NCI: Leo KingUnfettered Acela Expresses, like 2157 passing Attleborough, Mass., last fall, will be able to continue running with a cash infusion from USDOT. So will long distance intercity trains, from Chicago to Los Angeles, Miami to New York, Portland, Ore. To Vancouver, B.C. and all the rest.
Amtrak gets dollars to survive;
White House, via USDOT, comes through;
It took more than a week of wrangling and wringing of hands, but Amtrak and the Bush administration reached a tentative agreement Wednesday night on a plan to resolve Amtrak's budget crisis.
An informed source said the deal will "insure the carrier will continue operations to October 1," when the new fiscal year begins.
The deal, he said, "is worth a total of $270 million in a loan from the Administration through USDOT combined with what is left of Amtrak's resources."
"Significant details are still being finalized, and no final agreement has been signed," The AP quoted USDOT Secretary Norman Y. Mineta and Amtrak Chairman John Robert Smith. "We are confident that, with Congressional support, Amtrak services will not be disrupted."
The pair released a joint statement reporting "excellent progress" in their discussions on how to help the railroad close a $200 million budget shortfall.
Amtrak and the USDOT will also make a joint request for action by Congress, which has the power to appropriate money to the railroad. The carrier is still looking for at least $1.2 billion for the fiscal year 2003, which will also include required repairs on tunnels in the New York City area and some 80 broken coaches at Beech Grove, Ind. that have gone unrepaired for lack of cash as well as restoring some services that have been cut in recent months.
Mineta and Smith said the tentative agreement would improve Amtrak's financial discipline and performance, make Amtrak's finances and operations more open to public scrutiny and give federal officials a better understanding of its long-term prospects.
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|Labor optimistic regarding Amtrak|
Labor appears to be supportive of efforts to save Amtrak.
"We were impressed with the secretary's focus in signing a short-term solution to the immediate cash crisis facing Amtrak" said Ed Wytkind, Executive director of the AFL-CIO's Transportation Trades Department, "and we are confident from our discussions late this morning that the secretary is moving aggressively to avert Amtrak's shutdown and to sustain the company's cash needs through the end of the current fiscal year."
Six of the top rail labor leaders emerged from a "productive" meeting with Transportation Secretary Norman Mineta Tuesday regarding the threatened Amtrak shutdown.
Speaking to reporters on a telephone conference call, Wytkind reiterated the certainty that without the more than $200 million federal loan guarantee, either from DOT or alternatively by Congressional action, Amtrak will in fact shut down.
He urged the secretary "to give us some breathing room in the form of a loan guarantee before the end of the week" because without it, "Amtrak's trains will come to a screeching halt."
However, the labor chieftains "left the meeting today with the feeling the secretary will work round-the-clock to avert a transportation emergency."
Wytkind added the railroad labor movement believes Mineta's optimism is grounded in specifics.
"We are proceeding optimistically" convinced that "he (Mineta) has a plan to keep Amtrak running," he said, but the six union leaders also said, in answer to a question, that any settlement of Amtrak's problems would not be imposed on the backs of the railroad's workers.
"We have given, given and given," said Marc Filipovic, Railroad Coordinator for the International Association of Machinists and Aerospace Workers.
In any event, they quoted Mineta as saying, "Labor is not the target."
The issue was raised in the context of comments by Amtrak Board member Sylvia DeLeone and Sen. Kay Bailey Hutchinson (R-Tex.) - both Amtrak supporters - that Amtrak wages are "out of line" and "could not be sustained."
"Our workers get the lowest wages in the industry," said Charles Moneypenny of the Transport Workers Union. He cited the report of the Amtrak Reform Council, of which he was an often-dissenting member, which said that labor is not the problem with Amtrak. Moneypenny also cited Rep. John Mica (R-Fla.), a frequent Amtrak critic, as agreeing that labor costs were not in any way the root of Amtrak's financial woes.
Moneypenny put it this way: Picture the scenario where "we need to solve this great crisis, and yet our workers are asked to work for less than they already do."
