End of the Line for Amtrak?

Democrats call Republican proposal a 'death knell for passenger-rail service' in America.

Leaders of the House Transportation and Infrastructure Committee on June 15 unveiled a plan that proposes to deregulate passenger-rail service in the United States, threatening to end Amtrak's 40-year existence.

Under the plan, private-sector companies would be able to bid on the opportunity to take over intercity passenger-rail service from Amtrak. Amtrak, which Congress created in 1970, connects 46 states, the District of Columbia and three Canadian provinces.

The plan also calls for the private sector to bid on the construction, maintenance and operation of a high-speed-rail system in the Northeast Corridor, where Amtrak now provides passenger-rail service from Washington, D.C., to Boston.

"Putting competition in place is going to have the same effect on passenger rail as the deregulation of the airline industry, the deregulation of the trucking industry and [the deregulation] of the freight-rail system that we did over 30 years ago in this country," U.S. Rep. Bill Shuster, R-Pa., said at a June 15 briefing. "And they've been successes."

Shuster and committee chairman John Mica, R-Fla., unveiled their proposal at a briefing that was broadcast live via the Internet and teleconference. Mica told the audience that the briefing will be the first of two such events designed to receive public comments on the draft legislation.

Mica said the committee plans to introduce the bill on June 21 and finalize it on July 12.

"And let me say also that this legislation will pass," Mica added. "It may not pass in this session, but it's going to pass. I can guarantee it. And it will pass in the next 36 months."

'Desperately Needed' Legislation

While Mica and Shuster both emphasized that they support a national passenger-rail system, they argue that taking passenger rail out of the hands of Amtrak will improve service, boost ridership and reduce -- but not completely eliminate -- public subsidization of passenger-rail service.

"I think it's an opportunity for us to take passenger rail to a new level in this country," Shuster said during the briefing. "It's something that I think is desperately needed."

Shuster noted that the average public subsidy for Amtrak's long-distance routes is $118 per passenger. On the Sunset Limited, which provides service from New Orleans to Los Angeles, the per-passenger subsidy is nearly $408, Shuster said.

"We're losing $408 on every passenger," he said.

Shuster and Mica pointed out that the legislation will have provisions that give hiring preference to displaced Amtrak workers and that require states to maintain current levels of service.

"We want to create and protect jobs," Shuster said.

A 'Death Knell for Passenger-Rail Service'

U.S. Rep. Nick Rahall, D-W.Va., the ranking Democrat on the House Transportation and Infrastructure Committee, blasted the Mica-Shuster proposal, asserting that "Republicans are dusting off a chronically unpopular proposal that will cripple Main Street by auctioning off Amtrak's assets to Wall Street."

"This plan is a death knell for passenger-rail service from coast to coast," Rahall said in a statement.

While the House Republicans repeatedly asserted that their proposal will save taxpayer dollars, Rahall countered that the plan "puts the American taxpayer on the hook while they desperately seek fantasy funding from an invisible sector."

"In order to create jobs and remain competitive in the global economy, we ought to be looking at ways to help Amtrak achieve the goal of high-speed rail; not looking at ways to dismantle it," Rahall said.

U.S. Transportation Department Secretary Ray LaHood commended Mica for giving passenger rail "the attention it deserves." However, LaHood said the department has "many questions about the Mica proposal's feasibility."

"At present, we believe Amtrak is the entity most capable of taking the next steps to modernize rail service in the Northeast Corridor, which is why the administration has serious concerns about any proposal to privatize Amtrak's Northeast Corridor," LaHood said in a statement.

According to the Department of Transportation, May marked Amtrak's 19th consecutive month of year-over-year ridership growth, with more than 2.6 million passengers traveling on Amtrak. The department said Amtrak is on track to set a new annual ridership record this year.

A 'Stalemate Rail System'

Mica believes the busy 437-mile Northeast Corridor is ideal for 220-mile-per-hour passenger-rail service. But he slammed Amtrak's recent 30-year plan for establishing a high-speed system in the corridor, which comes with a $117 billion price tag.

"What we propose is quite a contrast," Mica said today. "We think we can do it in a third of the time -- in 10 years rather than 30 years. We think that rather than $117 billion in public money, we can attract a large percentage of the funds to help do this from private capital."

Andy Kunz, president and CEO of the U.S. High Speed Rail Association, called Amtrak's high-speed-rail proposal "absurd." But he said the association is "absolutely against" dismantling Amtrak.

"We are in favor of competition and private investment," Kunz told IndustryWeek. "The way we see the problems now is that Amtrak's hands are tied. They never have enough money. Private [companies] really won't invest in it. And so we're just stuck with this stalemate rail system."

Kunz said France and Spain faced a similar situation several years ago. When the two countries separated the upkeep of the rail infrastructure from the operation of passenger-rail service, and boosted investment in the infrastructure, "lo and behold both of those countries now have state-of-the-art rail systems."

"And both of them still have a government monopoly running them," Kunz said. "So we don't see Amtrak running it necessarily as the problem. But not being open to investment is a problem."

Mica noted that the Republicans' legislation proposes to make the bidding process separate for the rail infrastructure and the rail service, although it also would consider bids for "turnkey" solutions.

Mica also said that Amtrak would be allowed to bid. However, it's clear that the Republicans don't believe that Amtrak would stand much of a chance in the bidding process.

"After spending billions of dollars," Mica said in a June 14 news release, "Amtrak and its snail-speed, last-century level of service have reached the end of the line."

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