President and CEO Joseph Boardman announced this morning that Amtrak would pursue an “aggressive” agenda for 2012, including a large-scale equipment upgrade and some much-needed capital improvements to the busy Northeast Corridor [PDF]. Boardman said that fiscal uncertainty would not spell delayed capital investments — as it has in the past — because “customers expect us to get better.” He cited the company’s record ridership – 30.2 million passengers in 2011, the eighth time in the last nine years that Amtrak has set a new ridership record.

Artist's rendering of Siemens' "Amtrak City Sprinter" electric locomotive, the first of which will be built in 2012. Image: Metro Magazine

“I think the culture and organization of this company is changing to where we’re able to make investments,” Boardman said, offering as an example the purchase of 70 new electric locomotives. The purchase illustrates a surprising confidence in the future as the trains were “financed by debt because we were able to show folks we can pay that debt with increases in improved reliability and service.”

The locomotives will replace the entire fleet of electric locomotives currently in use on the Northeast Regional and Keystone Corridor routes, and will be capable of slightly higher speeds with greater reliability.

Long-distance trains will also be getting equipment upgrades in the form of 130 new sleeper, diner, and baggage cars. These will be used on long-distance routes which connect the Northeast Corridor to Montreal, Chicago, and Miami. Boardman pointed out that some of the cars they are replacing, inherited from predecessor railroads, are older than he is.

Concerning the rails themselves, Boardman said Amtrak would continue to pursue incremental upgrades to Northeast Corridor service. Upgrades to a 24-mile segment between Trenton, NJ, and New Brunswick will permit top speeds of 160 mph where speeds of only 135 mph are currently possible. This would be only the second segment of the NEC capable of speeds exceeding 150 mph (the other is in Rhode Island).

As for larger projects, such as the Gateway project that includes new tunnels under the Hudson River to New York, Amtrak intends to commit some funds to planning, design, and preliminary environmental review in 2012. Boardman admits, however, that there is no capital funding commitment to the Gateway project at this time.

The ultimate goal remains the implementation of a “next-gen” high-speed rail system on the NEC, capable of 220 mile-per-hour top speeds. When asked whether debating high-speed rail projects outside the NEC has made it more difficult to make HSR a reality in the northeast, Boardman answered that, if anything, “it’s given a great boost in the arm to Amtrak and to those who support rail in this nation to have HSR talked about outside the [Northeast] corridor.”

Mitt Romney won Iowa by 8 votes a day after making a weak argument against federal funding of Amtrak. Photo: Getty Images

In a landslide (er, eight-vote) victory over former Pennsylvania Senator Rick Santorum in the Iowa caucus last night, Mitt Romney solidified his lead over the rag-tag field of GOP nominees. He also took an opportunity, the day before the caucus, to make a tired old argument against public support of passenger rail service.

I gotta cap federal spending, and then I’ve got to balance the budget. Now how do you go about doing that?

[Brief heckling interlude]

My view is this: What you do to get our budget in line is you say this. You take all the programs the federal government has, and you say, “Which of these programs is so critical that we gotta have it?” And those things we keep.

But those programs that don’t pass the following test we gotta get rid of, and this is my test: Is this program so critical it’s worth borrowing money from China to pay for it? And on that basis we’ll get rid of some programs, even some we like.

[Takes an easy shot at "Obamacare".]

And there’s some other things — look, Amtrak ought to stand on its own feet or its own wheels or whatever you’d say. And I like the National Endowment for the Arts and the National Endowment for the Humanities but I’m not willing to borrow money from China to pay for it.

(Hat tip to Transportation Nation for breaking the story and providing the audio.)

In this brief moment, Romney staked out several positions that distinguish him from the rest of the pack. First, he acknowledged the existence of federal programs worth keeping — not something many Republicans want to do in these slash-and-burn days. And second, he actually mentioned transportation, which most of the field has completely ignored.

But Romney did echo the mainstream GOP attack on public rail subsidies, which help maintain money-losing lines (through conservative, Republican-voting, rural country) that the government mandates it to run as a public service. In so doing, Romney ignores Amtrak’s record ridership and the enormous success of its Northeast Corridor service, which reduces air pollution and traffic congestion along the country’s most heavily-traveled corridor. Meanwhile, we’re still waiting to hear any Republican candidate say roads ought to pay for themselves too. (Incentive: The first one who does gets a late Streetsie award for uncommon bravery.)

Though Romney’s win last night was anemic and potentially embarrassing, considering the fact that he nearly lost against someone who until very recently was destined for also-ran status, he’s positioned to clean up next week in New Hampshire and run a more consistent nationwide campaign than any of his opponents.

If this speech illustrates Romney’s true view on public transportation — that it has to pay for itself — advocates have a lot of work to do in educating him before he goes head-to-head with Obama for the White House.

This streetcar was made in Oregon, but will transit suffer under a Democratic mandate to buy all components stateside? Photo: Seattle Transit Blog

Among the bill’s stipulations:

• 100 percent of components and subcomponents of transit rolling stock must be made in the US by fiscal year 2016 (currently a 60 percent requirement, to be raised incrementally)
• Amtrak would lose its exemption from Buy America on projects under $1 million
• Any exemptions to Buy America sought will be subject to a period of public comment and must be reported to the Secretary of Transportation

It also seeks to eliminate loopholes for segmented or subcontracted projects like the east span of the San Francisco-Oakland Bay Bridge. Rahall specifically cited the bridge, the largest public works project in California’s history, as having been built using 43,000 tons of Chinese steel—“Made in China, but paid for by American taxpayers.”

The bill is the latest in a growing list of job-creation proposals and counter-proposals to come from either the President or Congress. And like those prior proposals, this one is unlikely to go very far.

Think of it as the Democrats’ answer to “drilling-for-infrastructure” (maybe “regulation-for-protectionism”?). While representatives from the AFL-CIO, United Steel Workers, and United Streetcar threw their support behind the bill at the announcement, a Republican House pushing to de-regulate everything will be unlikely to get behind a Democratic proposal to create additional regulatory burdens – and costs – for industry.

Indeed, it’s easy to read the bill as a mere political maneuver. Rather than letting the Republicans claim credit for introducing a transportation bill they’re overtly touting as a jobs-creator — and then letting them blame Democrats for refusing to pass it — the Democrats are trying to get out in front with their own unpassable jobs-and-transportation bill.

The Democrats introducing the bill remained optimistic, however. “The Republicans are now admitting that investing in infrastructure will be the major jobs bill of this Congress,” Rep. Peter DeFazio (D-OR) said. “The question is: where are they going to put the jobs?… They’ll answer it when they see this bill.”

Democrats also indicated that anxiety over the spending in the reauthorization will be assuaged if they can guarantee the money will be spent in the United States, creating American jobs. “When we’re talking about doing a transportation bill, the American people have to be convinced that we’re actually going to spend this money here in America, to put Americans to work,” said Rep. Daniel Lipinski (D-IL). “They cannot believe that we have spent these taxpayer dollars overseas.”

Buy America provisions, however, are no boon to the transit sector, which has to pay more for each component it buys. Since transit funding doesn’t increase with these mandates, the result is usually just less transit.

Chandra Brown, President of United Streetcar, was very enthusiastic: “As a businesswoman,” she said, “we need this bill.” Her company has built the first American-made streetcar in almost 60 years, and over 200 of her vendors are making new products as a result. But while the budding domestic transit vehicle industry is certainly excited about this bill, it has yet to be seen how much support it would garner from transit agencies themselves. Only one transit agency in the US—BART in San Francisco—has adopted a Buy America policy, and they did that three days ago. United Streetcar has two clients: Portland, OR, and Tuscon, AZ.

Following the announcement, Rahall was asked whether Committee Chair John Mica had been consulted on this bill, and whether it would ultimately be included in a larger transportation reauthorization effort. Rahall answered that he did not know; that moving ahead as a stand-alone bill is a possibility, but that Mica had been spoken to about Buy America’s inclusion in the reauthorization. His reaction, according to Rahall, was “not negative.”

Speaking at a press conference today, Mica backed off plans to privatize Amtrak service in the Northeast. He was joined by New York State Sen. Malcolm Smith and Reps. Carolyn Maloney and Jerry Nadler. Photo: Noah Kazis.

House Transportation Committee Chairman John Mica backed off his controversial plan to privatize passenger rail on the Northeast Corridor today, announcing at a press conference that reforming Amtrak would suffice.

