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With a new administration in D.C., it's time to think outside of the box because passenger rail's survival just may depend on it

Sunday, March 20, 2011

Thoughts on the March 11 House Meeting on Private Sector Involvement

Last Friday, the House Subcommittee on Railroads, Pipelines and Hazardous Materials held a hearing on the private sector's role in passenger rail operation. Representatives Mica and Shuster pointed out that Section 214 of PRIIA allows the current owners of rail infrastructure to operate up to two existing passenger routes and Section 502 provides a PPP opportunity for developing high speed rail.

In the case of the former, almost nobody has paid any attention to the long-distance routes because all of the focus has been on HSR. Had the feds done their job, then certain routes would have been already leased out to states or private operators in October 2009. Residents in the Gulf between New Orleans and Orlando are still waiting for the return of train service to their area but Amtrak management continues to drag its feet by either offering up excuses like it did in its 2009 report or by forcing states to pay for intercity service. If the Sunset were leased out like I proposed last fall with this schedule, then we would be somewhere. True Believer advocates always point out that the Association of American Railroads only wants Amtrak on its rails. The problem is that no one has come up with a logical proposal to make things better for entities like Virgin and Herzog. This is where Congress needs to step up and eliminate idiotic liability guidelines and compensate the railroads for having non-Amtrak operators on its rails.

As for Section 502, over 100 companies submitted applications for HSR projects with eight of them having legs to stand on. Sometime between December 2008 and January 2010, this was lost on the feds because the FRA gave Amtrak 76 of the 78 grants, which was at best baffling because the Administration didn't allow the Northeast Corridor to apply for any of the $8 billion that was passed in the 2009 stimulus bill.

Representative Corrine Brown was visibly upset over Rick Scott's scuttling of FLHSR, and she was the most skeptical among everyone that the private sector could deliver. The subcommittee should have called on Stan Feinsod and John Broadley more often because Feinsod never got to explain the German model and Broadley had some good ideas that are worth exploring. Too much focus has been on what the Brits did wrong in breaking up British Rail, too little on what they did right, and almost none on how the Germans have been successful with limited competition. The problem with Broadley's solutions is that Edward Wytkind and the unions represent a roadblock to any meaningful progress since some of them fear of an Amtrak breakup.

The biggest thing that I got out the hearing is that Democrats remain skeptical of private sector (hosts and others) involvement even though it can provide better service, innovation, and additional routes while Republicans remain skeptical of Amtrak even though it's better off being a predominantly Northeastern organization. As long as the parties stick to their positions, passenger rail will continue to suffer even as gas reaches $4/gallon.

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