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June 22, 2011

Mica’s Idea to Privatize Amtrak a Good First Step

By

If Rep. John L. Mica of Florida gets his way, passenger rail in America will no longer be in the death grip of the Federal Railroad Administration, Congress, rail unions and Amtrak management.

The Transportation Committee chairman has introduced legislation that would (1) transfer the 363 miles of tracks in Amtrak’s Northeast Corridor to the U.S. Department of Transportation, (2) require the department to seek competitive bids from private-sector investors/operators to fund, reconstruct and provide genuine high-speed rail service over the line, and (3) allow for competitive contracting of Amtrak’s long-distance routes and its state-supported lines.

Supporters claim that up to $60 billion could be attracted from private investors to create the new system, which Amtrak estimates could cost $117 billion. While the obstacles facing the project are substantial, Mr. Mica, a Republican, should be applauded for this bold step.

His plan is a welcome change from the dysfunctional status quo, but he’s facing considerable challenges. Amtrak’s exotic legal existence — it still has common shareholders, is a government corporation and is a party to numerous and costly labor contracts — must be addressed. So must the fact that passenger rail throughout the world — high speed or slow speed — is mostly a money loser. Still good-government types, fiscal conservatives and advocates of cost-effective mobility should applaud Mr. Mica’s effort to shift responsibility to the private sector.

As plans for this challenging restructuring get under way, Congress and the president should quickly create and implement a companion program to boost the quality of service over Amtrak’s many other lines, reduce Amtrak’s operating costs and allow the Department of Transportation to start working more cooperatively with the private sector in preparation for implementing this ambitious high-speed plan for the Northeast Corridor.

Specifically, Congress should require Amtrak to competitively contract the operation of its existing lines with private-sector providers that have been displacing, and/or substituting for, Amtrak in operating several regional commuter rail lines throughout the nation, most of which doesn’t use Amtrak to run the service.

In 2010, the Virginia Railway Express dropped Amtrak as its operator and awarded a five-year operating contract to the American subsidiary of the French company Keolis to provide better service at a cost below Amtrak’s.

The commuter rail operations of the Massachusetts Bay Transportation Authority (MBTA) dropped Amtrak as its operator in 2002, and contracted with Veolia, another French firm, to operate its system. Veolia still holds the contract and is in discussions with the MBTA for a third extension.

The Maryland Area Rail Commuter (MARC) operates three commuter rail lines connecting its suburbs with Washington and Baltimore. Two of the lines have been operated by private providers (most recently CSX) since the Maryland state government assumed financial responsibility for the service in 1974. Negotiations have been underway with Keolis to replace CSX when the contract expires.

Given that these three — and several other U.S. commuter rail systems — have opted to contract with private operators to achieve better service at lower cost to riders and taxpayers, Congress should impose the same process on Amtrak. At present, Amtrak operates about 23 lines within its own system and about 21 lines that are financially supported by the states. Some of these lines — say between five and 10 per year — should be subject to competition with private providers until the entire system has changed.

After all, why should Northeast Corridor riders be the only ones to benefit from the many benefits of competitive contracting?

Ronald D. Utt is the Herbert and Joyce Morgan Senior Research Fellow for the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.

First appeared in The Washington Times

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