Robert Scardelletti, International President of the Transportation Communications Union, noted that an Amtrak shutdown would adversely affect freight railroads, as well. Most especially impacted immediately, he noted, would be Norfolk Southern, which operates freight traffic over Amtrak's Northeast Corridor. Scardelletti said sharing "integrated tracks" would impact others.
Also mentioned at the news conference was a figure of 9 percent, which the union executives said would represent the increase in taxes the Class I carriers would have to pay into the Railroad Retirement Fund. Scardelletti said the fund would face a financial crisis of its own without Amtrak's contribution to it.
Tom White, spokesman for the freight carriers' Association of American Railroads (AAR) told D:F that he "had not heard a figure on that;" however, in the past, the freight lines have steadfastly resisted any suggestion that Amtrak be relieved of all or most of its payments to the retirement fund.
The union chiefs appeared convinced that the administration will come through and that Congressional action, though always a possible backup before Congress adjourns at the end of this week for the Independence Day recess, would not be necessary.
In answer to a question from D:F, Wytkind said Secretary Mineta gave no indication exactly what it was that had prevented his meeting Monday with the Amtrak board from bringing the crisis to closure then.
Other participants in the news conference included Don Hahs, International President, Brotherhood of Locomotive engineers; and Mac Fleming, International President, Brotherhood of Maintenance of Way Employes.
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|It was a wild week for Amtrak|
Last week, through the weekend and particularly the last few days, have been remarkable in Amtrak's survival as a crescendo of voices began being heard around the nation concerning Amtrak. Most were supportive. The Congress has finally jumped into the fray, although waiting until the last possible moment to do so, as we report elsewhere in this extra edition of Destination: Freedom.
America's passenger railroad got its sought-after cash infusion from the USDOT, although the exact amount is not yet clear, but President and CEO David Gunn and the board of directors had to fight tooth and nail to get it, from what we've been able to gather.
Looking back at events of the week, it was clear it was quite a ride.
A meeting was scheduled for 3:00 p.m. on Monday at the U.S Department of Transportation building at 400 Seventh St., SW in Washington. That was June 24.
Earlier in the day, Amtrak's Gunn - on the job for all of five weeks - published his fifth letter to employees (via e-mail and fax) in which he wrote, "I spoke to Transportation Secretary Mineta over the weekend," and Mineta "asked our board of directors and me to come over to the DOT this afternoon to work with him so that we could all avoid a shutdown. I welcome his active involvement, and hope you will, too."
Gunn said Mineta told him, "he does not want a shutdown," and it was "an encouraging sign that the Administration really wants to avert this from happening."
He added, "I want to dispel any notion...that I can just shut down our operations and happily return home to Cape Breton [Nova Scotia]. You can depend on me to do everything possible to keep our operations going - that's my commitment to you. I did not take this job to shut down our railroad."
Meanwhile, Amtrak West vice-president Gil Mallery, who, for now, still has that title, told employees out west, "We remain hopeful that a shutdown will be averted with the constructive involvement of the DOT. In addition to Mr. Gunn's written updates, we have instituted a daily call with our general managers and field personnel, as well as local union leaders that will be continued until this situation is resolved."
Railroaders at all levels were beginning to sweat. Would the shutdown begin on Wednesday? Would they have a job by week's end?
While all that was going on, we learned, via The Associated Press (AP), another airline was looking for a handout.
"United Airlines asked the government today for $1.8 billion in loan assistance, making it the biggest carrier yet to seek help from a loan guarantee program created to prop up the ailing industry after September 11. The nation's No. 2 airline, which has lost more than $2 billion since the attacks, is the third major carrier to seek federal guarantees, following America West and US Airways."
That's $1.8 billion while Amtrak was looking for a paltry $200 million.
Even America Online joined in the fray, albeit from a distance.
The online service conducted a poll among its subscribers, asking, "Should the government prevent a shutdown of Amtrak?"
The results were astonishing.
By 6:39 p.m., more than 10,000 people had responded.
6,802, or 65 percent voted "yes," while 2,964 (28 percent) responded "No," and only 524 people - just 5 percent - were not sure. The total voting was 10,290 at that time.
