Commission working paper - Explanation of the individual articles in the proposal for a Directive relating to the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification
Date: 1998-07-22
Institutions: European Commission
Subjects: common transport policy, freedom to provide services, rail transport, trade licence, transport company

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels, 22.07.1998 
COM(1998) 480  final 

98/0265 (COD) 
98/0266 (SYN) 
98/0267 (SYN) 

Proposal for a 
COUNCIL DIRECTIVE 

amending Directive 91/440/EEC on the development 
of the Community's  railways 

Proposal for a 
COUNCIL DIRECTIVE 

amending Directive 95/18/EC on the licensing of 
railway undertakings 

Proposal for a 
COUNCIL  DIRECTIVE 

relating to the allocation of railway infrastructure  capacity 
and the levying of charges for the use of railway  infrastructure 
and safety  certification 

COMMISSION WORKING PAPER 

explanation of the individual articles in the proposal for a Directive relating 
to the allocation of railway infrastructure  capacity and the levying of charges 
for the use of railway infrastructure  and safety  certification 

(presented by the Commission) 

GENERAL  COMMUNICATION 

Introduction 

A  renewed  railway  sector  is  vital  for  the  future  of  Europe's  transport  system.  The 
Common  Transport  Policy therefore  aims  at reversing  rail's  long-term  decline  in market 
share by creating  the  conditions  for  an  expanding,  competitive,  customer-orientated  rail 
system. Achieving the goal of sustainable mobility depends crucially on the  revitalisation 
of this environmentally friendly  sector. 

To compete with other modes of transport, the railways have to operate first  and  foremost 
as  businesses,  with  a  strong  orientation  to  the  markets.  They  need  independent 
management  and  sound  finances,  and  must  progressively  be  exposed  to  market  forces 
like  other  sectors.  This  implies  a re-definition  of the  relationship  between  the  State  and 
the railways and a clear division of responsibilities. This Communication proposes a new 
regulatory framework  for the conditions of access to infrastructure.  Later this year it will 
be  complemented  by  proposals  on  finances  (also  covering  public  services)  and  a 
communication  on the integration  of national systems. This will  cover not only technical 
harmonisation  but  also  social  aspects,  in  particular  the  qualifications  of  train  crews 
operating  across  frontiers.  The  Commission  will  also  launch  a  major  study  on  the 
changing  employment  opportunities  in  the  railway  sector,  focussing  on  job  profiles, 
educational  levels  and  investments  in  human  resources.  These  three  packages  would 
make  a  major  contribution  to  ensuring  that  rail  transport  can  compete  effectively  with 
other modes of transport and provide the services which the citizens of Europe require. 

The  Commission  recognises  the  public  service  role  of  the  rail  sector.  The  regulatory 
framework  must  ensure  that  public  services  can be  efficiently  provided  and  that  railway 
infrastructure  is maintained and expanded where it is needed across the Community. This 
essential  objective  is  most  likely  to  be  achieved  within  a  model  where  the  quality  and 
value  of  rail  services  improves  and  where  market  forces  are  allowed  to  improve 
competitiveness wherever this is possible. 

Directive  91/440/EEC was a first  step in the revitalisation  of the  Community's  railways. 
It  opened  the  market  to  competing  railway  undertakings  and  it  allowed  them  to  operate 
trains on the  same lines as incumbent rail operators. In addition,  it required  management 
independence  and  the  separation  of  infrastructure  management  and  transport  operations, 
at  least  in  the  accounts.  As  a result,  the  costs  of  utilising  infrastructure  are  now  being 
identified  and charges will be levied on railway operators. Financial and other contractual 
arrangements  that  used  to  be  hidden  within  one  enterprise  are  now  becoming  explicit 
transactions between several enterprises. 

The  Directive  is,  however,  limited  in  scope.  Some  Member  States  have  chosen  to  go 
beyond  the  Directive  to  establish  separate  bodies  for  infrastructure  management  and 
transport  operations  either  within  a  single  undertaking  or  in  separate  undertakings. 
Moreover,  some  Member  States  have  established  wider  access  rights  than  those 
tendering  for  public  services. 
contained 
Nevertheless, the fact remains that the Directive has provided only limited opening of the 
market.  This  is  perhaps  best  indicated  by  the  fact  that  the  incumbent  railway  operator 
remains in a dominant position in all Member States. 

in  the  Directive  and  have 

introduced 

One reason  for  this appears to be that  although  useful  rules have  been  defined,  we  have 
not yet been  able to  ensure that their  application  is open and  equitable.  In particular,  the 
bodies  responsible  for  implementing  the  rules  are  in  a  position  to  determine  the 
conditions  under  which  undertakings  enter  the  market  and  conduct  their  business.  The 
bodies responsible for  implementing the rules must be independent  in that they cannot be 
judge and party to decisions giving rise to a conflict  of interest. If an incumbent  operator 
has the dual roles of railway undertaking and regulatory body there is an inherent  conflict 
of  interest  and  this  could  be  considered  inconsistent  with  Articles  90.1  and  86  of  the 
Treaty. This situation must change if the rules of access are to have substance. 

It is now essential to build  on this first  step by creating the conditions to make the rights 
of  access  effective.  The  proposals  in  this  Communication  have  two  underlying  aims. 
First, to ensure that  all  railway  undertakings  are treated  in  a fair  and  non-discriminatory 
way; second, to provide for the efficient  and competitive use of  infrastructure. 

A first  step in this direction was taken  with the adoption  in  1995 of two  complementary 
Directives, one on the licensing  of railway undertakings1,  and the other on the  allocation 
of  infrastructure  capacity  and  the  charging  of  infrastructure  fees2.  These  directives 
established broad frameworks  at Community level, but did not settle all regulatory issues. 
There  is  a  wide  agreement  that  the  rules  on  capacity  allocation  and  on  charging  in 
Directive  95/19/EC  should  be  expanded  and  completed  and  that  the  accounting 
separation required by Directive 91/440/EEC is not sufficient  to guarantee fair  treatment. 
In its White  Paper  of  1996, "A  strategy  for  revitalising  the  Community's  railways"3, the 
Commission  demonstrated  the  need  fully  to  define  the  conditions  of  access  to  railway 
infrastructure.  In  its  resolution  on  this  White  Paper,  the  Parliament  called  for  the 
accompanying  measures  needed  to  define  conditions  of  access,  as  well  as  for  the 
progressive  opening of the market4. In its  1998 communication  on the implementation  of 
Directive  91/440/EEC5,  the  Commission  pointed  out  the  inadequacy  of  present 
arrangements and the widely shared view that the framework  needed to be completed. 

Securing  access  is  not  sufficient.  To  ensure  the  efficient  use  of  infrastructure,  charging 
systems  must  be  economically  sound  and  give the  right  signals  to  railway  undertakings 
and  infrastructure  managers.  To  develop  effective  charging  systems,  there  must  be 
transparency  about the finances  of infrastructure  management.  In capacity  allocation,  the 
needs  of  different  users  should  be  clarified,  the  choices  made  explicit  and  the  optimal 
solutions  identified.  Indeed, the whole process  of drawing  up and applying  explicit  rules 
would substantially contribute to  efficiency. 

1 

2 

3 
4 

5 

Council  Directive  95/18/EC  of  19  June  1995  on  the  licensing  of  railway  undertakings,  OJ  L 143, 
27.6.1995. 
Council  Directive  95/19/EC  of  19  June  1995  on  the  allocation  of  railway  infrastructure  and  the 
charging of infrastructure  fees, OJ L  143, 27.6.1995. 
COM(96) 421 final. 
Resolution  on the  Commission's  White  Paper  "A strategy  for  revitalising  the  Community's  railways" 
and the Commissions Communication  on the trans-European Freeways. A4-0412/97. 
Communication on the implementation and impact of Directive 91/440/EEC  on the development of the 
Community's railways and on access rights for rail freight  COM(1998) 202  final. 

The infrastructure  package 

The  Commission  now  proposes  three  measures  to  define  the  conditions  of  utilisation  of 
railway  infrastructure: 

• 

• 

• 

a  directive  to  replace  the  provisions  of  Directive  95/19/EC  on  the  allocation  of 
infrastructure  capacity and on the charging of infrastructure  fees; 

a  directive  to  amend  the  provisions  of  Directive  91/440/EEC  primarily  on  the 
separation of accounts of infrastructure  management and of transport operations; 

a  directive  to  widen  the  scope  of  Directive  95/18/EC  on  the  licensing  of 
railway undertakings. 

Allocation of capacity 

So far  as the  allocation  of  capacity  is concerned,  the proposed  directive  would  carefully 
define  the  rights  of  railway  undertakings  and  of  the  infrastructure  manager  and  would 
establish  a  well-defined  process  for  the  preparation  of  timetables.  Under  this,  different 
operators  would  be able to bid  for  capacity,  which would  be awarded  according to  clear 
rules and  criteria known  in advance. The process would  be designed  to resolve  conflicts 
between requests for capacity and to overcome problems of scarcity, in ways that respects 
the  rights  of  all  the  applicants.  The  directive  would  also  ensure  that  the  allocation  was 
performed  by a body.not providing transport  services itself,  and that there was a right of 
appeal.  As  well  as  ensuring  fair  and  non-discriminatory  treatment  in  this  way,  the 
allocation  process  would  promote  efficiency.  It would  make  clear  the  needs  of  different 
users,  including  the  infrastructure  manager,  the  scope  for  flexibility,  the  real  conflicts, 
the choices  to  be made  and  the  different  solutions.  More  specifically,  it  would  promote 
the  efficient  use  of  scarce  capacity  by  requiring  capacity  analyses  and  capacity 
enhancement plans. 

Charging of infrastructure  fees 

As for the charging of infrastructure  fees, the proposal  is to base, in principle, charges on 
marginal  cost, that is the cost which is directly incurred as the result of the operation of a 
train. It is a generally accepted tenet of economic theory that this gives the optimal use of 
resources,  assuming  various  conditions  are  met.  However  the  directive  would  allow 
charges  to  be  increased  and  modulated  to  attain  other  objectives:  a  higher  rate  of  cost 
recovery than  under  marginal  cost pricing,  inclusion  of external  costs  and the  resolution 
of problems  of  scarcity.  In this  way,  a good balance  could  be  struck  between  economic 
efficiency  and  the  achievement  of  wider  aims  of  transport  policy.  The  directive  would 
also require performance  schemes to be included in charging  systems with incentives  for 
good performance  and penalties for bad; this would greatly promote  efficiency. 

In  addition,  the  proposed  directive  would  help  ensure  fair  treatment,  by  obliging  the 
publication of charging schemes in advance and the provision of information  on how they 
are  calculated.  This  in  itself  would  be  a  major  advance,  but  there  would  be  specific 
provisions  to  guarantee  fair  treatment.  The  directive  would  create  safeguards  to  protect 
railway undertakings  against  the abuse  of monopoly  by an infrastructure  manager,  when 
it  sets charges. It would  also establish  safeguards  to prevent  fixed  charges and  discounts 

working  against  smaller  railway  undertakings; this would  help protect  newcomers  to the 
market as they tend to operate on a small scale. 

Separation of accounts 

An  essential  provision  of  Directive  91/440/EEC  is  the  separation  of  infrastructure 
management  and  transport  operations  at  least  in  the  accounts.  This  is  meant  to  achieve 
several aims: efficient  operation of two different  but linked activities, transparency  about 
the  use  of  public  money  and  a  solid  foundation  for  infrastructure  charges.  However,  in 
the case of integrated  railways, at most profit  and  loss  accounts  have been  drawn up  for 
infrastructure  management,  but  not  balance  sheets,  crucial  as  they  are  in  so  capital 
intensive  a  sector.  The  amending  directive  proposed  would  therefore  clarify  the, legal 
situation  and  require  the  separation  of both  profit  and  loss  accounts  and  balance  sheets. 
Moreover  the  Community  needs  to  go  further  in  putting  railway  finances  on  a  sound 
footing,  by  creating  a  comprehensive  framework,  including  rules  on  restructuring.  For 
this,  transparency  about  the  finances  of  different  transport  operations  is  essential. 
Passenger and freight  transport serve different  markets and are financed  in different  ways. 
In the case of passenger transport, public services play a major  role and compensation  for 
these  accounts  for  a  large  part  of  income;  this  is  not  the  case  with  freight  whose 
commercial  orientation  is more  direct.  To help the  efficient  management  of each and to 
create  greater  transparency  about  their  finances,  their  accounts  should  be  separated;  this 
too is proposed in the directive to amend Directive 91/440/EEC. 

Licensing of railway  undertakings 

Directive  95/18/EC  on  licensing  only  applies  to  railway  undertakings  providing  the 
services referred  to by Article  10 of Directive 91/440/EEC, that is the services covered by 
access rights. Also railway  undertakings  whose  activities  are  limited  to  urban,  suburban 
or  regional  services  do  not  fall  under  the  Directive.  However,  various  Member  States 
have  extended  access  rights  to  infrastructure  beyond  those  of  Directive  91/440/EEC  or 
opened  urban,  suburban  or  regional  services  to  tender.  To  ensure  that  these  rights  are 
applied  to  all  railway  undertakings  established  in  the  Community  fairly  and  without 
discrimination,  Community  rules  on  licenses  should  be  extended  to  all  such  railway 
undertakings. This is the purpose of the proposed directive. 

Avoidance of conflict of interest 

Although  various  Member  States  have  created  distinct  legal  entities,  others  have 
maintained  integrated  railways  that  are responsible  for  both  activities.  In this  case, there 
is  no  assurance.that  all  railway  undertakings  will  be  treated  equitably  when  seeking  to 
enter  the  market.  If  integrated  railways  are  responsible  for  setting  rules  for  charging, 
allocating  capacity,  timetabling  safety  regulation,  or  licensing  they  determine  the 
conditions under which their competitors do their business. An infrastructure  manager in 
stich  a  railway  has  an  incentive  to  further  the  interests  of  the  whole  undertaking, 
including  its  transport  services.  At  the  same  time,  it  is  under  an  obligation  to  treat  all 
railway  undertakings  equitably,  which  creates  a  conflict  of  interest.  The  Commission's 
communication  on  the  implementation  and  impact  of  Directive  91/440/EEC  found  that 
potential new operators considered a barrier to entry the lack of guarantee that all railway 
undertakings  would  be  treated  fairly  and  without  discrimination  when  seeking  to  use 
railway  infrastructure  managed  by  integrated  railways.  Consequently,  the  proposed 
directives  on  the  allocation  of  infrastructure  capacity  and  the  charging  of  infrastructure 

5 

fees,  on  the  separation  of  infrastructure  management  and  transport  operations  and  on 
licensing would provide that the functions  giving rise to the conflicts  of interest be made 
the responsibility of independent bodies that do not supply transport services themselves. 

Conclusion 

The  package  of  measures  contained  in  this  Communication  meets  the  widespread  call 
for defining  the  conditions  of  access  to  railway  infrastructure.  It  will  complement  the 
rules  laid  down  in  Directive  91/440/EEC.  The  package  is  necessary  whether  or  not 
further  liberalisation  of  different  types  of  railway  operations  is  introduced.  These 
rules would  indeed  provide  a  framework  within  which  more  liberalised  operations 
could be  introduced.  But  it  is  also  essential  for  making  the  existing  rights  of  access 
work  effectively. 

The objective  of these proposals are the fair  and non-discriminatory  treatment  of railway 
undertakings  and  the  efficient  use  of  infrastructure.  However,  the  benefit  of  these 
proposals,  if  adopted,  would  be  more  far  reaching.  They  would  help  to  increase  the 
efficient  use  of  railway  infrastructure,  improve  the  competitiveness  of  rail  transport  by 
improving the quality and pricing mechanisms for the infrastructure  and thus increase the 
competitiveness of rail transport compared to other modes of transport. 

If  the  long-term  objective  of  revitalising  the  Community's  railways,  both  freight  and 
passenger,  is  to  be  achieved,  the  swift  adoption  of  the  proposals  outlined  in  this 
Communication  is  ah  essential  step.  The  Commission  will  come  forward  with  further 
complementary proposals in the course of the autumn which, taken together, will provide 
the essential  underpinning  for  an efficient,  competitive  revitalised  railway  system  within 
the Community. 

Proposal for a 
COUNCIL  DIRECTIVE 

amending Directive 91/440/EEC on the development 
of the Community's  railways 

EXPLANATORY  MEMORANDUM 

Purpose of proposal 

1. 

Directive  91/440/EEC  is  the  principal  measure  taken  by  the  Community  to 
develop  rail  transport.  Its  main  aims  are  to  create  a  framework  for  the 
development  of  railway  undertakings  that  operate  in  a  commercial  manner  and 
adapt to the needs of the market and to begin the integration  of the railway  sector 
into  the  competitive  transport  market.  The  Directive  obliged  Member  States 
to ensure: 

the management independence of railway undertakings; 

separation  between  infrastructure  management  and  transport  operations  at 
least in the accounts; 

the 
reduction  of 
financial  situation; 

the 

railways'  debts  and 

improvement  of 

their 

certain  access  rights  to  infrastructure  for  the  operation  of  international 
services by railway undertakings. 

2. 

3. 

Both the Commission's  White Paper "A strategy for  revitalising the  Community's 
railways"1  and  its  "Communication  on  the  implementation  and  impact  of 
Directive  91/440/EEC  on the  development  of  the  Community's  railways  and  on 
access  rights  for  rail  freight"2  identified  certain  shortcomings  of  the  Directive, 
which limit its impact and block the full  achievement of its objectives. The aim of 
this  proposal  is  to  strengthen  the  Directive  so  that  its  aims  are  better  met.  At 
is  presenting  proposals  for  guidelines  on 
the same  time  the  Commission 
infrastructure  charges  and  on capacity  allocation,  which  are  intended  to  complete 
the  framework  for  access  to  infrastructure,  in  order  to  make  effective  the  access 
rights  created  by the  Directive;  it is also presenting  proposals  on the  licensing  of 
railway undertakings. 

One  key  element  of the  Directive  is the  separation  of  infrastructure  management 
and transport operations at least in the accounts. There are several reasons for this: 
to further  efficient  operation of two different  but linked activities by clarifying  the 
financial  results  of  each,  to  make  the  use  of  public  money  transparent,  as 
Member States  support  the  railways  in different  ways  and  for  different  purposes, 
and  to  create  a  solid  foundation  for  infrastructure  charges  through  clear 
identification  of  costs  and  revenues.  However  the  Commission's  Report  on  the 
implementation  and  impact  of  Directive  91/440/EEC  found  that  in  practice 
accounts  had  not  been  separated  fully,  except  for  the  railways  that  have  been 
divided  into  separate  entities.  No  integrated  railway  had  drawn  up  separate 
balance  sheets, but  at  most  separate  profit  and  loss  accounts.  This  is  despite  the 
fact  that  the  railway  sector  is highly  capital  intensive,  so  balance  sheets  are  vital 

I 
2 

COM(96) 421 final, 30.7.1996. 
COM(1998) 202 final, 31.3.1998. 

4. 

5. 

for  any  financial  assessment  (for  a  number  not  even  separate  profit  and  loss 
accounts  were  available). Although  Community  legislation  on  company  accounts 
in  general  and  on  railway  accounts  in  particular3  creates  obligations  to  draw  up 
both  profit  and  loss  accounts  and  balance  sheets,  it  is  worth  making  this 
requirement clear and explicit in the Directive for the reasons given. 

Putting  railway  finances  on  a  sound  footing  is  also  an  essential  part  of  the 
Directive. It requires Member  States to help reduce debt to a level which does not 
impede sound  financial  management.  The Commission's  "Communication  on the 
implementation  and  impact  of  Directive  91/440/EEC"  found  that  the  railways' 
debt  position  had  improved  considerably,  though  debt  service  remained  a  heavy 
burden  for  some.  However  this  is  only  a  beginning,  and  the  Community  has  to 
create  a  full  framework  for  railway  finances,  including  rules  on  aid  for 
restructuring.  For  this,  transparency  about  the  finances  of  different  transport 
operations is essential. Passenger  and freight  transport  serve markets that differ  in 
nature. In passenger transport, public services play a major  role, and compensation 
from  the  authorities  represents  a  large  part  of  the  railways'  income.  In  freight, 
demands  come  directly  from  individual  customers,  and  the  State  does  not 
intervene  to  procure  public  services,  so  its  commercial  orientation  is  therefore 
more  direct.  This  difference  is widely  recognised,  as Member  States  are  creating 
separate  companies  or  divisions  within  companies  for  passenger  and  freight 
services. The Commission  believes that greater transparency  is now needed  about 
the  finances  of  passenger  and  of  freight  services  and  it  therefore  proposes  to 
modify the Directive to require separate accounts for each activity. 

infrastructure  and  supplied 

Another requirement of the Directive is to establish certain access rights to railway 
infrastructure  for  the  provision  of  international  services  by  railway  undertakings 
established  in  the  Community  or  groupings  of  such  enterprises.  For  these  to  be 
effective  all  railway  undertakings  must  be  treated  equitably  and  without 
discrimination  when  seeking  access  to  infrastructure.  An  integrated  railway  that 
both  managed 
transport  services,  would  have 
responsibility,  for  setting  rules  for  charges,  allocating  capacity,  timetabling  and 
regulating safety  or licensing. In view of this they would determine the  conditions 
under  which  their  competitors  enter  the  market  and  do  their  business  and  this 
could  be  considered  inconsistent  with  Articles  90.1  and  86  of  the  Treaty.  An 
infrastructure  manager  in  an  integrated  railway  has  an  incentive  to  further  the 
interests  of the  whole  undertaking,  including  its transport  services, as well  being 
under an an obligation to treat all providers of transport  equitably. This conflict  of 
interest would be removed, if the functions  that determine  access to  infrastructure 
were  carried  out  by  an  independent  body  or  undertaking  that  does  not  operate 
transport  services.  Integrated  railways  could  retain  the  other  activities  of 
infrastructure  management,  as the  same conflicts  of interest  would  not arise. This 
proposal would amend Directive 91/440/EEC to make the setting and  enforcement 
of  safety  rules the  responsibility  of  a body  or  an  undertaking  that  does  not  itself 
supply  rail  transport  services.  The  Commission's  proposals  for  directives  on 

Fourth  Council  Directive  of  25  July  1978  based  on  Article  54(3)(g)  of  the  Treaty  on  the  annual 
accounts  of  certain  types  of  companies  (78/660/EEC).  OJ  L  222,  14.8.1978.  Council  Regulation 
(EEC) No 2830/77 of  12 December  1977 on the measures necessary to achieve comparability  between 
the accounting systems and annual accounts of railway undertakings. 

9 

infrastructure  charges,  capacity  allocation  and  licensing  would  require  the  same 
thing for other  functions. 

6. 

Finally  it  is  worth  clarifying  certain  parts  of  the  Directive,  in  the  light  of 
experience.  A  requirement  of  the  Directive  is  to  give  railway  undertakings, 
(the undertakings  that  operate  transport  services)  management  independence  and 
to  let  them  work  according  to  commercial  principles.  This  independence  and 
commercial  orientation  is  necessary  if  rail  transport  is  to  compete  with  other 
modes  and  realise  its  potential.  However  Member  States  may  legitimately 
intervene  in  infrastructure  questions  to  a  greater  extent;  indeed  the  Directive 
requires  Member  States  to  develop  national  railway  infrastructure,  taking  into 
account  the  needs  of  the  Community,  when  necessary.  Infrastructure  managers 
may  also  be  given  a regulatory  function  as well  as that  of  managing  their  assets. 
This implies  that  a distinction  should  be made  between railway  undertakings  and 
infrastructure  management  so  far  as  commercial  orientation  and  the  role  of  the 
State  are  concerned,  although  both  should  be  an  entity  independent  of  the  State 
and should be free to manage their own  affairs. 

Explanation of individual articles 

7. 

8. 

9. 

Article  1,  second  indent.  This  modifies  the  summary  of  the  provisions  of  the 
Directive.  It presently  states  that  only  separation  of  accounts  is  compulsory.  The 
text  should  be  amended  to  state  that  there  should  be  full  separation  of  accounts 
and  separation  of  functions  that  determine  access  to  railway  infrastructure,  to 
reflect the amendments to Article 6. 

Article  3, second  indent.  This makes  it clear  that  the  infrastructure  manager  may 
be a public or private undertaking, as well as a public body. 

Article  6,  paragraph  1.  This  amended  text  would  clarify  that  separation  of 
accounts  between  transport  services  and  infrastructure  management  means 
separation of both profit  and loss accounts and of balance sheets. 

10.  Article  7,  paragraph  1.  In  order  to  ensure  fair  and  non  discriminatory  access  to 
infrastructure,  this amendment  would require that  safety  regulation  be  carried  out 
by bodies or undertakings that do not supply rail transport services themselves and 
are  independent  of  bodies  or  undertakings  doing  so.  Article  7.  paragraphs  4,  5 
and 6.  These  new  paragraphs  would  clarify  that,  in  the  interests  of  efficiency, 
infrastructure  managers, 
like  railway  undertakings  should  have  a  status 
independent of the State, should have business plans and should be free  to manage 
their  internal  affairs.  Nevertheless  Member  States  should  take  the  measures 
necessary  for  the development  of their national  infrastructure  taking  into  account, 
where  necessary,  the  general  needs  of  the  Community,  as  already  required  by 
Article 7, paragraph 1. 

11.  Article 9, paragraph 4. This would require  separate accounts for passenger and  for 
to  promote  efficient  management  and  create 

transport  services, 

freight 
transparency about the finance  situation of each. 

10 

Subsidiarity 

12. 

Competence. This proposal  is put forward  on the basis of Article  75 of the Treaty 
and is therefore  the exclusive  competence  of the  Community.  It is an  amendment 
of an existing directive. 

independence  of 

13.  Means  of  action.  The  Community  has  already  taken  legislative  action  on  the 
management 
separation  of 
infrastructure  management  and  transport  operations  and  access  rights  to  railway 
infrastructure.  As shown above these rules do not go sufficiently  far to achieve the 
objectives  of Directive 91/440/EEC or need to be clarified  to be effective.  Further 
Community  legislation  is  therefore  needed  to  attain  the  goals  set  and  to  avoid 
disparate national measures. 

railway  undertakings, 

the 

14. 

Form  of  legislation.  As  in  the  case  of the  original  legislation,  a  directive  should 
strike  the  right  balance  between  harmonisation  to  achieve  essential  Community 
objectives  and  recognition  of differences  between  Member  States  in the  situation 
and  organisation  of  the  railways  and  in  relations  between  the  State  and 
the Railways. 

11 

98/0265 (COD) 

Proposal for a 
COUNCIL DIRECTIVE 

amending Directive 91/440/EEC on the development 
of the Community's railways 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 75 thereof, 

Having regard to the proposal of the Commission4, 

Having regard to the opinion of the Economic and Social Committee5, 

Acting  in  accordance  with  the  procedure  laid  down  in  Article  189c  of  the  Treaty  in 
cooperation with the European  Parliament6, 

1.  Whereas  Council  Directive  91/440/EEC7  should  be  amended  to  take  account  of 
experience  with  its  implementation  and  of  developments  in  the  railway  sector 
since its adoption, in order to ensure that its objectives are achieved; 

2. 

3. 

Whereas,  in order to promote the  efficient  operation  and  development  of the two 
infrastructure 
distinct  activities  of  provision  of  transport  services  and  of 
management,  to  make  transparent  the  use  to  which  public  funds  for  the  railway 
sector are put, and to create a solid basis for  infrastructure  charges, it is necessary 
to  separate  both  the  profit  and  loss  accounts  and  the  balance  sheets  of  the 
two activities; 

it 

is  necessary 

Whereas 
the 
international groupings  which  they  constitute  provide  the  services  referred  to  in 
Article  10 of Directive  91/440/EEC, they benefit  fully  from  the  access rights  laid 
down in that Article; 

railway  undertakings 

that,  where 

and 

4.  Whereas, to this end, all railway undertakings and international  groupings must be 
treated on a fair  and non-discriminatory  basis as concerns activities that  condition 
access  to  infrastructure,  and,  consequently,  the  laying-down  and  enforcement  of 
safety  rules  should  be  carried  out  by  independent  bodies  or  undertakings  that 
themselves do not provide rail transport services; 

5.  Whereas, to promote efficient  management of infrastructure  in the public  interest, 
infrastructure  managers  should  be  given  a  status  independent  of  the  State,  and 

4  OJC 
5  OJC 
6  OJC 
7  OJL 237, 24.8.1991, p. 25. 

12 

freedom  to  manage  their  internal  affairs,  while  Member  States  should  take  the 
necessary measures for the development and the safe use of railway  infrastructure; 

6.  Whereas  to  promote  the  efficient  operation  of  passenger  and  freight  transport 
including  aid  for 
services  and  to  ensure  transparency 
restructuring,  it  is necessary  to  separate  the  accounts  of  passenger  and  of  freight 
transport services, 

in  their  finances, 

HAS ADOPTED THIS DIRECTIVE: 

Article 1 

Directive 91/440/EEC is hereby amended as follows: 

1. 