Mica stood with New York Representatives Carolyn Maloney and Jerry Nadler at a conference held by the US High Speed Rail Association to announce further support for true high-speed rail along the Northeast Corridor. Mica has previously singled out the Boston-to-Washington corridor as the only proper location for high-speed rail (in contrast to the Obama Administration’s nationwide approach). Today, he urged that if any more high-speed rail funds are returned to the federal government, they be disbursed to the northeast. “Any further money for high-speed rail needs to go solely to the Northeast Corridor,” he said.

Mica said his goal was to see travel times as fast as in Amtrak’s ambitious proposal, but within a decade, instead of the 30-year timeline Amtrak set out.

Given Mica’s previous support for privatizing the Northeast Corridor, today’s announcement raises questions about how a revitalized push for high-speed rail along the route would be structured. Amtrak will be involved, Mica promised. “If there wasn’t an Amtrak, we’d have to create an Amtrak,” Mica said twice today. “It just needs reform.” He stated that he is no longer asking for the route to be taken away from Amtrak and that he is willing to compromise with other members of Congress and Amtrak leadership.

Even so, Mica still referred to Amtrak as a “Soviet-style train system.” It’s clear that ideological divisions linger.

Nadler, an opponent of privatization, added that there is now widespread agreement that private capital needs to be included in plans for the Northeast — Amtrak itself is seeking private investment — and also agreement that Amtrak will continue to serve the corridor. “If we all agree that Amtrak has to be the main vehicle,” said Nadler, “we have a lot of room to talk and to compromise.”

Mica did not announce or even call for additional federal funds for the Northeast Corridor, only saying he supported the reallocation of funding from any new states that return their rail money.

California is now by far the highest-profile high-speed rail project, and with the state announcing last week that the project’s estimated cost had more than doubled, Mica cast doubts about whether it would keep its funds. “I’ll give California a fighting chance, but it doesn’t look too good for the future,” he said. “If that money is going to lie dormant or just be spent, be tinkled away on a bunch of studies and not produce, I want that money here in the Northeast Corridor.” Mica added that he wasn’t trying to kill the California project, just lay out a Plan B for what would happen if it failed.

Rep. Maloney forcefully advocated for the creation of high-speed rail in the Northeast. “Our highways and airports are nearing capacity,” she said. “The Northeast Corridor contains 20 percent of the nation’s population and only two percent of the nation’s land.” There is, Maloney concluded, “no better program or project than investing in high-speed rail.”

In Mica’s keynote speech to the USHSR, he restated his pleasure that House Speaker John Boehner and Majority Leader Eric Cantor had committed to maintaining current transportation funding levels rather than reducing spending to what is available in the dwindling Highway Trust Fund. “That gives us the money to do what we need to do,” he said.

Mica said that Boehner would be responsible for determining where the additional revenue would come from and did not mention the Speaker’s recent announcement that the plan is to pay for the transportation bill with revenue from oil drilling.

Mica also urged the crowd, made up of high-speed rail advocates and representatives from large transportation firms, to work to educate Congress on the need for high-speed rail. There are 19 freshmen Republicans on the transportation committee alone, he noted. “Most of them have not been on legislative bodies before,” said Mica. “We have a lot of educating to do.”

In the current political environment, the Senate probably couldn't do much more than maintain current spending levels. But it's not enough to transform our transportation system. Photo: MTSNAC

The upper chamber maintained funding for several key livability programs, teeing up a fight with the GOP-led House over spending levels. A finished 2012 budget is already a month overdue and despite the Senate passage of a “minibus” (as opposed to an “omnibus”) spending bill yesterday, no one seems to expect a completed bill anytime soon.

The Senate bill maintains current overall spending levels, which, in the current environment, is a win for advocates of transportation investment, though given that the numbers don’t account for inflation, they essentially amount to a spending cut.

Either way, these figures don’t shift the status quo very much. While funding for TIGER and transit projects gets a modest boost, high-speed rail has been sharply reduced in this bill. And, since this appropriation comes in the absence of a new reauthorization of the federal transportation program, which could set new policies, these funds come without any guarantee that the money will be spent more wisely, in the pursuit of strategic goals and keeping systems in a state of good repair.

The bill includes:

• $550 million for the TIGER program, a key element of the shift away from formula funding and toward merit-based allocations for the most innovative projects. The bill sets aside almost a quarter of that funding for projects in rural communities. This funding level would represent a $23 million jump over the actual enacted number for this year.
• $41 billion – the same as this year – for the Federal-aid Highway program. Sen. Barbara Boxer was disappointed that the Senate did the math differently this year – rather than allocating $44 billion and then rescinding $3 billion of it, this bill makes the cut upfront. While that appears to be a more straightforward way to do it, some fear that it makes the baseline funding level look lower. That means that future funding will be determined based on $41 billion, not $44 billion.

• $358 million more than this year the New Starts program for capital transit projects, bringing the total up to about $8.7 billion $1.955 billion.
• $800 million for vehicle and driver safety programs, including research into the Toyota sudden-acceleration issue and incentive grants to states that enact distracted driver laws.
• $150 million for transit safety, all of it going to the Washington Metropolitan Area Transit Authority, still reeling from a deadly red line crash in 2009.
• $90 million for the Sustainable Communities Initiative – specifically, for grants from HUD’s Community Development Fund to promote integrated housing and transportation planning at the local and regional level. USDOT and EPA are partners in this effort.
• $120 million for HUD’s Choice Neighborhoods Initiative, a near-doubling of this year’s funding for this subset of the HOPE VI program. Aside from its focus on improving public housing, it also looks to improve access to schools, transportation, jobs and other services.
• $25 million for grants to help transit agencies reduce the energy consumption or greenhouse gas emissions of their operations.
• $100 million for high-speed rail, rescued by a few die-hard senators, in the face of a body almost ready to throw in the towel on the whole program.
• $544 million for Amtrak operations and $937 million for Amtrak capital projects. Amtrak is a favorite target of free-marketeers in the House looking to privatize passenger rail service in the U.S., so if the House and Senate ever even get so far in this budget process that they argue over such things, they’ll be arguing over this.

Amtrak CEO Joseph Boardman told senators that House plans would be devastating for passenger rail in the U.S.

“It’s not enough just to say we’re going to cut service,” Lautenberg went on. “It’s like cutting throats.”

The longtime rail champion took the opportunity to slam the House Republican plan to privatize the Northeast Corridor, and Amtrak CEO Joseph Boardman agreed that it would be disastrous. Boardman said privatization ran a huge risk of compromising safety and the environment.

More significantly, the Republican proposal is based on the assertion that Amtrak doesn’t do a good enough job of managing its own assets, and that a private company would be better suited to do so. But an audit of Amtrak shows great progress, testified Amtrak’s inspector general, Ted Alves.

“Ridership and revenue have grown steadily, and this year the company expect to exceed 30 million passengers for the first time,” Alves said. “Amtrak is also focused on improving management practices and financial performance and is finalizing a new strategic plan.”

Alves had several ideas for savings and improvement, but none of them had to do with privatizing its core asset. For example, he suggested restructuring Amtrak’s debt, which the company is working on, in conjunction with the Departments of Transporation and Treasury. Amtrak has identified 39 other leases that could be restructured to save money, but its authorization to do so has expired.

Alves also suggested improving long-distance train service, but said the key factor is reliability, and that can’t change unless the host railroads stop prioritizing freight trains over passenger rail and improve infrastructure, which they say they won’t do without more federal subsidies.

Indeed, many keys to Amtrak’s success are out of the company’s hands, as was confirmed by Mitch Behm, inspector general for rail at USDOT, who made it clear that the Federal Railroad Administration had not yet implemented all the legal provisions aimed at making the agency a more effective overseer of Amtrak. Specifically, he criticized the lack of a National Rail Plan.

Meanwhile, witnesses and senators alike criticized House plans to remove funding from “state-supported” short routes, which make up almost half of all Amtrak ridership. He said federal policy didn’t tell Amtrak to go out to the states and dictate what they would pay, but to negotiate with them based on their ability to pay. “How much more of the costs to the country, to Amtrak, do the states need to pick up?” he asked. He acknowledged that states needed to increase their contribution, but said it wasn’t going to be possible to drain “every nickel” out of the states. And Boardman went on to slam House Republicans for proposing to precipitously cut off support to the state routes:

But in their wisdom, there was a decision made that oh, by October 1, if we were to pass this, we would cut off the states entirely, without any compassion and understanding for the people who needed to get to work, or to a doctor’s office. Forty-three percent of our long distance ridership, so a significant portion of the state ridership, is the disabled population. It’s a lot easier for tem to use our trains than it is to use any other mode of transportation. And there is no other mode on the surface of the United States that connects the country together, than rail. None.

