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Wednesday, June 26, 2002
By Robert J. Samuelson Wednesday, June 26, 2002; Page A25 It is time to let Amtrak die. Actually, Congress should never have created Amtrak and, having done so, should have long ago killed it. The Amtrak problem is not mainly about transportation, because passenger trains move so few travelers. It's about politics, which is to say Washington's inability to control spending. Since its start in 1971, Amtrak has required $39 billion in federal subsidies (in "constant" 2000 dollars), says the General Accounting Office. Its annual cash needs are now running at $1 billion or more. Because Congress hasn't yet provided quite that much, it's running out of money. In the future, these amounts can only grow. Amtrak is a capital- and labor-intensive business that never could -- and never will -- be able to cover its costs. What's the justification for subsidizing it? The national government has two basic purposes: to solve national problems and to provide nationwide public services -- services that can't be supplied by the private market. Amtrak doesn't qualify on either ground. Its services aren't truly national. About two-thirds of its ridership is in the Northeast Corridor between Boston, New York and Washington. Nor does Amtrak represent an essential public service. If Amtrak didn't exist, most people would still get where they want to go. Amtrak provides only 0.3 percent of intercity transportation -- a proportion that has steadily declined. Cars, planes and buses supply the rest. Now, that's not 30 percent or 3 percent; it's three-tenths of 1 percent. Even if Amtrak's ridership tripled (which no one thinks will happen), its share would be less than 1 percent. In fiscal 2001, says the GAO, Amtrak carried an average of 64,000 intercity passengers a day. By contrast, airlines carried 1.8 million and buses 984,000. Amtrak operated in 45 states in 2001, but in 34 of those, it carried fewer than 1,000 passengers a day. Because Amtrak does so little, it can't contribute significantly to solving any conceivable national problem: alleviating congestion; reducing air pollution; saving energy. One 1995 study of trains between Los Angeles and San Diego estimated that they kept 2,240 cars off the road a day. Surely, no one noticed in a corridor where millions of cars move daily. The lesson of Amtrak is that Congress does not demand that federal programs serve true national needs. If it did, Amtrak -- and many other programs -- would disappear. Once a program exists, it becomes virtually immortal. To eliminate it would deprive the supervising congressional committees of power, and members of Congress rarely surrender power. Nor do they willingly invite bad publicity. If Amtrak shut down, its closing would be greeted on TV and in papers as a small national tragedy that was, somehow, a blow against sensible transportation and the environment. People have a romantic attachment to passenger trains. Amtrak is a subsidy for nostalgia. To disguise this, Amtrak's advocates construct artful arguments. It's said, for example, that because the government has subsidized highways and airways, passenger trains also deserve subsidies. But most airline and highway subsidies are covered by user fees, and the scale of the subsidies -- measured per passenger -- are much smaller. On Amtrak's long-distance trains, most passengers are subsidized at least $100 per trip. On some routes, the subsidy exceeds $300. The highways and airways don't get anything like that. Congress also periodically pretends that Amtrak can become self-supporting. In the original legislation, subsidies were supposed to be temporary. A few years ago, Congress again decreed that Amtrak become self-sufficient -- a goal so unrealistic that it's hard to see how anyone with a shred of intelligence or integrity could have endorsed it. Passenger trains made sense when Americans crowded into cities. But post-World War II suburbanization, interstate highways and jet travel (beginning in 1958) made trains economically unviable and socially irrelevant. By and large, people no longer moved from central city to central city but from one scattered suburban location to another. Trains couldn't compete with cars on cost and convenience. They couldn't compete with planes on time and cost. Because mounting losses were weakening private railroads, Congress created Amtrak to assume responsibility for deficit-ridden passenger trains. Congress dared not let passenger trains disappear. But neither could it allow railroads to slip progressively into bankruptcy, impairing their main economic function: moving freight. Railroads still carry about 40 percent of all freight. In some places -- mainly the Northeast Corridor and perhaps a few others -- passenger trains may make sense. According to the GAO, Amtrak's only route with an operating profit in 2001 was the New York-to-Washington Metroliner, which made $51 million. But that profit excludes the cost of buying trains and improving track. In an ideal world, Congress would set a termination date for Amtrak, say a year or 18 months from now. During that time, states and localities that wanted to continue passenger