The second indent of Article  1  is replaced by the  following: 

"-  by separating the management  of infrastructure  from  the provision  of railway 
transport  services,  the  separation  of  both  profit  and  loss  accounts  and  of 
balance  sheets  and  the  award  to  an  independent  body  or  undertaking  of 
responsibility  for  those  functions  determinant  for  equitable  and  non 
discriminatory  access 
the 
organisational or institutional  separation of other functions  being optional," 

infrastructure  being  compulsory,  and 

to 

2. 

The first and second indents of Article 3 are replaced by the  following: 

"- 

'railway  undertaking'  shall  mean  any  private  or  public  undertaking  whose 
business  is  to  provide  rail  services  for  the  transport  of  goods  and/or 
passengers with a requirement that the undertaking must ensure traction. 

'infrastructure  manager' means any body or undertaking that is responsible  for 
establishing and maintaining railway  infrastructure." 

3. 

Article 6(1) is replaced by the  following: 

"1.  Member  States  shall  take  the  measures  necessary  to  ensure  that  separate 
profit  and  loss  accounts  and  balance  sheets  are  kept  and  published,  on  the 
one hand,  for  business  relating to the provision  of transport  services  and,  on 
the  other,  for  business  relating  to  the  management  of  railway  infrastructure. 
Public funds  paid to one of these two areas of activity may not be  transferred 
to the other. 

The accounts for  the two areas of activity  shall  be kept  in a way that  reflects 
this prohibition." 

4. 

Article 7(1), is amended as follows: 

(a)  Paragraph  1  is replaced by the  following: 

"1.  Member  States  shall  take  the  necessary  measures  for  the  development 
of  their  national  railway  infrastructure  taking  into  account,  where 
necessary, the general needs of the Community. 

13 

They shall  ensure that safety  standards  and rules  are laid down,  applied 
and  enforced,  with  appropriate  monitoring.  This  shall  be  done  by 
bodies or  undertakings  that  do  not  provide  rail  transport  services 
themselves  and  are  independent  of  bodies  or  undertakings  that  do  so, 
in such  a way  as to  guarantee  equitable  and  non-discriminatory  access 
to  infrastructure." 

(b)  The following  paragraphs are added: 

"4.  Member  States  shall  take  the  measures  necessary  to  ensure  that 
infrastructure  managers  have 
regards 
management,  administration  and  internal  control  over  administrative, 
economic and accounting matters. 

independent 

status 

as 

5.  Business plans shall be drawn up for  infrastructure  managers,  including 
their  investment  and  financing  programmes.  Such  plans  shall  be 
designed  to  achieve  their  financial  balance  and  to  ensure  the  optimal 
and  efficient  use  and  development  of  infrastructure;  they  must  also 
provide for the means enabling these objectives to be achieved. 

6. 

In the  context  of the  general  policy  guidelines  determined  by the  State 
and  taking  into  account  national  plans  and  contracts  (which  may  be 
multi-annual)  including  investment  and  financing  plans,  infrastructure 
managers shall, in particular, be free to: 

establish  their  internal  organisation,  without  prejudice  to  the 
provisions of this Section; 

take decisions on staff and own procurement; 

manage  their  own  assets  as  efficiently  as  possible,  develop  new 
technologies  and  new  services  and  adopt  any 
innovative 
management techniques." 

5. 

The following paragraph shall be added to Article 9: 

"4.  Separate  profit  and  loss  accounts  and  balance  sheets  shall  be  kept  and 
published,  respectively,  for  business  relating  to  the  provision  of  passenger 
transport 
the  provision  of 
freight  transport  services.  Funds  paid  to  either  of  these  two  areas  of  activity 
shall be shown separately in the relevant accounts and shall not be  transferred 
to the other." 

services  and 

for  business 

relating 

to 

Article 2 

Member  States  shall  adopt the laws, regulations  and  administrative  provisions  necessary 
to comply with this Directive not later than one year following  the date of entry into force 
of this Directive. They shall forthwith inform the Commission thereof. 

14 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference  is to be made. 

Article 3 

This Directive shall enter into force  on the twentieth day following  that of its publication 
in the Official Journal of the European  Communities. 

This Directive is addressed to the Member States. 

Article 4 

Done at Brussels, 

For the Council 
The President 

15 

Proposal for a 
COUNCIL  DIRECTIVE 

amending Directive 95/18/EC on the licensing of 
railway undertakings 

16 

EXPLANATORY  MEMORANDUM 

1. 

and 

access 

Following the first  steps towards an integrated market for rail transport services by 
and 
giving 
international groupings thereof  by means of Article  10 of Directive  91/440/EEC1, 
two  additional  Directives,  95/18/EC2  and  95/19/EC3  were  adopted  in  order  to 
ensure  the  uniform  and  non-discriminatory  application  of  the  rights  granted  by 
Directive 91/440/EEC. 

undertakings 

railway 

transit 

rights 

to 

2.  Whilst  Directive  95/19/EC  set  broad  principles  for  the  allocation  of  railway 
infrastructure  capacity  and  the  charging  of  fees  for  its  use,  Directive  95/18/EC 
introduced  a  licensing  scheme  for  railway  undertakings  offering  the  services 
referred  to  in  Article  10  of  Directive  91/440/EEC4  but  not  for  other  railway 
undertakings.  Licences  awarded  in  accordance  with  Directive  95/18/EC  are 
obligatory  for  railway  undertakings  when  providing  these  services.  They  are 
granted  by the  Member  State  where  a railway  undertaking  is  established  but  are 
valid throughout the Community. The main requirements  for  licence, as set by the 
Directive,  are  good  repute,  financial  fitness  and  professional  competence. 
Following  the  principle  of  subsidiarity  the  Directive  sets  broad  principles,  but 
leaves  the  Member  States  responsibility  for  setting  detailed  rules  and  for 
administering the system. 

3.  When  restructuring  the  railway  sector,  some  Member  States  have  created  wider 
access rights to railway infrastructure  than those of Directive 91/440/EEC. Several 
Member  States have established wider rights of access to the Trans-European Rail 
Freight Freeways. These developments  are creating new opportunities  for  railway 
undertakings  established  in  the  Community;  indeed  any  such  undertaking  can 
enter these markets in advance of Community legislation on market access. 

4. 

Member  States naturally intend to insist that railway undertakings  seeking to enter 
these  markets  be  licensed,  in  order  to  ensure  safe,  dependable  and  satisfactory 
services. It is a basic Community principle, however, that there be free  circulation 
of  services  and  undertakings  be  treated  fairly  and  without  discrimination.  A 
common  scheme  for  licences  would  allow  the  achievement  of  both  these 
objectives  and  would  prevent  licensing  becoming  a  barrier  to  entry.  How  to 
licence railway undertakings  entering new markets is an issue that has been raised 
on various occasions, particularly in discussions on the Freight Freeways. 

1 

2 

3 

4 

Council  Directive  of  29  July  1991  on  the  development  of  the  Community's  railways,  OJ  L  237, 
24.8.1991. 
Council  Directive  of  19  June  1995  on  the  licensing  of  railway  undertakings,  OJ  L  143, 27.6.1995, 
p. 70. 
Council  Directive  of  19  June  1995  on  the  allocation  of  railway  infrastructure  and  the  charging  of 
infrastructure  fees, OJ L  143, 27.6.1995. 
I.e.  railway  undertakings  operating  international  combined  transport  and  international  groupings  of 
railway undertakings. 

17 

5. 

6. 

therefore,  proposes 

the  provisions  of 
The  Commission, 
Directive 95/18/EC  on  licensing  to  all  railway  undertakings  established  in  the 
Community,  irrespective  of whether  they  are providing  the  services  mentioned  in 
Article  10 of  Directive  91/440/EC.  This  would  allow  all  railway  undertakings  to 
exploit  possibilities  to  enter  markets,  on a uniform  and  non-discriminatory  basis, 
and would prevent licensing requirements becoming a barrier to entry. 

extend 

to 

It  must  be  emphasised,  however,  that  this  amendment  of  Directive  95/18/EC 
would not create new access or transit rights as such, and so would not change the 
scope of Directive 91/440/EEC. 

18 

98/0266 (SYN) 

Proposal for a 
COUNCIL  DIRECTIVE 

amending Directive 95/18/EC on the licensing of 
railway undertakings 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 75 thereof, 

Having regard to the proposal from the Commission5, 

Having regard to the opinion of the Economic and Social Committee6, 

Acting  in  accordance  with  the  procedure  laid  down  in  Article  189c  of  the  Treaty  in 
cooperation with the European Parliament7, 

1. 

Whereas  Council  Directive  91/440/EEC  of  29  July  1991  on  the  development 
of the  Community's  railways8  provides  for  certain  access  rights  in  international 
rail transport 
international  groupings  of 
railway undertakings; 

railway  undertakings  and 

for 

2.  Whereas,  to  ensure  dependable  and  adequate  services,  a  common  licensing 
scheme  is  necessary  to  ensure  that  all  railway  undertakings  meet  at  any  time 
certain  requirements  in relation  to  good repute,  financial  fitness  and  professional 
competence  in  order  to  protect  customers  and  third  parties  and  offer  services 
observing a high standard of safety; 

3.  Whereas, in order to ensure that access rights to railway  infrastructure  are applied 
throughout  the  Community  on  a  uniform  and  non-discriminatory  basis,  Council 
Directive  95/18/EC9  introduced  a  licence  for  railway  undertakings  providing  the 
services  referred  to  in  Article  10  of  Directive  91/440/EEC,  this  license  being 
obligatory for the operation of such services and valid throughout the Community; 

4.  Whereas,  since  some  Member  States  have  extended  access  rights  going 
beyond Directive  91/440/EEC  it  seems  necessary  to  ensure  fair,  transparent  and 
non-discriminatory  treatment  of  all  railway  undertakings  that  may  operate  in this 
market  by  extending  the  licensing  principles  laid  down  by  the  Directive  to  all 
companies active in the sector; 

5  OJC 
6  OJC 
7  OJC 
8  OJL 237, 24.8.1991, p. 25. 
9  OJL  143, 27.6.1995, p. 70. 

19 

5.  Whereas,  in accordance  with  the principles  of  subsidiarity  and  proportionality  as 
set  out  in Article  3b of the Treaty, the  objectives  of this  Directive,  namely  to  set 
out  broad  principles  for  the  licensing  of  railway  undertakings  and  the  mutual 
recognition  of  such  licences  throughout  the  Community,  cannot  be  sufficiently 
international 
achieved  by  the  Member  States  On  account  of  the  manifestly 
dimension  of  issuing  such  licences  can  therefore,  by  reason  of  its  trans-national 
implications,  be  better  achieved  by  the  Community;  whereas  this  Directive 
confines  itself  to  the  minimum  required  in  order  to  achieve  those  objectives  and 
does not go beyond what is necessary for that purpose; 

6.  Whereas  it  should  be  specified  that  transport  activities  in  the  form  of  shuttle 
services  for  road  vehicles  through  the  Channel  Tunnel  and  passenger  services 
solely operated  on a local  stand-alone network  or by using trams  or  light rail, are 
excluded  from  the  scope  of  Directive  95/18/EC,  as  are  railway  undertakings 
solely carrying out their own freight  operations  on a network used  exclusively  for 
that purpose; 

7.  Whereas  Community  conditions  for  access to  or transit  via  railway  infrastructure 

will be regulated by other provisions of Community law; 

8.  Whereas Directive 95/18/EC should be amended  accordingly, 

HAS ADOPTED THIS DIRECTIVE: 

Article 1 

Directive 95/18/EC is amended as follows: 

1.  Article  1  is replaced by the  following: 

"Article 1 

1. 

2. 

3. 

This  Directive  concerns  the  criteria  applicable  to  the  issue, renewal  or 
amendment  of  licences  by  a  Member  State  intended  for  railway 
undertakings which are or will be established in the Community. 

Railway undertakings  which operate passenger  services  on local  stand 
alone  networks  or  urban  or  suburban  passenger  services  using,  for 
example,  trams  or  light  rail  are  excluded  from  the  scope  of  this 
freight 
Directive.  Railway  undertakings  carrying  out 
operations on a network used exclusively  for  that purpose  are excluded 
from the scope of this Directive. 

their  own 

Railway undertakings  and  international  groupings the activity  of which 
is limited to the provision  of shuttle  services transporting  road  vehicles 
through  the  Channel  Tunnel  shall  be  excluded  from  the  scope  of 
this Directive. 

4.  A licence shall be valid throughout the territory of the Community." 

20 

2.  Article 2 is amended as follows: 

(a)  Point (a) is replaced by the  following: 

"(a) 

'railway undertaking' means any public or private undertaking the 
business  of  which  is to  provide  rail  services  for  the  transport  of 
goods  and/or passengers  with  a requirement  that  the  undertaking 
must ensure traction;" 

(b)  Point (d) is deleted. 

3. 

Article 3 is replaced by the  following: 

"Article 3 

Each  Member  State  shall  designate  the body  responsible  for  issuing  licences  and 
for  carrying  out  the  obligations  imposed  by  this  Directive.  The  task  of  issuing 
license  shall  be  carried  out  by  a  body  which  does  not  provide  rail  transport 
services itself and is independent of bodies or undertakings that do so." 

Article 2 

Member  States shall  adopt the laws, regulations  and  administrative  provisions  necessary 
to  comply  with  this  Directive  no  later  than  one year  following  the  date  of  its  entry  into 
force. They shall forthwith  inform the Commission thereof. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  reference  on  the  occasion  of  their  official 
publication. Member  States shall determine how such reference is to be made. 

Article 3 

This Directive shall enter into force  on the twentieth day following  that of its publication 
in the Official Journal of the European Communities. 

This Directive is addressed to the Member States. 

Article 4 

Done at Brussels, 

For the Council 
The President 

21 

Proposal for a 
COUNCIL  DIRECTIVE 

relating to the allocation of railway infrastructure  capacity 
and the levying of charges for the use of railway  infrastructure 
and safety  certification 

22 

EXPLANATORY  MEMORANDUM 

Section  1 - Introduction 

1. 

2. 

3. 

4. 

5. 

fits  under 

railway  policy 

The  Commission's 
the 
Common Transport  Policy  and there are a number  of high  level  objectives  that  it 
seeks  to  work  towards.  These  are  the  development  of  the  single  market, 
sustainable  mobility,  the promotion  of efficiency  in the  transport  system  and  the 
promotion  of  freight  traffic  by  rail.  This  proposal  aims  to  ensure  that  railway 
infrastructure  charges  and  capacity  allocation  procedures  contribute  to  achieving 
these objectives. 

the  umbrella  of 

It is a fundamental  Treaty objective  to ensure the completion  of the single market 
throughout  the  Community.  Through  developing  better  and  cheaper  services,  in 
particular for traffic  between the Member States, rail can assist the development of 
the  single  market  and  the  further  integration  of  national  economies.  However, 
among the transport modes, rail stands out as the one where  least progress has so 
far  been  made  in creating  the  conditions  where  undertakings  are  free  to  establish 
operations  and  offer  services  in  any  Member  State.  To  achieve  this  requires  the 
establishment  of  appropriate  access  rights  and  necessary  framework  conditions 
that include appropriate level and structure of infrastructure  charges. 

The Commission's  White Paper on the Common Transport  Policy1 notes the need 
for transport policies to contribute to the pursuit of sustainable mobility.  Different 
modes  of  transport  have  different  roles  to  play  in  meeting  the  Community's 
transport needs, but it is important to ensure that sensible and efficient  choices are 
made.  Different  systems  of  charging  between  transport  modes  or  on  different 
networks can have a negative influence  on the appropriate distribution of demand. 
Further  distortion  to  the  demand  for  transport  as well  as the  relative  demand  for 
different  transport modes will arise as a result of the lack of charges reflecting  the 
external costs of transport. 

The  promotion  of  efficiency  within  the  transport  system  means  ensuring 
that appropriate  modal  choices  are  made  as  well  as  ensuring  that  mechanisms 
encourage  efficient  choices  within  modes.  Progress  towards  efficient  modal 
choice can  be  made  through  ensuring  that  at  point  of  use,  transport  users  are 
confronted  with  the  full  additional  cost  (the  marginal  cost)  which  their  transport 
imposes on society. 

In  paragraph  103,  the  Common  Transport  Policy  White  Paper  states  that 
"Measures  affecting  the  charged  costs  of  transport  have  a  direct  impact  on  the 
competitive position of transport  systems and operators. It is difficult  for  national 
or  local  authorities  to  act alone  if by doing  so they will prejudice  the position  of 
their enterprises  relative to those from  other regions. For this reason,  measures of 
this kind are best taken within a framework  decided at Community level." Without 
a coordinated  approach,  lowering charges on one section of an international  route 
may  simply permit the tariffs  to be increased  on a different  part  of  infrastructure. 

l 

The future  development of the common transport policy, COM(92) 494  final. 

23 

These  interactions  point  to  the  desirability  of  a  framework  within  which  charges 
should be set which will ensure equity and achieve desirable policy aims. 

Railways  must  play  a  key  role  if  the  Commission's  objective  of  moving  toward 
sustainable mobility is to be realised, and if some of the goods and passengers that 
might  travel  by  road  will  instead  travel  by  rail.  Action  is  required  against  the 
background  where,  within  the  15  Member  States  of  the  EU  between  1990  and 
1995, rail transport has continued to  see a decline  in its market  share from  18.8% 
to some  14.4% of freight  tonne-km and from  6.8% to some 6.0% of passenger-km. 

Rail  should  be  particularly  attractive  as  a  means  of  moving  large  quantities  of 
freight  over  long  distances.  However,  in  Europe  rail  has  so  far  been  fairly 
unsuccessful  in retaining  and  developing  this market.  This  sector  of the  transport 
market  is of  importance  to the  development  of the  single  market  and  is  likely  to 
become increasingly crucial. In Europe a long distance rail journey will  frequently 
mean  that  capacity  must  be  granted  and  charges  levied  for  the  use  of  more  than 
one  infrastructure  network.  These  factors  create  an  additional  barrier  to 
international rail  traffic. 

Purchasers of transport services base their decisions on a number of factors.  While 
the  quality  of  service  and  reliability  are  likely  to  be  of  major  importance,  the 
weighting of the different  factors will be influenced  by a number of considerations 
and the price of the final  service will also be a major  factor  in transport  decisions. 
The  level  of  charges, which  have  to  be paid  for  the  use  of  infrastructure,  will  in 
itself have a significant  influence  on the final  cost of the  service. The impact  will 
differ  between  different  transport  modes  since  infrastructure  costs  vary  as  a 
proportion  of  total  service  cost.  In  the  case  of  rail,  the  cost  of  provision  of 
infrastructure  tends  to  be  high  while  the  marginal  costs  of  its  use  are  generally 
low.  Infrastructure  costs  comprise  a  substantial  proportion  of  total  railway  cost 
and therefore  can have  a significant  effect  on its relative  attractiveness.  It  is vital 
that these factors  are taken account of in charging systems if they are to enable rail 
services to be competitive. 

Council  Directive  91/440/EEC2  on  the  development  of  the  Community  railways 
created certain access rights for railway undertakings to the railway  infrastructures 
of the Community. In particular Article  10 provides that international groupings of 
railway  undertakings  are permitted  access  to  provide  international  passenger  and 
freight  services  and  there  is  a  right  of  access  for  combined  transport  services  to 
perform  international movements. These access rights resulted in two  fundamental 
changes  to  the  pre-existing  situation.  First,  they began  a process  of  separation  of 
railway  infrastructure  management  from  the  operation  of  trains.  Second,  they 
established  the  possibility  of  there  being  multiple  users  of  an  individual  railway 
infrastructure.  It was recognised  that these  rights  would  in themselves  have  little 
effect  unless  they  were  accompanied  by  a  legislative  framework  governing 
access conditions. 

Council Directive of 29 July  199, OJ L 237, 24.8.1991, p. 25. 

24 

10. 

11. 

12. 

13. 

14. 

Subsequently  in  1995, the Council adopted Directives  95/18/EC3 dealing with the 
licensing  of  railway  undertakings  and  95/19/EC4  on  the  allocation  of  railway 
capacity  and  the  charging  of  infrastructure  fees  for  services  operated  under 
Article  10 of Directive 91/440/EEC. Neither Directive  95/19/EC nor this proposal 
to  amend  it  concerns  access  rights.  Those  rights  of  access  are  determined  by 
Directive  91/440/EEC  and by any national  legislation  which creates  greater  rights 
of  access.  Directive  95/19/EC  and  this  proposal  are  intended  to  ensure  that 
within the  access  rights  existing,  the  allocation  of  capacity  is  performed  in  an 
appropriate manner. 

In addition to the  Community  legal  framework,  the railway  industry  has  seen the 
beginnings of changes  in its structure. In some Member  States there are a number 
of  private  sector  railway  undertakings  operating  passenger  and  freight  services. 
Some Member  States allow or require competitive tendering for  services  operated 
under  contract  to  public  authorities;  these  contracts  may  be  won  by  private 
companies.  Nonetheless,  despite  these  developments  it  remains  the  case  that,  in 
most Member States the traditional  incumbent railway undertaking  still  dominates 
the other undertakings. 

The  Commission's  Railway  White Paper5  set out  a strategy  for  enabling  progress 
toward  a  revitalised  Community  railway  which  will  in  turn  ensure  progress 
towards  its  high  level  goals.  The  White  Paper  sought  to  build  on  the  existing 
Community  legal  framework  and  proposed  further  measures  to  develop  the 
market. Two of the measures which it identified  were the need for further  action in 
the  areas  of  railway  infrastructure  capacity  allocation  and  railway  infrastructure 
charges  (paragraphs  48-55).  As  foreseen  in  the  White  Paper,  the  Commission 
has recently  published  a  communication6  which 
impact  of 
Directive 91/440/EEC.  This  notes  the  need  for  further  definition  of  Community 
rules for infrastructure  charges and capacity allocation. 

reviews 

the 

In their opinion7  on the White  Paper, the European  Parliament  noted the need  for 
further  elaboration  of  the  framework  for  access  to  railway  infrastructure.  The 
Economic  and  Social  Committee  noted  in  their  report  on  the  White  Paper  that 
"Infrastructure  charges  and  timetable  priorities  are  further  points  which  need  to 
be discussed..."8. 

The  Commission's  White  Paper  "Fair  Payment  for  Infrastructure  use"9  proposes 
that  the  "users  pay"  principle  should  underpin  the  development  of  charging 
systems in all commercial  modes of transport. The long term  objective  is to  align 
charges with "marginal  social costs", i.e. those costs that are imposed at the point 
of  use,  including  environmental  and  other  "external"  impacts.  The  White  Paper 

3 
4 
5 
6 

Council Directive of  19 June  1995, OJ L  143, 27.6.1995, p. 70. 
Council Directive of  19 June  1995, OJ L  143, 27.6.1995, p. 75. 
A strategy for revitalising the Community's railways, COM(96) 421 final 
Communication on the implementation and impact of Directive 91/440/EEC on the development of the 
Community's railways and on access rights for rail freight, COM(1998) 202 final. 

7  A4 - 0412/97 of  13 January  1998, OJ C 34, 2.2.1998. 
8 
9 

CES 459/97. 
Fair payment  for  infrastructure  use: A phased  approach to a common  transport  infrastructure  charging 
framework in the EU, COM(1998) 466 final. 

25 

recognises that, given the different  starting points, a gradual approach,  comprising 
three phases  is required.  The framework  proposed  for  rail  infrastructure  charging 
in  this  Communication  should  be  seen  as  covering  the  first  two  phases  of  the 
proposes approach as far as railways are concerned. 

15. 

There  are a number  of links between the allocation  of capacity and the levying of 
infrastructure  charges.  The  level  of  charges  will  influence  demand,  this  in  turn 
has an impact  on the ease with which requests for  capacity may be  satisfied.  This 
mechanism  may  be  used  specifically  to  allocate  capacity  through  an  auctioning 
mechanism  or  through  scarcity  charge  which  reflect  the  value  of  the  capacity. 
These mechanisms can ensure that users, who value the capacity most highly, will 
benefit  from  the use of it. Charges  may be levied  for  booking  capacity to  provide 
assurance that the capacity  will  be used.  Economic  incentives to  operate  services 
as planned  can improve the performance  of the system  and provide  an increase in 
available  capacity.  Some  functions,  in  particular  that  of  regulation  or  hearing 
appeals  for  both  activities,  could  probably  be best  undertaken  by the  same  body. 
To  ensure  that  these  links  are  not  lost  sight  of  the  two  issues  are  tackled  in  one 
proposal as they were in Directive 95/19/EC. 

16. 

It is therefore  clear that both capacity allocation procedures  and charging  schemes 
will have a significant  role in the further  development  of the rail transport  market. 
Without Community action in these areas, rail is likely to remain disadvantaged by 
its  structure  and  fail  to  deliver  its  full  potential.  At  the  same  time  this  action 
should  also  be  directed  at  encouraging  the  more  efficient  use  of  railway 
infrastructure  both in terms of access for different  traffic  types and also in terms of 
overall utilisation levels. 

1.2.  Section 2 - Current situation in railway infrastructure  charging 

17. 

The Community has for  a long time taken an interest  in charges  for transport use, 
and  there  are  a number  of pieces  of  legislation  on this  matter.  Regulation (EEC) 
No  1108/7010  set  out  an  accounting  system  for  expenditure  on  infrastructure  for 
land transport  and required  submission  of accounts to the Commission  each year. 
Regulation  (EEC) No  2598/7011  specified  the  items  for  inclusion  in the  accounts 
required  by  Regulation  (EEC)  No  1108/70.  Regulation  (EEC)  No  1384/7912 
amended  Regulation  (EEC) No  1108/70 by relaxing  the  reporting  requirement  to 
once  every  five  years  for  smaller  railways  as  well  as  making  some  other  small 
amendments.  Regulation  (EEC)  No  2830/7713  sets  out  requirements  for  the 
establishment  of  comparable  accounts  by 
railway  undertakings,  while 
Regulation (EEC) No  2183/7814  lays  down uniform  costing  principles  relating  to 
freight  transport. 

18. 

The  implementation  of  Directive  95/19/EC  in the  Member  States  has  resulted  in 
quite  disparate  infrastructure  charging  schemes.  Current  railway  infrastructure 
charging  schemes  differ  tremendously.  The  overall  level  of  recovery  of  rail 

10  Council Regulation (EEC) No  1108/70 of 4 June  1970, OJ L  130, 15.6.1970, p. 4. 
11  Council Regulation (EEC) No 2598/70 of  18 December  1970, OJ L 278, 23.121970, p. 1. 
12  Council Regulation (EEC) No  1384/79 of 25 June 1979, OJ L  167, 5.7.1979. 
13  Council Regulation (EEC) No 2830/77 of  12 December  1977, OJ L 334, 24.12.1977. 
14  Council Regulation (EEC) No 2183/78 of  19 September  1978, OJ L 258, 21.9.1978. 

26 

infrastructure  costs varies  from  zero  in some Member  States whereas  others  aim, 
at least in principle, to recover  100% of the costs. The structure  also varies widely 
from  negotiated charges via formulae to fixed tariffs,  some using multi-part  tariffs. 
There is in addition no uniformity  about what services are provided  for the charge 
being  levied  or  what  parameters  are  to  be  taken  into  account  in  setting  charges. 
An overview  of  different  charging  systems  in  the  Member  States  is  provided  in 
the Annex. 

19.  As explained  in the White Paper "Fair Payment for  Infrastructure  use", to provide 
price  signals for the optimal  use of infrastructure,  the charges  should  be set at the 
level corresponding to the additional cost imposed on society by the service. In the 
absence of charges covering external costs in all modes of transport  and given the 
relatively low levels of rail traffic  resulting  from  lack of customer  orientation  and 
high  cost  in rail,  such  charges would  currently  only represent  a proportion  of the 
overall  level  of  the  cost  of  provision  of  the  rail  infrastructure.  At  present  an 
optimal  charging  system  would,  therefore,  result  in  under  recovery  of  rail 
infrastructure  costs  and  the  only  means  of  continuing  the  operation  of  the 
infrastructure  would  be by the provision  of  support  from  elsewhere,  traditionally 
from  central  government.  It has to be pointed  out, however,  that  all rail  charging 
systems currently in place require significant  direct or indirect government  support 
for rail infrastructure  managers. 

20.  A  variety  of  mechanisms  exist  for  recovering  a  greater  proportion  of  the 
infrastructure  costs but these  are likely to  give rise to  varying  levels  of  distortion 
to patterns of use. Such mechanisms are based on principles such as the use of two 
part tariffs15,  Ramsey pricing16  or  annual  rolling  stock  charges.  So far  the  impact 
of  some  of the  inefficiencies  caused  by the application  of these  mechanisms  may 
have been limited, since price signals and incentives may only have a small impact 
on behaviour in industries with extensive public ownership and significant  barriers 
to  entry.  It  is  important  that  charging  mechanisms  do  not  prevent  traffic  from 
using  rail  infrastructure  when  it  is  able  to  pay  the  additional  costs  which  it 
imposes  even  if  that  contribution  is  only  small.  Some  current  practices,  if 
continued,  will  lead  to  price  sensitive  services  being  priced  off  the  rail  network 
unnecessarily, as well as competition being frustrated  by charging structures. 