New Mexico Sen. Tom Udall wanted to know why the fast-growing intermountain West wasn’t slated for high-speed rail improvements, and Boardman emphasized that in order to get high-speed rail, the first step is just to maintain the presence of any rail service at all. And that means not letting Congress strip away existing state routes.

Boardman also put in a plug for the Gateway tunnel, the proposed replacement for the ARC tunnel under the Hudson River, which New Jersey Gov. Chris Christie nixed last year. “If we’re not going to move forward with that, we’re going to run out of capacity on Northeast Corridor relatively soon. Within less than 20 years, there will be no additional capacity. So for all those that believe that they can add more trains, either south or north of New York, they’ll not be able to, because it’ll be dictated by the bottleneck of the tunnels and the service areas in Penn Station.”

As for high-speed rail – forget about it, he said, unless they can double capacity in the tunnels. And since the Northeast Corridor helps subsidize money-losing routes around the country, failing to move forward with the Gateway Tunnel would be another blow to corridors, in New Mexico and elsewhere, that want to see service expanded, not diminished.

The Pacific Surfliner train service, with its 240,000 annual passengers, could get zero federal support if the House gets its way. Photo: Wired

The 2012 transportation budget passed by a subcommittee of the House Appropriations Committee yesterday cut all high-speed rail funding and slashes Amtrak’s operating grant by 60 percent. What’s more, it forbids Amtrak from using that money to fund short corridors.

Ridership on those short corridors grew five percent in the last year [PDF]. Twenty-seven train lines, including several in and out of Chicago, would suddenly see their federal funding disappear, if the House budget were to becomes law. That would only leave the Northeast Corridor and a handful of cross-country routes; half Amtrak’s ridership would be cut instantly.

According to the National Association of Railroad Passengers, a rail advocacy group, the danger goes further than just the short corridors. The organization asserts that “the bill really would kill all of Amtrak because loss of the short corridors would cut revenues and balloon costs for Northeast Corridor and national network (overnight) trains… Overhead costs—such as for station facilities and maintenance back shops—which now are shared among routes would be dumped on the surviving trains. For example, the Texas Eagle would become the sole user of the St. Louis and Fort Worth terminals and six Illinois stations. And Amtrak’s Chicago terminal costs would be borne solely by eight overnight trains.”

NARP says this bill overrides “ongoing negotiations among states and Amtrak aimed at complying with Amtrak’s 2008 reauthorization law—and overrides that law’s October 2013 target date for “equal treatment” of all states as to what they must pay for short corridors.”

The House GOP proposal to privatize the Northeast Corridor has a section devoted to “state-supported” or short corridors. One plank of the plan involves “redirecting funds from Amtrak to state DOTs.” It seems that without any other elements of the plan in place — from initiating a competitive procurement process to holding negotiations with host freight railroads — the House is trying to move forward with just one piece: the part about de-funding Amtrak. A haphazard approach like this will certainly violate the first goal laid out in the privatization plan: to maintain current levels of service.

Meanwhile, the High-Speed and Intercity Passenger Rail program, one of President Obama’s signature initiatives, which he hoped would extend high-speed rail to 80 percent of the country in 25 years, was zeroed out. Thirty-nine states have applied for funds, but much of the attention has focused on the three states – Wisconsin, Ohio, and Florida – which have rejected them. NARP said the elimination of this program is devastating to the effort to bring U.S. interstate transportation up to the level seen in the rest of the developed world, setting that movement “back by decades” and “severely undermining America’s ability to stay globally competitive.”

Luckily this bill — like just about everything else introduced in Congress these days — appears destined for gridlock. If the two houses and the president ever agree on a 2012 budget, you can be sure that some of the programs that the House is trying to cut will make their way back into the final budget.

This smiling man (THUD Chair Tom Latham) is getting ready to take the axe to prized livability programs. Photo: Iowa Independent

The House Appropriations Subcommittee on Transportation, Housing and Urban Development (THUD) is planning deep cuts to many programs, some reminiscent of House Budget Committee Chair Paul Ryan’s notorious budget proposal, which wanted to slash transportation spending by about a third.

The subcommittee is led by Iowa Republican Tom Latham, whom we profiled when he took the gavel. At the time, we were worried he would end up cutting important livability programs, and here he is, doing exactly that.

At least transit and highway spending share the pain, both getting cut the same 34 percent. Highway funding goes from about $41 billion to $27 billion; transit funding (excluding New Starts) goes from $8.3 billion to $5.3 billion.

Bizarrely, the bill regresses to a pre-cooperation era and returns to the age of agency silos. One great accomplishment of the Obama administration has been the Sustainable Communities Partnership which joined USDOT, HUD and the EPA to work together on common development programs, planning inexorably linked programs of housing and transportation in conjunction with each other, and in consultation with the environmental regulator. But the appropriations bill prohibits HUD from using any funding for anything related to the Partnership.

In his excellent analysis of the dismal news, Transportation for America’s Stephen Lee Davis also delivers this blow: the innovative TIGER grants, TIGGER grants and high-speed rail programs are cut entirely. And more, Davis writes:

The New Starts transit program, which essentially funds all new transit system construction, gets cut to $1.55 billion down from $2 billion in FY10. In addition, a policy tweak is made that requires state or local funds to make up more than 50 percent of any new grant agreements. Or put another way, the feds will no longer cover more than half of any New Starts transit project, exacerbating an existing gap between the share the government will pay for transit vs. highway projects. (Highway projects get around 80 percent of their funds from the federal government.)

Existing passenger rail service faces deep cuts of its own. Amtrak’s capital budget (new rolling stock, new lines, equipment, etc.) is cut by $24 million (from $922 million to $898 million; down from $1 billion in 2010), but the operations budget is where Amtrak takes a big hit, going from $563 million to $227 million. On top of that, an important policy change will prevent Amtrak from using any of their operating funds on state-supported lines — lines where a state has partnered with Amtrak to increase passenger rail service and ridership. To put that change in perspective, in 2010 9 million rides were taken on state-supported routes.

Amtrak State-Supported routes, from the T&I Committee report

The bill also prohibits any new RRIF loans or loan guarantees. RRIF is a loan program, like TIFIA for rail projects, which has received significant attention over the last year. Cumbersome rules and application processes have resulted in the program being seriously undersubscribed, spending just $1 billion of the $35 billion it has at its disposal. Republicans have held hearings to work on improving the program, but now it appears they’d rather just leave it for dead.

There is a silver lining to this disastrous bill, Davis says, and it’s that the incompetence and intransigence that we’ve seen lately in Congress will keep it from becoming law — for a long time, at least. Remember, the fiscal year ends September 30 — the red-letter day when the current SAFETEA-LU extension and the gas tax also expire — and Congress is nowhere near ready to pass a consensus 2012 budget out of both houses.

That means that we can look forward to another budget extension, and possibly a whole string of extensions. That doesn’t necessarily mean it will be a clean extension — lately, Republicans have been flexing their muscle to demand spending cuts, even on extensions. But we won’t see this bill enacted for quite a while, if ever.

Members of the U.S. High-Speed Rail Association on Capitol Hill with Rep. John Mica (center) on Tuesday. Photo courtesy of USHSR.

At a meeting with members of the U.S. High-Speed Rail Association Tuesday, House Transportation Committee Chair John Mica softened his stance somewhat on his plan to privatize the Northeast Corridor.

He acknowledged that the proposal is “controversial” and said that was why he framed it in a separate bill, apart from the rest of the reauthorization. He said he’s “heard the concerns” about the plan. A member of his staff said that the original plan was being portrayed as transferring Amtrak’s assets away from it, while leaving Amtrak holding the bag on the debt. “Which, when you put it that way, does sound sort of unfair,” the staffer said, indicating that issues like those are being worked out.

Andy Kunz, president and CEO of the U.S. High-Speed Rail Association, said he was glad to see Mica striking a more cooperative tone. “His initial bill and his initial hearing was a little bit ‘This is it; take it or leave it’,” Kunz said. “Now he’s recognizing there needs to be a bit more cooperative action.”

The committee isn’t easing up on everything, though. The staffer also stated that the committee was giving inter-city and passenger rail “a temporary rest” while it focuses exclusively on high-speed rail. “It does not serve the two programs well to be ‘smooshed,’ or put together and consolidated the way they have been and then have most of the projects that receive funding not be high-speed rail in any way, shape, or form.”

