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Politico Reports on Tension Between Amtrak, Private Bidders Over Long-Distance Rail

By Admin

Private railroads, Amtrak spar over FRA pilot program rule

As published by Lauren Gardner in Politico

A pilot program to give private companies the chance to take over passenger train service on some long-distance routes from Amtrak is stoking tension among those businesses and the government-backed corporation as federal regulators craft the rules for the experiment.

Private rail companies told FRA at a hearing on Wednesday at DOT headquarters that they were concerned Amtrak is pushing for “veto” power over future attempts by them to run long-distance service under the program, which Congress created under the FAST Act. The goal is to give third-party operators an opportunity to run up to three long-distance services over a four- or eight-year period at a lower cost to the federal government, which routinely funnels about $1 billion a year to Amtrak for those routes.

Ed Ellis, president of Iowa Pacific Holdings, said Amtrak presented in its written comments on FRA’s proposed rule to implement the program “more than one Trojan horse” that would permit the national railroad to block it outright. He pointed to one Amtrak proposal that third-party operators include in their initial petitions their own access agreements with railroads that own the infrastructure along the routes, noting that Amtrak owns or controls infrastructure at points along most of the 15 long-distance routes.

“Obviously, it wasn’t the intent of Congress to give Amtrak the ability to veto privatizing long-distance train routes,” Ellis said.

Richard Slattery, Amtrak’s senior research director, dismissed that argument, saying the railroad acknowledged in its comments that it doesn’t consider itself a host railroad that is providing access to bidders that are seeking access agreements. Private companies should include those deals along with their applications so that Amtrak and FRA don’t waste resources evaluating petitions that have little chance of moving forward because they lack the necessary blessings of other railroads, he said.

Slattery defended Amtrak’s past work with states who wish to contract with private companies to provide rail services – and he dinged Iowa Pacific for an 11 percent drop in ridership since the company took over providing equipment, maintenance and food service for Indiana’s Hoosier State route.

“Operating intercity passenger trains in the United States is a very challenging business,” he said. “Although Amtrak constantly strives for improvements, we do not believe that anyone is better at it than we are.”

Amtrak advocates and private sector representatives alike urged FRA to clearly define how exactly regulators will determine the operating subsidy winning bidders will receive. Amtrak wants to exclude costs like depreciation and interest from FRA’s calculations, whereas companies like Iowa Pacific say taking those items out of the equation limits the attractiveness of the deal.

FRA also faces concerns about how the pilot program would apply federal labor laws for railroad employees. Labor groups reiterated their skepticism that the program would lead to better service than what Amtrak already provides.

“The idea that a private entity can just come in and provide more efficient and economical service than Amtrak simply because it is a private entity is a myth that we simply reject,” said Larry Willis, secretary-treasurer at the Transportation Trades Department of the AFL-CIO.