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Why Amtrak’s petition to restore Gulf Coast service has nationwide implications

Outcome could set precedent for future requests to use freight rail network for passenger service

Amtrak inspection train at Mobile. (Photo: Amtrak/Marc Glucksman)

The recently passed $1.2 trillion infrastructure bill  supports the expansion of Amtrak passenger rail service throughout the U.S.

But according to the Association of American Railroads (AAR), 97% of Amtrak’s 22,000-mile system uses tracks owned and maintained by the freight railroads. Amtrak does own approximately 730 route miles, primarily in the Northeast Corridor, which accounts for about 40% of Amtrak ridership.

Because Amtrak must use the freight rail network, any expansion of passenger rail service could affect not only freight rail operations but also the shippers and ports that depend on the freight rail network.

The question of how to accommodate both freight rail and passenger rail is currently before the Surface Transportation Board. Amtrak wants STB to require CSX and Norfolk Southern to let Amtrak use their tracks between Mobile, Alabama, and New Orleans to restore Gulf Coast service between the cities that was washed out by Hurricane Katrina in 2005.

However, a lot has changed since 2005, notably the growth at the Port of Mobile, which Alabama relies on to fuel its economy. 

Stakeholders testified last Tuesday and Wednesday about what factors the board should consider as it mulls Amtrak’s request.

Speakers included local and state officials for and against Amtrak’s request. Active parties in the case — CSX, Norfolk Southern, Amtrak and the Alabama State Port Authority — will present their arguments on March 9, although they reaffirmed their positions this week at the close of the two-day hearing.

Below are five takeaways from last week’s hearing.

A precedent-setting proceeding

Amtrak brought the issue to STB after years of discussions among itself, CSX and NS. Amtrak contends that the other parties have slow-walked the prospect of service restoration. CSX (NASDAQ: CSX) — whose tracks Amtrak would use for the majority of the route — and NS (NYSE: NSC) argue that Amtrak backed out of a study that would have looked at the impacts passenger rail would have on freight rail in the region. That history is described in more detail here.

“One of the victims that remains is passenger rail service along the Gulf Coast. It was just one of the many harms that resulted. But it has proven difficult to set right and I’m hoping that we are at a moment of fruition in that regard,” said Sen. Roger Wicker, R-Miss., who has been advocating for the resumption of Amtrak service on the Gulf Coast for years. Wicker added that the population has steadily increased in the region since 2010, which in turn has increased demand for transportation options.

“I want to emphasize that this endeavor is not a zero-sum game. Mississippians can and should have access to efficient freight movement and effective means of passenger travel. … This case is not an abstract policy question. It’s about continuing and completing the recovery some 16 years later,” Wicker continued.

Countered Alabama Republican state Sen. David Sessions, “I would love to see passenger rail — I believe in mass transit — but this area is so reliant on the services of CSX.” Most of the track that runs through his district is single track. The district also has two ship channels.

As the proceeding progressed before STB, the Alabama State Port Authority wanted to become an active participant because changes to freight rail service could directly impact shippers’ use of and access to the Port of Mobile.

“The Port of Mobile is not the same port it was in 2005 when Amtrak last operated in Mobile. Since then, the Alabama State Port Authority, the state of Alabama, private investors and the federal government have collectively invested over $1.4 billion in infrastructure improvements to support growth at the Port of Mobile,” said Sandy Stimpson, mayor of Mobile.

Stimpson pointed out how coal cargo has grown by 50% in the past 15 years, while container rail has grown 139%.

“These numbers represent incredible growth over the last 15 years but pale in comparison to the potential growth over the next 25, as long as that growth is not impeded by rail congestion. Simply put, today’s Port of Mobile’s operations are not the same as those of 2005,” Stimpson said.

The Port of Mobile. (Photo: Shutterstock/Felix Mizioznikov)

But underlying the more specific arguments was the broader issue of how federal regulators, Amtrak and the freight railroads should navigate Amtrak’s current and future requests to expand passenger rail service, especially since Amtrak would likely use tracks operated by the freight railroads.  

Indeed, a number of participants noted that the hearing has long-term ramifications.

“In DOT’s view, the board’s decision here will have far-reaching implications beyond the Gulf Coast. The outcome of this proceeding will be pivotal to the future development of intercity passenger rail in this country,” said Federal Railroad Administration Administrator Amit Bose. “We believe it’s imperative that the board use its authority to ensure that host railroads fulfill their fundamental statutory obligations to allow the expansion and improvement of intercity passenger rail services. As the board knows, the statutory obligations are at the core of the balance that Congress struck when over 50 years ago, it created Amtrak and relieved railroads of their common carrier obligation to provide intercity passenger rail service. It is the American public that suffers when the services are held up here.”

