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Rail Planning—Crisis and OpportunityFrancis H. Parker & Gorman GilbertPublished online: 26 Nov 2007.

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Rail Planning- Crisis and Opportunity Francis H. Parker and Gorman Gilbert

The role of the federal and state governments with respect to railroads has been dramatically changed by the establishment of ConRail and Amtrak. No longer does the “railroad problem” mean passenger service only, and no longer does the problem rest only in the private sector. With the planning of ConRail, federal and state governments have moved solidly into rail planning and operations. Planners in the public sector will increasingly be con-

On April 1, 1976, the federal government officially began its second major excursion into railroad operations. ConRail, formed from the remains of six bankrupt railroads, began operation on that day as a federally-funded corporation with 17,000 miles of track, thus becoming the nation’s largest railroad. ConRail began with $2.1 billion in federal funds and, despite careful planning, amidst con- siderable controversy as to whether it will ever reach the goal of profitability forecast for 1985.

ConRail drastically alters the traditional federal roIe as a regulator of railroads. The establishment of ConRail is the second recent governmental

Francir H . Parker, AIP, is an nssociate professor $planning at Rnll S h l e University. Previourly he taught at the Universily o j Norlh Carolina. His research and publzcations have focused on slate planning.

Gorman Gilbert is an assistant professor o f planning at the Uni- versity o f North Carolinn. He hm published extensively in the areas o f transit planning and rail planning.

cerned with a wide range of problems facing rail- roads. Currently, the impact of these problems is focused primarily on the state level where the responsibility lies for determining the feasibility of subsidizing unprofitable branch lines. However, other problems, such as urban rail relocation, are emerging as areas of public concern. This article outlines these problems as well as recent efforts to solve them.

effort to become more directly involved with railroad operations. The first government entry into railroad operations was the establishment of Amtrak, the National Rail Passenger Service Corporation, in 1971. Amtrak has received much publicity because of public interest in passenger service, but ConRail is potentially far more important. The success of ConRail will have important implications for the survival of the railroads as a part of the national freight transportation system.

The formation of ConRail has involved a massive planning effort comprising a series of federal agencies, seventeen states, and countless community and shipper groups. It has essentially reintroduced railroad planning as a major public concern for the first time since the pre-Civil War days of public works promotion.’ In so doing, it has introduced a series of problems and opportunities for public planners. Although these problems and opportunities were originally thought to be restricted to railroads in- volved in the northeastern rail crisis, it is now

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realized that they involve the entire country. Dealing with them will require interaction between the pri- vate railroad interests and the public sector at all levels of government.

The reasons for public neglect of rail planning are numerous and clear. The railroad system was largely constructed by private enterprise in an era of minimal government control and regulation. Planning was confined to the private sector and was concerned with market penetration or growth rather than with orderly regional development. Between the Civil War and the turn of the century, 160,000 miles of railroad were built, including much competitive overbuilding and many inherently uneconomical feeder lines. By the time public planning emerged in the twentieth century, the rail system was essentially in place, and public policy toward railroads was concentrated on rate regulation (under the Act to Regulate Commerce of 1887) rather than on alteration or rationalization of the railroad network itself.

The legacy of this situation is strong today. Urban planning proceeds largely on the assumption that the present rail network is fixed and immutable, an unfortunate barrier in some cases to urban redevelop- ment. Regional development planning assumes that the present rail network will remain in place, and that one location on that network is equal to all others in degree of access. State level transportation planning focuses on highway additions and improve- ments, with little consideration for the impacts of these investments on existing rail lines.

Given this historical separation between public planning and railroad operations, Amtrak and Con- Rail emerge in the 1970s as a dramatic change in public involvement with railroads. Of the two, Amtrak can be more easily explained as a response to a special situation, that is, as a recognition of the need to preserve a basic rail passenger service. ConRail is a different matter. Suddenly, after decades of functioning primarily as regulators of freight rail service, state and federal governments have been thrust into the role of rail planners. ConRail poses a number of crucial questions. Will the collapse of rail freight service in the Northeast be followed by similar collapses in other regions? Will ConRail succeed as a solution to the rail problems of the Northeast? If not, will public involvement with railroads escalate? In other words, has a new era of public rail planning and operations emerged, or is ConRail merely a temporary exception to a long history of separation of public planning and rail operations?

Substantial evidence indicates that Amtrak and ConRail will not be the limit of public involvement with railroads. On the contrary, it appears that a new public planningfield has been born: rail planning.

On the national level, rail planners are likely to be increasingly concerned with regional and national attempts to solve basic rail problems. On the state level, rail planners will be concerned with branch line abandonments, rail subsidies, and the impacts of rail service on economic development. On the local level, rail planners will be confronting problems of grade separations at highway-rail crossings as well as the relocation of rail facilities in urban areas.

T o deal with these and other rail issues, the public rail planner must be well versed in areas which are typically not in the domain of the traditional trans- portation planner. He must know, of course, about the recent rail legislation and the variety of programs it has created. He must know about how railroads operate. He should know something about rail history. Most of all, however, he must know why it is that railroads face problems severe enough to have resulted in the collapse of the northeastern railroad system.

This article represents a first step in providing this information. Railroad problems are briefly defined; public efforts to address these problems are reviewed; and the information needed by rail planners is delineated. Throughout, this article is concerned with a basic issue-the survival of railroads in freight operations.

