Heading Down the Wrong Track on Amtrak’s Northeast Corridor

Congress’s refusal to provide sufficient funding has pitted the nation’s passenger rail network against state agencies.

(Photo: AP/Mike Groll)

A man works on a rail bridge spanning the Hudson River as an Amtrak passenger rail passes by in December 2015 in Albany, New York.

Last fall, Amtrak implemented a new “cost-sharing policy” that significantly bumps up payments that some state transit agencies in the Northeast make to the national railroad network. The new policy aims to funnel additional funds into North America’s busiest regional passenger rail network—Amtrak’s Boston-to-Washington corridor—which is sorely in need of fresh infusions of cash to make up for decades of infrastructure disinvestment.

But the Massachusetts Bay Transit Authority (MBTA), the agency that runs the metro Boston public transportation system, cried foul when Amtrak presented it with a nearly $30 million bill for its yearly share. In a January letter to outgoing Amtrak president Joseph Boardman, Massachusetts Secretary of Transportation Stephanie Pollack called Amtrak’s demands “unreasonable” and pointed to the long-term contract between the two systems, in place for more than a decade, under which they extend services and the use of facilities to each other free of charge.

Amtrak has not backed down, and efforts to broker a resolution have failed, leading MBTA officials to a “see-you-in-federal court” gambit that is being closely watched by the mass transit sector.

Amtrak and state transit agencies like the MBTA that operate commuter rail networks should be natural allies. Instead, the two sides are now pitted against each other as a result of Congress’s refusal to sufficiently increase funding levels for the country’s passenger rail network. Federal and state transportation officials cannot satisfy the riding public’s appetite for 21st-century rail lines (like the ones in Europe and Asia that American tourists swoon over) with 20th-century trains, tracks, tunnels, and bridges, barely sustained by funding levels so inadequate they would raise the eyebrows of the 19th-century titans of industry who originally established the country’s rail networks.

The lawsuit comes at what should be a triumphant moment for Amtrak and its reliably profitable Boston-to-Washington lines.

The lawsuit comes at what should be a triumphant moment for Amtrak and its reliably profitable Boston-to-Washington lines. In the Northeast Corridor (NEC), Amtrak is the short-trip mode of choice. Between New York and Boston, more people travel by rail than by air; between New York and Washington, more than three times as many people use Amtrak than airplanes.

To the surprise of transit advocates, Amtrak made out better than it has in recent years in the five-year FAST (Fixing America’s Surface Transportation) Act that Congress finally passed last year after dozens of short-term funding extensions. The national railroad reeled in more than $8 billion over the period, for an average annual increase of $90 million. The NEC received a nearly $3 billion package, while the rest of the national system landed $5.5 billion.

Such sums, however, are still just a drop in the bucket when measured against Amtrak’s most basic needs. The NEC alone has a $52 billion backlog in delayed maintenance.

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For Michael Dukakis, the former Massachusetts governor, 1988 Democratic presidential nominee, and one-time member of Amtrak’s board of directors, the lack of funding is a travesty, particularly since the NEC service is such a success and because Amtrak covers most of its operating costs through its revenues.

“Even for some of the conservatives in Congress, this would be pretty dramatic evidence that the place is working hard to manage itself and to meet its obligations,” says Dukakis, a passionate rail fan who can be spotted in the Boston area using both the MBTA and Amtrak. “Yet there is a strong block of conservatives who don’t want to spend any money on [passenger rail],” he adds. “How they reconcile this with billions in subsidies for both highways and airports, I don’t know.”

Dukakis recognizes that the FAST appropriations fall far short of the multiple billions needed to catapult Amtrak into the rail big leagues with France, Japan, or China. “Every advanced industrialized nation in the world except us is investing heavily in high-speed rail and a national high-speed rail passenger system,” Dukakis told The American Prospect.

In an effort to scrounge up more money for infrastructure maintenance, the Northeast Corridor Infrastructure and Operations Advisory Commission (the region’s rail policymaking body which includes representatives from Amtrak, the NEC states, and the U.S. Department of Transportation) came up with a roster of assessments that each state transit agency in the corridor must pay to Amtrak.

According to the MBTA lawsuit, Amtrak would reap tens of millions in savings under this new policy.

