The Federal Railroad Administration (FRA) has announced final rules permitting eligible petitioners to submit proposals to replace Amtrak on up to three Amtrak routes. The rules implement provisions of the Fixing America's Surface Transportation (FAST) Act that require the FRA to implement a pilot program to evaluate and select new operators over particular long-distance routes.

The FRA rule creates a 180-day period from the rule's effective date of Sept. 5, 2017, to submit a petition. By limiting the time period, FRA reasons that it will avoid creating an ongoing burden on itself and Amtrak, and will foster competing proposals that can be weighed against each other.

The petition process is quite simple, amounting to a notice of intent to bid, but with one crucial exception. Any petitioner – whether an existing or newly formed rail carrier or a state authority – must have a written agreement with the owner of the infrastructure sufficient to show the owner's support. The vast preponderance of Amtrak's routes are over lines owned by freight railroads. It will be no small task for a new, possibly untested, operator to persuade the owners of those lines to permit it to step into Amtrak's shoes. The FRA makes it clear that prior passenger rail experience is not necessary.

If that hurdle can be surmounted, the next step is for FRA to publish a notice in the Federal Register. This will trigger a 120-day time period during which the petitioner can submit its bid. Amtrak, and any other interested petitioner, is also given the opportunity to submit a competing bid.

The FRA's requirements for a complete bid are comprehensive and should provide the agency with a solid basis on which to award a bid. The bidder must include:

  • at a minimum, an operating plan, a financial plan and executed copies of all necessary agreements with the owner(s) of the right of way
  • evidence that the proposed service is at least as frequent as Amtrak currently offers
  • description of the rolling stock to be used, and if not currently owned, how the equipment will be acquired

Amtrak is not required to make its equipment available, but the FAST Act does give the Surface Transportation Board (STB) the authority to determine whether Amtrak should be required to do so. Staffing and "terms of work" are to be described. The FRA has provided that employee protection applies and Amtrak employees are to be given hiring preference, consistent with the staffing plan.

If state funding is contemplated, the bidder must show written support from the appropriate state entity. A winning bidder will receive a federal subsidy based upon Amtrak's fully allocated costs of operating the route. Amtrak is required to make its reservations system, its stations and other necessary facilities available. If Amtrak and the new operator cannot reach an agreement, the STB is to prescribe the compensation and other terms of use.

Signaling that the FRA intends to hold a substitute operator to a high standard of performance, the operating plan must describe how the proposed service would outperform Amtrak's service measurements in a number of performance categories. Continued receipt of the annual subsidy will be conditioned on performance standards to be set by the FRA at least equal to those achieved by Amtrak. A successful bidder will be awarded a four-year contract to operate the route with an opportunity for one four-year renewal.

Numerous parties submitted comments in the FRA rulemaking, suggesting that there is at least some level of interest in the marketplace for bidding on Amtrak routes.