November 12, 2001

Amtrak May Be Primed for Revamping,
Panel Voices No Confidence in Structure

By DANIEL MACHALABA
Staff Reporter of THE WALL STREET JOURNAL

Concluding that Amtrak won't meet a congressional deadline to operate
without federal subsidies by the end of next year, an independent oversight
commission set in motion a possible revamping of the nation's intercity
passenger-train system.

The decision, reached Friday by the Amtrak Reform Council in a 6-to-5 vote,
said Amtrak as currently structured and funded is "not capable of delivering
the improvements in passenger rail service that are needed." The council
said Amtrak "has not made any significant progress toward operational
self-sufficiency." The council now has 90 days to file an Amtrak
restructuring plan with Congress, which has the final say on what happens to
Amtrak.

The decision won't affect Amtrak's train service for the foreseeable future,
Amtrak said. Congress may try to postpone a debate on the railroad's future,
as it considers other matters after the Sept. 11 terrorist attacks. "This
will end the status quo for Amtrak," said Rep. Jack Quinn (R., N.Y.),
chairman of the House railroad subcommittee and an Amtrak supporter. "What
we don't know is if passenger rail will be expanded or curtailed."

Amtrak spokesman William Schulz said the decision fails to take into
consideration federal underinvestment in passenger rail and the critical
role played by passenger rail service amid the crisis spurred by the Sept.
11 hijackings.

A 1997 federal law provided Amtrak with about $2.2 billion of capital funds
but required that it achieve self-sufficiency within five years. The
legislation also established the Amtrak Reform Council to determine whether
Amtrak would meet that goal. If not, Amtrak would have 90 days to submit a
plan for its own liquidation. Mr. Schulz declined to comment on any such
plan.

Congress isn't bound to adopt -- or even act on -- either the council's or
Amtrak's plan, Mr. Schulz said.

Friday's finding could give new ammunition to congressional critics of
Amtrak, especially its money-losing long-distance trains. Some Reform
Council members said they are impatient with the slow pace of improvements
at the railroad. "We want to see rail passenger service become more
important," said John Norquist, the Democratic mayor of Milwaukee who cast
the deciding vote Friday. Mr. Norquist wants to give states or groups of
states more flexibility to seek other passenger-train operators to compete
with Amtrak.

Gilbert Carmichael, chairman of the Amtrak Reform Council -- who voted
against the finding, but indicated he would support it if the vote were
taken in January -- wants to set up intercity rail more like the nation's
highway and aviation systems. In those systems, transportation companies are
responsible for their operations while separate government entities fund and
manage infrastructure. Amtrak is responsible for infrastructure, equipment,
real estate and running its trains. "It's almost that we have loaded the
mule down to the point it just can't walk," said Mr. Carmichael, a former
federal railroad administrator.

Other council members say Amtrak's biggest problem is that the federal
government spends far more money on aviation and highways than on passenger
rail. "Passenger trains have been kind of an illegitimate stepchild that has
to keep coming back with the tin cup," said Jim Coston, a Chicago lawyer and
Amtrak Reform Council member who voted against the finding.

Amtrak has made some progress in recent years, launching high-speed Acela
Express trains in the Northeast Corridor between Washington and Boston and
increasing ridership. Still, its financial performance has slipped. This
year, Amtrak acknowledged it borrowed $300 million against its ownership in
New York's Penn Station to cover expenses. Recently, Amtrak President George
Warrington said that to become self-sufficient by the end of next year,
Amtrak would have to assume more debt, mortgage assets and cut back on
service.

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