Which is likely why Amtrak wants to ditch its back-scratching arrangement with the MBTA. According to the MBTA lawsuit, Amtrak would reap tens of millions in savings under this new policy. Other states in the NEC like New Jersey would not.

The Bay State’s deal with Amtrak is unique. New Jersey Transit and other state transit agencies pay Amtrak for access to the tracks that the national railroad owns. However, the MBTA owns the nearly 40 miles of track between Boston and the Rhode Island state line. Under the terms of the 2003 contract that is the focus of the current lawsuit, Amtrak uses the MBTA’s tracks and stations, in return for which it dispatches both MBTA commuter rail trains and its own intercity trains. Amtrak also pays for the maintenance of the MBTA’s rail line. Under the terms of this grand barter arrangement, neither agency pays the other for these services.

What the lawsuit does not say is that MBTA has a problem with the new policy for an even simpler reason: The agency does not have $30 million to spare. Trapped in a fiscal nightmare, the MBTA carries nearly $9 billion in debt, has yet to plug holes in its 2017 budget, and continues to try to figure out how to save a metro Boston light-rail extension project that is $1 billion over budget.

So while Congress continues to sidestep the dollars-and-cents issues that led to the Amtrak-MBTA dispute, the NEC states will have to deal with the fallout themselves. But no one is fooled: In a December 2015 report outlining the new assessments, the NEC commission summed up Amtrak’s political travails this way: “The federal government has failed to provide Amtrak with consistent policy or financial commitments to support the mission it has prescribed for the company or to support intercity passenger rail in general.”

Time to Build the Revolution

I am not proposing that we should give up on winning the nomination – there is still a path. What I am saying is that it’s time to start building a grassroots agenda that won’t depend on winning the nomination. We may not have enough delegates to win the nomination, but there will be enough delegates to change the Democratic Party for future elections. Here are just some examples.

Platform Committee

When I worked for Bill Bradley in 2000, we were dismayed at the makeup of the platform committee. It was full of corporate execs. We sent a delegation to a platform committee that included Tom Hayden, Gloria Allred, and Lila Garrett. They were completely shut out, with none of their platform planks even earning a vote by the committee. It is probably too late to influence the makeup of this year’s committee, but we should demand that the 2020 platform committee have no seats allowed to corporations. If we play our cards correctly, I think there will be labor delegates in the Clinton camp that would welcome this move. It is time to return the party to working people and progressive organizations, many of whom are in the Clinton camp and could work with us on this.

Money in Politics

As we are seeing with the Sanders campaign, it is not surrender to refuse to participate in the current campaign finance system. This will be a little tougher to implement, but we could prohibit the party from forming super PACs and go into 2020 with a Democratic Party that raises its money like Bernie did. Get ready for a big fight here. Of course the platform should call for overturning Citizens United and implementing public financing, but it usually does call for those things, while practices never change.

Electoral Reform

Get rid of the front-loaded red state nominating process. If the calendar were reversed, we might be talking about how hard it will be for Hillary Clinton to catch Bernie Sanders. How about a National Primary Day on June 7th, when everyone’s vote will count the same. I spent the year in Iowa, and I see the strengths of retail politics in the current early state process. However, especially in the caucus system, there is too much room for establishment rigging of the process. Let’s get back to one person, one vote, and let all voters choose the nominee. I have heard all the arguments for the little guy not being able to compete in a national primary, and I think it is nonsense. Bernie had the largest rallies from day one of his campaign and raised the most money. If you have the best message, you can compete. “One Person, One VOTE!” should be a chant ringing through the convention hall in Philadelphia. Letting Iowa, New Hampshire, South Carolina, Nevada, and a bunch of southern states provide the momentum needed to win the nomination needs to end.

I would also love to see Bernie’s delegates fight for an opening up of our election process to lift the restrictions on third parties. Heck, with what’s happening on the Republican side, they might be willing to make it easier to form a third, fourth, or even more parties. It is ridiculous to think that two people could represent the views of the whole country.

These are just a few things that come to mind. I started out structurally since everything else depends on unrigging the process. Keep fighting for every delegate. The job at hand would be easier with Bernie at the helm. Let’s just not put all of our hope in Bernie. He brought us together – it’s time for us to join the fight too.

