Who will own the Northeast Corridor? The winner is ...

Posted by Fred Frailey
on Monday, July 18, 2011

The struggle over who will own and control the Northeast Corridor appears to be coming to a head. This year and next, at least, the apparent winner is Amtrak. I thought I would give you my overview of the struggle now unfolding.

On one side is Rep. John Mica, a Florida Republican who chairs the U.S. House of Representatives’ Transportation & Infrastructure Committee. He introduced legislation on June 15 that would transfer title of that part of the Northeast Corridor belonging to Amtrak to the Department of Transportation. At DOT, an appointed five-member executive committee would oversee competitive bidding by private investors for the right to invest in NEC improvements and operate passenger trains. (Competition with Amtrak would also be encouraged on short-distance and long-distance routes elsewhere in the country.)

On the other side is Amtrak, with its own 30-year, $117-billion plan to build a new, double-track, 220-mph NEC, also with private investment. Amtrak asked for expressions of interest or concrete proposals. Amtrak is now in the process of selecting a company to help it prepare a detail high-speed rail business and financial plan that will more clearly lay out the necessary steps. Later will come selection of private investors who will share in the costs (and rewards).
In an interview with Bloomberg’s Lisa Caruso, Mica said last Thursday that “Congress will never, never, even no matter what happens, they’re never going to give them $117 billion. They might give them a little bit here and little bit there. But then you get a half-assed, half-baked approach.” Spokesman Steve Kulm responded that Amtrak has no intention of seeking $117 billion from Congress, but rather intends to maximize private participation.
Mica’s legislation would not kick Amtrak off the NEC, I should add. Only its ownership would be taken away. But the chairman told Caruso that Amtrak would have to “give up some of the operational activity. Nobody is going to come into this unless they get a piece of the pie.”
Amtrak got some support last week from the Congressional Research Service, an arm of the Library of Congress that provides policy and legal analysis to committees. CRS said that giving the NEC to the Department of Transportation would violate the “takings clause” of the constitution’s Fifth Amendment, which requires compensation for government seizure of property. The CRS report is advisory only. Supposedly, should the Mica legislation become law, Amtrak could sue to block seizure of the NEC.
But Mica’s bill will not become law, not this year and not during the 2011-2012 session of Congress. He probably has the votes to get his bill out of the Republican-controlled committee and perhaps through the Republican-controlled House. But even then, the measure has almost no chance of success in the U.S. Senate, where Democrats hold a 53-47 working majority. And President Obama would oppose the bill even if the Senate went along and it landed on his desk for signature.
But that’s not the end of the story. Both Mica and Amtrak are building their cases to sway public opinion and congressional votes in the 2013-2014 session. Each side would be helped by concrete proposals from private investors. I suspect Mica will have the harder job. To date, his approach has been big on bluster and short on specifics (read a summary of the legislation here). Amtrak took the time and trouble to develop a comprehensive plan (read it yourself by going here) and, as mentioned earlier, is preparing to flesh out this proposal. The plan’s shortcomings are its awesome price tag and that three-decade time frame. But I suspect that for close to $40 billion you could build a new, 220-mph railroad between New York and Washington, and after permitting, do so in half a dozen years.
So while Amtrak may prevail this year and next, this fight is not over. Not even close to it. — Fred W. Frailey


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