service (including many commuter trains) could make arrangements to assume Amtrak's trains and costs. Because the benefits are mainly local, subsidies should be local too. Given Amtrak's dreary history, the chances of anything so sensible happening seem slight. Probably Congress will muddle through the present "crisis," throwing more money at Amtrak and proving once again that no federal program -- no matter how unjustified -- is ever a candidate for the ax. Rail safety improves but assaults on staff soar Jun 26 2002 The rail industry achieved its best ever safety figures last year, it has been revealed. But the figures had to be seen against the backdrop of last month's Potters Bar crash, said the Railway Safety group, which released the statistics. The latest figures covered the period April 2001 to March 2002 and so did not include the seven people who died and the 71 others who were injured in the tragedy. Rail union switches backing for Labour MPs Jun 25 2002 Britain's biggest rail union has decided to sack a number of Labour MPs including Deputy Prime Minister John Prescott. It is switching financial support to a new group of leading left wingers. The Rail Maritime and Transport Union voted to adopt a new group of Labour MPs including Jeremy Corbyn, Ann Cryer and Diane Abbott. Network Rail to get access to billions By Alistair Osborne, City Correspondent (Filed: 24/06/2002) Network Rail's bid to buy Railtrack plc is expected to be backed by three separate Government support packages, which are likely to be kept off the public books, it emerged yesterday. Alongside a £9 billion bridging loan backed by the taxpayer-funded Strategic Rail Authority, Network Rail is also expected to have access to billions of pounds of extra funding. This will be in the form of a long-term contingency fund and further mid-term resources, which one source said would ensure that Network Rail "is not punished for the mistakes of Railtrack". The contingency fund could only be used in the event of major problems on the railways under Network Rail's stewardship, such as a crisis similar to that in the industry after the Hatfield crash. For Network Rail to have access to this fund, the Government would probably demand management changes. The other mid-term funding will become available to help Network Rail deal with Railtrack's legacy projects, such as the West Coast main line upgrade where costs have soared from the initial £2 billion to as much as £13 billion. Information on the Government support packages is expected to be revealed by Transport Secretary Alistair Darling once Network Rail makes its formal £500m offer to take Railtrack plc out of administration. The deal could be announced as early as today, prompting a relisting of the shares in Railtrack Group, which are expected to start trading at a discount to the 240p-250p per share it hopes to return. While Network Rail and Railtrack Group were very close to signing last night, the relisting also depends on London & Continental Railways completing a £375m deal to buy Railtrack Group's option over the first phase of the Channel Tunnel Rail Link. Delays over this deal could postpone the announcement. Once announced, Mr Darling is expected to make a statement to Parliament and reveal details of the government support packages in a note probably lodged in the House of Commons library. The note is said to be "very complex". Government support is expected to be via the SRA but, like the £9 billion bridging loan, off the public accounts. The size of the mid-term support could be in the region of £10 billion. The CBI will today call for another £15 billion injection into the Government's 10-year transport plan, arguing that rail alone needs £12 billion more. Network Rail might also request more cash via an interim review with regulator Tom Winsor. The accounting for Network Rail has already sparked a political storm. Shadow chancellor Michael Howard has written to Gordon Brown asking: "Why should the £9 billion be regarded as a potential debt on an agency of the Government, but not on the Government itself? "People are rightly concerned with the declining performance of the railways since the Government decided to renationalise them. There is now a danger of Enron-style accounting being added to the charge sheet." National Statistics is yet to rule formally on the accounting for the £9 billion loan. Yesterday a spokesman for Mr Darling said: "It is a decision for the ONS [National Statistics] and they are independent of government." Virgin wins with West Coast deal Dominic O’Connell VIRGIN RAIL is to be given an extension to its controversial West Coast Main Line franchise in return for scrapping claims against Railtrack. The deal is likely to be finalised in September, and may also include a reduction in track- access payments by Virgin, as well as a scaling-back of the amount of ticket revenue it was to have paid to the government. The deal will resolve a row between Virgin and Railtrack over the troubled West Coast Main Line upgrade. Virgin has a 15-year franchise to run trains on the line. Virgin has invested in a £1.2 billion fleet of tilting trains that were to have run at 125mph from last month, and at 