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49 TABLE 3-19 Top 10 States for Rail served by more than one Class I railroad; secondary cities Tons Terminated, 2001 may be served by only one Class I carrier and/or by smaller % regional railroads. The Class I railroads have areas of general Rail Tons State Terminated U.S. geographical concentration. For example, transport between Total the West and Midwest is primarily provided by Burlington Texas 189,633,233 10% Northern and Santa Fe Railroad (BNSF) and Union Pacific Illinois 186,302,393 10% (UP); transport between the Midwest, East, and South is Ohio 97,329,450 5% Florida 93,820,901 5% largely provided by Norfolk Southern and CSX. No single California 92,684,031 5% railroad owns railway from the West to the East, but rail Georgia 83,033,699 4% company partnerships facilitate coast-to-coast transporta- Missouri 78,030,320 4% tion, as well as international transportation to Canada and Wisconsin 70,169,618 4% Virginia 68,915,424 4% Mexico. Indiana 63,407,891 3% Although U.S. railroads have always been privately Top 10 Total 1,023,326,960 53% owned, the extent of government regulation over them has U.S. Total 1,942,330,529 100% varied as the economy and modes of transportation have (Source: AAR) changed. The Staggers Rail Act of 1980 reduced government regulation of railroads to allow them to establish their own routes, adjust rates and services to market conditions, and equipment and infrastructure maintenance. For long distances, differentiate rates based on demand. The Interstate Com- rail is generally the cheapest form of freight transportation in merce Commission (ICC) retains authority over some non- the United States; the trucking industry is its biggest com- rate areas and can set maximum rates or take certain other petitor. To maintain its niche in the U.S. transportation mar- actions if a railroad is found to have abused its market power ketplace, railroads have consistently been within the lowest or engaged in anticompetitive behavior. quartile of all U.S. industries in terms of profitability. Before the Staggers Act, the Rail Passenger Service Act of Revenue by carrier type for 2001 is shown in Table 3-13, 1970 allowed the private rail industry to exit the intercity pas- above. Class I carrier financial statistics, including operating senger rail market, which was consistently operating at a loss. revenue and expenses, net income, and return on average eq- The same act established government-owned Amtrak, which uity in 2002, are shown in Table 3-20 below. Class I carrier has remained the sole intercity passenger rail carrier in the con- operating statistics, including freight revenue per ton-mile in tinental United States. Amtrak owns approximately 750 miles 2002, is shown in Table 3-21. of railroad. The remaining miles over which it operates are owned by freight railroads, which it pays for track use. A few 3.3.5 General Organization dozen cities in the United States have commuter and light rail passenger service between a central city and its suburbs or out- All Class I railroads are owned by private corporations, as lying region. These services are owned by either private com- are most regional railroads. Each corporation is run by a panies or local and state governments. Some of these commuter board of directors that appoints a chief executive officer to passenger operators own all or part of the railway over which oversee railroad management. Most major U.S. cities are they operate; however, it is becoming increasingly common for commuter passenger operators to extend their operations using railroad right-of-way purchased from freight railroads. In some TABLE 3-20 Financial Statistics of Class I Railroads, 2002 cases, a freight railroad has been contracted to provide passen- ger service (e.g., Union Pacific in the Chicago area), but in gen- Freight revenue (billion) $34.1 eral, freight railroads limit their operations to freight. Operating revenue (billion) $35.3 The Association of American Railroads (AAR) provides a Operating expense (billion) $29.6 Net income (billion) $3.2 unified voice and point of organization for the rail industry Operating ratio 84% with respect to regulations, safety, and more recently, security Return on average equity 8% and associated coordination with federal and local authorities. (Source: AAR) AAR membership includes all major freight railroads in the United States, Canada, and Mexico, as well as Amtrak, and TABLE 3-21 Operating Statistics of Class I represents more than 96 percent of intercity freight rail service Railroads, 2002 and essentially 100% of intercity passenger rail service. The FRA enforces rail safety regulations and conducts re- Freight revenue per ton-mile $0.0226 search and development in support of improved safety and rail Average tons per carload 63.3 Average tons per train 3,030 policy. The primary research center for the North American Average length of haul (miles) 853 railroad industry is owned by the FRA and operated by the (Source: AAR) Transportation Technology Center, Inc (TTCI), a subsidiary of