In response to the Congressional Research Service’s conclusion that the rail privatization scheme could run into constitutional problems, Mica’s staffer was dismissive, saying CRS merely warned that some courts could find it to be a violation, and they should be careful. (Sounds like a finding of unconstitutionality to me.)

As he often does, Mica spoke of his high-speed rail plans as a way to rescue high-speed rail from the Obama administration’s mismanagement and bungling. He often jokes about the “gift that keeps on giving”: the original $8 billion allocated for high-speed rail, some of which has been returned by gun-shy states and re-allocated.

Mica asserted that the involvement of the private sector is “non-negotiable” – which Amtrak itself would agree with, as it’s already seeking private sector partners. Mica gave Amtrak CEO Joseph Boardman credit for being on board. “Boardman sees that you cannot [upgrade the NEC to high speeds] – at least in his lifetime – under the current proposal,” Mica said. He also said Transportation Secretary Ray LaHood is “willing to negotiate.” But he cast blame on Vice President Joe Biden and Sen. Frank Lautenberg (D-NJ), who he said are willing to give “none of the pie” to private investors.

Everyone is still trying to figure out exactly what the “pie” consists of, in any case, and Mica let the USHSR know that he had sent a letter to Joseph Boardman asking for an itemized inventory of all the assets on the NEC and their fair market value. Mica’s staffer says that “knowing what’s there and how leveraged it is and what are the encumbrances” would be a “building block of private sector financing participation.”

Kunz of the U.S. High-Speed Rail Association agreed that Amtrak “needs to show that they’re willing to bend a little bit,” if for no other reason than because “Amtrak needs funding from the federal government every year.”

In an interview with Streetsblog immediately after the Capitol Hill meetings, Kunz said, “Amtrak is just assuming they’re going to control everything and run everything, and that may not be in the interests of the whole country… it’s the country’s rail system. They need to do what’s best for the country, which may not always be what’s best for Amtrak.”

Mica is hoping that transit-oriented development will be a key source of private sector involvement, and, perhaps, revenue. He pointed to successes with TOD in Phoenix and said, “Can you imagine, in the Northeast Corridor, what you could do?”

Mica also said he’s been meeting with Democrats on the larger reauthorization package, and that so far they’ve gotten about 55 or 60 percent of the way through the bill. It’s been lamented that there haven’t been “Big Four” meetings in the House like there have been in the Senate, bringing together top members of both parties from the committee, but those meetings have now started in the various subcommittees. Mica started to say that all that consultation was the explanation for the delay in marking up the bill, but then he said, “We will continue in a slower motion fashion,” he said, “mainly because our leadership controls the floor time.”

He granted that the delay makes sense. “Given the intensity of the current drama on the budget deficit, they probably calculated right,” he said. “To get this to the floor before next Friday seems highly unlikely. But we have a commitment to do it as soon as we get back [from recess]. So you’ll see everything go from slow motion into fast motion as soon as we get back.”

The U.S. High-Speed Rail Association is trying to drum up interest in its new “Republicans 4 Rail” program. They’re trying to get members of Congress, governors, state and local officials, and even some rank-and-file members of the Republican party to sign on.

For now, the pickings are still somewhat slim. Mica counts, although many Democrats see his Northeast Corridor proposal as the “death knell” of passenger rail in the U.S. So does Sen. Mark Kirk (R-IL), one of few Republican senators representing urban or industrial states. In trying to brainstorm other Senate Republicans who might be interested in joining R4R, Kirk’s staffer and the USHSR came up with a short list indeed: maybe Rob Portman from Ohio; maybe Scott Brown of Massachusetts if he weren’t running for reelection.

The rail lobbyists met with Kirk’s office after the meeting with Mica, but Kirk himself was not able to show up. His staffer talked about the Lincoln Legacy Infrastructure Development Act, also designed to draw private investment to public infrastructure projects.

He also alluded to the House/Senate split around the duration of a reauthorization. He said the constituent calls he gets on the subject are about split, 50-50, on the issue of whether to lock in low spending levels for six years, a la the House bill, or go with a two-year bill at higher spending levels, but offering less ability to plan long-term projects.

Amtrak’s annual ridership may inch over 30 million for the first time this year, but the assault on its funding by House Republicans hasn’t abated. Rep. John Mica (R-FL), chair of the House Transportation Committee, recently proposed slashing Amtrak’s federal subsidies by 25 percent over the next two years. While it’s tough to say how much deficit hawks will actually succeed in cutting, it’s looking increasingly unlikely that Amtrak – and indeed public transportation in general – will get the cash that advocates would like. Given the political climate, Amtrak faces, realistically, two choices: do more with less, or cut service and raise fares.

Amtrak is paying a big premium for these locomotives compared to similar purchases made by European rail companies.

Unfortunately, Transportation Secretary Ray LaHood’s recent announcement of a $562.9 million loan to Amtrak to buy new locomotives for the Northeast Corridor suggests that they will not be doing more with less. The money will go to buy 70 electric locomotives, which, as Alon Levy at Pedestrian Observations explains, are far more expensive than comparable European and Japanese models, and will lock us into outdated technology for decades to come.

Europe and Asia have realized the benefits of lighter and more nimble trains – cost, speed, and energy consumption among them – but Amtrak’s planned purchase is further proof that the U.S. is not quite there yet. One easy cost-saving move would be to wait two years for Positive Train Control, an anti-crash safety technology, to be fully installed along the Northeast Corridor. By 2015, Amtrak will no longer have to comply with the Federal Railroad Administration’s requirement that trains be able to withstand crashes with enormous freight trains. Free to buy lighter off-the-shelf foreign designs, Amtrak could then save 35-50 percent off the cost of the locomotives, as Alon notes.

An even more radical modernizing and cost-cutting measure (at least in the long run) would be to transition the Northeast Corridor Regional fleet from locomotive-hauled trains to electrical multiple units, or EMUs, in line with best practices in Europe and Asia. EMUs are, like subways in the US, individually-powered carriages, and standard models can be as cheap as the inflated price that Amtrak pays for its unpowered passenger railcars. The locomotive purchase locks Amtrak into buying more of these unpowered carriages in the future, making Amtrak’s decision to go with locomotives all the more important.

Taxpayers and transit-riders may be getting hosed by Amtrak’s lackadaisical attitude towards spending, but the vendors building the trains and supplying its parts probably don’t mind. Siemens may walk away with the lion’s share of the cost differential, spending much of it redesigning the locomotives to FRA standards. Thanks to Buy America domestic sourcing rules, American workers and suppliers will get the rest, with Siemens hiring 250 workers for the contract and knock-on effects for other American suppliers. Amtrak’s aversion to change and Congress’s ambivalence about public transportation started the problem, and these vested interests now have a stake in perpetuating it.

Unfortunately for transit advocates, neither the Democrats nor the Republicans are making a serious effort to cajole Amtrak – or any federally-funded programs, really – into spending money more wisely. Mica has put forward two transportation bills recently – a six-year general reauthorization, and a bill focused exclusively on privatizing Amtrak’s Northeast Corridor. Neither, however, would address crash safety standards or Buy America protectionist policy. His “major streamlining of the federal review process” might make transit projects move along a bit more quickly, but it won’t do anything to bring down high costs.

And while Mica hasn’t made any real effort to spend transit money more effectively, the Obama administration has gone a step further and actually increased costs by strengthening the protectionist stipulations attached to federal transit dollars. Back in February, Federal Transit Administration chief Peter Rogoff issued a memorandum stating that they will no longer consider “public interest” waivers for the Buy America program, which are normally issued when compliance with the rules for sourcing and manufacture would be a burden on transit agencies. This was perhaps inevitable with stimulus dollars, but the administration made clear in the memo that it affects all federal spending, not just stimulus funds.

With high unemployment numbers and an election coming up, the issue of jobs clearly looms large for Obama and the Democrats. Transit is for them as much a jobs program as it is an enhancer of mobility and cities. The risk here, as Tanya discussed a few weeks ago, is that projects will be chosen based on their ability to produce jobs, rather than their effectiveness as transportation.

Transit in the U.S. may be underfunded, but there’s no doubt that it’s also burdened by a considerable amount of waste. Beyond pricey rolling stock, American rail construction costs are astronomical, and labor productivity is rather low. With lean times ahead for the feds and many states, it’s time to get serious about transit spending. This should appeal to liberals because it means more transit, and to conservatives and libertarians because it means less waste and government spending.

But Democrats are still more interesting in ribbon-cuttings than details, and Republicans are still culturally allergic to understanding passenger rail. That means it’s up to urbanists to explain to both sides why getting passenger rail costs under control should be a shared goal.

