Explanatory Memorandum to COM(2020)260 - Measures for a sustainable rail market in view of the COVID-19 pandemic

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dossier COM(2020)260 - Measures for a sustainable rail market in view of the COVID-19 pandemic.
source COM(2020)260 EN
date 19-06-2020


1. CONTEXTOFTHE PROPOSAL

• Reasons for and objectives of the proposal

The COVID-19 pandemic has led to a major economic shock that is having a significant negative impact in the European Union and across the globe. The severity of the consequences will depend on both the duration and the geographical spread of the pandemic. More specifically, it is having an unprecedented impact on transport in general and the railway sector in particular. The pandemic may lead to a large number of insolvencies and liquidity shortages within the railway sector. It affects all the supply chain and has effects on railway undertakings, shippers and logistic enterprises. Infrastructure managers and service facility operators will also suffer from its financial consequences. If left unaddressed, the pandemic will cause a severe impact on international traffic, freight volumes and passenger numbers, digitalisation progress, market opening and market structures, the effects of which will be felt for an extended period.

The railway sector is of strategic importance to the European Union. It makes a vital contribution to the EU's overall economy and employment, by directly employing over 1 million people, around 600 000 of them by railway undertakings and 440 000 by infrastructure managers (by the end of 2016).

Rail transport is critical to the EU strategy for a more sustainable transport sector, economic and social cohesion and connecting Europeans within and between Member States. Rail is an important contributor to EU transport mix, providing clean mobility and a high level of efficiency. Therefore, rail transport is crucial for achieving the objectives of the green deal due to its value as the most sustainable and environmentally friendly transport mode

European rail transports around 1.6 billion tonnes of freight and 9 billion passengers each year. By 2016, EU passenger traffic volumes had reached 450 billion passenger kilometres out of around 6 trillion passenger kilometres of land transport overall. Rail passenger traffic is mostly domestic, with only 6 % crossing borders in 2016.

In 2016, EU freight traffic volumes reached 419 billion tonne kilometres out of 2.5 trillion of land transport overall. Around half of total rail freight is cross-border. This lends rail freight a strong European dimension, and makes it even more sensitive to a lack of interoperability and cooperation between national rail networks that can affect its competitiveness.

Following the outbreak of the disease, rail passenger and freight transport have declined significantly due to restrictions and lower demand. Temporary restrictions on travel connections between EU Member States have left a significant mark: most international passenger trains are no longer served, domestic rail transport has declined by up to 90% compared to last year’s figures. Many recent new entrants had to cease their operations, and all rail operators suffer large decreases in their transport services.

Rail freight operators supply cross border and domestic services but report declines in transport volumes. One of the main reasons was that demand from certain industries had ceased because production came to a standstill as most of Member States had put in place lockdown measures causing the collapse in the demand. Now, in the months following the lockdowns, demand is picking up slowly, but there is no full visibility about the development of demand for rail transport yet.

Passenger demand for the whole of year 2020 is projected to be considerably below 2019 levels, and also freight demand will still fall short of last year’s levels to a considerable extent.

In order to mitigate the impact of the pandemic, an ambitious policy response stretching over many fields is being put in place. In this context, the current Regulation intends to complement the existing rail-related framework in order to allow national authorities and rail stakeholders to deal more easily with a number of negative consequences of the COVID-19 pandemic, and to respond to the urgent needs of the railway sector as long as those consequences persist. Such measures concern notably the waiver, reduction or deferral of track access charges for the use of rail infrastructure, as well as the waiver of reservation charges. They cover a reference period from 1 March 2020 until 31 December 2020, in respect of which charges may be altered, by derogation from Article 27 of Directive 2012/34/EU whereby the network statement (displaying all applicable charges) shall be published no less than for months in advance for the deadline for requests for infrastructure capacity.

More specifically, the following can be retained:

Track access charges – the amount corresponding to direct cost: Article 31(3) of the Directive requires that charges for the minimum access package being set at the level of the cost directly incurred as a result of operating the train service. The provision would in principle stand in the way of the charges being set at a lower level. It is proposed to derogate from it, in order to allow Member States and infrastructure managers to have the widest range of possibilities at their disposal during the reference period.

Mark-ups: Article 32 allows Member States to provide for the levying of mark-ups set in relation to the ability to pay of the respective rail market segments. As such, this principle implies that mark-ups may be subject to fluctuations and are liable to decrease in case the ability to pay of the market segment considered decreases. Such decrease may in particular occur as a consequence of the current crisis. However, as Directive 2012/34/EU currently stands, amendments to mark-ups are in principle not possible in the course of a given working timetable period. By derogation from this rule, it is proposed to enable Member States to allow downwards adjustments in respect of the reference period.

Reservation charges: Article 36 of Directive 2012/34/EU provides for a regime of reservation charges. The objective of such charges is to discourage railway undertakings from cancelling train paths at short notice and therefore to promote the best and full use of existing capacity. Usually the level of this charge increases the closer the cancellation is to the time of operation.

Under Article 36 of Directive 2012/36/EU, it is in principle up to each infrastructure manager to decide whether it wishes to levy reservation charges. However, the second sentence of Article 36 renders the levying of those charges mandatory in case of “regular failure” by a railway undertaking “to use allocated paths or part of them”.

The pandemic has provoked severe disruptions to rail traffic that have led to widespread train path cancellations. The underlying events were and are beyond the control of railway undertakings. Moreover, they have given rise to (temporary) overcapacity. It can thus be assumed that the incentive effect intended by reservation charges in accordance with Article 36 of the Directive 2012/34/EU is not relevant insofar as the reference period is concerned.

2.