By Scott Galindez, Reader Supported News

The Primary Election Ignored By Big Media

Democrats Abroad

The results are in! In an unprecedented turnout, up 50% from 2008, 34,570 voters cast their ballots from over 170 countries all around the world, through in person voting, by fax, email, and post, and the results are as follows:

Bernie Sanders received 69% of the vote in the Democrats Abroad’s Global Presidential Primary, Hillary Clinton 31%.

Sanders picks up 9 pledged delegates as a result of the primary, while Clinton secures an additional 4 delegates.

% of total vote

Total Vote

Number of delegates won

Bernie Sanders

68.79%

23,779

9

Hillary Clinton

30.92%

10,689

4

Martin O’Malley

0.06%

21

0

Rocky De La Fuente

0.02%

6

0

Uncommitted

0.22%

75

0

Total

100.00%

34,570

13

Union Pacific devotes vast resources in Texas to pursue cross-border traffic

Cross–border traffic into and out of Mexico currently generates about 10 percent of UP’s annual volume.

By Jeff Stagl, Managing Editor

There are 12 millions cows in Texas, which leads the nation in herded cattle. There’s something else roaming the state in large numbers, too: trucks.

Texas tops the United States in the volume of freight trucked to and from Mexico, where manufacturing is booming. A microcosm of the state’s massive truck traffic is evident along Interstate 35 at the U.S./Mexico border in Laredo. Each day, about 12,000 trucks cross the border, mostly via two bridges dedicated to commercial traffic.

The Laredo crossing is the busiest for trucks entering the United States, and the Port of Laredo is the largest inland port along the border, home to more than 500 freight forwarders, 200 trucking companies and 100 U.S. customs brokers.

The crossing is a busy one for rail, as well, especially for Union Pacific Railroad. The Class I serves the area’s international rail bridge and operates a nearby intermodal terminal that’s overstuffed at 180 percent of capacity. The only railroad that serves all six major gateways along the border, UP also taps a heavily truck-used Texas crossing in Eagle Pass, and two others in Brownsville and El Paso.

With so many trucks traversing the region, the Class I is on a mission to divert more of them to rail. It’s a crucial pursuit, given UP’s revenue and traffic last year declined 9 percent and 6 percent, respectively, compared with 2014 results. To seize what’s become a golden opportunity, the railroad aims to better position its network and resources in the state to take on additional traffic, such as a bigger flow of consumer goods and auto parts.

Texas already is a major cog in UP’s 23-state network, home to about one-sixth of the railroad’s 47,000 employees and one-fifth of its 32,000 track miles. The railroad originates or terminates nearly 2.8 million carloads in Texas annually, or about 30 percent of yearly volume.

A busy rail bridge between Eagle Pass, Texas, and Piedras Negras, Mexico, includes a U.S. Customs and Border Protection facility that scans each rail car on a train.
Photo: Union Pacific Railroad

UP also devotes a lot of dollars to its operations there. On an annual basis, its payroll exceeds $750 million, in-state purchases total $2.6 billion and capital investment approaches $1 billion. The railroad last year allocated $800 million in capital to Texas — the most allotted to any state — after spending $623 million in 2014. From 2010 to 2015, UP spent $3.6 billion to bolster infrastructure in the state.

Ultimately, hardening infrastructure and expanding capacity is vital to achieving the truck diversion goal. New and expanded facilities coupled with doubled and upgraded track also will help the railroad build traffic in other key segments, UP executives say.

The Class I serves 12 ports and taps a large chemical market and oil/gas industry in Texas. In addition, the railroad hauls a lot of rock and aggregates, a traffic sector that figures to gain a boost from increased highway construction funded by the Fixing America’s Surface Transportation Act.

Banking on the border

But cross-border traffic is the primary business-growth target. That critical segment generates about 10 percent of UP’s total annual volume — a percentage UP execs are convinced will ratchet up over the next several years.

“We are very bullish on Mexico in general in the long term,” said UP Chairman, President and Chief Executive Officer Lance Fritz during an earnings conference held Jan. 21. “It’s a vibrant economy, it has got a vibrant middle class, and our access to the six primary rail gateways to and from Mexico give us a real great opportunity to participate in that economy.”

