No more state funds for crossing repairs means Michigan short line adopts surcharge
Saginaw Bay Southern Railway (SBS) has instituted a surcharge of $20 per car to cover a portion of expenses incurred to maintain crossings to Michigan Department of Transportation standards. The DOT recently decided to no longer fund repairs to state highway crossings.
The kicker to SBS officials is trucks are the primary cause of crossing damage. Michigan has high truck-weight limits, which cause crossings to take a pounding — along with the short line’s operating costs.
“The failure of the state to fund crossing repairs as they have done in the past means that the railroads are in the position of supporting our truck competitors by repairing damage that the trucks have caused,” SBS officials said on their Web site. “This direct subsidy to truckers places an unfair burden on SBS and our customers.”
This year, the 67-mile short line and its parent Lake State Railway Co., which formed SBS in 2005, have budgeted more than $500,000 for crossing work — enough money to replace 17,000 ties if the funds were invested in the railroad’s own infrastructure, SBS officials said. The short line plans to drop the surcharge if the state changes its policy.
What small railroads really need is more states to adopt programs that provide funds for infrastructure and operational improvements rather than eliminate the few short-line funding mechanisms already in place.
Posted by: 
Jeff Stagl | Date posted: 4/8/2008
Comments
Posted by Larry Kaufman on 4/9/2008 10:19:46 AM
Good for the Michigan short line! Too bad its own customers now will be paying for the state's effective subsidy of the railroad's truck competitors. Having once dealt with these issues in my Washington days, I would remind all that the legal basis for public maintenance of grade crossings stems from the fact that in virtually every case the railroad was there first and it is the public roadway that is crossing private property, not the railroad that is crossing a public highway. Perhaps the short line should seek support from the ASLRRA for legislation mandating that Sec. 130 funds be used by the State of Michigan for the purpose they were authorized.
Posted by BE Johnson on 4/9/2008 2:19:44 PM
If I was the shortline's management I would only repair the crossings to the extent that it facilitated my train traffic and let the highway traffic suffer through rough to impassable crossings. If the state complained about the crossing conditions I would then close the crossings and let the state be damned.
Posted by JJ O'Donnell on 4/11/2008 12:41:26 PM
Having been in the shortline business in my past, I would suggest, from a lesson that I learned, that SBS review the easement agreements that Michigan DOT has with them; they could suddenly get very expensive or cancelled out-right. It is important to remember here who has the privilege of crossing over whom.
Posted by Michigan Department of Transportation on 4/14/2008 1:59:20 PM
The Michigan Department of Transportation is continuing to fund repairs and reconstruction for crossings on state trunklines, contrary to SBS' statements. As a result of declining revenues and a statewide focus on other important safety initiatives, available federal funding has been reduced and will be limited to $2 million each year, beginning in 2009 for three years. In addition to federal funding, state railroad funds add $900,000 annually to the trunkline railroad program (this amount remains the same).
The selection of crossing repairs will be made according to a safety prioritization of projects, and will involve more maintenance fixes rather than full replacements. This approach will mean more crossings can be improved because the "fix" will be less expensive. Now, in order for a project to move forward through the trunkline railroad program, the railroad will fully self fund all railroad work (for which it is legally responsible by state law), and MDOT will assist with the design, pavement and traffic impacts.
State law makes railroads fully responsible for that portion of the crossing between the rails, over the ties, and for a distance of one foot beyond the ends of the ties. It is also the responsibility of the railroad to make the crossing surface as smooth as the adjacent roadway. The appropriate road authority is fully responsible for the roadway approaches to the crossing. These provisions are contained in the Railroad Code of 1993, which came about as a result of a massive joint effort of railroads, road authorities, and other stakeholders.
For several years, MDOT has voluntarily assisted railroads with their crossing work at state trunkline crossings throughout the state. However, the intent was never to relieve railroads of the responsibility of these repairs, but rather to assist with some of the work in an effort to leverage improvements at as many projects as possible.
