Hotline #248 - June 21, 2002

Unless it arranges for emergency financing, Amtrak could begin a shutdown process as early as the middle of the coming week, Amtrak President David Gunn told a Senate panel on June 20. His statement -- at a hearing of the Senate Transportation Appropriations Subcommittee, chaired by Patty Murray (D.-Wash.) -- reflects the fact that Congress adjourns at the end of business June 26. It is possible that, before Congress reconvenes July 8, Amtrak's cash could run down to the $50 million level Gunn believes he needs to shut down the system and protect Amtrak's assets.

Gunn said a report on fiscal 2001 by Amtrak's auditor (KPMG) -- due in December, but just completed -- revealed that Amtrak losses for 2001 were $160 million more than previously reported, and that losses for earlier years were $37 million more than previously reported. DOT Inspector General Ken Mead said that amount was very near the $200 million that he told Congress earlier this year would be the amount of cash shortfall Amtrak would face in 2002.

The difference this year, Mead said, is that because Amtrak's auditor missed a December deadline for completing the 2001 audit, Amtrak was in a technical state of default and lost access to its normal line of credit. Amtrak continued to work with the various financial institutions involved in a possible loan, but on June 17 approached the Federal Railroad Administration for a loan guarantee under the Railroad Rehabilitation Improvement Financing Program.

Federal Railroad Administrator Allan Rutter decried the lateness of the loan application, but said FRA might have an answer for Amtrak on June 24. He also expressed the Administration's position that it would oppose short-term help without reforms such as those proposed that very morning (see below), which, given the little time remaining, is quite unrealistic. Indeed, Chairman Murray said there was "no way" the proposals would be included in the pending supplemental appropriation. "The Administration has not submitted any reform legislation," she said. "All they have done is make a speech. The proposals in the speech are very controversial" and need to go to authorizing committees.

Rutter also said that, without such reforms, Amtrak should not get more than the $521 million proposed by the Administration for 2003, even though the Administration previously has testified that level would shut Amtrak down, and even though the reforms are not part of a formal, legislative proposal.

DOT Deputy Secretary Michael Jackson has played a key role in the Administration's dealings with Amtrak, and his absence from the country this past week probably hampered the Administration's response to this situation. His return June 23 may improve things.

If, however, in the end, the FRA/Bush Administration cannot or will not help, if Amtrak cannot complete its own process of obtaining a private-sector loan, and if Congress does not find a solution of its own, an announcement for the "orderly" shutdown of Amtrak by David Gunn will come within days. Gunn said at the hearing that the process would take some days, once begun, and would involve the entire network. About $50 million would have to be set aside to position and protect equipment and other physical assets. Gunn did not say anything about protecting the assets of future customers who have paid for, but not completed, Amtrak trips. NARP continues to believe that a shutdown is unlikely. But if it did happen, the result would be no commuter or intercity trains at such major terminals as Chicago Union Station, New York Penn Station, and Washington Union Station.

The Bush Administration yesterday, after many months of delay, released its proposal for passenger rail. The release occurred as part of a speech by Transportation Secretary Norman Y. Mineta, and does not exist in a formal, legislative-proposal form. The full text of the release is contained in Rutter's Senate testimony. The proposal has five parts:

1) "Create a system driven by sound economics." "Sound economics," to the Bush Administration, means no federal operating grants. Apparently, the Administration has learned nothing from the failed attempt by two Administrations, Congress, and Amtrak, to meet the operational self-sufficiency mandate of 1997. The Administration would push coverage of any operating losses to states. This would happen gradually, but in all likelihood would mean the end of all long-distance and most short-distance trains.

2) "Require that Amtrak transition to a pure operating company." This is already the case for nearly all Amtrak services always from the Northeast Corridor.

3) "Introduce carefully managed competition to provide higher quality rail services at reasonable prices." The Administration makes much of the fact that so little total travel in the U.S. (they say under 1%) occurs on Amtrak, and places the blame squarely on what it calls Amtrak's "higher unit costs" compared to other modes. Whatever the merits of the "higher-unit-cost" argument, it is far more likely "few" people use Amtrak because so little service is offered nationwide -- in other words, people can't use trains that aren't there. "Competition" can mean some contracting out of facets of services, but it also means franchising out entire routes -- something vigorously opposed by powerful freight railroads.

4) "Establish a long-term partnership between states and the federal government to support intercity passenger rail service." There indeed should be such a partnership, though the proposals provide no details. Early media reports said this section opposed any federal capital going to new, high-speed-rail proposals, but that is not the case. NARP, and many states, support an 80-20 federal-state capital partnership for passenger rail, as is common for other modes.

5) "Create an effective public partnership, after a reasonable transition, to manage the capital assets of the Northeast Corridor." NARP supports transferring ownership of Amtrak infrastructure in general, due to huge capital needs especially on the Northeast Corridor. But it should be transferred to the federal government, not to a vaguely defined coalition of states and other users, and NARP favors Amtrak continuing to dispatch trains and control capital investment.

The Administration plan got mixed reviews on Capitol Hill. Those already opposed to Amtrak embraced it; others did not. House Railroads Subcommittee Chairman Jack Quinn (R.-N.Y.) said such proposals should be discussed, but that short-term cash issues were not addressed. "I don't think that privatization of Amtrak is the answer, nor is separating it from federal support the way to proceed," he said. Senate Appropriations Chairman Robert C. Byrd (D.-W.Va.) asked, "What if Virginia decides not to pay for it and West Virginia does? Does the train stop at the border?" Sen. Kay Bailey Hutchison (R.-Tex.) said, "We can't have a patchwork of states [running trains.]"

