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Mica & Shuster Call for Larger Private Sector Role in Passenger Rail

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Mica & Shuster Call for Larger Private Sector Role in Passenger Rail

Washington, DC – Transportation and Infrastructure Committee Chairman John L. Mica (R-FL) and Railroads, Pipelines and Hazardous Materials Subcommittee Chairman Bill Shuster (R-PA) conducted a congressional hearing today on encouraging and increasing private sector participation in passenger rail service.

Both Mica and Shuster noted that the Administration’s passenger rail program has been an absolute disaster.

“With Ohio, Wisconsin and Florida rejecting funds, and the California project also looking troubled, I don’t think the Administration’s so-called high-speed and expanded passenger rail program could have had a worse launch,” said Mica.  “The only chance of success for high-speed rail is to rely on the private sector and focus on a project that makes sense, particularly the Northeast Corridor.  The questions now are how do we regain our credibility after so much damage has been done, and how can we find a better opportunity to bring true high-speed rail to the congested Northeast Corridor with significant private sector involvement?”

Mica also highlighted Amtrak’s inability to provide true high-speed service or operate with efficiency.  “Amtrak’s plan doesn’t cut it.  Amtrak operates a Soviet-style passenger rail service, with a high rate of subsidization by the taxpayers.  Last year, every single Amtrak ticket was underwritten by $54.48,” Mica said.

“Chairman Shuster and I have proposed letting the private sector compete with Amtrak on its money-losing routes, but this has yet to happen.  Internationally, the private sector successfully operates passenger rail and can turn a profit.  There’s no reason we shouldn’t be attracting private sector capital and expertise to operate intercity passenger rail in the United States.  In the next surface transportation reauthorization bill, we will ensure that we improve provisions to encourage private sector investment and participation in providing passenger rail service in this country,” Mica concluded.

Shuster and Mica concurred on the need for private sector competition to improve passenger rail service.  “This is an issue that is extremely important to me and to Chairman Mica, and that the Chairman and I have worked on for a number of years,” Shuster said.  “I firmly believe that we can make intercity passenger rail more effective and more affordable by partnering with the private sector and by bringing competition to the marketplace.

Shuster continued, “Two and a half years ago, President George W. Bush signed the Passenger Rail Investment and Improvement Act, the first rail authorization bill in 11 years.  That bill included important reforms in the operations of Amtrak, America’s intercity passenger railroad.  The Act also opened the door for the private sector to participate in providing passenger rail service in a number of important new ways.  For the first time, rail capital investment programs were established that give states primary control to improve and expand intercity passenger rail services.

“A pilot program was authorized to allow private sector entities to operate current Amtrak intercity routes, in much the same way that private sector companies now compete with Amtrak to provide commuter rail service.

“While we required the Federal Railroad Administration to develop a rule to implement the pilot program within one year of PRIIA’s enactment, FRA has yet to act.  I am disappointed by the delay in implementing this important provision and have raised my concerns to the FRA on numerous occasions.

“The Section 502 program established a public-private partnership opportunity for high-speed rail development.  Under this program, FRA solicited proposals to finance, design, construct, operate, and maintain high-speed intercity passenger rail systems within one of 11 specified corridors (including the Northeast Corridor).  Over 100 expressions of interest were submitted, and from these FRA received 8 substantive and credible proposals for development of high-speed rail corridor projects.

“This RFP process was kept completely separate from the Department of Transportation’s high-speed and intercity passenger rail grant funds that came through the 2009 Stimulus bill. In my view, this was a big mistake. Private sector participation can leverage federal funds and make projects less expensive, get them built faster, and help keep operating costs down.  I will be looking for ways to encourage private sector participation in passenger rail projects,” Shuster said.

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Filed under: Amtrak, Passenger Rail Politics, Passenger Rail Transportatio Policy

3 Responses

  1. Steve A says:

    Whatever reality the call for private investment in rail may have, there can be little doubt that Amtrak isn’t the answer. The key to private involvement is to get elements of competition into the mix. Do you want to ride on a train run by your local cable company?

  2. Even though Mica and Shuster are way too Northeast-centric, I would not be too easy to dismiss the overall message. After all, various companies from Europe and Asia DID in fact propose good ideas for HSR in America but were overlooked by either the stimulus grants or by Tea Party governors.

    Truthfully, there was no reason why 97% of last year’s grants should have gone to one company especially when the Administration prohibited it from submitting the NEC. The president may have tried to do too much for Amtrak at the expense of other operators who are/were ready, willing and able to operate trains in America.

    Preserving the current de facto monopoly does nothing to advance intercity rail travel because Amtrak risks going back to a state of complacency. When SNCF and JR Central of Japan drew up explicit plans on how they’d operate routes, Joe Boardman was forced to create a high speed rail division. The main reason why competition should be allowed is so travelers can have more options. If it means that Amtrak is forced to reconsider its overall mission, so be it. With other companies around, the national carrier will have to upgrade its equipment and actually work hard to prove that it’s still relevant.

    Also worth pointing out is that if the PRIIA guidelines had been enforced, then, the host railroads should have already been able to bid on the long-distance routes and even operate them. However, everybody has been so caught up with HSR that the overnight routes have largely been forgotten.

    Last spring, Jon Fostik brought up new ideas on how to advance long-distance trains. If Amtrak is not willing to do much for the overnight trains, then the hosts or other carriers must be allowed to explore that market while Amtrak mainly focuses on the Northeast.

  3. The rail enthusiast has a good thought. My own thinking is that it is past time for the host railroads to operate the passenger trains again, and they should operate a route structure that is at least twice as dense as the current “National System” which isn’t. How can it be national with the gulf between NewOrleans and the east Coast. For want of a 620 mile segment, it is not a national system. In 1971, most railroads were on the verge of bankruptcy unless they were relieved of passenger trains. Enter Amtrak. In 1980, came the Staggers Act, and now railroads, few as the major systems are, make very tidy profits every year. Hence, turn the passenger trains back to them under a mandate of operation. Take most overnight mail off the highways and put it on the trains, and allow the host railroad to add container cars as long as they do not impact the schedule of the train, and allow them to seek the conveyance of package express. Lastly, provide a sufficient tax credit that, along with the above, will allow a break-even, or perhaps 5% profit on the operation. Put a cap on litigation and liability.

    Amtrak should then do only a few things:
    1. Operate & Maintain the NEC
    2. Operate a ticketing & reservations system for
    3. Provide equipment and equipment maintenance.
    for all, motive power included.

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