And then, the Feds blinked


Passenger trains? So much for the Obama administration's "sense of urgency."

The U.S. Department of Transportation has not only solidified its reputation for ineptitude when dealing with railroad matters; they've also proven incapable of playing a decent game of poker!

On the one hand, we had the Washington elite. On the other, a group of sober-minded and responsible businessmen.

And the bureaucrats blinked first.

I must admit that Ray LaHood's crawfishing has been fairly comical to watch. I only wish he hadn't left the F.R.A.'s Joe Szabo to fade most of the heat. It was LaHood and his badly planned and executed "guidelines" for new-and-improved passenger service which caused the problems.

Oh, well. I suppose the vision of Obama Speed Rail went to their collective heads. After all, with such a wondrous plan, what else would our Class Is want to do but hop on board?!

Perhaps bring a healthy dose of reality to the proceedings?

All the U.S. D.O.T. really needed was the willingness to treat our industry with respect. That would have enabled them to acknowledge the Big Three issues (capacity, taxation and liability) and understand why it's necessary to include a pot full of cash with any negotiations. Unfortunately, they did NONE of those things! If I was a gold-plated Brass Hat, I'd be telling our government to go jump in a lake, too!

According to various sources, the F.R.A. is now "working with states and the railroads to come up with guidelines in the next six weeks that better balance the need for passengers to know they will reach destinations on time and the need for freight railroads to avoid congestion with passenger trains."

Referring to our existing railroad system as "world-class," Szabo said he believes "it needs to be improved and preserved.”

Refreshing? Yes. Honest? That's a good question. After all, "working with railroads" - which should have been a major part of the process all along - sounds eerily similar to the calls for reason LaHood once passed off as trivial, "nitty-gritty details."

So which is it?

At least for now, we'll have no more talk of the railroads "sidetracking" Obama’s "signature transportation project." Szabo, eating a forced plate of crow, admitted the proposed guidelines were "poorly worded, poorly vetted." The F.R.A.'s public statement specifically mentioned how Szabo "accepted personal responsibility" for his agency's "failure to seek stakeholder input."

F.R.A. spokesman Warren Flatau and Associate Administrator Karen Rae, still smarting from their boss' dressing down, are remaining a bit more defensive. Regarding the original guidelines, Flatau said, "This isn't something we pulled out of thin air."

Maybe they should ask a railroad executive what he thinks, first.

One such executive, speaking to Fred Frailey (and requesting anonymity), remained skeptical that anything has changed. "The proof will be in the pudding," he said. "Let's see if they listen to the railroads."

As the F.R.A. busies itself drafting new guidelines, Szabo remains upbeat. "There's no question the right balance can be achieved," he said.

Insofar as yesterday's work is concerned, Szabo confessed that inadequate dialogue between his agency and the other players caused the initial rift, allowing "for potentially extreme interpretations" of what the federal government was trying to achieve.

"It's important in any partnership that you properly respect your partners. We know with that initial guidance that we put out, we didn't do a good job of respecting our partners."

Respect. Partner. Nice sounding words.

Now, let's see if they really mean them - and listen.

 

 

  • Your thoughts are provocative and thoughtful, Blaine.  I'm not an operating expert, but I should think additional passenger frequencies could be scheduled onto most freight lines.  Perhaps a few are so congested that no additional trains can be run, but I suspect that's a small percentage.  I do know that the Class 1s, through the AAR provided Congress with their basic policies toward passenger use of freight rail tracks back in 1997.  Most of the Class 1s indicated a willingness to cooperate.  Among their conditions were: our stockholders will not be expected to subsidize Amtrak; our customers will not be expected to subsidize Amtrak; any capital investment required to handle passenger trains shall be provided by Amtrak or the Congress; and, some lines simply cannot be shared because our projections are that all current planned capacity will be taken up by freight operations.  I think, Blaine, that if you really look at this issue closely, you'll find that the real obstacle to better, more frequent passenger service comes from the Congress and the libertarians who once read "Atlas Shrugged."  Note, too, that Amtrak would need considerably more equipment if it were to operate increased service - either new routes of more frequencies.  Yet, in placing new car orders, Amtrak apparently intends to scrap the old equipment and not keep it in reserve.  Good management?  You tell me.

