7/11/17 Forwarded email from Dirk:<br /><br />Nice analysis of the FRA Competitive Rail proposal. Not likely to &quot;fly&quot; with all the restrictions.<br /> <br />-----------------------------------------------------------------------------------------------------<br /> <br />From Trains.com<br /> <br />Analysis: Hurdles await long-distance privatization plan<br /> <br />By Bob Johnston | July 10, 2017<br />RELATED TOPICS: PASSENGER | REGULATION | GENERAL NEWS | AMTRAK<br />Trains Industry Newsletter<br />Get a weekly roundup of the industry news you need.<br />Sign up<br />By signing up you may also receive occasional reader surveys and special offers from Trains magazine. View our privacy policy.<br /><br /><br />The eastbound &#039;Southwest Chief&#039; speeds past the Kewa, N.M., Rail Runner station in 2014 on tracks now owned by New Mexico, which would have to furnish access to a petitioner wanting to take over the long distance train.<br /><br />Three photos, Bob Johnston<br /><br />WASHINGTON - Will private companies step up to take over existing U.S. long-distance passenger train routes? A directive from Congress in Amtrak&#039;s 2015 reauthorization that was folded into 2016&#039;s Fixing America&#039;s Surface Transportation Act aims to find out.<br /> <br /> <br />After a public hearing and comment period ending October 2016, the Federal Railroad Administration on July 7 issued the Competitive Passenger Rail Service Pilot Program&#039;s final rule, which outlines the requirements for bidding and how proposals will be evaluated should a franchise of four years be granted. <br /> <br /> <br />Trains News Wire examined the final rule&#039;s details to determine challenges and opportunities for both prospective route bidders and Amtrak as the incumbent. Here are five of the pilot program&#039;s principle points:<br /><br />1. The winning bidder would receive 90 percent of Amtrak&#039;s &quot;fully-allocated operating cost.&quot;&nbsp; <br /> <br />Testing the premise that another operator can run an Amtrak long distance train more efficiently and with better service while assuming there would be an operating loss, the program provides the new operator with an annual payment inflation-adjusted over the four years equal to 90 percent of what Amtrak reports as its &quot;fully-allocated operating costs of the route for the prior fiscal year.&quot;<br /> <br />Explaining how the agency weighed commenters&#039; concerns about where that number comes from, the FRA says, &quot;to avoid confusion,&quot; it will post the &quot;maximum subsidy amount available for each route&quot; on its website. The figure is supposed to include &quot;only cost categories associated with the operating portion of Amtrak&#039;s grant.&quot; <br /> <br />But every long-distance train is saddled with apportioned costs, not just fuel and employee wages. Without a full-system burden which Amtrak must support, a third party operator could conceivably come up with a &quot;this train only&quot; cost structure substantially lower than what Amtrak reports and still have extra funds available to promise enhanced on-board service. <br /> <br />Questioned by Peter DeFazio, D-Ore., the House Transportation and Infrastructure Committee&#039;s ranking member at a June 22 hearing, Amtrak president Wick Moorman admitted, &quot;When you look at how Amtrak does its accounting, the long-distance fares which are roughly $500 million cover the fuel and crew costs and base operation of the network - where the loss is incurred is really in the allocated cost, the cost of the reservation system for the entire network, the law department, and all of the (selling, general, and administrative) expenses.&nbsp; <br />&nbsp; <br />Every route outsourced to another operator would deduct that amount from Amtrak&#039;s operating grant. Moorman told DeFazio that if the long-distance network were abolished, &quot;we would be able to cut some (costs) but the rest would then go back to the state-supported businesses and the (Northeast) Corridor.&quot;<br /><br />&#039;Hoosier State&#039; equipment trails the &#039;Cardinal&#039; north of Lafayette, Ind., on Aug 29, 2016. Indiana used Amtrak crews operating Iowa Pacific equipment, but that arrangement isn&#039;t allowed in the long distance outsourcing plan.<br /><br />2. Route bidders must either own the route infrastructure or &quot;enter into a written agreement governing access with the owners of such infrastructure.&quot;<br /> <br />This effectively means that any host railroad that doesn&#039;t want to get back into the passenger business itself has veto power over any operator other than Amtrak that wants to run a train. Of the 15 long-distance routes (excluding terminal trackage), all but two (City of New Orleans and Auto Train) run on at least two railroads; on four of these (Palmetto, Crescent, Silver Star, and Silver Meteor), one of the &quot;hosts&quot; is Amtrak&#039;s Northeast Corridor. Bidders are not permitted to shorten an existing route by serving only a portion of it.<br /> <br />Further, the final rule prohibits a route petitioner to partner with Amtrak in any way, as Iowa Pacific Holdings did when Indiana used Amtrak operating crews to run the Hoosier State while Iowa Pacific supplied equipment and on-board service. Although hiring displaced Amtrak conductors and engineers is a preferred option, these people would have to report to the host railroad&#039;s operating management and safety officers.