Jonathan McDonald is executive consultant at Raul V. Bravo + Associates and a board member at the Commuter Rail Coalition.
As a longtime veteran and advocate of the U.S. rail industry, I, like many, am frustrated by our inability to deliver high-speed rail. Despite the United States’ reputation as a leading economic power and technological innovator, our attempts at developing HSR have been expensive, underwhelming and ultimately unsuccessful.
Achieving real HSR in the United States requires a new approach that leverages the capabilities of the federal government, state governments and the private sector. By taking advantage of the benefits that each party brings, we could achieve a national HSR system with no new taxes. But more than this, it would initiate an economic boom that could transform many static areas of the U.S. economy, improve quality of life for millions of Americans and bring the country together in a way no other technology can.
The challenge
Building high-speed rail typically involves either private industry deciding there is a profitable business opportunity or government deciding HSR is needed and seeking voter approval for funding.
These approaches don’t work in the U.S. for one simple reason: In the U.S., unlike most other countries, private companies own the vast majority of the rail lines — about 136,000 miles versus just 530 miles of public track, which are owned by Amtrak. The main business of those private companies is transporting freight.
The freight railroad industry opposes HSR on its property. High-speed tracks must be grade-separated from existing freight lines, and freight trains can’t use these tracks because heavy loads damage them. Cost is another factor: It takes 15-20 years to build a single HSR line at a cost of more than $100 million per mile.
Governments are often the other high-speed rail developers, but state and federal governments in the U.S. are not prepared to efficiently operate profitable businesses. The net effect is that voters are reluctant to approve the funds and related taxes for high-speed rail.
The solution
We must change how we think of rail. Governments should move from taxpayer-funded projects to partnering with private industry to build infrastructure and operate businesses over high-speed rail corridors. Any successful plan must also ensure that no stakeholders — from freight railroads to Amtrak to organized labor — are worse off as a result.
Here’s how it works: First, Congress would create a National Railroad Infrastructure Bank. Its purpose would be to own, manage and maximize the economic benefit of national rail infrastructure assets, but it would not operate or maintain any assets. It would start by taking ownership of Amtrak’s Northeast Corridor. Over time, it would add assets in different corridors. It would issue long-term public-private partnership contracts with open access to all service providers.
The program would rely on states to add new assets and reduce local risks that traditionally deter private participation. States wanting a new high-speed corridor would conduct feasibility studies, identify a business case and select a locally preferred route that meets congressional requirements. States could further entice developers by covering certain costs, adapting policies, assuming key risks and providing guarantees like ridership support or limits on competing routes.
The program would engage private industry in two critical ways. It would contract a private infrastructure manager to develop the asset, using the National Railroad Infrastructure Bank. The manager would be encouraged to build the maximum capacity for maximum profits. That could include rail usage and associated property development. This structure protects taxpayers from delays and cost overruns, while such contracts would help shield projects from disruptive political cycles.
To ensure fair and open access, the developer would be prohibited from passenger or freight operations. It would lease capacity to operating concessionaires such as Amtrak, state-supported operators, freight companies or new private players. Both the developer and the concessionaire would be for-profit companies. Finally, the system would inspire and enable new business models, technologies and exponential growth in a long-stagnant sector of the economy.
Pragmatic steps to progress
High-speed rail in the United States is achievable. But to reap the immense benefits of HSR, we need to build it.
The model proposed here offers a practical path to overcome the barriers we’ve faced trying to build HSR. It creates an environment where each party does what it does best and takes on the risks it can best control.
Federal and state governments effectively clear the path so private industry can build and operate high-speed rail profitably at reasonable risk without burdening taxpayers. In the end, everyone benefits, including the public.