  • The latest information I have concerning Amtrak farebox return rates (FBRR) indicates that 72% of their operating costs are recovered.  This does not include potential revenue from other sources such as advertising, concessions, etc.  This information was gathered from what should be considered a reputable source.  This level of subsidy is apparently lower than any other operating (rail) passenger service currently providing service in the U.S.  Without mentioning the names of the other agencies included in the report, many had FBRRs in the 40s and 50s with one agency down as low as 8.1%. Considering the heavy subsidy the gov't currently provides for our nations highways and airports, the Amtrak subsidy doesn not appear excessive.

    Illinois State Governor announced the "ground breaking" of the first (incremental) HSR project in the U.S. at Alton, Illinois today on the U.P. line between St. Louis and Chicago.

  • I have no problem with the data you provide, Blaine, but I do have some problems with the alleged "logic" of the data.  First, I am unaware of any other company operating intercity rail passenger service in these United States.  (If there are others, I'm certain a loyal PR reader will set me straight.)  That means others are commuter operators and/or excursion/entertainment operators.  That's not apples and oranges; it's not even apples and apple sauce.  Aside from using steel wheels to roll on steel rails, they really are different businesses with different business models that make farebox recovery a meaningless comparison.  By my standard, which may be wrong, Amtrak has the best farebox recovery ratio - and the worst.  A 70% farebox recovery ratio says nothing about capital investment, capital cost, return on capital, or any of those other annoying measurements that must be applied to any venture.  Sorry to appear negative, but I come from a world where stockholders get really unhappy if the business they think they own part of doesn't return well over 100% in farebox revenue - enough to cover the cost of capital invested in the business.

  • Amtrak spends $1.60-1.70 for every revenue dollar.  This is clearly a failed business mode -l unlike the highway system which only spends $1.60 or so for every dollar of gas taxes received. The challenge with Amtrak is that it owns and operates the equipment on a largely private infrastructure while the highway system is set up for private ownership and equipment on a public infrastructure.  Hence, there is no question of counties, cities & townships using general revenues to pay for construction, operation and maintenance of the "last mile" system so vital (more than twice the mileage of state & fed highways) to make the state and federal gas tax system work.  Local governments find it much harder to justify subsidizing Amtrak for a wide variety of reasons.  So Amtrak= federal subsidization (and annual uncertainty) while highways=local subsidization.

  • Subsidization is subsidization, no matter how you slice it.  A debate over which layer of government spends how much is an exercise in futility.  That Amtrak may spend $1.60 to $1.70 for each dollar of revenue is probably a meaningless figure.  If airlines were not effectively subsidized and the private automobile were not effective subsidized, would Amtrak's subsidy need be as high as it is?  

    I have said until I'm blue in the face that rail passenger service does not operate without subsidy anywhere in the world.  To argue that Amtrak is a failed business model borders on the ridiculous.  Why set a standard for Amtrak that is not applied to any other mode of passenger travel?  How about increasing the federal and state gasoline tax to a level that would pay for construction and maintenance of public highways?  How about increasing fuel and excise taxes on heavy trucks to a level that approximates their cost responsibility for the same public highways?  How about switching from a per-gallon tax that produces less money each year relative to miles driven, and replace it with a vehicle mile tax?  That Amtrak operates its equipment over a private right-of-way is a meaningless statement deserving of a big "so what?"  A subsidy is a subsidy.  Also, considering that federal and state fuel taxes go to support of federal and state highways, I can assure you that many miles of public road are in fact maintained by local governments.  This is particularly true in the upper Midwest where heavy 18-wheel farm trucks beat unpaved and lightly paved county roads into dust just moving grain from farm to market.