There are additional resources available to railroads, specifically MDOT's Michigan Rail Loan Assistance Program (MiRLAP). This program offer interest-free loans on a competitive basis to railroad companies or others who wish to preserve or improve the state's rail infrastructure. The loan could spread out the cost of an improvement over 10 years.
For all these reasons, the sources of revenue for railroad crossing improvements is expected to be a subject of discussion for the newly formed Transportation Funding Task Force, which is charged with reviewing the adequacy of surface transportation financing in Michigan.
For further details on MDOT's trunkline railroad program, contact Brett Kach, Trunkline Crossing Engineer, Design, 517-335-2272.
Posted by James Swidergal on 4/15/2008 11:20:31 AM
After reading the latest insert to this blog by the Michigan people I must assume that the short lines in Michigan are responcible for the crossings, yet isn't it the state that actually monitors and approves installation and enacted legislation for said crossings and that the railroads are only inpart responsible for the maintenance of said crossings. If that is the case then the state needs to reimburse the railroads no matter what the states economic climate is. More and more crossings are being installed and then left to the railroads to maintain,maybe a reduction in crossings would mean the fewer would be better maintained, too much is being taken granted for by the states and as well as the public at large.
Posted by Pat Latz on 4/15/2008 1:34:55 PM
Jyst a "NEW YORK MINUTE". The grade-crossing maintenance and up keep is funded 90% by the Feds and 10% by the state. Is the State of Michigan disregard- ing its minor 10% payment? Furth- er, what is happening with the Feds 90% grants to the State of Mich- igan? The legsilation for this progfram was enacted in 1976, which I had a hand in its writting. Do not believe any change has occurred.
Posted by Larry Kaufman on 4/16/2008 1:00:18 PM
Pat Latz is right about the federal funding of grade crossings. The program is known in verbal short-hand as Sec. 130 funding, as that was the section of the original act that dealt with grade crossing maintenance. More to the point, the Michigan DOT response posted above is about as bureaucratic as one could stand. You can change the name, but when push comes to shove, the various state DOTs mostly still are Highway Departments.
Posted by Dave Smith on 4/16/2008 8:00:21 PM
I'm curious about one thing. The Michigan DOT responder stated that the railroads are responsible for maintaining the crossing up to one foot beyond tie width on either side of the rail path. Yet I have seen many rail crossings here in the Pacific Northwest where the roadway is paved right up to the outside of the rail. How can a railroad be responsible for maintaining roughly 4 feet of pavement when said pavement is contiguous on both sides of the approaches?
Posted by Dave Smith on 4/16/2008 8:09:50 PM
I also want to take aim at SBS's claim that the trucks that use their crossings are also their "competitors". It is more likely that those trucks are the last mile connection between the railroad and the consumer, making them teammates in the larger scale of things. What is it that SBS hauls that is proven to be a commodity also being hauled to the Class I connection(s) by trucks? If an SBS representative can show us proof of such truck competition, I'll accede. Otherwise, it just seems to be more of the rail vs truck mythology, a destructive attitude in this day of multimodal cooperation.
Posted by Larry Kaufman on 4/17/2008 11:25:52 AM
Dave Smith may "take aim" at the claim that trucks that use SBS's crossings are also their competitors, but his aim is really off, which will come as no surprise to those who are used to Mr. Smith's antipathy to railroads and rail. He tries to argue that it is more likely that those trucks are the last mile connection between the railroad and the consumer, making them teammates in the larger scale of things. Some may be. That's more likely to be true of a Class 1 network railroad, but probably is not so in the case of a short line like SBS. Short lines and trucks are vigorous competitors. Freight in a truck is not going to be the last mile between the short line and a shipper or consignee, except for some commodities, so much as it is likely to be freight moving between a shipper or consignee and the nearest Class 1, if it even moves part of the way by rail at all. Whether Mr. Smith "accedes" or not certainly is of no concern to SBS of Michigan, and yes, it is more of rail vs. truck competition, which he invariably rejects or sides with the truckers. Mythology? Hardly.A destructive attitude? Hardly. Competitors compete. That's normal. And where it is in the interest of the carriers and the customers, they work cooperatively, which just might be why intermodal is the fastest growing segment of the rail business, the present freight recession notwithstanding. Mr. Smith, admittedly an employee of a company in the utility business, appears to have a different definition of competition than do those who actually compete in the market place. Cooperation between rails and truckers occurs when it is in the economic interest of customers by providing them with better service, lower price, or both.