Major rail problems There are two categories of railroad problems:

those which affect the rail industry and those which rail service-or the lack of rail service-impose on the public. More simply, these problems may be viewed as those facing the railroads and those facing planners.

Clearly, these categories are not independent. The problems of railroad financial vitality affect the quality and even the existence of service pro- vided to local shippers, and this service is inextricably related to public goals of economic development, environmental protection, and energy conservation. Thus, it is necessary that planners understand the scope of the problems facing rail operations. In that these problems have been treated in detail else- where, it is appropriate to review briefly only a few of them here.2

Changing industrial structure In the past it was believed, or hoped, that some

of the railroads’ chronic financial problems would be solved as the economy grew, generating increased transportation requirements in which the railroads would inevitably share. For several reasons this appears to be a somewhat misleading hope.

One problem is that national economic growth has increasingly been in the service sector rather

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than in the goods producing sector. As the economy matures, less of it is concentrated in areas requiring extensive freight transportation. In the years 1947- 1972, while real Gross National Product (GNP) was increasing at a rate of 3.8 percent annually, the aggregate domestic intercity freight traffic, measured in ton miles, was only increasing 2.8 percent annually (Task Force on Railroad Productivity 1973).

The second problem is that the growth in freight that has occurred has been ill-suited to railroad handling. Manufacturers are focusing on more com- plex commodities with higher values per pound. While this means that freight is frequently moving at a higher rate and generating more revenue per ton-mile for the carrier, it also puts an increasing emphasis on speed of delivery and damage-free handling, areas where the railroads do not compete well. Trucks are becoming the preferred mode for high-value commodity shipments. Pipelines and high voltage energy transmission threaten the railroads’ competitive hold on low value fossil fuel shipment at the other end of the rate scale. Many shippers prefer not to use the railroads, viewing them only as fallback or reserve carriers.

A third problem is the greater market orientation of much manufacturing at the expense of older, *

established manufacturing regions. This helps some railroads in the Southeast and West but contributes to the spread of railroad bankruptcy in the Northeast and Midwest.

The changing industrial structure in some cases puts the railroads at an inherent disadvantage. In other cases, as noted below, there are institutional or regulatory constraints which restrict the railroads’ ability to respond to changes. Many areas remain in which the railroads, through hard work, can effectively compete, but the changing industrial structure means that the railroads will not be re- prieved automatically by a growing economy.

Excess capacity The rail system in the United States was largely

constructed during the nineteenth century. From 1835 to 1916 the rail system grew from 767 miles to 254,000 miles. Much of this phenomenal growth occurred during a highly speculative era following the Civil War. In fact, the rail system grew by 700 percent from 1865 to 1900, a period during which the Gross National Product grew by only 400 percent (Carson 1971). Rail expansion was fueled by the optimism of national expansion and was marked by speculation on future traffic and competition between railroads. The result was overbuilding and duplication by parallel lines. Barriger (1955) estimated that 30 percent of the nation’s rail system accounted for only 2 percent of the total ton-miles of traffic.

There are substantial regional differences in the degree of excess capacity. In planning ConRail, the United States Railway Association estimated that approximately 22 percent of the rail mileage in the Northeast accounted for 2.2 percent of the total freight carried by rail in the region (USRA 1975). A more recent Department of Transportation study estimates the potentially unprofitable lines in other regions of the country. Table 1 shows the results including the amount of traffic originating or terminating on these low-density lines. Clearly, excess capacity is not a problem which is unique to the Northeast.

Table 1. Excess capacity outside the Northeast

Potentially Percent of uneconomic carloads lines (PUL) originating or

1974 (percent of terminating Region Mileage 1974 miles) on PUL

South Atlantic 16,688 6.6 0.6 East South

Central 14,911 6.0 0.6 West South

Central 25,577 14.1 1.9 West North

Central 48,337 28.4 5.3 Mountain 30,266 17.8 3.1 Pacific 15,183 17.1 2.1

Source: U.S. Department of Transportation (1 976).

The problems posed by excess capacity are severe, and knowledge of them is essential for a broader understanding of rail problems. The burden of excess capacity was felt early by railroads in the form of high fixed costs which resulted from the capitalization required for expansion. These high fixed costs contributed to extensive financial failures during economic depressions in 1873, 1884, and 1893. In fact, after the 1893 panic, one-quarter of the rail- road trackage was in receivership. In more recent times, excess capacity has led to operating losses on low-density lines. The Federal Railroad Adminis- tration has estimated the avoidable losses on the nation’s 2 1,000 miles of low-density trackage to be $57 million annually (Task Force on Railroad Productivity 1973).3 Of this total, at least $20 million in annual losses were attributable to 5,000 miles of low-density Penn Central track.

The traditional railroad response to the problems of excess capacity has been twofold: mergers and abandonments. Late in the 1800s, numerous end- to-end mergers combined short-line railroads into major regional systems. Ripley reports that railroads over 1,000 miles long accounted for only ’7 percent of the nation’s trackage in 1867 but 67 percent in 1910 (Ripley 1914). While these end-to-end mergers

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created larger rail systems, they did little to reduce excess capacity. As a result, railroads in the 1900s began abandoning light-density lines. Between 192 1 and 1930 alone, the Interstate Commerce Commission (ICC) granted permission for 500 abandonments (Carson 197 1). The railroad pressure for abandon- ments was augmented in the late 1950s and the 1960s by parallel mergers in which two or more railroads would merge and eliminate parallel trackage and excess facilities through abandonment. The parallel merger movement culminated with the Penn Central merger in 1968.

