cannot agree on terms and conditions for use of
a railroad right-of-way. Currently, no such process or venue exists for consideration of
public interest issues. Freight railroads can, and often do, unilaterally deny access to
passenger rail agencies, sometimes for legitimate reasons, but often for dubious reasons
or for no reason at all other than not wanting passenger rail operations. Public agencies
so denied have no recourse under the existing framework. We are thus concerned that the
proposed merger may make what is already a difficult process even more so.
The normal way a state or regional public transportation agency would
gain access to property needed for public improvements would be through eminent domain
proceedings. However, state law based condemnation authority does not extend to property
owned by freight railroads, which come under the interstate authority of the federal STB.
APTA and the Association of American Railroads (AAR) have met to
discuss the possibility of an industry-wide framework to help facilitate the negotiation
of local agreements. While these discussions have identified numerous areas of mutual
benefit, we have not been successful in negotiating any process for resolving disputes.
Finally, in its review of major rail consolidations, STB should note
that the ability of rail passenger agencies to obtain the rail access agreements they need
to serve the public is a very difficult task under normal circumstances, but becomes even
more complex in a continually downsizing core system.
Impacts on Rail Passenger Service Must be a Prime Consideration in
Merger Determinations
In its announcement of this hearing, the Board raises the question as
to whether now is the time to focus on opportunities to improve service, as opposed to
continued consolidation. As these issues are considered, APTA urges the Board to fully
consider the potential impacts of mergers on passenger operations, as well as on freight.
We emphatically agree with the emphasis in STB’s hearing notice that attention needs
to be placed on how to improve service. We are equally emphatic that this focus on
improved operations must extend to passenger as well as freight services. In some cases,
this will require careful oversight on operating and dispatching matters.
Historically, America’s rail corridors have been used for both
freight and passenger purposes. At one time, both were operated by the private sector
under laws governing public utilities - laws that recognized the public interest in the
system. As passenger operations became unprofitable, private railroads were relieved of
the obligation to operate passenger service directly. Services were often taken over and
supported financially by public entities. STB’s review and oversight must recognize
the evolving rail passenger industry, and its critical inter-relationship with the rail
freight industry.
Accordingly, APTA suggests the following three principles for STB to
consider in its review of merger requests:
1) STB should carefully consider the impacts of mergers on existing and
future rail passenger services as a key factor in its determination on the merger itself.
Any adverse impacts to rail passenger operations should be weighed, as a public policy
issue, in the decision as to whether or not to approve any merger.
2) If there are any existing or future rail passenger operations that
will be adversely affected by a merger, STB should consider ways to mitigate the impacts
of that merger by granting additional access rights in that corridor, or by granting
rights to prospective new services.
3) In its approval of railroad mergers, we urge the STB to maintain a strong oversight
role to protect the interests of rail passengers.
APTA thanks STB for the opportunity to comment. We would be pleased to
provide any additional information that may be useful to the Board.
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