Well I am not a lawyer but I play one when I write contracts…
I realize if a bill actually revised Title 49 it would be written such that it struck and added to paragraphs, but I have included complete text. This post goes along with the Intercity Marketplace thread. There are three parts, the first this risk pool below, the second a shadow toll proposal for the pilot that never got off the ground, and a third a proposal to institute budget discipline that recognizes the realities of the US transportation marketplace… Blue indicates revised text.
Proposed Additions to TITLE 49 USC 24xxx
Passenger common carrier service large loss risk pool program
a) In General. – Ground passenger carrier operations are highly complex, with three parties or more. To ensure an efficient market, an insurance pool is desired to spread the risk of infrequent accidents. Within 1 year after the date of enactment of (this act), the Federal Railroad Administration shall complete a rulemaking proceeding to develop a program that—
This is the Shadow Toll modification to the pilot in the 2008 PRIIA, based on my paper and the NPV of the user payments into the interstate highway program… Blue text is proposed revised language from the 2008 bill.
Proposed Modifications to TITLE 49 USC 24711# Alternate passenger rail service pilot programa) In General.— Within 1 year after the date of enactment of (this act), the Federal Railroad Administration shall complete a rulemaking proceeding to develop a pilot program that—
(1) permits a rail carrier or rail carriers that own infrastructure over which Amtrak operates a passenger rail service route described in subparagraph (B), (C), or (D) of section 24102
Finally, a proposal to align the NRPC budget by the “A B C” formula proposed below… This would allow for economies of scale in larger and more trains off the NEC to be properly accounted for without being overshadowed by the large NEC fixed costs.
(f) Alternate NRPC Funding Formula Report.— Within 1 year after the date of enactment of (this act), the Federal Railroad Administration shall complete a report on the suitability of shifting NRPC funding to a three part formula-
(1) NRPC Funding = A + B + C x Rail Passenger Miles Carried
(A) Component A- Shared Station Building capital and maintenance costs, cost to exclude incremental cost per passenger boarding;
(i) required due to the use in law and practice of large terminal buildings by many entities other than the NRPC, estimated at $200 million a year. Within this item NRPC is to include security costs at such stations; and
(B) Component B- Shared Infrastructure capital and base maintenance costs in the Northeast Corridor and other large metropolitan hub terminal areas with MSA populations over 1.5 Million, cost to exclude incremental cost per axle and train mile;
You have so far left out any mention of the most critical part of this scheme – ensuring safe operation as a precondition for participating in the pool and licensing arrangements.
There need to be strict formal requirements to keep the usual fly-by-night and corner-cutting operations from coming in, causing the usual sorts of incompetent disaster and depleting the pool, and then conveniently ‘going out of business’, shucking the assets at pennies on the dollar to new shell corporations set up by relatives or cronies, and doing the dip again.
Underwriting requirements, too.
The trick is going to be to ensure that the initial and ongoing requirements are fair and fact-based, not the usual political claptrap and barriers to entry masquerading as ‘safety assurance’ or whatever weasel words. Developing the right balance here, and expressing it clearly and concisely, should be done NOW, as an integral part of the proposal.
As to the competitively bid services (by passenger mile funding instead of lump sum) a bid bond would certainly take care of the fly by night operators as you have to satisfy the bonding company or the rates go up. A requirement of a minimum of 2 years operating under FRA rules would also go a long way.
The self liquidating large loss insurance pool language is actually meant to deflect liability which is the precondition of the investor held railroads.
Any comments on the A+B+C funding formula? It was created after looking into the cost categories that Amtrak is/was using to develop the 403b state funded train costs. The intent is to provide an alternative funding formula for Amtrak that is compatible with competitively bid services. It separates out the two large fixed cost drivers Shared large stations and Shared large Metro terminal trackage as well as basing Amtrak funding on a per passenger mile metric to encourage them to seek economies of scale on the LD network (at a rate below the historic interstate cross-subsidy).