Last in a three-part series
During the week that leaders in the House of Representatives were struggling to push approval of the Infrastructure Investment and Jobs Act over the finish line, CSX and Norfolk Southern fired another shot across Amtrak’s bow.
The two Class 1 passenger carriers asked the U.S. Surface Transportation Board to dismiss a case brought by Amtrak last spring seeking to have regulators compel the freight carriers to host a new rail passenger service between New Orleans and Mobile, Alabama.
The Gulf Coast corridor proposal is a harbinger of what lies ahead for other proposed new Amtrak services that could be funded by the IIJA. It is a sobering cautionary tale.
Funding for operating and capital expenses is already in place for the 150-mile New Orleans-Mobile route that until August 2005 hosted Amtrak’s tri-weekly Sunset Limited between Los Angeles and Orlando, Florida.
CSX, which owns most of the route, has been dragging its feet on the proposed New Orleans-Mobile service for more than five years. At one point it demanded $2 billion in route infrastructure work.
In their STB filing, CSX and NS said they would withdraw their opposition to the new service if Amtrak pays for 14 capacity improvement projects the carriers say are needed.
In a fit of hyperbole, the Class 1 carriers said Amtrak service without these improvements would cause “systematic failure” to their freight service, most notably adversely affecting first mile, last mile freight service to shippers. These assertions would be comical were they not so serious.
For years Amtrak’s host railroads have demanded expensive infrastructure improvements as the price of agreeing to service expansion, including daily service for the Sunset Limited and Cardinal, or new service on a now freight-only route.
Many a service expansion has been stymied due to these demands for capital improvements, which Amtrak usually cannot afford.
The underlying conflict before the STB is about more than whether passenger trains are going to operate between New Orleans and Mobile and how much Amtrak and its state partners will have to pony up for infrastructure improvement projects.
Ultimately, it is about rules and whose interests those rules favor.
Amtrak and rail passenger advocates want rules that provide an easier path to service expansion in the face of host railroad resistance.
The host railroads want to maintain the status quo of being able to dictate the terms of access. They dislike having to deal with political pressure seeking to force them to accept passenger trains that they view as having the potential to interfere with their freight operations. They dislike having foisted upon them something they view as contributing nothing to their primary reason for being, namely providing transportation of freight.
I’ve written about this issue before and you can follow this link to read more: https://wordpress.com/post/akronrrclub.wordpress.com/61853
If Amtrak loses the STB Gulf case or gets a mixed decision that could curtail how much service expansion it is able to achieve.
But even a favorable decision for Amtrak may not be enough. NS and CSX and/or the Association of American Railroads are likely to go to court to seek to overturn that ruling or get it modified. They have the resources to litigate for as long as it takes to get the rules that they want.
From a rail passenger advocate perspective, the STB case is about serving the public interest. Rail passenger advocates make the assumption that additional intercity rail passenger service by definition does that.
From a host railroad perspective, the STB case is about maintaining control of its own property and protecting its competitive position in the transportation industry.
This is not to say host railroad resistance can’t be overcome. It is matter of on whose terms these disputes will be settled and how much that will cost. It is why the STB case could be critical to the success of the Amtrak ConnectsUS plan.
There are other potential obstacles standing in the way of passenger rail expansion.
The Amtrak ConnectsUS plan is predicated on state and/or local governments taking over the operating expenses of the new corridors described in the plan.
Amtrak has proposed paying up to 90 percent of those costs initially and fronting money for capital projects to establish stations and do host railroad-demanded infrastructure work.
The Amtrak share of operating costs will eventually reach zero over a six-year period.
A key question is whether Amtrak or the FRA will move ahead on projects in which the state(s) to be served by a new route fail to commit to picking up their share of a route’s operating costs.
The Amtrak ConnectsUS plan seems built on the belief that once the new services are up and running the states served will recognize their value and provide funding. Amtrak seems to be hoping that public pressure will lead to continued state funding of the service by the states served.
But what if they don’t? Many of the proposed new corridors are in states that have never funded Amtrak service. Why would they want to do so now?
The American Recovery and Investment Act of 2009 contained $8 billion in grants for high-speed rail projects that did not require a state match.
In January 2010 Ohio received a $400 million grant to launch the 3-C Quick Start project.
In that year’s gubernatorial election, Republican John Kasich actively campaigned against the 3C project and Republicans who controlled the Ohio General Assembly expressed concerns about Ohio having to pay $17 million for operating costs.
After defeating incumbent Ted Strickland, a Democrat, Kasich killed the 3-C project. Ohio Republican legislative leaders in a move that was not well publicized at the time created rules that made it highly unlikely that Ohio would be able to use the federal grant to establish the 3-C Quick Start project.
