Biggart Baillie Solicitors

Regulating the Borders Railway

Friday, February 18, 2011

by Neil Amner

On 7 January 2011, the Office of Rail Regulation (“ORR”) launched a six-week consultation closing 21 February 2011 on the way it proposes to regulate the Borders Railway which is regarded as a new railway.  [Click here to access consultation papers.] 

The Borders Railway will be procured by Scottish Ministers through Transport Scotland as “a long-term non-profit distributing public-private partnership”, and it will be used by a franchised train operator. 

The Borders Railway is due to open in 2014.  It will consist of 30 miles of railway between Millerhill, near Edinburgh and Tweedbank.  It will be owned by Scottish Ministers, but it will be regulated by the ORR as a branch of the national network.

Transport Scotland has invited bids for a contract to design, build, fund and maintain (“the DBFM Contract”) the line and its seven stations.  The contract Scottish Ministers and the DBFM Contractor is for a 30 year period.  The train operator will pay access charges to the DBFM Contractor which the ORR must agree.  The track access charges will include a contribution to the cost of construction of the railway.  The track access charges will be in addition to the payments by the Scottish Ministers under the DBFM contract. 

Whether the franchised train operator pays or receives a premium for operating services on the route (and hence whether or not track access charges are to a greater or lesser degree also funded by Scottish Ministers will only be known in due course). 

Transport Scotland have asked the ORR to assume the role of adjudicator of the DBFM Contract in “determining the efficient cost of any modifications that may be made to the railway in future” for example electrification or more double-tracking than is included in the initial proposal.  Transport Scotland has also said it will consult the ORR during the procurement process and on the final terms of the DBFM Contract “to ensure alignment with and that they are complementary to the ORR’s regulatory requirements”.

The ORR expects Network Rail and the Borders Railway operator (ie the DBFM Contractor) to draw up an operational interface agreement (or connection agreement) governing the end-to-end connection at Millerhill.  This will follow ORR’s standard model contract, but it will need to be amended because these typically cover simple connections to private sidings rather than a connection between two licensed rail networks.  This agreement will need to be approved by the ORR. 

The ORR must also approve the track and station access agreements between the DBFM contractor and the franchised train operating company.  The ORR can regulate the working relationship of these parties through those agreements.  To operate the infrastructure and all stations on this network, the DBFM Contractor will need both a network licence and a station licence from the ORR. 

The Borders Railway is being designed and built for passenger use only and not for freight.  But if this changes in the future, the ORR says freight access charges would have to be set on a marginal cost basis.

The ORR will regulate safety in the same way as it does for all other railways.  The cost of the ORR’s activities as health and safety regulator and enforcement body for the railway industry are met by a levy paid by all railway service providers.   This includes a person who manages or controls or participates in managing a railway, so can include infrastructure managers such as the DBFM Contractor. 

If you have any queries on the consultation, including any assistance in framing a consultation response, please contact Neil Amner (namner@biggartbaillie.co.uk; 0141 228 8000) for an initial discussion and an indication of whether we may be able to assist you.