National Association of Railroad Passengers: www.narprail.org

Hotline #543

The Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies held a hearing on the White House’s proposed Fiscal 2009 transportation budget on March 6, with Transportation Secretary Mary Peters as the sole witness.

Subcommittee Chair Patty Murray (D-WA) said in her opening remarks, “The Administration’s deepest cuts would be to investments in highways and airports – along with his usual request to slash Amtrak and throw the railroad into bankruptcy.  These cuts would be devastating, and his proposal is unacceptable.”  Secretary Peters’ written testimony did not address the Amtrak issue.

Sen. Kit Bond (R-MO) called the Administration’s request a “dismal budget picture for all modes of transportation.”  On the proposal to “borrow” $3.2 billion from the Transit Trust Fund to fill a gap in the soon-to-be-insolvent Highway Trust Fund, he likened it to “taking a bandage off of a bleeding wound to put on another bleeding wound.”

Sen. Frank Lautenberg (D-NJ) decried the proposed $800 million for Amtrak.  “Once again, President Bush is trying to shut down Amtrak despite strong ridership numbers.  At a time of record gas prices, airline congestion, and congestion on our highways, the President is trying to take away an environmentally friendly option.”

An exchange between Lautenberg and Peters went as follows:

Lautenberg:  “Amtrak said it needs two times the amount President Bush is proposing to operate efficiently.  However, the president continues to reduce his budget request.  Does the president understand the railroad’s needs as he makes these ridiculous budget requests?”

Peters:  “Yes.  It is confusing how ridership grows, yet request for more subsidies continue to grow.  There has to be some economy of scale.”

Lautenberg:  “Your logic is flawed. They need more money to handle the ridership increase because the entire rail system is antiquated and over worked.  Your logic says that you are asking more of them while giving them less to work with.  Are you satisfied with the system?”

Peters:  “We think the federal government should invest in capital, while Amtrak should reduce their need for subsidies.”

Lautenberg:  “What commuter lines make money?  Subsidies for Amtrak are steadily declining.  What we are doing today to our passenger rail system is hurting our society, and setting a trap for ourselves for the future.”

Sen. Arlen Specter (R-PA) complained of a cavalier attitude from USDOT towards his office.  “I personally sent the DOT a list of concerns, and no one has bothered to respond.”  He also noted, “The application for Maglev in Pennsylvania has been sitting on someone’s desk for over a year without a response.”

The House Transportation Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing to receive testimony regarding the role of investment in the rail industry on March 5.  The hearing was spurred by concerns of an attempted takeover of CSX by the Children’s Investment Fund (TCI), a hedge fund, and the recent acquisition of RailAmerica by Fortress Capital.  Witnesses included Federal Railroad Administrator Joseph Boardman, CSX President and CEO Michael Ward, TCI Partner Shehal Amin, RailAmerica CEO John E. Giles, and Harvard Business School Assistant Professor Robin Greenwood.  All three members of the Surface Transportation Board (Chairman Charles D. “Chip” Nottingham, Vice Chairman Francis P. Mulvey, and W. Douglas Buttrey) also testified.

Complete statements and a video of the hearing are available on the hearing page.

In a statement before the hearing, Subcommittee Chair Corrine Brown (D-FL) said, “The nation’s freight railroads are of critical importance to keeping America’s economy moving.  The vital role played by the rail industry could be crippled if unknown foreign ownership or short-sighted investors took control of any freight rail company.  Foreign-owned hedge funds are profit driven, not accountable to anyone but their company’s investors, and probably do not have an American railroad company’s long term best interests in mind.  In this case, TCI has indicated it intends to cut capital expenditures for CSX and impose large rate increases.  If these reports are accurate, it could slow capacity growth and adversely affect the rail industry, as well as the U.S. economy as a whole.”

House Transportation and Infrastructure Committee Chairman James L. Oberstar (D-MN) noted, “23 years ago, [investor] Carl Icahn appeared before this committee in this very room [regarding his proposed takeover of Trans World Airlines].  He told Committee Chairman [Norman] Mineta and the Committee what he would do [at the helm]... Mr. Icahn failed to abide by the assurances, and sold off $1.4 billion in assets… including the $400 million St. Louis to London route, which American purchased and made their money back by the end of the year.  What did he do with that [$1.4 billion], reinvest it in TWA?  No, he took the cash and reinvested it in other assets… That’s the lesson that sticks in my mind.”

