Amtrak’s May 12th Philadelphia train derailment has renewed focus on funding Amtrak. With more than 200 people injured and eight fatalities, the debate has shifted from “Can we agree to do anything for Amtrak?” to “How much can we agree to do for Amtrak?”
There is agreement that the current model has serious shortcomings, and simply repeating yesterday’s legislative solutions will not result in improving tomorrow’s outcomes. In 1971, Amtrak was conceived as an experiment. It’s an experiment that has failed because it isn’t sustainable in today’s fiscal environment. Federal spending caps, massive federal transportation infrastructure needs, entitlements and defense make it unlikely that Amtrak will receive significantly increased appropriations. As a result, the Passenger Rail Investment and Improvement Act of 2008 (PRIIA) sought to increase Amtrak’s funding by shifting rail passenger service costs to the states, but they, too have no money.
Rail advocates cite Amtrak’s growing total ridership and record revenues as success proof, but Northeast Corridor (NEC) ridership has been stable for more 40 years, having peaked in 2000 with 12.9 million trips, while only state-supported services have significantly increased. Meanwhile, Amtrak’s expenses have grown to annual losses of more than one billion dollars, losses requiring offsetting appropriations.
Ignoring the rail industry’s difficulties deploying PTC, the NEC for decades has utilized an ATC cab signal system that successfully protected passengers from violations of operating authority, while dispatcher-controlled software provided positive protection for track workers. In 1995, Amtrak began to implement its Advanced Civil Speed Enforcement System (ACSES), which 20 years later has yet to be completed south of New York.
Connecticut’s Governor Malloy recently complained to the USDOT that Amtrak has repeatedly proven incapable of executing major projects on time and budget. Amtrak received about $3 billion under the American Recovery and Reinvestment Act of 2009—the Stimulus Act. Much of Amtrak’s stimulus money remains unspent, while Amtrak’s approved and funded infrastructure work remains unimplemented.
This is not an Amtrak workforce issue. Amtrak’s workers have labored hard and successfully to provide a reliable, safe passenger railroad. It’s a project delivery and infrastructure funding process issue.
This requires a new transformational process, which generates a steady, reliable source of non-appropriated money for Amtrak’s infrastructure. “American Intercity Railroad Network for the 21st Century” orAlRNet-21, is such a new process. It creates an “off-budget” funding stream that causes more than a billion dollars annually to be invested in Amtrak’s owned infrastructure. It includes incentives and penalties to achieve project delivery focused on fixed project budgets and hard final completion dates using construction and project management techniques the private sector routinely employs. It eliminates the allocation of Amtrak’s NEC costs to non-NEC trains and, consequently, it increases Amtrak’s political viability and broadens its political support. AlRNet-21, by means of a stock spin-off, separates Amtrak into two federally owned entities:
• Amtrak remains the nation’s rail passenger carrier operating long distance, regional, NEC, and contracted state and commuter trains. Amtrak retains all its rolling stock, workshops, reservations and sales organizations, and back-office people and assets.
• A new federal infrastructure entity owns Amtrak’s infrastructure. It is managed by an infrastructure management organization (IMO) that the Surface Transportation Board selects on a competitive basis. The IMO, under a 50-year revocable concession, funds, manages, grows rail services and constructs new infrastructure to bolster capacity and eliminate deferred maintenance. The IMO is mandated to offer non-discriminatory dispatching over Amtrak’s NEC and Midwest infrastructures, and is prohibited from running its own trains. The NEC Infrastructure and Operations Advisory Commission publicly develops and coordinates annually a rolling five-year infrastructure investment plan.
Existing commuter carriers continue to pay avoidable-cost access fees. Amtrak’s current schedule patterns are protected and different service patterns, city pairs and service classes are opened to new train operators and Amtrak to exploit. The result gives rail travelers increased intercity service frequencies, shorter trip times and more fare options.
AlRNet-21 causes substantial northeast and midwest investment and workforce development. As the IMO’s annual $1 billion investments accumulate, NEC chokepoints will be removed, and the fastest New York-Washington trip times will be reduced to about 2 hours. It permits Chicago/Michigan infrastructure to serve as a development platform for new, high-quality passenger services emanating from a Chicago hub.
The IMO is funded through private equity and a RRIF loan, repayment of which is fully guaranteed by a third-party investment-grade financial instrument. Loan interest is paid through investments in the federally-owned infrastructure—ensuring more than $50 billion of infrastructure improvements over the concession life. All improvements become property of the U.S. government.
The IMO makes its return by shifting as little as 10% of NEC intercity trips from highway to rail—Amtrak’s market share is currently only 6%—increasing train ridership by offering shorter travel times, increased passenger train frequencies and new passenger services built around new station gateways where rail, highway and aviation infrastructures intersect shortening door-to-door travel times.
AIRNet-21 is good public policy. It fully protects the public sector. Amtrak’s infrastructure and improvements thereto remain publicly owned and collaboration is promoted between stakeholders to leverage commuter agencies’ funding resources.
AlRNet-21 is also good business policy, achieving better rail service, guaranteeing that more than $50 billion of non-appropriated monies are invested in Amtrak’s NEC and midwest infrastructures, fully protecting Amtrak’s passengers and workers, and removing Amtrak’s infrastructure losses from Amtrak. The private sector IMO managing Amtrak’s infrastructure must, at all times, bear the financial risk of its undertakings, may only benefit from its lMO role to the extent operating surpluses are produced, and be unable to bail out when outcomes are worse than forecasts. I believe we must do something transformational, now. Today’s Amtrak experiment hasn’t worked, but we can learn from it. DOT Secretary Foxx has stated multiple times that public/private partnerships may be the only way the government can fund the maintenance and construction of transportation infrastructure mega-projects. AIRNet-21 was once thought “too good to be true,” but it is true. Change is banging on our door asking to be embraced. Why are we not embracing AlRNet-21?
Dr. Francis P. Mulvey is a distinguished economist, educator and public official having served two terms as a Commissioner on the Surface Transportation Board from 2004 until 2012. He was designated as the Board’s Vice Chairman in January 2010 and again in 2012. At the time of his appointment to the SIB, Mulvey was Democratic Staff Director for Railroad Subcommittee of the US House of Representatives’ Committee on Transportation and Infrastructure. He was responsible for all railroad legislative matters for the Ranking Democratic Member of the Subcommittee, and advisor to the Ranking Democratic Member of the Full Committee on overall transportation policy issues. Other positions held include: Deputy Assistant Inspector General for Rail, Transit, and Special Programs, U.S. DOT Office of the Inspector General; Assistant Director, U.S. General Accounting Office; Director of Economic Research for the NY State Legislative Commission on Solid Waste Management; Programs Manager, National Academy of Sciences, Transportation Research Board; Vice-President for Research, American Bus Association; and Economist at the Federal Railroad Administration. In addition, he has served as Adjunct Faculty at the RH. Smith School of Business and Public Administration, University of Maryland; Assistant Professor, Northeastern University Department of Economics; Assistant Professor, Wheaton College Department of Economics; and Assistant Professor, Bowling Green State University Department of Economics. Mulvey holds a Ph.D. in Economics from Washington State University (1974); a BS in Economics from New York University (1966); and an MA in Economics from the University of California at Berkeley (1968). He may be contacted at frankmvl@aol.com.
Editor's note: The preceeding editorial reflects Dr. Mulvey’s opinion. Railway Age’s publishing of this piece is not an endorsement of AIRNet-21.