21. 

It is clear from  discussions with railway undertakings that the current situation is a 
deterrent  to the  development  of  international  services, because  of the  complexity 
of  establishing  the  overall  level  of  infrastructure  charges  but  also  because  of  the 
different  price  signals which  are sent by the various  schemes. In its  report  on the 
Commission's  Railway  White  Paper  the  European  Parliament  notes  the  problem 
of  differing  charging  systems  for  rail  infrastructure  and  took  the  view  that  the 
Commission  should  submit  proposals  on  the  criteria  to  be  taken  into  account  in 
calculating the cost of railway infrastructure.  In addition the Economic  and  Social 
Committee  has identified  the present  systems of infrastructure  charges  as being a 
very serious problem and urged the Commission to give the highest priority to this 
area of work. 

15  This  means  the  use  of a  fixed  tariff  to  recover  a proportion  of the  fixed  costs  and  a  variable  charge 

which relates to the amount of use made of the  infrastructure. 

16  This involves the use of mark ups which vary inversely with the elasticity of demand. 

27 

22. 

For  freight  traffic  the  impact  of  these  different  charging  mechanisms  can  be 
particularly  problematic.  Moving  freight  by  rail  should  become  increasingly 
attractive  as  distances  increase.  In Europe,  long  distances  will  frequently  mean  a 
journey  which  crosses  more than  one  railway  infrastructure  network.  Rail  freight 
is almost  always in very  strong competition  with road  haulage  and  in many  cases 
also  exposed  to  competition  from  inland  waterway  and  short  sea  shipping.  In 
comparison  with  these  other  modes,  a  high  proportion  of  the  cost  of  rail  arises 
from  its  infrastructure,  which means that the type  of charging  scheme  can have  a 
correspondingly  high  effect  on  its  competitiveness.  This  is further  re-inforced  by 
the fact  that road  freight  currently pays relatively  low  infrastructure  charges  on  a 
marginal  basis and is not charged  at the point  of use for  the high  external  costs it 
generates.  It  also  needs  to  be  possible  for  railway  undertakings  to  quickly 
determine the level of charges they will have to pay if they are to be able to rapidly 
bid  for  freight  traffic 
in  competition  with  road  services.  This  problem  is 
exacerbated  where  a  service  will  cross  more  than  one  infrastructure  network. 
Finally  if  charging  schemes  in  different  Member  States  are  designed  to  send 
different  signals to users, this could produce a confusing  situation  for  operators of 
long distance services who are unable to respond to the different  signals. 

23. 

It can therefore  be concluded that there is a pressing need to make progress on the 
harmonisation  of  infrastructure  charge  structures  for  international  rail  freight 
services.  The  main  reasons  can  be  summarised  as  the  different  objectives  of 
Infrastructure  Managers,  the  resulting  different  charging  systems  which  have  the 
potential  for  discrimination,  varying  service  packages,  the  use  of  different 
parameters  for  varying  charges,  the  failure  to  recognise  international  freight  as 
operating  in  a different  market  and  ensure  its  competitiveness  at  an  international 
level  and  finally  the  impossibility  of producing  a price  rapidly  as  a  result  of  the 
above factors. 

24.  A further  issue  is that the market  for  the  supply  of railway  infrastructure  is by its 
nature  essentially  monopolistic.  This  implies  a  considerable  need  to  control  the 
behaviour  of  the  Infrastructure  Manager  to  ensure  that  he  does  not  abuse  that 
position.  In  particular  limits  might  be  needed  where  he  varies  access  charges 
between  traffic  types  and  might  levy  excessive  charges  particularly  for  traffic 
which is to a high degree dependent on using rail. It is equally important to ensure 
that  the  Infrastructure  Manager  is  provided  with  the  necessary  incentives  to 
improve  his  efficiency  and  thus  lower  costs  and  charges  and  improve  network 
performance  as well as to make investments where these are necessary. 

25. 

There has been much interest in the issues raised, both historically and in the light 
of recent  developments  in the rail  sector within the Community.  In recognition of 
the problems  and  the need  for  action, the  International  Railway  Union  (UIC) has 
independently  undertaken  a number  of  studies  on  railway  infrastructure  charges. 
Of particular  interest  are the  study  on allocatively  efficient  pricing  mechanisms17 
and  a  further  report  entitled  Peage  II18  which  was  intended  to  identify  areas  of 
potential  harmonisation  for  railway  infrastructure  charges.  The  Commission  has 
been  kept  informed  of  progress  on  this  work  and  has  taken  due  account  of  its 

17 

Infrastructure  cost  recovery  under  allocatively  efficient  pricing  UIC/CER  study  by  Dr  Rana  Roy, 
March 1988. 

18  UIC Le P6age study - Coopers and Lybrand report for UIC April  1998. 

28 

results.  The  European  Conference  of  Ministers  of  Transport  (ECMT)  has  also 
recently  held  a  round  table  on  "user  charges  for  railway  infrastructure"  and 
published a report19. 

26. 

Following  the  publication  of  its  Railway  White  Paper,  the  Commission  has 
undertaken  a  study20  including  a  review  of  the  principles  and  issues  associated 
with charging for railway infrastructure  use as well as the systems currently in use 
within  the  Community.  This  study  has  been  closely  monitored  and  directed  by a 
committee  of  representatives  of  the  Member  States  assisted  by  observers  from 
interested organisations21 and representatives of small railway undertakings. 

Nature of problems  to be addressed 

27.  Discussion  of  railway  infrastructure  charges  can  be  complex  on  account  of  the 
many different  objectives which charging schemes can seek to achieve. Frequently 
those different  objectives will result in conflicting  requirements from  the charging 
system. While there are many possible objectives  for  a rail  infrastructure  charging 
system, the broad aims can be characterised as ensuring efficient  use and provision 
of  rail  infrastructure,  efficiency  in  other  parts  of  the  rail  industry  and  the 
promotion of economic and social policy objectives. 

The price for  efficient use 

28.  As the Commission's  White Paper "Fair Payment for Infrastructure  use" indicates, 
the efficient  price to be charged  for  infrastructure  use to  be  optimal  will be  equal 
to the additional cost imposed on society by the operation of an additional  service. 
This  is  referred  to  as  the  short  run  marginal  cost  (SRMC).  This  position  was 
backed  by  the  ECMT  round  table  whose  report  states  that  "The  fundamental 
principle  is that  a  system  of  user  charges  should  relate  the  running  of  additional 
trains  to  the  additional  cost  that  running  those  trains  entails".  For  a  service 
operating  on  rail  infrastructure  without  capacity  shortages  these  costs  will  arise 
from  factors such as: 

• 
• 
• 
• 
• 
• 
• 

track wear and tear; 
traction current used; 
increased signal operations costs; 
train planning costs; 
additional management and administration costs; 
scarcity and congestion costs; 
noise, pollution and other external  effects. 

29. 

In  reality  the  charging  scheme  for  railway  infrastructure  must  take  account  of 
charges  levied  for  the  provision  of  other  transport  services  which  compete  with 
(or are  complementary  to)  rail  services.  For  railways  a  particular  problem  is  the 
pricing  of  road  services,  since  road  users  are  charged  directly  for  only  a  small 

19  CEMT/CS/RE(98) 3  Committee  of  Deputies,  Economic  Research  Committee,  Conclusions  of 

Round Table  110, User Charges for Railway  Infrastructure. 

20  An  examination  of  rail  infrastructure  charges  -  report  for  the  European  Commission  May  1998  -

NERA. 

21  CER, UIC, ESC, UIRR, Joint Committee 

29 

proportion of the costs generated by their use of road infrastructure.  This issue was 
discussed  in  the  Green  Paper  "Towards  Fair  and  Efficient  Pricing  in  Transport" 
and  in  the  White  Paper  "Fair  Payment  for  Infrastructure  use".  The  White  paper 
concludes that the most desirable and efficient  situation is for all transport users to 
pay the cost which they impose  on society at the point  of use. Nevertheless,  until 
there  is  a  willingness  to  achieve  this,  a  second  best  solution  is  to  provide 
compensation  to  transport  users  generating  relatively  low  costs  to  reduce  their 
charges.  Until  charging  for  external  effects  is  implemented  in  all  modes  of 
transport,  this  situation  justifies  the  implementation  of  compensation  scheme 
resulting  in lower  charges for  access to rail infrastructure.  Nevertheless,  any  such 
scheme would require solid justification  for the proposed levels of compensation. 

Other Objectives 

30.  While  pricing  based  on  additional  cost  may  be  the  most  appropriate  way  of 
ensuring  optimum  use  of  infrastructure,  it  does  have  limitations.  It  can  be 
criticised  for  focusing  only  on  rail  infrastructure  (and  not  other  parts  of  the  rail 
industry, transport sector or economy as a whole) and then only at a single point in 
time.  In  practice,  the  price  mechanism  is  often  also  expected  to  achieve  other 
important  objectives  in  addition  to  promoting  efficient  immediate  consumption 
and  production  decisions.  In  particular  it  is  important  to  ensure  that  there  are 
incentives  to  attract  traffic  which  makes  economic  sense,  to  expand  capacity 
where  needed,  and to  increase  efficiency,  both  of train  operations  but  also  of the 
infrastructure  manager. 

Economic and social policy  objectives 

31. 

32. 

The  importance  of  railways  to  economic  and  social  activity  means  that 
governments  often  have specific  objectives which may mean that they wish to see 
a  departure  from  commercial  pricing  and  decision-making.  It  is  established 
Community  policy that there  should  be managerial  independence  of railways  and 
that  over time  the  accounts  of  infrastructure  managers  should  balance.  To  enable 
this  to  be  reconciled  with  such  other  Government  objectives  may  require  the 
provision of substantial state contributions. 

For example, Member States may wish, for regional policy reasons, to ensure that 
railway  services  are  provided  to  rural  or  isolated  locations.  It  is  unreasonable  to 
place the burden for the provision  of these services on the infrastructure  manager, 
and  in  this  case  government  must  purchase  the  supply  of  the  railway  service 
including the appropriate level of infrastructure  charges at an appropriate price. 

Need for  harmonisation measures 

33. 

From a point of view of transport efficiency  at the European level it is desirable to 
ensure  that  railway  infrastructure  charging  schemes  employ  the  same  principles. 
This will facilitate journeys crossing more than one network,  send clear  signals to 
users  and  ensure  that  where  competing  infrastructures  exist,  sensible  choices  are 
made between them. 

30 

Section 3 - Current situation in capacity  allocation 

34.  Directive  95/19/EC  established  a  broad  framework  at  Community  level  for  the 
allocation  of railway  infrastructure  capacity for  the provision  of  services  operated 
under  Article  10  of  Directive  91/440/EEC.  Since  the  implementation  of 
Directive 91/440/EEC, the international  capacity  allocation  process  has  also  been 
modified  under Forum Train Europe -  an organisation set up by a large number of 
European  railway  companies  -  to  take  account  of  the  changes  created  by  that 
Directive  and  in  particular  a  number  of  points  are  synchronised  through  the 
Forum Train  Europe  process. The  actual  practical  procedures  for  establishing  the 
timetable  are  frequently  carried  out  in  practice  in  a  similar  method  in  most 
Member States. 

35. 

The  different  capacity-allocation  schemes  currently  in  use  in  the  Member  States 
and  the  role  of  Forum  Train  Europe  were  assessed  in  the  course  of  a  study22 
carried out  on behalf  of the  Commission.  This  study  which  was  accompanied  by 
a committee  of  experts  from  the  Member  States  and  the  industry  concerned 
(CER, UIC,  ESC,  UIRR,  joint  committee  and  small  railway  undertakings) 
highlighted  differences  between  the  allocation  processes  and  the  timing  of  the 
different  steps  for  the  regular  timetable  between  Member  States.  The  study  final 
report aims to draw together best practice and to put forward  proposals  for  further 
development  of  allocation  processes  which  will  assist  in  relieving  the  problems 
which have been identified  by the various participants in the process. 

36.  As the  market  for  railway  services  has begun  to  evolve,  it has  become  clear  that 
the existing arrangements do not satisfy  many of the needs which exist. There are 
frequent  complaints that allocation processes fail to place appropriate value on the 
needs  of  specific  traffic  types,  that  processes  are  biased,  that  information  is 
misused  and  that  the  whole  process  is too  slow  and  unwieldy.  While  efforts  are 
undoubtedly  being made to improve this situation  at national  level, it is clear that 
many  of  these  concerns  also  affect  markets  at  Community  level,  and  therefore 
require a Community legislative  framework. 

37. 

38. 

The  capacity  allocation  process  cannot  be  viewed  as  an  isolated  process.  It  fits 
within  a  larger  framework  running  from  long  term  infrastructure  development 
through  access  control,  and  the  scheduling  process  down  to  train  control.  It  also 
has  links  with  other  aspects  of  the  management  of  railway  infrastructure  such  as 
the  scheme  for  infrastructure  charges.  These  factors  all  affect  the  allocation 
process on one network, but difficult  questions  also arise about ensuring  adequate 
collaboration  between  allocation  processes  to  enable  operation  of  services 
between networks. 

It  is  clear  that  the  current  situation  is  far  from  ideal,  and  appears  in particular  to 
hamper - international  services, the development of the rail market and the growth 
of  rail  freight.  To  a  large  degree,  these  difficulties  are  linked  with  the  fact  that 
many of the decisions which must be taken are a matter of judgement  and balance, 
rather  than  having  any  clear  right  answer.  These  point  to  a  need  to  address  the 
processes  to  be  followed  rather  than  the  development  of  rigid  rules  leaving  the 
details to be addressed at Member State level. 

22  Coopers and Lybrand, Examination of Train Path Allocation, May  1998. 

31 

Commission  Objectives 

39. 

The  main  objectives  of  the  Commission  in tabling  this  proposal  are  therefore  to 
seek to ensure fairness  and efficiency  in allocation processes, notably with regards 
to  international  train  paths,  and  to  enhance  collaboration  for  the  allocation  of 
capacity  across  more  than  one  network.  Seeking  to  ensure  fairness  in  arriving  at 
allocation  decisions  will  involve  ensuring  a  better  balance  between  the  needs  of 
different  users  of the network,  in particular  recognising  the  specific  requirements 
of  freight  transport,  as  well  as  addressing  the  different  needs  of  users  and  the 
infrastructure  manager. Promoting efficiency  in the allocation process will involve 
streamlining the process, making better use of capacity, and ensuring that capacity 
constraints  are  addressed.  Enhancing  collaboration  between  allocation  bodies  for 
different  networks  will  involve  addressing  how  this  should  take  place,  and  also 
what redress is required when things go wrong. 

Nature of specific  problems to be addressed 

Equality of treatment 

40. 

It  is  clear  that  all  applicants  for  capacity  must  be  treated  in  a  fair  and  non 
discriminatory  manner  yet  schemes  frequently  fail  to provide  adequate  assurance 
of  this  to  applicants  for  capacity.  These  concerns  extend  beyond  fairness  to  also 
concern  the  treatment  of  commercially  sensitive  information  during  the  process. 
As with  any  activity where  one body  is determining  the  conditions  and  ability  of 
other  undertakings  to  access  a market,  it  is  important  that  there  is  no  possibility 
of one  of  the  market  players  being  in  a  position  to  unfairly  influence  decisions. 
in  the  relationships 
These  factors  point  to  the  need  for  greater  clarity 
between railway  undertakings, the  infrastructure  manager  and  the performance  of 
capacity allocation. 

41.  All  parties  have, for  different  reasons  an  interest  in  the  good  performance  of  the 
allocation process, undertakings want to know that their needs are given  adequate 
weight  while  infrastructure  managers  need  to  be  sure  that  they  are  obtaining 
optimal  use  of  the  infrastructure.  This  is  likely  to  be  of  most  concern  for 
undertakings  that  are  not  dominant  in  the  market,  but  as  the  trend  to  a  more 
effective  separation  between  infrastructure  management  and railway  undertakings 
continues, even the larger undertakings are likely to require assurance. 

42.  All requests  for  capacity  shall be accorded equal priority  in their treatment  by the 
allocation body. This is clearly essential to ensure that different  applicants  receive 
non-discriminatory  treatment. It is also desirable from  the point of view of making 
optimal  use  of  the  rail  network.  If  the  allocation  process  is  approached  by 
determining  a number  of priority  services which  cannot then be moved  or  altered 
in  any  way  then  this places  immediate  constraints  on  the  availability  of  capacity 
for  other  services.  This  limits  the  utilisation  of  the  infrastructure  as  well  as  the 
availability of train paths which adequately meet the needs of other services. 

43. 

It is therefore  desirable that the allocation  body  should  commence  its task  with  a 
clear  understanding  of  all  of  the  requests  which  have  been  submitted  and  the 
commercial  needs  of  those  requests.  Its  task  is  then  to  ensure  the  optimum 
outcome  which  ensures  that  to the  greatest  degree  it  can  satisfy  those  requests  in 
an  acceptable  manner.  It  must  only  be  the  case  that  when  it  is  unable  to 

32 

satisfactorily  meet all of the requests that it can then apply the previously  specified 
priority rules to determine which requests will be rejected. 

44. 

The  allocation  body  must  ensure  that  information  it  gathers  about  operations 
remains  confidential  since  this  type  of  information  could  be  of  considerable 
interest  to  other  undertakings.  At  the  end  of  the  allocation  process,  each 
undertaking  should  feel  confident  that  his  bid  has  been  treated  according  to  the 
rules set out and that it has been treated with equal priority to comparable requests 
from  other  undertakings.  Where  this  is  not  the  case  he  must  have  the  ability  to 
launch an appeal. 

Transparency 

45. 

For  an  integrated  railway  without  competitors,  decisions  on  the  allocation  of 
capacity  are  essentially  administrative.  There  is  no  question  of  discrimination 
since  all  participants  are  employed  by  the  same  company.  Such  a  situation 
removes  one  complexity  but  does  not  necessarily  mean  that  the  results  of  the 
process  are  in  any  way  optimum.  It  could  be  that  administrative  rules  are 
developed to facilitate  the performance  of the allocation task  but which do not  in 
fact reflect  the reality of the markets in which the different  services are required to 
operate.  In  some  cases  this  could  arise  as  a  result  of  changes  in  markets  which 
have not been reflected  in the way the allocation process is performed.  It is  useful 
even  where  only  one  railway  undertaking  organises  railway  services  for  the 
choices which are made between different  services and types of traffic  to be made 
explicit rather than  hidden.  To overcome these problems  implies  a clear  need  for 
the  rules  governing  the  process  to  be  established  after  discussion  with  users  and 
then made available to all applicants in advance of the process. 

Requirements of different traffic types 

46. 

47. 

48. 

It is vital  in establishing  the  allocation  scheme  and  during the  allocation  process, 
that  adequate  account  is  taken  of  the  requirements  of  different  traffic  types. 
Different  users  of  the  rail  network  will  have  different  and  often  conflicting 
requirements.  It  is  not  possible  to  satisfactorily  anticipate  these  since  they  will 
vary between undertakings  and between the individual  traffic  flows  performed  by 
those undertakings. A distinction  can be drawn between the  commercial  needs of 
an  applicant  within  a  timetable  period,  and  the  need  for  continuity  between 
timetable periods. 

Constraints  related  to  capacity  allocation  can  arise  from  many  different  factors. 
Between  different  types  of  rolling  stock  there  is  a  wide  spectrum  of  top  speed, 
deceleration  and  acceleration  characteristics.  Different  services  have  different 
stopping  patterns  and  therefore  require  access  to  facilities  which  may  not  be 
required by other  services operating  on the same route. Very different  needs  arise 
for freight  and passenger services. 

In general  it is clear that most passenger  services, especially those  serving a local 
or  regional  market  are  likely  to  desire  stable  timetables  which  are  known  in 
advance  with  a  gradual  evolution  to  reflect  changing  demand  or  service 
enhancement.  They  will  wish  to  provide  for  appropriate  interchanges,  with 
services  at  suitable  intervals  to  meet  customer  needs  and  allow  business 

33 

development.  These  needs  will  differ  between  long  distance  services  and 
local services. 

49. 

For  freight  services,  in  general  the  time  at  points  en  route  is  likely  to  be  less 
crucial  than  originating,  arriving  or  total  journey  time.  In  addition,  a  large 
proportion of the potential freight  market may only be available to rail if it is able 
to provide services quickly in response to demand, whether those are occasional or 
regular. Freight services may often need flexibility  to alter operations to fit in with 
other aspects of the logistic chain. Nevertheless, once services are established they 
may  also  have  a  legitimate  interest  in retaining  aspects  of  the  operation  between 
timetable periods. 

50.  When  coordination  is required  it will be necessary  as part  of that process  to  take 
account  of the needs  of the different  services. The  implications  for  modifications 
to requests  must be taken into account  on the running  of the  services  both  within 
the immediate vicinity but also over the whole length of their journey.  It will also 
be  necessary  to take  account  of  the  effect  of the  modification  on the  business  of 
the applicant who is affected.  In view of these factors  the process must be carried 
out transparently and in consultation with the railway undertakings  involved. 

Balance between freight  and passenger 

51.  Until  there  is  a  fuller  reflection  through  charges  of  the  external  costs  associated 
with  different  transport  modes, it seems likely that long distance passenger  traffic 
is  likely  to  remain  constrained  to  distances  where  journey  times  are  not 
significantly  greater than the comparable time to travel by air. However, freight  is 
not  so  constrained  and  in fact  long distance  and  international  freight  services  are 
likely  to  be  one  of  the  areas  where  rail  has  significant  opportunities  to  increase 
market  share.  However,  the  operation  of  these  types  of  services  faces  numerous 
difficulties. 

52. 

53. 

Freight  has traditionally  been  accorded  fairly  low priority  on the  rail  network.  In 
part  this may be a reflection  of the past  market  where  rail  tended  to  carry  mostly 
low  value  bulk  commodities  such  as  coal,  steel  and  grain  where journey  speeds 
were less crucial. If rail is to succeed in expanding market share then it is likely to 
need to increase its share of higher value more time sensitive goods. In theory rail 
should  be  ideal  for  such  movements  since  it  offers  the  potential  for  secure 
transport without congestion and thus guaranteed journey times. 

Traditionally  the timetabling  process  has  been  geared  around  passenger  services, 
however,  the  changing  needs  of  the  freight  market  imply  that  the  methods  of 
allocating  capacity must begin to take greater account of the needs of freight.  The 
time  frame  for  requests  can  be  very  different  with  scheduled  passenger  needs 
identified  many  months  prior  to  fmalisation  of  the  timetable  whereas  freight 
request  could  vary  even  up  to  the point  of  departure  of the  train  if that  could  be 
accommodated.  In view of this it is desirable that infrastructure  manager's  should 
attempt  to  reduce  the  lead-time  for  preparation  of  timetables  which  will  retain 
flexibility  till  later  in  the  process.  In  addition  increased  use  of  Information 
Technology will enable later adjustment.  Clearly there are constraints  such as the 
lead-time  for  planning  passenger  services  and  the  need  for  timetables  to  be 
published  and  distributed  and this will place  limits on the time  at which the  final 
timetable can be published. It is important that infrastructure  managers  should pay 

34 

regard to the needs of traffic  which requires capacity at short notice when they are 
allocating capacity for regular services. 

Services operated under contract to public  authorities 

54. 

55. 

56. 

Public  passenger  transport  plays  a  vital  role  in  reducing  environmental  damage 
and  promoting  social  cohesion.  In  view  of  this,  society  often  requires  a  higher 
level of public transport  service by road or rail than purely  commercial  decisions, 
by  operators,  would  provide.  These  services  are  known  as  public  services.  In 
the past,  public  authorities  secured  public  services  by  imposing  public  service 
obligations  on  operators.  Community  law23  now  requires  that  publicly  funded 
transport  services  should  be  clearly  defined  in  public  service  contracts  and 
the operators  of  these  services  should  be  properly  compensated.  However, 
Member  States can exempt  operators providing  only local  and regional  passenger 
transport from these requirements. 

To secure service integration, it is often  appropriate for  operators of passenger rail 
services  to  be  awarded  an  exclusive  right  to  operate  defined  types  of  services 
within  a  defined  geographical  area.  There  is  no  comprehensive  requirement  for 
public  authorities  to  bring  market  forces  to  bear  in  awarding  exclusive  rights  or 
public  service  contracts,  but  this  is  now the  practice  in  an  increasing  number  of 
Member  States, particularly in relation to the tendering  of multi-year  contracts  to 
provide rail  services within regions. This development  is welcome  as a means  of 
providing incentives for efficient  and effective  services. 

There is a linkage between the capacity allocation process  and the ability of local 
authorities to purchase  services which are operated under contract to them. Where 
railway  undertakings  are  subject  to  a public  service  obligation  or  public  service 
contract  requiring  them  to provide  a service, then  the  capacity  allocation  scheme 
must enable them to fulfil  their obligations. Where public authorities are preparing 
to tender  a public  service  contract, the capacity  allocation  scheme  needs to  allow 
them  to  define  -  within  acceptable  parameters  -  the  nature  of  the  capacity  that 
will be  available  to  the  successful  tenderer  during  the  period  of  the  contract. 
Directive  95/19/EC  went  some  way  to  addressing  these  links,  but  further 
clarification  is needed. 

57. 

It  is  important  that  capacity  can  be  obtained  with  sufficient  long  term  certainty 
for the provision  of this type of service, and that  it is possible  for  the authority to 
be able to  seek the  capacity  even  if it has not  yet  defined  the  operator.  However, 
these  needs  must  be  set  against  the  needs  of  the  infrastructure  manager  to 
manage the infrastructure  efficiently,  and the needs of other undertakings to access 
the  infrastructure. 

International collaboration 

58. 

The creation  of international  train paths  introduces  an extra dimension  and  set of 
problems that  can be particularly  damaging  for  freight.  On the  one hand  the need 
for  collaboration  can slow down the process, and is likely to impair the quality of 

23  Regulation  (EEC)  No  1191/69  (OJ  156,  28.6.1969)  amended  by  Regulation  (EEC)  No  1893/91 

(OJ  169,29.6.1991). 

35 

the  final  product  because  of  the  difficulty  of  dealing  with  all  the  interactions 
involved.  At  the  same time,  assurances  are  required  that  decisions  are  made  in a 
manner which is as fair as that for purely national  traffic. 

59.  Where journeys cover long distances, it is inevitable that they are likely to involve 
increased  interaction  with  other  traffic  flows  as  well  as  the  likelihood  that  they 
will  need  to  use  capacity  constrained  track  sections.  Set  against  this  however,  is 
the possibility  that  in  some  circumstances  they may  offer  potential  for  deviations 
to avoid  such constraints.  Appropriate  attention must be paid to these  difficulties 
and possibilities when establishing allocation rules and allocating capacity. 

60. 

improvements  can  probably  be  achieved 

Some 
the 
collaboration  between  the  different  bodies  responsible  for  capacity  allocation, 
further  improvements  may  be  possible  through  enhanced  communication  and 
exchanges  of  information.  In  any  case,  the  timing  of  the  international  processes 
needs  to  be  closely  linked  to  the  national  allocation  processes  to  ensure  that 
neither process causes excessive constraints for the other. 

through  enhancing 

Rights to capacity 

61. 

Current  Community  law  does  not  clarify  the  rights  associated  with  railway 
infrastructure  capacity.  The uncertainties  which exist for  railway undertakings  are 
mirrored by uncertainties for the infrastructure  manager. There is a need to  clarify: 
how  long  the.right  to  use  capacity  is  granted  for;  what  expectations  users  may 
have  about  their  ability  to  operate  a  similar  service  in  future;  and  their  ability  to 
use capacity  allocated  with  a particular  service  in mind  for  a similar but  different 
service. There is also a need for clarification  of whether there is a right to  transfer 
capacity  allocated  to another  undertaking  with  or without  some  compensation  for 
such a transfer. 

Available  capacity 

62. 

Railway  infrastructure  capacity  is  not  something  that  can  be precisely  defined  in 
terms of a number of train paths per hour, nor is it a concept which exists without 
regard to factors  such as the mix  of traffic,  the characteristics  of the rolling  stock 
and  so  on.  While  these  characteristics  mean  that  it  is  not  simply  a  matter  of 
apportioning a given number of rights between competing requests they also make 
the process of determining which requests shall be met and how fully they shall be 
met  a task  which  requires  a considerable  degree  of  openness  and  transparency  to 
provide  assurance  that  it  is  carried  out  fairly.  Where  there  is  scarce  capacity  the 
choices  that  must  be  made  between  competing  needs  should  be  made  within  a 
framework  which  is  explicit.  This  will  ensure  that  undertakings  seeking  capacity 
have an understanding  of the likelihood  of success thus enabling the avoidance of 
pointless  effort  and the production  of more  informed  requests. It will  also  enable 
them  to  assess  whether  the  use  of  those  criteria  has  resulted  in  an  outcome 
consistent with the stated principles. 