The Government Accountability Office issued a report yesterday roundly criticizing federal surface transportation policy.  In the abstract of ”Surface Transportation: Restructured Federal Approach Needed for More Focused, Performance-Based, and Sustainable Programs,” the GAO asserts that, “Surface transportation programs need to be reexamined in the context of the nation’s current unsustainable fiscal path. Surface transportation programs are particularly ready for review as the Highway Trust Fund faces a fiscal imbalance at a time when both congestion and travel demand are growing.”

Ohio has requested Amtrak undertake a study to analyze the costs and details of initiating passenger train service in the “3-C” Corridor (Cleveland-Cincinnati via Columbus and Dayton).  According to an Amtrak news release, Gov. Ted Strickland (D) “asked that the analysis be done in two parts: Cleveland to Columbus and Columbus to Cincinnati (via Springfield and Dayton). The Governor called the 3-C the “backbone of the Ohio Hub, the state’s long-term vision for passenger rail in Ohio.””  All Aboard Ohio President Bill Hutchison was also quoted as lauding the governor for “taking this first step and showing leadership in recognizing the potential of rail development in Ohio. Many other states have already seen remarkable benefits from the implementation of passenger rail services with Amtrak from Maine all the way to California.”

Amtrak announced this week events for National Train Day that will occur on Saturday, May 10.  The date marks the anniversary of the laying of the Golden Spike to complete the Transcontinental Railroad at Promontory Point, UT in 1869.  Event details will be forthcoming at NationalTrainDay.com, where interested parties may sign up for updates.

A Cambridge Systematics study commissioned by AAA has found that automobile accidents cost motorists $164.2 billion annually.  The annual cost per person of $1,051 dwarfs the $430 per person ($67.6 billion total) annual cost of road congestion in the United States.  These two hidden costs of driving total $231.8 billion, which is nearly three and a half times greater than direct federal spending on highways.

The City of Seattle has purchased the historic King Street Station from BNSF for the sum of $10, Mayor Greg Nickels (D) announced on Thursday.  Amtrak and Washington DOT have already restored certain elements of the 1906 structure, which was architecturally marred by “modernizations” such as false ceilings and plastic chairs ahead of the 1962 World’s Fair.  But further restoration (including seismic retrofitting) should be completed within the next three years.  $10 million in city funds will match $16.5 million in federal and state monies to fund the improvements.

The historic ATSF station in San Bernardino, CA is open to passengers once again after Amtrak reached an agreement with the city to partially fund a volunteer Station Host volunteer program.  Amtrak removed agents from the station while it was being rehabilitated, and did not return them when the building renovation was completed a few years ago.  Under terms of an agreement with the City of San Bernardino, Amtrak will pay $500 per month for the next 20 years; $400 will go towards building a museum in the lobby, while $100 will go to San Bernardino Associated Governments to coordinate the Station Hosts.  If you are interested in being a Station Host, please contact the San Bernardino Historical and Pioneer Society.

Amtrak Guest Rewards members will soon be able to purchase additional points, thanks to a deal with vendor Points.com that was announced this week.  Amtrak has not yet outlined details of the service.

A Union Pacific train carrying hazardous chemicals derailed in Mecca, CA on Tuesday, shutting down the Sunset route and causing an evacuation of the area.  On Wednesday, Amtrak turned the Sunset Limited in Tucson, providing a bus bridge to and from Los Angeles.  No further disruptions were expected.

Strong storms in Lancaster, PA caused concrete from a bridge to fall onto catenary wires on Amtrak’s Keystone corridor Wednesday morning.  Amtrak and SEPTA service was disrupted for the early part of the morning.

NARP regional meetings continue tomorrow;  Region 1 meets in Boston and Region 2 meets in Schenectady.  Next Saturday, March 15, Region 4 meets in Baltimore, Region 6 meets in Toledo, and Region 10 meets in Omaha.