The combined effect of rail mergers and abandon- ments has been a decline in trackage since 1916. Between 1916 and 1974, the nation’s rail lines shrunk by 54,000 miles, or 21 percent of the 1916 system. It is against this background of continual rail line shrinkage that current problems of excess capacity must be viewed. Clearly, past efforts to reduce capacity have not been sufficient to reverse the long-term decline in the financial health of railroads.

Work rules Railroad management has long complained that

the work rules negotiated with labor unions are archaic and unduly restrictive. There are several examples of such work rules. One is the “crew consist” rule requiring a four-man crew on freight trains. Another is the rule establishing 100 miles as the basis for a day’s pay for train crews. Still another is the separation of shop workers into six shop crafts with sharply defined divisions of labor. To the unions, these rules represent a measure of job preservation, an important consideration, given the 61 percent decline in railroad employment in the twenty-five years prior to 1972. However, to management, these rules represent unreasonable restrictions on productivity and innovation. This latter view has permeated the public consciousness through such pejorative and emotional terms as featherbedding.

The impacts of these rules are more pervasive than one might expect. The most obvious effect of the four-man crew requirement is increased labor costs. In fact, it is estimated that as many as 95 percent of all freight trains could operate with only a three- man crew and as many as 30 percent with only an engineer (Task Force on Railroad Productivity 1973). Management response to this requirement has been to run fewer trains with each train carrying more freight. In 1974 the freight load per train hit an all-time high of 1,875 tons (Association of American Railroads 1975). From the shipper’s perspective this trend toward heavier trains means less frequent service, slower speeds, and hence longer delivery

times-all factors which make rail less attractive than trucking.

Because of the impacts of work rules on train operations-and hence, diversion of freight to trucks-it is difficult to estimate the total cost to railroads of the work rules. The Task Force on Railroad Productivity estimates the impact in terms of lost efficiency to be approximately $500 million to $1 billion per year. The task force concludes that solving the work rules problems “is one of the two or three most important opportunities before the railroads” (Task Force on Railroad Productivity 1973, p. 218).

Rail freight rates One area in which the public has long Seen

involved with railroads is rate-making. The Act to Regulate Commerce in 1887 and numerous pieces of legislation since then have firmly asserted the public role in regulating rail freight rates. One result of this regulatory activity is what some observers see as unrealistic and unwieldy rate schedules.

Conventional wisdom asserts that rates are a prob- lem for two reasons. First, rates are based on “value of service” rather than reflecting the actual costs experienced by railroads. The rates are a reflection of “what the traffic will bear.” Different commodities therefore have different haulage charges. Critics claim that value-of-service rates mask the inherent cost advantages that railroads experience compared to trucks for longer shipping distances. To the extent that such an advantage exists, flexibility in rate- making should allow railroads to offer shippers lower rates than do trucks. However, neither the railroads nor the ICC currently has good information on what specific transportation services cost (Kneatsey 1975).

A second, not unrelated problem is that of com- plexity. Rates differ by commodity, distance shipped, direction shipped, region of the country, size of shipment, and type of service (i.e., piggy-back, unit train, etc.). The result is an enormous number of rates. In fact, it has been estimated that some forty-three trillion rail rates exist (Phillips 1969). Thus, one frequent proposal for alleviating rail problems has been to simplify the existing rate structure.

Lagging productivity One result of the work rules and other institutional

constraints has been that railway productivity has not kept pace with other economic sectors, whether measured in labor productivity or capital productivity. The lag in labor productivity is not apparent at first glance, since output (expressed in revenue ton miles) increased 30 percent from 1947 to 1974 while employment decreased 6 1 percent (Association of

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American Railroads 1975). In fact, however, while there were some productivity gains in the switch from steam to diesel power, much of the decline in employ- ment reflects basic changes in railroad business, specifically in almost entirely dropping the labor intensive passenger and less-than-carload freight business. Even if ton-miles are considered the appro- priate measure of output (many say it is not), output per employee is increasing more slowly than in other industrial sectors. Output in ton miles per employee in the trucking industry may now be equal to or better than that in some segments of railroading.

Productivity of capital is also low, as reflected in low industry-wide rates of return. Despite expensive additions to technology in some areas (such as classi- fication yards), there is still a low overall utilization of much of the freight car fleet. Excess capacity in the physical plant also obviously contributes to low productivity. The problem is essentially intertwined with the problems of work rules, regulatory con- straints, and excess capacity.

Branch line problems Branch lines constitute a basic problem for both

the railroad industry and for public planners. Branch or light density lines are prime examples of excess railroad capacity, with capital investments which are out of proportion to the number of carloads origi- nated or terminated. Attempts to economize lead to low maintenance levels on the branches, necessitating low speed operation. Limited traffic leads to infre- quent service, and infrequent service in turn drives more traffic away. In some cases, light rails on branch lines may physically preclude the use of modern high-capacity cars (Iowa Department of Transportation 1976a).

