How do we get better terms from the owner of the track we run on?
Seven questions for anyone running trains on track he does not own.
The question this Read asksWhat does the agreement we signed cost us each year, in dollars, read the way nobody has read it since we signed it?
Exposure Read 1 · The Operating Agreement
Many short lines operate on track owned by somebody else — a state, a county, a port, a transit authority, or a Class I railroad that leased the branch rather than sell it. The agreement that governs it is usually signed once and read closely never again.
These agreements are not written in bad faith. A public owner is protecting an asset he holds in trust; a Class I lessor is preserving optionality on a line he did not want to run and may one day want back. Both are doing their job.
Nobody puts ties, ballast and surfacing into the ground — material that cannot be recovered at anything like its cost once it is down — on terms that hand it to the owner for nothing.
An agreement that cannot be rationally signed if it is understood is an agreement that was not understood. That is not a criticism of the owner.
Run them yourself.
Run them yourself. They take an afternoon and a copy of your own lease, they require nobody’s help, and that is the point of giving them away.
When do your improvements become the owner’s property?
Find the clause on improvements and read the timing. If it says upon installation rather than at termination, every tie and every yard of ballast belongs to the owner the moment it goes down. That is not a lease term. It means you are paying rent in capital and calling it maintenance.
Is there a way to get any of it back, or only a right to remove it?
Most agreements give a departing operator a period to remove what he installed. A right of removal is not compensation. Nobody recovers the installed value of surfaced track by pulling it up. Name the clause that pays you. If you cannot find one, there isn’t one, and the words for it are constructive depreciation or unamortized investment.
Where is the line drawn between the owner’s work and yours?
There are normally two categories — major rehabilitation, which the owner funds, and routine or cyclical maintenance, which you fund. Look for the test that separates them. If there is no dollar threshold, no quantity trigger and no defined boundary, the line will be drawn by whichever party holds the stronger hand, and that will not be you.
What did you commit to spend, and what protects the revenue that funds it?
Count the obligations. Ties per year, miles surfaced, defects cleared inside a stated window. Add them up at today’s installed cost. Then go and find the clause that protects the rate you charge. If the first number is large and the second clause does not exist, you have a fixed cost against an unprotected income.
Who controls the traffic that can end your agreement?
Many agreements let either party walk away if carloads fall below a stated figure. Work out who can put you under that number. If a single customer can do it by doing nothing, he holds a right to end your lease that he never signed for and never paid for — and both of you know it during every rate conversation.
Which counterparty does your agreement actually protect you against?
Read the termination and relief provisions and ask who they contemplate. On publicly owned track they are usually written against the connecting Class I — a tariff increase, a service change — and very few contain any protection against the shipper, who on a single-customer line is the only party with real power over you. If your lessor is the Class I, the question inverts: your landlord is also your connection, negotiates your divisions from the stronger side, and may hold a recapture right. Find out who your agreement thinks the threat is, then decide whether it was right.
What would it actually cost you to enforce any of this?
Find the dispute clause and the damages clause together. Consequential damages barred, arbitration required, each side bearing its own costs — that combination is common, and for an operator without deep reserves it is decisive. A remedy you cannot afford to pursue is not a remedy.
A question you cannot answer from the document itself is already an answer. It means the term is not there, or it is there and nobody has read it.
The annual cost of an agreement nobody has read since it was signed.
Set it beside what it would cost to have the agreement read properly, clause by clause.
What arrives.
Your agreement, read against the seven
Every clause that answers a question, cited by number, and every question the document will not answer, named as such. The ones it will not answer are the finding, and they are set down in writing so that nobody has to take them on anyone’s word.
Your exposure, in dollars
Capital installed and at risk under question 01, the undefined boundary priced under 03, the obligation at today’s installed cost under 04. Computed from your records, not from an average, so that it survives being read by a board or a lender.
A renewal position
What to ask for and in what order — a vesting date, a compensation schedule, a defined boundary, a restated trigger — with what each is worth to the owner as well as to you. Written so the owner’s program manager can carry it upstairs without rewriting it.
An honest read on the property
Whether the agreement, as written, can be performed on the traffic the line actually carries. Including the answer you would rather not have, which is the only reason the answer is worth anything.
And what it is not
This is not legal advice and it does not replace counsel. It establishes what the agreement says and what it costs — the facts your counsel needs in order to advise you at all.
The seven questions above are the test of the firm that wrote them. Run them, and judge the firm by what they find.
Most operators can run these seven questions without help, and they are yours to run. If you run them and find nothing, that is a good afternoon spent and you owe nobody anything.
If you find something you cannot fix alone — or would rather have the work done by someone who has sat on both sides of one of these — write and say what you found.
Our bench of career railroaders brings better than 160 years of combined field experience. Nobody we send learns railroading on your property. That is a standard, not a résumé.
Write and say what you found.
Write and say what you found, or call 928.605.7984 and say it. Not an impression — what the seven returned when you ran them on your own agreement: your score, and which one the document would not answer. The one you could not answer is the finding. It is worth more than anything this firm could tell you before seeing it, and on most agreements it is the whole matter.
You will have a reply within one business day, from the principal and not from a form. Writing puts you on no list. If what comes back says you have no problem, you will be told so. What comes back sets the next stage, or the work stops there. The full Exposure Read, with its worksheet, comes from the same address.
This page is general information about railroad practice. It is not legal, engineering or financial advice, it does not replace counsel or an inspection of your property, and reading it does not engage SteelWheels.Co.
solutions@steelwheels.co · 928.605.7984 · What happens when you write back