    Do I have answers to all transportation problems (note, in the English language, we are talking about problems, not "issues," as those who practice corporate-speak like to call them)?  Of course not.  But I do recognize that simple, black and white solutions rarely provide meaningful solutions.

  • Larry,

    I appreciate your comments, positive or otherwise.  I was careful to classify the agencies, I was using to compare to Amtrak, as  "operating (rail) passenger service currently providing service in the U.S.".  I know that Amtrak is indeed currently the only "intercity" passenger operator.  I was merely trying to compare the apparent apples of commuters, etc. to the oranges we know as Amtrak. I was only interested in making a statement that the current level of subsidy for Amtrak may be warranted. I was also not implying that any of the capital costs related to Amtrak or the other "passenger operators"  were covered even partially by farebox revenues.  

    There exist factions in the industry today that firmly believe that, with the right level of service, operating ratios greater than unity (Operating Revenues/Operating Costs >1) are possible. Indeed two of the states with the largest share of the 2009 $8B PRIIA funds are banking on it.  

    I'm interested in all HSR projects including plans to develop shared corridors with lower targets of regional and emerging high speed rail speeds.

  • Blaine:  You are correct.  There are factions that believe rail passenger service - if properly run and with the appropriate fare/service structure - would be a commercial success.  They are "true believers," and that's a kind term.  Real HSR, which would require separate tracks if not separate rights-of-way, would be no more economic than today's Amtrak service.  I am not opposed to rail passenger or HSR service.  I simply think it will be an easier "sell" when its adherents present realistic arguments for it and the required subsidies.  The "foamer" belief that there are plots against passenger service may make intersting reading; they are not at all realistic or even rational.  I criticize libertarian kant on numerous issues in addition to passenger rail.

  • Larry, I appreciate your comments.  The other relatively unique attribute of "true" HSR projects which is often muddied by the U.S. freight experience is related to the required maintenance effort.  Too often railroad engineers assume that maintenance costs vary directly with speed and traffic volumes.  While this relationship certainly holds true when comparing similar lines running similar trains, this overly simplified perspective should not be extended to include the rather unqiue design of "true" HSR systems.

    I'll attempt to shed some light on the vast difference in a few short paragraphs.  

    Firstly the horizontal and vertical geometric design of HSR lines differs substantially from that of typical freight lines.  To appreciate the difference consider that the typical curve used in a turnout which permits diverging speeds of up to 110 mph is so flat that it is actually considered tangent by some of the FRA's own standards for acceptable line deviations (in 62').  While the FRA does ensure that curved geometry can be appropriately checked by longer chords, the point I'm attempting to make here is that we have curves that are essentially tangent.  Even the curves which are outside of turnouts and which may be superelevated are so flat that they are essentially defined as tangent by existing FRA rules governing freight lines. Imagine the potential savings which would be realized by freight railroads if suddenly all of their curves became tangent!

    One other point I'd like to make is related to slab track installations.  Properly designed, these systems require far less maintenance than their ballasted track alternatives. I've heard the stories about thousands of Japanese descending upon Shinkansen lines in the early morning hours to "renew" sections of track. This is more closely tied to their maintenance philosophy than real maintenance need.  For the skeptics out there I ask you to read the FRA's RR0803 research report which describes the slab track installation made on their DOT test track wich has endured 7 years of coal train testing, accumulated hundreds of MGTs and has not required a single day of maintenance. Nor is there any signs of pending failure or need for maintenance.

    I'm not a rolling stock expert but suffice it to say that notwithstanding the FRA's CEM requirements,  "faster trains generally need to be lighter".  