Commuter railroads, including some run by Amtrak and some not, began scrambling to make contingency plans.
Former Amtrak CEO and now New Jersey Transit chief George Warrington disclosed, under pressure from the media, that NJT had no contingency plans.
There had been no public comment throughout the Amtrak fiasco from NJT regarding anything, despite numerous inquiries from New Jersey media.
After much badgering by the press, NJDOT chief Jamie Fox, to whom Warrington reports, finally admitted they had no contingency plans at all. He also said NJT could not take over the Northeast Corridor in Amtrak's absence.
Meanwhile, Metro-North was reported to have already formulated the outlines of a plan to increase its service to provide at least partial relief if Amtrak had needed to shut down operations north of New York City.
Metro-North operates on the Northeast Corridor between New Haven, Conn., and New Rochelle, N.Y. It continues on from there to Grand Central Terminal in New York City, and cannot operate on Amtrak's line to Penn Station because of voltage differences in the catenary.
Boston's MBTA wasn't in much better shape.
Boston Globe reporter Mac Daniel informed his readers on June 21, "The MBTA's commuter rail service, which is operated by Amtrak and serves 700,000 riders daily, could be disrupted as early as next week because it is too late to insulate the T from drastic cuts by the troubled national railroad system, agency officials have been told."
Not only that, but, like NJT, "MBTA officials acknowledged yesterday that they have no contingency plan if Amtrak were to make cuts." While some transit officials said Amtrak was making idle threats to secure more funds from Congress, T officials were scrambling to develop a backup plan.
T officials got their wake-up call after Amtrak's Gunn told MBTA chief operating officer Anne Herzenberg that "commuter rail service could not be protected if intercity routes were cut."
Amtrak would neither confirm nor deny that report.
Meanwhile, the T's new general manager, Michael H. Mulhern, wrote Gunn on Wednesday asking for clarification on what could happen locally if Amtrak shut down its intercity rail operations before the end of the fiscal year.
"Any impact to this service will severely cripple the metropolitan Boston area," he wrote. Mulhern also said no one from Amtrak had called him about the threat to commuter rail service.
A full shutdown would not only have disrupted the 60,000 passengers who ride Amtrak on 260 trains each day, but would halted or seriously interfere with commuter service in the Northeast, around Chicago, California and the Pacific Northwest.
Lines in the Pacific Northwest would have been affected as well. Reporter Les Blumenthal of The News Tribune wrote The Sounder commuter passenger service between Tacoma and Seattle could have been affected if Amtrak shut down. He was quoting Sen. Patricia Murray (D-Wash.) on Tuesday.
She blamed the White House and Congressional Republicans for doing too little to save the troubled passenger rail system, which maintains the locomotives used to haul the Sounder passenger cars.
Amtrak would also have curtailed service to Portland, Los Angeles and Chicago.
"It's time for the White House to get serious," said Murray, who leads the Senate transportation appropriations subcommittee and has jurisdiction over Amtrak funding.
Another possible impact would have been on the freight railroads if Amtrak had put its trains away.
House Transportation and Infrastructure Committee Chairman Don Young (R-Alaska) asked the Surface Transportation Board if it had "sufficient authority to prevent the wide-spread disruptions that might result in the Northeast and elsewhere from a shut down of Amtrak."
Young specifically asked the STB on June 24 if it has "sufficient authority to direct the dispatching, maintenance, or other operations on the Northeast Corridor that would permit continued commuter operations, freight operations, or both in the event that Amtrak begins to cease operations on July 1, 2002."
Part of the answer lies in a 1973 law which authorizes the STB to respond to certain cessations of rail service by directing another railroad temporarily to provide that service. The federal government pays the cost of such directed service, not covered by revenue from the operation. In short, Amtrak or not, federal dollars pay.
"The effects a shutdown of the Northeast Corridor would have on that region of the United States would certainly be substantial and adverse," Young said.