Warning: this is about to get a little wonky. But I figure if Streetsblog readers can get all nerdy on transit, you can probably geek out on legalese every once in a while too.

CRS looked at two constitutional provisions and found that the GOP plan violates them both.

First: the Takings Clause [PDF]. The government is allowed to take private property for public use, as long as the owner is justly compensated. The bill proposes to transfer the corridor and rolling stock from Amtrak to the USDOT.

According to CRS, this poses three constitutional questions:

• Is Amtrak an entity outside the government? (It’s not a “taking” if property is transferred to different agencies within the government.) On this question, CRS says that the federal statute creating Amtrak unequivocally stated that it “is not a department, agency, or instrumentality of the United States Government.” The courts have upheld this definition.
• Do the assets to be transferred constitute “property” under the Takings Clause? CRS says they are “classic, well-established forms of Taking Clause property.”
• Is the transfer of assets from Amtrak to USDOT a taking? Indeed, it’s a “paradigmatic” taking, according to CRS. The only way for the term not to apply is if the transfer were somehow deemed non-coercive, since the draft bill contains no mechanism for enforcement. Still, CRS concludes that the “not-truly-coercive argument seems unlikely to succeed.”

OK, so it’s a taking. That’s fine – as we said, the constitution allows takings – as long as they’re justly compensated and for the public use. Whatever you think of the plan to privatize Amtrak, apparently just about anything Congress decides to do satisfies the “public use” clause. But the question of compensation is thornier.

Under the bill, the compensation Amtrak will be awarded consists of “all but one share of the preferred stock of Amtrak held by the Secretary” (USDOT holds all of Amtrak’s preferred stock) and relief of all debts to USDOT. CRS doesn’t make a determination on what the value of that compensation is, but Amtrak’s common stock, at least, is virtually worthless.

Either way, CRS says, it’s not so much the amount of the compensation as its form that is troubling. State courts have consistently found that “money is the only legally adequate compensation.”

Moving on now to the Appointments Clause [PDF]. Paradoxically, the reasoning behind CRS’s conclusion that the rail plan violates the Appointments Clause contradicts the reasoning behind its conclusion that it violates the Takings Clause.

The Appointments Clause protects the separation and balance of powers by vesting the president with the power to appoint high-level officials only with the advice and consent of the Senate. The rail privatization proposal would create a Northeast Corridor Committee that essentially takes over the powers of Amtrak, with broad authority over the acquisition and improvement of rail facilities. CRS finds that the powers given to the members of that committee are significant enough to warrant presidential appointment with Senate approval, under the Appointments Clause.

Here’s the rub: in order to determine this, CRS found that Amtrak is enough of a federal entity to warrant constitutional appointments, as to any other key federal post. In so doing, it cites a Supreme Court case that decided that Amtrak was enough of a federal entity that it had to abide by governmental free-speech mandates.

In discussing the Takings Clause, CRS found this case to be somewhat of an outlier in a case history that generally defined Amtrak as independent. But in discussing the Appointments Clause, CRS quotes the Justice Department as saying “we can conceive of no principled basis for distinguishing between the status of a federal entity vis-à-vis constitutional obligations relating to individual rights and vis-à-vis the structural obligations that the Constitution imposes on federal entities.” Which is to say, either Amtrak is a federal entity or it isn’t. And in this case, they found that it is.

The way that the House had proposed to appoint the five members of the executive committee was a little more haphazard than what the Appointments Clause mandates. The committee, under the plan, would consist of (A) The Secretary of Transportation,  (B) one member representing the states of the Northeast Corridor, appointed by the governors (and DC’s mayor), (C) one member appointed by the Speaker of the House of Representatives and one member appointed by the majority leader of the Senate, and (D) one member, selected by a majority of the voting members of the Northeast Corridor Infrastructure and Operations Advisory Commission.

The House Transportation Committee can try to argue with the contradictions behind the CRS results, but it most likely cannot escape the fact that the rail plan, as currently written, violates at least one constitutional amendment.

Top committee Democrat Nick Rahall of West Virginia couldn’t be more pleased. “The ideals enshrined in the Constitution by our Founding Fathers have guided our Nation for centuries and Republicans should not railroad these principles in their flawed rush to privatize Amtrak,” he said in a statement. “This ideological assault on Amtrak is nothing more than a Transcontinental Tragedy that will result in a Constitutional Catastrophe.”

Photo: The Economist

Surely the congressman is aware that most high-speed systems elsewhere in the first world were built with enormous investments of government money (not to mention exercises of government power, including eminent domain seizures to find land for new routes).

Major infrastructure projects, be they airports, highways, or railroads, are more often than not undertaken with significant government support. Privatisation of established rail lines has been successful before and can be again. But Americans shouldn’t trick themselves into thinking that private investors will willingly foot the bill for massively upgrading the nation’s high-speed rail infrastructure.

The post also questions the anti-privatization argument that the proposal would leave less profitable routes without an important source of funding. “Economics, not nostalgia or politics, should determine where Amtrak operates,” N.B. writes. “Right now, it’s often the opposite. Is it really necessary that Amtrak service Dodge City, Kansas (pop. 27,340)?”

Of course, the blog also says the obvious: this proposal isn’t going anywhere. House members can argue about it all they want, but the Senate isn’t having it, and neither is the president. It was wise of Mica to introduce the bill separately from the rest of the reauthorization, to avoid the risk of letting this controversial idea sink the rest of the bill.

My notes say that I’m supposed to say, ‘Thank you Mr. Mica for holding today’s hearing.’ I don’t think so. Because I think legislation that affects the entire passenger and freight rail system in the United States deserves hearing, examination and debate. There are numerous legal, financial and operational questions that need to be answered before we auction off Amtrak to Wall Street investors.

Rep. Corinne Brown (D-FL) wasn't quite ready to thank Mica, as is customary, for holding the hearing.

The hearing was called at the last minute as a result of Brown’s and others’ demands for a full airing of Democrats’ concerns before taking quick action on the Republican plan to privatize Amtrak’s Northeast Corridor.

Committee Chair John Mica (R-FL) started off blustery and aggressive, saying, “We’ll have a hearing every week if we have to until we get this done” and dismissing his critics’ concerns with visible frustration. Once he got that out of his system, though, he adopted a more conciliatory tone as he talked about Amtrak.

He introduced Amtrak CEO Joseph Boardman with some self-effacing humility: “[Boardman] takes a beating from time to time, sometimes from me, unwarranted, and I apologize publicly for that, but he does as good a job he can with the cards he’s dealt,” Mica said.

That was just the beginning of Mica’s overtures to the embattled rail chief and his allies. He prodded Democrats and witnesses for suggestions for improving the plan, looking to incorporate their suggestions to build consensus for the bill. Significantly, Mica even allowed that the plan to privatize the Northeast Corridor could end up leaving Amtrak more or less intact, especially since Amtrak is already looking for private-sector partners to team up with.

“I’m not trying to limit any service they provide, or privatize all of Amtrak,” Mica said. “I don’t mind giving authority to Amtrak to do what we’re trying to achieve. I don’t know that we need to create a second entity to do this.”

He said he’d been told by Amtrak leaders in the past that they didn’t have the authority to team up with the private sector to operate and maintain the corridor. “The key is to attract private capital, so we have got to have the ability, for whatever entity, whether it’s Amtrak or another entity, to attract that private capital.”

Boardman indirectly chided Mica for his previous attacks on Amtrak, saying, “The stability of Amtrak and its future are critical to have any confidence in us as a centerpiece. And this legislation, and the way that we’re characterized on a regular basis, doesn’t sustain that in the investment public. And it’s not accurate. Sir.”

While Mica may have been willing to take a vacation from his usual name-calling, not all Republicans were as generous in their approach to Amtrak. I’ve been waiting all session to hear from Rep. Chip Cravaack (R-MN), the freshman who ousted Chair Jim Oberstar from his seat last fall. In the first words I’d personally heard from Cravaack at a T&I Committee hearing, he toed the Tea Party line, mingling xenophobia and a fanatical commitment to avoiding borrowing. Amid more moderate, old-school Republicans like Mica, he embodied the new class of Republicans.

“Amtrak is broken, and the other fact is that we’re broke,” Cravaack said. “I hear about investment – where is that investment money going to come from? Right now 47 percent of our debt is foreign owned. Do we plan to go over 50 percent of that debt? We’re going to have foreign-owned entities own our debt and begin to start telling us where we can and can’t invest our money. I’m not willing to put my children and my grandchildren at that risk.”

