“Amtrak Southwest Chief ’s Future in Doubt” Prepared for the New Mexico House of Representatives Interim Transportation Infrastructure Revenue Committee November 12, 2013 As Edited For Style/Grammar by Matthew Larsen, Amtrak Southwest Chief Coalition Admin Problem/Opportunity: Amtrak’s Los Angeles to Chicago Southwest Chief, currently operated over BNSF in New Mexico, Colorado and Kansas, faces an uncertain future between now and 2016. At issue is the future capital cost of track work, bridges and signals , and non-capital cost (maintenance) necessary for passenger train operations. There is currently no available Congressional funding mechanism for this. Background: In 1970 Congress chartered a government corporation, the National Railroad Passenger Corporation (Amtrak) to assume responsibility for a national rail passenger system. A network of nationally important routes was established, two of which pass through New Mexico: the Sunset route along southern New Mexico from Los Angeles to New Orleans, and the Southwest Chief route from Los Angeles to Chicago through northern and central New Mexico. Amtrak now covers about 80% of its own operating (non- capital) costs. The big issue for all transportation modes is infrastructure costs. Unfortunately, Congress made no provision for a permanent funding stream to capitalize Amtrak equipment and infrastructure needs. The Amtrak/Freight Railroad Relationships: Amtrak negotiates multi-year contracts with each freight railroad to use their track to operate its passenger trains over their right-of-way, for which Amtrak pays them compensation. Amtrak operates as a tenant railroad for all long distance routes outside the Northeast Corridor. The freight railroads’ consistent position is that they are not fully compensated by their tenant (Amtrak) for infrastructure used by their tenant. A new contract is required by 2016. Previous contracts extended from 1971-1996 and 1996-2015. Southwest Chief Route: The Southwest Chief serves eight states and 35 cities and towns. Its 2,200-mile route diverges from the BNSF main “Trans-con” east-west line at Newton, Kansas. Amtrak then uses an alternative secondary BNSF route through Hutchinson, Kansas and La Junta and Trinidad, Colorado. From Trinidad, the route enters New Mexico near Raton and proceeds from Raton to Las Vegas and Lamy where BNSF track ownership ends and state owned track begins. The Chief’s route on state owned track extends from Lamy to Isleta through Albuquerque. At Isleta, it returns to BNSF-owned track and heads west to Gallup and Los Angeles. This segment of the route is about 686 miles long, about one third of the total 2200 mile route. The route Amtrak uses between Newton, Kansas and a point west of Isleta has very little freight track. Within New Mexico, BNSF has no freight customers on the portion of the line it owns and maintains under contract for Amtrak. Thus Amtrak is the only user. However, the Northeast New Mexico Economic Development Organization (NEEDO) is seeking freight customers for BNSF such as Western Wood of Raton and Old Wood of Las Vegas. In addition, San Miguel County is discussing using its rail spurs to send waste to the Wagon Mound Waste Facility that also has a rail spur. Santa Fe Southern Railroad, based in Santa Fe, is also seeking freight opportunities between Lamy and Santa Fe. The future of line is in doubt: Its future is in doubt because of several factors. First, track and signals have reached the end of their useful life and need replacement. Second, Amtrak/BNSF contract renegotiations come due in 2015. BNSF has told Amtrak that it will not include the current route in a new ten years contract unless these repairs are undertaken at Amtrak’s expense. BSNF has provided Amtrak with its cost estimates for maintaining the line for the Southwest Chief over the ten-year period commencing in 2016. BNSF Passenger Car Service has not received Amtrak requests for upgrades on Raton Line to Lamy. BNSF is willing to receive cost estimates per mile post with funding from regional public funding. The Local Economic Development Act (LEDA) could allow regional public funding to BNSF to comply with the Anti Donation Clause. Our communities would request cost sharing and a commitment from BNSF for more freight business. Ten Year Capital Needs: Amtrak has been told by BNSF that the 10-year capital needs for the 686-mile line in question are approx. $94.4 million. There is an informal agreement that this sum be divided equally between Amtrak, BNSF, Kansas, Colorado and New Mexico, and paid in equal installments over the ten-year period. For New Mexico this amounts to approx. $4 million per year for 10 years. Ten Year Routine Maintenance: Identified routine maintenance is $11.58 million annually for the ten-year period for the entire line. The cost in New Mexico for “sole use track maintenance” amounts to $6.727 million for Amtrak operation beyond BNSF’s minimum requirements for freight operation. Northeast New Mexico has lost all BNSF Maintenance workers to Colorado and we would like a commitment from BNSF to cost share in return for the Locomotive Fuel Tax Exemption. BNSF should identify its minimum maintenance costs that it pays. Amtrak/BNSF Contract Renegotiations: Funding from somewhere is needed to maintain this route to adequate standards to continue operation of the Southwest Chief beyond 2016. Current Situation: A volunteer association of citizens and elected oofficials has formed in New Mexico, southeast Colorado, and Kansas to support continuance of the Southwest Chief. The Coalition calls itself the “Amtrak Southwest Chief Coalition.” Its membership includes elected and retired public officials, active and retired railroad officers and employees, organizations and private citizens. In New Mexico, the Coalition has been at work since December, 2011. The Coalition has been successful in obtaining Resolutions in support of the continuation of the Amtrak Southwest Passenger Train from the Boards of County Commissioners of Bernalillo, Santa Fe, San Miguel, Mora and Colfax Counties; the city councils of Albuquerque, Santa Fe, Las Vegas, Wagon Mound and Raton; and the New Mexico Municipal League. The Coalition has also gained the support of the Northeast and North Central Economic Development Organizations. Finally, both the New Mexico House of Representatives and the New Mexico Senate recognized the importance of the continuation of the Southwest Chief on its current route by Memorials [HM 2 and SM 3] passed during the most recent legislative session stating “that the New Mexico congressional delegation and the governor be called upon to support the continued viability of the Southwest Chief.” Impact: Possible Line Abandonment by BNSF: Amtrak is currently the only customer on the Lamy, New Mexico-Colorado border segment of the line owned by BNSF. BNSF can file for abandonment of the line when it reaches a point where there is no customer. That point could be reached in 2016, if Amtrak no longer