Destination:Freedom Newsletter
The Newsletter of the National Corridors Initiative, Inc.
Vol. 2 No. 45, November 12, 2001
Copyright © 2001, NCI, Inc.
James P. RePass, President
Leo King, Editor

A weekly North American Railroad update

Acela passes through...

NCI: Leo King

CAB VIEW - Amtrak has recorded a great spike in its ridership since September 11, but now Bombardier is suing Amtrak over cost overruns, and the Amtrak Reform Council has voted 6-5 for the national passenger railroad to liquidate - to fold up its tent. Meanwhile, the trains will continue running. Here, while Massachusetts Bay Transportation Authority train No. 812, operating from Providence, R.I. to Boston, makes a station stop at Attleboro, Mass., Acela Express train No. 2190 from New York City wheels by at speed in 150 mph territory. It is 30 minutes away from its South Station destination on November 7.
Bombardier sues Amtrak;
ARC votes to 'liquidate'
By Wes Vernon
Washington Correspondent

Just as Amtrak was formulating a response to a $200 million dollar lawsuit filed by the train manufacturing Bombardier Corp., on Thursday, the watchdog Amtrak Reform Council on Friday approved its Congressionally mandated "finding" that the passenger railroad will not meet its late 2002 deadline for operational self-sufficiency.

The Bombardier legal action was filed late Thursday in U.S. District Court here in Washington. The company charges Amtrak disrupted its ability to produce and deliver the high-speed Acela Express trainsets for the Northeast Corridor on schedule or in an efficient manner.

Bombardier claims Amtrak failed to upgrade tracks to make them fully compatible with high-speed service, thus forcing the trains into an extra year of testing.

"Track quality and train design go hand-in-hand," said Bombardier President Peter Stangl.

Amtrak shot back with a press release and a posting to its web site saying, in so many words without spelling it out, that Bombardier's action smacks of the old cry of "Stop hitting my fist with your face!"

The railroad stated, "After five years of delays, performance failures, and self-inflicted financial losses, it is no shock that Bombardier is now attempting to shift the blame for (Bombardier's) mismanagement of the high-speed trainset contract to Amtrak," said the passenger train service's statement.

The comment was not signed, and no Amtrak official was quoted, but the idea that this could go out without the explicit okay of Amtrak CEO George Warrington would not be credible.

Amtrak accused the Bombardier and Alstom consortium of leaving a long trail of failures that is "staggering." These include the train delivery, "design, subcontractor oversight, production, and compliance with Buy America requirements."

Under terms of the contract, Amtrak asserted or reserved the right to assert its claims in excess of $250 million resulting from trainset deliveries more than a year late, including the last five sets. The carrier complained that speed restrictions are required, "because trainsets don't meet specifications on track that complies with new, tougher FRA requirements, failure to provide on-time and adequate maintenance, and failure to comply with warranty obligations."

So, Bombardier and Amtrak are blaming each other for the delays.

At an NCI conference last year, then-Amtrak board chairman Tommy Thompson (now Health and Human Services Secretary in the Bush administration) said he was "damn mad" at the consortium for its failure to deliver the trains on time and to the specifications in the contract.

Bombardier alleges Amtrak did not accurately describe the clearances needed for tunnels and bridges, was late in completing the electrification from New Haven to Boston, and was indecisive on several issues, including draperies for passenger car windows and choosing a chime to warn that doors were closing.

It was the train manufacturer, not Amtrak that failed to meet specifications, according to the Amtrak reply. Amtrak lays out in chronological order the failure of the Bombardier-Alstom consortium to deliver the Acela trainsets on time.

"Amtrak's contract with the consortium is quite explicit. There is no ambiguity," said Amtrak management.

"After five years of delays, performance failures and self-inflicted financial losses, it is no shock that Bombardier is now attempting to shift the blame for the consortium's mismanagement of the high-speed trainset contract to Amtrak."

Neither organization mentioned the carbody four-inches-too-wide issue nor the original truck bolts that were too short.

Bombardier claimed, "Amtrak did not provide track upgrades necessary for high-speed service. As a result, the trains had to undergo more than a year and a half of additional testing." Bombardier president Peter Stangl argued, "Track quality and train design go hand in hand." He added, "Had Amtrak delivered the quality of tracks required for high-speed service, we could have avoided costly and time-consuming testing and the trains would now be running at full speed, trip times would be reduced and passenger comfort would be increased."

Bombardier's complaint also stated that Amtrak provided inaccurate information about the dimensions of tunnels, electromagnetic interference on the Northeast Corridor and track geometry. It also contended, "Amtrak delayed decision-making on major technical issues as well as a series of design details, which in turn halted progress in critical areas and led to production modifications and design revisions."

"We ask that Amtrak take responsibility for its shortcomings on the Acela project, so that we can resolve outstanding issues, according to the release.

HHP and Acela

NCI: Leo King

FAST AND FASTER - High-horsepower engines, like the one on the right, can travel up to 125 mph, but the speedy Acela Express trainsets, like the pair lurking behind the catenary poles, with two engines and six cars - can zip along at 150 mph.
Bombardier stated it had delivered all 15 high-horsepower electric engines (HHP-8s at 8,000 hp and numbered 650-664) and 15 of the 20 trainsets (numbered in the 2000 series) called for in the $710 million (in U.S. dollars) contract. Amtrak awarded the contract in 1996, and expanded it in 1998. "They are performing well," said Stangl. Amtrak did not comment on their performance.