Role of Information Technology 

63. 

Information  technology  has  been  slow  in  arriving  in  this  area  although  it  is 
beginning 
lack  of 
compatibility  between  systems  could  still  hamper  its  playing  a  full  role  and 

important  role.  Nevertheless 

to  play  an 

increasingly 

36 

facilitating  the  establishment  of train paths  which  cross network  boundaries.  It is 
desirable  to  monitor  progress  in  this  area  and  to  ensure  that  the  results  of 
Community  and national  research  can be rapidly employed  to assist  in  improving 
the allocation processes. 

Charges 

64. 

There  is an obvious relationship  between the charges  which  are  levied  for  access 
to  scarce  capacity  and  the  allocation  of  that  capacity  among  bidders.  Ideally 
charges should be set at a level to reflect the opportunity cost for the  infrastructure 
manager  of  traffic  which  is  priced  off  the  network.  Then,  in  theory,  for  a  given 
infrastructure,  there should be no allocation problem since bids for capacity should 

•  not exceed that which can be made available. 

65.  Where capacity constraints are identified  through the allocation process this raises 
the question of whether capacity should be expanded. Because of the monopolistic 
position  of  the  infrastructure  manager,  it  is  important  to  ensure  that  appropriate 
processes  exist  to  address  the  constraints  in  an  open  way  and  to  ensure  that 
the views  of  all  parties  are  taken  into  account  in  planning  what  enhancements 
are desirable. 

Section 4 - The Commission  proposal 

66. 

The main  issues to be  addressed  by mechanisms  to  charge  for  the  use  of  railway 
infrastructure  and to allocate capacity on it have been identified  in  Sections 2 and 
3.  The  fact  that  capacity  has  a  value  and  that  the  level  of  charges  will  influence 
demand for  capacity lead to strong links between these mechanisms  and  therefore 
the  Commission  believes  that  a  unified  approach  needs  to  be  taken  to  address 
these issues. As discussed above, the main objectives of the proposal are: 

• 

to  ensure  greater  efficiency  in  the  use  of  rail  infrastructure  and  to  drive 
down costs; 

, 

• 

• 

• 

to make existing  access rights effective,  by clarifying  charging  and train path 
allocation rules; 

to  facilitate  the provision  and use  of high  quality  international  train paths by 
harmonising allocation procedures and charging principles; 

to  ensure  that  charging  and  allocation  procedures  do  not  act  as  barriers  to 
market entry. 

Independence of regulatory  functions 

67. 

It is self evident that in view of the need to provide assurance that these processes 
will  be  fair  to  all  undertakings,  it  is  necessary  for  the  allocation  and  charging 
processes  to  be  performed  independently  of  any  railway  undertaking.  To  ensure 
effective  collaboration  to  enable  the  efficient  operation  of  services  at  an 
international  level  there  is  a  need  for  these  bodies  to  collaborate  and  some 
requirements  are  laid  down  about  this.  There  will  remain  many  matters  of 
judgement  in the allocation  process which  even with  an unbiased  decision  maker 
may  be  open  to  dispute.  Where  negotiation  on  price  forms  part  of  the  charging 
framework,  this also will need to be closely supervised. This points to the need  for 
37 

a  powerful  body  which  can  ensure  that  the  frameworks  are  fair  and  that 
discrimination  does  not  take  place.  Such  a  regulatory  body  will  oversee  these 
processes  and  deal  with  complaints, 
imposing  conditions  on  the  parties 
where necessary.  The proposal  contains provisions to  ensure  that  these  objectives 
are met. 

Transparency 

68.  Users and potential  users of the infrastructure  require information  about  access to 
the  network  and  the  rules  and  procedures  which  apply  both  as  far  as  train  path 
allocation  and  charging  are  concerned.  . This  information  will  include  details  of 
the infrastructure  available, the rules and procedures for the allocation process and 
the methodology used for  establishing charges as -well as the charges levied where 
there  is  a tariff.  It  is, therefore,  proposed  that  infrastructure  managers  publish  a 
"network  statement"  covering  these  issues.  Such  a  published  statement  should 
function  as a handbook for these aspects of access to the rail  infrastructure. 

Efficient  management and provision of rail  infrastructure 

69. 

The  monopolistic  nature  of  railway  infrastructure  needs  to  be  addressed  in  a 
number  of  ways.  The  performance  of  a  railway  operation  requires  access  to  a 
number  of  different  types  of  service.  Many  of these  will  only  have  one  supplier, 
often  the  infrastructure  manager.  In view  of this  some  safeguards  are required  to 
ensure fair treatment and set general rules which will apply to these. In addition, it 
is  important  for  more  efficient  railway  operation,  as  well  as  to  ensure  fair 
treatment  that  there  is  greater  clarity  about  infrastructure  cost  and  its  causation. 
Mechanisms  are also required to provide incentives for  infrastructure  managers to 
take  steps  to  drive  down  the  cost  of  the  infrastructure  and  to  expand  it,  where 
necessary. For scarcity constrained  infrastructure,  it is proposed that  infrastructure 
managers propose a capacity enhancement plan. 

Charging principles 

70.  A major  element of harmonisation which is required  is in the area of the principles 
of  charging.  The  proposal  aims  to  send  correct  signals  about  rail  usage  through 
charges  based  on  Short  Run  Marginal  Cost.  This  will  include  charges  relating  to 
the scarcity of capacity. The possibility to offer  discounts forms part of this system 
and  rules  are  proposed  to  determine  the  level  of  discounts  which  should  be 
permitted  so  as  to  ensure  fair  competition  between  undertakings.  Another 
important  area  where  charges  are  required  is  for  external  effects.  Charges  which 
will  lead to  a reduction  in the production  of external  effects  are highly  desirable, 
but  safeguards  are  also  required.' In  the  absence  of  an  intermodal  pricing 
framework,  it  is  proposed  that  charges  could  be  differentiated  in  function  of 
external costs but that this should not lead to an increase in average rail charges. In 
view of this it is also necessary to permit  compensatory payments to take  account 
of  situations  where  competing  transport  operations  (e.g.  road  haulage)  are  not 
properly  charged for  the costs they impose on society. A number  of exceptions  to 
the  basic  charging  principles  would  be  permitted  where  there  is  either  a  cost 
recovery  target  or  where  new  investment  is  required  that  could  not  be  financed 
otherwise.  However,  in  view  of  the  importance  of  freight  services  to  the  single 
market  no  additional  charges  would  be permitted  for  these.  Essentially,  two-part 

38 

tarrifs  and  negotiated  and  published  ramsey  prices  would  be  allowed,  provided 
certain conditions were met to avoid distortions of competition24. 

Incentives for efficient  use 

71.  A  number  of  measures  are  required  to  encourage  optimal  utilisation  of 
infrastructure  capacity  and  fair  access.  It  is  important  to  ensure  that  capacity  is 
used when booked. Financial  incentives can be created to achieve this. In addition 
general arrangements need to be defined  for the return of capacity which has been 
requested  but  is  not  used  so that  this  does  not  artificially  obstruct  the  use  of  the 
infrastructure.  To  provide 
the 
infrastructure  manager  to  ensure  that  operations  are  not  disrupted  it  is  also 
desirable  that  economic  signals  are  provided  about  the  cost  of  this.  This  can  be 
achieved  through  a  performance  scheme.  Specific  arrangements  may  also  be 
required  where  an  infrastructure  manager  wishes  to  optimise  infrastructure  use 
through  dedicating  specific  infrastructure  for  a  particular  purpose.  This  may  for 
example  be  desirable  for  certain  freight  lines  or  high  speed  track.  Where  this 
results  in  a more  optimal  use  it  is  of  course  desirable,  however  some  safeguards 
are  also  needed.  The  proposal  contains  various  provisions  that  are  aimed  at 
ensuring these objectives. 

railway  undertakings  and 

incentives 

for 

Authorised  applicants 

72.  A number of different  parties have an interest in access to railway capacity. While 
this  is  of  essential  importance  to  railway  undertakings  since  only  they  can  run 
railway  services, it is essential that those others who wish to use railway  services 
but  require  certainty  about  their  future  needs  and  their  ability  to  receive  an 
attractive  service  can also have necessary  rights. It is proposed  that  all persons or 
legal  entities  with  a  commercial  or  public  service 
in  procuring 
infrastructure  capacity for  the operation  of railway  services  can  do  so  (authorised 
applicants). Licensed railway undertakings would  all be authorised  applicants, but 
other  bodies  such  as,  shippers  and  local  governments,  may  also  choose  to  apply 
for  this  status.  Obviously,  only  licensed  railway  undertakings  with  access  rights 
defined  in  Directive  91/440/EEC  (or  wider  rights  granted  by  Member  States) 
could actually carry out rail services. 

interest 

International train services as part of the timetabling process 

73. 

timings  and 

To  ensure  effective  international  coordination  of  capacity  allocation  requires  a 
harmonisation  of  certain 
for 
international  train  paths  at  an  early  stage  of  the  timetabling  process.  This  is 
proposed..  In addition to ensure the efficiency  of the process and to guarantee the 
ability  of  different  undertakings  to  participate  in  the  process  it  is  desirable  to 
establish general rules about making an application  and the scheduling process. A 
similar  purpose  is  served  through  ensuring  that  a broad  set  of  general  principles 
are followed  when undertaking capacity allocation. 

the  consideration  of  requests 

24  These concepts are discussed  in "Fair payment for  infrastructure  use: A phased approach to a common 

transport  infrastructure  charging framework in the EU", COM(1998) 466  final. 

39 

Infrastructure  scarcity 

74.  Where  capacity  is  scarce, common  rules  are  desirable  to  guarantee  fair  treatment 
and to promote efficient  infrastructure  use. Rules are therefore  proposed  to  define 
the  coordination  process  and  procedures  when  absolute  scarcity  arises.  These 
procedures  are  linked  with  specific  rules  for  addressing  an  absolute  shortage  of 
capacity  through  an  analysis  of  its  use  and  then  a  requirement  to  develop  an 
enhancement plans where this is appropriate. 

Short notice requests and the use of Information  Technology 

75.  A specific  challenge concerns  services which cannot be planned  long in advance. 
These  are often  poorly  served  and measures  are therefore  proposed  to  ensure that 
short-notice  requests  can be  adequately  accommodated  on the  network.  This  can 
particularly be assisted through greater use of Information  Technology. 

Resolving disputes 

76. 

The nature of the allocation process with a constrained time schedule coupled with 
decisions  that  to  some  degree  will  be  matters  of judgement  and  may  result  in 
commercial  benefit  to  undertakings  point  to  the  likelihood  of  disputes  arising. 
While unfair treatment must be open to appeal, it is also desirable to ensure that an 
arbitration  process 
resolution  of 
straightforward  disputes. 

is  available 

to  enable 

speedy 

the 

Section  5 

Legal base 

77. 

This  proposal  is  put  forward  on  the  basis  of  Article  75  of  the  Treaty  and  is 
therefore  of exclusive competence of the Community. 

Means of Action 

78. 

The  Community  has  already  taken  legislative  action  to  lay  down  broad  rules  for 
the  allocation  of  capacity  and  charging  for  the  use  of  railway  infrastructure 
(Directive 95/19/EC). However, these were only applicable to services carried out 
under  directive  91/440/EEC  and  it  has  been  noted  that  they  have  not  been 
sufficient  to  overcome  problems  which  can  arise  from  legitimate  interpretations 
within  their  framework.  It  is  clear  that  a  further  defining  of  the  processes  and 
principles  to  be  used  is  needed  to  ensure  efficient  use  of  railway  infrastructure 
capacity and development  of the railway sector. This will need to take the form  of 
legislative  action, however  the proposal  is limited  to those  aspects  which need to 
be  defined  at  Community  level  and  leaves  the  administrative  and  more  precise 
details to the competent authorities of the Member States. 

Form of Legislation 

79. 

It  has  been  illustrated  that  action  needs  to  be  undertaken  for  the  development  of 
more  coherent,  non-discriminatory  schemes  of  charging  for  access  to  railway 
infrastructure  and  of  railway  infrastructure  capacity  allocation.  Nevertheless,  not 
all  aspects  of  the  schemes  need  to  be  harmonised  and  indeed  there  are  perfectly 
legitimate  reasons  for  certain  substantial  variations.  Charging  schemes  may  vary 
40 

for example, for policy reasons and also to take account for  instance of geographic 
differences  whereas  capacity-allocation  schemes  may  need  to take  account  of the 
differences  in  traffic  types.  Such  an  approach  can  be  achieved  by  the  use  of  a 
directive  which  establishes  broad  frameworks  and  principles  for  the  scheme  but 
leaves aspects and responsibility for its implementation to the Member States. 

Subsidiarity 

80.  Measures  are  required  to  ensure  fair  access  to  the  market  for  the  provision  of 
railway  services  and  to  ensure  that  charging  and  capacity-allocation  schemes  do 
not hinder the flow  of goods throughout the Community. It is apparent that where 
measures, are aimed  at ensuring  fair  access to the  market,  these  must  apply to  all 
relevant  bodies  affected.  Thus  while  it  may  be  legitimate  for  there  to  be  some 
difference  between charging systems and capacity-allocation  schemes, all  systems 
must ensure non-discrimination  between undertakings which have the right to use 
them. This measure does not address the question of access to the market but aims 
to ensure that there is equitable treatment where access rights exist. 

81. 

82. 

In view of the network nature of the railway industry and the fact  that it would be 
inappropriate  to make a distinction  between national  and  international  traffic  it is 
necessary to establish a common framework  covering all services. A proposal that 
dealt  only  with  international  traffic  would  create  unnecessary  and  counter 
productive  distortions  to  the  market.  A  charging  scheme  with  different  prices 
applying to traffic  travelling nationally or internationally  would  be  discriminatory 
and  might  be  impossible  particularly  where  a  train  might  for  instance  be 
comprised  of international  wagons travelling as part of a purely  domestic  train  as 
one  leg  of  their  journey.  Similarly  for  the  allocation  of  capacity,  national  and 
international  traffic  must  use the  same tracks  and  must  be  accommodated  within 
the  timetable.  It  is  therefore  desirable  that  processes  and  timing  are  sufficiently 
harmonised  to  ensure  that  all  services  with  a  legitimate  right  to  access  the 
infrastructure  are able to do so on a fair  and non-discriminatory  basis. To  achieve 
these benefits requires legislation at Community level.. 

It  has  been  noted  that  there  is  benefit  in  some  degree  of  harmonisation  at 
Community  level  of  the  provision  of  services  to  railway  undertakings.  The 
Common Transport Policy White Paper further  identified  the difficulty  of tackling 
charging  problems  at  the  level  of  individual  Member  States  because  of  the 
competitive  effects  on  industry  and  enterprises.  Measures  are  also  required  to 
ensure  that  the  international  allocation  of  railway  infrastructure  capacity  is 
performed  in a manner  which  complies  with the Treaty. This  clearly  falls  outside 
the competence  of  individual  Member  States  and  must  therefore  be  addressed  by 
Community legislation. 

83.  All  of  these  factors  outlined  above  make  it  clear  that  action  is  needed  at 
Community  level,  as  evidenced  by  Directive  95/19/EC,  to  define  the  broad 
principles  and  methods  of  capacity  allocation  and  charging  systems,  while 
allowing the precise details to be filled  in by Member States. It is for these reasons 
that the Commission is proposing this Directive. 

41 

Summary of current railway infrastructure  charging arrangements in 
the Community 

Austria 

Charges  comprise  an  annual  fixed  charge  per  km  of  route  used,  a  variable  charge  per 
gross tonne km, and a variable charge per train-km. 

Belgium 

A  system of infrastructure  charging  will be introduced  during  1998. The revenue  will be 
raised  from  a  system  of  variable  charges.  The  charge  applied  to  each  individual  train 
service  will  be  calculated  according  to  a  formula  involving  a  common  reference  price 
(per train-km) multiplied by  coefficients. 

Denmark 

Currently a simple charge is levied for each km of the rail network used. A new system of 
charges  will  be  introduced  in  1999,  comprising  a  fixed  annual  charge  per  line  km,  a 
variable charge and a daytime capacity charge on the most heavily used line. 

Finland 

There is a simple charge per gross tonne km, which differentiates  between passenger  and 
freight  trains,  plus  an  additional  charge  per  net  tonne  for  freight  traffic,  which  is  not 
distance related. 

France 

For high  speed,  suburban,  and  ordinary trunk  routes there  is a monthly  fixed  charge  per 
km of route, a reservation charge per train km, and a usage charge per train-km. For other 
routes there is simply a reservation charge per train km. 

Germany 

Infrastructure  charges  are  calculated  on the  basis  of  a  set  of  standard  charges  per  train-
km, which vary according  to the type and quality  of the route  and  the type  of train.  The 
basic charges may be further  adjusted  to take account of requirements for higher or lower 
degrees  of reliability;  higher  or  lower than  normal  train  weights;  discounts  are  available 
of  up  to  5%  in  respect  of  high  volumes  of  traffic,  and  up  to  6%  in  respect  of  long-
term contracts. 

Greece 

There no infrastructure  charges are at present. 

Ireland 

There are no infrastructure  charges at present. 

42 

Italy 

There are no infrastructure  charges at present. 

Luxembourg 

There are no infrastructure  charges at present. 

The Netherlands 

With the exception  of freight  freeways,  infrastructure  charges have been  set at zero until 
2000, reflecting political concerns about the impact of introducing infrastructure  charges. 

Portugal 

Rail infrastructure  charges have not yet been introduced, and the charging framework  will 
need to be approved by the regulator (who has not yet been appointed 

Spain 

There are no infrastructure  charges at present. 

Sweden 

Infrastructure  charges  currently  include:  a  fixed  charge  per  axle  per  year,  which  varies 
between different  types of rolling stock, variable charges and a traffic  control charge. 

United Kingdom 

For  franchised  passenger  services  the  charging  framework  comprises;  a  large  fixed 
charge,  a  low  variable  charge  and  a  performance  scheme.  The  overall  level  of  fixed 
charges was calculated  so as to allow the Infrastructure  manager to cover its total costs, if 
it achieves expected efficiency  improvements. 

For  other  services  charges  are  negotiated.  For  freight  services,  mark-ups  should  be 
consistent  with  a structure  of charges that  enables the recovery  of the  fixed  costs  of the 
freight  network  (but subject  to a standalone  cost ceiling on individual  charges). For non-
franchised  passenger  services,  any  mark-up  should  provide  a  share  of  the  expected  net 
benefits  from  a new service which is commensurate  with its share of the risks  associated 
with the service. 

In Northern Ireland with the exception  of some freight  services operated  by IE for  which 
it pays a simple annual fixed  charge agreed with NIR, there are currently no  infrastructure 
charges nor are there any plans to introduce infrastructure  charges. 

43 

98/0267 (SYN) 

Proposal for a 
COUNCIL  DIRECTIVE 

relating to the allocation of railway infrastructure  capacity 
and the levying of charges for the use of railway  infrastructure 
and safety  certification 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 75 thereof, 

Having regard to the proposal from  the Commission25, 

Having regard to the opinion of the Economic and Social Committee26, 

Acting  in  accordance  with  the  procedure  laid  down  in  Article  189c  of  the  Treaty  in 
cooperation with the European Parliament27, 

1.  Whereas  greater  integration  of  the  Community  railway  sector  is  an  essential 
element  of  the  completion  of  the  internal  market  and  moves  toward  achieving 
sustainable mobility; 

2.  Whereas  Council  Directive  91/440/EEC28  of  29  July  1991  on the  development  of 
the  Community's  railways  provides  for  certain  access  rights  in  international  rail 
transport  for  railway  undertakings  and 
international  groupings  of  railway 
undertakings; whereas these rights mean that railway  infrastructure  can be used by 
multiple users; 

3.  Whereas  Council  Directive  95/19/EC of  19 June  1995 on the allocation  of railway 
infrastructure  capacity  and  the  charging  of  infrastructure  fees29  set  out  a  broad 
framework  for the allocation of railway infrastructure  capacity; 

4.  Whereas  those  Directives  have  permitted  a  considerable  variation  in  the  structure 
and  level  of  railway  infrastructure  charges  and  the  form  and  duration  of  capacity 
allocation processes; 

5.  Whereas 

appropriate 

infrastructure 
coupled with  competitive  operators  will  result  in  a  better  balance  of  transport 
between modes; 

capacity-allocation 

schemes 

rail 

for 

25 

27 

26 

OJC 
OJC 
OJC 
28 
OJL237,  24.8.1991, p. 25. 
29  OJL  143, 27.6.1995, p. 75. 

44 

6.  Whereas  encouraging  optimal  use  of  the  railway  infrastructure  will  lead  to  a 

reduction in the cost to society of transport; 

7.  Whereas there are a small but growing number of undertakings  seeking to make use 

of the Community's rail  infrastructure; 

8.  Whereas  it  is  desirable  for  purchasers  of  railway  services  to  be  able  to  enter  the 

capacity-allocation process direct; 

9.  Whereas  the  charging  and  capacity-allocation  schemes  should  permit  equal 
and non-discriminatory  access  for  all  undertakings  and  attempt  as  far  as  is 
possible to  meet  the  needs  of  all  users  and  traffic 
in  a  fair  and 
non-discriminatory  manner; 

types 

10.  Whereas  charging  and  capacity-allocation  schemes  should  encourage  railway 
infrastructure  managers  to  optimise  use  of  their  infrastructure  for  society  as 
a whole; 

11.  Whereas  railway  undertakings  should  receive  clear  and  consistent  signals  from 

capacity-allocation  schemes which lead them to make rational decisions; 

12.  Whereas  it  is  desirable  to  grant  some  degree  of  flexibility  to 

infrastructure 

managers to enable a more efficient  use to be made of the infrastructure  network; 

13.  Whereas capacity-allocation and charging schemes may need to take account of the 
fact  that  different  components  of  the  rail  infrastructure  network  may  have  been 
designed with different  principal users in mind; 

14.  Whereas  the  requirements  for  passenger  services  may  often  conflict  with  the 
requirements  for  freight;  whereas  the  requirements  for  passenger  services  may 
result  in  a network  which  is more  costly  to  build  and  maintain  than  one  designed 
solely for  freight; 

15.  Whereas the needs of different  services need to be properly balanced; 

16.  Whereas  the  increasing  speed  differential  between  freight  and  passenger  rolling 
stock can lead to an exacerbation of the conflict between these two types of  traffic; 

17.  Whereas  services  operated  under contract to  a public  authority may require  special 

rules to safeguard  their attractiveness to users; 

18.  Whereas  different  users  and  types  of users  will  frequently  have  a different  impact 

on capacity; 

19.  Whereas  the  charging  and  capacity-allocation  schemes  must  take  account  of  the 

effects  of increasing saturation of capacity and ultimately the scarcity of capacity; 

20.  Whereas  the  different  time-frames  for  planning  traffic  types  mean  that  it  is 
desirable  to  ensure that  requests  for  capacity  which  are made  after  the  completion 
of the timetabling process can be  satisfied; 

21.  Whereas 

the  speed  and 
responsiveness  of the timetabling  process  and  improve  the  ability  of  applicants  to 

technology  can  enhance 

the  use  of 

information 

45 

bid for capacity, as well as improving the ability to establish train paths which cross 
more than one infrastructure  manager's network; 

22.  Whereas,  to  ensure  the  optimum  outcome  for  operators  and  traffic  types,  it  is 
desirable to require an examination of the use of capacity when the coordination  of 
infrastructure  capacity is required to meet the needs of users; 

23.  Whereas,  in  view  of  the  monopolistic  position  of  the  infrastructure  manager,  it  is 
desirable  to  require  an  examination  of  the  available  capacity  and  methods  of 
enhancing  it  when  the  infrastructure  capacity  allocation  process  is  unable  to  meet 
the requirement of users; 

24.  Whereas a lack of information  about other railway undertaking's requests as well as 
about  the  constraints  within  the  system  may  make  it  difficult  for  railway 
undertakings to seek to optimise their capacity requests; 

25.  Whereas  it  is important  to  ensure the better  coordination  of  allocation  schemes  so 
as to ensure the improved attractiveness of rail for traffic  which uses the network of 
more than one infrastructure  manager, in particular for international  traffic; 

26.  Whereas it is important to minimise the distortions of competition which may arise, 
either between railway infrastructures  or between transport modes, from  significant 
differences  in charging principles; 

27.  Whereas  it  is  desirable  to  define  those  components  of  the  infrastructure  service 
which  are essential  to enable  an operator to provide  a service  and  which  should be 
provided in return for minimum access charges; 

28.  Whereas  investment  in  railway  infrastructure 

infrastructure 
charging  schemes  should  provide  incentives  for  infrastructure  managers  to  make 
appropriate investments where they are economically attractive; 

is  desirable  and 

29.  Whereas  any  charging  scheme  will  send  economic  signals  to  users;  whereas  it  is 
important  that those  signals to  railway undertakings  should  be  consistent  and  lead 
them to make rational decisions; 

30.  Whereas  appropriate  charging  schemes  for  rail  infrastructure  coupled  with 
appropriate  charging  schemes  for  other  transport  infrastructures  and  competitive 
operators will result in an optimal balance of different  transport modes; 

31.  Whereas  it  is  desirable  to  allow  some  degree  of  flexibility  to  infrastructure 
managers to vary charges so as to encourage more efficient  use of the  infrastructure 
network  for  example  the  ability  to  vary  train  paths  or  a  long-term  commitment 
by operators; 

32.  Whereas, to enable the establishment  of appropriate and fair  levels of  infrastructure 
charges, infrastructure  managers  should  record  and  establish  the  valuation  of their 
assets  and  develop  a  clear  understanding  of  cost  factors  in  the  operation  of 
the  infrastructure; 

46 

33.  Whereas  it  is  desirable  to  ensure  that  account  is  taken  of  external  costs  when 
making  transport  decisions  as  outlined  in  the  Commission's  Green  Paper  on  Fair 
and Efficient  Pricing30; 

34.  Whereas  it  is  desirable  for  any  infrastructure  charging  scheme  to  enable  traffic  to 
use the rail network which can at least pay for the additional  cost which it imposes 
on society; 

35.  Whereas while negotiations for individual train paths could reflect  the market value 
of the access, disparity  of information  may result  in poor outcomes  and the  burden 
of the negotiations may be excessive; 

36.  Whereas  a  railway  infrastructure  is  a  natural  monopoly;  whereas  it  is  therefore 
necessary  to  provide  infrastructure  managers  with  incentives  to  reduce  costs  and 
manage their infrastructure  efficiently; 

37.  Whereas  it is important to  ensure that  charges  for  international  traffic  are not  such 

as to prevent rail from meeting the needs of the market; 

38.  Whereas the overall level of cost recovery through infrastructure  charges will  affect 

the necessary level of government  contribution; 

39.  Whereas  discounts  which  are  allowed  to  operators  must  relate  to  actual  cost 

savings experienced; 

40.  Whereas  it  is  desirable  for  railway  undertakings  and  the  infrastructure  manager  to 

be provided with incentives to minimise disruption of the network; 

41.  Whereas  the  allocation  of  capacity  is  associated  with  a  cost  to  the  infrastructure 

manager,  payment for which should be required; 

42.  Whereas, in accordance with the principles of subsidiarity and proportionality as set 
out  in  Article  3b  of  the  Treaty,  the  objectives  of  this  Directive,  namely  to 
coordinate  arrangements  in  the  Member  States  governing  the  allocation  of 
railway infrastructure  capacity  and the charges made  for  the use thereof,  cannot  be 
sufficiently  achieved  by the Member  States  in view  of the  need  to  ensure  fair  and 
non-discriminatory  terms for  access to the infrastructure  as well  as to take  account 
of the  manifestly  international  dimensions  involved  in the  operation  of  significant 
elements  of  the  railway  networks,  and  can  therefore,  by  reason  of  the  need  for 
coordinated  trans-national  action,  be  better  achieved  by  the  Community;  whereas 
this  Directive  confines  itself  to  the  minimum  required  in  order  to  achieve  those 
objectives and does not go beyond what it necessary for that purpose; 

43.  Whereas  Council  Regulation  (EEC)  No  2830/77  of  12  December  1977  on  the 
measures  necessary  to  achieve  comparability  between  the  accounting  systems  and 
annual  accounts  of railway  undertakings31,  Council  Regulation  (EEC) No  2183/78 
of  19 September  1978  laying  down  uniform  costing  principles  for  railway 
undertakings32, and Council Decision  82/529/EEC of  19 July  1982 on the fixing  of 

30  COM(95) 691 final. 
31  OJL 334, 24.12.1977, p. 13. 
32  OJ L 258, 21.9.1978, p. 1. 

47 

rates  for  the  international  carriage  of  goods  by  rail33,  all  of  which  were  last 
amended  by  the  Act  of  Accession  of  Austria,  Finland  and  Sweden,  are  now 
superseded and should therefore  be repealed; 

44.  Whereas  the  requirements  of  Directive  95/19/EC  relating  to  safety  certification 
should be replicated in this Directive; whereas Directive 95/19/EC should  therefore 
be repealed, 

HAS ADOPTED THIS DIRECTIVE: 

CHAPTER I 

Introductory  provisions 

Article 1 

Scope 

1. 

