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House Plan to Privatize Northeast Corridor Retains Public Ownership

10:36 AM PDT on June 15, 2011

Under the House Republicans’ proposal to bring more private competition to the nation’s most valuable transportation asset, the Northeast Corridor would remain in public hands. Transportation Committee Chair John Mica (R-FL) made clear that under his and Rail Subcommittee Chair Bill Shuster’s plan, “the public maintains ownership of the corridor; we’re not giving it to any private firm.”

Mica and Shuster also affirmed their support for a national passenger rail system, but both wanted to find a way to reduce the amount of public subsidy that supports that program. “We will have to subsidize a number of the routes,” Mica said, “because almost every form of transportation is subsidized.” That’s a significantly more moderate stance from a man who accuses Amtrak of “Soviet-style” inefficiencies.

At a briefing on the plan this morning, Mica and Shuster suggested two possible scenarios: in the first, they’d separate the Northeast Corridor’s infrastructure from the operations. Amtrak would become an operating unit under USDOT and it could participate in an open bidding process to become the operator of the rail service. Meanwhile, USDOT could enter into contracts with private firms to build and maintain the 456 miles of track and right-of-way.

Advocates say the ability to turn its full attention to operating trains might not be a bad situation for Amtrak. As Mica said, “It’s very difficult to develop, finance, construct and operate a high speed system.”

Still, that’s the essence of scenario #2: Mica calls it a “turnkey” project, which would provide private companies with an opportunity to “develop, control, maintain, run, and operate” the rail system.

Mica proposes that USDOT narrow down the applicants to two or three bidders, allowing a regional executive committee the final decision about who runs the service.

“Amtrak has made some progress,” Mica admitted. “They finally identified and designated the Northeast Corridor a high-speed rail corridor.” Still, he said the Amtrak plan to do it in 30 years with $117 billion is a failure. Mica says that with private participation, it can be done in 10 years – sort of an L.A.-style 30/10 program for the Northeast – and with far less money. He said he thinks the NEC will be a “cash cow.”

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