140mph from May 2005. They would have cut journey times from London to Birmingham, Manchester and Glasgow by at least half an hour. But Railtrack has been unable to deliver the necessary track improvements specified in the contract with Virgin — leaving it open to compensation claims. The cost of the upgrade has soared — from £2.1 billion when work began in earnest in 1998, to a final official estimate last year of £6.3 billion. Bechtel, the US construction manager famous for saving troubled construction projects, including the Channel tunnel, has concluded that a 140mph railway would cost £13 billion. “We thought it might be close to £10 billion, but this is unbelievable,” said one source. Bechtel was asked to study progress on the project by John Armitt, Railtrack’s chief executive. The main task was to determine whether a revised September 2003 timetable for 125mph running could be met. It is understood that Bechtel concluded that the deadline is challenging but can be met. “The figure for 140mph is really a red herring,” said one source close to the talks. “We are focused on how to achieve 125mph.” Bechtel is also understood to have concluded that the West Coast line was in a much worse state than thought when the railways were privatised in 1996. Directions: Book of the Week: Great railway journeys of Europe Anthony Sattin Great Railway Journeys of Europe edited by Tom Le Bas (Insight Guides £16.99) Unlike Britain, continental Europe is seeing a renaissance in train travel, thanks to the spread of the high-speed rail network, and Insight’s new guide to the best of Europe’s railway journeys celebrates this. The Orient Express is the first of 70 journeys described and lavishly illustrated. Most routes are confined to single countries; some, such as Spain’s Al Andalus and Switzerland’s Glacier Express, are obvious, but many are not, including the Middlesbrough to Whitby route, the train that runs through the Causses region of southern France, and the line that crosses the Corinth Canal into the Peloponnese. This latest Insight Guide will help you choose your route and sort out the practicalities along the way. To buy Great Railway Journeys for the reduced price of £13.59, excluding p&p, or any travel guides, call The Sunday Times Books Direct on 0870 165 8585 SWT it may lose new franchise by Dick Murray Transport Editor South West Trains, which serves some of the busiest commuter routes in the country, could lose its proposed 15-year franchise because of continuing poor services. Passengers have complained of late, overcrowded and cancelled services. The Transport Secretary said SWT is "not being operated as well as anybody would like. Its performance levels are not acceptable." He said if the Strategic Rail Authority cannot negotiate a franchise renewal that puts the interests of the public first, it will be prepared to seek a new franchise operator. His condemnation sent a shock wave through Stagecoach-owned SWT, which believed it had the franchise sewn up. SWT recently announced the completion of a £1 billion order for new trains. Sunday, June 23, 2002
Scottish News: Scotland is top of rail danger list Mark Macaskill SCOTLAND'S railways are the most dangerous in Britain with more acts of vandalism and sabotage than any other part of the country, official figures have revealed. Statistics released by Railtrack, the track owner, show that three out of the top five most hazardous stretches of track are north of the border. Scotland also has among the highest numbers of track trespassers. The company has warned that it is "only a matter of time" before there is a fatal disaster on Scotland's railways. The warning comes a month after the derailment of a train at Potters Bar, in Hertfordshire, which left seven people dead and 76 injured. Jarvis, the company responsible for track maintenance, claims the accident was a result of sabotage although investigators have found no evidence to support their claims. According to Railtrack, the most dangerous rail journey in Britain is between Whifflet, in Coatbridge, and Glasgow. Last year there were 63 separate acts of vandalism on the 12-mile stretch of track. The line at Kirkwood Station is identified as Britain's most dangerous with 38 individual attacks. They included an incident last year when 20 youths threw bricks at a train emerging from the station, smashing all the windows in the drivers' cab. Other stations under siege include Wishaw which recorded 34 attacks, Shieldmuir where there were 25 and Whifflet, which recorded 25. There were a further 30 reports of vandalism on routes into the high level at Glasgow Central. Items including shopping trolleys, wheelchairs, washing machines, mattresses and, in one case, a moped, have been dumped on the rails in the path of trains often travelling faster than 100mph. Last year, a driver was shot at by two youths brandishing an air rifle as the train passed through the Avonhill area in Cumbernauld and another was seriously injured when he was hit in the face by a stone in Holytowm, Lanarkshire. On several occasions, drivers who have stopped to remove obstacles have been ambushed by thugs and beaten up. The problem is so serious that, in some cases, drivers