Amtrak CEO Joseph Boardman said the privatization plan would set back high-speed rail development by 10 years.

Boardman rejected this kind of talk, saying Amtrak was “a world leader in terms of cost recovery and efficiency” and that its plan for developing high-speed rail had received “positive reviews.” He said breaking up Amtrak and handing its assets over to a private firm “would set back the development of high-speed rail by 10 years or more, and will cost the economy of the Northeast and the United States taxpayer a great deal more money.”

Democrats also questioned whether the bill was constitutional. “The nonpartisan Congressional Research Service has determined that this proposal is unconstitutional because it violates the appointments clause of the Constitution,” said Committee Ranking Member Nick Rahall. “It is also likely that the proposal violates the takings clause because it takes Amtrak’s private property without just compensation.” Several others echoed Rahall’s concerns. Boardman affirmed that his understanding was that Amtrak would receive no compensation at all for the corridor or the trains.

“In the history of a ‘taking’, that’s not what we do in this country, and that’s not what happened when the corridor was transferred to Amtrak back in 1976,” Boardman said. “The private owners were paid substantially, even though they were bankrupt.”

Despite Mica’s more moderate language, Democrats kept calling this a plan to kill Amtrak, and indeed, Boardman agreed that that would be the upshot. “With the debt that we’d be left with, we would not be able to service that debt,” Boardman said, “and as a result of that, without an increase in additional federal assistance, there would be no way for us to continue to operate any of the non profitable [routes].”

“We can tear apart Amtrak and hope for the best or give Amtrak the tools that it needs to run true high-speed rail,” said Rep. Brown.

“This bill throws the entire passenger rail system off a cliff and hopes a safety net will suddenly appear,” echoed Rep. Jerry Nadler (D-NY). “At least, it hopes the NEC is safe. It doesn’t deal effectively with other routes, except to remove the cross-subsidy from the Northeast Corridor that now supports them.”

Del. Eleanor Holmes Norton (D-DC) said the cross-subsidies were fair if the United States is, indeed, a union. And Rahall was standing up for his home state of West Virginia when he rushed to the defense of cross-subsidies and of the Cardinal line that connects New York and Chicago, running through his state.

“The Cardinal will suffer a fatal blow under this proposal, along with many other vital routes that connect rural areas of our country, coast to coast,” said Rahall. “Right now, Amtrak serves about 40 percent of America’s rural population. All of this service would be lost under the draft legislation.”

Democrats and some witnesses also expressed serious concerns about labor issues with a transition to private operation. While Mica and Rep. Bill Shuster (R-PA) have continually assured organized labor that wage and benefits will be preserved and that Amtrak employees will have preference for hiring, in fact all existing contracts will be abrogated under the plan, with no guarantees and no Davis-Bacon protections.

Indeed, Nadler alluded to the fact that keeping current wage and benefit arrangements would make the contract so costly that private companies would be scared away.

Many Democrats referred mockingly to a provision in the draft bill that authorizes the FRA to pay private entities $2 million each just to prepare a proposal to take over the rail operation or maintenance. Brown said such a thing was “unheard of.”

“We pay corporations in order to encourage competition among corporations?” said Norton. “Do I hear you right? Wouldn’t it be an indication of whether or not a bidder were a serious bidder, that he was willing to put his own capital up to bid?”

She said that provision would have to be stripped out or “be laughed out of the proposal.” Still, though, she and other Democrats maintain that the entire privatization plan won’t go far. Norton says “no one entertains the illusion” that the bill would get through the Senate or be signed by the president and that it “annoys” her that an otherwise “practical” committee would waste time with it.

Indeed, some speculate that Mica is introducing this bill separately from the rest of the reauthorization – which he said would be unveiled the week of July 4 – because he knows it has no chance of passage and didn’t want to let the whole transportation bill sink with it.

Privatization of Amtrak service could disrupt commuter rail lines that run on its tracks. Source: GAO

House Transportation Committee Chair John Mica (R-FL) is moving forward with his plan to hand over the Northeast Corridor to private companies, despite (or because of) the fact that such a move could write Amtrak’s obituary.

Is privatizing the corridor a good move? Mica and Rep. Bill Shuster (R-PA) say that with the participation of private companies, they can build “real high-speed rail on NEC – less than two hours between WDC and NYC” and they can “double total intercity rail traffic on NEC.” They claim they can do all that for far less than Amtrak’s proposed price tag of $117 billion.

Commuter Rail

But some say that’s “not a rational plan.” One Hill staffer working on transportation issues said that Mica’s idea “just doesn’t work.” After all, she says, as long as commuter rail shares the track with intercity rail, there’s no way to double intercity service and run it at 120-mph speeds while still accommodating local train service. She says unless their plan is to raise fares exponentially to gather funds to build a whole new parallel track, it’s impossible to meet Mica’s goals under the terms he’s setting.

A 2006 GAO report [PDF], foreseeing the GOP attack on Amtrak, found that an “abrupt Amtrak cessation” would be severely disruptive to transit agencies up and down the corridor. “Seven of the nine commuter rail agencies in the Northeast operate over Amtrak-owned portions of the Northeast Corridor,” the GAO found. “According to officials from these agencies, access to Amtrak’s infrastructure is essential to their services.”

Even if services kept running but the management switched to a private company, the GAO warned that the transition “would take months, not weeks” and would involve complex labor and liability issues. “So we’re just putting everyone through all this upheaval to essentially put in the exact same thing, just under a different name,” said the staffer.

All We Are Saying is Give Amtrak a Chance

Meanwhile, PRIIA, the law that reauthorized Amtrak in 2008 [PDF], is still in its infancy. It re-invested in the state of good repair of Amtrak’s infrastructure and sought to resolve its debts. Some say it’s too early in that process to bury Amtrak now. Besides, Amtrak itself is inviting the private sector to collaborate with them on upgrading the NEC. Proposals were just due two weeks ago. Again, to many, it’s premature to interrupt this process.

Federal Assets

More reasons to oppose the privatization scheme are coming out of the woodwork each day. Sen. Dick Durbin (D-IL) just introduced a bill, the Protecting Taxpayers in Transportation Asset Transfers Act, which draws attention to another problem with the plan: that privatization squanders federal investments in public infrastructure.

Durbin’s bill would help ameliorate that issue by requiring repayment to the federal government, as well as mandating the consideration of factors such as the environment, public health, commerce and national security. It also introduces new accountability measures to ensure sound maintenance and the disclosure of anticipated effects on wages and employment.

“The last transportation bill alone provided states with an average of $48 billion per year for upgrades to roads, bridges and mass transit systems,” said Durbin. “Any deal to sell or lease these assets should be closely examined and include a return on the federal taxpayer investment.”

Bailouts

If that weren’t enough reason for liberals and conservatives alike to flee, screaming, from any plan to sell off our most valuable transportation asset, consider this: Reconnecting America says, “Globally, rail privatization has led to costly government bailouts of private companies that have acquired too much risk.”

“Investors have an implicit assumption that taxpayers will provide a backstop for companies that make risky choices to maximize profits,” Reconnecting America continues. “This approach will require an unknown amount of taxpayer funds in an effort to attract private investors to upgrade, maintain and operate the NEC.”

British Government support to the rail system, 1985-present. Source: Reconnecting America/Office of the Rail Regulator, UK DIT

Republicans constantly point to Virgin Rail in the UK as a great privatization success story, but in fact, the company that took over the rail infrastructure went bankrupt just five years after assuming ownership and the government had to take over the company, with the net effect that the taxpayer portion of passenger rail funding increased after privatization. Virgin, the operator, stayed afloat – but according to Darnell Grisby of Reconnecting America, “If Virgin had to cover its own maintenance and capital needs, its balance sheet would be bleeding as well.” This is the model Mica and Shuster are looking to for guidance on the NEC.

Add to all of these pitfalls the fact that by taking the profitable NEC off Amtrak’s books, the lucrative Acela line can no longer help pay for long-distance rail service in the rest of the country. If the GOP thinks per-passenger federal subsidies on those money-losing lines are high now, just wait until Amtrak has no ability of its own to help cover those services.

Rural Amtrak service could be a sticking point as Mica tries to win over members of his own party to his privatization plan. Photo: TrainWeb

John Mica has blinked.

Rather than go full steam ahead with his fast-track plan to introduce his bill to privatize the Northeast Corridor today and to have the committee discuss it and vote on it tomorrow, Transportation Committee Chair John Mica (R-FL) has agreed to delay action to allow time for a full legislative hearing. Democrats on the committee had asked Mica for the chance to get a full look at the proposal and voice their concerns.