"An Amtrak shutdown could adversely affect the economy in the Northeast United States because shippers' freight might not be able to get to its destination. Moreover, commuters in the Northeast and around the country may not be able to get to work either because the commuter authority operates on Amtrak infrastructure or because the commuter authority uses Amtrak employees to operate or maintain its trains," Young said. He made no mention of long-distance Amtrak operations outside the Northeast Corridor.
The STB was expected to respond to Young this week.
Around the same time, AP writer Laurence Arnold, whose beat includes Amtrak, reported that the House Transportation subcommittee on railroads answered Amtrak's pleas for a major boost in funding, sending a strong signal that the cash-starved railroad would get the money it said it needed to avoid cutting routes.
The proposal was adopted on June 19 and would guarantee Amtrak's existence for another year, giving lawmakers and the Bush administration more time to debate a long-term policy for passenger rail.
If approved by Congress and signed by President Bush, the bill would give Amtrak the $1.2 billion it requested for the fiscal year beginning October 1. The bill would also provide $775 million for security and safety upgrades.
What is significant beyond that is that the bill enjoys bipartisan support from transportation leaders in the Republican-controlled House, which is generally more skeptical of Amtrak than the Democrat-controlled Senate.
"This bill represents the beginning of a new era of passenger rail in this country, because it recognizes the simple fact that it takes real money to provide real service," said Tennessee Rep. Bob Clement, the ranking Democrat on the subcommittee.
Rep. Earl Blumenauer, D-Ore., said he normally opposes "short-term fixes" but considered the bill an important boost for Amtrak.
One leading Amtrak critic, Rep. John Mica (R-Fla.) voted against the bill.
"At best this is a Band-Aid," said Mica, who favors breaking up Amtrak and letting private companies take over any profitable routes.
"It only will stave off the inevitable."
The bill imposes new requirements on Amtrak to submit periodic assessments, business plans and a capital-spending plan to the government, said Rep. Jack Quinn (R-N.Y.), the subcommittee chairman.
"We simply want to know that the money is being spent wisely," he added, and that the full committee will consider the bill in about two weeks. Quinn supports Amtrak.
That measure, however, would be of no help in Amtrak's immediate cash flow dilemma.
The AP's Kyle Wingfield wrote from Atlanta, "The National Association of Railroad Passengers said federal spending on Amtrak should mirror investments in air travel and highways to ensure a balanced transportation system."
NARP president Alan Yorker told the wire service, "We pay those costs to keep our airports in top shape. We should be paying to maintain our railroads." Yorker was attending a ceremony in Atlanta remembering former NARP President Jack Martin, who died last year.
"The members of Congress are hearing loud and clear that Americans want this," Yorker said. "The question is how to finance it."
Gunn said the railroad would begin turning away passengers and moving trains to storage by Wednesday unless it got a grant or loan, but those actions were delayed because of the ongoing meetings in Washington.
Earlier in the week, USDOT's Mineta had said the agency was making plans to replace Amtrak as owner of the 366 miles of Northeast Corridor tracks from Boston to Washington. There were no concrete proposals presented.
Yorker said states interested in passenger rail service would be wise to pitch in, but, he said, Amtrak should be viewed not as profitable company but as another government service, such as the interstate highway system.
"This is an investment, this is not a subsidy," he said.
NARP's recommendations include establishing a Rail Trust Fund, possibly funded by a one-cent gasoline fuel tax, and handing over Amtrak's infrastructure, but not its control, to USDOT.
At the end of the day -actually, it was Tuesday morning - we learned, via Reuters News Service, "With the Bush administration offering no plan to rescue Amtrak... from a threatened shutdown, the U.S. Senate will take matters into its own hands on Tuesday."
Senate lawmakers, led by Majority Leader Tom Daschle of South Dakota, proposed emergency legislation to give the cash-strapped passenger railroad the $200 million it desperately needs to keep trains running.
While Mineta said he was confident a shutdown could be averted, Gunn and Amtrak Chairman John Robert Smith were less sure. They said Mineta's involvement could push back the shutdown deadline but his commitment alone "does not stop it from occurring."