require counselling and time off to recover. Rail companies, including Scotrail and freight operator EWS, have also introduced toughened glass, used in aircraft cockpits, to reduce the risk of injury to drivers. "In the past, this problem has been dismissed as harmless youths up to mischief," said Janette Anderson, director of Railtrack Scotland. "However, these vandals are real criminals who endanger the lives of thousands of passengers. "We do have a serious problem in Scotland and it's only a matter of time before another person is killed. "We are currently in talks with the executive and it is crucial that we also engage the judiciary in Scotland. There needs to be much stiffer penalties." According to the police, route crime on Scotland's 2,500 miles of rail network has risen by 26% from 2,565 in 1999 to 3,238 in 2001 and costs the country about £26m in delays, repairs and counselling for traumatised staff. The rise in vandalism is despite ongoing efforts to battle the problem including undercover police officers travelling on the worst routes and the use of CCTV cameras.Last week, Railtrack ran a national campaign to raise awareness of vandalism on the network. ScotRail says the true scale of vandalism is much larger than official figures suggest.Last year, it recorded 645 stone-throwing incidents which damaged 451 train windows and injured 14 passengers and staff. It also noted 303 incidents of obstructions deliberately placed on the line. Yet official figures compiled by Her Majesty's Railway Inspectorate (HMRI) — which only include incidents if a train is damaged — recorded 54. Superintendent Stuart Buchanan, area commander of the British Transport police in Scotland, said: "It's very serious,. The scale is much higher than government figures show." The official inquiry into the Potters Bar rail crash, in which seven people died and 76 were injured, has rejected evidence from maintenance contractors that sabotage was to blame. Investigators have established that at the time of the crash the track points were incorrectly installed. They believe this was caused by "maintenance failure". xecutives from Jarvis, the contractor responsible for the section of track at Potters Bar, claimed after the accident that they had uncovered evidence of sabotage. However, investigators have found no evidence of sabotage in the dossier of photographs compiled by Jarvis to support its theory. Eurostar smartens up its act ... By Jeremy Skidmore THE EUROSTAR Group is to spend £35 million over the next three years on a fashion makeover for its cross-Channel train service aimed at winning back high-spending business and corporate customers. Ticket sales fell 7 per cent to 1.77 million in the first quarter of this year, and the three months to June are unlikely to see an improvement. Much of the fall is attributed to factors outside the group’s control and is in the leisure market. It has suffered from a slump in demand following September 11, foot-and-mouth and now the World Cup. But David Azema, Eurostar chairman, admits that sales have been levelling off in business travel as well and wholesale changes are needed to encourage people to switch from flights to Paris and Brussels. While Eurostar has about half the business travel market to the two cities, it is facing increasing competition, with easyJet the latest operator to launch services to the French capital this week. “Our punctuality has improved and now 80 per cent to 85 per cent of trains are on time. But you cannot just be on time and clean. We need to bring something more. We carried out a comprehensive review, we listened to people and we took recommendations to the board,” Azema said. Among some of the complaints from disgruntled passengers were the garish yellow colours on the trains and the quality of the food. About £10 million is being invested in new business class lounges. The first of these opened in London this week, Paris opens on June 24 and Brussels is due for completion at the end of the year. Eurostar has 31 train sets, each with 770 seats, and the rest of the money will be spent on refurbishing them — which will help justify Paris return prices of £405 for First Class and £500 for Premium First. Philippe Starck, the designer, has been brought in to oversee the refurbishments. Azema promises a change of lighting and colours in standard class and a completely different atmosphere in First, with more comfortable seats and improved dining. Premium First will be better still, he claims, with just 14 seats instead of 24. “We have discovered that there is an upper class market that wants something special,” Azema said. “It may be a footballer or just someone who wants their own private space. It will be like being on a private jet. It will also give us something to reward our frequent travellers with. In the same way that British Airways can upgrade people to Concorde, we can upgrade people to Premium First.” Azema will leave before the work is completed. After three years as chairman, he is returning to France to head a subsidiary of Vinci, the French conglomerate. But before he goes he will also oversee the implementation of a new corporate structure, which he claims will also