The hearing is scheduled for tomorrow. The committee has not yet announced who will be appearing as witnesses. We’ll bring you a report after the hearing.

Rahall is pleased with the change in timing. “I would like to thank Chairman Mica for agreeing to Democrats’ request to hold a hearing on this bill before marking it up so that all Members could have an opportunity to better understand its sweeping ramifications,” he said in a statement.

But other Amtrak advocates on the Hill say it’s just delaying the inevitable. And it’s not just Democrats that are critical of the plan to take the Northeast Corridor away from Amtrak and let private companies run and operate the line. There are rumors that Mica’s gotten some grief from members of his own party over the plan.

After all, no one questions that the underlying motive of the privatization plan is to dismantle Amtrak, a company Mica has long derided as a “Soviet-style” money pit.And many rural areas – often represented by Republican lawmakers – depend on Amtrak service as an essential transportation connection and a focal point of their towns. It’s no wonder the representatives of those towns are nervous about the proposal.

Not so fast, Republicans. Rahall wants some bipartisan input on rail privatization. Photo: Red Dog Report

Rep. Nick Rahall (D-WV), ranking member on the House Transportation Committee, and Rep. Corinne Brown (D-FL), ranking member on the Subcommittee on Railroads, sent a letter [PDF] requesting that the committee hold a full legislative hearing on the bill. Rahall yesterday called the proposal a “death knell for passenger rail.”

The letter says:

This legislation, which you state makes sweeping changes to the national passenger rail system, has not been shared with Democratic Members or staff; we have not been briefed on the proposal; and it is not yet available for public review. We believe there should be an opportunity to have a formal discussion on this legislation that would allow all interested and affected parties to participate before moving it through the Committee process.

The text of the draft bill has since been made available on the T&I committee website [PDF], as well as a section-by-section analysis [PDF], although there is no guarantee that the language in the draft is the language that will be in the final bill. The committee held a briefing yesterday for the public, but there was no chance for other lawmakers to comment, ask questions, or invite witnesses, as they would in a hearing. The next time the committee is scheduled to consider the legislation is next Wednesday – the day after the final bill is introduced – when the committee will vote on it.

Congressional insiders say members of the majority party usually share legislation with members of the minority, especially when it involves such dramatic changes to current law. Some say such a shutout is “unheard of.” The lack of consultation is especially notable since the Transportation Committee has historically been characterized by high levels of cooperation across the aisle.

Meanwhile, the first section of the GOP bill contains some language sure to raise a few eyebrows. It directs Amtrak to redeem all stock in the company and use eminent domain to acquire the stocks, if necessary. It’s fascinating that in order to privatize the corridor, the GOP plans to nationalize a private, for-profit corporation, forcibly seizing stock from private shareholders, if necessary. Proposals like that could alienate some conservative and libertarian allies who otherwise would like to see more private participation in rail.

LaHood isn't happy with the GOP plan to privatize Amtrak's Northeast Corridor. Photo: Christian Science Monitor

Chairman Mica and I share a strong interest in high speed rail, particularly in the Northeast Corridor.  He should be commended for giving this topic the attention it deserves.

However, based upon our preliminary review, we have 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. The administration also has the responsibility to ensure that taxpayer investments are protected and well-managed.

With 50 million people in the corridor and another 20 million coming over the next generation, the Northeast Corridor can and should be one of the top high speed rail corridors in the world.  I look forward to working with Chairman Mica to make that happen.

Could the Northeast Corridor be taken away from Amtrak? Photo: Amtrak

Mica and Shuster also affirmed their support for a national passenger rail system, but both wanted to find a way to reduce the amount of public subsidy that supports that program. “We will have to subsidize a number of the routes,” Mica said, “because almost every form of transportation is subsidized.” That’s a significantly more moderate stance from a man who accuses Amtrak of “Soviet-style” inefficiencies.

At a briefing on the plan this morning, Mica and Shuster suggested two possible scenarios: in the first, they’d separate the Northeast Corridor’s infrastructure from the operations. Amtrak would become an operating unit under USDOT and it could participate in an open bidding process to become the operator of the rail service. Meanwhile, USDOT could enter into contracts with private firms to build and maintain the 456 miles of track and right-of-way.

Advocates say the ability to turn its full attention to operating trains might not be a bad situation for Amtrak. As Mica said, “It’s very difficult to develop, finance, construct and operate a high speed system.”

Still, that’s the essence of scenario #2: Mica calls it a “turnkey” project, which would provide private companies with an opportunity to “develop, control, maintain, run, and operate” the rail system.

Mica proposes that USDOT narrow down the applicants to two or three bidders, allowing a regional executive committee the final decision about who runs the service.

“Amtrak has made some progress,” Mica admitted. “They finally identified and designated the Northeast Corridor a high-speed rail corridor.” Still, he said the Amtrak plan to do it in 30 years with $117 billion is a failure. Mica says that with private participation, it can be done in 10 years – sort of an L.A.-style 30/10 program for the Northeast – and with far less money. He said he thinks the NEC will be a “cash cow.”

Meanwhile, Mica and Shuster both took great pains to assure organized labor that their interests will be preserved under the new plan. Reaching out to “union brothers and sisters,” they said union wages and benefits would be maintained and employment would be expanded as the service grew.

Democrats reacted to the plan with a fire usually reserved for birthers and death panelists. “This plan is a death knell for passenger rail service from coast to coast,” said the committee’s ranking Democrat, Nick Rahall (D-WV). “Privatizing this profitable corridor will not merely affect train service in that region; it will have a devastating domino effect from coast to coast, leaving trains stuck at the station across the nation.”

Rahall called the plan a “partisan,” “ideological assault on passenger rail service.”

Sen. Frank Lautenberg (D-NJ), author of the law that reauthorized Amtrak in 2008, said the plan “to privatize rail on the Northeast Corridor would increase costs for passengers and make rail travel less reliable” and vowed to fight the plan in the Senate.

But other rail advocates are cautiously optimistic. Former Pennsylvania Governor Ed Rendell, co-chair of Building America’s Future, called in to the briefing to “congratulate” Shuster and Mica for their leadership, and said that while he’s a big fan of Amtrak, he knows the federal government isn’t going to come up with $117 billion to devote to the NEC.

Petra Todorovich of America 2050 said, “Without having seen the details, my sense is that this is a great first step for thinking about how to implement world-class high-speed rail on the Northeast Corridor.”

Still, she’s afraid that it neglects a critical element: the $8.8 billion maintenance backlog on the corridor. Amtrak hasn’t been provided the resources to maintain a state of good repair on the system, Todorovich said. She said every country that has developed high-speed rail has first dedicated sizable public investment in the infrastructure. She said the private sector will participate, but they’ll want a return on their investment.

“The Northeast Corridor is an asset that’s deteriorated and requires 8.8 billion of investment upfront to bring to a state of good repair,” she said. “What private company is going to come in and spend almost $9 billion before they can even start making investments that would allow them to run high-speed trains?”

The Northeast Corridor (specifically the Acela service) is Amtrak’s only money-maker, and the profits have been used to subsidize other, money-losing routes which Congress mandates Amtrak run as a public service. Rep. Shuster noted that the public subsidizes the average Amtrak trip to the tune of $118 per passenger, with that number growing to almost $408 for some routes, like the Sunset Limited between New Orleans and Los Angeles.

So what would privatization of the NEC mean for those other corridors? Todorovich points out that the help the Northeast offers other corridors isn’t that great: the NEC netted just $61 million last year. She said some of that could be made up with a national passenger rail ticket surcharge, which would reach even routes like California’s emerging high-speed rail line, which will be operated independently and would, therefore, not pump money back into Amtrak.

Besides, Todorovich said, “whether it’s the Northeast’s obligation to subsidize other corridors nationally is a question.”

She did have other concerns about the proposal to privatize the Northeast Corridor, however. “There’s always been a bipartisan coalition in Congress, anchored in some places by rural representatives who care about those long-distance services,” Todorovich said, “and there is some fear that breaking the Northeast Corridor off would upset that national coalition.”

Mica said today’s briefing opens a public comment period between now and Friday, during which time the committee will accept input about the plan. He said this first element of the reauthorization bill will be introduced next Tuesday and marked up Wednesday, meaning the committee will finalize the bill, approve it, and send it to the full House for a floor vote.

Mica said the full reauthorization will be introduced in the week following the July 4 recess, with a markup scheduled for July 12.