Mineta said any solution to Amtrak's fiscal woes would have to include steps to reform its business practices, which Gunn said he had already begun.
After a meeting late on Monday with other Senate lawmakers, Daschle said a proposal would be made in that chamber on Tuesday for emergency spending legislation to get Amtrak the money it needed.
The Senate also intended to fold the emergency aid into a homeland security funding bill which had not yet been finalized by House-Senate negotiators.
A trusted source told us that in a telephone conversation with an upper manager in a Northeast Corridor office in Philadelphia, Mineta called the DOT-Amtrak board meeting after the Bush Administration and the USDOT offered Amtrak a $200 million bridge loan to cover operations to the end of the fiscal year -but Amtrak refused the offer. The true figure later turned out to be $100 million.
The source said Gunn turned down the offer flatly because it would require Amtrak to begin immediately dismantling its long distance network and concentrate services in corridors only.
Many press outlets overlooked a terse press release from Amtrak on Monday in which board chairman Smith and CEO Gunn jointly said, "Secretary Mineta's pledge to avert a shutdown of Amtrak in the next several days is greatly appreciated. However, there has been no reconciliation of the simple fact that Amtrak is running out of cash and no agreement of how to provide a loan guarantee or appropriation that will continue train service to the end of the fiscal year. In short, the pledge delays a shutdown, but it does not yet stop it from occurring."
AP writer Jonathan D. Salant informed us later on Tuesday morning Senate Democrats urged President Bush to include $205 million for Amtrak in a new spending bill as the administration met with labor unions to discuss ways to keep the passenger rail system running. The Dems added $5 million.
"If we are going to help Amtrak, they must have resources and they must have them as quickly as possible," said Senator Tom Daschle.
Mineta, meanwhile, was meeting with transportation union representatives on Tuesday to discuss the Administration's efforts to overhaul Amtrak, and Senator Murray, chairwoman of the Senate Appropriations transportation subcommittee, agreed on the need for changes, but rejected the Bush administration's plan.
"Their reform package is a reform package for failure," Murray said.
Murray and 16 other Senate Democrats - more than one-third of the caucus - sent a letter to President Bush asking that he include $205 million for Amtrak in the supplemental spending bill.
On the Republican side, Sen. Kay Bailey Hutchison of Texas, a longtime staunch Amtrak supporter, said the federal government has an obligation to maintain a national railroad system.
"We're all going to be in this together," she said.
Hutchison agreed that railroad operations need an overhaul. She said Amtrak's labor costs were "out of line with other workers in our country" and urged rail unions to be open to changes.
By Tuesday afternoon, Gunn sent another message to the troops, addressed to his "Dear Co-Workers," in which he stated, "We still don't have a loan, a loan guarantee, or an appropriation to solve our problem."
He briefly explained about Monday's meeting, and was glad Mineta "expressed confidence that a shutdown can be averted. That is a welcome sign of support."
Gunn added, "All the members of the board are continuing to work hard on resolving the problem. I am especially thankful that Chairman John Robert Smith is remaining in Washington to help us as we work with Congress and the Administration to solve the problem."
In a postscript, he added, "Did you see in the news yesterday that United Airlines has asked the federal government for a nearly $2 billion loan guarantee?"
By the legislative day's end on Tuesday, Senators Ernest "Fritz" Hollings (D-S.C.), Robert C. Byrd Jr. (D-W.Va.) and a lengthy list of Senate colleagues sent President Bush regarding emergency funding for Amtrak to be included in the supplemental. More than 30 senators had signed the letter, and Hollings was still collecting more. Both men are Amtrak supporters, and Hollings even has a photo of an Amtrak P-42 locomotive on his home page.
By Wednesday morning, we learned Gunn had confirmed to the Washington Post that the shutdown was delayed about a week.
Post reporters Don Phillips and Dan Morgan joined forces to write the story that explained Amtrak would run its full passenger train service for another week, but added that it would have to begin an orderly shutdown July 4 or July 5 if it had not received cash by then.
Gunn said the railroad, which has lost money throughout its 31-year history, needed $205 million to carry it through the rest of the fiscal year.