"We believe the facts of this case will show that Amtrak disrupted our ability to deliver the Acela trainsets and locomotives on time and on budget, and caused major costs overruns."

The 46-page complaint "comes after repeated attempts by Bombardier to achieve a settlement through negotiations. While we regret having to resort to legal action in this matter, we have reached an impasse in our discussions with Amtrak and see no other alternative to protect our rights and resolve this dispute," added Stangl.

He added, "We are proud to be associated with the development and realization of the first high-speed train project in North America. We are delivering a very high-quality product that obviously suits the needs of Amtrak, as indicated by the very positive comments, both public and private, that we have heard from Amtrak and its passengers," Stangl said.

Much of the passenger railroad's effort to meet the Congressionally mandated deadline for operational self-sufficiency was riding on fast delivery of the Acela high speed service which would hopefully attract more riders and bring in more revenue.

Amtrak's mention of the $250 million it has a right to demand from the manufacturers for the delayed delivery of the trains carries with it a possible suggestion that Bombardier is going to court in search of a way to lower the damages it has to pay by, in Amtrak's words, "spinning a story through litigation that doesn't remotely resemble the facts."

Bombardier's partner Alstom is not involved in the lawsuit.

Amtrak's press release stated, "The consortium narrowly won a highly competitive bid to manufacture and deliver the trainsets based in large measure on its promise to begin deliveries in the fall of 1999. However, on September 1, 1999, the president of Bombardier Mass Transit North America acknowledged its inability to deliver the trains as promised in the contract by November 1999 because of its own need to conduct modifications and testing on the trainsets. The consortium then established a tentative delivery date for Spring 2000, which it also failed to meet."

Amtrak took a lot of heat from the Congress and industry observers over failing to meet its announced - and even advertised - start date.

"Last year, the consortium threatened to withhold delivery of the first trainsets unless Amtrak waived its claims related to trainset performance. Amtrak refused, the consortium relented, and the trainsets were delivered, although a year late," the document stated.

"Next, it said they would assert hundreds of millions of dollars in claims because Amtrak had disrupted trainset production. When asked to provide evidence by submitting a claim, it failed to do so," the writer said, and "Now it appears Bombardier is spinning a story through litigation that doesn't remotely resemble the facts. It intends to win public relations points with the hope that Amtrak can be politically pressured to settle, thereby saddling Amtrak's passengers and American taxpayers with the full financial burden of the consortium' failures."

HHP-8 Number 661

NCI: Leo King

HHP-8 No. 661 was among the last for Bombardier to deliver to Amtrak.
Amtrak also expects the consortium to live up to its contract responsibilities to manage the day-to-day maintenance of the trains. Amtrak claims management has been forced to step in daily to do the consortium's work.

Amtrak warned, "The consortium can expect Amtrak to be ever more vigilant enforcing its rights and demanding delivery of the trains the manufacturers agreed to build."

All of that was on Thursday. The next day, the Amtrak Reform Council (ARC), on a 6 to 5 vote, approved a report to Congress that Amtrak will not reach self-sufficiency by its deadline to do so.

That council action triggered a 90-day period in which the ARC must develop a restructuring plan for passenger rail service in this country. Within the same 90-day period, Amtrak, when it's not busy fighting off the Bombardier suit, must take the time to draw up a plan for its own liquidation. Thus, while pursuing its main goal of running trains, Amtrak officials have been presented with what one might call a one-two punch.

Here is something that cannot be stressed forcefully enough: No trains will be canceled. The trains will keep running. We mention this because the largely transportation-ignorant media will either misreport this story outright or report it in a misleading way. Not long ago, radio wire service rewrites reported the Acela Express was going to cease operations for lack of ridership. The real story was that a non-stop New York-Washington train had merely added a stop in Philadelphia.

Moreover, in the final analysis, ARC and Amtrak can write reports and plans until doomsday, but nothing happens until Congress to decides what to do, if anything.

Here is something else to bear in mind: The Bombardier-Alstom consortium will continue to deliver the final five Acela trainsets all while Bombardier is fighting Amtrak in court.

So if you hear some "top slop" deejay ripping and reading wire copy that says anything contrary to what has been explained in the last three paragraphs, disregard it.

The real argument in the ARC debate centered not around whether the finding should ever be issued. That's a settled matter under the major Amtrak Reform and Accountability Act of 1997. The only question was whether to issue the finding now or wait until January when other things will be in place, including a DOT Inspector General's report.

The close vote to go ahead with the finding now did not follow all the predictable ideological lines. Council Chairman Gil Carmichael, a Republican who served as FRA Administrator in the first Bush administration, and Associate FRA Administrator (in the current Bush administration) Mark Yachmetz, joined Democrats Jim Coston, S. Lee Kling, and Charles Moneypenny (the labor representative) in voting no.