Bose also noted that the federal infrastructure package calls for FRA to complete a major study evaluating the restoration of daily Amtrak long-distance services that have been discontinued or are not daily.

U.S. Rep. Peter DeFazio, D-Ore., chairman of the House Committee on Transportation and Infrastructure, reiterated the responsibility of the Class I railroads to enable passenger rail service on their networks.

“The biggest barrier is getting enforcement of [Amtrak’s] statutory rights so they can add service in parts of the country. This is not the only route that they’re looking at putting additional service on, but the precedent established in this hearing will be very applicable to those future ones,” DeFazio said.

Even the railroads noted the importance the proceeding might have on future decisions regarding passenger rail.

“We believe that America can and should have both safe, effective passenger railroads and a safe, productive freight rail system. Mutual success for passenger and freight railroads requires collaboration and recognition of the challenges that railroads face, especially as it pertains to newer expanded passenger rail service,” said Ian Jefferies, AAR president and CEO. However, he said AAR takes no position in the proceeding and does not advocate for any of the parties.

“In our view, litigation should always be a last resort, as most host railroad and Amtrak disputes are, and we expect they will continue to be, resolved informally,” Jefferies continued. “Therefore, we strongly believe that early coordination and cooperation between the host railroads and passenger railroads can lead to better outcomes for all involved. And … we believe the board can facilitate that cooperation.”

The proceeding even garnered comments from those who live far from the Gulf Coast but feel that the hearing could impact their pursuit of expanded passenger rail service.

“I understand the importance of freight rail networks, especially now at a time when supply chain issues and trucking shortages are plaguing our economy. And yet the importance of investing in passenger rail, a greener connective tissue linking cities across the nation, cannot be ignored,” said Satya Rhodes-Conway, mayor of Madison, Wisconsin. “This vision can only truly be achieved by ensuring that Amtrak has access to freight rail, as outlined in laws that are already on the books. For communities like Madison, the ability to establish passenger service could be unreasonably impaired if freight operators are given the broad ability to block passenger rail.”

Who will pay for Amtrak service?

Another point of contention at the hearing was who will pay not only for capital improvements that would need to be made at Mobile, but also pay for Amtrak’s service  between Mobile and New Orleans once initial dedicated Amtrak funds and federal funding expire. 

“Amtrak has refused to commit to any additional infrastructure investments to accommodate its new service. Yet Amtrak is in an enviable position in that it could help address the infrastructure needs it requires,” said CSX President and CEO Jim Foote. “Having recently received billions of dollars in the recent infrastructure bill — and there are billions of additional dollars that can apply to projects like this — one should be asking, what level of investment, if any, is Amtrak willing to provide to support its new service? Is this new service a priority for Amtrak or not? In my view, there is a right way and a wrong way to add new passenger service to a busy rail line.”

Amtrak has said that it as well as state and federal sources have committed to providing funds for the Gulf Coast line.

“The taxpayers are looking at a sizable bill down the line for passenger rail,” said Alabama Republican state Sen. Chris Elliott, noting that Alabama and the city of Mobile have yet to dedicate funding to the passenger rail service.

City Councilman Joel Daves also questioned the city’s role in paying future costs for Amtrak service. While Amtrak may foot the costs to cover any operating deficits for the first few years and the federal government might subsequently bear the burden for several years, Daves expressed concern about who would pay for future operating deficits down the road. 

Those costs could include additional capital and ongoing expenses such as grade crossing improvements, track and dispatching upgrades needed for positive train control, and additional facilities and insurance-related costs.

“What I’m afraid of is that there’s going to be some kind of unfunded mandate to the city or to the state of Alabama in order to fund an operating deficit, which is greater than any operating deficit of any rail line that I know of,” Daves said. 

Daves said a Mobile resolution endorsing passenger rail service and its commitment to provide $3 million for the first three years of that service are contingent on two conditions that he says haven’t been met: Amtrak or the Southern Rail Commission (SRC) securing funds from other sources to construct a passenger rail station and undertake necessary capital improvements that would address freight and passenger rail service needs, and the completion of a study assessing the impact that passenger rail service would have on freight activity, taking into account projected growth at the Port of Mobile and the widening of deepening of the Mobile ship channel.

Data should drive decision-making

The parties all agree that data is key to this issue, but they disagree on how efforts to collect that data have been handled.

Amtrak and the SRC, an interstate rail compact created by the federal government to advocate for rail service in Mississippi, Alabama and Louisiana, argue that CSX and NS haven’t been transparent with the data or operational procedures they used for previous studies, including those with funding support from FRA, arguing that the data is proprietary. They also say there is copious data on the issue from previous studies over the years.

