The contrast was striking. In a week in which opposing parties butted heads during a U.S. Surface Transportation Board hearing over proposed Amtrak service along the Gulf Coast, officials held a news conference in Pennsylvania to announce expanded Amtrak service between New York and Pittsburgh.
On the surface, the Pennsylvania announcement appears to be an example of how to go about getting intercity rail passenger service.
One key to achieving such breakthroughs is money to fund capacity expansions for the host freight railroad. Another key is a lot of patience. The second New York-Pittsburgh train is five years away from being inaugurated and it has been discussed for at least as many years.
The announcement indicated that talks with host railroad Norfolk Southern over the scope of the capital improvements have some loose ends to tie up.
In theory, those negotiations could break down and result in a situation much like the one on the Gulf Coast where the host railroads are demanding capital improvements that exceed what Amtrak and its state partners are willing to pay.
Yet it seems unlikely that officials from Norfolk Southern, Amtrak, the Federal Railroad Administration, the Pennsylvania Department of Transportation and Pennsylvania Gov. Tom Wolf would have held that news conference to announce the new train if the parties didn’t think that an agreement was close to being finished.
Pennsylvania officials have been seeking a second daily train to Pittsburgh for years to supplement the New York-Pittsburgh Pennsylvanian, which uses track east of Harrisburg, Pennsylvania, that is owned by Amtrak.
The route hosts numerous Keystone Service trains and Southeastern Pennsylvania Transportation Authority commuter trains.
The operating agreement that NS and PennDOT are working to complete will define project scope, how freight and passenger rail operations will use the Pittsburgh-Harrisburg corridor, compensation for use of NS track, and liability protection.
Officials have said capacity expansion at NS freight yards is expected to cost between $142.8 million and $170.8 million with much of that being provided by the state.
The state is taking money from a fund to buy new passenger equipment to pay for NS capacity expansions.
In turn, the money from the passenger equipment fund is being replaced by federal grants awarded under provisions of the Infrastructure Investment and Jobs Act.
If it could happen in Pennsylvania why can’t it happen along the Gulf Coast?
There are a number of significant differences in the two situations starting with the political climate.
Somewhat overlooked in the Gulf Coast case is that while the proposed double-daily New Orleans-Mobile, Alabama, service has political support from Louisiana and Mississippi officials, it has faced hostility if not outright opposition from most Alabama officials, particularly at the state government level.
This split political support has, perhaps, emboldened host railroad CSX into being recalcitrant by demanding exorbitant capital improvements that it knows no one will or can agree to pay.
In Pennsylvania, there is unified political support for rail passenger service and state officials have experience paying for and overseeing intercity and commuter rail passenger service.
That level of experience doesn’t exist along the Gulf Coast. The three states involved have funded corridor-type service on the New Orleans-Mobile route in the past, but eventually those trains were discontinued after the states ended their funding.
It is noteworthy that in Pennsylvania the line to be used for the second Pittsburgh train is a far busier freight corridor than the CSX Gulf Coast line.
Yet the parties have been able agree in principle to a capital improvement plan, something that has yet to happen along the Gulf Coast.
During his testimony before the STB, former NS and Amtrak CEO Charles “Wick” Moorman extolled the virtues of additional Amtrak service to Virginia that was developed during his time at NS.
He held that up as an example of what is possible when the parties work together instead of being at each other’s throats as has been the case with the Gulf Coast service.
Moorman also cited the success of the Virginia trains with their growing ridership.
Left unsaid in Moorman’s remarks is that all of those new Amtrak trains into Virginia are extensions of Northeast Corridor service. The same is true of the Pennsylvanian and the proposed second Pittsburgh train.
The Pennsylvania and Virginia trains had the advantage of building upon existing high levels of intercity rail passenger service in a densely populated area. That is not the case along the Gulf Coast.
Amtrak’s host railroads are sensitive to accusations that they are opposed to hosting passenger trains.
CSX CEO James Foote in his testimony before the STB in the Gulf Coast case claimed to not be opposed per se to the proposed New Orleans-Mobile service. He even suggested CSX would have approved a restoration of the tri-weekly Sunset Limited on the Gulf Coast route.