2. 

3. 

4. 

This Directive concerns the principles and procedures to be applied with regard to 
the  setting  and  charging  of  railway  infrastructure  charges  and  the  allocation  of 
railway  infrastructure  capacity.  Member  States  shall  ensure  that  charging  and 
capacity-allocation  schemes  for  relevant  railway 
the 
principles  set  down  in  this  Directive  and  allow  the  infrastructure  manager  to 
market and make optimum effective  use of the available infrastructure  capacity. 

infrastructure 

follow 

This  Directive  applies  to  main-line  railway  infrastructure  used  for  domestic  or 
international rail services. 

Stand-alone  local  passenger  networks,  and  networks  such  as  tram  or  light  rail 
which  can  solely  be  used  for  the  provision  of  urban  and  suburban  passenger 
services, are excluded from the scope of this Directive. 

Privately  owned  networks  that  exist  solely  for  the  use  by  the  owner  for  its  own 
freight  operations are also excluded from the scope of this Directive. 

Railway undertakings and international  groupings the business of which is limited 
to  providing  shuttle  services  for  road  vehicles  through  the  Channel, Tunnel  are 
excluded from the scope of this Directive. 

Article 2 

Definitions 

For the purpose of this Directive: 

(a) 

'Allocation'  means  the  allocation  of  railway  infrastructure  capacity  by  an 
infrastructure  manager or allocation body. 

33  OJL234,  9.8.1982, p. 5. 

-  48 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

(i) 

G) 

(k) 

(1) 

(m) 

(n) 

'Authorised  applicant'  means  a  person  or  legal  entity  with  a  commercial  or 
public  service  interest  in  procuring  infrastructure  capacity  for  the  operation  of  a 
railway  service, who has complied with the necessary requirements to enable him 
to  seek  to  book  capacity  and  who  wishes  to  reserve  the  use  of  capacity  on  the 
relevant railway infrastructure.  This shall include licensed railway undertakings. 

'Capacity-constrained  infrastructure'  means  a  section  of  infrastructure  for 
which demand for  capacity cannot be fully  satisfied  even after  coordination  of the 
different  request for  capacity. 

'Capacity  enhancement  plan'  means  a  measure  or  series  of  measures  with  a 
timetable  for  their  implementation  which  are  proposed  to  alleviate  the  capacity 
constraints  leading  to  the  declaration  of  a  section  of  infrastructure  as  "capacity 
constrained  infrastructure". 

'Coordination'  means  the  process  through  which  the  allocation  body  and 
authorised  applicants  will  attempt  to  resolve  situations  in  which  there  are 
conflicting  applications for infrastructure  capacity. 

'Framework  agreement'  means  a  general  agreement  setting  out  the  railway 
infrastructure  capacity  needs of an authorised  applicant  over  a period  longer  than 
one timetable period. 

'Infrastructure  capacity'  means  the  potential  to  schedule  train  paths  on  an 
element of  infrastructure. 

'Infrastructure  manager'  means  any body or undertaking  that  is responsible  for 
establishing and maintaining railway  infrastructure. 

'Network'  means  the  entire  railway  infrastructure  owned  and  managed  by  an 
infrastructure  manager. 

'Network  statement'  means  the  statement  which  sets  out  in  detail  the  general 
rules,  deadlines,  procedures  and  criteria  concerning  the  charging  and  capacity-
allocation  schemes.  It  shall  also  contain  such  other  information  as  is required  to 
enable application for capacity. 

'Railway  undertaking'  means  any public  or  private  undertaking  the  business  of 
which is to provide rail services for the transport  of goods and/or passengers  with 
a requirement that the undertaking must ensure traction. 

'Regulatory  body'  means the  organisation  which  is charged  with  overseeing  the 
processes of railway infrastructure  capacity allocation and charging schemes. 

'Scheduling  process'  means  the  process  which  begins  with  applications  for 
infrastructure  capacity  and  is  completed  with  the  production  of  the  working 
timetable. 

'Short  notice  request'  means  a  request  for  capacity  which,  .because  the 
requirement  is not known sufficiently  far  in advance, cannot be requested  through 
the normal scheduling process. 

49 

(o) 

(p) 

1. 

2. 

'Train path' means the infrastructure  capacity needed  to run  a train between two 
places over a given time-period. 

'Working  timetable'  means  the  data  defining  all  planned  train  and  rolling-stock 
movements  which will  take place  on the relevant  infrastructure  during the  period 
for which it is in force. 

Article 3 

Network statement 

The  infrastructure  manager  shall,  in  consultation  with  authorised  applicants  and 
other interested parties, develop and publish a network  statement. 

The  network  statement  shall  set  out  the  nature  of  the  infrastructure  which  is 
available  to  railway  undertakings.  It  shall  contain  information  setting  out  the 
conditions  for  access  to  the  relevant  railway  infrastructure.  It  shall  contain  a 
separate  section  setting  out  charging  principles,  and  tariffs  where  appropriate,  as 
specified  in Article 7 and a section setting out capacity allocation criteria and rules 
as specified  in Article  17. It shall also contain detailed  information  on procedures 
and deadlines to be  followed. 

3. 

The network  statement  shall be made  available to  all parties that  are or may wish 
to be authorised applicants, at a charge not exceeding its cost of publication. 

4. 

The network statement shall be kept up to date, and modified as necessary. 

CHAPTER II 

Infrastructure  charges 

Article 4 

Establishing, determining and collecting charges 

Member  States  may  establish  a  charging  framework  while  respecting  the 
managerial  independence  laid  down  in  Article  7  of  Directive  91/440/EEC.  The 
establishing  of specific  charging rules, the determination  of charges  for the use of 
infrastructure  and  the  collection  of  those  charges  shall  be  performed  by  the 
infrastructure  manager. 

the 

infrastructure  manager, 

form,  organisation  and 
in 
Where 
decision-making  functions,  is  not  independent  of  any  railway  undertaking,  the 
function  referred  to  in  paragraph  1  and  described  in  this  Chapter  shall  be 
performed  by  a  charging  body  that  is  independent  in  its  legal  form  and 
organisation and decision-making from any railway undertaking. 

legal 

its 

Infrastructure  managers  shall  collaborate  to  achieve  the  efficient  operation  of 
train services  which  cross  more  than  one  infrastructure  network.  They  may 
establish  such joint  organisations  as  are  appropriate  to  enable  this  to  take  place. 
Any collaboration  or  joint  organisation  shall  be  bound  by  the  rules  set  out. in 
this Directive. 

50 

1. 

2. 

3. 

4. 

5. 

Except  where  specific  arrangements  are  made  under  Article  9(1),  infrastructure 
managers  shall  ensure  that  the  charging  system  in  use  is  based  on  the  same 
principles over the whole of their network. 

Infrastructure  managers  shall  ensure  that  the  application  of  the  charging  system 
results  in  objective,  equivalent  and  non-discriminatory  charges  for  different 
railway undertakings that perform  services of equivalent nature in a similar part of 
the market. 

6. 

An  infrastructure  manager  or  charging  body  shall  respect  the  commercial 
confidentiality  of information provided to it by authorised applicants. 

Article 5 

Services 

1. 

2. 

Railway  undertakings  shall  be  entitled  to  the  package  of  services  that  are 
described  in  the  Annex  as  the  minimum  access  package  as  well  as  those  of  the 
services described in the Annex as access services which are required. 

To ensure the safe operation of the network, railway undertakings may be required 
by the infrastructure  manager to procure  a number  of  services. These  services are 
described  in  the  Annex  as  mandatory  services  and  may  be  supplied  by  the 
infrastructure  manager  or  by  some  other  body  approved  by  an  independent 
regulatory body. 

3.  Where the  infrastructure  manager  offers  any  of the range  of  services  described  in 
the  Annex  as  additional  services  he  shall  supply  them  upon  request  to  an 
authorised  applicant. 

4. 

Railway  undertakings  may  request  a  further  range  of  ancillary  services,  listed  in 
the  Annex,  from  the  infrastructure  manager  or  from  other  suppliers.  The 
infrastructure  manager is not obliged to supply these services. 

Article 6 

Infrastructure  cost and accounts 

1. 

2. 

3. 

Member  States  shall  lay  down  conditions,  including  where  appropriate  advance 
payments,  to  ensure  that  the  accounts  of  an  infrastructure  manager  shall,  under 
normal business conditions over a reasonable time period, at least balance  income 
infrastructure  charges,  surplus  from  other  commercial  activities  and 
from 
State aid,  on the  one  hand,  and  infrastructure  expenditure  on  the  other.  Such  aid 
shall be made in accordance with Articles 77, 92 and 93 of the Treaty. 

to 
Infrastructure  managers  shall,  due  regard  being  had 
maintaining and  improving  the  quality  of  the  infrastructure  service,  be  provided 
with  incentives to reduce  the  costs  of provision  of  infrastructure  and the  level  of 
access charges. 

to  safety  and 

Member  States  shall  ensure  that  the  provision  set  out  in  paragraph  2  is 
implemented,  either  through  a  contractual  agreement  between  the  competent 
authority and infrastructure  manager covering a period of not less than three years 

51 

which  provides  for  State  aid  as  referred  to  in  paragraph  1,  or  through  the 
establishment of an appropriate regulatory scheme with adequate powers. 

4.  Where a contractual agreement as described  in paragraph 3 exists, the terms of the 
contract  and  the  structure  of the payments  agreed  to  provide  financial  support  to 
the  infrastructure  manager  shall  be  agreed  in  advance  to  cover  the  whole  of  the 
period of the contract. 

5. 

6. 

1. 

2. 

Infrastructure  managers shall develop and maintain an inventory of assets that they 
manage,  which  shall  contain  their  current  valuation  as  well  as  details  of 
expenditure on enhancement and renewal of the  infrastructure. 

The  infrastructure  manager  shall  establish  a  methodology  for  apportioning  costs 
between  different  types  of  rolling  stock  and  operations,  based  upon  the  best 
available understanding of cost causation. 

Article 7 

Statement of charges and charging schemes 

The  infrastructure  manager  shall,  in  consultation  with  the  authorised  applicants 
and other  interested  parties, prepare  a statement  of charges  and  charging  schemes 
for inclusion in the network  statement. 

The  statement  shall  contain  appropriate  details  of  the  charging  scheme  and 
sufficient  information  on  charges  that  apply  to  the  services  listed  in  the  Annex 
which  are provided  by only one supplier. The statement  shall  contain  information 
on the charging scheme in force as well as indications of likely changes in charges 
for the following five years. It shall contain a general analysis of sales and income 
which  does not permit identification  of the charges payable by an undertaking  for 
a specific  service. 

3.  Where  an  infrastructure  manager  implements  a  discount  scheme  as  defined  in 
Article  10, a performance  scheme  as defined  in Article  12, or reservation  charges 
as  defined  in  Article  13, then  details  of  these  schemes  shall  be  included  in  the 
statement of charges. 

4. 

5. 

Upon  receiving  a reasonable  request  from  an  authorised  applicant,  the  regulatory 
body  shall  require  infrastructure  managers  to  make  available  to  the  regulatory 
body,  within  one  month  and  free  of  charge,  sufficiently  detailed  costing 
information  used  for  infrastructure  charge calculations  as well  as data  illustrating 
the  basis  on  which  they  establish  and  apportion  costs  between  different  types  of 
rolling  stock  and  services  to  enable  that  applicant  to  satisfy  himself  that  the 
charges comply with the requirements of this Directive. 

To  permit  the  assessment  of  the  feasibility  of  operation  of  a  service  an 
infrastructure  manager shall provide free  of charge, within one month of a request 
from  an  authorised  applicant,  information  on  charges  which  would  apply  for 
rolling stock types or services which are not covered in the published  information. 

52 

1. 

2. 

3. 

4. 

5. 

6. 

Article 8 

Principles of charging 

Charges  for  the  use  of  railway  infrastructure  shall  be  paid  to  the  infrastructure 
manager and used to fund his business. 

Member  States  may  require  the  infrastructure  manager  to  provide  all  necessary 
information  on the charges imposed to satisfy  them that the charges are levied on a 
non-discriminatory basis. 

Without prejudice  to paragraph  5, the infrastructure  charge  for  the use of  railway 
infrastructure,  which  comprises  the  minimum  access  package  and  any  of  the 
access services required, shall be set at the cost that is directly incurred  as a result 
of the operation of the train. 

The infrastructure  manager  shall include  in the infrastructure  charge a sum which 
reflects  the  scarcity  of  capacity.  This  charge  shall  only  be  levied  on  identifiable 
segments  of  the  infrastructure  which  are  subject  to  capacity  constraints.  The 
determination  of the  level  of  this  charge  shall  be  based  on  a methodology  about 
which  interested  parties  shall  be  consulted  in  advance.  The  methodology 
employed shall be described in the statement of charging principles. 

The infrastructure  charge may be modified  by a charge to take account of the cost 
of the external  effects  arising from  the  operation  of the train.  Such a charge  shall 
be differentiated  as a function  of the magnitude  of the effect  caused.  The level of 
these  charges  shall  be  based  on  a  published  methodology  on  which  railway 
undertakings  that  are either using or may wish to use the infrastructure  have been 
consulted. In the absence of any comparable  level of charging  of external  costs in 
other,  competing  modes  of  transport,  any  such  charges  shall  result  in  no  overall 
change  in  revenue  to  the  infrastructure  manager.  In  situations  where  the 
incorporation of an external charge component leads to additional revenue, it is for 
Member States to decide how the revenue shall be used. 

To  avoid  undesirable  excessive  fluctuations, 
in 
paragraphs 3,  4  and  5  may  be  averaged  over  a  reasonable  spread  of  trains  and 
times. Nevertheless, the relative  magnitudes  of the  infrastructure  charges  shall be 
related to the relative difference  in costs, between services. 

the  charges  referred 

to 

7.  Where services listed in the Annex as additional, mandatory and ancillary  services 
may only be supplied by one supplier then the charge imposed for the service shall 
relate to the cost of their provision based upon the actual level of usage. 

8. 

Charges  shall  be  levied  for  capacity  used  for  the  purpose  of  infrastructure 
maintenance.  These  charges  shall  not  exceed  the  net  revenue  loss  to  the 
infrastructure  manager due to the effects  of the maintenance. 

Article 9 

Exceptions to charging principles 

1. 

In exceptional  circumstances  and  for  specific  projects,  charging  arrangements  for 
the use of  infrastructure  or improvements  to  existing  infrastructure  may be  based 
53 

on  the  long-run  additional  costs  arising  from  the  investment  made,  including  a 
reasonable  rate  of return.  Charges  may  only be  set  on this  basis  on the  condition 
that the infrastructure  manager demonstrates to the regulatory body that: 

(a) 

the investment required would not otherwise have been made; and 

(b) 

the investment and the charging  scheme together  result  in an  improvement 
in economic  efficiency. 

Member  States should in principle seek to ensure that any service which is able to 
pay at least the cost which it gives rise to, is not prevented by the charging  scheme 
from  utilising  infrastructure  capacity.  Where a charging  body wishes  to recover a 
higher  level  of  costs  than  that  permitted  by Article  8(3), (4)  and  (5), then  it may 
only  do  so,  for  services  other  than  freight,  by  imposing  additional  charges 
following  one of the sets of rules laid down in paragraphs 3, 4 and 5. 

A fixed  charge  may  be  levied  on the railway  undertaking  making  greatest  use  of 
an element  of infrastructure  and  a system  of fixed  and variable  charges  levied  on 
other  railway  undertakings.  For  this  purpose,  the  network  may  be  divided  into 
elements;  each  element  of  the  infrastructure  shall  be  no  less  than  1  000 km  in 
length. The charge  shall be based  upon, and  shall  not  exceed,  the costs which  are 
associated  with  the  infrastructure  element  but  which  are  not  covered  by  the 
charges  set out  in Article  8(3). Where a fixed  charge  is levied, the  charging  body 
shall  ensure  that,  when  performing  an  equivalent  service  at  the  same  time  in 
the same  market,  other  railway  undertakings  shall  not  face  an  average  charge  or 
a charge  for  running  an  additional  service  either  of  which  is  more  than  10% 
greater than that which is paid by the railway undertaking making the greatest use 
of the element. 

Charges  may  be  increased  and  modulated  through  negotiation  in  relation  to  the 
elasticity  of demand  for  different  services  or types  of  services. This  may  only be 
permitted  under the  close  supervision  of a regulatory  body  and  where  safeguards 
are in place which ensure that charges to users who are dependent on rail transport 
are not excessive. Regulatory  bodies  shall, after  consultation, prepare  and publish 
rules to  be  followed.  Charges  defined  in this way  shall  be  included  in  a  contract 
between the infrastructure  manager and the authorised  applicant. 

The  infrastructure  manager  may  publish  tariffs,  distinguishing  between  different 
clearly  defined  traffic  types,  which  reflect  the  willingness  to  pay  more  than  the 
costs  that  they  impose.  This  may  only  be  permitted  in  circumstances  where 
safeguards  are  in place  which  ensure  that  charges to  users  who  are  dependent  on 
rail  transport  are  not  excessive  and  that  arrangements  are  in  place  to  ensure  that 
traffic  which  can  at  least  pay  the  additional  costs  which  it  imposes  may  be 
accepted.  Regulatory  bodies  shall  supervise  the  tariffs  for  different  traffic  types 
and ensure that they are appropriate. 

2. 

3. 

4. 

5. 

54 

Article 10 

Discounts 

1.  Without  prejudice  to  Articles  85,  86  and  90  of  the  Treaty,  any  discount  on  the 
charges  levied  on  a  railway  undertaking  by  the  infrastructure  manager,  for  any 
service, shall comply with the criteria set out in paragraphs 2, 3 and 4. 

2. 

3. 

4. 

1. 

2. 

3. 

1. 

Discounts  shall  not  exceed  the  actual  cost  saving  to  the  infrastructure  manager 
from  the  operation  in  comparison  with  a  single  isolated  equivalent  journey.  In 
determining the level of discount, no account may be taken of cost savings already 
internalised in the charge levied. 

Discounts may only relate to charges levied for a specified  infrastructure  section. 

Separate discount schemes shall apply for different  types of service. 

Article 11 

Compensation schemes for unpaid marginal external and infrastructure  costs 

Member  States may put  in place a time-limited  scheme to compensate  for the use 
of  railway  infrastructure  for  the  demonstrably  unpaid  marginal  external  and 
infrastructure  costs of other transport modes in so far  as these exceed the marginal 
external and infrastructure  costs of rail. 

The  methodology  used  and  calculations  performed  must  be  publicly  available.  It 
shall  in particular  be possible  to  demonstrate  the  specific  uncharged  costs  of  the 
competing  transport  infrastructure  that are avoided  and to  ensure  that the  scheme 
is granted on non-discriminatory terms to undertakings. 

Member  States shall ensure that  such a scheme is compatible  with Articles 77, 92 
and 93 of the Treaty. 

Article 12 

Performance  scheme 

Infrastructure  charging  schemes  shall  encourage  railway  undertakings  and  the 
infrastructure  manager to minimise disruption and improve the performance  of the 
railway  network.  This  shall  be  achieved  through  a  performance  scheme  which 
provides  for  penalties  for  actions  which  disrupt  the  operation  of  the  network, 
compensation  for  undertakings  which  suffer  from  disruption  and  bonuses  that 
reward better than planned  performance. 

2. 

The  basic  principles  of  the  performance  scheme  shall  apply 
the network. 

throughout 

55 

Article 13 

Reservation charges 

1. 

2. 

3. 

Infrastructure  managers  may  levy  a  charge  for  capacity  that  is  requested  but  not 
used according to the principles set out in paragraphs 2 to 6. 

The charge shall be utilised in such a manner as to provide incentives for  efficient 
use of capacity. 

Where  all  requests  for  capacity  can  be  satisfied  without  coordination,  the  charge 
shall, as a maximum, be no greater than the costs of providing the path. 

4.  Where coordination  is required, the charge shall, as a maximum, reflect  the value 

of the capacity requested. 

5. 

6. 

1. 

2. 

3. 

4. 

5. 

Special  arrangements  may  be  made  where  an  undertaking  has  an  agreement  to 
enable it to run one or more trains without specifying  the exact times of operation. 

Reservation  charges  shall  not  be  collected  until  after 
capacity requested. 

the 

time  of 

the 

CHAPTER III 
Allocation of capacity 

Article 14 

Capacity rights 

The  right  to  permit  train  operations  on railway  infrastructure  shall  belong  to  the 
infrastructure  manager of that network. 

Capacity shall be allocated  by an infrastructure  manager  and, once allocated  to an 
authorised  applicant,  may  not  be  transferred  by  the  recipient  to  another 
undertaking  or  service.  The  use  of  capacity  by  a  railway  undertaking  when 
carrying  out  the  business  of  an  authorised  applicant  who  is  not  a  railway 
undertaking shall not be considered a transfer. 

The right to use specific  railway infrastructure  capacity in the form  of a train path 
may be granted to authorised  applicants for  a maximum  duration of one timetable 
period. 

An infrastructure  manager and an authorised applicant may enter into a  framework 
agreement  for  the  use  of  capacity  on  the  relevant  railway  infrastructure  for  a 
longer term than one timetable period, in the manner laid down in Article 20. 

Infrastructure  managers  and  authorised  applicants  shall  enter  into  contracts 
that define  their  respective  rights  and  obligations  in  respect  of  any  allocation 
of capacity. 

56 

Article 15 

Capacity  allocation 

1. 

2. 

Member  States  may  establish  a  framework  for  the  allocation  of  railway 
infrastructure  capacity while respecting the managerial  independence  laid down in 
Article  7 of Directive  91/440/EEC. The infrastructure  manager  shall  establish  the 
specific  capacity  allocation  rules  and  shall  perform  the  capacity  allocation 
processes.  In  particular,  the  infrastructure  manager  shall  ensure  that  railway 
infrastructure  capacity  is  allocated  on  a  fair  and  non-discriminatory  basis  and  in 
accordance with Community law. 

Where  the  infrastructure  manager  is  not  independent  in  its  legal  form  and 
organisation  and  decision-making  from  any  railway  undertaking,  then  the 
allocation  function  shall  be  performed  by an  allocation  body.  Such  an  allocation 
body  shall  be  independent  from  any  railway  undertaking  in  its  legal  form  and 
organisation and decision making. 

3. 

Infrastructure  managers  and  allocation  bodies  shall  respect  the  commercial 
confidentiality  of information provided to them. 

Article 16 

Collaboration to allocate capacity on more than one network 

1. 

Infrastructure  managers  shall  collaborate  to  enable  the  efficient  creation  and 
allocation  of  capacity  which  crosses  more  than  one  network.  They  may 
establish such joint  organisations  as  are  appropriate  to  enable  this  to  take  place. 
Any  collaboration  or  joint  organisation  shall  be  bound  by  the  rules  set  out  in 
this Directive. 

In  particular,  they  shall  establish  an  organisation  to  coordinate  the  allocation  of 
capacity  at  an  international  level  that  includes  representatives  of  infrastructure 
managers for all railway infrastructures  whose allocation decisions have an impact 
on  more  than  one  other  infrastructure  manager.  This  organisation  may  include 
appropriate 
the 
Community.  The  Commission  shall  be  informed  and  shall  be  invited  to  attend 
meetings of the organisation as an observer. 

infrastructure  managers 

representatives  of 

from  outside 

2. 

3. 

At  any  meeting  or  other  activity  undertaken  to  permit  the  allocation  of 
infrastructure  capacity  for  trans-network  train  services,  decisions  shall  only  be 
taken by representatives of infrastructure  managers. 

The  participants  in the  collaboration  referred  to  paragraph  1 shall  ensure  that  its 
membership,  methods  of  operation  and  all  relevant  criteria  which  are  used  for 
assessing and allocating capacity be made publicly available. 

4.  Working  in  collaboration  as referred  to  in the  first  subparagraph  of  paragraph  1, 
infrastructure  managers  may  assess  the  need  for,  and  may  where  necessary 
organise  and  request  the  creation  of  international  train  paths  to  facilitate  the 
operation at short notice of freight trains. 

57 

Such pre-arranged  international  train  paths  shall  be  made  available  to  authorised 
applicants via any of the participating infrastructure  managers. 

Article 17 

Network statement - capacity  allocation 

1. 

2. 

3. 

4. 

5. 

The  infrastructure  managers  in  consultation  with  authorised  applicants,  other 
interested  parties  and,  where  appropriate,  other  infrastructure  managers,  shall 
prepare a statement  of capacity allocation principles and criteria which shall  form 
part of the network  statement. 

the 
This  statement  shall  set  out 
infrastructure  which  is  available  to  railway  undertakings  and  any  restrictions 
relating to its use, including likely capacity requirements for maintenance. 

the  general  capacity  characteristics  of 

The  statement  shall  specify  the  procedures  and  deadlines  which  relate  to  the 
capacity  allocation  process.  It  shall  contain  specific  criteria  which  are  employed 
during that process, in particular: 

(a) 

the  modalities  according  to  which  authorised  applicants  may  request 
capacity from the infrastructure  manager; 

(b) 

the requirements governing authorised applicants; 

(c) 

the schedule for the application and allocation processes; 

(d) 

the principles governing the coordination process; 

(e) 

the  procedures  which  shall  be  followed  and  criteria  used  where 
infrastructure  is capacity constrained; and 

(f) 

details of specialised infrastructure  designations; 

(g) 

any conditions by which account is taken of previous levels of utilisation of 
capacity in determining priorities for the allocation process. 

The  statement  shall  detail  the measures taken to ensure the  adequate  treatment  of 
freight  services, international services and short-notice requests. 

The  statement  shall  be  published  no  less  than  four  months  in  advance  of  the 
deadline for requests for infrastructure  capacity. 

Article 18 

Principles of allocation 

In determining  its statement  on capacity allocation, the infrastructure  manager  shall have 
regard to the necessity or desirability of factors  such as: 

(a) 

sharing  the  capacity  and  securing  the  development  of  the  infrastructure  for  the 
carriage of passengers and goods for domestic and international traffic  in the most 
efficient  and economical manner in the interests of all users of railway services; 

58 

(b) 

prevention of discrimination between undertakings or classes of undertakings; 

(c) 

promotion of competition in the provision of railway services; 

(d)  maintaining and improving service reliability levels; 

(e) 

(f) 

(g) 

satisfaction  of  reasonable  requirements  of  authorised  applicants  and 
infrastructure  manager with regard to the future  development of their businesses; 

the 

maximisation of the flexibility  available to the infrastructure  managers with regard 
to  the  allocation  of  capacity,  but  consistent  with  satisfaction  of  the  authorised 
applicant's reasonable requirements; 

prevention  of  any  imposition  of  undue  constraints  on  the  wishes  of  other 
undertakings  holding,  or  intending  to  hold,  rights  to  use  the  infrastructure  to 
develop their business; 

(h) 

appropriate  regard  to  the  financial  interests  of  providers  of  public  funds  for  the 
purchase of passenger services; 

(i) 

providing incentives for good performance. 

Article 19 

Authorised  applicants 

1. 

2. 

3. 

Applications  for  railway  infrastructure  capacity  may  only  be  made  by  an 
authorised  applicant. 

The  infrastructure  manager  may  set  requirements  with  regard  to  authorised 
applicants  to  ensure  that  its  legitimate  expectations  about  future  revenues  and 
utilisation  of  the  infrastructure  are  safeguarded.  Such  requirements  shall  be 
appropriate,  transparent  and  non-discriminatory.  The  requirements  shall  be 
published  as  part  of  the  allocation  principles  in  the  network  statement,  and  the 
Commission shall be  informed. 

The  requirements  in  paragraph  2  may  only  include  the  provision  of  a  financial 
guarantee that must not exceed an appropriate level which shall be proportional to 
the contemplated  level of activity of the authorised  applicant, and assurance of the 
capability to prepare compliant bids for capacity. 

Article 20 

Framework agreements 

1.  Without prejudice  to Articles  85, 86 and 90 of the Treaty, an authorised  applicant 
and  an  infrastructure  manager  may  enter  into  a  framework  agreement  that 
specifies  the  characteristics  of the  railway  infrastructure  capacity  required  by  the 
authorised  applicant  over  a  period  of  time  exceeding  one  timetable  period.  The 
framework  agreement shall not specify  a train path in detail, but should be such as 
to seek to meet the legitimate commercial needs of the authorised  applicant. 

