Arrangements between railroads
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Railroad companies can interact with and control others in many ways. These relationships can be complicated by bankruptcies.
Operating
Often, when a railroad first opens, it is only a short spur of a main line. The owner of the spur line may contract with the owner of the main line for operation of the contractee's trains, either as a separate line or as a branch with through service. This agreement may continue as the former railroad expands, or may be temporary until the line is completed.If the operating company goes bankrupt, the contract ends and the operated company must operate itself.
Leasing
A major railroad may lease a connecting line from another company, usually the latter company's full system. A typical lease results in the former railroad (the lessee) paying the latter company (the lessor) a certain yearly rate, based on maintenance, profit, or overhead, in order to have full control of the lessor's lines, including operation.If the lessee goes bankrupt, the lessor is released from the lease.
Stock ownership
Most railroad companies are publicly traded with stocks. As the stockholders control the company, one railroad company can buy a majority of stock of another one in order to control it. Sometimes a bridge line, a railroad that has a majority of traffic coming from points not on its line, is owned equally by the companies that use it (via trackage rights).Stock ownership does not automatically result in merge of operations, merely in friendly policies towards each other. Operating and leasing agreements typically require a more stringent approval process through the regulating body.
If the owned company goes bankrupt, its stock is worthless, and the owner no longer controls it (unless it buys it back at auction).
Consolidation
Consolidation happens when two railroad companies are consolidated. It is often the last step in an arrangement between two railroads, and is hard to undo, except in the case of bankruptcy, when different parts of the railroad may be sold to different buyers at auction.Trackage rights
Trackage rights or running rights is an arrangement where the company that owns the line retains all rights, but allows another company to operate over certain sections of its track. The agreement may specify whether the latter company can serve customers on the line. In some cases, the former company may opt to not run any trains over the line but still own it; this can also be done via a partial lease. Overhead trackage rights or incidental trackage rights refers to the case of the latter company not being allowed to serve customers.Trackage rights can be temporary or long-term as needed. Temporary rights agreements are typically made when some kind of disaster affects one railroad while a parallel railroad line is fully operational. The parallel railroad will often grant temporary rights to the affected railroad until the problem is resolved. Long-term agreements can be made to allow competing railroads access to potentially profitable shippers or to act as a bridge route between otherwise disconnected sections of another railroad. A union station typically involves trackage rights; the company that owns the station and associated trackage is typically owned in part by the railroads that use it, which operate over it by trackage rights. In the United States, all such agreements are filed with the Surface Transportation Board and are available as a matter of public record.
Haulage agreement
A haulage agreement is similar to one of trackage rights, but the railroad that owns the line operates the power for the cars of the latter company.History
Originally, at least in the United States, it was not clear whether railroads were going to be run like turnpikes, in which any paying customer could use the road. The Seekonk Branch Railroad in East Providence, Rhode Island (then part of Seekonk, Massachusetts) tested this by in 1836 building a short branch of the Boston and Providence Railroad to their own dock and using the full line of the B&P. Massachusetts passed a law prohibiting this, and the B&P bought the branch in 1839.
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