Amtrak, P3 Misconceptions, And Future Of Passenger Rail

December 13, 2013

Although routinely outshined by the political controversy of the moment, one of Washington’s longest running debates — the future of the National Rail Passenger Corporation, i.e., Amtrak — steadfastly continues.

Formed in 1971 as part of a legislative compromise to stave off the impending extinction of the nation’s passenger train industry, Amtrak was never intended to be a permanent solution. At the time, many politicians viewed the death of passenger rail as inevitable and did not at all think of Amtrak as a means to save the industry, but rather as a means to permit it to die with some dignity.

Yet, more than 40 years later, Amtrak lives on, and its operations remain subsidized by federal dollars. This has not been without controversy, however, and there have been repeated calls over the years for an end to the government’s continued funding of Amtrak. Just this summer, for example, Rep. John Mica of Florida introduced legislation that would privatize portions of the national passenger rail system.

Although many Amtrak supporters in Congress remain opposed to relinquishing total government control over Amtrak, some do appear to support some private involvement in Amtrak, and former Sen. Frank Lautenberg of New Jersey, one of Amtrak’s strongest supporters for decades, recently expressed interest in a public-private partnership to solve Amtrak’s financial problems.

To some, Lautenberg’s statement may sound puzzling. Isn’t Amtrak, after all, a public-private partnership? In fact, although Amtrak is an entity with both public and private elements, it is not a true public-private partnership (also known as a “P3” or “PPP”).

A P3 is not created by granting a public subsidy to a private operation. A popular misconception about public-private partnerships is that they are a “gift” of public dollars to a private entity, but a P3 is much closer to the opposite — a private subsidy of a public operation.…

Read the rest of the story on Law360. (Full article text available with free trial.)


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