Back to the Future
Is a Rocky Mountain railroad revival in the cards?
By Jon KovashIn the obscure and sometimes mystical universe of trains, 2007 could end up being the year that produced the atmospheric conditions that led to the prospect of a serious railroad revival in America. For half a century the U.S. rail system has been regarded as a rusty souvenir of the Iron Age, to be sold off as scrap and sites for cell towers. But in recent months there are new signs of hope for train buffs. Prompted by the fuel crisis and the death spiral of transportation infrastructure, governments at all levels, and maybe even private investors, are ready to build more trains.
I live in remote Moab, Utah, where the nearest track belongs to Union Pacific, the longest-standing and still largest of the American rail barons. UP laid the first tracks from Nebraska to Promontory Summit in Utah, founded Sun Valley and connected the Rockies to the world. Not anymore. Amtrak’s California Zephyr runs tantalizingly close to Moab — one of four remaining coast-to-coast routes, it passes by just a 30-minute car drive north of here. But the closest Amtrak station where I can get a ticket and board is Grand Junction, a 90-minute drive away.
If I do choose to board the Zephyr, two trains a day will take me east through Denver or west through Salt Lake City. Both towns are once-great rail hubs of the Rockies from which there are no longer any north or southbound routes. Otherwise, across the great empty West, Amtrak will only take me to a scattering of random towns that happen to be on I-70 (Glenwood Springs, Rifle, Sparks, Crescent Junction, Truckee). A handful of critical connections, most modest in track length, have been severed, some quite recently. Passenger rail service to the burgeoning Phoenix/Tucson area was abandoned in 1997. In 1993, Union Pacific abandoned the second track on Donner Pass. Other critical gaps: Albuquerque to El Paso, Denver to Trinidad, Flagstaff to Tucson, and Salt Lake City to Las Vegas. It’s not just the West, either. Since Hurricane Katrina, when track was damaged between New Orleans and Jacksonville, the Sunset Limited no longer reaches to Orlando.
My little brother Hal used to hop trains in Denver. He and a buddy would jump on the railcars carrying new autos. They sat in the bucket seats of new Mustangs — the keys were even in the ignition so they could use the radio. My own fantasy has long been just to throw the bike and duffel on the train and travel at will, like in civilized countries, to urban centers as well as distant valleys and canyons. Will this ever come to pass? I am more encouraged than ever, but the answer lies in following the money.
In October, the U.S. Senate quietly passed Senate Bill 294 by a 70 to 22 veto-proof majority. SB 294 would take Amtrak off its starvation diet, and for the first time in history, provide significant money for new passenger rail services. From Reagan (“it would be cheaper to buy them plane tickets”) to W. Bush to McCain, Republicans have especially loved to hate Amtrak. But SB 294’s principal co-sponsor is archconservative Senator Trent Lott, signaling that a new bipartisan coalition for passenger rail may be emerging.
Is Congress finally acknowledging the near-universal popular support for trains? The more cynical have guessed that a bunch of different business lobbyists are beating the crap out of the railroad lobbyists. Either way, the U.S. House is expected to take up the bill in early ‘08, along with the lesser-known HR 1650, the Railroad Antitrust Enforcement Act, and HR 2125, the Railroad Competition and Service Improvement Act, both of which arose out of last year’s flurry of hearings on rail reform. Forbes Magazine predicted this will be “one of the major battles on Capitol Hill next year.”
In January, the railroads disclosed they spent several million dollars in 2007 on lobbying against railroad re-regulation.
In December, the Association of American Railroads (the Big Guys) declared that “Piggybacking passenger service on privately owned and operated freight rail assets will give America a third-rate passenger rail system.” But Congress is all in a tizzy largely because we already have a third-rate passenger system, as well as a third-rate freight rail system. Every mile of intercity rail in America except for the Acela (NYC to DC) belongs to a private freight line. The economy doesn’t work without freight transport, and it is corporate America itself, the chambers of commerce, manufacturers, captains of industry, farmers and conservative state bureaucrats who now say the railroads provide poor freight service at monopoly prices and are disastrously unready to meet future business needs.