Greg White, former chairman of the SRC, said part of the problem was CSX’s estimates on how much it would cost to restore passenger rail service to the Gulf Coast. Costs went as high as $2.3 billion at one point for service between New Orleans and Orlando, Florida. Other estimates include a revised figure of around $400 million from CSX and $120 million from the U.S. Department of Transportation for the Mobile-to-New Orleans service.

“We’re now seeing what appears to be delaying tactics by CSX using straw man arguments about port concerns that are simply an attempt to kill passenger rail along the Gulf Coast. If CSX had negotiated in good faith over the last few years, I would have confidence … . But as someone who’s at the table at every stop and engaged in numerous telephone conversations through the early Gulf Coast working group years, I have to say that I’m convinced we’re being stonewalled.” 

CSX countered that it has been working with the other parties on providing needed data and that it is Amtrak that isn’t cooperating. CSX and NS have both said they support passenger rail in the region, provided that freight capacity needs are addressed.

“This case is about far more than just getting 20 to 40 people per trip from New Orleans to Mobile,” CSX’s Foote said. “It’s about a new national agenda and Amtrak’s desire to change the law and create a new road map for imposing new passenger service without working with host carriers or local communities to first add necessary capacity. It is hard to resolve a dispute when the other side has a different agenda.”

Knowing what data to use, such as the data used in a rail traffic control study, also helps the parties negotiate using the same language or units of measurement, according to AAR’s Jefferies.

Furthermore, that data is not only helpful in determining how to establish passenger rail service, but also in helping the railroads know how and where to invest in their networks, Jefferies said.

“Railroads make investments to meet not only today’s capacity demands, but future capacity demands as well, because investing in a railroad is, as you know — if you’re growing capacity, that’s a 50-plus-year financial commitment you’re making,” Jefferies said. “And when establishing a new passenger service, I think it’s important that you set those expectations early. Whether or not that requires infrastructure investment from Amtrak or from the project sponsor is a project-specific question. 

Jefferies continued: “I’ll say in general … we see countless projects around the country that come to fruition in a positive way. And those generally occur when all interested stakeholders have the opportunity to sit around the table, agree on a mutually desirable outcome, agree what the required resources are to bring to the table and agree who’s going to bring those resources. And we see that work successfully — I won’t say every day, but very frequently around the country. And at the end of the day, it is all about that early communication, coordination and agreed-upon outcomes. And so without getting into the specifics of a particular project where traffic flows may change, I just think it’s important that we all keep that in mind and know that those investments that are made today are made for long-term commitments.”

Bur Amtrak contends that NS and CSX haven’t provided the necessary data.

“Like any analytic tool, RTC [rail traffic controller data] produces usable outputs when the inputs are accurate. Transparency in the process is critical. When Amtrak and its commuter partners do RTC modeling, they agree upon the inputs and assumptions and all data used in the modeling,” said Amtrak President and CEO Stephen Gardner. “As Ian Jefferies of the AAR and [former head of Amtrak and NS] Wick Moorman have told you, that is also the standard practice in the freight railroad industry. But that’s not what happened with CSX and NS here. They unilaterally selected inputs and assumptions and wouldn’t tell Amtrak or FRA what they were.” 

The impact of supply chain congestion and changing workforce patterns

The COVID-19 pandemic not only exacerbated supply chain congestion but also changed how people work. Witnesses noted those two trends during the hearing. 

Indeed, supply chain challenges served as a backdrop for those urging STB members to take heed before approving Amtrak’s request. Not only is much of the service line single track, but any freight delays that are seen as long term could send business away from Mobile and to competing ports. 

“I do not believe that this is the right time to voluntarily introduce dynamics that threaten to add to a serious supply chain [crisis], which challenges our country,” said Mac McCutcheon, Alabama Republican state representative and speaker of the House.

McCutcheon continued: “It strikes me as undeniable that whatever your interest in passenger rail, now is simply not the time to proceed. The nation’s supply chain is facing fundamental challenges to a degree that we have not seen in decades. Those challenges are throughout the economy, adding to the very real pressures created by inflation and other economic stressors. Charging forward with a new passenger service before — and I emphasize this — before we have addressed all the items that need to be talked about, I feel is shortsighted. The good news is that we have time to get this right. Any immediate urgency in expanding the passenger service needs to be fully vetted.”

Shippers are concerned that if CSX trains must give preference to Amtrak’s trains, it could create delays on the freight rail network or cause congestion. Moreover, delays of several days can result in significant demurrage charges, shippers noted.

“Small delays can cause us to stock out at our terminals. Our customers are building runways, bridges, tunnels, highways, ports for federal, state and local governments, among others. They cannot have a hundred men standing on a half-complete bridge, waiting for cement for one day or two or even more, not to mention the significant fines and penalties they face when they don’t complete these jobs on time,” said Tom Giovinazzi, director of rail services for building materials manufacturer Holcim.

