Federal Panel Finds Amtrak Won't Break Even

Washington - A federal oversight panel has concluded that Amtrak won't meet a congressional mandate to break even on its operations by the end of 2002, a ruling that forces contingency plans to be developed for the rail line's restructuring or liquidation.

The Amtrak Reform Council, which was formed to monitor the rail line, voted six to five on Nov. 9 to find that the rail line's business plans will not allow its operations to be free of federal subsidy by the Dec. 2, 2002, deadline.

The decision sets in motion a 90-day process requiring the council to draft a reorganization plan for Amtrak and for the rail line to design a contingency liquidation plan. Congress then will choose between the two plans, devise its own plan or determine to take no action.

U.S. Department of Transportation secretary Norman Mineta, a member of the council who voted against the majority, issued a statement, saying, "Intercity passenger rail remains an important component of the national transportation system. The events of Sept. 11 underscore this fact. I have consistently called for congressional consideration of structural reforms to passenger rail."

Mineta added, "To me, the question is one of timing. DOT's inspector general will issue a report on Amtrak's financial situation later this month. We need to assess the full financial picture at Amtrak carefully and work with Congress to implement effective reform."
Mineta said that in the interim, Amtrak has assured the Administration that it intends to operate as normal.

Amtrak issued a statement in response to the council's decision, saying, "The decision of the Amtrak Reform Council is the wrong decision at the wrong time. The council is charged under the law to account for 'Acts of God, national emergencies and other events beyond the reasonable control of Amtrak.' Despite the current national emergency declared by President Bush, and the heightened public service role that Amtrak has assumed since Sept. 11, there is no evidence that the council adequately considered this factor."

Further, Amtrak stated that the council also must consider whether Amtrak has received adequate capital funding based on DOT inspector general Kenneth Mead's 1998 assessment. "Amtrak's capital funding has fallen hundreds of millions of dollars short of this assessment. There is no indication that the council adequately considered this capital shortfall," the company said.

The White House is expected to propose a comprehensive plan for passenger rail service early next year.

Separately, last week Bombardier of Montreal, which manufactured Amtrak's new high-speed Acela Express trains, sued Amtrak for $200 million, claiming the rail company was responsible for much of the delay in delivering the new trains. Bombardier claimed Amtrak failed to live up to its contract and must pay for production cost overruns. Amtrak responded to the lawsuit, claiming that Bombardier mismanaged the contract. Amtrak said it has reserved its right to claim $250 million for the manufacturer's "record of failure."