NARP's release on the Administration plan is at its web site.

After several months of work, NARP's board has produced an Amtrak revitalization plan, called, "Modern Passenger Trains, a National Necessity." It is available at NARP's web site, and is being distributed to legislators and other interested parties.

A letter urging funding for Amtrak in 2003 in the amount of $1.2 billion was signed by 52 Senators and sent to Senate appropriations leaders, June 17. That amount is what Amtrak has said it needs to survive in 2003. Click here for a list of the signatures. A similar letter was signed by 162 Representatives last week.

The Wisconsin Association of Railroad Passengers released the results of a poll at news conferences in Madison and Milwaukee on June 18. The poll indicated that more than three quarters of Wisconsin residents support an expanded, nationwide passenger rail network. As many said that they would use the service improvements that are being proposed as part of the nine-state Midwest Regional Rail Initiative. More than half supported using federal funds towards the improvements.  WisARP President John Parkyn said, "The public is saying it wants more trains and faster trains, and is willing to help pay for them." More information is at the WisARP web site.

A low-speed accident at the south throat of Baltimore Penn Station on June 17, during the afternoon rush hour, caused five minor injuries, and long delays for hundreds of passengers all along the Northeast Corridor. Investigators believe that Amtrak's northbound Palmetto stopped 200 feet beyond a stop signal, hitting a southbound MARC commuter train that was changing tracks. That derailed one Amtrak locomotive and two unoccupied MARC coaches. The Amtrak line was blocked until the following morning; the southbound Crescent and Silver Meteor detoured over CSX with much delay. MARC ran service from Washington to West Baltimore, and a bus bridge from BWI to Penn Station.

An empty gravel truck crossing in front of the eastbound California Zephyr June 17 derailed and the lead locomotive caught fire. Nevertheless, injuries to the truck driver, two Amtrak crew members, and one passenger were minor. The accident happened near Gretna, which is between Lincoln and Omaha, Neb.

Brush fires in the west have been causing some disruption for Amtrak. The Coast Starlight was annulled south of Oakland June 16-18 because of a fire along the coast at Vandenberg Air Force base. Another fire zone in the Cajon Pass east of Los Angeles caused at least one Southwest Chief to detour earlier this week from Los Angeles to Palmdale, Mojave, and Barstow.

Fires in Colorado the week before forced the California Zephyr to detour through Wyoming a few days -- one westbound train had made it as far as Glenwood Springs, and had to turn back to Denver.

Just a week ago, Amtrak removed the Chicago-Denver sleeper from the California Zephyr, which usually runs in the summer, because of a general shortage of Superliner sleepers. Now, Amtrak is restoring that sleeper to the train beginning August 1. This is made possible by some gains in car repair.

NARP Executive Director Ross Capon appeared on National Public Radio's "Public Interest" program on June 17. An audio file of the broadcast is on the web site of station WAMU -- if you try that site after this week, click on "2002 Archives."

CBS Television's "Sunday Morning" program plans a segment on Amtrak on June 23.

A bill allowing Ohio to join the Midwest High Speed Rail Compact is on its way to Governor Taft for signature. It passed the Senate unanimously on February 19, and the House on June 19 (85-6).

The Supreme Court ruled on June 17 that police can search passengers on trains and buses without telling them they have the right to refuse to cooperate. While various law enforcement agencies long have searched both intercity trains and buses for drug couriers, they also have stepped up their search for possible terrorists since the attacks of September 11. The case at issue, U.S. v. Drayton, involved Tallahassee police who moved through a Greyhound bus in 1999, asking each passenger questions, then zeroing in on two men wearing heavy clothes on a warm day. The police asked if they could search the men and their luggage; they turned out to have bricks of cocaine strapped to their legs.

The Court ruled 6-3 that the fact that the search was on a bus was no different from being on the street, and that a "reasonable person" would have felt free to refuse to cooperate. However, the minority opinion said the opposite was true, partly because a bus is a more confined space than a street. Those justices also said that bus (and train) travel is not the same as airline travel, where passengers routinely submit to searches without a warrant. "The commonplace precautions of air travel have not, thus far, been justified for ground transportation," they wrote.

Union Pacific will start a big track work project July 1 between Kirkwood and Jefferson City, Mo. During the work, Amtrak's St. Louis-Kansas City trains will face some delays.

A new Amtrak Thruway bus service begins June 25 running south from Wilmington, Del., to Dover, Harrington, and Seaford, east to Rehoboth Beach, south to Bethany Beach, and Ocean City, Md., and west to Salisbury. The bus operator is Greyhound/Carolina Trailways.

New Jersey Transit will open its Newark City Subway extension on June 22, and restore weekend service to the line. An $181 million renovation and expansion plan that started three years ago -- and was to take nine months -- now is complete. Light-rail cars (used on the "subway") now will run to Bloomfield Ave. in Bloomfield.

The president of the United Transportation Union, Byron A. Boyd, was the guest speaker at the regular transportation round-table luncheon at the National Press Club in Washington, on June 14. Boyd said that the UTU would consider supporting a key legislative issue for freight railroads this year if the railroads demonstrate support for an expanded nationwide passenger rail service, and if railroads support a legislative change to policies for calling up railroad operating crews. The key issue being pushed by the railroads is repeal of the 4.3 cent fuel tax, which some have proposed putting into a trust fund for rail infrastructure.