The U.S. Department of Transportation took back the grant minus the $2 million Ohio had already spent. That money was disbursed elsewhere, primarily to California.
Ohio was not alone in spurning ARIA funding for rail passenger service. Projects in Florida and Wisconsin also were killed by incoming Republican governors.
The rules for grants the FRA will be awarding from IIJA funds have yet to be written although the IIJA enabling legislation establishes some criteria as described earlier in this series.
It is not difficult, though, to image that what happened in Ohio in 2010 could happen again when it comes to developing new passenger service envisioned by the Amtrak ConnectsUS plan.
Some new passenger services may result from IIJA funding, but the scope of expansion might be more modest than what rail advocates are envisioning.
Another obstacle could arise in 2023 when the 118th Congress is seated.
Just as what happened in Ohio in 2010, the 2022 election season is likely to feature candidates pledging to repeal or restrict how funds from the IIJA are used. Passenger rail could find itself in the cross hairs of those attacks.
Historically, the party that holds the White House in a president’s first term loses seats in Congress in the next mid-term election.
With Democrats holding paper-thin margins in the House and Senate, it would not take much for Republicans to gain control of one or both chambers in the 2022 elections.
If that happens, the environment for passenger rail in the 118th Congress likely will be quite different than it has been in the 117th Congress.
As pointed out in the first installment of this series, realizing the full potential of the IIJA on passenger rail service expansion will require appropriation of funds by Congress.
It is difficult to imagine a GOP-Controlled Congress being receptive to spending billions on new rail passenger service.
Republicans tend not to favor expansive and expensive government programs. Many GOP members of Congress identify as fiscal conservatives and they often oppose government-funded passenger rail of any kind.
Some of Amtrak’s fiercest and most persistent critics are conservative think tanks and many GOP members of Congress align with their views when it comes to transportation policy.
President Joseph R. Biden will still be sending appropriation proposals to Congress in January 2023 and 2024 and his administration probably can be counted on to recommend friendly budgets for passenger rail.
Yet Congress will have the final say on how much money passenger rail receives. A Republican-controlled Congress will not be inclined to give Biden any victories he can point to if he seeks re-election in 2024.
It’s not that all Republicans are opposed to intercity passenger rail. Amtrak’s national network has survived as long as it has because enough GOP representatives and senators have voted in favor of continued funding for it. Some of them have advocated for maintaining the existing Amtrak service in their states.
Republicans and Democrats have philosophical differences when it comes to how to spend public money and what to spend it on. There is nothing sinister about that. It is just a divergence of viewpoints about the role of government at the federal, state and local levels.
This includes differing views on the role government has to play in transportation policy and what modes of transportation should benefit the most from government investment.
But even putting that aside, there are limitations as to how much either party is willing to spend on rail passenger service.
In the 50 years of Amtrak’s existence, many Democratic administrations and Democratic-controlled chambers of Congress have failed to provide the type of reliable dedicated funding of rail passenger service that advocates and Amtrak have sought.
It is one thing to marshal political support to maintain the status quo of the existing intercity rail network and quite another to build support for the type of expansive additions to the network that rail passenger advocates favor.
There just seems to be too many forces that have kept intercity rail passenger service from developing into something more than a boutique form of transportation. The IIJA has not vanquished those forces.
The passage of the IIJA and its historic levels of passenger rail funding may thus turn out to be an aberration rather than a transformation to a new world order in which the nation’s rail passenger network undergoes a substantial expansion to resemble something from the 1950s.
There is too much entrenched opposition from interests who fear passenger rail’s gains will come at their expense.
This dynamic be can be seen at the state level where lawmakers must approve a balanced budget every year and passenger rail funding is weighed against the importance of other needs.
Those competing interests were on vivid display in Ohio in 2010 in the controversy over the 3-C Quick Start project.
Aside from a potentially hostile political environment and host railroad intransigence, the success of passenger rail programs funded by IIJA are linked to how well or how poorly the law is implemented.
The potential of the IIJA to influence rail passenger service is a long game and over the course of it there are bound to be changes in priorities among Amtrak managers, members of key congressional committees, and state and local transportation agencies.
Those changes will affect what does and doesn’t get done.
At this point there is much anticipation and expectation among rail passenger advocates about what could happen now that the IIJA is in place.
But expectations are not reality. It is a lesson passenger advocates know all too well. For once there is reason to be optimistic that good things are going to happen. From a passenger rail perspective, some good things will happen with IIJA funding.
It is just that what IIJA is able to achieve may not be as far-reaching as many passenger rail advocates want to believe.
It is far from a sure thing that we are on the cusp of a new era or a second rail revolution.
Rail Passenger Funding, Running Amtrak on Time, New NS President Didn’t Impress Some Workers
January 17, 2022Bit and pieces of insights into the workings of railroad world . . .