The system mileage of America’s railroads peaked in the 1920s, at 380,000 miles of track. Today, more than half of that track is gone, and little of the remainder is used for passenger service. The golden age of American train travel, when you could take a train most anywhere, lasted barely three decades. Much of the remaining system is characterized by crumbling tunnels, sagging bridges, outdated tracks and infrastructure that America’s civil engineers say “was downsized to a core network whose route system is descended directly from its 19th Century design.”
GREAT TRAIN ROBBERIES
For me one question persisted: Why has everyone now turned against the railroads? Then I came across a study funded by industrial freight customers, which concludes that America’s “Class I” railroads, including Union Pacific, have overcharged their customers to the tune of $6.5 billion since 2005 in the guise of fuel surcharges. A subsequent investigation by the General Accounting Office noted that the railroads “may have abused their market power.” The GAO traced the problem back to Reagan-era reforms — the 1976 Railroad Revitalization and Reform Act and the 1980 Staggers Rail Act, which together allowed the railroads to price according to “market conditions” and to recover costs through a “differential pricing” formula. It was argued that increased competition would benefit rail customers. Economists call what happened since then “the emergence of a capacity-constrained environment in which demand exceeds supply.” (As recently as 1976, there were still 30 Class I railroads — it’s presently down to seven and shrinking.) The GAO said an increasing percentage of “captive shippers” are being overcharged by up to 300 percent “over the statutory threshold.” In plain English, that means the railroads have (allegedly) been gouging their best customers the worst. Since 2001 federal regulators have heard only ten claims for rate relief, nine of them from coal companies. The GAO explained that no one else can afford to sue because it takes an average of $3 million in legal fees and 3.3 years to get a decision. Left with few options to get their money back, freight customers have initiated several class-action suits, but hope to get their real revenge in Congress.
TheStreet.com, seemingly oblivious to these developments, chirped that railroad stocks “are finally getting the recognition for their well-positioned economic role and pricing power, which allows them to pass fuel cost increases on to their customers.”
Stung by this “pricing power,” a growing and broadening sector of the business community has come to accept a neocon heresy — that sometimes it takes government to restore competition. How else to explain why Congress is poised to enact historic reversals? SB 772 (“re-regulation”) reaches back in time to amend the Clayton Act, the Sherman Antitrust Act, the Wilson Tariff Act and the Federal Trade Commission Act. It declares that railroads “must take into account impacts on shippers, consumers and affected communities.” Overall, there are a score of related bills on the congressional docket that seem crafted to work as a grand package (where were we during all these hearings?). S953, the Railroad Competition and Service Improvement Act, would put teeth back in Federal regulation. Several more bills propose to entice investment in railroad infrastructure with tax credits and tax-free bonds.
The Congressional concern was long preceded by state and local lobbying. Attorneys General in 21 states had already asked Congress to re-regulate the railroads, which they charge with exhibiting “the classic symptoms of unrestrained monopoly power.” (The big seven control 84 percent of the traffic and get 91 percent of the revenue.) An exhaustive study released last year by state highway and transportation officials concluded that deregulation, along with subsequent mergers and conglomeration, has led to a rail system that plies “a relatively few high density corridors” that are “poorly connected to primary consumer markets,” using infrastructure that has endured “disastrous deferment of maintenance.”
THE RAIL REVIVAL WILL NOT BE TELEVISED
Despite Amtrak’s poverty and the dearth of private investors, a modest American rail renaissance has come about during the last 15 years, especially for commuter rail in midsized cities. State and local agencies across the country, tired of waiting for the feds, have been making their own deals with Amtrak and funding new or improved routes that account for much of the dramatic increases in rail ridership during the last five years. Fourteen states now provide operating support for services on Amtrak corridors. Twenty-two states have funded rail projects, and thirty have joined the States for Passenger Rail Coalition to lobby for more train money.
Like most states, Utah’s DOT has a “2030 transportation plan,” which gives lip service but little real commitment to rail — the guy at UDOT wondered why I was calling about railroads, since “we only do highways.” Curiously it’s been the Salt Lake City Chamber of Commerce that has vigorously proposed new taxes for light rail and urged the completion of new light-rail lines on the Wasatch Range by 2015 instead of 2030. You know something’s brewing when fervent Romney guys push new sales taxes, property taxes, fuel taxes and even vehicle mileage taxes.
