Are Minnesota Taxpayers Being Taken for a Ride by Amtrak?

Most Minnesotans have likely never heard of the proposed $550 million Northern Lights Express (NLX) passenger rail line from the Twin Cities to Duluth-Superior. Yet MnDOT has been quietly laying the groundwork for the line for years with a series of engineering and environmental studies. Meantime, Gov. Walz has prioritized the project, requesting $15 million from the legislature to keep NLX on track.

If NLX becomes a reality, MnDOT has made it clear that Amtrak would operate the 152-mile line on behalf of the state. In recent weeks Amtrak officials have surfaced in meetings with elected officials in Duluth-Superior and the State Capitol, lauding NLX as “one of the most shovel-ready projects in the nation.”

Critics question the cost and viability of the proposed line, which would rebrand and revive the failed Northstar passenger service that was scuttled in 1985. MnDOT planners estimate passenger fares would likely cover less than half the estimated $17.5 million annual cost of operating NLX, leaving Minnesota taxpayers on the hook for millions of dollars each year.

Moreover, there’s concern that Amtrak could take Minnesota taxpayers for an expensive ride. A sweetheart system established by Congress empowers Amtrak to raises millions of dollars off the backs of states like Minnesota by operating in-state passenger routes like NLX, according to a prominent passenger rail consultant.

“Regrettably, what has not yet been put on the table for the public’s right to know is a piece of congressional legislation called PRIIA (Passenger Rail Investment and Improvement Act of 2008),” said Mark E. Singer, who frequently criticizes Amtrak in the industry journal Railway Age.

Singer maintains the millions of dollars Amtrak would charge MnDOT to operate NLX would be tantamount to subsidizing the national rail line’s financially struggling commuter line in northeastern states at Minnesota taxpayers’ expense. Amtrak lost $168 million in 2018.

“In essence, this was designed by Amtrak as a means of subsidizing its deficit-ridden Northeast Corridor by charging all other non-Corridor states to operate their corridor trains under 750 miles, based upon Amtrak’s own faulty full cost methodology,” Singer said.

Amtrak CEO Richard Anderson underscored the national rail line’s reliance on state funding under PRIIA at a congressional hearing in February.

“To gain a sense of the scope and importance of our state supported trains, it is worth remember that Amtrak partners with 21 agencies in 18 states to operate 29 state supported routes,” Anderson told the U.S. House Committee on Transportation and Infrastructure.

“…Together, state supported lines carry 15 million passengers annually, almost half of our customers. This number has grown by two-thirds over the last 20 years, and this growth shows every sign of continuing.”

NLX project manager Frank Loetterle recently acknowledged that Amtrak depends on financially favorable agreements with states in the Duluth News Tribune.

“Any shortfall in revenue is made up for by the state,” Loetterle told the newspaper. “Whatever fares don’t cover, the state pays for.”

In response to an American Experiment inquiry, MnDOT officials insisted they have not yet begun “formal discussions about any operating agreement or fee structure for the proposed NLX line” with Amtrak to date.  If talks commence, MnDOT vowed to safeguard Minnesota taxpayers’ interests.

“Should funding be made available, MnDOT would conduct a thorough evaluation of proposals from Amtrak or other potential providers, in consultation with the standards set forth by the State-Amtrak Intercity Passenger Rail Network (SAIPRC) to ensure transparency and a fair shake for Minnesota taxpayers,” MnDOT said in a statement.

Yet the 2008 federal law puts state transportation officials at a distinct disadvantage in negotiating a competitive agreement, according to Singer. He contends Amtrak lacks transparency in divulging the actual cost of its services and equipment for routes like NLX, while giving a pass to states on Amtrak lines in the northeast.

“Although Minnesota will be paying for this proposed service, the states along the Northeast Corridor, between Boston-Washington, get a free ride and are not charged for their corridor trains, which operate under 750 miles,” said Singer.

“This is the end result of how Amtrak acts as a government sanctioned monopolist against state interests.”