Five Republicans - Vice Chairman Paul Weyrich, Christopher Gleason, Nancy Rutledge Connery, Wendell Cox, and Bruce Chapman were joined by Milwaukee's Democrat Mayor John Norquist in voting yes.

Norquist, in fact, turned out to be the swing vote. Attending the session by phone, he was absent at the time the roll call was taken, initially resulting in a 5-5 tie. When he was recalled to the phone, the mayor listened to Weyrich and Chicago railroad lawyer Coston arguing opposite points of view.

In voting to go ahead with the finding, the mayor, an intellectual who marches to his own drummer, decided to vote "Aye" for a number of reasons. Basically, he explained, he believes "the public wants good quality fast trains and (overall) passenger train service, and I strongly believe we need to get on with it."

Norquist added, "Everybody knows the (current) structure can't pull it out."

Associate FRA Administrator Mark Yachmetz, who said he was representing DOT Secretary Norman Mineta, said the administration would release its own plan for passenger rail service (that may involve Amtrak or some other entity) in late January or early February, concurrent with its budget for fiscal year 2003, which begins next October 1. It was the administration's hope, Yachmetz said, that Congress would have such a plan in place and authorized on a multi-year basis (perhaps five years) by Memorial Day 2002.

This, of course, is a significant change from what FRA Administrator Allan Rutter told D:F through a spokesman last week. At that time, the word was the Bush administration wanted Amtrak reauthorized under the current structure for 2003 while America is engaged in a "great debate" on the future of passenger rail in 2002.

The sharp revision in FRA's position illustrates what Yachmetz means when he tells us that the administration's discussions on overall passenger train policy "are at their earliest stages right now."

In another sign of a disconnect behind the scenes at the White House on this issue, Weyrich observed that Office of Manpower and Budget director Mitch Daniels had indicated while DOT Secretary Norman Y. Mineta speaks for DOT, he does not necessarily speak for the administration, so, obviously, the Bush administration's passenger rail policy is a "work in progress."

Yachmetz told D:F that he cast a vote against triggering the finding because it "takes time away from (Amtrak) management," which "is faced with significant challenges in running this railroad right now. They don't need the diversion, and also they don't need negative signals" that writing a "liquidation" plan would imply.

The National Association of Railroad Passengers (NARP) made a similar point in a message to its members, saying that Amtrak, "whose resources already are stretched to the limit, now must find time to draft a plan within 90 days for its own liquidation," complete with "additional staff time," and potentially negative consequences in terms of relationships with its lenders and perhaps with customers reluctant to make long-range travel plans with Amtrak.

However, NARP took comfort in the fact that ARC's Carmichael and the Bush administration's FRA cast their lots with the dissenters, and that Weyrich, the chief proponent of the finding, is a longtime NARP member who "has made it clear that he supports a national passenger rail system."

This reporter, who has covered Washington for nearly 34 years, frankly expressed to Yachmetz some doubts that Congress can be persuaded to vote out a long-range passenger train plan or a long-range anything that upsets the status quo within a mere four months, from early February to Memorial Day.

The FRA official responded he's been around the bend on the Hill a few times too, and that "Congress can move quickly when the issues are important."

Bottom line: the Bombardier suit and the finding may constitute a "one-two punch." But the sky is not falling.

Mineta says timing is key

Long after our deadline for this issue of D:F passed, we learned that USDOT Secretary Norman Y. Mineta issued a statement following the Amtrak Reform Council's vote for a "possible restructuring or liquidation" of the passenger service. In brief, he supports passenger rail, but not necessarily Amtrak.

Mineta said, "Intercity passenger rail remains an important component of the national transportation system. The events of September 11 underscore this fact.

"I have consistently called for Congressional consideration of structural reforms to passenger rail. In July, for example, I wrote to Congress to urge that 'formal consideration of what that rail transportation network should be, what we can afford, the reforms that may be necessary, and how they will be implemented should take place soon, well in advance of the expiration of the current Amtrak authorization.'

"To me, the question is one of timing. The 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.

"In the interim, Amtrak has assured the Administration that it intends to operate as normal. We will work closely with Amtrak. The Amtrak trains are running today, they will run tomorrow, and throughout the coming months as Congress takes up this important national debate.

"I encourage the ARC to issue policy recommendations on Amtrak reform as soon as possible."

Amtrak, NARP weigh in on ARC vote
Amtrak's response to the Amtrak Reform Council's negative decision on the Amtrak issue came swiftly. Stating it was "The wrong decision at the wrong time" in a press release which carried no officials' names, George Warrington or otherwise stated the "Council is charged under the law to account for 'acts of God, national emergencies, and other events beyond the reasonable control of Amtrak."

Its writer stated, "Despite the current national emergency declared by President Bush, and the heightened public service role that Amtrak has assumed since September 11, there is no evidence that the ARC adequately considered this factor."

The unnamed author complained, "The council also must take into account whether Amtrak has received adequate capital funding based on the DOT Inspector General's 1998 assessment. Amtrak's capital funding has fallen hundreds of millions of dollars short of this assessment. There is no indication that the ARC adequately considered this capital shortfall."