uses the line. BNSF officials state the freight railroad does not intend to abandon this parallel secondary line (Newton- Lamy) because they view it as a safety valve to their Trans-con line. The problem is that presently there is no freight business on the line. We believe strong efforts should be undertaken it build rail freight along the route. Nevertheless, the risk of abandonment remains. The potential end of rail passenger service would negatively affect New Mexico, Colorado and Kansas. First, for most of the northeast region the train is the only transportation alternative to driving. There is little or no bus or air service for much of the route. There is bus service from Albuquerque to Raton. Second, the Amtrak Southwest Chief issue has the potential to significantly affect New Mexico’s tourism industry, in addition to small towns and rural counties along the route. Finally, it has the potential to directly affect Albuquerque because 1/3 of the Southwest Chief passengers board or get on in New Mexico. In the worst- case scenario it would result in the abandonment of the the line by BNSF from the Colorado border to Lamy. Abandonment of this rail line would forever foreclose any rail passenger or freight options along the Front Range, between Denver and El Paso. Amtrak has bus connections from Raton to Denver that could be affected. Raton is building an inter-modal transportation facility collaborating as a New Mexico Mainstreet Community. The loss of passenger service means loss of railroad employment, (already occurring with the loss of freight on the line), and loss of taxes. A loss of the line will mean a loss of future economic development at a time when the region is experiencing growth, especially Las Vegas. An example of the rippling effect of what might happen in the Northeast Region should the train stop running is the loss to the Raton Area School District of the ability to provide bus transportation to its students. The private company currently providing the service can only stay in business because Philmont Ranch hires the company to transport scouts during the summer months. Last year, 8862 scouts traveled to Philmont. No train, no scouts, therefore, no bus company and no bus transportation for a school district that covers a large territory with many miles between students and the school house. Philmont is the largest employer in Colfax County. The passenger service is used primarily to provide transit for the general population, and secondarily to provide transit for tourism. Ridership has significantly increased from 2006 to 2012, the last year that statistics are available. In the meantime, Albuquerque is experiencing a decline in air passengers at the SunPort, and the number of airlines serving New Mexico’s sole international airport are down. Santa Fe, on the other hand, is trying to build up it’s air traffic and the number of airlines serving the city. Student enrollment at United World College and New Mexico Highlands University is increasing and becoming a more important factor in rail ridership, and Philmont Ranch has seen growth as well – last year reporting that 8,862 scouts from all 50 states attended its summer programs, most of whom travel to the Ranch via the Southwest Chief. Railroads, especially passenger railroads, are economic stimulators and generators. With the trains came the people who created the towns and cities which led/leads to the merchants and schools, and all of the supporting infrastructure. Investment in the railroad leads to a return on the investment. The state of New Mexico would receive a significant return on its investment in keeping the Southwest Chief on the track. Both BNSF and Amtrak, as privately held corporations (Amtrak’s stock is held by the Secretary of Transportation and BNSF is a sole-shareholder company) receive direct economic return. If New Mexico enters into a partnership with either one or both of them, it too will receive a significant return on its investment. However, that return will be in the form of business formation, population growth and increase tax revenue. Maintaining the train on its current route will support regional economic development and economic sustainability. It is true that the requested funds could be used for other purposes. However, to not support the continuation of the Southwest Chief on its current route through New Mexico, Colorado and Kansas will result in the economic destruction of the Northeast Region. To find the way to continue New Mexicos historic support for the train will support not only the current economic base, but also support the continued growth and development of the region. Recommendations: A Multi-State Approach: The Coalition and the many public oofficials who will appear at the hearing on November 12 before this Committee believe that this issue will be most effeffectively addressed with a multi-state approach. We are asking the New Mexico Legislature to examine various proposals that we will put forth at the hearing as part of a three-state solution. Focused Studies: The Legislature should set aside sufficient funds for one or more focused studies conducted by the Legislative Counsel Service to determine what statutory vehicles are presently available to address the financial and policy issues and what additional legislation may be needed. New Mexico does not currently have policy with regard to the economic relationship of railroads to the state. The Legislative Council Service is best able to address these issues, as they are within the Legislative prerogative rather than the Executive. Hire A Knowledgeable Consultant: The Legislature should set aside sufficient funds to allow the Legislative Council Service to hire a consultant or consultants knowledgeable in railroad financing, including representatives of the Federal Railroad Administration, to assist in determining the exact capital and maintenance costs needed to keep the Southwest Chief on its present route. Railroads, for various reasons, are very reluctant to share corporate financial data. They are, however, willing to do so through consultants whom they trust will respect the confidentiality of that data. New Mexico cannot address this problem without access to that data. The threatened termination of Southwest Chief passenger rail service will cause significant economic damage to New Mexico. Therefore, it is in New Mexico’s best interest to gain access to such data to formulate an appropriate Legislative response. The hiring of a trusted consultant will aide in that effort. At the hearing, we will ask that New Mexico invest $3,800,000 in capital improvements along the rail line from Lamy to Raton, and $6,727,00 in annual maintenance costs for ten years. We will be presenting various ways this can be approached, and also how these costs can be reduced through cost sharing through BNSF ownership of the Lamy to Raton line.
Posted on: Sun, 03 Nov 2013 00:15:55 +0000
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