Branch lines were laid out in an expansionist era of railroad growth in an attempt to tap as many local sources of traffic as possible. Much of this traffic is in small or irregular lots, the sort of traffic for which trucks appear ideally suited. Railroads have increasingly sought to abandon such operations when they appear unprofitable, while public regula- tory agencies have consistently questioned or opposed such abandonments on the grounds of the harm this would do to local communities.

The public sector's position historically has been to insist that railroads had an obligation to provide these services, even if unprofitable, and to argue that high profits permitted on other traffic would cross-subsidize unprofitable operations on the branch lines (Carson 197 1). The evidence of northeastern and midwestern bankruptcies suggests that these off- setting profits no longer exist.

There is disagreement about how damaging the effect of branch line closure will be on communities

formerly served. ConRail planners estimated that of the 279 counties which would be affected by proposed branch line closures, only 7 counties would experience a change in county employment exceeding 2 percent as a result of the closure, and only 15 counties would suffer employment losses exceeding 1 percent (USRA 1975, vol. 2). An Iowa study comparing towns which had lost rail lines with those still having branch line service suggested that rail abandonment had little impact on employ- ment, business activity, or community growth (Iowa DOT 1976a).

On the other hand, the Pennsylvania Department of Transportation has contended that individual communities affected by proposed ConRail closures will suffer large employment losses, and that these losses are masked when they are aggregated from the individual community level to the county level (Pennsylvania DOT 1975). A retrospective study of branch line abandonments indicates that a number of the abandonments studied have had significant impacts on individual shippers and on their com- munities, and that those impacts were generally predicted accurately by the Protestants during abandonment hearings (Simat, Helliesen, and Eich- ner 1973). Community leaders continue to fear the impact that branch line abandonments would have on their economic development (Grossman 1976).

Local land use conflicts Land use conflicts are a problem of direct concern

to the urban planner as well as to the railroad. Such conflicts occur at several levels, ranging from railroad-vehicular conflict at individual grade cross- ings up to conflicts between a railroad and adjacent urban neighborhoods. While the community may find the railroad a safety hazard or an obstacle to urban redevelopment, the railroad in turn finds its operations impaired by the frequency of conflicts. In many cases one party or the other (typically the community) would be the prime beneficiary of changes in the situation. In other cases there might be genuine benefits to both parties, but one party (typically the railroad) does not have the capital to invest in improving the situation.

According to a recent inventory, there are 402,000 crossings in the U S . between railroads and vehicular or pedestrian rights-of-way. These include 2 19,000 public and 142,000 private crossings at grade between railroads and motor vehicles. Costs to highway users at grade crossings are estimated at $800 million per year, based on 1970 traffic levels, and accident costs at about $185 million per year (SRI 1975). There are only 37,500 grade-separated crossings at present, and the costs of constructing these can range upwards of $1 million per crossing.

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Reducing conflicts through actual railroad reloca- tion has been a costly and infrequent solution, although rail mergers and the ConRail consolidation may open up a number of possibilities for rerouting railroad traffic and closing duplicate facilities. A nationwide survey of urban railroad problems has estimated that there are about 1,650 places which could potentially benefit from main and branch line relocation, with total costs of relocation estimated between $3 billion and $1 1 billion. The same survey indicates that urban areas themselves are rarely willing to contribute more than 20 percent of the relocation costs (SRI 1975).

In some major urban areas opportunities may exist for modifying the overall pattern of railroad operations, including changed traffic routings, aban- donment and subsequent redevelopment of redun- dant facilities, and selective relocations. Besides the benefits to the community, the railroads would seek to achieve benefits by reducing the freight-car time spent in terminals and the cost of terminal operations, potentially major problem areas in the railroads’ present competitive situation. Studies of such situations have been done for New Orleans and St. Louis (Parsons, et al. 1973, 1975). Such major terminal alterations, while more feasible as a result of mergers and ConRail, must still deal with the major hurdle of inflexible work rules. One railroad in St. Louis has conducted a major project, jointly with the unions, to determine how existing facilities may be better utilized through changes in work rule practice (Railway Age 1976a). Urban planners need to be aware of these institutional constraints on rail- road planning as well as the more obvious physical constraints.

The public search for solutions The widespread rail bankruptcies, the public

takeover of northeastern rail service, and the threatened cessation of rail freight service to many communities are problems which have precipitated a broad public search for solutions to “the railroad problem.” These efforts are described in the following sections.

It is important to realize that rather than a single rail problem there are many. Some affect primarily the industry itself, while others are of key concern to local or regonal public planners. The position of the observer inevitably affects the view of the problem, creating multiple viewpoints of multiple problems. It is also useful to remember that the present search for solutions is not unique, that since World War I there has been public debate over one aspect or another of the railroad problem.

Pre-ConRail consolidation plans Unlike most problems facing railroads, the problem

of excess capacity has long drawn the attention of

public officials. In fact, proposals for restructuring railroad systems have predominantly originated from outside the railroad industry.

Of these proposals, one stands out as a historical footnote to ConRail. At the close of World War I, the federal government faced the decision of what to do with the nation’s railroads that had been nationalized during the war. The problem was how to prevent a recurrence of the rail operations chaos that had necessitated the nationalization. Rather than permanently nationalize the industry, the federal government attempted to rationalize the rail systems. Along with returning the railroads to private management, the Transportation Act of 1920 required the Interstate Commerce Commission to develop a consolidation plan for the nation’s railroads.