Posted by Dave Smith on 4/17/2008 7:15:07 PM
If SBS claims that the trucks crossing their lines are "competitors" and not "deliverers", then let them prove it with some real-time data. Making stereotypical generalizations proves nothing except an air of unprofessionalism. Indeed, if they can prove in a court of law that the Michigan statute forces them to subsidize their business competitors, they could probably get the statute thrown out by a reasonable judge. Otherwise, it sounds like more of the same - an excuse to raise rates on shippers ala the now infamous fuel surcharges used by the Class I's to supplement revenue rather than an actual attempt at cost recovery. Thank heavens my employer is 100 percent removed from a dependence on railroads, otherwise I'd have to cop an attitude toward railroads!
Posted by Larry Kaufman on 4/18/2008 10:57:24 AM
Dave Smith, you have an annoying habit of asking rhetorical questions, then assuming an answer, and assuming that to be gospel. What part of "a railroad is private property" don't you understand? The SBS is required by law to maintain public crossings of its property. The public (government) is required to pay for a portion of the cost of that maintenance. The public does not contribute to the maintenance of the signalling and warning devices that its use requires. SBS does not have to satisfy your or me that a truck is either a "deliverer" as you so snarkily put it, or a "competitor." It bears financil burden no matter what the truck is doing. You then jump into a locution on fuel surcharges, assuming the earth to be flat! Fuel costs money. If the cost is not recovered, service will deteriorate and eventually will vanish. Perhaps that is what you really seek? Other than the cockamamie "study" by the ACC, there is no evidence that any fuel surcharges are excessive. The STB did find that they must be more transparent and involve no double-dipping on rates that reflect fuel cost under RCAF. It did not find any fuel surcharges to be higher than justified. You don't like that decision? Take it up with the STB. As for your employer being 100% free of reliance on rail service, I'm sure any potential railroad service provider is equally happy as you say your are. You'd make a lousy customer, undoubtedly demanding more service and lower cost than your business would be worth. I am curious about one thing: If you are not in the railroad business, and you don't use rail in your business, why are you reading a railroad trade publication and its blogs so avidly? Inquiring minds want to know, as the old advertising slogan goes.
Posted by Dave Smith on 4/21/2008 7:42:43 PM
Larry, all I'm asking for is SBS to provide some evidence that most of the trucks that cross their line are also SBS's competitors. If and when that is provided, I will concede the argument. Until then, I am dismissive of such statements, as I find them to be counterproductive to multimodal cooperation. To answer your question as to why I have an interest in the rail industry, hey, I'm a fan! I would like nothing more than for this nation to be saturated with rail lines, preferably intramodally competitive rail companies, and thus better able to optimize multimodal synchronicity. The fact is, the US rail industry under the antiquated closed access integrated model is but a fraction of what it could be. Having only two Class I rail service providers to choose from out West is a travesty.