As I try to catalog local rail initiatives, I am struck by how paltry the price tags seem, many equivalent to unloading a couple of La Jolla trophy estates:
• $6 million in subsidies needed per year to run Maine’s new Downeaster.
• $6.5 million to extend Amtrak from Oklahoma City to Dallas.
• $4 million for a new switching yard at Tigard, Oregon that clears the way for commuter rail service.
• $37 million to buy 42 miles of old freight line near Seattle for future passenger rail.
• $20 million to construct freight rail improvements and make rail connections to businesses in Pennsylvania.
• $10 million to improve the Empire Line from NYC to Albany.
Amtrak’s annual shortfall, which has had the neocons and paleocons grumbling all these years, amounts to a half a billion dollars, less than the cost of two days fighting the war in Iraq. In that context ,the estimates for massive system-wide improvements contain numbers that also seem far from daunting:
• $14 billion to upgrade safety crossings.
• $12 billion to upgrade tracks on the short lines that can’t handle new heavier freight cars.
• $3 to 4 billion a year to restore and improve freight rail infrastructure.
• $8 billion a year for the proposed and aggressive 2050 Passenger Rail Plan, which could get millions of Americans out of their cars.
DON’T BUILD IT, AND THEY WILL COME
Like the other Class Ones, Union Pacific has steadily abandoned service on all but its highest volume and most profitable lines, which are the bulk unit, double-decker trains carrying raw materials. The single largest rail market in the U.S. consists of UP’s operations hauling coal out of Wyoming’s Powder River Basin to all points east. If you want to see Union Pacific humping for customers, go to tiny Bill, Wyoming (you’ll have to drive — there’s no bus or passenger train service), where 13,000-ton coal trains converge day and night. In nearby Gillette, motorists wait in long lines at the train crossings, according to the Gillette News Record.
Cramer’s Choice advises me to buy UP stock because the Class I railroads are “well positioned to gain from positive trends,” by which he means their value lies principally in monopoly power. With record demand and no expansion, the big railroads don’t really need new “captive customers.” Much of their profits go to stock buy-backs, and capital improvements are left to others, even warehouses, which have vanished in the just-in-time, “push-to-pull” shipping economy. Only 18 percent of Union Pacific’s profits come from “intermodal” shipping, meaning stuff that has to be loaded, unloaded & delivered to regular people and thrifty businesses.
Monopoly affords more than just the power to shut out rivals. When Union Pacific does (theoretically) face competition, consumer groups allege it engages in a practice called “bottlenecking.” They cite the example of Lafayette, Louisiana, which uses coal from the Powder River Basin 1,500 miles away. Union Pacific’s Class I rival, Burlington Northern, also has tracks to Lafayette, except for the last 20 miles, owned by UP. UP won’t “rent” those 20 miles of track at any price (wink wink?). So Lafayette pays a premium to get its coal shipped on UP trains.
The short-lines or minor railroads, shut out by the Class I monopolies, typically trade paper assets and create new layers of middlemen rather than new ventures. According to Minnesota Attorney General Lori Swanson, the Class Ones and short-lines “enter into ‘paper barrier’ agreements which essentially pass control of the railroads to the bottleneck operators.”
THROW MOMMA ON THE TRAIN
While private investors have regarded new railroad ventures as unsexy and fruitless endeavors, a resurgence of theme park railroading indicates that deals can be made with both the Class Ones and the short-lines, which suddenly discover unused capacity. Reno-based Trains Unlimited Tours offers 38 tours on vintage rail cars, including the Santa Fe Express, which boards wealthy L.A. art patrons at downtown Union Station on a string of 1948 Vista Dome coaches and Pullmans, which are clipped on the end of Amtrak #4, The Southwest Chief. Service in the cars features “monogram china,” damask table linens, full bar service, “triple sheeted” terry bath robes and “crisp starched and pressed bed linens.”
At Lamy, New Mexico, the vintage cars are uncoupled from the Chief and yoked to a waiting locomotive that will pull them to the historic and otherwise unused rail station in the heart of Santa Fe’s gallery district. Breakfast is served on departure — the brochure says you can “relax watching commuters battle the freeways as you enjoy another cup of coffee in the Vista Dome.”