Cross-border traffic is expected to grow in part because Mexico’s manufacturing output is accelerating. The Manufacturers Alliance for Productivity and Innovation (MAPI) expects output to grow more than 3 percent in 2016.

Automotive production is exploding as low interest rates and gasoline prices entice buyers, and industrial production is booming as consumer demand mounts and a near-sourcing trend — which is drawing more raw material suppliers to south Texas — continues to gain steam.

Mexico will be Latin America’s manufacturing growth leader for the foreseeable future, according to a MAPI report issued late last year.

“Mexico is tied with Canada as the second-largest importer to the U.S. after China, and Mexico is becoming second,” says Bernardo Ayala, UP’s vice president of Mexico markets. “Economic integration is very strong there. Mexico is doing a good job of continuing to attract foreign investment.”

Texas transportation leaders expect the healthy cross-border activity and the state’s explosive population growth to drive a freight volume ramp-up over the next two decades. A freight mobility plan drafted late last year by the Texas Department of Transportation predicts that by 2040, freight moving in the state will nearly double to 3.75 billion tons while cross-border cargo will skyrocket 196 percent.

The plan prompted the Texas Freight Advisory Committee to warn that such an extreme increase could worsen the state’s already congested highway system, meaning alternative modes — such as rail — will become more important to ensure economic competitiveness. That’s music to UP execs’ ears.

“The state knows a massive amount of freight is coming, and that rail is a key part to their future,” says Brenda Mainwaring, vice president of public affairs for UP’s Southern Region. “We see the same drivers as the state. Texas is huge part of our franchise, and we operate it that way.”

Infrastructure an emphasis

To accommodate current freight demand and prep for the heavy volume to come, UP aims to keep adding capacity and upgrading infrastructure throughout the state.

“Texas is a business-friendly state, and has been for a long time,” says UP Senior Vice President of Corporate Relations Scott Moore. “We will continue to make investments in the state as business dictates.”

Growing business with a large beer and wine producer/marketer dictated the need for UP to construct the Kinney County Railport, which was completed late last year in Spofford near the Eagle Pass crossing.

The $40 million box-car cleaning, washing and repair facility provides a pipeline of cars for customers that ship millions of cases of beer annually, helping to improve operational efficiency and network fluidity, says UP Director of Public Affairs Ivan Jaime.

Workers at the railport — which launched operations Jan. 4 — clean and prepare box cars to meet food-grade guidelines. That way, cars arrive quicker and are ready to be loaded by beer customers in Mexico, then returned to the United States for distribution.

The major customer served by the facility is Constellation Brands Inc., which is spending $2 billion to expand its brewery and glass bottle production plants in Nava, Coahuila, Mexico, about 50 miles from the railport. When the brewery expansion is completed by 2017’s end, the company expects to boost production capacity from 10 million to 25 million hectoliters.

The plant produces such beer brands as Corona Extra, Corona Light and Modelo Especial, which are imported to the United States.

Crews at the Kinney County Railport in Spofford, Texas, primarily clean and repair box cars for a major Mexican brewery near the U.S. border.
Photo: Union Pacific Railroad

Ferrocarril Mexicano S.A. de C.V. (Ferromex) — UP’s interchange partner in Mexico that’s partly owned by the Class I — previously staged and inspected cars near the brewery. But that became a redundant check, says Jaime.

The railport — the only dedicated food-grade car cleaning facility in UP’s network, says Mainwaring — now provides Constellation Brands about 90 50-foot box cars per day to meet the current need. The railport is designed to handle 240 cars per day.

From autos to avocados

As it flows in from Mexico in large volumes, beer continues to be a growing business line for UP, says Ayala. So are certain imported perishable items, such as avocados and limes.

UP also anticipates a business boost from Mexico’s energy reform, which has opened the sector to private investment, and poses potential for oil and fuel oil imports, says Ayala.

In addition, the structure of power generation that was controlled by the Mexican government is changing, with a conversion to natural gas, he says.

But the most promising cross-border opportunity is the automotive sector. In 2015, vehicle exports had reached a record 2.9 million units, about 70 percent of which were exported to the United States, the Mexican Automobile Industry Association estimates. Auto production will exceed 4 million units by 2017, the association projects.