I recently received in my email inbox a message quoting Evan Stair of the Friends of the Southwest Chief group in which he suggested that the promise of new and expanded service contained in the Amtrak Connects US plan is largely a mirage.
Amtrak has estimated the plan will cost $75 billion to implement.
In his interview, Gardner characterized the federal government as the capital partner but the ongoing operating expenses are the responsibility of the states and Amtrak.
And Amtrak has made clear that it’s responsibility to pay operating expenses will only last at best for five years. After that states will be on the hook to pay operating expenses as is the case now with state-supported corridors on the West Coast, in the Midwest and along the East Coast.
“I frankly believe the Amtrak Connects US program will result in few, if any new routes,” Stair wrote. “States are unlikely to commit to long-term operational dollars without some federal operational matches.”
Stair is probably right about that but could have gone even farther. It may not be realistic to think that states that are not now and/or have never paid Amtrak for corridor service will do so in the future even with a short-term Amtrak funding match for operational expenses.
Yes, I’m talking about you, Ohio.
Speaking of Amtrak, Canadian Pacific CEO Keith Creel told a Midwest shippers conference in Chicago last week that he was “proud” of having reached an agreement with the passenger carrier to allow for the prospect of additional passenger service on routes operated by CP and it merger partner Kansas City Southern.
As reported by Trains magazine, Creel also talked about how CP has become one of Amtrak’s best host railroads in dispatching its trains on time. It wasn’t always that way.
“Five years ago, six years ago, we didn’t lead the industry in Amtrak service,” Creel said.
He went on to say that his 30 years as an operating officer taught him that it’s not easy for a freight railroad to coexist with passenger service.
“I understand the conflicts sometimes and the tradeoffs sometimes when you mix high speed passenger rail with what is, in comparative terms, low-speed freight rail,” Creel said. “I understand the track geometry challenges, I understand the speed challenges. But I also understand that if you prioritize right, and there’s tradeoffs, and balance in a partnership, you can succeed. And that’s the approach we’ve taken at CP.”
Creel’s comments suggest that having the right attitude is key to running passenger trains on time and if CP can do it so could the other Class 1 Amtrak host railroads.
Yet CP doesn’t host as many Amtrak trains as its Class 1 brethren and doesn’t host any long-distance trains over thousands of miles.
Perhaps the best that can be expected is that the host railroads could do better than they do, but dispatching is a balancing act and there will be times when a host railroad puts its own interests ahead of avoiding delaying Amtrak for what the host sees as a relatively short period of time.
Speaking at the same shipper’s conference, new Norfolk Southern President Alan Shaw told a story of how on his first day in his new post he decided to go out into the field and meet and greet NS operating employees in Toledo, which is the largest NS crew change point on the system.
“I wanted to thank [the employees] for their dedication to Norfolk Southern and our customers, and I wanted to get their input into how we fix service and how we continue to improve our productivity,” Shaw said.
As reported by Trains magazine on its website, Shaw said he approached some workers sitting outside the crew room.
He was wearing khakis, boots and a collared shirt and the workers thought he was an operations supervisor.
“So I walk up and introduce myself. They told me their names, and one of the guys said, ‘Well, what do you do?’ I said, ‘Well, I’m the president’. And he looks at me, and I’m like, ‘Not Joe Biden president, but president of Norfolk Southern.’ And the other dude pulls out his phone, and he’s like, ‘Oh, yeah, yeah, yeah, I see the announcement. Congratulations!
“So that made me feel good. And then the one guy looks at me and says, ‘What craft did you come from? . . . Were you mechanical, or engineering, or a conductor, or an engineer?’
“And I was like, ‘No, I started in finance.’ He was really not impressed with that. He goes, ‘Man, at some point, we’re going to have a craft employee running the railroad.’
“It is somewhat humbling when you go out there and talk to them, because they’ve got their own expectations.”
Shaw is right about that, but expectations are not reality. It’s possible that a future railroad president might have worked as a craft employee at an early point in his or her railroad career, but it is not realistic to think that C suite executives will be pulled from the ranks of operating or maintenance employees.
If you want to be a railroad president you need to have spent extensive time in such areas as finance, law or marketing and moved up the ranks in those departments.
Operating employees are not the only railroad stakeholders who have expectations and the expectations of some stakeholders carry more weight than those of others.
Shaw told another story about his first conversation with members of the railroad’s board of directors.
“Their primary message to me was, ‘Don’t mess up,’” Shaw said. “Now, it was a little more forceful than that. I’ll let you use your imagination what the real verb was that they used.”
I think we can easily figure that one out.
Tags:Alan Shaw, Amtrak, Amtrak funding, commentaries on transportation, Keith Creel, Norfolk Southern, On Transportation, posts on transportation, railroad executives, Toledo Ohio
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