    I aplogize for being rather long-winded. I believe it is important that we all appreciate that "true" HSR infrastructure (and rolling stock), perhaps counterintuitively, is likely to require less maintenance attention than conventional shared corridor freight lines.  In this respect, the empirical rules which govern today's passenger operations and the ability of fare box revenues to cover operating costs, may need to be revisited.

  • Yes. Lower speed operations depend on balancing intial cost and maintenance cost at one point; HSR at another, since what would cause a minor problem over time in one situation could cause immediate catastrophic failure in the other, and because, as you say, the easiest way to improve acceleration and braking is not to beef up the brakes and the motors, but to spend money on weight reduction.

    This is (part) of what can drive the disproportionate construction costs, and a huge part of why governments see it as an appropriate stimulus project.

  • For those of you that want to continue to wrip Amtrak , I suggest reading William Buckley's National Review on line article "Yes to Railroads" . Many of the arguements pro and con concerning passenger rail would be answered. Stimulus funding for transportation rail is a joke as it is for any other industry . Freight railroads taking federal funds for infrastructure are hypocritical if they object to passenger rail getting the same.  

    Hopefully on November 2nd , sane people will be in control of Congress and in 2012 we will have a new party in control, hopefully dominated by fiscal conservatives . In the meantime the AAR should put out a publication as they did in the 50's and 60's with figures as to what each transportation mode receives in subsidies either direct or indirect (such as tax free bonds to build and non taxable real estate). I am sure the Heritage Foundation could help the AAR in this regard. Then in 5 years set ALL modes on a glide path to profitabilty or covered by user fees. Then let the fittest prevail. Maybe some passenger trains will be discontinued or added and maybe some airports will be expanded or closed.

    As our country goes into debt to foreign governments , now is the time to let supply & demand prevail . We cannot afford to

    subsidize any form of transportation, river traffic included.

    Until ALL modes are on an even playing field , I will fight for the rail industry (both freight and passenger) to be on an even playing field .

  • GB(?)>"Hopefully on November 2nd , sane people will be in control of Congress"

    Have you no respect for over 200 years tradition?

  • Clinchfield:  I might have let anmccaff have the last word - his was quite good - but you have so much misinformation in your comments that I feel it necessary to correct the record:

    C - For those of you that want to continue to wrip Amtrak , I suggest reading William Buckley's National Review on line article "Yes to Railroads" . Many of the arguements pro and con concerning passenger rail would be answered.

    When did Buckley become the expert?  He has standing as a conservative, not as a transportation maven.  I was not aware that he's still alive.

    C- Stimulus funding for transportation rail is a joke as it is for any other industry .

    When you're in a hole, it's considered a good idea to stop digging.  Stimulus spending puts money into the hands/pockets of those who can be counted on to spend it quickly.  My economics textbook referred to the multiplier effect of spending such money.  Some joke.  I'm not laughing.

    C- Freight railroads taking federal funds for infrastructure are hypocritical if they object to passenger rail getting the same.

    Freight and passenger rail are two completely different businesses.  The onlything they have in common is that the rails are 4 feet, 8 1/2 inches apart, and both use steel wheels on steel rails. Their business models are completely different.  Besides, the freight railroads have not asked for any federal funds for infrastructure.  They would like to have an investment tax credit of 25% for those projects that create new capacity.  If this troubles you, C, please discuss in a future comment.

    C- Hopefully on November 2nd , sane people will be in control of Congress and in 2012 we will have a new party in control, hopefully dominated by fiscal conservatives .

    anmccaff provided the best response to your screed.  This is the PR blog, not a political debate site.

    C- In the meantime the AAR should put out a publication as they did in the 50's and 60's with figures as to what each transportation mode receives in subsidies either direct or indirect (such as tax free bonds to build and non taxable real estate). I am sure the Heritage Foundation could help the AAR in this regard.