The reporters were quite correct when they stated, "Meetings and conferences peppered the Washington official landscape yesterday, with talks at the White House and news conferences on Capitol Hill. Whatever is decided, it is clear that it will come down to the wire as Congress prepares to head home, and there is always the danger of a misstep or miscalculation."
The question boiled down to whether the administration would give Amtrak a loan guarantee under a program for which Amtrak may not be eligible, or whether Congress and the administration will agree to insert a direct grant to Amtrak in a homeland security supplemental appropriations bill now moving through Congress. They told readers that Mitchell E. Daniels Jr., director of the White House Office of Management and Budget and no admirer of Amtrak, said it is "not out of the question" to include Amtrak in the homeland security bill. He said he could identify "offsets" that had not been used that could accommodate stopgap bailout money, possibly meaning cuts in the Senate's homeland security funding, which President Bush considers excessive.
Daniels said the administration was determined to keep Amtrak open, but he had harsh words for Amtrak's board of directors on Tuesday after meeting with Vice President Cheney and Senate Minority Leader Trent Lott (R-Miss.)
"We're determined to keep Amtrak and also to see the beginnings of change at Amtrak," he said. "If this board was serving in a private sector capacity it probably would have been forced to resign, if not faced some severe sanctions."
Meanwhile, Rep. Young sent a lengthy letter to Mineta asserting that Amtrak was not eligible for a loan guarantee under the program the administration was considering, the Railroad Rehabilitation and Improvement Financing Program. He said only an appropriation is proper.
"If Amtrak wants a loan, let's follow a truth in non-lending policy," Young said. "We all know that Amtrak will either not repay the loan or will use appropriated federal funds to repay the loan. Let's keep the money transfer clean and just appropriate it to them and not try to disguise it from what it really is - a taxpayer bailout."
"I think ultimately we'll get a loan guarantee or a supplemental, but I can't be sure," Gunn said.
If a shutdown did occur, Gunn said, long-distance trains would stop running first, with commuter and corridor trains that operate on Amtrak tracks or use Amtrak crews halting perhaps four to five days later. Chief Operating Officer Stan Bagley said he would prefer to halt corridor and commuter runs at midnight on a Saturday to avoid stranding commuters or business travelers, meaning that shutdown could come as early as July 6 or as late as July 13. Commuter operators expressed relief that they had at least an extra week to prepare.
Gunn, in a news conference, confirmed reports that the Bush administration Monday had suggested a loan guarantee of a little more than $100 million, coupled with savings by Amtrak, which he said could not be done.
Gunn also confirmed that the Administration asked about mortgaging Chicago's Union Station, but that was discarded as impractical.
The break finally came late Wednesday, when Mineta and Smith told reporters they had brokered a deal.
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President & CEO, NCI
Washington, D.C. (June 26) - And so it appears that we begin the next round of the National Railroad Passenger Corporation's Lazarus-like existence.
Today's agreement between U.S. DOT Secretary Norman Mineta and the Amtrak Board and management that the federal government should guarantee a $204.9 billion gap in Amtrak's funding is not a bailout, although that is how the action will be portrayed. It represents an investment in time, not simply passenger service, and should be regarded as such by friend and foe alike.
By agreeing to help obtain the funds, meager as they may be, to keep Amtrak running through October 1, the federal government is allowing a tiny amount of breathing room so that a plan can be devised for the permanent funding of a national system, whether it is called "Amtrak" or something else.
Because so many journalists subscribe to Destination: Freedom, we want to add some comments for them, as they get all kinds of propaganda aimed at them by the highway lobby:
We are not out of the woods. We are not even nearing the edge of the forest - but at least we have provisions, and clothing, and will. We also have one special thing: the American people, who time and again, overwhelmingly, have demanded a decent rail system. So, in the end, it's up to us. Let's move out then, and make this happen. You'd be amazed what even a single letter to a Congressman, or to his hometown paper, will do to a politician. Most of them are good people, and are there to serve. They really do listen, and, I think, they are listening now.
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