These are leisure experiences marketed to the relatively affluent — a tantalizing taste of what it would be like if you could really travel around the country on trains and not have to ride with chickens. A more garish theme train is the Grand Canyon Railway, which in 1989 revived 60 miles of historic track from Williams, Arizona, to the South Rim. You can actually get to Williams on Amtrak, but the sprawling Grand Canyon Railway RV Park attests that most have arrived in their own “parlor cars”. A 30-minute Wild West Shootout precedes each departure of the restored 1923 steamer, and every railcar has its own singing cowboy (the website features complaints from passengers who didn’t like their singing cowboys).
THE FUTURE OF ‘LOW-SPEED’ TRAINS
It strikes me that in our lifetime America will never have a transcontinental high-speed train — I don’t think it’s ever even been put on the table. So high-speed doesn’t mean squat to us in the interior West. But what about regular-speed? The tracks are mostly still there and largely still functional. Could regional rail travel be revived with high-tech conventional trains?
If any one man knows the answer, it might be Tom Rader, an unlikely rail executive who started out in the Alaska cruise tour business. In 1982, Rader wanted to put cruise passengers on a train and take them to Anchorage, Fairbanks and Denali. He renovated (beginning with chopping their tops off) four old bi-level commuter railcars and started booking passengers on the Alaska Railroad. The Denali train was a hit and the operation was sold to Princess Tours. Thus emboldened, in 1988, in a former Navy blimp hangar in Tillamook, Oregon, Rader invented his own “Ultra Dome” cars, which he began building for two promising clients: Marlboro wanted a private cruise train with hot tub and piano lounge, and an outfit called “Florida Fun Train” wanted train cars with restaurants, arcades and theaters. But the Marlboro train and Fun Train both went belly up, leaving Rader with half-finished railcars, and forcing him to reorganize in 1997. Just as things looked bleakest, the orders started trickling in: Princess Tours wanted two more cars, the Alaska Railroad bought the Fun Train cars, British Columbia Rail ordered three Ultra Domes and Colorado Railcar was born.
Rader built a 75,000-square-foot factory at Fort Lupton, east of Denver and adjacent to a UP mainline. But he had more in mind than Ultra Domes. For years he had noticed that some European rail routes use what are called DMU (Diesel Multiple Units) trains. Smaller than American trains, the European DMUs are essentially self-propelled passenger railcars that are super fuel-efficient because they don’t require a 3,500-horsepower locomotive diesel engine. But they don’t meet U.S. crash standards, and received little attention, except from Tom Rader.
Rader decided to build his own DMUs, which he began constructing on state-of-the art roll cages made of Corten steel. In 2002, they passed crash tests at the Transportation Technology Center in Pueblo. With its quiet twin-600 hp Detroit Diesels, Rader’s DMU also achieved 732 passenger miles per gallon, and puts out less emissions per seat than an electric train. The world’s largest DMU, it’s a double-decker, 89 feet long and 20 feet high, containing the engines and seating for 188. It can tow up to two additional coach cars that each have another 200 seats, plus baggage space, bike racks and ADA bathrooms. It can easily top 100 mph but is designed for 60 to 70 mph service. It boasts the lowest initial cost-per-seat anyone has achieved in the industry. Colorado Rail recently provided a DMU and coach to a Florida commuter line for $7 million. How cool is that? For the price of a nondescript yacht, you could have a private train that can carry your 400 closest friends across the land.
Available extras include:
• Dining cars with seating for 76 and stainless-steel hotel galleys.
• Sleeper cars with TV, VCRs, telephone & audio, leather couches, marble counters, Oriental rugs and steward call buttons.
• Entertainment rail cars with bars, dance floors, gaming areas, libraries, spas with hot tubs, theaters, offices and lobbies.
In 2006, Rader acquired the American Orient Express, a vintage “toy train” operation with a somewhat goofy history. AOE started out in 1990 as the American European Express, a luxury business train between Chicago and New York, which shortly thereafter failed. The company next tried a vacation train through West Virginia’s New River Gorge, which also failed. The AOE press release archives refer to a “failed attempt to convert the train to a transport for country music enthusiasts between Texas and Branson, Missouri.” I can only imagine what else lurks in the file (“Disney rejects tourist and hog train to Graceland”). But the American Orient Express persisted in finding a vacation niche that was the landlocked equivalent of the Alaskan cruise racket that Rader had pioneered.