Could a private company take over Amtrak's Northeast Corridor? Photo: Trains

Mica said that ridership of the NEC hasn’t changed since 1977, the year after Amtrak took over the corridor: a record he calls “one of the most dismal on earth.” [PDF] Amtrak advocates contend that chronic underfunding has starved the system, creating a situation that would make world-class service impossible. They also point to record ridership system-wide in seven of the past eight years, mostly due to the increase in state-supported service. (Representatives from Amtrak would have spoken on behalf of the railroad but were not invited to testify.)

The Mica/Shuster plan would separate the Northeast Corridor from Amtrak and transfer it to USDOT initially, then spin it off as a separate business unit. A competitive bidding process would determine who takes over the title. That entity would have to establish high-speed service from Washington to New York that takes under two hours (doing it in 15 years, not 30, as Amtrak proposed) while reducing or eliminating federal subsidies. They plan to include this proposal as part of the surface transportation reauthorization bill.

Mica and Schuster stress that organized labor would keep all its protections and that the plan would boost employment, but unions are having none of it. Edward Wytkind, president of the AFL-CIO’s Transportation Trades Department, said Amtrak’s 30-year plan for high-speed rail includes all the private sector participation it needs. “There is no high-speed passenger rail system in the world that operates without significant government assistance,” he said. “Private sector companies simply cannot make a profit without federal support.”

He said private entities taking over the most profitable part of Amtrak’s system would “let the rest of the system wither” and he simply didn’t see what the country would be getting in return for this valuable transportation asset.

Wytkind reminded members of Congress that when Amtrak took over the NEC in 1976, it was because the private company that had been running it had gone bankrupt and no one else wanted it.

Ranking Democrat Nick Rahall echoed Wytkind’s point. “We created Amtrak because the private sector didn’t want to operate unprofitable passenger rail service,” Rahall said. “Private companies did not want to run passenger rail service then and I am not convinced they want to do it now… Just two years ago, DOT issued a request for proposals for private companies to develop high-speed rail in the U.S. Guess how many companies were just chomping at the bit to get their hands on these projects? Not one. Not one single proposal was submitted by the private sector for developing high-speed rail on the Northeast Corridor.”

D.C. Delegate Eleanor Holmes Norton added, “Amtrak has shown it knows how to run a railroad, because the Northeast Corridor is profitable. And guess what? Those profits are helping to pay for your districts. It’s the only part of the system that is profitable. So you’ve got to ask yourself: What are you going to do about the rest of the country if Amtrak goes private?”

Rahall said Acela constitutes a significant jump in the quality of rail service in the country, that Amtrak has made improvements, that its ridership is up and it is making money on the NEC. “We should be celebrating Amtrak’s 40^th birthday,” Rahall added, “not trying to kick it in the caboose by selling off its assets.”

Some speakers saw middle ground options between full privatization and the status quo. Ignacio Jayanti, who served on an Amtrak blue ribbon panel in 1997, suggested that a separate organization should manage the infrastructure but Amtrak should continue to run the operations. He said infrastructure maintenance was the root of most of Amtrak’s shortfall and was harder to attract public support for. However, the federal government would still own and, ultimately, control the infrastructure. It would also lend up to $25 billion in rail funds, to be more than matched by $50 to $60 billion in private sector capital.

Thomas Hart of the U.S. High-Speed Rail Association thought it should be the other way around. “America has a history of investing in state-of-the-art transportation infrastructure with the government funding the base infrastructure and private companies operating the transportation vehicles within that base infrastructure,” Hart said. “That is how our highway system and our aviation systems were built and operate today.”

Of course, all of this is predicated on the idea that Amtrak is consuming too much public funding. But many Amtrak advocates say the problem is that it’s been underfunded and that the expectation that rail should pay for itself is ludicrous, since no transportation mode pays for itself – even cars. “Last year, we spent more than $40 billion on highways,” testified Sen. Frank Lautenberg (D-NJ). “Over Amtrak’s entire 40-year history, it’s received just under $38 billion.” Even Carlos Bonilla, testifying from the libertarian, anti-rail Reason Foundation, concurred with that. Some Democrats mused that if the government could bail out Wall Street, which had created a monumental economic crisis, it could lend a helping hand to Amtrak.

Eleanor Holmes Norton urged Shuster and Mica to leave the Amtrak privatization plan out of the transportation reauthorization, predicting that this controversial proposal would kill the bill. Lautenberg later told reporters that the privatization plan “hasn’t begun to get any legs to stand on as I see it” and that it would amount to a “death potion” for the transportation bill, according to the Wall Street Journal. Even Republican committee leaders said the plan could probably pass the House but would fail in the Senate.

Senators in Appropriations have to ask, Who rides the train cross-country anymore? Photo: Pignouf

The idyllic cross-country train trips that many Americans still take could get derailed by today’s “slash and burn” federal budget policies. Meanwhile, fears for the safety of rail passengers in the post-bin Laden era are drumming up political support for costly security measures and raising, once again, questions about why the federal government funds rail routes without any promise of profitability.

At this morning’s Senate Appropriations hearing on budget requests for the Federal Railroad Administration (FRA) and Amtrak, the three senators in attendance were unified in their support for funding rail transportation. They’re working on the funding request for the FRA for 2012, not the rail piece of the overall transportation reauthorization. Still, with huge disagreements over spending levels in Congress still raging and a showdown looming over cuts as a quid-pro-quo for raising the debt ceiling, next year’s funding is a significant question.

So the three senators present wanted to know how they could be expected to defend rail funding without more transparency in the budget allocation process. They also asked pointed questions about what the administrators of the FRA and Amtrak were doing to keep riders safe from the terrorist attacks threatened by Al-Qaeda.

The FRA has taken on a greater role in the allocation of funding for rail projects over the last several years and senators appeared frustrated over a lack of clear information as to where the funding would come from. Indeed, some security projects appear in the FY2012 budget request but the FRA is also requesting a USDOT loan to for the same thing.

Transportation Appropriations Subcommittee Chair Patty Murray (D-WA) was quick to commend FRA Administrator Joseph Szabo for his efforts, but called him out for not improving transparency about how, when, where and why projects are funded.  “I support investments,” she made clear. “Now is the time to address critics head on. We must communicate with the people.”

Murray and Sen. Frank Lautenberg (D-NJ) presented a grim future for surface transportation if funding does not keep up pace with booming population growth. The only other senator to speak, ranking Republican Susan Collins of Maine, agreed and reminded her colleagues that the ambitious national rail plan proposed by the FRA, including high-speed rail, has yet to be followed up with any cost estimates, for construction or operations.

Szabo, for his part, could only promise that studies to be released within “the next couple of months” would present the “broader business case” for funding both high-speed rail and individual projects across the country. Szabo, the first union railman to hold his position, was proud of what his agency was doing to keep hazardous freight secure – but admitted that there are still unimplemented security measures that date back to 9/11.  He pointed out that for every $50 spent on aviation security, only $1 went to surface transportation.

Mr. Szabo’s predecessor and the current president and CEO of Amtrak, Joseph Boardman, was noticeably more willing to get into details. He agreed that a disproportionate number of Amtrak employees received overtime in the last few years, particularly during ARRA-funded projects, but said that it would have actually cost more to bring on new employees with Amtrak’s full benefits packages (54 percent of the salary-related cost) and train them for the required 24-30 month period, only to lay them off as soon as projects were completed. He said that Amtrak was already addressing overtime, as well as other operational overhead, wherever it could be reduced, but it was clear he did not see these among the biggest budget problems.

Sen. Collins presented Boardman with a pointed question: “How, given that you are serving more passengers than ever before, each and every month, are you losing more money than last year?” His answer began with a awkward nod to rail advocates.

The pro-rail folks always shudder and get concerned when I talk like this, but you are not going to be able to cut costs enough on long distance trains to make them profitable. It becomes more a question of policy of whether we are going to have border-to-border, coast-to-coast connectivity.

Despite record increases in ridership, Amtrak continues to rely on federal funding to keep all of its trains running. Collins wanted to know what Boardman thought of former Pennsylvania Gov. Ed Rendell’s ideas for severing the budgetary ties between Northeast railways and the rest of the country. As he has said before, Boardman believes this would only decrease ridership by disconnecting what should remain a unified transportation system.

He was also quick to remind Collins that long-distance routes are, for many rural Americans, their only connection to regional and local transit systems. Congress mandates that Amtrak operate those routes, which no private carrier would, as a public service although they do lose money. Boardman warned that while cutting those routes may seem like low-hanging fruit, it would be painful to those who most need transportation options — and would inevitably yield negative affects on ridership elsewhere.