The resulting plan was a modification of the Ripley Plan proposed by Harvard economist William Ripley in 1921. This plan called for nineteen rail systems, five of which were to be in the Northeast. However, the Transporation Act of 1920 did not give the ICC authority to require railroads to imple- ment the consolidation plan. As a result, the railroads effectively blocked implementation of the plan. The plan-and the ICC role as a rail planner-were revoked by the Transporation Act of 1940.4

Regional Rail Reorganization Act Throughout their history, railroads have frequently

faced bankruptcy. Prior to 1970, such bankruptcies were handled on a case-by-case basis and reorganized under the provision of the Bankruptcy Act. In the early 1970s, however, eight railroads in the Midwest and Northeast were simultaneously in bankruptcy, and a number of others were precariously close to insolvency. These bankrupt carriers represented 26,866 miles of rail line, of which 19,415 belonged to the Penn Central.5 Given the massive regional focus of these rail bankruptcies, it became clear that the case-by-case procedures called for by the Bankruptcy Act were inadequate. A coordinated regional approach was needed.

The Regional Rail Reorganization Act (RRR) pro- vided such an approach. It called for an intensive public rail planning effort in a seventeen-state region in the Midwest and Northeast. It created both the United States Railway Association (USRA) to apply a restructured rail system in the region and the Rail Services Planning Office (RSPO) in the ICC to critique USRA’s plan. However, unlike the Trans- portation Act of 1920, the RRR Act also created an implementation mechanism- the Consolidated Rail Corporation (ConRail). The act charged USRA with the task of examining the bankrupt lines and forming from them a new, streamlined system which would be “economically viable.”

In fulfilling this charge, USRA proposed that

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Figure 1. Lines and trackage rights making up the ConRail System.

Source: Consolidated Rail Corporation

ConRail include 15,000 miles of seven bankrupt carriers.6 An additional 2,000 miles were to be sold to solvent carriers in the region with major purchases to be made by the Southern, the Norfolk and Western, and the Chessie System.’ The remaining 5,757 miles of rail lines were judged by USRA to be uneconomical and were recommended for abandonment. It is the paring of these light-density lines that represents USRA’s attempt to solve the “excess capacity” problems facing the railroads. It is also these abandon- ments which have spurred states to assess their rail needs and to embark on rail plans. The final ConRail system is shown in Figure 1.

Railroad Revitalization and Regulatory Reform Act

The public role in rail planning entered a second phase early in 1976 with the passage of the Railroad Revitalization and Regulatory Reform Act (RRRR). This is a complex piece of legislation that, among other provisions, creates greater flexibility for railroads in rate-making and increases the responsive- ness of the ICC. It also provides funds to implement the final system plan of ConRail. The total funding authorized by the act is $6.4 billion.

Of equal importance are other sections of the RRRR Act which extend many of the subsidy and planning provisions of the RRR Act to states outside the

SYSTEM MAP

ConRail region. Title V, for example, provides a $600 million rail fund to be used for rehabilitating rail facilities. These funds are available to railroads throughout the nation.

The RRRR Act also extends-and expands-the state role in rail planning to states outside the ConRail region. Title VIII provides $360 million for state-sponsored rail freight assistance programs, including rail service continuation payments, pur- chase of lines for operation or for “rail banking” against future needs, railroad rehabilitation pay- ments, or programs to reduce the impact of rail service abandonment in ways other than continuation of direct rail service (such as industrial relocation). Federal assistance funds are available for five years on a diminishing scale identical to that for rail service continuation payments in the Northeast. Out of the total authorized for assistance programs, $5 million is specifically earmarked for planning activities for each of three fiscal years. An additional $20 million is available for conversion of abandoned railroad rights-of-way to recreational use over a three year period.

State rail planning

After a hundred years in which the relationship between railroads and state governments consisted

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largely of adversary conflicts over rates and services, a number of states are considering a more active role with respect to rail service. Threatened by wholesale cutbacks of service, states have pursued options ranging from rehabilitation loans to service subsidies to direct state ownership of rights-of-way.

This new state activity can be considered under three headings: (1) state responses to ConRail and the Regional Rail Reorganization Act of 1973, (2) state activity outside the ConRail area or independent of it, and (3) pending state activity as a result of the Railroad Revitalization and Regulatory Reform Act of 1976. State rail plans and ConRail. In passing the RRR Act, Congress expressed not only its desire for an “economically viable’’ system, but also its concern for communities facing cessation of rail service. Thus, on one hand the act calls on USRA to eliminate unprofitable branch lines, and on the other hand it provides a federal subsidy program to continue local rail service.

To be eligible for participation in the program, states were required to prepare a state plan for rail transportation, including a listing of those lines, in order of priority, on which service should be maintained through the provision of subsidies. Sub- sidies could be used for operation or for maintenance and improvement of track (Section 4026)) and were generally intended for use where “the cost to the taxpayers of rail service continuation subsidies would be less than the cost of abandonment of rail service in terms of lost jobs, energy shortages and degrada- tion of the environment” (Section 401 (a)). The actual decisions on which lines to preserve were deferred to the states. Subsidies were available on a 70 percent federal-30 percent state basis for each of two years in the program with $90 million to be available each year.* A formula based on miles of line was used to allocate entitlement funds, with additional discretionary funds available.