    Some of us might not be as in love with the Heritage Foundation as you appear to be, Clinchfield.  I've never known the recipient of an "indirect" subsidy to admit that he received any subsidy.  Some subsidies are "justified" by the fact that competitors get them and the playing field just might be unbalanced.  If truckers did not receive subsidies in the form of lower-than-justified fuel and excise taxes, would the Interstate Highway System be as extensive as it is and would the failed railroads of the Northeast and Midwest have failed?

    C- Then in 5 years set ALL modes on a glide path to profitabilty or covered by user fees. Then let the fittest prevail. Maybe some passenger trains will be discontinued or added and maybe some airports will be expanded or closed.

    That's a nice, simple approach.  Simplicity is not the same as being correct, however.  If this nation had insisted on every passenger train covering all expenses by fares, I daresay there would be no passenger trains left at all.  You may believe in libertarian kant, but the world is not as simple as you seem to believe.  I know of no commuter operations - bus or rail - that covers all its expenses.  It is considered a good idea, though, to get several million Americans to their jobs each day in major American cities, so we have commuter service subsidized by the society.  Is that one of the services you believe should be discontinued?  As for airports, I'll save that for a different blog.  Let it suffice to say that major city airports actually are not subsidized, the airlines operating at them paying the cost of the bonds that built them.  Smaller city airports do tend to be subsidized, but just try to cut them off.  You'll be lynched by the good citizens who believe that commercial air service keeps them functioning in the real world.

    C- As our country goes into debt to foreign governments , now is the time to let supply & demand prevail . We cannot afford to subsidize any form of transportation, river traffic included.

    That's a nice political rant, C, but this country has been in debt since the Revolution.  It funds the debt by selling bonds.  Yes, foreign governments purchase the bonds, just as foreign individuals and American citizens do.  Debt is debt, and you have tapped into a right-wing rant on this one.

    C- Until ALL modes are on an even playing field , I will fight for the rail industry (both freight and passenger) to be on an even playing field .

    Go get 'em, C; go get 'em.  Just how will you fight to keep everyone on this level playing field?  What rail freight rates might be charged if railroads didn't have to compete with subsidized trucks and barges?  What volume might those railroads have if their competitors were not already subsidized?  Just curious.

  • A couple of comments.  First, I think Buckley's words are important, since they summarize well why someone who is usually uncomfortable with subsidies will tolerate them for passenger rail.  Ideas have more value, sometimes, when they come from someone you don't expect to hear them from.  By the early sixties, it was obvious to many that the Reds weren't leaving mainland China any time soon, but it had to be Nixon that moved on it; others would have been seen as "soft on communism."  Buckley's words have the same power as a lawyers do when he's telling you not to sue, even though it's gonna cost him a fat fee.

    As for the degree of recent freight subsidy, many projects were less a question of subsidy than of mutual advantage,  Public money that speeds port access can have a direct, measurable ROI, as can particular spurs and other such local upgrades- they often show up in changes to the tax base; the benefits of eliminating grade crossings are a little harder to fix, but they can be real enough, too.  In some cases, such work has minimal direct benefit to the railroad, and a great deal to the areas surrounding the track.  Even if the money goes to or through the railroad, that ain't what I call a subsidy, not in the way that, say your average Amtrak line is.

    Finally, useful as stimulus spending may be, far too many people remember only half of Keynes' ideas...the part that lets them spend, of course.  The flip side of deficit spending was deliberate contraction of the money supply in boom, and nobody -business, labor, voter, or politicians - likes the sound of that so much.

    It's also worth remembering that stimulus spending was originally seen as an emergency measure; we seem to have used it for smaller and smaller "emergencies."

    Finnally, it -does- matter what you spend any money on, if you want to call it "investing" instead of "relief."

    It's worth remembering that part of the reason rail was hurt from about 1918 through....well, I dunno that it has stopped yet...was that roads and waterways, being publicly owned, were seen as appropriate places to spend money in a downturn.  

  • Kind of you to say so, but a little editing on my part might have gone a long way.  "Finally" shouldn't show twice, and all that.