59 

2. 

Framework  agreements  shall  not  be  such  as  to  preclude  the  use  of  the  relevant 
infrastructure  by other authorised applicants or services. 

3. 

.  A framework  agreement  shall  allow  for  the  amendment  or limitation  of  its  terms 

to enable better use to be made of the railway  infrastructure. 

4. 

5. 

6. 

7. 

1. 

2. 

3. 

4. 

5. 

6. 

The parties to a framework  agreement may agree penalties in the event of its being 
necessary to modify  or terminate the agreement. 

Framework  agreements  shall  in  principle  be  no  longer  than  five  years.  The 
infrastructure  manager  may  agree  to  a  longer  period  in  specific  cases.  Any  such 
exemption  shall be justified  by the existence  of commercial  contracts,  specialised 
investments or risks. 

While  respecting  commercial  confidentiality, 
framework  agreement shall be made available to any interested party. 

the  general  nature  of  each 

Users with specific  needs may wish to define  aspects of capacity in the  framework 
agreement more closely than is normally permitted,  in recognition of its economic 
importance.  Infrastructure  managers  may  take  account  of  such 
or  social 
requirements  for  more  specifically  defined  capacity, provided  that  it  is  purchased 
through a contract that recognises the cost of this to the infrastructure  manager and 
that it is compatible with the principles set out in the network  statement. 

Article 21 

Schedule for the allocation process 

The infrastructure  manager shall adhere to the schedule for  capacity allocation  set 
out in paragraphs 2 to 7. 

The working timetable shall be established once per calendar year. 

The  timetable  change  shall  take  place  at  midnight  on  the  last  Saturday  in  May. 
Where a change or adjustment  is carried out after the summer it shall take place on 
the last  Saturday in September each year and at such other intervals between these 
dates as are required. 

The  final  date  for  receipt  of  requests  for  capacity  to  be  incorporated  into  the 
working  timetable  shall  be  no more than  12 months  in  advance  of the  entry  into 
force of the timetable. 

No  later  than  11  months  before  the  working  timetable  comes  into  force,  the 
infrastructure  managers shall ensure that provisional  international train paths have 
been established in collaboration with other relevant allocation bodies as set out in 
Article  16.  Infrastructure  managers  shall  ensure  that  as  far  as  possible  these  are 
adhered to during the subsequent processes. 

Infrastructure  managers  shall  agree  international  train  paths to  be  included  in the 
working  timetable,  with  the  other  relevant  infrastructure  managers  concerned 
before  commencing consultation  on the draft  timetable. Adjustments  shall only be 
made if absolutely necessary. 

60 

7. 

No  later than  four  months  after  the deadline  for  submission  of bids by  authorised 
applicants, the infrastructure  manager shall prepare a draft  timetable. 

1. 

2. 

3. 

4. 

5. 

1. 

2. 

3. 

Article 22 

Application 

Authorised  applicants  may  apply  to  the  infrastructure  manager  to  request  an 
agreement  granting  rights  to  use  railway  infrastructure  against  a  charge  as  laid 
down in Chapter II. 

Requests  relating  to the regular  timetable  must  adhere  to the  deadlines  set  out  in 
Article 21. 

An  authorised  applicant  who  is  a party to  a framework  agreement  shall  apply  in 
accordance with that agreement. 

Authorised  applicants  may  request  capacity  crossing  more  than  one  network  by 
applying to  one infrastructure  manager.  That  infrastructure  manager  shall  then be 
permitted  to  act  on  behalf  of  the  authorised  applicant  to  seek  capacity  with  the 
other relevant infrastructure  manager. 

Infrastructure  managers  shall  ensure  that,  for  capacity  crossing  more  than  one 
network,  authorised  applicants  may  apply  direct  to  any  joint  body  which  the 
infrastructure  managers establish. 

Article 23 

Scheduling 

The infrastructure  manager shall as far as is possible meet all requests for  capacity 
including requests for train paths crossing more than one network,  and shall as far 
as possible take  account  of all  constraints  on authorised  applicants,  including  the 
economic effect  on their business. 

The  infrastructure  manager  shall  ensure  that,  except  as  set  out  in  Articles  20(7), 
25(3)  and  27,  no  priority  is  given  to  any type  of  service  or  authorised  applicant 
within the scheduling and coordination process. 

The  infrastructure  manager  shall  consult  interested  parties  about  the  draft 
timetable  and  allow  them  at  least  one  month  to  present  their  views.  Interested 
parties shall include all those who have requested  capacity as well as other parties 
who  wish  to  have  the  opportunity  to  comment  on  how  the  timetable  may  affect 
their ability to procure rail services during the currency of the timetable. 

4. 

The  infrastructure  manager  shall  take  appropriate  measures  to  deal  with  any 
concerns that are expressed. 

61 

Article 24 

Coordination  process 

1. 

During  the  scheduling  process,  when  the  infrastructure  manager  encounters 
conflicts  between different  requests then he shall attempt, through coordination of 
the requests, to ensure the best possible matching of all requirements. 

2.  When  a  situation  requiring  coordination  arises,  the  infrastructure  manager  shall 
have the right, within reasonable  limits, to propose capacity that  differs  from  that 
which was requested. 

3. 

4. 

infrastructure  manager  shall  attempt, 

the 
The 
appropriate  applicants,  to  achieve  a resolution  of  any  conflicts  in the  light  of the 
principles set out in Article  18. 

through  consultation  with 

The principles  governing the coordination process  shall be defined  in the network 
statement.  These shall  in particular reflect  the difficulty  of arranging  international 
train  paths  and  the  effect  that  modification  may  have  on  other  infrastructure 
managers. 

5.  When 

requests 

for  capacity  cannot  be  satisfied  without  coordination, 
requests 

to  accommodate  all 

shall  attempt 

the infrastructure  manager 
through coordination. 

Article 25 

Scarcity of capacity 

1.  Where after  coordination of the requested paths and consultation with applicants it 
is  not  possible  to  adequately  satisfy  requests  for  capacity  then  the  infrastructure 
manager must immediately declare that element of infrastructure  on which this has 
occurred  to  be  capacity  constrained  infrastructure.  This  shall  also  be  done  for 
infrastructure  which it can be foreseen will suffer  from  insufficient  capacity in the 
near  future. 

2.  When 

infrastructure  capacity  has  been  declared 

the 
infrastructure  manager  shall  carry  out  a  capacity  analysis  as  described  in 
Article 28,  unless  a  capacity  enhancement  plan  as  described  in  Article  29  is 
already being  implemented. 

to  be  constrained, 

3. 

4. 

5. 

When charges levied under Article 8(4) have not achieved a satisfactory  result and 
the  infrastructure  capacity  has been  declared  to  be  constrained,  the  infrastructure 
manager may in addition employ priority criteria to allocate capacity. 

The  priority  criteria  shall  take  account  of  the  importance  of  a  service  to  society, 
relative  to  any  other  service  which  will  consequently  be  excluded.  This  shall 
include taking account of the effect  in other Member States. 

The  importance  of  freight  services  and  in particular  international  freight  services 
shall be given adequate consideration in determining priority criteria. 

62 

6. 

For  capacity-constrained  infrastructure,  the  infrastructure  manager  shall,  to  an 
appropriate  degree, take  sufficient  steps to  ensure that  it  can accommodate  short-
notice  requests  which  are  foreseen  or  foreseeable  at  the  time  of  the  scheduling 
process. It shall ensure that the ability to satisfy  these requests is comparable  with 
that for requests within the timetabling process. 

7. 

The procedures  which  shall  be  followed  and  criteria  used  where  infrastructure  is 
capacity-constrained  shall be set out in the network  statement. 

Article 26 

Short-notice  requests 

1. 

2. 

3. 

4. 

1. 

2. 

The  infrastructure  manager  shall  ensure  that  at  any  time  it  is  able  to  respond  to 
short-notice  requests  for  individual  train  paths  in  no  more  than  five  days.  The 
average response time for this type of request shall be less than two days. 

Infrastructure  managers shall where necessary undertake an evaluation of the need 
for  spare  capacity  to  be  kept  available  within  the  final  scheduled  timetable  to 
enable them to rapidly respond to foreseeable  short-notice requests for capacity. 

The  infrastructure  manager  shall  ensure that  information  on  spare  capacity  which 
may  be  used  to  satisfy  short-notice  requests  is  made  available  to  all  authorised 
applicants who may wish to use this capacity. 

General statistics of response times to short-notice requests and the outcome of the 
requests shall be published for each timetable period referred  to in Article  21. 

Article 27 

Specialised  infrastructure 

Unless  suitable  alternative  routes  exist,  railway  infrastructure  capacity  shall  be 
considered to be available for the use of all types of service which conform  to the 
characteristics necessary for operation on the line. 

Where  there  are  suitable  alternative  routes  the  infrastructure  manager  may,  after 
consultation  with  interested  parties,  designate  particular  infrastructure  for  use  by 
specified  types  of  traffic.  Without  prejudice  to  Articles  85,  86  and  90  of  the 
Treaty, when  such  designation  has occurred, the  infrastructure  manager  may  give 
priority to this type of traffic  when allocating capacity. 

Such designation  shall not prevent the use of such infrastructure  by other types of 
traffic  when  capacity 
to  the 
characteristics necessary for operation on the line. 

is  available  and  when  the  train  conforms 

3. 

When  infrastructure  has  been  designated  pursuant  to  paragraph  2,  this  shall  be 
described in the network  statement. 

63 

Article 28 

Capacity analysis 

1. 

2. 

3. 

4. 

The objective  of a capacity analysis referred  to in Article 25(2) is to determine the 
restrictions on capacity which prevent requests for  capacity from  being  adequately 
met,  and  to propose  methods  of  enabling  additional  requests  to  be  satisfied.  This 
analysis  shall  identify  the reasons  for the constraints  and  what  measures might  be 
taken in the short and medium term to ease the constraints. 

The analysis shall  consider the infrastructure,  the operating procedures, the nature 
of the  different  services  operating  and  the  effect  of  all  these  factors  on  capacity. 
Any  measures  proposed  include  in  particular  re-routing  of  services,  re-timing 
services, speed alterations and infrastructure  improvements. 

A  capacity  analysis  shall  be  performed  by  the  infrastructure  manager  in 
consultation with current and prospective users of the relevant  infrastructure. 

A capacity  analysis  shall be completed  within two months  of the identification  of 
infrastructure  as capacity constrained. 

Article 29 

Capacity enhancement plan 

, 

1.  Within  six  months  of  the  completion  of  a  capacity  analysis  described  in 

Article 28, the infrastructure  manager shall propose a capacity enhancement plan. 

2. 

3. 

4. 

A capacity enhancement  plan  shall be developed  in consultation  with users of the 
relevant  capacity  constrained  infrastructure.  It  will  identify  the  reasons  for  the 
capacity constraint, the options for  enhancement, the likely future  development  of 
traffic,  constraints  on  infrastructure  development,  the  cost  of  options  including 
likely  changes  to  access  charges  and  a  cost  benefit  analysis  of  the  possible 
measures identified  to enhance capacity. 

The  proposed  plan  shall  contain  a  plan  of  the  action  that  shall  be  taken  and  a 
timetable for implementation of the measures. 

Unless  it  is for  reasons  beyond  his control, where  an infrastructure  manager  does 
not  make  progress  with  the  action  plan  identified  in  the  capacity  enhancement 
plan,  then  he  shall,  on  request  of  railway  undertakings  using  the  relevant 
infrastructure,  cease to levy any fees which are levied in respect of the shortage of 
capacity for the relevant  infrastructure. 

Article 30 

Use of train paths 

1. 

Infrastructure  managers  shall impose conditions concerning the utilisation  of train 
paths which they grant to authorised applicants as set out in paragraphs 2, 3 and 4. 

64 

2. 

3. 

4. 

1. 

2. 

1. 

For capacity constrained infrastructure,  the infrastructure  manager shall require the 
surrender of a train path which, over a period of at least one month, has been used 
on less than 75% of the occasions for which it has been booked. 

For  infrastructure  sections  where  coordination  was  required,  but  which  are  not 
capacity  constrained,  the  infrastructure  manager  may  require  the  surrender  of  a 
train path which,  over a period  of  at least  one month,  has been  used  on  less than 
75% of the occasions for which it has been booked. 

In  the  network  statement,  an  infrastructure  manager  may  specify  conditions  by 
which  it  will  take  account  of  previous  levels  of  utilisation  of  train  paths  in 
determining priorities for the allocation process. 

Article 31 

Infrastructure  capacity for  maintenance 

Requests  for  infrastructure  capacity to enable  maintenance  to be performed,  shall 
be submitted during the scheduling process. 

Adequate  account  shall  be  taken  by  the  infrastructure  manager  of  the  effect  of 
capacity reserved for track maintenance on other authorised applicants. 

Article 32 

Arbitration 

The  infrastructure  manager  shall  ensure  that  an  arbitration  procedure  capability 
which can reach a decision on a dispute within ten working days is available when 
it  allocates  railway  capacity  or  participates  in  a  joint  organisation  to  allocate 
international  railway  capacity.  The  arbitration  shall  assist  in  the  resolution  of 
disputes  relating  to  the  allocation  of  infrastructure  capacity.  The  procedures  and 
method of operation shall be agreed in consultation with authorised applicants and 
shall be published as part of the network statement. 

2.  Where  arbitration  is required, each participant  shall pay its own costs.  Additional 

costs of the arbitration shall be shared equally between the parties. 

3.  When authorised  applicants and an infrastructure  manager  or joint  organisation of 
infrastructure  managers  request  arbitration,  they  shall  commit  themselves  to 
provide all information  required to reach a decision and shall agree to be bound by 
the decision of the arbitration body. 

CHAPTER IV 

General measures 

Article 33 

Regulatory  body 

1.  Without prejudice  to Article  32, Member  States  shall establish  a regulatory  body. 
This  body  shall  be  independent  in  its  organisation,  funding,  legal  structure  and 

65 

decision-making  from  any infrastructure  manager,  charging  body,  allocation  body 
or  authorised  applicant.  The  body  shall  function  according  to  the  principles 
outlined in paragraphs 2 to 8 below. 

2. 

An  undertaking  shall  have  a  right  to  appeal  to  the  regulatory  body  if  it  believes 
that  it  has  been  unfairly  treated,  discriminated  against  or  is  in  any  other  way 
aggrieved,  and  in  particular  against  decisions  adopted  by  the 
infrastructure 
manager concerning: 

(a) 

the network  statement; 

(b) 

criteria contained within it; 

(c) 

the allocation process and its result; 

(d) 

the charging scheme; 

(e) 

level or structure of infrastructure  fees  which they are, or may be, required 
to pay. 

The  regulatory  body  shall  ensure  that  charges  set  by  the  infrastructure  manager 
comply  with  Chapter  II  and  are  non-discriminatory.  Negotiation  between 
undertakings  and  an infrastructure  manager  concerning  the  level  of  infrastructure 
charges  in  as  provided  for  in  Article  9(4)  shall  only  be  permitted  if  these  are 
carried  out  under  the  supervision  of  the  regulatory  body.  The  regulatory  body 
shall intervene  if  negotiations  are  likely  to  contravene  the  requirements  of 
this Directive. 

The regulatory body shall have the power to request relevant information  from  the 
infrastructure  manager,  authorised  applicants  and  any third  party  involved  within 
the Member State concerned, which must be supplied without undue delay. 

The regulatory body shall be required to determine any complaints and take action 
to remedy  the  situation  within  a maximum  period  of two  months  from  receipt  of 
all  information. 

A  decision  of  the  regulatory  body  shall  be  binding  on  all  parties  covered  by 
that decision. 

In the event of an appeal on a refusal  to grant capacity, or on the terms of an  offer 
of  capacity,  the  regulatory  body  shall  either  confirm  that  no  modification  of  the 
infrastructure  manager decision is required, or it shall require modification  of that 
decision in accordance with directions specified  by the regulatory body. 

Member  States shall take the measures necessary to ensure that decisions taken by 
the regulatory body are subject to judicial review. 

3. 

4. 

5. 

6. 

7. 

8. 

Article 34 

Safety  certification 

1. 

The  arrangements  for  safety  certification  for  railway  undertakings  which  are  or 
will be established  in the  Community  and the  international  groupings  which  they 

66 

form,  where  such  undertakings  and  groupings  carry  out  services  referred  to  in 
Article  10 of Directive 91/440/EEC under the conditions laid down in that Article 
shall be in accordance with paragraphs 2 and 3 of this Article. 

2. 

3. 

The  Member  States  shall  provide  that  a  safety  certificate  in  which  the  railway 
undertakings'  safety  requirements  are  set out be  submitted  in order to  ensure  safe 
service on the routes concerned. 

In order to obtain the safety  certificate, the railway undertaking  shall comply with 
the regulations  under  national  law,  compatible  with  Community  law  and  applied 
in  a  non-discriminatory  manner,  laying  down  the  technical  and  operational 
requirements  specific  to rail services and the safety requirements applying to  staff, 
rolling stock and the undertaking's internal organisation. 

In  particular,  it  shall  provide  proof  that  the  staff  whom  it  employs  to  operate 
to  in  Article  10  of 
and accompany  the  trains  providing  services  referred 
Directive 91/440/EEC  has  the  necessary  training  to  comply  with  the  traffic  rules 
applied by the infrastructure  manager and to meet the safety requirements imposed 
on it in the interests of train movement. 

The  railway  undertaking  shall  also  prove  that  the  rolling  stock  making  up  the 
trains has been  approved  by the public  authority  or by the  infrastructure  manager 
and checked in accordance with the operating rules applicable to the  infrastructure 
used.  The  safety  certificate  shall  be  issued  by  the  authority  designated  for  the 
purpose by the Member State in which the infrastructure  used is situated. 

Article 35 

Report 

The  Commission  shall,  four  years  after  entry  into  force  of  this  Directive,  submit  to  the 
Council a report, accompanied if necessary by proposals for further  Community action. 

Article 36 

Implementation 

Member  States  shall  adopt the laws, regulations  and  administrative provisions  necessary 
to  comply  with  this  Directive  from  1 January  2000.  They  shall  forthwith  inform  the 
Commission thereof. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference  is to be made. 

Article 37 

Repeals 

Regulation  (EEC)  No  2830/77,  Regulation  (EEC)  No  2183/78,  Decision  82/529/EEC, 
and  Directive  95/19/EC  are  hereby  repealed  with  effect  from  the  date  laid  down  in 
Article 36. 

67 

Article 38 

Entry into force 

This Directive shall enter into force  on the twentieth day following  that of its publication 
in the Official Journal of the European Communities. 

Article 39 

Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the Council 
The President 

68 

ANNEX 

The minimum access package shall comprise: 

(a) 
(b) 
(c) 
(d)  . 

(e) 

handling of requests for  capacity; 
the right to utilise track capacity which is granted; 
use of running track points and junctions; 
train  control  including  signalling, regulation,  dispatching  and  the  communication 
and provision of information  on train movement; 
all  other  information  required  to  implement  or  operate  the  service  for  which 
capacity has been granted. 

Access services shall comprise: 

(a) 
(b) 
(c) 
(d) 
(e) 
(f) 
(g) 

access to refuelling  facilities; 
access to passenger stations, their buildings and other  facilities; 
access to freight  terminals; 
access to marshalling yards; 
access to train formation  facilities; 
access to storage sidings; 
access to maintenance and other technical  facilities. 

Mandatory services shall comprise: 

(a) 

assistance  in  the  case  of  serious  incidents  or  serious  disturbance  to  normal 
train movements; 
police intervention where necessitated; 

(b) 
(c)  monitoring the compliance with safety and regulatory standards by undertakings. 

Additional  services shall comprise: 

(a) 
(b) 
(c) 
(d) 
(e) 
(f) 

use of electrical supply equipment for traction current; 
traction current; 
pre-heating of passenger trains; 
supply of fuel; 
shunting; 
tailor made contracts  for: 

control of transport of dangerous goods, 
assistance in running abnormal trains. 

Ancillary Services shall comprise: 

(a) 
(b) 
(c) 

access to telecommunication  network; 
provision of supplementary  information; 
technical inspection of rolling stock. 

69 

COMMISSION WORKING PAPER 

explanation of the individual articles in the proposal for a Directive relating to the 

allocation of railway infrastructure  capacity and the levying of charges for the use 
of railway infrastructure  and safety  certification 

Article 1 

1. 

2. 

This article defines the scope of the proposal. Measures are required to ensure that 
capacity  allocation  and  charging  schemes  ensure  fair  access to the  market  for  the 
provision  of railway  services and to ensure that they not hinder the flow  of goods 
throughout  the  Community.  Paragraph  1  defines  the  purpose  of  the  proposal, 
which  is  to  define  the  framework  for  the  allocation  of  railway  infrastructure 
capacity, and for charging for the use of railway  infrastructure. 

It is intended that the rules proposed here should apply to infrastructures  which are 
available  for  the  use  of  conventional  freight,  combined  transport  or  passenger 
railway  services. The proposal  is not intended to address infrastructures  which are 
specifically  constructed  and  operated  for  light  rail  services, metros  or trams.  For 
conventional rail networks which are operated solely for the use of an undertaking 
in the course of its business then equally it would not be appropriate  for the terms 
of this proposal to apply. These limits are defined  in paragraph 2. 

3. 

Paragraph  3 repeats the exclusion  contained  within Directive 95/19/EC relating to 
shuttle services through the Channel Tunnel. 

Article 2 

4. 

This article defines  a number of terms as they are used in the proposal. 

Article 3 

5. 

6. 

Paragraph  1 of this  article  requires  the  infrastructure  manager  responsible  for  the 
network  to prepare,  in consultation  with users,  a  statement.  Paragraph  2  requires 
that it shall set out: details of the network; of the schemes in force for access to the 
network;  and  the  detailed  criteria  and  procedures  which  will  be  followed.  The 
intention  is  to  ensure  that  parties  with  a right  of  access  should  be  able  to  access 
this  information,  which  they  will  require,  in  a  straightforward  manner  and 
paragraph 3 requires the publication to be made available at cost. 

It is not  intended  that  the production  of the network  statement  should  present  an 
excessive  bureaucratic  burden.  From year  to  year  the  network  and  its  constraints 
will  only change  in so far  as investment  is undertaken  or there  are  other  physical 
changes.  The  deadlines  and  data  that  are  required  in  the  submission  of  bids  are 
also likely to remain constant and matters such as the criteria for making  decisions 
in the case of  scarcity  are  also  likely to  be broadly  constant.  In view  of this, it  is 
unlikely  that  for  the  majority  of  the  information,  these  changes  will  be  very 
frequent  and paragraph 4 requires the statement to be modified  as necessary. 

70 

Article 4 

7. 

8. 

9. 

Paragraphs  1 and 2 require that the establishment  of charges and their collection is 
performed  by a body that is completely independent from  any railway undertaking. 
Where  there  is  a  complete  separation  between  the  infrastructure  manager  and 
railway  undertakings  then  the  infrastructure  manager  could  perform  this  task. 
Paragraph  3  permits  infrastructure  managers  to  coordinate 
their  charging 
activities, this is particularly  desirable for  international  services along the route of 
individual 
international 
infrastructure  managers  do  not  prevent  the  development  and  operation  of 
this  traffic. 

flows  so  as  to  ensure 

that  decisions  by 

traffic 

There may be reasons  why  an infrastructure  manager  will  wish  to  vary  its  access 
charges to influence  traffic  patterns. It might do this under political  or commercial 
pressure to favour  a specific  destination  such as a port,  or for  its own  commercial 
reasons,  e.g.  to  encourage  rail  traffic  to travel  further  over  its  own  network  thus 
resulting  in higher  revenues  for  it.  Such  distortions  are unlikely  to  result  in more 
efficient  transport  systems and therefore  should be avoided  as far  as possible. It is 
therefore  desirable  that  an  infrastructure  manager  should  employ  the  same 
charging  principles  throughout  the  network.  This  is  required  by paragraph  4  and 
will ensure that there is no distortion between routes or destinations. An exception 
is  made  in  this  paragraph  for  situations  where  specific  arrangements  have 
been made  to  facilitate  investment  that  might  require  a  departure  from  the 
standard principles. 

Paragraph  5 places  a requirement  on the  infrastructure  manager  to  ensure  that  it 
does not  discriminate  between  undertakings  operating  in the  same  market.  It  is a 
fundamental 
requirement  that  infrastructure  charges  must  not  discriminate 
between  different  users.  This  may  not  result  in  identical  charges,  but  if  two 
undertakings using the same equipment perform  the same service in a comparable 
market, then the only likely difference  in charges should relate to any cost  savings 
which the infrastructure  manager receives. Paragraph 6 requires that  infrastructure 
managers must not disclose commercially sensitive information provided to them. 

Article 5 

10. 

This  article  is  concerned  with  the  provision  of  services  to  railway  undertakings. 
Infrastructure  managers  frequently  offer  a wide range  of  services.  While  some of 
these  will  inevitably  only  have  one  supplier,  for  example  signalling,  others  can 
reasonably  be  provided  by  other  suppliers  e.g.  diesel  fuel  or  storage  facilities. 
Because of the monopoly position of the infrastructure  manager,  it is necessary to 
ensure,  as  required  by  Article  86(d)  of  the  Treaty,  that  it  does  not  abuse  its 
position  and  require  customers  to  purchase  a  bundle  of  unrelated  services  or 
charge excessively  for  those  services which only it can provide. At the same time 
it is necessary to ensure that a railway undertaking may buy the services needed to 
exercise  its right  of access. These will vary  from  a minimum  package  of  services 
required to operate a diesel train service through a range of other services that may 
be purchased if required. 

11.  Where  there  is potential  for  competing  suppliers  then  there  is a reduced  need  for 
strict  control  over  the  prices  that  may  be  charged.  There  is  merit  in  having 
harmonised  ranges  of  services  available  and  therefore  five  levels  of  service  are 
71 

proposed  and defined  in annex  1. The minimum  service package  should  comprise 
everything  which  is  required  to  enable  the  operation  of  a  diesel  powered  train. 
Providing  the  operator  is  licensed  and  the  equipment  and  operation  safety 
approved,  there  should be no obligation to make  further  expenditure. Paragraph 1 
requires  that  these  services  are  provided  to  the  railway  undertaking.  Paragraph  2 
deals with  other  services  which  the  infrastructure  manager  may require  a railway 
undertaking to procure, even though he may not  supply them.  Paragraphs  3 and 4 
concern  other  types  of  services  which  an  undertaking  will  require  to  carry  out  a 
number of activities and set out the conditions relating to them. 

Article 6 

12. 

13. 

14. 

15. 

The purpose  of  this  article  is to  ensure  that  infrastructure  managers  have  a  good 
understanding  of the value of their assets and the cost of maintaining them as well 
as of cost causation within their business and have incentives to reduce costs. The 
intention is to encourage good commercial practice and goes beyond that required 
in Directive 91/440/EEC to have separate accounts for the infrastructure  manager. 
Paragraph  1 replicates  the  requirement  in Article  6(1)  of  Directive  95/19/EC  for 
infrastructure  managers  accounts  to  balance  while  recognising 
that  such 
contributions must respect treaty obligations. 

Infrastructure  managers are in a monopolistic position and are thus less  subject  to 
competitive pressure and therefore  less likely to ensure that  costs are reduced  and 
efficiency  increased. Charging schemes can affect  the willingness of  infrastructure 
managers  to  reduce  cost.  For  example,  where  charges  are  based  upon  the 
additional  cost  imposed  by  a  train  operation,  then  the  benefits  of  any  cost 
reduction  by the infrastructure  manager  would  need  to  be passed  on  immediately 
to  railway  undertakings.  This  will  remove  any  incentive  for  the  infrastructure 
manager  to  achieve  the  improvement  in  the  first  place.  Therefore,  paragraph  2 
requires  there  to  be  an  obligation  on  the  infrastructure  manager  to  reduce  costs 
while paragraph  3 requires this to be achieved  either through  a regulatory  scheme 
or  a  contractual  arrangement  exceeding  three  years.  Paragraph  4  ensures  that 
where  a  contractual  arrangement  is  made,  this  should  define  the  level  of  State 
contributions in advance for the whole period of the contract. 

Incentives  are  also  required  to  ensure  that  investment  is  undertaken  where  it  is 
needed  and  makes  economic  sense.  Both  of  these  objectives  could  also  be 
pursued via  the  external  regulatory  scheme  or  a  contract  between  State  and 
infrastructure  manager. 

Paragraph 5 requires an inventory of assets and their valuation to be maintained by 
the  infrastructure  manager  while  paragraph  6  requires  the  establishment  of  a 
methodology  for  apportioning  cost  between  different  users  of  the  infrastructure. 
This is essential to enable charging based upon cost. 

Article 7 

16. 