When Rader stepped in, he changed the name to GrandLuxe RailTours. It’s still a toy train, but easily the most ambitious and extensive private train in America. Remember about the “critical gaps” in Amtrak routes? Rader’s train gets to cruise around on ten-day excursions to all those otherwise now freight-only tracks that still lead to every nook and cranny of America. On the “Parks of the West” tours you can ride the vanished Salt Lake to Las Vegas to Albuquerque route, visiting Santa Fe, Sedona, Grand Canyon and Zion along the way. Or you can head north on the vanished Salt Lake to Seattle route, visiting Jackson Hole, Yellowstone, Glacier and Coeur d’Alene. The GrandLuxe train also operates on the Zephyr route from Denver to San Francisco, the “Antebellum South” from New Orleans to DC, and on the tracks from Mazatlan to Copper Canyon.
In May ’07, Rader was invited to appear before the House Transportation and Infrastructure Commission, where he urged lawmakers to “make rail transit more affordable to Americans” by encouraging the use of “tools at hand” and “the best available technology,” or in other words, a high-tech touch on the good old “low-speed” train.
Riding the regular Amtrak routes can be rewarding for the bold tourist or domestic traveler who’s not in a hurry. The Zephyr is 4.6% on time, with an average 10.5-hour delay between Chicago and San Francisco. On one trip, my train was blocked by a freight accident, and buses hauled us from Salt Lake to Reno, where we once again boarded the train. As recently as January, Amtrak trains have been stranded in Donner Pass blizzards. A blogger whose Pacific Surfliner trip from San Diego to Santa Barbara was cut short when the train ran out of gas, posted that “at least it wasn’t a plane.”
For these last 50-some years, we have been unique among first-world countries in regarding trains as transit for hobos, losers, coal and logs. Today, even in patrician burgs like Scottsdale, town officials are holding polite debates about whether the train should go down the main street or one block over. If the cash spigot for passenger rail is indeed opened, the bulk of the money will follow the bulk of the people, to commuter corridors among the most populous cities and their airports. If high-speed enthusiasts rule the day, these projects will be relatively slow to come to fruition, as the U.S. remains far behind in high-speed technology and experience. The Acela, America’s first and only “high-speed” (it averages 83 mph) train, travels from New York to Washington in two hours, 45 minutes (the Eurostar now does London to Paris in 2:15). From the outset, the Acela was beset with technical problems, delays and large cost overruns. Recently, after years of fruitless effort, Amtrak abandoned its agreement to provide a 110 mph train from New York to Albany. Amtrak had refurbished three ’70s-era Rohr Turboliner locomotives, which now sit in a warehouse.
In Asia and Europe, where most of the new technology is being developed, high-speed rail has already obsolesced a significant sector of short-hop aviation. China, which has trains that reach 267 mph, has embraced a plan to connect every province, including China’s 30 largest cities, with new high-speed rail routes that carry both passengers and freight. China is spending $12 billion a year on railroad infrastructure, a number that could soon reach $20 billion, utterly dwarfing even the most ambitious plans now contemplated for American rail. Ironically, investors like Warren Buffet, who have shunned railroad building in America, are salivating at getting in on the Chinese action.
The rail corridor here in Moab gave way to an energy corridor some years back, so now the town throbs day and night with interstate truck traffic. There is still a Union Pacific track coming in from the Zephyr line — it almost reaches town, just across from Arches National Park, and then heads downriver to a big potash mine. A few years back, Bill Gates visited Moab on those same tracks in his private train, and some time soon they may be used to haul radioactive tailings away from the banks of the Colorado River. For now only one train a week comes by here, a freighter that goes to the potash mine. Will DMUs ever bring passengers to Moab? Are the old tracks in good enough shape to handle it? Would Union Pacific be amenable to new proposals to use its tracks, or to once again stop the Zephyr at Moab? Mark Davis, the Union Pacific Public Information guy was cordial and assured me that “all that stuff is on our web site.” He emphasized that UP’s rail assets are “at or near capacity” and that “people won’t stand for taxpayer money going to trains.” I could tell our conversation was near an end when I innocently asked, “If your lines are maxed out, why don’t you just build more?” The answer, my friend, is blowin’ in the chambers of the Senate Antitrust Subcommittee.
MG