The author further argued that the "practical effect of the ARC's decision is to limit Congress' role in making critical policy choices about the future of passenger rail. Amtrak intends to work at the earliest opportunity with Congress and the Administration to address the ARC's decision and to fashion an appropriate policy for the nation's passenger rail system."

In the meantime, the writer noted, the railroad "intends to continue serving its customers." Its trains are still running.

By early Friday evening, National Association of Railroad Passengers (NARP) executive director Ross Capon weighed in on the issue. He told his membership and the press via e-mail, "At a time of national crisis, one directly related to intercity passenger transportation, Amtrak, whose resources already are stretched to the limit, now must find time to draft a plan within 90 days for its own liquidation."

He said Amtrak's fortunes have improved dramatically since the terrorist attacks.

"NARP believes that the ground under the U.S. transportation establishment has shifted fundamentally -- and favorably towards rail -- as a result of September 11. In the past two months, we have seen unprecedented editorial support for passenger rail and for Amtrak," he said.

Capon pointed out that "In October, ridership on Acela Express and Metroliners in the Northeast Corridor was 43 percent above a year ago and revenue growth was substantially greater. Ridership was 11 percent above plan. Sleeping-car occupancy rates and revenues on most routes were stronger than a year ago. Amtrak's share of the total travel market likely rose, since airlines in October reported a 65 percent occupancy rate (down from a year ago) on flight schedules that most carriers had cut 20 percent.

As of November 8, monthly ticket sales totaled $34.7 million, and sales were 17.3 percent ahead of one year earlier, a $5.1 million gain.

Lost in all the day's news was a report from Thursday that the Senate Finance Committee approved a tax stimulus package that includes a three-year, $7 billion version of the High Speed Rail Investment Act, plus $2 billion for a new railroad tunnel under the Hudson River.

Capon said, "Like Amtrak, we are unaware that the council's action reflected its statutory mandate to account for "acts of God, national emergencies, and other events beyond the reasonable control for Amtrak."

Capon asserted, "The fundamental problem facing passenger rail is inadequate public funding in general, and, in particular, the lack of a federal program for partnering with states on improving tracks which would, in turn, improve the economic performance of trains (including long-distance trains) running on the various federally designated high speed corridors. We do not see an Amtrak reorganization as likely to solve that problem."

He concurred with other industry experts that "Enactment of the High Speed Rail Investment Act and adequate annual appropriations for Amtrak are critical if the U.S. is to get the balanced transportation system we need to face the challenges of the new century."


'Liquidating' Amtrak

By Jim RePass
Publisher, Destination: Freedom
President and CEO
The National Corridors Initiative

November 9's 6-5 vote of the Amtrak reform Council to issue a finding under the Amtrak Reform Act of 1997 that Amtrak can not free itself from federal operating subsidies by 2002 was a contentious vote for all involved, and will anger many supporters of Amtrak, and of a national system of passenger rail.

It will also confuse many journalists - and even worse - headline writers who do not cover transportation on a regular basis or who are new to transportation issues since the events of September 11. It will therefore confuse and frighten many ordinary Americans who will read their stories.

This need not happen.

Amtrak must now, under the law, develop a "liquidation plan" for submission to Congress that could recommend any number of options, from shut-down to restructuring, and even an expansion of service. The Amtrak Reform Council will also present its own report to Congress, which will, in all likelihood, present a plan for separating Amtrak into two or more entries to deal with infrastructure and another to deal with operations.

Because of the current transportation emergency, the timing of the ARC vote was very painful, despite the fact that ARC Vice Chairman Paul Weyrich is right - that Congress must face the fact that if we are going to have a national rail system, then Congress must come up with a plan that works, including stable funding. There is growing support in Congress to void the break-even requirement for Amtrak, as there should be.

Unless we redefine many of Amtrak's costs as capital rather than operating costs - which, while doable, raises accounting and other eyebrows - Amtrak won't be any closer to breaking even than are the airlines or the highway system. Both of those modes are far more heavily subsidized than Amtrak has ever been, but they get a free pass from the media, and in the airlines' case, and extra $5 billion just last month, because their massive federal, state, and local tax support is never defined as a subsidy, while Amtrak's tiny federal funding is.

While the trade press has understood this bifurcation for years, the general media has only slowly been catching on; but they are catching on, thank goodness.

Of course, there is a very fundamental argument going on between those who see Amtrak as an essential part of ground transportation that should be assisted and expanded, and those who want it shut down at any cost. These quitter ideologues simply care less about this country and its security than they do about their own ideology, and that is reprehensible, and should be exposed for the lockstep ideological cant that it is. We feel that the time for that kind of selfish thinking was already long gone, but that on September 11 any legitimacy it had died forever.

Over the next 90 days, Amtrak will have to deploy already frazzled assets to create a proposal for Congress. Those of us who believe that Amtrak's survival is essential, while certainly in need of reforms and improvements as would be any organization that has been so systematically underfunded as has Amtrak over the past 30 years, should do all we can to offer any and all assistance to George Warrington, Mike Dukakis, and the rest of Amtrak's leadership, to get this job done, not least because it is the only national passenger rail system that has the legal right to operate its trains over freight railroads. If Amtrak disappears, that right disappears, and will never be regained.