benefit passengers. Eurostar is operated by Eurostar UK, SNCF in France and SNCB in Belgium, a situation that has led to administrative nightmares. “If someone complained in Dijon about an incident in Waterloo, then they would shrug their shoulders and say it was a different company,” said Azema. “When we wanted to get train announcements turned off in First Class, we fitted switches to the trains. But in some countries the announcements would actually be switched on in some trains when they should have been switched off. We couldn’t fit standard mirrors in cabins because the standards were different in the three countries. But this is changing. We now have a unified marketing department Bahn bremst Metrorapid aus Nordrhein-Westfalen gerät mit seinen Planungen für den Metrorapid in Verzug. Auf Antrag der Deutschen Bahn hat die Vergabekammer der Bezirksregierung Düsseldorf dem Land vor wenigen Tagen untersagt, Ingenieurleistungen für das Großprojekt zu vergeben. DPA Der Metrorapid auf dem Bahnhof, freilich nur in einer Computersimulation Der Grund: Die Bahn will unbedingt an der Trassenplanung für die Schnellstrecke zwischen Dortmund und Düsseldorf beteiligt werden, obwohl ihre Tochter DE Consult im Wettbewerb von sechs Bietern nicht zu den drei Favoriten des Landes zählte. In ihrem Nachprüfungsantrag bemängelt die DB-Kanzlei Fritze Paul Schmitt einen "wettbewerbsverzerrenden Wissensvorsprung" der favorisierten Bieter; ferner seien "Auswahl und Anwendung der Wertungskriterien fehlerhaft". Da ein langer Rechtsstreit die von NRW erstrebte Fertigstellung der Strecke zur Fußball-Weltmeisterschaft 2006 unmöglich machen würde, bietet die DB listig einen Ausweg an: Die drei ausgewählten Konsortien sollten die unterlegenen Konkurrenten, darunter natürlich DE Consult, durch Unteraufträge an dem Projekt beteiligen. "Bei einem derartigen Verfahren", heißt es in einem Brief des DB-Vorstands an NRW-Verkehrsminister Ernst Schwanhold, könnten die entstandenen "Irritationen geheilt werden", auch wäre "die Gefahr der Projektverzögerung durch einen vermeidbaren Rechtsstreit gebannt". Wie das Großvorhaben finanziert werden soll, bleibt derweil unverändert offen. Mineta to Push Amtrak to Stay Open By Don Phillips Washington Post Staff Writer Sunday, June 23, 2002; Page A12 Transportation Secretary Norman Y. Mineta said yesterday that the Bush administration "is not interested in allowing Amtrak to shut down," and he arranged to meet with the railroad's board tomorrow afternoon to determine what the administration can do to prevent it. The administration also no longer insists on wholesale "reforms" of Amtrak as part of a rescue, but wants assurances that the passenger-train corporation will impose fiscal discipline and increase the flow of information to the government, administration sources said. Amtrak President David Gunn has said Amtrak is so low on cash that it will have to begin an "orderly shutdown" and declare bankruptcy when Congress goes into recess, probably Wednesday or Thursday, unless the administration gives it a loan guarantee or Congress grants it $200 million. Amtrak has never made money in its 31-year history and lost about $1.2 billion last year. A shutdown would end all the country's intercity passenger train service, and would stop or seriously affect most of the country's commuter trains. That includes Virginia Railway Express and most Maryland commuter trains. Federal Railroad Administration staff members are working to determine whether the government can legally guarantee a loan under a law intended for long-term capital needs, the Railroad Rehabilitation and Improvement Financing Program. Deliberations so far indicate there may be a way to do it, a source said. Administration sources said Mineta's meeting with the Amtrak board is partly intended to assure the nation that a shutdown almost certainly would not occur, and particularly to reassure commuter railroads that are livid about possibly being caught up in the shutdown. The sources also said administration officials do not think they received adequate financial information from Amtrak, and want to determine if there are alternatives to loan guarantees or appropriations, including the release of unobligated funds or transferring money from other parts of the budget. "I think people [in the administration] are focusing on the problem," Gunn said in an interview, adding that Mineta's request for a meeting "sounds positive to me." Mineta said that even though the administration does not want Amtrak to shut down, "Amtrak must face the reality that difficult decisions need to be made and fundamental management changes need to take place to keep the company alive." "We want Amtrak to succeed, not merely survive from crisis to crisis," he said. In a speech last week, Mineta proposed that states pay more of passenger-train costs, that Amtrak's Boston-Washington Northeast Corridor be spun off to an unspecified "public partnership," and that some Amtrak routes and jobs be contracted out. Some congressional sources viewed yesterday's Transportation Department press release as a dig at Gunn, who is known to have angered some administration officials with his outspokenness and independence in only