In responding to this program the eligible north- eastern states prepared state rail plans, generally acting through their departments of transportation or public service cornmissi~ns.~ As expected, based on the program impetus, the plans focused heavily on a line-by-line analysis of those branch lines recom- mended for abandonment by USRA. A variety of assumptions were made about costs of operation, maintenance, etc., in some cases varying widely from the assumptions used by USRA planners. Generous assumptions were also made about the community impact of abandonment, including jobs, wages and taxes to be lost and unemployment benefits to be paid.1° In some cases the states con- ducted shipper surveys or other research to improve the quality of their data base. New York State, for example, surveyed and interviewed shippers to

determine which alternatives they would actually choose if confronted with a loss of rail service. The better state rail plans are marked by a specificity of analysis and information which goes beyond what USRA was able to do with their necessarily generalized analysis of the branch lines.

In analyzing the impacts of rail abandonment, the states could employ a list of criteria suggested by the Rail Services Planning Office.” Those criteria which were used with greatest consistency included operating costs, employment levels and wages paid by affected shippers, and air pollution and energy consumption of the rail, mode and its alternatives. A range of other criteria, including economic, social, and environmental factors, was used sporadically by one or more states. Only a few states used a formal benefit-cost procedure in determining priori- ties for service continuation.

The result of liberally assessing the benefits of branch line preservation was that the states were generally able to make a case for preserving a majority of the lines excluded by USRA. In total, the lines proposed for subsidy exceed the funds avail- able for that purpose, but under the heavily federal matching arrangement there is no incentive for the states not to be generous in retaining service. It may well be that this first round of state rail plans constitutes a holding action, extending rail service until more is known about the problem and about the level of federal commitment to its solution. Termination of federal funding would certainly result in a different and more rigorous benefit-cost analysis on the part of the participating states.

A second result of the analysis, focusing as it did on individual line segments, was a concentration by the states on the public perspective, with little understanding or concern for the rail industry perspective. Analysis was incremental, assuming that the basic system was sound and that the problem could be approached through marginal adjustments to individual unprofitable branches. The wisdom of this is questionable, given the evidence of an industry- wide economic problem for the northeastern rail- roads. At least one commentator has suggested that, in subsequent rounds of planning, the states will need to focus more on the overall system characteris- tics of the industry and perhaps make harder choices concerning the desirability of retaining so much branch line service (Fuller 1976). State planning outside of ConRail. Some state action has not been dependent on the subsidies of the Regional Rail Reorganization Act, but either predates the act or lies entirely outside its province. New York State, for example, relying on a 1974 bond issue, provided grants for rehabilitation of several lines damaged in 1973 by Hurricane Agnes (Black and Runke 1975). These were provided in response

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to immediate crises, and in some cases may have been misspent in the light of long range priorities. New York has also acquired for rail banking a line reaching into the Adirondack preserve. The state will not operate the line, but will preserve its right- of-way for possible future restoration of service.

Elsewhere in the Northeast, Vermont has become the direct owner of several rail lines following bankruptcies which occurred prior to the Penn Central debacle. The state contracts with private operators to provide service over the lines, including provisions for subsidy if the operator cannot make a profit while maintaining a specified minimum level of service (Black and Runke 1975).

The preeminent example of rail planning and assistance by a non-northeastern state is Iowa, with a program involving shared responsibility for branch line rehabilitation, based on contractual agreements between the railroad, the state, and local shippers or communities (Preisser 1975). Iowa has probably done more than most states in analyzing the overall role of the rail system, in this case as a link in the movement of the state’s grain crops. Rail links in the state aye classified according to their functional characteristics and are further rated as being “neces- sary,” “not necessary,” or “not sure” (Iowa DOT 1976a, p. 113). Priority ratings are then assigned for potential projects under the branch line assistance program. Being outside the ConRail area, Iowa was forced to begin its planning with a consideration of the entire rail network, a function which in the northeast was assumed by USRA.

Other state planning activity unrelated to ConRail includes rail passenger service planning, both for state subsidy of commuter operations and for shared subsidy of Amtrak trains under Section 403(b) of the National Rail Passenger Service Act of 1970. New York, Michigan, and Illinois are examples of states participating in the matching subsidies of the 403(b) program, while at least one other state has prepared a plan for rail passenger service (Wisconsin Department of Transportation 1975). It has also been suggested that states should take a more active role in planning for the reuse of abandoned rail rights- of-way, especially in light of their scenic and recreational potential (Nehman 1975). State planning under RRRR. Under the RRRR Act, states outside the Northeast now have the option to obtain federal funds for rail planning. It remains to be seen whether these plans will be drawn broadly or narrowly. The service continuation funds are specifically applicable to those lines which the railroads seek to abandon under other provisions of the act; and it is likely that some plans, like some present plans in the Northeast, will exist simply as a formal prerequisite for receiving these funds. The act clearly envisages something more than this,

describing the rail plan as coordinated with an overall transportation plan for the state. It may be hoped that at least a few states will take this seriously and will develop plans which carry on the example set in Iowa.

Local rail planning Local rail planning efforts to date have focused

primarily on grade crossing hazard reduction, grade crossing elimination, and rail relocation. The 1973 Federal Highway Act authorized $175 million for grade crossing projects on federal aid roads. While no money was specifically authorized for grade crossings off the federal aid system, such projects could be conceivably included as part of a general safer roads demonstration project intended for the nonfederal aid system.

