Texas A&M Transportation Institute’s Policy Research Center has published a paper, “Considerations for Public Freight Rail Projects in Texas,” that addresses that question and more.
So, why would the public consider participating in projects with private companies that own and operate freight railroads? Federal, state or local governments may do so to advance clearly defined public interests in freight rail projects, for the following reasons:
- Public interest may not match railroad business objectives. As railroad traffic increases, communities could benefit from grade separations (i.e., separating road and rail traffic with a bridge), but railroads may not gain enough economic returns to merit paying for such expensive structures. Working with railroads to address grade separations as part of corridor-wide highway-rail grade crossing safety improvements, the public sector can leverage other private sector capital investments.
- Railroads may be unable to reach agreement to resolve rail congestion that affects the public. Multiple railroads may share assets with capacity constraints (e.g., a bridge, at-grade crossing, or shared switch or terminal) that affect the public (e.g., blocked crossings, noise, and emissions), and may not be able to agree on allocating costs and responsibilities for solutions. Modest public participation in such projects can facilitate agreements to apply private funding to resolve congestion chokepoints.
- Railroads may not have access to capital to address public needs. Texas, like most states, has regional and short line railroads serving shippers and communities, and some of these companies may not be able to access capital to invest in economic development projects of interest to the public. Many states provide competitive programs of grants and loans to foster last-mile rail connections on short line railroads to local businesses.
In any of these instances, the public sector could consider participation in freight rail projects not as an income transfer but as a project-specific means of working with a private freight railroad (or railroads) to accomplish results for the public at large.
The report outlines the types of public freight railroad projects deployed throughout the U.S., describes Texas laws that authorize such agreements, presents four case studies of public freight railroad projects in Texas and the U.S., and applies lessons from these case studies to potential public freight railroad projects in Texas.