This  article  requires  infrastructure  managers  to  develop  a  statement  of  their 
in 
charging  principles  for  incorporation  in  the  network  statement  defined 
Article 3. Not  only  do  efficient  charging  schemes  need  to  be  developed  but  that 
the necessary information  on the level and structure of charges needs to be openly 
available.  To  ensure  that  charges  and  charging  schemes  are  reasonable  and  fair, 

72 

infrastructure  managers  need  to  consult  all  users  of  their  network  when  they 
propose  changes  to  the  infrastructure  charging  scheme  and  this  is  set  out  in 
Paragraph  1. 

17. 

Paragraph  2  ensures  that  the  necessary  information  is  included  in  the  statement 
including  information  on  revenues  and  foreseeable  changes  in  the  charging 
scheme over the next five years. Paragraph 3 requires information  on other aspects 
of the charging scheme to be included in the statement. Paragraph 4, requires more 
detailed  data  to  be  made  available,  to  enable  current  and  prospective  railway 
undertakings  and  other  users  to  ascertain  the  cost  of  operating  existing  and 
potential  services  and  to  understand  how  modifying  their  operations  could  affect 
the  charge  incurred.  Paragraph  5  ensures  that  similar  information  will  also  be 
made  available  for  any  type  of  new  service.  Only  with  all  of  this  information 
openly available  is it possible for railway undertakings to respond  to price  signals 
relating,  for  example,  to  wear,  energy  use,  capacity  shortages  or  performance. 
These  requirements  will  lead  to  greater  efficiency  in  rail  operations  as  well  as 
facilitating the introduction of new services. 

Article 8 

18. 

19. 

The proposed charging scheme for rail infrastructure  is part of the first stage of the 
Commission's  approach  towards  ensuring  a  consistent  introduction  of  fair  and 
efficient  infrastructure  charging systems across all modes of transport  as set out in 
the  White  Paper  on  Infrastructure  Charging  in  Transport  (COM(1998)  460). 
In keeping  with  the  general  approach,  the  rail  proposal  aims  at  better  aligning 
charges  with  marginal  costs.  The  various  provisions  aim  at  bolstering  the 
competitiveness  of rail transport  by providing  a much  more  transparent,  efficient 
and  equitable  charging  structure  and  constitute  an  important  step  in  harmonising 
rail  infrastructure  charging.  The  Commission  intends  further  developing  the 
charging  system  over  time  as  part  of  the  three  stage  approach  proposed  in  the 
White Paper. 

Several  features  of the  system  are  noteworthy:  First,  as  a transitional  measure,  it 
allows  derogations  from  the marginal  cost  charging  rule, enabling  member  states 
to  seek  higher  levels  of  cost  recovery  through  a  non-discriminatory  second  tier 
charging  system.  This  is, however,  not  allowed  for  freight  transport  which  is  in 
direct competition with road haulage, a mode which, on a marginal basis, does not 
pay  for  its  avoidable  infrastructure  costs.  Moreover,  European  rail  networks  are 
predominantly  passenger  networks.  Secondly,  the  proposal  allows  compensation 
payments  for  unpaid  marginal  external  and  infrastructure  costs  in other  modes of 
transport, thereby facilitating  the establishment of efficient  relative prices between 
different  modes  of  transport.  Thirdly,  it  is  also  proposed  to  include  scarcity 
(congestion) charges. These are an integral component  of marginal  costs and their 
inclusion ensures that marginal cost based pricing can lead to satisfactory  levels of 
cost  recovery.  Their  inclusion  is  also  vital  in  order  to  ensure  that  efficient 
incentives  are  provided 
to  authorised  applicants  who  apply  for  scarce 
infrastructure,  thereby  enhancing  the  efficiency  of  the  train  path  allocation 
process.  Obviously,  their  inclusion  would  render  rail  transport  more  competitive 
vis-a-vis road transport because it ensures that incentives are in place to keep high 
value  added  traffic  on  the  rail  system.  Finally,  differentiation  of  charges  on  the 
basis  of  external  costs  is  permitted,  but  increases  in  average  charges  are  not 
allowed until equivalent charging systems are in place in other modes of transport. 
73 

20. 

21. 

22. 

As set out in the White Paper, the Commission proposes to develop a Community 
for  estimating  external  costs  and  developing  appropriate 
methodology 
charging systems. 

Paragraph  1  ensures  that  charges,  which  are  levied  for  the  use  of  railway 
infrastructure,  shall,  not  only  be  paid  to,  but  be  retained  by  the  infrastructure 
manager.  The  objective  is  to  ensure  that  the  infrastructure  manager  has  an 
incentive  to boost  traffic  volumes,  and  also  has  an  interest  in making  best  use of 
the network. If the infrastructure  manager does not retain the charges then this link 
is lost. 

Paragraph 2 requires the provision of information  by the infrastructure  manager to 
the Member  State so that it may verify  that there is no price discrimination, this is 
identical to Article 9(2) of Directive 95/19/EC. 

Paragraph  3  defines  the  basic  requirements  of  infrastructure  charges  for  the 
minimum service package. The first  sentence requires the level of the charge to be 
that  which  will  result  in optimal  use  of the  infrastructure,  that  is to  say that  fees 
should  be  based  upon  the  additional  cost  caused  by  the  operation  of  the  train. 
While this provides the basis for the charges, the charge may be higher as a result 
of other elements. 

23.'  Paragraph  4  requires  charges  to  reflect  scarcity  of  capacity.  At  high  levels  of 
capacity  utilisation,  infrastructure  managers  may  find  that  they  cannot  satisfy 
authorised  applicants'  demands  for  access.  Initially,  this  might  mean  that 
authorised  applicants  are  unable  to  obtain  the  train  paths,  or  the journey  times, 
they  would  like.  At  locations  with  extremely  high  demand,  it  may  mean  that 
services  or  authorised  applicants  are  unable  to  access  the  network  at  all.  For 
efficiency  reasons,  the  opportunity  cost  (i.e.  the  net  revenue  foregone  by  the 
infrastructure  manager  because  the  same  capacity  could  have  been  sold  to  other 
operators)  should  therefore  be  included  in  the  infrastructure  fees.  Where 
opportunity  costs  are  included  in  infrastructure  fees,  this  will  ensure  that  scarce 
capacity is allocated efficiently  between competing users. However, it is important 
in  view  of  the  monopolistic  position  of  the  infrastructure  manager,  that  he  must 
consult with interested parties to ensure that the charging methodology is optimal. 

24. 

Paragraph  5  is  concerned  with  charging  for  external  effects  arising  from  rail 
transport.  It is entirely  appropriate  and desirable  for  charging  mechanisms  to take 
account  of the  external  effects  of the  use  of the  infrastructure.  Where  competing 
modes  of  transport  do  not  pay  comparable  charges  for  external  costs,  it  is 
important  that  the  changes  in  railway  infrastructure  charges  to  reflect  different 
levels of impact on society should not disadvantage rail. This would arise through 
a net increase  in the infrastructure  manager's  revenue  and  is therefore  prohibited. 
This paragraph  should  be read  with  Article  11,  which provides  for  compensation 
schemes  where  a  competing  transport  mode  fails  to  pay  a  comparable  level 
of charges. 

25. 

It  is  important  that  such  charges  must  be  calculated  on  a  clear  and  transparent 
basis and the methods of calculation published.  Careful  consideration will need to 
be given to the use of revenues from  this type of charge. When  such  mechanisms 
are put in place they need to reflect the fact that it is not the infrastructure  manager 
who is suffering  the burden of the cost, and must not provide incentives for him to 

74 

encourage  traffic  which  is  more  damaging  to  society  because  of  the  resulting 
higher revenues. For this reason it may be desirable that revenues do not accrue to 
the  infrastructure  manager  but  are used  for  the  general  alleviation  of  impacts  and 
improvement  of the transport  situation.  In all  cases, mechanisms  to  influence  the 
level  of  external  costs  need  to  be  realistic  and  non-discriminatory  and  should  be 
developed 
the 
infrastructure. 

in  consultation  with  railway  undertakings  who  will  use 

Paragraph  6 permits  a degree  of  averaging  of  charges. There  are two  reasons  for 
this,  first  the  cost  of  continuously  recalculating  charges  and  second  the  need  for 
some  predictability.  It  may  be  costly  to  calculate  specific  charges  for  different 
types  of train  service, different  parts  of the  network  and  at  different  times  of  the 
day  or  week,  particularly  if  costs  also  change  over  time  and  therefore  would 
require frequent  recalculation. Averaging will involve a trade-off  between the cost 
of  recalculating  a  detailed  set  of  charges  and  the  accompanying  uncertainty  for 
users  set  against  the  likely  welfare  loss  (in  terms  of  under  or  over  use  of  the 
network)  from  basing  charges  on  averaged  cost  data.  The  nature  of  this  welfare 
loss  will  depend  on  the  way  in which  average  costs  are  calculated.  For  example 
the impact of averaging charges between peak and off-peak  periods is likely to be 
far  more  serious  than  the  impact  of  averaging  between  off-peak  periods  on 
different  days of the week. 

Excessive  variation  in  charges  can  make  it  difficult  for  railway  undertakings  to 
plan  services,  particularly  those  involving  major  investment  decisions  or  where 
services are planned long in advance and they require a firm price for future  access 
rights. For example, a new service introduced on a route with no capacity  shortage 
may become uneconomic if charges rise as a result of increased congestion on that 
route. Therefore, undertakings may prefer  stable prices, which would require price 
variations to be smoothed out and this is permitted. It is desirable to publish likely 
price changes over time, and this was required in Article 7(2). 

Paragraph  7  requires  the  charges  for  services  which  are  listed  as  mandatory, 
additional,  and ancillary, but which only have one supplier to relate to the cost of 
their  provision.  This  would  permit  a  reasonable  level  of  profit,  but  prevent 
exploitation  of  a  dominant  position.  Where  there  is  a  choice  between  multiple 
suppliers, competition should ensure that prices are appropriate. 

Paragraph  8 permits charges to be levied for  capacity which is taken  out of use to 
permit infrastructure  maintenance. The charges should not exceed the net revenue 
loss to the infrastructure  manager had the maintenance not been performed  and the 
track  had  instead  been  in  use.  The  levying  of  such  charges  will  provide  a  good 
economic  signal  of  the  cost  of  the  track  possession  and  provide  incentives  to 
perform  the maintenance  at the least  disruptive  times  and  find  means  of reducing 
the length of time required. 

26. 

27. 

28. 

29. 

Article 9 

30. 

This article deals with methods of covering a high proportion  of rail  infrastructure 
costs through  charges. Efficient  pricing  based  on marginal  costs  would  generally 
recover  only  a  relatively  small  proportion  of  total  rail  infrastructure  costs. 
However,  a number  of Member  States will wish to recover  a higher  level of  cost. 
There  are  a  number  of  concerns  about  this.  In  the  first  place,  this  has  distorting 

75 

effects  because  a high  level  of cost recovery  from  rail  infrastructure  has the same 
effect  as  a  tax  on  rail  infrastructure  and  such  a  tax  will  be  more  distorting  in 
its effect  than a more general tax. The need to meet cost recovery targets  accounts 
for  many  of  the  inefficiencies  in  current  charging  frameworks  in  use  in  the 
Member States. 

31.  Where  it is necessary for the infrastructure  manager to levy charges which lead to 
revenues  systematically  higher  than  marginal  cost  then  careful  consideration  is 
required of the impact of those charges on rail traffic  in general and their effect  on 
individual  railway  undertakings.  It  is  particularly  important  that  charges  are  not 
based  on  average  costs  or  anything  that  approximates  this  as  it  provides  a  major 
disincentive to attract traffic  which can cover at least the costs which it imposes. A 
number  of different  systems are possible. It is essential  that any system  employed 
is  non-discriminatory  and  this  requirement  will  lead  to  the  need  for  certain 
safeguards  depending  on the  system  employed.  It is equally  important  that  where 
there  are  classes  of  users  who  are rail  dependent,  limits  should  be  placed  on the 
charges  which  can  be  imposed  upon  them.  Finally,  even  where  a higher  level  of 
cost  recovery  is  sought,  the  system  should  still  enable  a user,  who  could  at  least 
cover the cost that he causes, to operate on the network. 

32. 

Paragraph  1  provides for  special arrangements to enable charges to be higher than 
marginal cost up to the level of the additional costs imposed in the long run, where 
this is required to cover the cost of investment. Provisions  (a) and  (b) require it to 
be  shown  that  without  charges  at this  level  the  investment  would  not  have  been 
undertaken  and  crucially that the combination  of the investment  and the  resulting 
charges will lead to enhanced efficiency  of the transport  system. 

33.  Where  a  higher  degree  of  cost  coverage  is  required  from  charges,  a  number  of 

options exist. 

34. 

The  use  of  fixed  charges,  which  do  not  vary  with  traffic  levels,  may  enable  a 
higher  degree  of cost  recovery  while  still  allowing  variable  charges  to.reflect  the 
additional  cost  of  traffic.  However,  fixed  charges  may  deter  potential  new 
undertakings, or distort competition between large and small undertakings. 

35.  Alternatively  a  higher  level  of  cost  recovery  may  be  achieved  through  variable 
charges  set  above  the  additional  cost.  There  are  a  number  of  different  ways  in 
which  this can  be  achieved,  some  of which  result  in more  distortion  than  others. 
Ramsey Pricing (which involves setting mark-ups over SRMC which are inversely 
proportional to demand elasticity) should minimise the impact on the total volume 
of  traffic. 

36. 

37. 

Paragraph 2 requires that, for freight  traffic,  infrastructure  charges may not exceed 
the  efficient  price, determined  in Article  8. For  other  traffic,  higher  charges  may 
be levied based upon paragraphs 3 to 5. 

Paragraph  3  requires  that  where  fixed  charges  are  employed,  measures  must  be 
taken  to  ensure  that  railway  undertakings  are  not  disadvantaged  through  facing 
substantially  higher  average  or  marginal  fees.  Multi-part  tariffs  where  a  fixed 
element  is payable  for  access to  a part  of  the  network  for  a  significant  period  of 
time  can  provide  a  substantial  hurdle  for  any  potential  undertaking  to  overcome 
and  will  remain  a  substantial  dis-benefit  to  undertakings  other  than  the  largest 

76 

38. 

undertaking  operating  on the  section  of infrastructure.  Fixed  charges  may  not  be 
imposed  for  short sections of track because this has the effect  of being virtually an 
average cost charge. In view of this the lower limit of an infrastructure  element  for 
the application of fixed  charges is set as 1000km. 

Paragraphs  4  and  5 deal  with  the  situation  where  mark-ups  are  used  to  assist  in 
achieving  a higher  level of cost recovery by enabling an infrastructure  manager to 
extract  maximum  revenue  from  each traffic.  Paragraph  4  deals  with  the  situation 
where charges are negotiated. Because of the great danger of discrimination  either 
deliberately  or  as  a  result  of  different  undertakings'  market  position  this  type  of 
system  can  only  be  permitted  where  there  is  an  effective  system  of  regulation 
which can ensure that deals made are not discriminatory.  The rules to be  followed 
shall be prepared by the regulatory body in consultation with users. It is important 
to  ensure  that  the. costs  of performing  the negotiations  are  not  excessive  and  that 
as  far  as  possible  undertakings  are  sufficiently  well  informed  to  be  able  to 
negotiate. Paragraph 5 deals with the situation where tariffs  are published that vary 
depending  on  market  segment.  Here  there  is  less  danger  of  discrimination 
although it is still necessary to ensure that the tariffs  are applied  in a fair  manner. 
This  system  runs  the  risk  of  pricing  traffic,  that  could  cover  the  additional  costs 
that  it  imposes,  off  the  infrastructure.  This  would  be  inefficient  and  therefore 
provision  must  be  included  to  enable  special  exemptions  to  be  made  to  enable 
such traffic  to operate. 

Article 10 

39. 

40. 

This article details limits to discount  schemes. The Commission's  decision on the 
Zaventem  airport  charges  case34  set  out  principles  which  should  govern  any 
discount  which  is  offered  by  an  undertaking  in  a  dominant  position.  The 
Commission  considered  that  in  this  case  a  system  of  discounts  could  only  be 
justified  on  the  basis  of  any  cost  savings  to  the  manager  of  the  infrastructure. 
The cost  savings  arising  from  an applicant  submitting  a large number  of  requests 
for  capacity  are  likely  to  be  quite  small  and  this  will  govern  the  likely  size  of 
any discount. 

Paragraph  2 requires  that  such  a  scheme  may  only reflect  actual  identifiable  cost 
savings  to  the  infrastructure  manager.  Where  an  infrastructure  manager  provides 
for  a  discount  scheme,  such  a  scheme  could  confer  unfair  advantage  on  one  or 
more undertakings. If a scheme applied to a whole network it is clear that the only 
undertaking  likely  to  qualify  would  be the  existing  national  railway  undertaking 
and that this must be prohibited.  This is the intention  of paragraph  3. Even where 
a  scheme  applies  at the  level  of  an  infrastructure  element  it  can  be  unfair  in that 
one undertaking  may  only  offer  freight  services  yet  for  example  both  freight  and 
passenger  services  are  counted  together  toward  the  discount  for  no  objective 
reason. This is prevented by paragraph 4. 

34  Commission Decision 95/364/EC of 28 June  1995, OJ L 216, 12.9.1995. 

77 

Article 11 

41.  Distortion  between  different  transport  modes  is  likely  to  arise  as  a  result  of  a 
failure to fully  charge users of one mode of transport or type of transport for all its 
marginal  costs.  While  full  charging  of  marginal  costs  is  the  first  best  solution, 
where  a Member  State  has  not  taken  measures  to  achieve  this  in  other  modes  of 
transport, then they must be free to provide appropriately calculated  compensation 
to  railway  operations  and  this  is  provided  for  in  paragraph  1.  Such  schemes 
shall be  calculated  to  take  account  of the  different  impact  of  transport  modes  on 
society. The compensation must be calculated  on a clear and transparent basis and 
the  methods  of  calculation  must  be  published  as  required  by  paragraph  2. 
Member States  should  take  account  of  the  comment  of  interested  bodies  when 
elaborating  such a scheme. Member  States will need  to  ensure that  such  schemes 
to  compensate  users  of  rail  infrastructure  for  specific  unpaid  external  costs  of 
competing  transport  modes  are  compatible  with  Articles  77,  92  and  93  of  the 
Treaty  as  set  out  in paragraph  3. The  Commission  is  likely  to  propose  a  specific 
exemption  in the  revision  of  Regulation  (EEC)  No  1107/70  setting  out  the  basis 
on  which  such  schemes  will  be  approved,  including  requirements  that  the  cost 
valuation  be  strictly  proven  and  that  the  scheme  be  resubmitted  for  approval  at 
regular intervals. 

Article 12 

42. 

The  charging  framework  should  provide  appropriate  incentives  for  both  railway 
undertakings  and the infrastructure  manager to improve performance.  Paragraph 1 
requires  the  introduction  of  performance  incentives  within  the  charging  system. 
Incentives  are  required  to  minimise  disruption  and  are  probably  best  achieved 
through  the  use  of  a  monitoring  process  and  performance  scheme  where 
undertakings pay penalties when they cause delay and receive compensation when 
they  are  delayed  or  bonuses  if  they  exceed  planned  performance.  Corresponding 
payments  should  arise  where  the  infrastructure  manager  is  at  fault.  If  linked  to 
charges,  an  incentive  mechanism  will  require  charges  to  vary  independently  of 
costs,  so that  revenue  may  rise  or  fall  in  response  to  good  or  poor  performance. 
Paragraph 2 requires the scheme to be applied equally throughout the network and 
to all undertakings. 

Article 13 

43. 

This  article  describes  the  framework  that  should  apply  for  the  levying  of  charges 
for  the  reservation  of  capacity.  This  expands  on  the  previous  requirements  of 
Article  12 of Directive 95/19/EC. It is important that an undertaking  should not be 
able to prevent another undertaking from  obtaining the capacity needed to  perform 
a railway service by booking large amounts of capacity. This needs to be balanced 
against  the  desirability  for  undertakings  not  to  be penalised  for  trying  to  develop 
new  services. Paragraph  2 establishes  a general  requirement  for  these  charges  to 
encourage efficient  use of the infrastructure  capacity. Paragraphs  3 and 4  describe 
the  maximum  levels  of  charge  which  may  be  levied  in  certain  circumstances. 
Paragraph  5  enables  special  arrangements  for  example  where  capacity  is  only 
required by an undertaking  on an occasional basis and  at other times the  capacity 
is  available  for  other  uses.  Paragraph  6  requires  that  any  charges  may  not  be 
collected  until  the  time  when  the  capacity  requested  has  passed.  While  the 
infrastructure  manager  should  have  adequate  assurance  that  it  will  be  able  to 

78 

collect any charges owing, the need to pay in advance would unnecessarily hamper 
development of the market and be in particular a barrier to smaller undertakings. 

Article 14 

44. 

45. 

46. 

This  article  defines  the  terms  under  which  the  right  to  use  railway  infrastructure 
capacity  may  be  granted.  This  has  important  ramifications  for  the  provision  of 
services  operated  under  contract  to  a  public  authority,  for  the  ability  for 
undertakings to develop new services, for  freight  customers to obtain  competitive 
offers  for  services they require and the development  of the railway sector. In view 
of  this  it  is  important  to  clarify  the  extent  of  the  right,  including  the  ability  to 
effect  transfers  of it. 

For  services  operated  under contract to a public  authority  it is desirable to  ensure 
that  if the  authority  decides  to  contract  with a different  supplier  of  services,  then 
the  service may continue to be purchased  by the local  authority.  This implies that 
the right to the capacity must not belong to the previous undertaking providing the 
service. There may also be situations where it is desirable for public  authorities to 
seek  capacity  for  the  operation  of  services  before  they  have  appointed  the 
undertaking that will provide the service. 

In  view  of  these  needs  it  is  desirable  that  the  ownership  of  the  capacity  of  the 
railway  infrastructure  to  carry  trains  rests  with  the  infrastructure  manager  as 
required  in paragraph  1. Paragraph  2 requires that the allocation  of these rights is 
performed  by the infrastructure  manager. Once allocated, the right must be used or 
returned  to  the  infrastructure  manager,  it  cannot  be  transferred  even  within  one 
company  since  this  would  undermine  the  role  of  the  infrastructure  manager  in 
making  decisions  on the optimal  use of the limited  capacity.  Paragraph  3 permits 
the  granting  of  right  to  applicants  to  use  specific  capacity  over  one  timetable 
period.  The allocation  of a train path for  a timetable  period provides  a short term 
right  for  the  applicant  to  use  that  train  path  subject  to  the  agreed  terms  and 
conditions of access. Paragraph 4 provides for arrangements to be made for  longer 
term capacity needs and which are dealt with more fully  in Article 20. Paragraph 5 
requires  the  establishment  of  legally  enforceable  contracts  which  specify  the 
agreements that have been entered into. 

Article 15 

47. 

This  article  sets  requirements  for  the  performance  of  capacity  allocation.  Where 
there  is  a  dominant  railway  undertaking  closely  linked  to  the  infrastructure 
manager,  other  railway  undertakings  may  have  reasonable  fears  concerning  the 
impartiality  of the allocation process. In this  case the  only effective  solution  is to 
require  that  the  allocation  process  be  performed  by  a  body  which  is  completely 
independent  from  any  user  of  the  infrastructure.  Ideally  this  will  be  the 
infrastructure  manager  as  set  out  in paragraph  1. Paragraph  2  ensures  that  where 
there  is not  a clear  legal  and  managerial  separation  of the  infrastructure  manager 
from  railway  undertakings  then  a  separate  allocation  body  must  undertake  this 
task.  Paragraph  3  requires  the  commercial  sensitivity  of  information  to  be 
respected during the allocation process. 

79 

Article 16 

48. 

49. 

50. 

To create the possibility of offering  an international train  service it is necessary to 
ensure  that  capacity  can'be  reserved  in  a  coordinated  manner  in  more  than  one 
network.  At  present  train  paths  tend  to  be  allocated  on  a national  basis  and  then 
adapted through the Forum Train Europe process to enable them to be usable. This 
can frequently  result in poor paths particularly where the service has a low priority 
e.g.  freight.  Better  coordination  is required,  with  to  as  large  a  degree  as  possible 
comparable  access  conditions,  processes  and  criteria.  Coordination  may  be  best 
performed  bi-laterally  for  services  across  a  border,  multilaterally  for  an 
international  route  such as the Freight Freeways which have been put  in place, or 
in a multilateral  forum. 

Paragraph  1 establishes  an obligation  for  infrastructure  managers to collaborate  in 
any  appropriate  manner  with  other  infrastructure  managers  to  enable the  efficient 
creation and allocation of capacity crossing multiple networks. This is of course of 
greatest  significance  for  the  international  routes.  In  any  of  these  situations  it  is 
essential  that  similar  conditions  apply  to  the  collaboration  as  to  the  individual 
bodies. This will apply in particular to; the methods of decision making, provision 
of  information,  and  confidentiality  of  information  provided  by  applicants. 
Paragraph 2 requires that an organisation be created to coordinate the international 
allocation  of  capacity.  It  acknowledges  that  such  an  organisation  will  need  to 
the 
incorporate  representatives  from  railway 
Community and requires that the Commission should be both kept informed  of the 
activities of this organisation and permitted to attend meetings. 

infrastructure  bodies  outside 

Paragraph  2  establishes  that  in  parallel  with  the  arrangements  for  individual 
infrastructure  managers,  decisions  must  be taken  only by infrastructure  managers 
and not by railway undertakings  or their representatives. Paragraph  3 requires that 
when  collaborating  in  this  way,  infrastructure  managers  shall  ensure  that 
information  on  the  membership  of  such  collaboration,  as  well  as  sufficient 
information  about  how  the  collaboration  functions  shall  be  made  available. 
Paragraph  4  permits  the  creation  of  pre-arranged  train  paths.  This  enables  the 
in  the 
operation  of  Trans  European  Rail  Freight  Freeways  as  outlined 
Commission's  Communication  COM  (97)  242  final.  Paragraph  4  requires  that 
such  train  paths  should  be  made  available  through  any  of  the  participating 
infrastructure  managers. 

Article 17 

51. 

Paragraph  1  requires  the  preparation  of  a  section  of  the  network  statement 
describing  the  framework  in  which  applications  for  capacity  will  be  considered. 
To  enable  an  efficient  allocation  process  to  be  carried  out,  it  is  important  that 
applicants understand the availability of capacity on the infrastructure  network and 
the rules and criteria which will be applied. This information,  which is required by 
paragraphs  2  and  3, forms  the  framework  within  which  applications  for  capacity 
will  be judged  and  must  be  clear  and  available  to  all  applicants.  It  provides  a 
measure against which decisions may be judged and it provides guidance to enable 
applicants  to  make  informed  requests.  Paragraph  4  requires  that  the  statement 
should  specifically  address  measures  to  tackle  the  specific  needs  of  freight, 
international  and  short  notice  services, which  have tended  to  be  poorly  served  in 
the past. To enable the statement to inform  bids for  capacity, paragraph  5 requires 
80 

that the infrastructure  manager should produce the network  statement four  months 
in advance of the deadline for the timetabling process. 

Article 18 

52. 

This  article  aims to provide  guidance  on the type of  issues  that  the  infrastructure 
manager  will  need  to  address 
in  its  capacity  allocation  statement.  The 
infrastructure  manager  is required to have regard to these  issues, but how it reacts 
and addresses any issues which arise is legitimately a matter for which it should be 
free to make decisions. The list is not intended to be exhaustive, although it covers 
the principal areas of concern. 

Article 19 

53. 

54. 

This  article  defines  which  entities  may  apply  for  railway  infrastructure  capacity. 
The ability to bid for the right to capacity is totally distinct from the right of access 
to the railway infrastructure  to operate a train  service. The latter right  is governed 
under Community law by Directive 91/440/EEC and by national  legislation where 
this provides  for  a greater  degree  of access. These rights  of access  are  associated 
licensing,  safety 
with  additional 
certification  and  compliance  with  other  appropriate  regulations  concerning 
operations of,  for example, the rolling stock. 

requirements  governing 

issues  such  as 

The ability to hold rights to railway capacity is linked to the ability to use rail for a 
transport  service.  It  is  self  evident  that  railway  undertakings  need  to  have  this 
possibility  to  enable  them  to  offer  rail  transport  services.  It  is  also  the  case  that 
there  are  other  parties  with  an  equally  legitimate  interest  in  the  use  of  rail  for  a 
transport  service,  these  will  include  purchasers  of  public  passenger  services, 
combined transport operators and industry with large volumes of freight.  There are 
a variety of reasons why these parties may wish to have the right to hold  capacity. 
In  so  far  as  a  market  exists  for  the  provision  of  train  services,  purchasers  of  a 
service  may  wish  to  have  the  freedom  to  use  different  railway  undertakings  to 
satisfy  their  business  needs.  Where  a business  is  taking  a  risk  in  developing  or. 
operating a service then it is understandable and legitimate that it should also have 
the  ability  to  control  the  factors  used  in  running  its  business.  A  customer  of  a 
railway  service  may  have  different  objectives  for  the  development  of  their 
business,  which  may  even  conflict  with  the  business  objectives  of  a  railway 
undertaking.  Businesses  may  want  greater  assurance  that  their  interests  will  be 
safeguarded  in the allocation process than can be provided  by an intermediary. In 
the case of services carried  out on contract to a public authority the authority may 
need to acquire the capacity before  it has  selected the railway undertaking,  it will 
need to ensure the continuity  of services if the undertaking  changes, and  it needs 
to ensure that the outgoing undertaking  does not  seek to  keep  any of the  capacity 
which is granted for those services. 