Amtrak is far from perfect, but destroying it or splitting it up at this critical time in our nation's history - when unifying national institutions and systems such as Amtrak should be strengthened, not disassembled - would be almost literally insane. It should not happen, and those of us who care about it should fight to make sure it does not.

Make your holiday reservations early
Amtrak advises 'heavy travel' is expected this year, and advance ducats are required for most trains, especially in the Northeast Corridor from Virginia to Massachusetts

Amtrak's Northeast Corridor is gearing up for what the company anticipates will be record-setting Thanksgiving ridership, and will, for the first time, require reservations for most of its trains in order to better accommodate demand.

To increase its capacity, Amtrak will add more than 40 trains in the Northeast Corridor during Thanksgiving week. The rail service will also run an all-reserved schedule in the Northeast during the holiday week (Nov.21 through Nov.26) on trains between Washington and Boston and between Springfield and New Haven.

Exceptions to the all reserved service include the Clocker (New York to Philadelphia) and Keystone (Harrisburg, Philadelphia, New York) service.

As a security measure, all passengers must bring photo identification to the stations in order to pick up or purchase their tickets.

No tickets will be sold aboard the trains between Boston and Washington, Amtrak said.

Passengers flock to trains
Six weeks after terror attacks forced a shutdown of air travel, Amtrak's nationwide ridership remains stronger than usual, although the average number of daily passengers each day has declined from the highs reached soon after the attacks, a wire service reports.

Meanwhile, the Boston to New York air shuttles have begun flying again.

October ridership totals were expected to show 1.9 million riders nationwide, or about 3 percent higher than a year ago, Amtrak reported on November 6.

In September, ridership was down 6 percent from the previous year to 1.7 million, mainly because of low demand at the beginning of the month stemming from the economic downturn, Amtrak spokeswoman Karen Dunn said in Philadelphia, but the carrier experienced a huge bump in passenger volumes after the attacks when travelers opted for trains instead of planes to avoid delays or flying altogether.

Dunn said ridership soared 17 percent during the aviation shutdown on September 11 and 12, and that passenger volumes were about 10 percent higher in the final two weeks of September compared with the same period one year earlier.

She said ridership remained strongest in the Northeast Corridor, to and from Boston, New York and Washington. The prolonged closure of Washington's Ronald Reagan National Airport and the growing popularity of Amtrak's Acela Express high-speed train were cited as contributing factors. The airport has since reopened, but air carriers such as Continental, Delta and US Airways are offering scaled-back service.

Thirty-six Acela and Metroliner trains make trips between Washington and Boston each day and 16 Acelas travel daily between New York and Boston.

Congress is considering proposals that call for expanding high-speed rail, including the High Speed Rail Investment Act of 2001, which would allow Amtrak to sell $12 billion in bonds over the next 10 years.

Meanwhile, shuttle flights to New York and Washington are beginning to make a comeback. The Boston Globe reported November 5 the shuttles from Boston to New York and Washington, which had completely stopped following the terrorist attacks on the World trade Center and the Pentagon on September 11 began flying again, but on a limited scale, far from where they once were.

Business travelers are required to arrive two hours early, and security procedures create long lines. Reagan Airport didn't reopen for weeks, and when it did, schedules were slashed dramatically. A growing economic recession has impacted corporate travel budgets, but seven weeks after the attacks, the shuttle is back.

The US Airways shuttle from Boston's Logan Airport to Reagan National, which resumed Oct. 4 with just four flights a day, now runs 14, and many of them are oversold, requiring the airline to use larger jets, said Thomas Kinton, Logan's aviation director.

The Delta Shuttle is running 17 times each weekday from Logan to New York's LaGuardia Airport (a return to its regular schedule), a surprise to both airline and airport officials, and the U.S. Airways shuttle to New York increased service from 12 to 16 trips on November 8.

Flights to and from LaGuardia are still carrying about half as many passengers as they did before September 11, Kinton said, but even that has elated those who expected a much slower recovery for a transportation service based on speed, frequency, and ease.

BLE engineers begin merger voting
Members of the Brotherhood of Locomotive Engineers began voting November 7 on a merger with the United Transportation Union that would create the biggest U.S. rail union and increase bargaining leverage.

Ballots were sent to 40,000 locomotive engineers in the U.S. and Canada and must be returned by Dec. 10, union spokesman John Bentley said. Workers with regular assignments as well as those who are laid off or only work when needed are eligible to vote, he said. The UTU, with 60,000 train-crew members eligible to vote in the two countries, backed the combination by almost a 6-1 margin, Bloomberg News reported last week.

Both unions are in contract talks with Union Pacific Corp., CSX Corp., Burlington Northern Santa Fe Corp. and Norfolk Southern Corp., which carry 90 percent of U.S. rail freight. The UTU and those railroads reached a tentative contract last year that hasn't been ratified because of a dispute over language. The engineers and 10 other labor groups are in negotiations.

An earlier merger vote by the Cleveland-based engineers union was halted in September when U.S. District Judge Ann Aldrich impounded the ballots because of a dispute over public disclosure of daily vote tallies. A settlement of that dispute last month cleared the way for the voting that began today.