The Mobile River and the Port of Mobile. (Photo: Shutterstock/George Dodd III)

In addition, any local delays could affect the fluidity of the greater rail network.

Over the past five years, the Port of Mobile has increased from one to five per week its calls of vessels coming from Asia to the U.S. Gulf, according to Brian Harold, managing director for APM Terminals Mobile, which handles containerized cargo coming in and out of the port. The port also has access to five Class I railroads and two major U.S. interstates.

“The Gulf Coast, simply put, needs to be attractive to shipping companies. We need the Gulf to be our third coast for our supply chain. In order for that to happen, we need multiple viable ports of call that can provide larger volumes and support these vessels that are continuing to get bigger and bigger,” Harold said. “For Mobile to continue to be a viable port of call for vessels that are expected to double in size, that requires continued growth on our rail corridor for freight. Simply put, my company, our shippers and our stakeholders see these issues worthy of due process and consideration.”

However, Amtrak supporters said the COVID-19 pandemic’s opening up of opportunities for people to work from home can be a boon for outlying communities near metropolitan areas that have access to passenger rail.

“In these last few years, where people desire to live in a community like ours, they’ve moved from Philly or New York or New Jersey to come to a community like Scranton. But in order to continue this migration and continue to connect these economies and build opportunity, we need to maintain those transportation options to the major metropolitan areas,” said Paige Gebhardt Cognetti, mayor of Scranton, Pennsylvania. “Passenger rail is about opportunity for regional economies. It’s about families looking for a higher quality of life. It’s about building a sustainable infrastructure for the future. We’ll keep fighting here in northeastern Pennsylvania to reestablish our own passenger rail corridor to New York, and will stand up for other communities that need to get their lines back up as well.”

What would Wick do

Comments from Moorman, a former president and CEO of both NS and Amtrak, garnered attention from the board because of his unique vantage point. Moorman has also been a member of the Virginia Passenger Rail Authority, which has sought to expand passenger rail service through the commonwealth.

Moorman’s interest in the proceeding stems from his involvement in reaching agreements between Amtrak, Virginia and North Carolina over the expansion of Amtrak service in those states.

“While negotiations over these types of projects are never easy, they shouldn’t take forever. If you have reasonable people on both sides, they can get done, as I have seen many times. And it does seem clear to me that a neutral party needs to step in and come up with a resolution and it’s also very clear to me that the STB is the right entity to do that.”

During Moorman’s tenure at NS, Amtrak expanded service in certain areas of Virginia, which is significant because the Virginia Port Authority in Norfolk faced issues similar to those the Port of Mobile is facing now in potential freight impacts related to adding passenger rail service. 

But after identifying capacity needs alongside Amtrak, “the NS line did not have any detrimental impact on the port’s rail service,” Moorman said. 

The modeling used by the parties at that time included physical characteristics of the rail line, as well as details on freight operations. While some of that information was proprietary, the pertinent information was provided by using confidentiality agreements, Moorman said. The modeling should also take into account not only existing service and needs but proposed capacity improvements, he said. 

“The key in all of this is you cannot effectively use a capacity modeling tool like RTC unless there isn’t a commitment to a fair process and a willingness to negotiate on both sides. The results of the modeling must be shared and transparent, as I said before to both parties,” Moorman said. “And this is particularly important in Amtrak’s case, as agencies like the FRA insist upon showing that projects are efficient and that all of the investments for which funding is sought are necessary to achieve the project’s purpose before they’ll ever award grants.”

He continued: “And one other important point to make about capacity modeling: It isn’t just about tallying up a list of capital projects. When railroads are looking to address capacity issues, building infrastructure is always the last choice because of its expense, both in terms of capital and ongoing maintenance. And that holds true even for railway engineers like me who think rail infrastructure is a wonderful thing. Effective modeling involves figuring out not only what to build but what you don’t need to build. There are alternatives such as tweaking schedules or implementing operational efficiencies that will minimize the need for expensive infrastructure investments. And if all the parties aren’t invited to the table during capacity modeling, such alternatives are likely to be ignored.”

“You don’t have to just build an agreement that’s set in stone forever. You build an agreement that has some flexibility in what might happen and the steps that both parties will take,” Moorman said.

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One Comment

  1. Richard Arguile

    “While negotiations over these types of projects are never easy, they shouldn’t take forever. If you have reasonable people on both sides, they can get done, as I have seen many times.”

    Moorman is correct – there is no reason Amtrak and railroads cannot decide on where longer sidings and double-tracking are necessary to expand the volume of trains using any route – freight and passenger. It is laughable how the railroads have suggested that billions of dollars of improvements are required to handle a couple of Amtrak daily trains. The railroads want Amtrak to pay 100% for ROW improvements that increase their own efficiency at zero expense to them. Shame on their greed.

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.