In some cases grade crossing hazard reduction has been achieved by physically relocating rail- road lines, or by combining several rail opera- tions onto one existing line. Bay City, Michigan, as part of a general urban renewal program, was successful in persuading the Grand Trunk Western and the Penn Central to share use of four miles of track, thereby eliminating forty-eight grade crossings on the duplicate facility. (Railway Age 1976b). A railroad consolidation study in Lincoln, Nebraska, led to the creation of a Railroad Transportation Safety District with taxing authority and the power to negotiate with area railroads for consolidation of track use and acquisition and redevelopment of excess facilities (Chamberlain 1973).

Section 163 of the 1973 Highway Act authorized $90 million for funding of demonstration projects dealing with track relocation in twelve cities. These were in addition to a pilot relocation project in Greenwood, South Carolina, begun under the 1970 Highway Act and involving modification to two railroads in the center of the downtown district. The Greenwood project is essentially complete while the others are now moving toward construction (Railway Age 1976c).

It is estimated that between 1950 and 1973, some two hundred rail relocation projects were completed, at an average cost of $4.7 million (based on a sample of 111 completed projects) (SRI 1975). Perhaps two hundred more cities have similar relocation projects which are held up for lack of funds. If all the U.S. cities which could potentially benefit from rail relocation were to carry out such projects, the total costs might run from three to eleven billion dollars (SRI 1975).

I t is clear that many cities are waiting for federal funding to assist in such projects. The highway bill sent to the President in April, 1976, includes $84 million for railroad relocation demonstration projects through 1978, in addition to those projects already

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funded. Compared to the magnitude of the problem, this amount is small, but it does represent a con- tinuing move toward federal support of such activities.

Most such projects will focus on small segments of rail line for the benefit primarily of the community itself. An additional public role is possible in cities with major terminal complexes, as shown by the New Orleans and St. Louis studies cited earlier. Planners at USRA have reportedly told railway industry officials they can no longer afford the luxury of duplicate facilities in many areas. This may apply especially to urban areas with high land values and too many underutilized rail yards, a legacy of highly competitive premerger days. The public role in these cases may be that of facilitator and catalyst, looking for solutions which will benefit rail operations and efficiency as well as reducing railroad-community conflicts and redeveloping valu- able real estate. Such projects will be more complex than the typical relocation projects, requiring a thorough understanding of railroad operations as well as full-scale participation by both railroad management and railroad labor. While far more complex than such single purpose planning as grade crossing protection, this type of mutual public- private planning may be where some of the highest benefits for local rail planning actually lie.

Conclusions This article has attempted to demonstrate the

range of problems confronting the rail industry and to show how these problems relate to those which are of most pressing interest to public planners. Rather than a single problem there is a range of intertwined problems, and these have prompted a broad public search for solutions at the national, state, and local levels. Several points deserve repeti- tion by way of summary.

1. The “railroad problem” is multifaceted and has been around in one form or anther for a long time. The present rail bankruptcies, while dramatic in their magnitude, are not the first such problems in the industry, and ConRail is not the first public effort to deal with these problems.

2. While public attention focuses on passenger service and Amtrak, the more serious problems of the

3.

4.

5.

rail industry deal with freight service and with the continued ability of the rail system to provide desirable service levels at reasonable cost to the industry and to the public. The railroad problem involves the basic economics of the entire railroad system and the question of its survival in competition with other modes. The problem is not limited merely to the economics of marginal branch lines in an otherwise healthy rail system. State rail planning, which has flourished under the Regional Rail Reorganization Act, has concen- trated primarily on .the problems of marginal branch lines, and has been biased toward preserva- tion of most of the present system regardless of efficiency or cost. As planning becomes more widespread under the Railroad Revitalization and Regulatory Reform Act of 1976, planners will have to make harder decisions concerning alternatives to existing rail services and will have to deal with the economics of overall rail systems. Local rail planning is expected to expand with additional federal support, concentrating pri- marily on line relocation to reduce railroad- community conflicts. This will probably be of more direct benefit to the public than to the rail- roads involved. A much more difficult local planning approach, although one with a high joint payoff, will take advantage of rail mergers and consolidations to substantially streamline railroad terminal operations, with public side benefits through reduced community conflict and redeveloped land.

There appear to be real benefits to continued public involvement in rail problems, and these will directly affect planners at all levels of government. The public role with respect to railroads is moving from a purely regulatory stance, with public agencies and railroads as adversaries, to a more supportive stance with respect to uneconomical but publicly necessary services. There may be high payoffs both for the public and for the rail industry from a mutual approach to rail planning. This approach will require joint involvement by public planners, rail industry planners, and rail labor and will involve a shared commitment to find solutions of benefit to all parties.

Notes 4.

1.

2. 3.

22

There have been some exceptions, including federal operation of the railroads during World War I and federal construction of the 575-mile Alaska Railroad in 1923, but these government actions did not alter the basic configuration of the national rail network. For example, see Task Force on Railroad Productivity (1973). Low density is defined in this instance to be less than twenty- five annual carloads originating or terminating per mile of track.

5.

6.