The two unions' leaders approved a merger in 1999 that never was completed because of a financial dispute. The engineers claimed accounting irregularities in the other union's insurance fund, which the UTU denied.

'Back on Track America' starts national tour
"Back on Track America," a national coalition of corporations, nonprofit organizations and small business experts, is launching a six-month nationwide rail tour to bring information, advice and free counseling directly to small businesses affected by current economic conditions and the continuing events since September 11. Organized by small business expert Jane Applegate, "Back on Track America" - that's its corporate name - is supported by an alliance of various companies and organizations. Major sponsors include Amtrak and America Online, Inc.

Beginning in mid-November, coalition members will journey across the country, hosting workshops and town meetings aimed at revitalizing the small business sector during these tough economic times. Traveling from city-to-city aboard Amtrak, hundreds of volunteers will join business experts, best-selling authors, and well-known entrepreneurs in a series of free public events in more than a dozen cities, including New York, Boston, Chicago, Dallas, Los Angeles and the San Francisco Bay Area.

The Back on Track America tour will begin with an AOL and Amtrak-sponsored launch event at Washington, DC's Union Station tomorrow (November 13). After the kickoff, volunteers, coalition members and small business owners will board a reserved coach and depart for New York City and the first event, which takes place on November 15.

George Warrington, Amtrak president and CEO, said, "It is vital for all areas of business to work together to build the strength of America's small business community because it is these small businesses that are the economic heart of so many American communities."

Throughout the tour, AOL will offer Back on Track America online programming features with in-depth coverage of each event in addition to advice, tools and resources directly from the tour in addition to onsite participation at the events. Content from the tour can be accessed, beginning tomorrow, through the AOL Online, AOL Web Properties, Netscape, and CompuServe, and throughout the Netscape Netbusiness service for small businesses.

"The Back on Track America effort seeks not only to bolster ailing small businesses but also the spirit of those who have worked so hard to make them succeed," said Ted Leonsis, AOL vice chairman. He added, "AOL is looking forward to working alongside other key contributors in the small business space to provide entrepreneurs with direct access to the experts, tools and resources to help their businesses recover, grow and excel."

Each event will seek to bring together small business owners and their employees with leading experts for group and individual counseling and moral support aimed at helping businesses get back on their feet and make the most of a difficult time in light of tough economic and emotional circumstances.

Expert advice, one-on-one counseling and numerous resources will be available at no cost to business owners attending the Back on Track America workshop sessions. Representatives from SCORE (Service Corps of Retired Executives), Fleet Bank, Merrill Lynch Business Financial Services, MasterCard Corporate Payment Solutions, ING U.S. Financial Services, Quick Books by Intuit and additional coalition members will be on hand to provide free counseling and support. Each session will conclude with a community town hall-style meeting where business owners and leaders will develop practical solutions to pressing business issues.

Other participating Back on Track America coalition members providing support for the tour include, ClubCorp, Wyndham Hotels & Resorts, Entrepreneur Media Inc., ThinkDirectMarketing, Inc., Art of Living Foundation and Pilot Pen Corp.

Small business expert Jane Applegate called on big and small business leaders to reach out in response to the numerous cancellations of business conferences and events during the past few months.

"Big and small business owners were already facing economic troubles prior to September 11," said Applegate, president of SBTV (Small Business TV) Corp., which is producing the events.

"We're bringing free expert advice and resources right to the doorstep of America's entrepreneurs. We're grateful for Amtrak and AOL's participation along side the rest of the coalition in supporting the Back on Track America vision," she said.

Back on Track America is a grassroots coalition of corporations, non-profit organizations and business experts "dedicated to helping support small businesses nationwide during these challenging times by bringing them information, advice and free counseling," a press release explained. Over the next six months, Back on Track America will bring top experts in finance, human resources, marketing, technology, and legal issues right to doorstep of small businesses across the country via a cross-country train tour.

Amtrak mailrooms reported clear of anthrax
Amtrak mail handling facilities are "clean," Amtrak reported last week, and free of any anthrax contamination.

E. R. Frazier, Sr., senior vice president for System Security and Safety said on November 2, "Testing shows no contamination in New York, Philadelphia, nor Washington, D.C."

He stated "As a precaution, environmental tests for evidence of anthrax bacteria were made at seven Amtrak mail-handling facilities during the week of October 29. These locations, in New York, Philadelphia and Washington, were chosen for testing because they may have handled mail from one of several U.S. Postal Service facilities that had tested positive for presence of the bacteria."

He said the specific locations tested included mail and express facilities at New York City's "Mail Dock," which is also called "the Diagonal," Philadelphia's mail dock at track 1, 30th Street Station, and Washington's Ivy City mail dock.

Also included were mailrooms at Penn Station, New York; 30th Street Station, Philadelphia; 60 Massachusetts Ave., and 10 G St, Washington.

Frazier said the same contractor who has tested U.S. Postal Service facilities did the tests.

Citizens' Forum for Transportation to meet
National Corridors Initiative's Northeastern unit, the Sierra Club of Connecticut, and the Transportation Choices Coalition of Connecticut will be co-sponsoring a "Citizens Forum for Transportation" on Saturday, December 15, from 9:30 a.m. to 3:00 p.m. at the New London Radisson Hotel, which is within walking distance of the New London Amtrak, Shore Line East and bus station as well as the Long Island Cross Sound Ferry Terminal.

