Summary of Proposed Federal Income Tax Credits – Intermodal Freight and Passenger Infrastructure

The “Quant” measures a previously overlooked background investment, flowing from Highway Trust Fund (HTF) taxes
on unrelated daily use of locally funded streets that is in turn leveraged mostly toward edge-highways through the gas tax
proxy. This HTF leveraging is like taxing food purchases at all cafes, coffee houses, convenience stores, groceries, and
restaurants to build one new restaurant, enabling an inexpensive buffet, while just painting the walls at the other buildings.
Yes, such could obliquely be called a food user fee for food infrastructure, but the marketplace is obviously affected.
A below-the-rail infrastructure investment program, equivalent to the HTF leveraging by person-mile or by freight truck
trailer-mile, can accelerate the modernization of nationwide railway infrastructure and resolve marketplace inefficiency.
Below-the-Rail Infrastructure – Shareholder Owned:
A Federal Tax Credit to reimburse local property taxes paid on line-haul Right-of-Way, terminals, property, and plant as
Interstate Highways pay no property tax is proposed to promote recapitalization through equalization of investment.
A Federal Tax Credit of $21.0/train-mile for the first 800 train-miles of highway competitive intermodal rail freight
between public terminals is proposed. This rate is but 90% of the $0.26/truck-mile investment over and above user fees
collected between exits of the original Interstate Highway system for a 90 trailer train, thus more fiscally efficient.
In total, the Tax Credit take rate is estimated to be about $2.8 Billion annually based on an average of four round trips a
day over the 46,000 mile core network, spurring a private investment in the early phase of around $8 Billion annually.
These investments on Shareholder owned railroads would be deficit-neutral through:
1. Reducing shippers’ financial costs by around $3 Billion annually through a projected market shift to greater
intermodal use and shorter drayage distances offered by more economical service offerings and near sited new
terminals, while using private entities to achieve the benefits of commercial vehicle TSW study economically.
2. Providing categorically exempt, nimble, privately led infrastructure investment to fund fluidity improvements,
such as passing and staging tracks, new faster alignments and stronger bridges as prioritized by private owners.
3. Ensuring fluid interstate rail routes exist for military movements and seasonal traffic surges, called for in FRA
National Rail Plan; thus postponing General Fund expenses for Interstate Highway congestion relief projects.

Below-the-Rail Infrastructure – Publicly Held:

While intercity passenger rail has been viewed by planners to only fit congested regions where expansion of land-hungry
highways becomes too expensive the overlooked “Quant”, a metric of a leveraged nationwide investment in highways,
suggests a distance based railway infrastructure investment through the National Railroad Passenger Corporation (NRPC)
would be equitable throughout the rural heartland of the country in addition to a fixed investment in congested regions.
A fund for access to shareholder owned Class I railroads, as well as fixed passenger terminal facilities, large loss liability
pools needed for interoperability, and commuter rail infrastructure is proposed. About $2.4 Billion annually would be re-
directed from Federal railroad Income taxes instead of Federal General Fund buckets at the same level.
NRPC Mainline Track Capital Lease (Shareholder or Publicly held railways) = $8.0/train-mile
NRPC Terminal Facilities - Boarding Platforms, ADA mods, Yard Tracks, and Security = $8.0/train-mile
USDOT Large Loss Liability Pool (Operator covers small claims) = $0.007/passenger-mile
Note: Combined the above equals about $17.2 per train-mile in equivalent Below-the-Rail Investment
Nationwide Urban Rail Infrastructure grants (Most Economical congested peak-capacity) $0.9 B annually
NEC Rail Infrastructure grants (Most Economical congested peak-capacity addition) $0.9 B annually

An analysis of Amtrak’s cost center data for existing long-distance operations indicates that the true revenue gap is nearly
equal to the below-the-rail infrastructure costs such as mainline track leases, terminal yards, platforms, and risk
protection. Thus an amicable path forward is to expand passenger volume per train-mile, utilizing the declining cost curve
of passenger trains with respect to volume to improve financial performance. After the investment in Below-the-Rail
infrastructure costs, the operator should be able to cover all remaining Marginal Costs including operating personnel, fuel,
consumables, and equipment capitalization and maintenance from consumer revenue after profit on the longer routes, or
with a smaller sum of local support for shorter routes, thus providing a functioning feedback loop for management to
improve service to the public and make efficient small changes to customer facing provisions without prescriptive rules.

