A new plan for high-speed rail

Require freight rail carriers to offer passenger service again

The Obama Administration has discovered high speed passenger rail as both a job stimulus and a means for balancing fuel and environmental constraints with increasing personal transportation needs. Various state and regional groups, supported by self-proclaimed high speed rail experts, are competing for federal seed money grants. Winners will be chosen; losers encouraged to try again with the hope of an ever increasing fund supply. The U.S. Secretary of Transportation visits foreign countries to see how high speed passenger rail works. China offers to supply the U.S. with real know-how, experience and equipment, and the transportation secretary is cautiously optimistic that the U.S. railroads might be cooperative in this whole effort.

Is there anything wrong with this picture? Plenty — and, ironically, it is the direct result of conscious public policy.

As a new trial attorney in the Interstate Commerce Commissioner's Office of the General Counsel in 1970, I was a firsthand witness to the early phases of this policy which came close to destroying America's passenger rail services altogether. Like other newcomers, I was given a number of "train off" cases to defend in the federal appellate courts. Those were cases in which the ICC allowed individual passenger trains to be discontinued. The nation's railroads had a clear federally enforced obligation to provide adequate passenger service, along with freight service. This obligation could only be relieved on a case-by-case, train-by-train basis if the carrier could show that continuing the particular passenger train was no longer consistent with the "public convenience and necessity."

The arguments before the commission were essentially the same, whether for historic trains like the "Wabash Cannonball" or the myriad anonymous "number" trains. It went like this: There are increasingly available alternatives to the passenger train in question, passengers are deserting the rail service for those alternatives resulting in increasing losses for the train in question, those losses cause a diminution in service, initiating a vicious cycle, which jeopardizes the carrier's ability to provide adequate freight service needed by the public, in turn putting the very solvency of the private U.S. rail system at risk. (Almost a third of the U.S. rail carriers had then recently been operated by trustees in bankruptcy.)

The outcome of the individual cases before the commission was predictable; the carriers usually prevailed. The reviewing appellate courts deferred to the discretion given the commission by Congress, and the U.S. passenger rail system dissolved over the '70s like chips falling off a mosaic; no overall plan, just continuing dissolution.

That continued until Congress finally realized that it could no longer postpone the question of weighing passenger rail needs against America's railroads' overall solvency. The issue became no less than protecting the private sector U.S. railroads from bankruptcy — and protecting Congress from the hard issues of nationalization.

Congress acted by taking down what remained of the now-pockmarked passenger rail mosaic and replacing it with Amtrak. It absolved the U.S. railroads from their passenger rail obligations in one fell swoop. As we can now clearly see in retrospect, Amtrak was a half-hearted compromise from the beginning, if not quite a legislative sham.

Woefully underfunded from the start, the truncated Amtrak system began its life as a barely tolerated mandatory tenant on the freight-owned rail infrastructure. Meanwhile, Japan and Europe, especially France, moved into real high speed rail service while the U.S. looked on with envy and wonderment. How did we get left behind?

While rail passenger service atrophied under Amtrak, the freight-only railroads revived and thrived. Relieved of their passenger burdens, and significantly deregulated in rate matters, the U.S. freight rail industry restructured itself over the '80s and '90s. Encouraged by new ratemaking freedoms and their continued exemption from the antitrust laws, the freights entered a frenzied merger phase. The more than 40 Class I railroads that existed in 1970 merged themselves down to four mega-systems: two in the East (CSX and Norfolk Southern) and two in the West ( Burlington Northern Santa Fe and Union Pacific/Southern Pacific), with a strong north-south carrier serving U.S.-Mexico routes (Kansas City Southern).

But this freight system rationalization succeeded a bit too well. The merging carriers emphasized their most productive lines by concentrating traffic over them while sloughing off their less efficient lines. The result — a tighter rail freight system that is now approaching capacity. Ironically, this "success" is now coming back to haunt the freight/passenger divorce policy.