five weeks on the job. The press release noted that only the Amtrak board can shut down operations and declare bankruptcy. The release also seemed to criticize Gunn's testimony Thursday to the Senate Appropriations subcommittee on transportation, in which he said the orderly shutdown would have to start sooner than some had expected and that Mineta's proposals were misguided and unworkable. "DOT officials and others found Gunn's testimony alarming since it described a significant acceleration of deadlines reported to the board of directors as recently as three weeks ago," the Transportation Department statement said. Gunn said, however, that he thought the department was stating the obvious because legally, only the board can declare bankruptcy. "I always intended I'd go the board," he said. "You have to go through the bankruptcy process." Sen. Patty Murray (D-Wash.), chairman of the appropriations subcommittee, cautioned Mineta not to use the meeting to punish Gunn. "The goal of Amtrak's board meeting on Monday should be to ensure the continuation of rail service in this country by insisting that the Bush administration either issue a loan guarantee or request a supplemental appropriation from Congress," Murray said in a statement. "The goal should not be to chastise a CEO for sharing his frank and experienced views on a set of policy proposals on which he was never consulted." Amtrak Shutdown Could Stall Travel MostAmtrak Shutdown Could Stall Travel Most Commuter Service Would Be Halted _____Related Articles_____ • Amtrak May Begin Shutdown in Days (The Washington Post, Jun 21, 2002) • Bush Warned to Be Speedy on Amtrak Funding (The Washington Post, Jun 20, 2002) • U.S. to Offer Amtrak Plan (The Washington Post, Jun 20, 2002) By Don Phillips Washington Post Staff Writer Saturday, June 22, 2002; Page E01 An Amtrak shutdown, threatened for the middle of next week, would ripple far beyond intercity passenger train service to halt or severely curtail rail commuter service along the East Coast and California, officials said yesterday. Any commuter trains that use the national passenger railroad's tracks -- basically the Northeast Corridor from Washington to Boston -- or are operated by Amtrak under contract or use Amtrak stations, would be affected. In the Washington area, Virginia Railway Express said it would shut down all service. Maryland Rail Commuter Services (MARC) said its Washington-Baltimore Penn Line would shut down, and it is still reviewing options for the Camden and Brunswick lines. No MARC trains could enter Union Station, however. An intercity and commuter rail shutdown could create havoc along the East Coast, where hundreds of thousands of people would be forced onto highways, subways and airports. Amtrak, for instance, now hauls more passengers between Washington and New York than the airline shuttles combined. "This is no way to treat the traveling public," said Pete Sklannik Jr., VRE's chief operating officer. "It's a bad time to play brinksmanship, it really is." Congress and the Bush administration are arguing over how to save Amtrak from a cash crisis that could shut down all the country's intercity passenger service before the July 4 holiday period. Amtrak President David L. Gunn said that unless the Bush administration comes through with a $200 million loan guarantee or Congress is close to appropriating the money, he will begin an orderly shutdown by Wednesday or Thursday. Amtrak also would be placed into bankruptcy under a court-appointed trustee. Federal Railroad Administration staff members said they would work through the weekend to try to make a loan guarantee work, and members of Congress continued to protest what they called the administration's inaction. Senate Appropriations Committee Chairman Robert C. Byrd (D-W.Va.) said yesterday he would attempt to add $200 million for Amtrak to a Senate appropriations bill for homeland security that is now under negotiation between the Senate and House. President Bush has threatened to veto the bill, saying it is too expensive. Administration officials have said they would insist that any additional direct aid to Amtrak be linked to major reforms including eliminating or contracting out some routes. Gunn said a shutdown would take four days or so, enough time to avoid stranding any passengers and to get Amtrak equipment to storage areas where it could be guarded from vandalism until Amtrak's creditors could assume custody in bankruptcy. "We're trying to be as optimistic as we can," Gunn said yesterday. "I really can't believe that wisdom isn't going to prevail in this case." VRE's Sklannik said that he had hoped to be able to operate trains into the L'Enfant Plaza station, but Amtrak informed him yesterday morning that the necessary collective bargaining agreements could not be worked out for VRE to hire the Amtrak engineers that run his trains. The only Amtrak track used by VRE is through the tunnel into Union Station. In addition to the Washington area shutdowns, Philadelphia's Southeastern Pennsylvania Transportation Authority would be largely shut down, as would New Jersey Transit. "The operational chaos that will result from this is incalculable at this point. It's a