Jonathan McDonald is an executive consultant at Raul V. Bravo + Associates and a board member of the Commuter Rail Coalition.
As a long-time veteran and advocate of America’s rail industry, I, like many, am frustrated by our inability to deliver high-speed rail. Despite America’s reputation as a leading economic powerhouse and technological innovator, our attempts to develop HSR have been expensive, underwhelming, and ultimately unsuccessful.
Jonathan McDonald
Permission granted by Commuter Rail Coalition
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 leveraging the benefits that each part brings, we could achieve a national HSR system without new taxes. But more than that, it would start an economic boom that could transform many static areas of the American economy, improve the quality of life for millions of Americans, and unite the country in a way that no other technology can.
the challenge
Building high-speed rail typically involves either private industry deciding there is a profitable business opportunity or the government deciding HSR is needed and seeking voter approval for funding.
These approaches don’t work in the US for one simple reason: in the US, unlike most other countries, private companies own the vast majority of rail lines: about 136,000 miles versus only 530 miles of public track, which is owned by Amtrak. The main business of these private companies is the transport of goods.
The freight rail industry opposes HSR on its property. High-speed tracks must be grade separated from existing freight lines, and freight trains cannot use these tracks because heavy loads damage them. Cost is another factor: it takes 15 to 20 years to build a single HSR line at a cost of more than $100 million per mile.
Governments are often the other developers of high-speed rail, but US state and federal governments are not prepared to efficiently operate profitable businesses. The net effect is that voters are reluctant to approve funding and related taxes for high-speed rail.
the solution
We need to change the way we think about railways. Governments should shift from taxpayer-funded projects to partnering with private industry to build infrastructure and operate businesses through high-speed rail corridors. Any successful plan must also ensure that no stakeholders, from freight railroads to Amtrak to organized labor, are made 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, assets would be added 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 attract developers by covering certain costs, adapting policies, assuming key risks, and offering guarantees such as user support or limits on competing routes.
The program would involve private industry in two critical ways. It would hire a private infrastructure manager to develop the asset, using the National Railroad Infrastructure Bank. The manager would be encouraged to build maximum capacity to obtain maximum profits. This could include rail use and associated real estate development. This structure protects taxpayers from delays and cost overruns, while such contracts would help protect projects from disruptive political cycles.
To ensure fair and open access, the developer would be prohibited from passenger or freight operations. It would add capacity to operating concessionaires such as Amtrak, state-backed 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 sector of the economy for a long time.
Pragmatic steps to progress
High-speed rail in the United States is possible. 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 have faced in trying to build HSR. It creates an environment where each party does what it does best and takes the risks it can best control.
Federal and state governments effectively pave the way for private industry to build and operate high-speed rail profitably at reasonable risk without burdening taxpayers. In the end, everyone benefits, including the audience.