It is therefore appropriate to enable Member States to lift the obligation established by the second sentence of Article 36 of the Directive in respect of cancellations during that period


Refund by Member States: In respect of each of the items referred to above (charges based on direct cost, mark-ups and reservation charges) any decreases of charges as authorised by Member States in accordance with the Regulation proposed would income losses on the part of the infrastructure manager.

Those income losses would in principle be compensated in accordance with Article 8 i of Directive 2012/34/EU. Under that provision, Member States are under the obligation to ensure that the accounts of infrastructure managers facing losses due, inter alia, to unexpected lower demand, remain balanced over a period of 5 years under normal business conditions.

The income losses for infrastructure managers, entailed by decreases as contemplated in the proposed Regulation, would by definition not occur under Directive 2012/34/EU as it currently stands. It is therefore proposed to that infrastructure managers be refunded within a period shorter than the one established in Article 8 i of that Directive, i.e. by 31 December of the year following the year in which the loss was incurred.

Adjustments of the network statement: the network statement sets out in detail the general rules, deadlines, procedures and criteria for charging and capacity-allocation schemes, including information for applications for infrastructure capacity.

It is proposed to stipulate that the network statements should be kept up to date and amended without delay.

• Consistency with existing policy provisions in the policy area

Directive 2012/34/EU does not address extraordinary circumstances, such as those created in the railway sector by the COVID-19 outbreak. Targeted derogations should therefore be authorised to mitigate the effects of the pandemic on railway transport, and to maintain the integrity of the Single European Railway area. Moreover, the competitive market structure involving historical operators and newcomers requires relief measures that continue to ensure a level playing field.

• Consistency with other Union policies

3.

The effective functioning of the Single European Rail Area depends on the economic performance of the market players and on safeguarding the achievements already made


regarding management independence of infrastructure managers and railway undertakings, transparency of provisions for charging and network access, non-discrimination and equal treatment in paths allocation and charging schemes as well as market opening. The negative economic consequences of the COVID-19 outbreak for rail market stakeholders could endanger their financial viability and possibly have serious negative effects on the functioning of the transport system, which would negatively impact the economy as a whole. According to a survey conducted in May and June 2020 with railway undertakings via the Railway Undertakings Dialogue platform no dedicated aid has been provided so far to the rail sector stakeholders. The Regulation proposed addresses these issues.

2. LEGALBASIS, SUBSIDIARITYAND PROPORTIONALITY

• Legal basis

This initiative is based on Article 91 of the Treaty on the Functioning of the European Union, which is equally the legal basis of Directive 2012/34/EU itself.

• Subsidiarity (for non-exclusive competence)

The objectives of the proposal cannot be sufficiently achieved by the Member States for the following reason: Track access charges are comprehensively regulated at EU level and therefore Member States cannot deviate from Union rules unless there is specific European legislation. Directive 2012/34/EU does not allow Member States, in the context of the COVID-19 outbreak, to react to the unforeseeable impacts on railway transport in particular by adapting the rules on charging and capacity allocation. This may only be achieved through an act adopted by the Union, permitting (targeted) derogations. Moreover, under the terms of the Regulation proposed it remains up to Member States to decide whether to implement the measures provided for, having also regard to the means at their disposal in terms of public funding.

• Proportionality

The proposal does not go beyond what is necessary to achieve the objective of alleviating the impact of the current COVID-19 outbreak through targeted derogations from Directive 2012/34/. The proposed measure is therefore proportionate, including as regards the reference period to which it applies. This period reflects current estimates on the time during which the COVID-19 pandemic on the rail market will last. It is proposed to empower the Commission to prolong this period where necessary.

Choice

of the instrument

In order to achieve its objective, the legal instrument must be of direct and general application. Therefore, the appropriate legal instrument is a Regulation.


3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER

Contents

1.

CONSULTATIONS


ANDIMPACTASSESSMENTS

Ex-post evaluations/fitness

checks of existing legislation

This is an urgent measure triggered by the sudden and unforeseeable outbreak of COVID-19 disease.

Stakeholder

consultations

Given the urgency of the matter, a formal stakeholder consultation has not been carried out. However, both Member States authorities and stakeholders have called upon the Commission to adopt a proposal for appropriate measures in the context of the allocation and charging framework of Directive 2012/34/EU.

In particular, rail sector associations representing railway undertakings repeatedly approached the Commission asking for urgent measures. These measures would aim to ensure that the sector could cope with lost income and reduce the risk of bankruptcies, especially for private operators. One of the most advocated measure is the suspension of charges for track infrastructure, stations, service facilities and the use of stabling sidings.

Following this call for action, some Member States and infrastructure managers started to react by taking and/or considering such measures. The Commission conducted a survey in March, April and May 2020 via the PRIME charges subgroup. On the basis of the results of the survey, it was concluded that some Member States showed apparent readiness to take relief measures along the lines proposed in this Regulation.

Given the lack of appropriate emergency provisions in the Directive, there is a need to create a framework for the measures required by the COVID-19 crisis through the adoption of this Regulation.

• Collection and use of expertise

As explained, collection of expertise at the usual degree of detail was not possible due to the urgency of the situation. However, the Commission has drawn on experience gained through its contacts with Member States and railway stakeholders.

• Impact assessment

Given the urgency of the situation, an impact assessment has not been carried out.

• Regulatory fitness and simplification

Not applicable.

• Fundamental rights

Not applicable.


4. BUDGETARYIMPLICATIONS

Not applicable.

5. OTHERELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The measure does not include any specific monitoring or reporting arrangements. However the Commission should follow the development of the COVID-19 outbreak and its impact on Single European Rail Area and if necessary be empowered to adopt a delegated act to extend the time periods concerned by this measure.

• Explanatory documents (for directives)

None.