disaster," New Jersey Transportation Commissioner James P. Fox told the Associated Press. In New York, Metro North would be largely unaffected since it owns and operates its own trains and tracks from the north and east and uses New York Grand Central Station instead of Amtrak's Penn Station. The Long Island Rail Road could operate as usual with one major exception -- it couldn't get into Manhattan because its trains use Penn Station. Boston's commuter system would be mostly shut down because its trains are operated by Amtrak and use many stretches of Amtrak track and stations. Chicago's Metra would be inconvenienced because many of its trains use Amtrak's Union Station, but other trains into other stations could continue to operate as long as they do not use Amtrak tracks. In California, all commuter service would apparently be shut down, including major systems in Los Angeles and San Francisco, because they are either operated by Amtrak or use Amtrak facilities. In some ways, the Amtrak crisis is a carbon copy of many incidents during the corporation's 31-year existence. Amtrak was formed as a "profit-making" corporation on May 1, 1971, a description long acknowledged as a fabrication by many of the federal staff members who helped form the company. For three decades, Congress gave Amtrak barely enough money to maintain service while ordering it to run trains that passed through the states or districts of key members of the Senate or House. Often, Amtrak management has threatened to shut down certain routes as a way of forcing Congress to come up with more money. Many observers apparently believed that was happening again -- until last week. This crisis is different in two major ways: • Over the last few years, Amtrak has papered over its crises by borrowing against its assets. Amtrak also ran out of cash last year, then mortgaged New York Penn Station for $300 million to keep operating. But Penn Station was the last major asset that Amtrak had to mortgage. • Gunn, on the job only five weeks, is no-nonsense, politically independent and decisive. When he said Amtrak would shut down, people who knew him believed him. The Bush administration has acknowledged that it has no contingency plans if there is a shutdown. FRA Administrator Alan Rutter appeared a little surprised by a question Thursday before a Senate subcommittee as to whether the FRA had a contingency plan. He said he would prefer to spend his time working on a way to keep Amtrak running. Meanwhile, Standard and Poor's downgraded Amtrak's credit rating yesterday to the lowest investment grade, and Moody's placed Amtrak on a a watch list for a possible downgrade. By Don Phillips Washington Post Staff Writer Saturday, June 22, 2002; Page E01 An Amtrak shutdown, threatened for the middle of next week, would ripple far beyond intercity passenger train service to halt or severely curtail rail commuter service along the East Coast and California, officials said yesterday. Any commuter trains that use the national passenger railroad's tracks -- basically the Northeast Corridor from Washington to Boston -- or are operated by Amtrak under contract or use Amtrak stations, would be affected. In the Washington area, Virginia Railway Express said it would shut down all service. Maryland Rail Commuter Services (MARC) said its Washington-Baltimore Penn Line would shut down, and it is still reviewing options fo • Hearing on Amtrak Funds Called (The Washington Post, Jun 15, 2002) • McCain Pledges Help in Averting Amtrak Shutdown (The Washington Post, Jun 7, 2002) • Amtrak Faces Shutdown In July, Says New Chief (The Washington Post, Jun 6, 2002) • Amtrak Picks New President (The Washington Post, Apr 27, 2002) • Amtrak at Risk Of Shutdown (The Washington Post, Feb 28, 2002) • Council to Unveil Amtrak Plan (The Washington Post, Feb 7, 2002) • Money Woes Threaten Amtrak's Future (The Washington Post, Feb 2, 2002) • Report: Amtrak's Financial Woes Have Worsened (The Washington Post, Jan 26, 2002) By A Washington Post Staff Writer Thursday, June 20, 2002; 6:54 PM Amtrak President David Gunn said today he will have no choice but to begin an orderly shutdown of rail passenger service nationwide "in the middle of next week" unless the Bush administration approves a $200 million loan guarantee or Congress is near passage of a direct appropriation or loan guarantee. At the same time, he said, he will take Amtrak into bankruptcy proceedings and place the passenger train corporation's assets under a court-appointed trustee. However, Federal Railroad Administrator Alan Rutter said the FRA will be unable to give Gunn an answer on his loan guarantee request before early next week. And Rutter and other administration officials also appeared to be playing hard-ball with Congress over whether to give Amtrak a direct $200 million appropriation as part of a supplemental appropriations bill on homeland security, now making its way through Congress, that President Bush has threatened to veto. The Amtrak saga was played out before the Senate Appropriations subcommittee on surface transportation, headed by Sen. Patty Murray (D-Wash.), where Democratic and Republican senators excoriated Rutter and Transportation Department