55. 

These  arguments  provide  overwhelming  evidence  of  the  need  to  enable  bodies 
other  than  railway  undertakings  with  a  legitimate  interest  to  seek  railway 
infrastructure  capacity.  Paragraph  1 restricts  the  ability  to  apply  for  capacity  to 
authorised  applicants.  Paragraphs  2  and  3  permit  the  setting  of  appropriate 
requirements to provide assurance that any body which submits a bid can do so in 
an appropriate manner and can pay any necessary penalties should the capacity bid 
for remain unused. 

81 

56. 

In  all  cases,  the  right  to  use  of  capacity  allocated  by  the  infrastructure  manager 
rests  with  the body to  whom  it was  allocated  for  the period  of  allocation.  Where 
the  operation  of  the  service  is  contracted  to  a  licensed  railway  undertaking,  that 
undertaking  does not  acquire  any right to the capacity used  beyond  the period  for 
which they perform the service. 

Article 20 

57. 

58. 

59. 

This article defines  the means to provide applicants with longer-term  assurance of 
capacity  through  entering  into  a framework  agreement  as  set  out  in paragraph  1. 
Applicants need to have some certainty over the type of rights that they enjoy  and 
the likelihood that those rights will be available and usable  for  a period of time in 
the future.  This is important for  undertakings'  ability to win and retain customers, 
but  also  to  underpin  their  ability  to  carry  out  investments  in,  for  example, 
equipment and in developing the service. 

The  most  desirable  type  of  right  will  vary  between  traffic  and  operator  types.  It 
may be that local passenger  services would benefit  from  relatively fixed  schedules 
over  a period  of years, whereas  for  long  distance  passenger  services  this  may  be 
less important  and  for  freight,  the most important  point may be to ensure that the 
departure  and  arrival  times  are  satisfactory.  While  these  framework  principles 
might  be  optimal  for  different  traffic  types,  the  challenge  is  to  ensure  that  a 
balance  is struck between the competing  needs. Assurance  must  be  proportionate 
to  the  applicant's  identifiable  needs  and  must  not  be  such  as  to  prevent  other 
applicants  with  a  legitimate  expectation  to  be  able  to  operate  services  on  the 
infrastructure  from  having  a  reasonable  expectation  of  acquiring  the  necessary 
capacity.  Providing  rights that  are too narrowly  defined  will  create  constraints  on 
the network capacity, which can hamper the scheduling of other services, while on 
the  other  hand,  too  little  security  will  deter  or  hinder  development  of  their 
business.  Paragraph  2  requires  that  the  arrangements  do  not  prevent  other 
legitimate users from  obtaining capacity on the network. 

The  commitment  must  include  explicit  requirements  for  flexibility,  which  will 
allow optimal use to be made of available capacity. This is set out in paragraph 3, 
while  paragraph  4 permits  these  to  be  accompanied  by penalties  if  agreed.  Long 
term  capacity  commitments  must  be  proportionate  to  need,  and  paragraph  5 
requires  that  they  must  not  normally  be allowed  to  be  for  longer  than five years. 
Paragraph  6 requires that the nature  of the agreements  entered  into must be made 
public to ensure that any concerns about their effect  can be addressed. Paragraph 7 
provides  the  means  for  authorised  applicants  that  place  a  high  value  on  meeting 
one  or more particular  characteristics  of a service  to purchase  a greater  degree of 
assurance that their commercial needs will be satisfied.  However, this must  reflect 
the cost that the additional inflexibility  will impose upon the network. 

Article 21 

60. 

This  article  determines  the  timing  of the  various  steps  in  the  allocation  process. 
There  is  considerable  merit  to  the  synchronisation  of  the  timetabling  process 
across  infrastructure  networks  to  facilitate  bidding  for  paths  which  cross  more 
than one network. A similar argument can be made to enable undertakings to more 
easily  bid  for  capacity  on  another  infrastructure  network.  In  any  case  in view  of 
the  unavoidable  linkage  between  the  international  allocation  processes  and 

82 

national  processes  it  seems  desirable  to  propose  a  synchronisation  of  the  main 
elements  within  the  process.  Paragraph  2  therefore  defines  the  dates  of  the 
major timetable  changes  as  well  as  the  maximum  period  beforehand  for  the 
submission  of  bids.  Specific  mention  is  made  of  the  timing  of  the  international 
coordination  which  must  take  place  in  parallel  with  the  national  processes  to 
ensure an optimal outcome. 

Article 22 

61. 

This  article  determines  how  applicants  may  apply  for  capacity.  Paragraph  1 
requires  that  applicants  must  apply  to  the  appropriate  infrastructure  manager  for 
capacity.  Paragraph  2  ensures  that  the  application  respects  the  deadlines  for  the 
process. Paragraph  3 requires that where an applicant has a framework  agreement, 
then their application must conform  to that agreement. Paragraphs 4 and 5 concern 
applications  for  capacity  crossing more than  one network. Paragraph  4 permits an 
application  to be made  to  one of the  infrastructure  managers  who  will  coordinate 
the granting of capacity with other relevant  infrastructure  managers.  Alternatively 
paragraph  5 ensures  that  if  infrastructure  managers  create  any joint  body  for  the 
allocation of capacity on more than one network then an authorised  applicant may 
apply directly to that body for capacity. 

Article 23 

62. 

This  article  determines  how  the  draft  timetable  shall  be  created.  Paragraph  1 
places  a  requirement  on  the  infrastructure  manager  to  attempt  to  satisfy  all 
properly  submitted  requests  for  capacity. In  doing  so, it  must  take  account  of the 
needs  of  the  applicants.  Paragraph  2  requires  that  the  infrastructure  manager 
should treat all requests for  capacity equally except as provided  for  where there is 
scarcity  of  capacity  or  specialised  infrastructure.  Paragraph  3  requires  the 
infrastructure  manager to consult interested parties about the draft  timetable.  This 
is to  ensure that  all parties  have the opportunity  to  identify  whether  the  draft  will 
be  unable  to  satisfy  their  requirements  and  to  provide  an  opportunity  for  those 
problems  to  be resolved  or  for  them  to  seek  arbitration.  It  also  provides  time  for 
possible  reallocation  of  staff  or  rolling  stock  where  required.  Paragraph  4 
require the  infrastructure  manager  to  take  appropriate  action  to  deal  with  any 
concerns raised. 

Article 24 

63. 

This  article  describes  the  process  to  be  followed  where  conflicts  arise, between 
requests. It is inevitable that as demand for the use of capacity rises on a section of 
the network that request for train paths may conflict.  Measures need to be taken to 
ensure  that  while  attempting  to  respect  the  necessary  aspects  of  the  paths 
requested,  through  making  minor  adjustments  to  the  characteristics  of  the  path 
it becomes  possible  to  accommodate  additional  requests.  This  is  set  out  in 
paragraphs  1 and  2.  Paragraph  3  establishes  the  principle  that  the  infrastructure 
manager  should  seek  to  achieve  an  optimal  resolution  of  conflicting  requests  for 
capacity.  Paragraph  4 requires that the principles to be employed  must  be  set out 
in  the  network  statement.  Paragraph  5  establishes  the  principle  that  it  is  more 
desirable  to  attempt  to  satisfy  all  requests  for  capacity  than  to  prevent  the 
operation of a requested service. 

83 

Article 25 

64. 

65. 

66. 

This  article  describes  the  procedure  where  a  request  for  capacity  cannot  be 
adequately  satisfied  due  to  a  shortage  of  capacity.  As  demand  for  train  paths 
increases  it  will  become  increasingly  difficult  to  satisfy  the  requirements  of  the 
authorised  applicants.  Initially  this  may  require  minor  differences  between 
capacity  requested  and  that  allocated.  As  demand  increases,  so  the  capacity  that 
can  be  made  available  will  often  be  unacceptable  to  users  and  it  is  possible  that 
there  may  simply  be no  suitable  capacity  available  at  all. The traditional  solution 
to this  issue was to  allocate priorities to different  traffic  types, which  would  then 
be allocated  paths with the least important  being  squeezed  out of the  system  first. 
There  are  a  number  of  reasons  why  such  a  simple  approach  is  no  longer 
acceptable. Firstly the existence of more than one railway undertaking may require 
decisions  which  require  choices  about  comparable  priority  services  of  different 
railway  undertakings.  Secondly  the  system  fails  to  give  due  consideration  to  the 
different  requirements of service types. 

In  the  situation  where  scarcity  arises  the  potential  for  coordination  will  already 
have been exhausted.  Paragraph  1 requires that in this situation, the  infrastructure 
must be declared capacity constrained. Following this, paragraph 2 then requires a 
thorough  analysis  of  the  scope  for  greater  adjustments,  than  would  normally  be 
considered  in  the  coordination  process.  Paragraph  3  permits  the  infrastructure 
manager,  when  it  must  make  a  choice  between  conflicting  requests,  after 
coordination  has been  carried  out, to base that  choice  on priority  criteria which  it 
has previously  specified.  Paragraph  4 requires  that  the  priority  criteria  must  take 
account  of  the  value  to  society  of  a  service  which  is  excluded  relative  to  one 
which is not. This must also take account of the effect  in other Member  States, for 
example additional  lorry traffic  through the Alps if an international  freight  train is 
excluded from the network in Denmark. 

Paragraph  5  notes  that  adequate  consideration  must  be  given  to  freight  and 
international  freight  when  determining  priorities.  This  implies  that  freight  should 
not  automatically  be  allocated  least  priority,  but  that  the  importance  of  services 
should  be  considered  on  their  merits  and  in  particular  the  implications  for  the 
development  of rail services. Paragraph 6 requires that adequate steps are taken to 
enable  short-notice  requests, that is to say for  traffic  types which  are not  planned 
so  far  in  advance,  to  receive  a  comparable  chance  of  being  granted  capacity  to 
those  within  the  timetabling  process.  The  infrastructure  manager  will  need  to 
employ a set of pre determined rules to decide which traffic  is to be excluded  from 
the  network.  The  rules  shall  be  clear  and  explicit  and  paragraph  7  requires  the 
rules which are applied to be published as part of the network  statement. 

Article 26 

67. 

The  purpose  of  this  article  is  to  enable  greater  potential  flexibility  to  railway 
undertakings. Paragraph  1 requires that the  infrastructure  manager  should  be  able 
to respond rapidly to requests for capacity which are tabled outside the timetabling 
process. Paragraph 2 creates a requirement for infrastructure  managers to be aware 
of  the  extent  to  which  they  have  spare  capacity  available  to  meet  requests  for 
capacity  outside the normal  scheduling process. This capacity  is most  likely to be 
attractive  to  freight  train  operators  and  should  enhance  their  ability  to  compete 
with  road  haulage  for  late  booked  traffic  or  amendments  to  pre  arranged  traffic. 
84 

Paragraph  3 requires  information  on the  availability  of  spare  capacity,  which  has 
been  identified,  to  be  supplied  to  all  likely  users.  Paragraph  4  requires  the 
publication of statistics showing the overall performance  of the allocation process. 

Article 27 

68. 

This article replaces Articles 4(b) and 5 of Directive  95/19/EC, and makes  special 
arrangements  for  certain  infrastructures.  Paragraph  1 requires  that  infrastructure 
shall  normally  be  available  for  all  types  of  service,  unless  suitable  alternative 
routes exist which are not capacity constrained. There will be circumstances where 
the  infrastructure  manager  wishes  to  ensure  for  operational  reasons  either  that 
specific  types of service are accorded priority on a piece of infrastructure  or that it 
is  necessary  to  grant  some  rights  to  access,  perhaps  related  to  the  financing  of 
investment.  In  so  far  as  such  rights  are  not  in  contradiction  with  other  rules, 
paragraph  2  provides  for  them  to  be  permitted  after  consultation.  Typical 
examples might relate to a dedicated  high speed  line where the operation  of other 
traffic  types, even if technically compatible might lead to dramatic reduction in the 
availability  of  the  infrastructure  for  the  purpose  for  which  it  was  constructed. 
Similar  arguments  might  apply  where  a  link  is  intended  for  freight  services  to 
keep them off a passenger  line and its use by passenger  services could  inhibit that 
purpose.  Clearly  the  extent  to  which  such  special  arrangements  may  be  put  in 
place must be proportionate to their need and effect.  Paragraph 2 ensures that such 
arrangements  cannot  be  put  in  place  to  prevent  legitimate  requests  to  use  the 
infrastructure.  Paragraph  3  requires  the  publication  of  such  a  designation  in  the 
network  statement. 

Article 28 

69. 

This  article  defines  what  is  meant  by  a  capacity  analysis  in  case  of  scarcity. 
Railway  infrastructure  is  a natural  monopoly  and  in  the  majority  of  cases  this  is 
likely  to  remain  the  case.  This  coupled  with  his  frequent  close  links  with  the 
State implies  that  the  manager  of  the  infrastructure  is  not  forced  by  a  market  to 
respond  in  an  economically  rational  manner.  This  may  result  in  sub-optimal 
behaviour  with  regard  to  the  provision  or  use  of  capacity.  A  key  role  therefore 
needs to be played by the State, either itself or through a regulatory body to ensure 
that  infrastructure  managers  do  behave  in  a  manner  that  is  consistent  with  the 
interests  of society and not  simply their  own interest.  In particular,  with regard to 
capacity  allocation,  processes  are  needed  to  ensure  that  where  capacity  becomes 
scarce,  appropriate  measures  are  put  in  place  to  alleviate  this  situation  in  an 
appropriate manner. 

70.  Where any request  is unable to be met, either because there  is simply no  capacity 
or  the  capacity  available  is  so  far  from  what  was  requested  as  to  be  effectively 
unusable  then  the  infrastructure  has  become  saturated  for  at  least  some  time 
period.  This  situation  is not  necessarily  of  concern  to  the  infrastructure  manager 
particularly  if  he  is able to  increase  his access  charges  in  view  of the  scarcity.  If 
the infrastructure  manager is sufficiently  commercially motivated then he is likely 
to  explore  all  possible  ways  of  extracting  the  maximum  possible  usage  from  his 
infrastructure.  In situations where this is not the case it is desirable to ensure that 
he  carries  out,  in  consultation  with  railway  undertakings,  an  assessment  of  the 
infrastructure  involved  and  the  apparent  constraints.  These  requirements  are  set 
out  in  paragraphs  1 and  2.  There  should  also  be  a  thorough  assessment  of  the 
85 

competing  demands  around  the  time  of  the  request  to  identify  what  possible 
methods  of  re-timing,  slowing  or  re-directing  traffic  could  enable  a  fuller 
accommodation of the requested paths. This analysis may identify  measures which 
enable  the  operation  of  further  services, however  if they  do  not  then  they  should 
lead the  infrastructure  manager  to  perform  an  assessment  of possible  methods  of 
capacity  enhancement  and  appropriate  cost benefit  analysis. Paragraph  3 requires 
that all of the interested parties should be consulted  during the performance  of the 
analysis. Paragraph 4 sets a time limit for the completion of the analysis. 

Article 29 

71. 

This  article  describes  the  nature  of  a  capacity  enhancement  plan.  Paragraph  1 
requires  that  where,  after  the  capacity  assessment  process,  the  infrastructure 
manager  still  cannot  fully  satisfy  the  request  for  paths,  then  he  must  within  6 
months  carry  out  an  assessment  of  the  potential  for  capacity  expansion  through 
investment.  Paragraph  2 requires that  such an assessment  should  take  account  of 
projected  traffic  alterations, should consider short and long term measures, should 
take  account  of  their  costs  and  benefits  and  the  ability  of  operators  to  pay  those 
costs  through  higher  access  charges.  The  infrastructure  manager  shall  consult  all 
interested  railway  undertakings  on  the  conclusions  of  the  assessment  before 
announcing its proposals for  measures to alleviate the capacity  scarcity. Where an 
infrastructure  manager  has  carried  out  such  a  survey  and  is  implementing  the 
proposals  agreed,  it has no  further  need to perform  such  a  survey.  Dependent  on 
the  outcome  of  this  the  infrastructure  manager  will  be  able  to  develop  plans  for 
investment to alleviate the constraints. This plan should be set out and followed  by 
him.  Paragraph  3 requires  the plan  to include  a timetable  for  the  implementation 
of the measures. Paragraph 4 ensures that where, for reasons which he can control, 
the infrastructure  manager fails  to make progress to the timetable  in the plan then, 
if requested  by the railway  undertakings  using  the  infrastructure  which  it  covers, 
he must cease to levy any fees which arise from the shortage of capacity. 

Article 30 

72. 

This  article  requires  that  booked  capacity  must  be  used  or  returned  to  the 
infrastructure  manager.  The purpose  of this  requirement  is to  ensure  optimal  use 
of  scarce  capacity.  Paragraph  1  permits  an  infrastructure  manager  to  impose 
requirements  on the use of train paths that are booked. Paragraph 2 deals with the 
situation  where there  is insufficient  capacity  to  meet  all  requests.  In this  case the 
infrastructure  manager  must  request the  surrender  of  any paths  used  for  less than 
75%  of the booking  over  a period  of at  least  one month.  Paragraph  3 deals  with 
the  situation  where  coordination  was  required  but  no  services  were  excluded.  In 
this  case the infrastructure  manager  is permitted  to  require  the  surrender  of paths 
which  are  used  for  less  than  75% of  the  booking  over  a  period  of  at  least  one 
month.  Paragraph  4  permits  the  infrastructure  manager  to  base  future  priority 
decisions on past performance  in the utilisation of booked capacity. 

Article 31 

73. 

This  article  describes  the  arrangements  for  booking  capacity  for  maintenance  of 
the  railway  infrastructure.  Paragraph  1 requires  that  bids  shall  be  submitted  for 
capacity to undertake  infrastructure  maintenance. The infrastructure  manager may 
be  making  the  allocation  decision,  and may  also  be the  body  seeking  capacity  to 
86 

carry out maintenance. In view of this paragraph  2 requires that  adequate  account 
be  taken  of  the  effect  of  the  capacity  reserved  for  track  maintenance  on  other 
applicants for  capacity. 

Article 32 

74. 

This article describes arrangements  for arbitration with the aim of offering  a more 
rapid  resolution  for  more  straightforward  problems.  Many  of  the  decisions  that 
must  be taken  during  the  allocation  process  involve  matters  of judgement,  and  it 
would  be  surprising  if  disagreements  did  not  arise.  Proper  consultation  and 
openness  about  the  process  and  criteria  used  should  help  to  ensure  a  better 
understanding  of  the  limitations.  In time  this  is  likely  to  result  in  better  bids  for 
capacity  from  applicants.  Nevertheless,  it  is  quite  likely  that  there  will  be 
occasions where applicants feel that they have not been properly treated and would 
like  a  second  opinion.  In  addition  because  of  the  constraints  on  the  timetabling 
process,  it  is  desirable  to  offer  the  parties  the  possibility  of  reaching  agreement 
through some sort of arbitration process rather than a lengthy appeal. Nonetheless, 
it is clear that the existence of an arbitration process neither prevents  an appeal to 
the  regulatory  body,  nor  to  seek  a judicial  ruling  on  any  decision.  Paragraph  1 
requires  an  infrastructure  manager  to  ensure  that  an  arbitration  procedure  exists 
both when it carries out the allocation process and where it collaborates with other 
infrastructure  managers.  It  also  requires  that  arrangements  exist  to  enable  a 
decision to be reached in ten working days. 

75. 

Paragraph  2  requires  each  party  to  an  arbitration  to  pay  its  own  costs,  with  any 
other costs shared equally between them. Paragraph  3 ensures that when  choosing 
to  agree to  arbitration,  the parties  commit  themselves  to  providing the  necessary 
information  and to abide by the decision reached. 

Article 33 

76. 

77. 

The right to appeal against decisions of the infrastructure  manager is  fundamental, 
Article  13  of  Directive  95/19/EC  ensured  that  in  all  Member  States  a  right  of 
appeal  must  exist  with  regard  to  the  charging  of  fees  or  applications  for 
railway infrastructure  capacity  to  operate  services  permitted  under  Article  10  of 
Directive 91/440/EEC.  Those  decisions  must  be  made  within  two  months  of  all 
information  being  available.  However,  it  is  important  that  the  ability  to  appeal 
must cover not only the actual decision but also the rules and criteria which set the 
framework  for  the decision. In view of the complexity of the issues involved, it is 
desirable  that  this  appeal  body  should  be  a  specialised  body  with  detailed 
knowledge  of  the  railway  sector  and  in  particular  the  allocation  process.  In  any 
case  it  is  likely  that,  given  the  existing  requirement  for  a  decision  within  two 
months, this process cannot be dealt with by the courts. 

This  article  sets  out  the  requirements  for  a regulatory  body  to  be  established  for 
rail  infrastructure  networks.  This  requirement  supersedes  the  provision  of 
Directive  95/19/EC,  and  the  regulatory  body  will  have  wider  powers  to  oversee 
the  charging  and  capacity  allocation  processes  rather  than  to  provide  only  the 
possibility  of  appeal.  The  latter  possibility  still  exists,  but  the  possibility  for 
arbitration  in  the  capacity  allocation  procedures,  and  the  requirement  in  this 
proposal  to  oversee  elements  of  the  charging  scheme  should  reduce  the  need 
for appeals. 

87 

78. 

79. 

Paragraph  1 requires  that  this  body  must  be  completely  independent  of  all  the 
parties  involved.  Paragraph  2  sets  out  the  areas  where  the  regulatory  body  must 
have the power to take  action.  Paragraph  3 requires  that  negotiation  may  only be 
employed  as  part  of  the  process  of  setting  infrastructure  charges  under  the 
supervision  of  the  regulatory  body.  Paragraph  4  ensures  that  the  regulatory  body 
shall have the power to request information  which it requires to make its decisions 
while paragraph 5 requires that a decision must be taken within two months of any 
complaint to the regulatory body. Paragraph 6 provides for  it to have the power to 
impose  conditions  on  all  relevant  parties.  Paragraph  8 ensures  that  any  decision 
that it takes must be open to review in a court. 

Each  national  regulatory  body  clearly  only  has  a  remit  to  consider  allocation 
complaints  in the territory in which it is established.  In the case of charges this is 
unlikely to be a problem because the charge will be levied for the use of a  specific 
element  of  infrastructure.  If  charges  are  set  which  make  an  international  service 
uneconomic, then they can be challenged in the State where they are set. However, 
applicants  for  capacity  which  crosses  more  than  one  Member  State  may  be 
unhappy  with  allocation  decisions  taken  but  be  unable  to  pinpoint  a  particular 
infrastructure  manager  which  they  believe  has  not  acted  appropriately,  possibly 
because the decision  was taken by a joint  organisation.  This  situation  implies  the 
need for  an international  appeal body. However  desirable this might be, providing 
such an appeal body would present  a number of difficulties.  In particular  it might 
be  controversial  to  create  a  body  which  has  the  necessary  legal  powers,  and  it 
could  also  prove  difficult  to  achieve  this  through  a  directive  addressed  to  the 
Member  States. Nonetheless, it of course remains possible  for  a party which  feels 
that  it  has  been  treated  in  a  manner  which  contravenes  the  competition 
requirements  of the Treaty to bring this to the notice  of the  Commission.  In view 
of these considerations  it is not proposed  at this  stage that an appeal  body  should 
be  established  to  deal  with  problems  arising  from  the  international  allocation  of 
railway capacity. 

Article 34 

80. 

This  article  replicates  those  parts  of  Directive  95/19/EC  which  deal  with  safety 
certification  issues. No  changes  are made to  any of these provisions, and  in view 
of this, paragraph  1 is required  to ensure that the scope  of this article  is the  same 
as that covered by the safety article in the preceding Directive. 

Articles 35,36,37 and 38 

81. 

These articles deal with the coming into force  of the proposal and the need for the 
Commission  to  report  on the  effects,  four  years  after  entry  into  force  along  with 
any recommendations on further  action. 

88 

Article 37 

82. 

83. 

This  article  repeals  Directive  95/19/EC  as  well  as  two  other  Regulations  and  a 
Decision relating to charges that are superseded by this proposal. 

There is in existence  a considerable  quantity of Community  legislation  relating to 
rail  transport.  Those  texts  which  address  the  question  of  charges  should  be 
reconsidered  when  putting  forward  this proposal.  Regulations  (EEC) No 2830/77 
and  (EEC) No 2183/78  and  Council  Decision  82/529/EEC  in particular  appear to 
fall  in  this  category.  Regulation  (EEC)  No  2830/77  lays  down  measures  which 
were considered  to be necessary to achieve comparability  between the  accounting 
systems  and  annual  accounts  of  railway  undertakings.  Regulation  (EEC) 
No 2183/78  lays  down  uniform  costing  principles  for  railway  undertakings 
charging  for  international  full  train  freight  traffic.  Council  Decision  82/529/EEC 
relates to the fixing  of rates for the international carriage of goods by rail. 

84. 

In view of their age, both Regulations do not reflect  the changed  railway  industry 
in a number of ways. In particular, both are only addressed to a limited number of 
railway  undertakings  one  of  which  no  longer  exists,  and  neither  reflect  the 
accounting  separation required in Directive 91/440/EEC, nor the fact that in many 
Member  States  that  there  is  a  separation  of  the  function  of  Infrastructure 
Management from  Railway undertakings. 

85.  Regulation  (EEC) No 2830/77  lays  down measures  which  were  considered  to  be 
necessary  to  achieve  comparability  between  the  accounting  systems  and  annual 
accounts  of  railway  undertakings.  With  the  development  of  a  proper  market  for 
rail transport  in the  Community,  it  should  be of considerably  less  importance  for 
there  to  be  comparability  between  railway  accounting  systems.  The  current 
proposal  requires  sufficient  information  to  be  made  available  by  Infrastructure 
Managers to ensure that railway undertakings  can be confident  that they are being 
required  to  pay  a  legitimate  charge.  In  addition  Community  rules  governing 
company accounts should also ensure a reasonable degree of  conformity. 

86. 

87. 

Regulation  (EEC)  No  2183/78  lays  down  uniform  costing  principles  for  railway 
undertakings  for  charging  for  international  full  train  freight  traffic  Many  of  the 
cost factors  referred  to in the Regulation  are infrastructure  cost factors  which  are 
covered  in  this  proposal.  Such  a  legal  framework  is  in  addition  only  necessary 
where  the  market  is  insufficiently  developed  to  ensure  rational  behaviour  by  the 
undertakings.  Directive  91/440/EEC  has  provided  the  first  steps  toward  the 
creation  of  a  proper  market  for  railway  services  and  many  Member  States  have 
gone  further.  These  developments  provide  for  the  possibility  of  competing 
operators and therefore make the regulation an anachronism. 

Therefore,  in  view  of  the  fact  that  in  many  ways  both  of  these  regulations 
they  will  be 
the 
no longer  reflect 
largely superseded by 
(EEC)  No 2183/78  and 
(EEC) No 2830/77 are repealed. 

this  proposal,  Regulations 

the  structure  of 

industry  and 

that 

89 

88. 

Council  Decision  82/529/EEC  also  no  longer  reflects  the  changed  nature  of  the 
rail  market.  The  Decision  is  based  upon  Council  Decision  75/327/EEC  which 
itself  was  repealed  by  Directive  91/440/EEC.  As  with  the  Regulations,  the 
Decision  is  only  addressed  to  a  limited  number  of  railway  undertakings  one  of 
which  no  longer  exists.  The  Decision  is  however  no  longer  compatible  with  the 
situation  created  by  Directive  91/440/EEC  which  creates  the  possibility  of 
competing international rail freight  services. This possibility means that the  fixing 
of  rates  between  undertakings  as  foreseen  in  the  Decision  could  run  counter  to 
Article 85 of the Treaty. In addition, the commercial independence and managerial 
freedom  which  was  sought  by  the  Decision  to  enable  the  setting  of  different 
tariffs  for  international  freight  services  is  now  enshrined  in  Article  4  of 
Directive 91/440/EEC. In view of these factors there is no objective  reason for the 
continued existence of this Decision and it is therefore  repealed. 

90 

ISSN 0254-1475 

COM(98) 480 final 

DOCUMENTS 

EN 

07  06  10 

Catalogue  number  :  CB-CO-98-494-EN-C 

ISBN  92-78-38628-6 

Office for Official  Publications of the European Communities 

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