The first in a series of forums planned, speakers will include former Rhode Island Governor's Counsel William G. Brody, legal architect of the revival of downtown Providence; Rhode Island Public Transportation Authority's General Manager Dr. Beverly Scott on RIPTA's successful trolley bus program; Frank Guzzo, head of marketing for Siemens Transportation Systems of North America, Sacramento, Calif.; the Robert Wood Johnson Foundation's transportation expert Marla Hollander; NCI President Jim RePass, and several other leading speakers, to discuss creating an integrated transit-based transportation system for New London and the southeastern Connecticut - southwestern Rhode Island region.

Sierra Club of Connecticut Transportation Chair Molly McKay is organizing the event. Registrations can be made by e-mailing her at with your name and credit card information.

Registration is $25 for Sierra Club, TCCC, and NCI members and $30 for non-members. A luncheon will be served. Space is limited.

Corridor lines...

FEC service is set back;
funding is the issue

A Florida state advisory council has shot down Amtrak's bid to start new passenger service on Florida East Coast territory.

The Florida DOT applied this year for $23 million from the Transportation Outreach Program, a pot of money the state legislature divides each year among dozens of projects, but they turned down the rail request. Funding for the Amtrak route didn't make the cut when the seven-member citizen panel voted October 26 to recommend a list of $91.8 million in projects.

The decision casts uncertainty on the plan because it lacks enough money for a start-up that could have begun in mid-2003, the Jacksonville Times-Union reported on November 5.

The route would run from Jacksonville to Miami, and would augment existing inland service. Stops along the way would include St. Augustine and Daytona Beach, two tourist destinations that lack any passenger train service. The route would add an option for travelers still skittish about boarding planes after the September 11 terrorist attacks that killed thousands in New York by crashing hijacked planes into both World Trade Center towers.

"We really haven't figured out what our next move will be as far as the project is concerned," said Nazih Haddad, manager of passenger rail development for the state DOT. "It's a good project."

He said the state will "go back to square one" and open discussions with local communities, Amtrak and Florida East Coast Ry., which owns the line where the Amtrak trains would run, about how to close the funding shortfall.

An estimated $64 million would be needed to make the FEC line ready for passenger trains. Most of the money would build passing sidings, but would also pay for new signals, grade crossing improvements, and stations at new locations - St. Augustine, Daytona Beach, Titusville, Cocoa-Port Canaveral, Melbourne, Vero Beach, Fort Pierce and Stuart.

The state has set aside $15.5 million and FEC has agreed to pay $3 million. The application for Amtrak "was one of the most discussed projects before the council," said Thomas Conrecode, chairman of the panel. He said an Amtrak official told the council the railroad was so bullish on the route that it expected the ticket revenue to lift Amtrak into the black after years of red ink. But Conrecode said the size of the request worked against it. It might have been better if it were done in phases with communities on the route helping foot the bill, he said.

The advisory council reviewed 206 applications totaling $727 million that were submitted by the state, cities, counties, ports and airports. It whittled that down to recommend 38 projects for $91.8 million.

 Coming to America
NJ's new addition, number 4600


Last week, we told you New Jersey Transit had purchased 29 new electric engines from Bombardier. No. 4600 is the first, and is on a boat coming to America from Germany. The "ALP 46" electric engines, based on German Railway's Class 101 engines, can travel at 100 mph.

Amtrak wins Caltrain contract
The Peninsula Corridor Joint Powers Board (JPB) unanimously voted to again award a five-year Caltrain commuter contract to Amtrak. Gil Mallery, Amtrak West president, and Michael Scanlon, JPB's executive director, signed the contract at the conclusion of the November 1 board meeting.

Amtrak is responsible for the entire operation, including providing train and engine crews, train operations, dispatching, maintenance of way and signals, maintenance of equipment for the 77-mile system from Gilroy to San Francisco, as well as providing capital project support.

Caltrain operates 80 weekday trains between San Jose and San Francisco. Eight trains extend to Gilroy, and the trains pick up passengers at 34 stations. Amtrak reports its average daily ridership is 33,323 passengers, a 5.8 percent increase over last year.

Amtrak has operated the Caltrain service since 1992. The new cost-plus, fixed fee contract is valued at $231.4 million, and the term is November 11, 2001 through June 30, 2006.

Amtrak is the contract operator for eight different commuter railroad services on the West and East coasts, carrying 58 million passengers annually. The commuter rail properties include Caltrain, Sound Transit in Seattle, Metrolink in Los Angeles and surrounding counties, Coaster in San Diego County, VRE in Virginia, MARC in Baltimore, MBTA in Boston, and New Haven-Shore Line East in Connecticut.

Prov and Worcester freight

NCI: Leo King

OPEN OR FORCED? - Would it be "open access" or "forced access" if another operator could run on anybody else's lines? Railroaders and shippers are debating the issue. Here, a 46-car Providence and Worcester Railroad freight drag slips by New London, Conn. over Amtrak rails on its way to its New England Central connection on November 6.
  Think Tank...