Chief Financial Officer Donna McLean for failing to take action sooner. Gunn said Amtrak must have time an orderly shutdown, perhaps over a week, so that passengers can have sufficient notice and Amtrak cars and locomotives can be moved to safe storage where they can be guarded from vandalism. Although not all details have been worked out, Amtrak officials indicated that no trains would be stopped immediately and no passengers stranded. All long-distance trains would be allowed to finish their runs, and a date would be set for shutting down the Northeast Corridor. Gunn said it would cost about $50 million to shut down the system and have enough money left over to pay employees to guard the equipment. Other small expenses would continue, such as keeping the overhead electrical wires powered up in the Northeast Corridor so that thieves would not steal the wire. "The urgency of this is enormous," Gunn said. "We are near the point of no return." The suddenness of the shutdown surprised subcommittee members. One possible reason, revealed by Gunn in answer to a question from Murray, is that Amtrak's auditors have discovered that Amtrak's deficit is about $200 million worse than thought for fiscal 2001 – 1.87 billion instead of 990 million. That discrepancy apparently is one of the key reasons auditor KPMG has refused so far to declare Amtrak a "going concern," which makes a bank loan all but impossible to obtain. There was no explanation for the large discrepancy, but after only five weeks on the job, Gunn has been highly critical of Amtrak's bookkeeping and has is instituting a tight new budget system. Gunn called the turn of events "most disturbing" and called Amtrak's former budgeting process "ineffective." "Clearly there's a problem if we have that big a swing," Gunn said. "It's a pretty significant change." In some ways, the Amtrak crisis appeared to be transforming into a "who-blinks-first" political showdown between Congress and the Bush administration, with Gunn caught in the middle. Murray said that if the Bush administration fails to ask for enough money to prevent an Amtrak shutdown, "the administration can explain why it would allow intercity rail passenger service to die when many of us in Congress are ready and willing to fund it." Repeatedly, Rutter and McLean sidestepped pointed questions on whether they would take whatever action necessary to keep Amtrak from shutting down, saying only that they were "working furiously" to determine whether they could legally grant Amtrak's request for a loan guarantee under the Railroad Rehabilitation and Improvement Financing Program. Transportation Department Inspector General Kenneth Mead expressed doubts that Amtrak could legally receive a loan under the program, which is supposed to be for long-term capital needs and not for short-term operating costs. Then McLean surprised the subcommittee by saying that even if Congress goes ahead with a $200 million appropriation, the administration would require that it to be accompanied by "reforms" along the principles laid out yesterday by Transportation Secretary Norman Y. Mineta. In a speech yesterday to the U.S. Chamber of Commerce, Mineta laid out several principles for Amtrak long-term legislative changes including having states pay a larger share of passenger train costs, spinning off the Northeast Corridor to a "partnership" of states and corridor users, turning Amtrak into a pure operating company and contracting out some services including some routes. Murray shot back: "I want to make one thing clear. The administration has not submitted any reform legislation to this committee or any other committee. All they have done is make a speech. The proposals in the speech are controversial. There is no way that we are going to include any such proposals in the supplemental. If the administration wants reforms, they can propose them in legislation to the authorizing committees." The Mineta principles drew almost universal bipartisan opposition from Congress, with two major exceptions, Sen. John McCain (R-Ariz.), who commended Mineta and said the first step to reform should be to fire the entire Amtrak board of directors, and Chairman Don Young of the House Transportation and Infrastructure Committee, who also commended Mineta and noted than many of his recommendations can be accomplished without new legislation. The Amtrak Reform Council, which also made similar recommendations, praised the Mineta principles but said it is also important to keep Amtrak running now. That was about the end of the praise for the proposal. Numerous members of Congress, unions and passenger advocacy groups criticized the proposal. Rep. Jack Quinn (R-N.Y.), chairman of the House Transportation subcommittee on railroads, said that Mineta's principles can help with the debate over Amtrak, but clearly what Amtrak needs now is money including the full $1.2 billion request for next fiscal year. In the meantime, the important thing is to prevent the shutdown. Democrats were usually harsher. "Finally after months of delay, we have the administration's model for the future of rail passenger service in America," said Rep. James L. Oberstar (D-Minn.). "It was not worth the wait." > |