The interest in restructuring did not die in 1940. For a discussion of a few of the later proposals see Blaze (1974). The bankrupt roads and their mileage are: Penn Central (19,415), Reading (1,156), Ann Arbor (301), Boston and Maine (1,393), Central of New Jersey (591), Erie (2,928), Lehigh Valley (992), and Lehigh and Hudson (90). The Boston and Maine elected not to participate in ConRail. The Ann Arbor was proposed for inclusion by USRA but was omitted from the final ConRail system. It is being operated by ConRail under contract with the state of Michigan.

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7.

8.

9.

10.

11.

The purchases by the Southern and the Chessie were never culminated, thereby giving ConRail a total of 17,000 miles of rail line. In response to criticism about the shortness and uncertainty of this program, the Railroad Revitalization and Regulatory Reform Act of 1976 extended the subsidy provisions to five years, beginning with 100 percent federal support in the first year and tapering to 70 percent in the fourth and fifth years. A total of $360 million was authorized for thls program, including $5 million for planning (P.L. 94-210, Title VIII). In Indiana, lacking a department of transportation, the plan was prepared jointly by the Public Service Commission and the Center for Urban and Regional Analysis, Indiana University. In Rhode Island the Statewide Planning Program prepared the plan. Michigan and Rhode Island, for example, assumed that all jobs in branch-line-dependent industries would be lost, and that these displaced workers would be paid unemployment benefits for a full year. These assumptions alone produced enough costs to justify public subsidy of almost all branch lines. The RSPO, established within the ICC by the RRR Act of 1973, is statutorily responsible for setting standards to determine the amount of subsidy payment and to determine whether particular lines are eligible for subsidy. The planning and evaluation criteria of RSPO were not mandatory, but the states were required to relate their own planning to those suggested criteria (P.L. 93-236, Title 11).

References Association of American Railroads. 1975. Yearbook of railroad

facts. Washington, D.C. Barriger, J. W. 1955. Supei--railroads for a dpamic American

economy. New York: Simmons-Boardman. Black, W. R., and Runke, J. F. 1975. TJze stales and m?al rail

preseruation: alternative strategies. Lexington, Ky: Council of State Governments.

Blaze, J. R. 1974. Towards a national policy of super railroads. In Proceedings, Transportation Research Forum. Oxford, Ind.: Richard B. Cross.

Carson, R. B. 1971. Mainline to oblivion. Port Washington, N.Y.: Kennikat Press.

Chamberlain, Elliot A. 1973. Railroad consolidation and relocation. AIP Planners Notebook 3, June.

Fuller, J. W. 1976. Rail planning: what’s new from the states’ view. Paper presented at annual meeting of the Transportation Research Board.

Grossman, H. J. 1976. End of the line for small towns. A S P 0 Planning 42, 2: 17.

Iowa Department of Transportation. 1976a. An economic analysis of upgrading rail branch lines: a study of 71 lines in Iowa.

Report prepared for Federal Railroad Administration. Des Moines, Iowa.

. 1976b. Trans plan ‘76: initial Iowa transportation plan. Des Moines, Iowa.

Kneatsey, J. T . 1975. Transportation economic analysis. Lexington, Mass.: D.C. Heath.

Nehman, G. I. 1975. State’s role in planning for abandoned rail rights-of-way under the Rail Reorganization Act of 1973. Paper presented at national conference, American Institute of Planners, San Antonio, Texas.

Parsons, Brinkerhoff, Grotz, and Hill. 1973. Comprehensive areawide railroad consolidation and relocation study-St. Louis region. Phase one interim report prepared for East-West Gateway Council.

Parsons, Brinkerhoff, Quade, and Douglas. 1975. New Orleans, Louisiana, regzonal railroad planning demonstration study. Report prepared for U.S. Department of Transportation.

Pennsylvania Department of Transportation. 1975. Review of United States Railway Association preliminary system plan. Harrisburg, Pa.

Phillips, C. F. 1969. The economics of regulation. Homewood, Ill: R. D. Irwin.

Preisser, V. 1975. State rail planning from the perspective of a state outside the Northeast region. I n Proceedings of 1975 National Rail Planning Conference. Washington, D.C.: U.S. Department of Transportation.

Railway Age. 1976a. St. Louis terminal: MoPac gets a better handle on car handling. March 29. pp. 32-33.

. 1976b. Crossing elimination, Michigan style. January 26. p. 8.

. 1976c. More money for crossing protection? January 26.

Ripley, W. 2. 1914. Railroadts--finance and organization. New York: Longmans Green.

Simat, Helliesen, and Eichner, Inc. 1973. Retrospective rail line abandonment study. Report prepared for U.S. Department of Transportation.

Stanford Research Institute. 1975. Urban railroad relocation: nature and magnitude of the problem and planning for remedial action, vol. 1. Report prepared for U.S. Department of Trans- portation.

Task Force on Railroad Productivity. 1973. Improving railroad productivity. Washington, D.C.: National Commission on Pro- ductivity.

U.S., Department of Transportation. 1976. Railroad abandonments: a report on effects ats ide the Northeast region. Washington, D.C.: U.S. Department of Transportation.

United States Railway Association. 1975. Final system plan. Washington, D.C.

Wisconsin Department of Transportation. 1975. Wisconsin state rail plan: the future of Wisconsin rail passenger service. Madison, Wis.

p . 22.

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