Page 66

RAILWAY AGE CONFERENCE & EXPO

THE NEW PASSENGER PARADIGM By Ray Chambers

B

y the time I was a young man, over-regulation plus huge highway/aviation subsidies nearly killed the rail mode. In 1971, Congress created Amtrak to save freight railroads. PennCentral and other carriers tumbled into bankruptcy. By 1973, I was the lobbyist for the Secretary of Transportation, and we pushed bills through Congress to restructure and nationalize those railroads and jumpstart the deregulation that culminated in the successful Staggers Act of 1980. As a Republican political appointee, I could see the handwriting on the wall in 1975 and decided it was time to join the lucrative private sector. Beginning with the mighty Boston & Maine and Rock Island as clients, followed by short lines, C&NW and rail contractors, I wrestled with about every rail policy issue to hit Washington. Finally I retired from the firm I started. My wife didn’t want me home at lunch and I can’t play golf worth a damn, so I kept a favored client who kept me off the streets. That client, Herzog, had growing passenger operations. They noted that my Congressional successes equally benefitted their direct competitors. That ended up in the creation of the Association of Independent Passenger Rail Operators (AIPRO). We are a small organization. Four companies sit on our Board. They are FirstTransit, Herzog, Keolis and TransDev. Annually, the independent operators carry 80 million passengers in the U.S. I am now at it full time—having completely failed at retirement. Here is my message: The bad news is, the old model of monopoly intercity passenger city service is broken beyond repair. The good news is, we are at the beginning of a New Passenger Paradigm for urban and intercity rail in America. What is the New Passenger Paradigm? It is a connected urban-intercity rail network based roughly on the principles of the interstate highway system. While the federal government will be expected to supply infrastructure capital, states and local authorities will be responsible for implementation under general federal guidelines. Private service providers and P3 financing will be maximized. In fact, the New Passenger Paradigm has begun. No additional law is really needed. States are now responsible for funding and managing all 27 intercity corridors under 750 miles (2008 PRIIA, Section 209). Federal law requires that state-supported corridors be open to competition with Surface Transportation Board (STB) binding arbitration for the transfer of necessary Amtrak facilities and equipment. A streamlined Pilot Program is established where three long distance routes shall be transferred with subsidy to

32

Railway Age

July 2016

any responsible applicant who proposes equal or better service at 90% or less of the current Amtrak subsidy for up to eight years (FAST Act). The only real need for new legislation is to revisit the federal financing piece. AIPRO will press for two new statutes: 1. A new program of Grants to the States Based on 2008 PRIIA Section 301. A bipartisan deal was struck in 2008 between Transportation & Infrastructure Chair Jim Oberstar and Ranking Republican John Mica. The states were made responsible for all intercity subsidies on corridors under 750 miles (Section 209), while the federal government would provide the states with capital grants (Section 301). The states completely stepped up to the plate. Since then, Republican and Democratic governors have found the money and not abandoned one mile of service, ponying up some $300 million each year. In a complex series of sad developments, which I know well, the federal government reneged on the Oberstar-Mica Section 301 deal and left the states holding the bag with a totally unfunded mandate. 2. A new program to highlight Passenger Rail Economic Development Opportunity by promoting value capture. Transportation Oriented Development Value Capture districts can be the key to significant funding for rail projects. In the last Congress, the PetriLipinski H.R. 1544 called for a national program to encourage TOD value capture that could return significant sums to passenger rail projects ranging from streetcar to high speed rail. To accelerate the New Passenger Paradigm we need not reinvent the steel wheel, but rather look to such places as Germany and the United Kingdom. In the UK during the past 10 years of the private-operator competitive regime, operating costs decreased by 46% while ridership soared from 1 billion passengers to 1.6 billion passengers per year. All of the EU is mandated to move in this direction. Railway Age’s Chicago Rail Insights Conference, where I introduced the New Passenger Paradigm, was largely a freight forum. Take note: Passenger train expansion can be a growing component in freight’s changing business portfolio. We’ll need major public-private partnerships to add substantial capacity to our current rail infrastructure. Nothing is impossible, even in hard times. Lincoln brought us the Transcontinental Railroad in the Civil War and Eisenhower brought us the Interstate Highway System in the Cold War. Both changed America. I am an optimist. I have no doubt President Clinton—or maybe President Trump—will be happy to usher in this New Paradigm of High Performance Urban and Intercity Passenger Rail in America. It will change America for the better! RA

Profile for Railway Age

July 2016 Railway Age  

July 2016 Railway Age