“Competition Will Put Passenger Rail on the Right Track,” a new Discovery Institute report, “outlines a bold vision for restoring American passenger rail through competition, private sector innovation and targeted infrastructure investment.”
Co-authored by Discovery Institute Founder and Board Chair Bruce Chapman and Senior Fellow Ray Chambers, who also heads AIPRO (Association for Innovative Passenger Rail Operations), the report (download below) “argues that the time is ripe for meaningful reform.”
Chapman and Chambers note that Congressional reauthorization of transportation policy “is on the horizon” and cite “growing interest from private operators.” They propose a “Passenger Rail Authority” to “restructure the national system and open the door for public-private partnerships” with “the power to restructure passenger rail policy, much as happened with the U.S. Railway Association (USRA) beginning in 1974.” Chambers added that “the future of passenger rail is not about dismantling Amtrak. It’s about modernizing it and allowing private innovation to thrive alongside it.”
Chapman and Chambers propose eight “reform goals.” Excerpts:
- “Restructure the US passenger rail system to ensure competition by adopting a Competitive Access Model. If the Amtrak statutory right to access freight tracks at a below-cost rate continues unaltered, the deck will be stacked against private rail competitors. Few could survive. Therefore, the old model for expanding intercity service needs to change. Over the past few years, Union Pacific and AIPRO have developed a model for passenger rail access called the Competitive Direct Access Model (CDAM). The current Amtrak statutory operator preferences over track owners, which have created a near-monopoly, would be eliminated. Access to track usage, key performance indicators and operating standards, including on-time performance, would be negotiated through legal contracts, and disputes would be settled by arbitration. Amtrak would continue to operate as a commercial entity and compete in the new passenger rail marketplace. Amtrak and private competitors would have equal access to tracks through negotiated agreements with the freight railroads… It is a frequently deployed model used to achieve commuter rail access from Florida’s Tri-Rail to Chicago Metra’s 86-mile Rockford line. It has been used on intercity service, most notably to set Amtrak access terms for the California Capitol Corridor. Federal Railroad Administration grants for new corridor projects would require competitive bidding among potential operators, or, in some cases, public justification for a sole-source selection.”
- “Strengthen state government management of city-pair routes (routes of less than 750 miles). Following PRIIA guidelines, states should fund, as desired, any subsidies needed for city-pair routes. There are now 30 city-pair corridors, and the FRA has provided scoping funds for 69 new projects in 41e states. The fact is, only a few states, such as Washington, California and Connecticut, are adequately staffed and trained today to manage this responsibility. Accordingly, the FRA should help build capacity for state management through technical assistance and even one-time Federal-State partnership grants.”
- “Consider Separating Northeast Corridor Train Service and Infrastructure. The Shuster Blue Ribbon Panel on Amtrak reform was under the auspices of the House Transportation & Infrastructure Committee. Its 1997 report and the 2002 report of the Statutory Amtrak Reform Council (on which Bruce Chapman was a member) made similar proposals. The recommendations were to split Amtrak into two federally owned corporations, one focused on the passenger rail operations and the other on infrastructure. This functional separation would clarify costs, improve financial transparency and facilitate targeted investments by the government for infrastructure and by private management for operations. The new Passenger Rail Authority would provide detailed recommendations to the President and Congress, and the FRA would implement the recommendations.”
- “Reconfigure long-distance (LD) routes to optimize traffic flow and manage costs effectively. One of the principal challenges in passenger rail operations concerns the future of long-distance trains. These services are highly popular with local leaders and highly unprofitable as a general rule. If the LD network is to be stabilized and expanded a clear commitment is needed similar to highway and aviation. The public interest must be defined and stable funding provided. The current LD network has a large footprint across rural America and has significant bipartisan support… The LD network offers connectivity to underserved rural communities, granting mobility where commercial airlines do not fly and intercity buses do not operate. For the National Network it is necessary to assess social and economic benefits and then authorize subsidy levels. It is important to note [Amtrak’s] National Network is composed of two separate groups. The first is state-supported city-pair corridors … under 750 miles. The second is the LD network… For the state supported network … the states determine the economic and social benefits and provide the subsidy. For LD routes, Congress must play that role by quantifying the social and economic benefits and providing stable funding.”
- “Establish a sustainable rail capital fund, similar to those that support roads and air traffic. This federal fund would be sufficient to build bridges, tunnels, stations, maintenance yards, bypasses, and other necessary infrastructure to expand the passenger rail network. Funding sources might include rights-of-way utility fees and transportation-oriented development “value capture” from urban development projects adjacent to new passenger rail facilities. Meanwhile, the FRA’s Federal State Partnership Discretionary Grant program should continue. Primary applicants should be states, with Amtrak and state-approved private competitors being eligible.””
- “Institute legal reforms. Liability and indemnification processes for equitable insurance access should be made available to new private competitors. Commuter systems should be admitted to this program. Likewise, a National Equipment Supply initiative should be established to identify and meet equipment needs for the next 20 years. Environmental and other permitting should be accelerated to complete all reviews within the next two years.”
- “Create a High-Speed Rail (HSR) Plan. The Authority should devise a plan for HSR development that includes planning, regulatory processes, and funding systems needed to build a network akin to those in China, Japan and Europe. For a plan to be real, primary funding sources must be identified. This could include a mix of federal grants, state funds, and private investment, including through transportation-oriented development… This Plan must apply ‘lessons learned’ from California’s troubled and very costly HSR project, which faces solid Republican opposition as ‘the train to nowhere.’ Pursuing a program with bipartisan support will be critical.”
- “Assure worker rights on the intercity passenger network. Intercity rail corridor development will uphold worker rights for rail operations, as established under PRIIA, section 301. This includes labor rights during any transitions from Amtrak to new operators for operating and non-operating (rights of way maintenance and signal crews). On infrastructure construction projects, the Davis-Bacon Act’s prevailing wage requirements will apply to all federally funded projects.”
The report highlights what Chapman and Chambers call “successful private rail models such as Brightline in Florida”* and recommends “leveraging infrastructure grants to stimulate further private investment and improve service quality nationwide.”
*Mandatory redemption came due on close to $1 billion in private activity bond debt. Brightline is reissuing that debt, on Aug. 12 distributing a Series 2025B “Limited Remarketing Memorandum.” The term rate is 10%, but Brightline claims it’s “expected to yield 15% to bondholders of Series 2025A bonds.” Bondholders have also been offered a security lien on Brightline West equity. The company in July deferred a scheduled payment to bondholders, and petitioned state agency Florida Development Finance Corp., to issue up to $400 million of private activity bonds for design and planning on its Tampa extension and improving existing routes. Brightline, though, has managed to increase capacity and train frequency, which is helping increase ridership.