That train ran between New Orleans and Orlando, Florida, via Mobile until August 2005 when the route was damaged by Hurricane Katrina. Officially, Amtrak suspended the Sunset Limited but it has yet to return and probably will not.
Last summer a Union Pacific executive wrote a column posted on that railroad’s website noting instances in which UP had cooperated with public agencies and Amtrak to host and expand rail passenger service, primarily in California.
At the same time the UP executive decried wide-ranging passenger train expansion proposals such as the Amtrak Connects US plan that he said host railroads see as efforts to impose passenger service requirements on them rather than being collaborative ventures.
What seems clear is that Amtrak’s host freight railroads do not share the vision of rail passenger advocates of the need for a wide-reaching network of passenger trains in the United States.
Class 1 railroad executive don’t spend much time thinking about the need for rail passenger service in the United States. That is not part of their mission or purpose.
That doesn’t mean they don’t have beliefs about where rail passenger service makes sense and where it doesn’t.
We might be seeing in the Gulf Coast case an example of the latter.
Amtrak Expects to Need $1B in Annual Fed Funding For the Next Decade
May 8, 2022Back in 2019 when the much reviled Richard Anderson was president of Amtrak, the nation’s passenger railroad talked a lot about how it was on the cusp of breaking even.
A budget estimate that Amtrak sent to Congress in March 2020 even predicted operating profits by 2025. Those profits were expected to grow over the next decade.
But that same month the COVID-19 pandemic took hold and the bottom fell out for Amtrak and other transportation providers.
America’s Railroad, as Amtrak likes to call itself, lost 97 percent of its ridership and Congress responded by providing Amtrak $3.7 billion in emergency funding in federal fiscal years 2020 and 2021 to stave off bankruptcy.
Although COVID-19 and its variants is still around, the pandemic fears have been waning and passengers are returning to the rails.
Amtrak now projects that it will reach pre-COVID ridership and revenue by FY2024, which begins Oct. 1, 2023.
Yet the passenger carrier’s most recent budget estimates submitted to Congress show a shift in the thinking of Amtrak management about its finances.
Gone are the rosy projections of operating profits. Those have been replaced with an acknowledgement that Amtrak will need federal funding of $1 billion a year in the next decade.
The Eno Center for Transportation has published an analysis of Amtrak’s latest budget estimates that provides an overview of how Amtrak now sees its finances playing out in the next several years.
That analysis can be read at https://www.enotrans.org/article/amtrak-concedes-perpetual-1-billion-year-operating-losses/
From my perspective, the most interesting and important points in the analysis written by Jeff Davis are made toward the end because they hint at a coming battle in Congress that some rail passenger advocates may not see coming.
In the past several months Amtrak supporters have been talking up the benefits to intercity rail passenger service of the infusion of money from the Infrastructure Investment and Jobs Act.
The Rail Passengers Association has touted IIJA as an unprecedented if not a once in a lifetime $36 billion investment in passenger rail.
In talking about how transformative this funding will be, RPA has oversold what IIJA is likely to produce. That could be setting up some of its members for future shock.
There is, of course, some truth to the rhetoric being espoused by RPA and other rail passenger advocates. And to his credit RPA head Jim Mathews has hinted that the gains of IIJA could be more fragile than many of his members want to believe.
IIJA has created the potential for expansion of the nation’s rail passenger network. That in turn has led to expectations that have been fed by Amtrak itself proposing an expansive plan known as Amtrak ConnectsUS that would create more than 30 new corridor services.
But expectations are not reality nor do they always become reality.
It is true that the IIJA contains funding that could help launch some of those new services envisioned in Amtrak ConnectsUS.
But what some may not recognize unless they have paid close attention is that IIJA is a capital funding program. It provides not a dime for operating expenses of a single Amtrak train.
Those expenses will be paid for by ticket revenue, public money or both.
Now Amtrak has said that it won’t make enough in ticket revenue to pay the expenses of its trains.
For most rail passengers advocates that is no big deal. They have long acknowledged that passenger trains need public funding and have sought to explain that away by saying that all forms of transportation are funded at some level with public funding.
There is some truth to that if you consider that the infrastructure used by airlines and bus companies is paid for in part with public money.
