Originally created 02/08/02

Panel on Amtrak calls for breakup

WASHINGTON - Countering Amtrak's pleas for more money, a congressional advisory panel said Thursday that private companies should be given the chance to make passenger trains more efficient and successful.

The Amtrak Reform Council called for competition in passenger rail, currently the exclusive domain of Amtrak. Two companies expressed some interest.

"The system we have today, the old Amtrak, has not worked and is not working," said Gilbert Carmichael, the chairman of the reform council.

The council finished nearly four years of work by sending a 111-page report to Congress and briefing officials from the Bush administration.

Amtrak, in a statement, said the report sidestepped questions about what kind of rail system Americans want, or how much it will cost.

The council said Amtrak, created in 1971 to relieve freight railways of the burden of carrying passengers, should no longer make policy or own land. It would break Amtrak into three pieces.

ONE WOULD MAKE policy and another would oversee the tracks, property and stations Amtrak owns in the Boston-Washington Northeast Corridor.

The third would conduct train operations. After a transition of two to five years, it would accept bids for franchises to run various routes.

"The council believes that, as is the case throughout our free-market economy, competition would drive down costs and improve service quality and customer satisfaction," the report states.

The council voted 9-1 in a mail ballot to approve the report. Charles Moneypenny, who represented rail labor on the council, voted "no." Transportation Secretary Norman Y. Mineta, the Bush administration's representative, abstained.

The next step is up to Congress, because of a vote this year on whether to authorize Amtrak's continued existence. The House Transportation Committee has scheduled a Feb. 14 hearing on the report.

The plan faces a hostile reception from Amtrak supporters on and off Capitol Hill.

"BY CHOOSING TO ignore the fundamental problem ... of chronic federal underinvestment, the ARC report has proposed a magic wand solution that misses the mark," said Sen. Charles Schumer, D-N.Y.

"I think this report should be rejected out of hand," said Amtrak Chairman Michael Dukakis, the former Massachusetts governor.

He called decentralization "a prescription for bureaucratic paralysis" and said the real issue is money.

Amtrak, which lost a record $1.1 billion in 2001, says it has a $5.8 billion backlog in work needed on its trains, tracks, railyards and stations.

Last week, Amtrak said it will cancel long-distance routes unless it receives $1.2 billion in the 2003 budget year, which begins in October. President Bush has proposed $521 million.

The council's vice chairman, Paul Weyrich, the president of the Free Congress Foundation, warned that if Congress resists change, "the day will come when there will be no Amtrak."

Critics have questioned whether private companies would be interested in entering the passenger train business. But there was some early interest.

"What we heard today is certainly encouraging for the private sector to enter the market," said Scott Spencer, the president of Railway Service Corp., a Delaware company seeking to break into intercity passenger rail.


Highlights of the proposal the Amtrak Reform Council sent to Congress:

  • Amtrak and the National Railroad Passenger Corp., currently the same entity, would be split, and the corporation would oversee a transition of train operations to the private sector.
  • During a transition period of two to five years:

  • Train operations would be handled by a subsidiary with an organizational structure like Amtrak's.
  • Another subsidiary would own, operate and maintain the tracks, property and stations Amtrak currently owns in the Boston-Washington Northeast Corridor.
  • The corporation would have the authority to franchise out one Amtrak route as a pilot project, through competitive bidding. The winning bidder would have to hire Amtrak employees, by seniority, and respect Amtrak's existing collective bargaining agreements.
  • The federal government would continue to subsidize the operations of long-haul, overnight trains.
  • After the transition period:

  • Passenger routes would be subject to franchising by competitive bids.
  • States developing high-speed corridors or subsidizing lower-speed trains would have the right to manage the franchising process for those routes.
  • Mail and express operations would be franchised through competitive bidding as a single unit or as parts of passenger operation franchises.
  • The federal government would continue to subsidize long-haul, overnight trains. Those train routes also could be franchised; winning bidders would be the ones requiring the smallest subsidies.
  • States would begin to cover any losses associated with existing and new service in short-haul corridors.
  • The operating company created as part of the transition could be privatized.

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