Since
the early 1970’s, the government
has expended about $200 million annually for the installation
of automated gates at railroad crossings. About $165
million comes from the federal government’s so-called
Section 130 money that is dedicated to the improvement of
warning devices at crossings, while the other $35 million
has been derived from the combination of other federal monies
and State programs. (A very small amount comes from
private interest groups.) At the same time, the railroad
industry has invested close to none of its own money for
gate installations. At one time in our history, railroads
were required to pay half of the cost of gates, but this
contribution shrunk to 10%, and eventually to nothing --
although in a limited number of cases, railroads make a minor
contribution. In fact, the industry may profit from
installing gates in that they not only charge the government
for time and materials, they also are reimbursed for overhead
allocations and “additives” (a surrogate for
profit). The basis for the railroad industry’s
shrinking contributing toward gate installations seems to
have changed over the years.
Originally, the 50-50 percent sharing
arrangement was attributed to the fact that railroads and
public road authorities shared ownership of public grade
crossings. Without the track
structure there would be no grade crossings. On the
other hand, the same could be said for the absence of highways. But
as the overbuilt, inefficient, and financially-troubled railroad
industry became mired in bankruptcies, deferred maintenance,
and inadequate capital in the decades following World War
II, the government increased its contribution to 90 percent. The
change was also justified on three underlying premises. First,
it was espoused that since railroads preceded highways, that
highways crossed railroads and as such, were a nuisance to
railroads. As a spokesman from the industry’s
trade association – the Association of American Railroads – said, It’s
the state highway people who decided to put highways . .
. over the railroad tracks. They’re the highway
experts. We didn’t put the highways in, and frankly,
we would prefer that they not be there. (Statement
of Tom White as cited in the Omaha World-Herald Company,
September 29, 1999.) Second, it was thought that since
motorists, and not railroads, were the overwhelmingly prime
beneficiary of automated gates (and other crossing improvements),
that the government should fund gate installations. After
all, collisions between trains and motor vehicles often resulted
in death and injury to motorists, but rarely to railroad
personnel or passengers (in the case of Amtrak and commuter
lines). And the fact that railroads had the right of
way over motor vehicles at gated crossings, was in itself
evidence that motorists needed protection from trains – not
the other way around – and hence, that the public benefited
from crossing improvements. Rhetorically speaking,
why should railroads pay for informational and safety devices
that offered almost no benefits to them?
All three of
the underlying premises have serious flaws, but since the
railroad industry had been in the financial doldrums during
much of the 20th century, and the industry’s powerful
lobbying efforts did not face counter-veiling forces, the
railroad industry managed to get itself excused from paying
for gate installations. And to this day, the general
public has no idea who pays for improvements at grade crossings,
and what the relative roles are of the railroad industry
and the government. But today’s railroad industry
is not that of our grandfathers, or even our fathers. The
industry has consolidated into seven Class I (the largest
railroads based on annual revenue) systems, with four railroads
dominating the industry. The seven Class I railroads
enjoy over $40 billion of annual operating revenue, with
about 93 percent of that amount going to the top four systems
(Union Pacific, Burlington Northern/Santa Fe, Norfolk Southern,
and CSX Transportation). Two of the other three Class
I railroads are owned by large Canadian-based railroad systems. These
mega-railroads operate in many monopoly markets, enjoy significant
profits, have experienced large increases in the price of
their stock, and have paid their executives substantial salaries,
bonuses, and grants of stock. They can well afford
to pay for the installation of gates, not only because of
their strong financial posture, but also because the actual
cost of installing gates is less than they charge the government,
and because such costs are pre-tax expenses. In a number
of cases, these railroads pay far lower income taxes than
other companies because their capital intensity allows for
significant accumulated tax deferrals.
Aside from the major change in the
financial ability of the railroad industry, the other underlying
premises – as
cited above – have a logical contrary perspective. For
example, while railroads were built prior to highways (the
industry was initiated in 1830, long before the development
of motor vehicles), railroads did not precede the movement
of goods and passengers by horse-drawn power. In essence,
the need for people and commodities to travel between various
locations existed long before the advent of trains. Furthermore,
it was the public that granted railroads the land that they
operate on, and provided them with exclusive licenses to
run commercial ventures. In other countries, the railroads
were owned and operated by the federal government (the one
exception was a single large Canadian railroad). In
this sense, railroad track structures cross roads and highways
needed and used by the public and thus, they interfere with
societal needs. While it is true that the public benefits
more from grade-crossing improvements than do railroads,
it is the railroad industry that caused the conditions to
exist whereby track and roadways intersect. The public
also incurs the cost of having to yield to trains at grade
crossings, resulting in wasted time and more importantly,
deaths and injuries caused by a variety of factors, including
inadequate warning devices and deficient crossing structures. Thus,
the benefit to the public from installing automated gates
is due to the fact that the public suffers from having gates
at only about 30 percent of public crossings. Gates
are by far the safest protective device at grade crossings,
as federal statistics show them to be 3-4 times safer than
such passive devices as crossbucks. And finally, just
because trains have the right of way over motorists at grade
crossings, does not mean that railroads are exempt from their
responsibility to warn motorists when trains are approaching. The
granting of the right of way was a matter of physics – not
a matter of identifying relative responsibilities between
railroads and the public.
Based on their monopolistic positions,
their financial wherewithal, their interference with societal
needs for the movement of people and goods, their exclusive
operating licenses granted by the public, and the havoc
they cause the public when accidents occur, it is time
for the railroad industry to pay for the installation of
gates at grade crossings. The
cost to railroads is far less than their charge to government
agencies and in many cases, they can pass the added expense
on to their customers. The railroad industry is currently
faced with so much demand that traffic congestion has become
a much talked-about issue. To combat such demand, the
industry has been raising its rates (prices) in order to
maximize profits. For an industry that has been experiencing
steady increases in its annual revenue, it has both the moral
responsibility and financial ability to single-handedly pay
for the installation of automated gates at crossings throughout
the country. In summary, the 10 reasons why railroads
should pay for the installation of crossing gates are as
follows:
- The concept of time and place utility – that
is, having people and goods at times and locations --
preceded the development of the railroad industry in
this country.
- The existence of pathways, trails and streets preceded
the development of the railroad industry in this country.
- Railroads were granted their land and their rights-of-way
by the public and in return, have a responsibility to provide
safe travel over their track structures.
- Trains were given the operational right-of-way over motorists
at grade crossings, and in return, have a responsibility
to provide motorists with safe crossing.
- Train-motor vehicle collisions result in death and injury
to motorists, but not to on-train personnel or passengers,
and thus, railroads should provide maximum safety to motorists
at their crossings.
- If railroads paid for the installation of automated gates,
the total cost would be lower in that overhead charges
could be absorbed by railroad customers and additives (profit)
would be non-existent.
- By paying for the cost of grade-crossing installations,
railroads would have the incentive to make such installations
in a more effective and especially, efficient, manner.
- By taking over the expense of installing crossing gates,
government expenditures for gates, as well as the bureaucracy
of federal and State agencies, would be eliminated, thereby
reducing the burden on taxpayers.
- The railroad industry has been re-monopolized into four
mega and three other large railroad systems and these carriers
can well afford to pay for the installation of crossing
gates.
- With the lower cost of gate installations, more crossing
gates would be installed in a shorter period of time than
is currently the practice.
If the railroad industry was required to pay for the installation
of automated gates at their crossings, the end result would
be the reduction of grade-crossing accidents, and fewer injuries
and deaths among the general public.
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