Airlines and bus companies will counter that they pay their “fair share” through user fees and taxes of the cost of that infrastructure, but that’s a debatable proposition that is at best a half truth.
The public funding of airline and bus operations does not stand out as a line item in a budget as does funding of Amtrak operations.
In his analysis, Davis makes a valid point in writing, “Amtrak can claim with some credibility that Congress, through the IIJA, chose to de-emphasize the issue of operating losses.”
He then makes a side-by-side comparison of what the federal code says about Amtrak operations before and after passage of the IIJA.
At first glance, those changes appear to put to rest the notion that Amtrak is expected to be profitable.
But read the language again. Whereas before IIJA Section C of 49 U.S.C. §24101 said “Amtrak shall . . . use its best business judgment in acting to minimize United States Government subsidies . . .” the IIJA changed the phrasing to Amtrak shall “maximize the benefits of Federal investments.”
Nothing in the federal code requires Congress to spend money on intercity rail passenger service at all. Likewise, the federal code does not require Congress to spend whatever it takes to maintain the existing Amtrak network forever let alone spend money to expand that network.
That is a significant point because the debate in Congress is not so much about whether Amtrak trains lose money – even if some members try to frame it that way – as it is how much to spend to underwrite those losses.
Since Amtrak’s inception in 1971, some members of Congress have sought to end federal funding of intercity rail passenger service if not put Amtrak out of business.
Those efforts have uniformly failed although at times Congress has reduced its financial support of Amtrak, which in turn led to the discontinuance of some routes and trains.
The last significant shrinkage of routes and services occurred in the early 2000s, the service suspensions that occurred during the COVID-19 pandemic notwithstanding.
It is also noteworthy that those early 2000s service reductions came as a coda to the last time Amtrak proposed major service expansions, many of which never occurred.
In the Eno analysis, Davis notes that when the IIJA was adopted deficit spending was not considered by a majority of members of Congress to be a problem because the nation was still recovering from the fallout of the COVID-19 pandemic.
But now the nation is facing large scale inflation and budget deficits are one factor that drives inflation.
If, as many political pundits predict, Republicans gain control of one or both chambers of Congress in the November elections, Amtrak funding requests may face a more hostile environment.
It may be that federal law doesn’t require Amtrak trains to make a profit, but that means nothing to deficit hawks. It never has and it never will. They have beliefs about what is a legitimate purpose on which to spend public money and what is not. Intercity rail passenger service is among the latter.
And some Republicans have already signaled what they hope to do about Amtrak.
Rep. Rick Crawford (R-Arkansas) introduced the Returning Amtrak to Economic Sustainability Act, which calls for changing the language of 49 USC 24101 to replace the word “modern in the phrase “intercity passenger and commuter rail passenger transportation” with “economically sustainable.”
The RATES act would also add the phrase “while ensuring route profitability proportional to the Federal share of investment” as well.
It is uncertain if the RATES Act would make it through a GOP-controlled Congress although it likely would receive a more favorable reception than it has in the current Congress controlled by Democrats.
But even if Democrats maintain control of Congress, lawmakers must still deal with the prospect of having to, as Davis put it, “either write the checks for the billion-per-year operating losses over the coming decade, or else use their annual platform to encourage (or require) Amtrak to pay attention to operating losses if they want to avoid writing those checks.”
That could easily lead to environments such as existed in 1979, in the early 1980s and in the late 1990s when Amtrak budget cuts resulted in service reductions.
Rather than enjoying the fruits of a second passenger rail renaissance in which the nation’s passenger train network expands, passenger train advocates will be faced with fighting to save as much existing service as they can if not having to save Amtrak itself.
Amtrak’s budget projections are filled with figures that show how much money long-distance passenger trains lose per passenger.
Those numbers have been used in the past to argue in favor of reducing if not ending federal spending on passenger trains. Don’t be surprised if those arguments surface again.
Richard Anderson is unlikely to return as Amtrak’s president but the political climate could lead to another Amtrak CEO who thinks as Anderson did and behaves as Anderson did in taking aim at long-distance trains for reduction.
Tags:Amtrak, Amtrak funding, Amtrak funding request, Congress, Eno Center for Transportation
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