Posted by Larry Kaufman on 4/22/2008 2:18:10 PM
Davey (you call me by my first name although we never have met, so I shall do the same), you no doubt will be delighted as may others to know that this is my last response to you on this blog or any other published by PR. That is because you choose to ignore comments by others as thought they never had been made, then proceed as though your statements were unchallenged. This is not discussion, Davey, it is political humbuggery. I won't waste any more time trying to engage you in discourse. You prefer to have a monologue and you just go right ahead and talk to yourself from now on. You see, it doesn't matter whether the trucker in question is SBS's most vigorous competitor or the brother-in-law of the CEO of SBS. It still is crossing the railroad's private property. It already has an effective subsidy because the user fees/taxes paid by 18-wheelers do not cover their aloquot share of the highways they consume. That's really quite simple. Perhaps you even understand it. Whether you "concede" the argument is of no concern to SBS or anyone else, as you have set up a straw man. I don't know nor care whether you are just being perverse, but it makes no difference. Most likely, there are numerous trucks crossing the SBS right of way, some may be competitors, some may be "deliverers" as you call them, and others may just be joy-riding. It makes no difference. They cross private property whose owner is required by law to maintain the crossing for which they do not pay. Davey, you are "dismissive" of any statement or argument that does not comport with your preconceived prejudices. So be it. You claim to be a rail fan and that you wish to see this country "saturated" with rail lines. Davey, that kind of saturation brought the industry to the point of financial collapse once before. Spare us your fandom; we probably could not afford to have you as a fan. Your track record at this blog suggests you dissemble in your zeal for competitive railcompanies. They are highly competitive now, and where they are not, the STB has the legal authority to determine maximum rates for captive traffic. That it finds in favor of the railroads most of the time just might be evidence -- which I'm sure you reject -- that the system really does work. Finally, in the category of you don't know what the hell you are talking about, the rest of the world has the multi-access regimes you would visit on this country. Their freight service is lousy. Our is light years better, although you seem to be in a minority that doesn't accept that reality. There are thousands of trackage rights agreements throughout the U.S., all entered into by private corporations that find it in their mutual interest to do so. What you call an "antiquated closed access integrated model" is not a model. It is what works best by providing a market rate of return on investment and thereby the ability to reinvest in better and more service. Oops, I forgot; you work for a utility holding company and you get to bake the cost of your expansion into your rates that your customers must pay by order of the state PUCs, whether they wish to or not. The travesty is that you abuse this blog to prattle and spew your ignorance and antipathy toward the railroads. Don't try to tell us what a fan you are, because if anyone did what you call for, the industry would disappear. Perhaps that is what you really seek.
Posted by Dave Smith on 4/23/2008 6:52:49 PM
Again, it is a simple request for SBS to stand by their statement regarding truckers being their competitors, preferably with some actual data. I'm certain the MSDOT has some kind of database regarding commodity flows that would aid in making such a determination. As to whether it is "fair" that railroads be required to maintain roadway on either side of the tracks, I agree that such is unwarranted given that in most cases the railroad preceded the establishment of the roadway. However, it is facile to suggest that SBS or any other rail company is being forced to subsidize it's competition via crossing maintenance requirements. First of all, most railroads are natural monopolies as defined by most economists, ergo a "monopoly" exists because it has no effective competition. Secondly, a railroad isn't "subsidizing" those who use a crossing via such mandates, it is "subsidizing" MSDOT. Study up on the legal definition of easements and ROW's - just because one "owns" an easement/ROW doesn't allow him to block those who wish to cross from one side to the other, yet that person is still liable for eliminating hazards to the crossers. I suspect there may be liability questions involved as well in MSDOT's overreaching maintenance requirement. I guess it would have been simpler to just impose a de facto tax increase on railroads and use these funds to maintain the crossings. The fact that railroads don't pay fuel taxes like truckers would suggest that SBS's/Mr. Kaufman's subsidy argument is exactly backwards. In economics, it is axiomatic that those who pay taxes are subsidizing those who don't. (Larry, the very fact that you are using the tag "Larry Kaufman" in your responses would suggest that you are okay with folks addressing you as such. If you don't want folks to call you "Larry", I would suggest that you provide the name by which you would like to be addressed. PS - you'll notice I use the name "Dave", not "Davey". Again, the tone of your responses speaks volumes about your character.)
