This article was written by Manfred Ohrenstein, member of the Business Alliance for Northeast Mobility, founding partner of Ohrenstein & Brown, LLP, and former New York State Senator. This post was originally published on the Business Alliance home page. In the coming weeks, articles by other guest writers will be published here on the Business Alliance's blog, Back on Track: Northeast.
Background on Legislation
In mid-July, Rep. John Mica (R-FL), Chairman of the House Transportation & Infrastructure (T&I) Committee, introduced legislation aimed at constructing high-speed rail on the Northeast Corridor (NEC). The bill includes a controversial proposal to remove Amtrak from the NEC and to sell the present right-of-way and railroad operations to private investors who would bid for the opportunity to finance, construct and operate a high-speed rail system. The legislation would also impose an impressive requirement that high-speed rail be up and running just ten years after the successful investors are chosen.
Many passenger rail advocates, including the Business Alliance for Northeast Mobility and the U.S. High-Speed Rail Association (USHR), praised some aspects of the bill, but generally considered the proposal unrealistic in its failure to recognize that it is unlikely that private industry alone would cover the immense investment required to build and operate a high-speed rail line of the extent and complexity required in the NEC. It is clear that substantial public investment is required for this project to be successful.
Meeting Report
Last week, Mica met with members of the USHSR to discuss their concerns about the bill. In a positive move, Mica showed a remarkable willingness to negotiate and alleviated the major concern about the lack of public participation in his proposal. He agreed that the federal government would need to be involved in the development of high-speed rail through a public-private partnership.
The meeting began with a detailed briefing by Joyce Rose, Staff Director for the Rail Subcommittee. Without even being questioned, Rose explained that Mica understood that he could not succeed in his legislative goals by privatizing the NEC and that public funding has to be a part of this unique high-speed rail project.
When he arrived (about half-way through the meeting), Mica immediately tackled
the question of government participation. He started by directly addressing Thomas Hart, Vice President of USHR. Earlier this summer, Hart testified before the T&I Committee and criticized the bill, arguing that no high-speed rail line can be constructed without significant government participation. Mica explained that as much as he would personally favor a totally privatized project, he now understands that there would have to be a public component to any successful high-speed rail plan in the NEC. Although he did not elaborate with respect to specifics, such as whether the government would provide loans or grants or how much support the government could provide, Mica was clear that only a true partnership between the private and public sectors would be able to achieve success.
What was particularly heartening was that, while politicians often tailor their message for each audience, Mica accepted that his remarks at this meeting would be in the public record. The meeting was open to the public and was held in his Committee's the public hearing room. At one point, a participant pointed out that press was present, and Mica stated that he was talking at a public meeting.
The meeting still left in question the potential role of Amtrak on the NEC. Although he recognized the importance of government funding, Mica did not give any indication of what institutional form the United States Government's participation would take. So, it is possible that Amtrak's role can be worked out later. While it is clear that Amtrak must be involved as the owner of the NEC, Mica is also correct in insisting that private investors will need to have substantial control to be willing to invest in such a major project. Any private investor will be rightly interested in maximizing profits, and will need to be given control to pursue that aim.
Analysis
It is clear that Mica's legislation is constrained by his own politics and those of the Republican party. Like his Republican colleagues, Mica does not like Amtrak. He considers rail subsidies a waste of money and wishes to see passenger rail fully privatized, a position which is unrealistic since privatization of our passenger rail system will never happen. He also has to contend with the reality that his colleagues don't support the existing federal high-speed rail program because they believe it effectively subsidizes Amtrak. A large number of Republicans simply don't want to support Amtrak or invest in passenger rail at all. As a result, Mica's legislation takes the approach of removing Amtrak and privatizing the NEC.
Although many advocates are disturbed by this ideological approach, it is important to recognize that Mica has emerged as a major champion for high-speed rail on the NEC. Despite his party's antipathy toward subsidized passenger rail, Mica has identified the NEC as a highly valuable, government-owned asset and that high-speed rail on the NEC would be a major innovation for the United States and that it is possible to build it out in 10 to 15 years with private investments. Now, with his recognition that public investment is also essential, Mica is embracing the kind of public-private partnership that many advocates believe is the only way to achieve high-speed rail on the NEC.
By providing so much attention to this issue, Mica has also placed high-speed rail on the NEC on the agenda in a time when most Republicans have turned their back on large-scale public investment. When you have someone who is in another ideological camp, but agrees with you to a very large extent on the goal, it makes sense to try to work with him and reach an agreement. Since Republicans control the U.S. House of Representatives, this would be a propitious time to do that.
About Manfred Ohrenstein
Mr. Ohrenstein is founding partner of Ohrenstein & Brown, LLP and leads the firm's Government Affairs practice, serving as a strategic consultant and government affairs representative for Fortune 500 companies in New York City, New York State, and Washington, D.C. Mr. Ohrenstein is a prominent political and civic leader in the city and state of New York and is a 35-year veteran of the New York State Senate, where he was a member until 1995 and also served as Democratic Minority Leader. He chaired the New York Delegation to the Democratic National Convention, is currently Vice-Chairman of the New York Holocaust Museum, and a member of the Board of Directors of the Insurance Federation of New York.
Images:
U.S. High-Speed Rail Association
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