<br />&nbsp; <br />Some railroads may also view cooperating with a petitioner as a Trojan horse, which might be used against them if a third party freight operator wanted to run on its tracks in the future. On the other hand, if they have contracts with a commuter rail operator such as Herzog or Keolis, it wouldn&#039;t be much of a stretch to extend that known association to a long distance route.<br /><br />3. The new operator must also receive &quot;concurrence&quot; from a state if the long distance train covers a route portion &quot;funded by a state or states&quot;<br /> <br />No long distance train operates over a route that does not at least share host railroad tracks with state-sponsored services, though whether a state actually &quot;funds&quot; a route, as opposed to only operation of its own trains over it, is open to debate. Into Chicago, for example, all of the Midwest corridors are assessed a portion of route costs (stations, reservation system, etc.) that Amtrak does not help defray with a long distance train. The Empire Builder runs on publicly owned Metra commuter rail tracks, but five Michigan round-trips&#039; only involvement with the Capitol Limited and Lake Shore Limited is running with those trains on Norfolk Southern-owned right-of-way.<br /> <br />States, however, have an on-going business relationship with Amtrak, which is in a position to establish costs such as the reservation system and leased cars and locomotives. It is naïve to assume that this would not have an effect on whether a state would &quot;concur&quot; to have another operator take over a train such as say, the Coast Starlight or City of New Orleans, each of which provides another round-trip on one of its sponsored corridors.<br /><br />Passengers wait in new &#039;Auto Train&#039; station at Lorton, Va., in 2015. A bidder on this service would be required to find a different venue and equipment or strike a deal with Amtrak for leases.<br /><br />4. Surface Transportation Board will adjudicate any disputes between Amtrak and a winning bidder of a long distance route.<br /> <br />Amtrak is required to provide &quot;access to its reservation system, stations, and facilities directly related to operations of the awarded route(s) to the bidder.&quot; This presumably would also mean cars and locomotives if the petitioner was unable to find suitable equipment. &quot;Access&quot; doesn&#039;t mean providing facilities at &quot;cost,&quot; because Amtrak is likely to argue it has paid substantial sums in keeping its own assets modern and up-to-date.<br /> <br />For instance, it has completely rebuilt both Auto Train terminals, instituted e-ticketing as a part of the reservation system, and invested heavily in Chicago-based dispatching facilities handling train movements at Chicago Union Station and in New Orleans. Given the dearth of car and locomotive options or running repair facilities available to a new entrant, it is reasonable to assume that there will almost certainly be a difference of opinion between Amtrak and a potential bidder aiming to pluck one of its 15 routes as to what is a reasonable leasing price for use of equipment and stations.<br /><br />5. The pilot program petitioning process will necessarily reveal information, which Amtrak has considered to be proprietary.<br /> <br />Competitive Passenger Rail Service Pilot Program petitioners must file a bid by March 4, 2018, 180 days after the final rule becomes effective in September 2017. Among other details, the submission must &quot;provide the FRA with sufficient information to evaluate the level of service described in the proposal&quot; and &quot;how the passenger rail service would meet or exceed the performance required of or achieved by Amtrak on the applicable route during the last fiscal year.&quot;<br /> <br />While Amtrak is required to provide on-time performance, revenue, and ridership information by route in its federally required monthly statements, it closely guards the multi-dimensional Customer Satisfaction Index scores compiled by utilizing thousands of monthly post-trip surveys of passengers. These include metrics based on travelers&#039; perceptions of food service, bathroom cleanliness, information given by crews, and the like. Route managers and states use this information to monitor performance, encourage employees who do a good job, and take corrective action where warranted. <br /> <br />Strengths and weaknesses released in sufficient detail would be extremely valuable to petitioner trying to make a case to take over a route. But that bidder also must be ready to launch a similar tracking program to confirm that it is indeed fulfilling its promises.<br />&nbsp; <br />After the bid is received, Amtrak has 120 days to file a bid of its own in an attempt to justify why it should keep the route, and may choose to mine the same statistics to build its case.<br /><br /><br /><br />Craig Peachy, Director<br />SMART – Transportation Division<br />Wisconsin Legislative Board, LO 056<br />7 N Pinckney Street, Suite LL-25<br />Madison, Wisconsin 53703-4208<br /><br />