Summary - National Railway Infrastructure Plan 1 1/3/2020

Beneficial Changes for Future Authorization Legislation
1. Structure Federal Amtrak and Common Carrier investments through railroad industry income Tax Credits either
claimed directly by private owners or assigned to the USDOT for nationally held assets.
a. Fixed investments in two groups of unique bottleneck infrastructure costs, Northeast Corridor (NEC) and
Nationwide Corridors, whose costs are largely unchanging with respect to train-mile volume. This is the
least expensive way to provide intercity travel capacity for shorter intercity trips in crowded urban areas
where land for expansion is occupied, funded at $0.9 Billion annually for each, $1.8 Billion total.
b. Variable investments in terminal and line-haul infrastructure by Train-mile for NEC, National Network,
Private, long-Commuter, and State Corridor intercity rail passenger services that cross a state boundary or
are over 50 miles in route length, the intercity trip cutoff point used in various USDOT studies. Funding
passenger trains at a $16.0 per train-mile Interstate Highway equivalent investment metric would
consolidate many of the various USDOT Federal programs, the FRA for Amtrak and the FTA for long-
commuter rail, provide coordination for infrastructure expansion and long-term improvement where such
services mix, and allow for efficient incremental improvements in a multi-year construction program.
c. Variable investment in Intermodal rail freight infrastructure at a $21.0 per train-mile Interstate Highway
equivalent investment metric for the first 800 miles between public terminals, for nimble private
investment to ensure major capacity projects are pursued to support the national economy efficiently.
d. Rebate fully all highway fuel taxes paid by Motor coach operators on Common Carrier routes to simplify
funding given the existing very low rates of infrastructure cost recovery anyway from operators due to the
existing leveraged highway investment program and partial rebates in Federal and State law.
e. Rebate fully local property taxes paid on mainlines by railroads on routes with Class 4 track or above.
2. Establish a large loss $295 Million per occurrence, liability pool at the USDOT for all ground passenger common
carriers operating from accessible terminals, either by railways or highways, with coverage provided by the
USDOT at a budget rate of $0.007/passenger mile; significantly below the existing rates other Federal general
fund social programs expend on automobile accidents outside the HTF. The route operators would in turn be
responsible for arranging first-dollar coverage of at least $2 Million per occurrence at a safety record rated
deductible, which the insurance market could price based on the operator’s safety record and management plan.
3. Enable Competitive Pilot Project petitioners to optionally pass-through as a NRPC subcontract, track access rights
and agreements when NRPC Train and Engine Operating crews or the infrastructure owner crews are used from
existing crew bases; revising the competitive pilot rule to allow petitioners to count these pass-through, sub-
contracted, provisions as meeting the requirements to first have an access agreement. This is similar to the pass-
through arrangement the States enjoy when sponsoring rail services and as such has survived legal challenge. This
also recognizes that NRPC exclusively acts as the gateway to the remaining Common Carrier right of access for
passenger operations at incremental cost with performance incentives. The action would spur NRPC to respond
competitively to marketplace opportunities or another operator may take up the challenge.
4. Extend the Competitive Pilot franchise period to at least 8 years, with dedicated funding from a pool of related
federal refundable Tax Credits assigned in the year of award so as not to rely on future appropriations.
5. Ensure a USDOT buy-back provision exists for equipment purchased for Competitive Pilot operations at the end
of contract, as there is not enough volume, as exists in the United Kingdom, for leasing companies.
6. Simplify the Competitive Pilot program agreement starting point as such has been left to be arbitrated through a
complicated and lengthy Surface Transportation Board (STB) process should an agreement not be forthcoming. It
would be advantageous for Legislation to set a upper level cost to access nationally held assets like terminals and
yards as well as state funded commuter infrastructure that will always be jointed shared as well as specifying the
actual investment to be provided by the US on the route in lieu of the Amtrak subsidy should an existing route be
assumed from Amtrak. Conceptually, these values could be near to those proposed for Amtrak’s federal funding
earlier, thus providing a level playing field for competition and certainly when bidding.

Summary - National Railway Infrastructure Plan 2 1/3/2020

 Table B-2. Fully Allocated Costs by Subfamily, Pre-Audit FY2018 Dollars (Millions) APT Average Costs FY2018 Dollars (Millions) -
This table provides the allocated costs of each APT Subfamily. Responsibility for Infrastructure and Operations parsed per
Highway and Aviation Divisions

Percent
Operating Below-the-Rail Above-the-Rail Operations
Operating of Amtrak % of
Subfamily and Capital Infrastructure Investment (Mostly Variable with
Family Family Name Subfamily Name Costs Fully Operating
Number Costs (Mostly Fixed with Respect Respect to Train
(Millions) Allocated and Capital
(Millions) to Train Movements) Movements)
Costs
FM_101 Central Div MoW $19.90 0.5% $26.30 0.5% X $26.30
FM_102 MidAtlantic Div MoW $93.20 2.2% $150.30 2.7% X $150.30