“We expect production to grow to 5 million units in the 2018-19 timeframe,” says Ayala, adding that UP works with all major automakers, including Toyota, Kia, GM, Ford, Nissan and Infinity.

At the border, UP interchanges auto shipments with either Ferromex or Kansas City Southern de Mexico S.A. de C.V., which serve the plants.

Healthy vehicle production also is fueling auto parts traffic that’s hauled into Mexico via containers. In fourth-quarter 2015, UP’s finished vehicle traffic climbed 8 percent to 129,700 units and auto parts volume rose 8 percent to 94,600 units compared with the same 2014 period.

At the same time, other containerized cargo coming into the United States — such as refrigerators, washing machines and flat screen TVs — has boosted UP’s intermodal fortunes, says Ayala.

“It’s been a growing intermodal sector, especially products for the U.S. consumption market,” he says.

But the mounting wave of consumer products has been both a boon and a strain for the Port Laredo intermodal terminal. With so much volume pouring into the facility — especially from Mexico — it’s bursting at the seams.

“It’s the only intermodal terminal on the border in Texas,” says Mainwaring, adding that the facility handles autos and auto parts, grain, beer, food products and other consumer goods.

Time for a bigger terminal

Enter a $90 million project designed to greatly improve and expand the terminal. UP has divided the project into two phases.

Launched last year, the first phase involves massive sitework to prepare more than 37 acres for the facility’s larger footprint. That work was completed recently. The phase also includes the construction of an automated, state-of-the-art entrance that will accommodate 24/7 operations. The railroad expects to complete the entrance later this year.

The second phase calls for doubling the terminal’s size to handle more truckloads. UP has not yet determined a start date for the phase, which will involve trackwork and expanded parking areas.

A date to start a planned expansion at the San Antonio Intermodal Terminal (SAIT) hasn’t been scheduled yet, either. Projected to begin over the next several years, the work calls for building additional track to handle longer trains — stretching 8,000 or 9,000 feet — and creating more parking spaces.

The more than 300-acre SAIT performs about 190,000 lifts per year and is designed to handle 250,000 lifts annually at full build out. Opened in late 2008, the facility serves San Antonio, Austin, Eagle Pass and Laredo, as well as the entire south Texas market. The terminal is located within 200 miles of the border and hundreds of Mexican factories.

UP also hasn’t set a construction start date for another key project: a huge classification yard in Hearne. The railroad more than a year ago announced its intent to build what will become one of its biggest classification yards.

The site was chosen for the facility because of the populations and metroplexes in the region, says Moore. Seven UP lines converge in the area, connecting markets in Dallas/Fort Worth, Houston, Austin and San Antonio, as well as other points in east Texas and the Gulf Coast. Work might not necessarily start in 2016, he says.

Greater access, greater growth

Meanwhile, the railroad continues to build, upgrade and tap other infrastructure in the state. In August 2015, UP relocated its Brownsville border crossing from the Brownsville and Matamoros bridge to the new West Rail International Bridge across the Rio Grande River, about 15 miles downstream.

The first new international rail crossing between the United States and Mexico since 1910, the bridge provides a more efficient route, eliminating more than half a dozen grade crossings in downtown Brownsville. Additionally, a new customs facility was established by the bridge to ensure a smoother transition for the movement of goods, UP execs say.

In terms of trackwork, the Class I last year replaced 27 miles of rail and repaired surfaces at 13 crossings southwest of Dalhart; replaced 20 miles of rail and repaired surfaces at six crossings near Sierra Blanca; and replaced 81,077 ties, installed 59,435 tons of ballast and repaired surfaces at 114 crossings on a line between Waco and Hearne.

Crews also began laying 38 miles of double track in the Glidden Subdivision on the west side of Houston to accommodate growing traffic into and out of the city. When the project is completed in April, the new double track will increase operational efficiency, UP execs say.

So, it isn’t a matter of hoping enough business will be there once UP puts the necessary infrastructure in place. It’s more about ensuring the railroad is prepared to divert more of the multiplying cargo from highway to rail.

It helps that parties in the United States and Mexico are working well together in the manufacturing realm, says Ayala. That’s an impetus behind Texas’ freight explosion, he believes.

“The most exciting thing is the integration of both countries,” says Ayala.