FM_103 New England Div $59.10 1.4% $85.30 1.5% X $85.30

MoW
FM_104 New York Div $110.10 2.6% $140.10 2.5% X $140.10
Maintenance of
FM_MOW MoW
Way
FM_105 MoW Support $113.80 2.7% $572.60 10.4% X $572.60
FM_106 System Gangs $8.60 0.2% $114.00 2.1% X $114.00
FM_107 West Div MoW $11.10 0.3% $11.20 0.2% X $11.20
FM_108 Empire District $10.70 0.3% $14.70 0.3% X $14.70
FM_109 Michigan Line $10.30 0.2% $10.40 0.2% X $10.40
FM_201 MoE Turnaround $163.00 3.9% $163.30 3.0% X $163.30
FM_202 MoE Loco $88.30 2.1% $88.50 1.6% X $88.50
Maintenance
FM_203 MoE Car $38.00 0.9% $38.00 0.7% X $38.00
Maintenance
Maintenance of FM_204 MoE Support $39.10 0.9% $44.00 0.8% X $44.00
FM_MOE
Equipment FM_205 MoE Multiple $186.60 4.4% $344.00 6.2% X $344.00
FM_206 MoE HSR $57.60 1.4% $58.20 1.1% X $58.20
Maintenance
FM_207 MoE Back Shop $18.00 0.4% $79.10 1.4% X $79.10
FM_208 MoE Material Control $10.60 0.3% $10.60 0.2% X $10.60

FM_301 On Board Services $262.70 6.2% $262.70 4.8% X $262.70

(OBS)
FM_302 T&E $438.40 10.4% $438.40 7.9% X $438.40
FM_OPS_ Ops -
FM_303 Yard $71.00 1.7% $71.20 1.3% X $71.20
TRANS Transportation
FM_304 Fuel $128.10 3.0% $128.10 2.3% X $128.10
FM_305 Transportation - $11.50 0.3% $11.50 0.2% X $11.50
Multiple
FM_306 Train Movement $86.70 2.0% $86.80 1.6% X $86.80
FM_307 Train Movement - $152.30 3.6% $160.10 2.9% X $160.10
Host RR
FM_OPS_ Ops - FM_308 Transportation $77.60 1.8% $149.80 2.7% X $149.80
TRANS Transportation Support
FM_309 Power - Electric $81.10 1.9% $81.10 1.5% X $81.10
Traction
FM_310 Stations $196.90 4.7% $196.90 3.6% X $196.90
FM_SALES Sales and FM_401 Sales $10.30 0.2% $10.30 0.2% X $10.30
_MKTG Marketing FM_402 Information & $73.00 1.7% $73.00 1.3% X $73.00
Reservations
FM_403 Marketing $54.90 1.3% $77.40 1.4% X $77.40
FM_404 Station and On- Board $5.00 0.1% $5.00 0.1% X $5.00
Technology
FM_601 Corporate $144.10 3.4% $190.30 3.4% X $190.30
Administration
FM_602 Centralized $237.20 5.6% $296.40 5.4% X $296.40
General and Services
FM_G_A
Administrative FM_603 Qualified Mgmt $971.50 23.0% $1,015.60 18.4% X $1,015.60
FM_604 Direct Customer (Non- $49.40 1.2% $154.10 2.8% X $154.10
NTS)
FM_605 Subsidiary $39.20 0.9% $39.20 0.7% X $39.20
FM_UTILI Utilities FM_801 Utilities $5.80 0.1% $5.80 0.1% X $5.80
TIES
Police, FM_901 Police $58.90 1.4% $60.90 1.1% X $60.90
Environmental & FM_902 Emergency Mgmt $28.40 0.7% $34.40 0.6% X $34.40
FM_POLIC Safety & Corp Security
E_SAFETY
FM_903 Environmental & $7.40 0.2% $22.30 0.4% X $22.30
Safety
Grand Total $4,229.10 100% $5,521.60 100% $1,917.90 $3,604.00

Reconcilliation of APT Formula to Actual FY2018 Costs and Revenues

FY2018 Federal Government Investment after FRA witholding1 $1,924.90

Below-the-Rail Infrastrucutre Remaining to be Covered by Operations ($7.00) $7.00
Actual FY2018 Total Operating, Capital, Interest, Pensions, Tax, and Net Change in Cash1 $5,063.70
APT Formulaic Cost Above Actual FY2018 Costs $457.90 9.0% $ (457.90)
Total Above-the-Rail Operations Cost + Remaining Infrastructure Cost $ 3,153.10
Actual FY2018 Total Revenues (Tickets, State Contributions, Ancillary, and Other Core) 1 $ 3,386.70
1. Consolidated Financial Statements National Railroad Passenger Corporation and Subsidiaries (Amtrak) for FY2018

Summary - National Railway Infrastructure Plan 3 1/3/2020