Rail regulation means poor service

By Wes Vernon
Washington Correspondent

Shippers pushing for tighter regulation of America's railroads may end up shooting themselves in the foot, according to a new study by the Washington-based Competitive Enterprise Institute.

Authored by Jerry Hausman, Ph.D, Director of MIT's Telecommunications Business and Economics Program, the study warns that pending legislation imposing "open access" and more flexible "bottleneck" rates "threaten a return to the discredited era before deregulation when wide-ranging regulatory controls deterred investment and caused much of the rail industry to collapse."

"Open access," which the industry calls "forced access," would compel a railroad to allow a competitor to use its track, in some cases even in the absence of a finding that the track-owning railroad is abusing its monopoly by charging unreasonable rates or offering sub-par service - or both.

"Bottleneck" legislation would prohibit a railroad from refusing to quote a rate to carry a captive shipper's goods from point A to point B other than the rate charged by the owning carrier. The owning carrier, under the proposed legislation, would have to quote a rate involving an interchange with a second or competing carrier at some point along the way. Currently, the owning railroad can confront the shipper with what amounts to a "take it or leave it" charge using only its tracks for the entire trip.

While the proposed changes would give shippers an advantage in bargaining rates downward for at least part of the trip, it could also lead to inefficiencies where goods take unnecessary detours by hundreds of miles to reach their destination. The fact that the owning railroad would have to pass its own equipment on to a competitor who could also at the same time undercut him on prices is also viewed by the industry as inherently unfair.

However, officials of shipper organizations, mainly the National Industrial Transportation League (NITL) and the Alliance for Rail Competition (ARC), argue that open access and bottleneck rate revisions would break what they say are unfair monopoly situations. Legislation to impose the new rules has been introduced in the Senate by Sen. John D. Rockefeller IV (D-W.Va.) and in the House by Rep. James Oberstar (D-Minn.).

In a statement submitted last year to the federal Surface Transportation Board (STB), the ARC, which represents rail shippers exclusively (as opposed to NITL, which includes shippers doing business with all modes) complained that the entire rail industry enjoys what ARC called a "duopoly among the four largest Class I carriers. This prevails," the shipper's group argued, "because two of them (CSX and NS) cover the eastern half of the U.S. and the other two (UP and BNSF) cover the western half."

ARC's Diane Duff has argued that competitive access would motivate carriers "to be responsive to customer needs. Further, she contends, competitive access would actually benefit the railroads because the "incumbents" or host railroads "could charge adequate user fees, would experience traffic growth, and would, in turn, realize newly found economies in traffic density."

The Rockefeller-Oberstar standard should also be applied to bottleneck situations, argued Duff, because of "the market power held by today's rail system." She urged the board to take a position on the bills or make its own recommendations in favor of competitive access or changes in bottleneck regulations.

Here's how Hausman thinks open access and bottleneck rate regulation would hurt railroads and shippers alike.

He said it would drive down railroad revenues towards variable costs. This outcome "fails to cover the very large fixed and common costs incurred by the railroads such as laying track and digging tunnels. No railroad will make these investments unless it can expect to recover its investment."

He also suggests open access, according to the CEI study, would discourage railroads from investing in their own infrastructure if they're forced to give their competitors a free ride.

At a Surface Transportation Board hearing earlier this year, Norfolk Southern CEO David Goode asked how a manufacturer would react if he were forced to turn over his factory to a competitor?

Open access and bottleneck regulations would require cost-based price caps that would ignore return on railroad investments created by "sunk costs" that a railroad makes which are not reversible.

Hausman says his study is based on "consumer welfare" or the "public interest" standard.

Other than those who are involved with or study the railroad industry, people generally ignore freight trains except when there's an accident at a railroad crossing. However, whenever there's a strike or threat of a strike, the politicians in Congress and the White House scurry to head it off at the pass, often much to the chagrin of rail labor.


Because if the railroads were shut down for ten days, there would be a political firestorm as voters would freeze in the dark or get along without many of the taken-for-granted essentials railroads bring to market. Hausman's point is that the financial health of the railroads is a matter of "public interest," not just a shareholder concern.

Railroads, as the CEI study points out, have been subjected to nonsensical constraints throughout their history.

Back in 1965, for example, Southern Railway introduced new more efficient grain cars and wanted to pass a significant savings on to customers by cutting their rates. But do you think the bureaucrats at the old Interstate Commerce Commission (ICC) would permit the railroad to do that? No way. "Illegal price discrimination," you see. It just wasn't "fair" for Southern to "build a better mousetrap" than its competitors. Everybody had to impose equally high rates. This is the "public interest?" Hausman effectively asks.

The 1980 Staggers Act was aimed at changing all that.

"It unleashed the industry from the regulatory restraints that had nearly destroyed it," Dr. Hausman writes. The result was streamlined procedures that allowed the carriers to shed underused tracks. The railroad industry was permitted to charge different rates to different shippers to reflect customer demands.

Despite productivity improvements and inflation-adjusted decreases in railroad rates, "the railroads have yet to achieve a return on capital equal to the cost of capital." What Staggers did was transform railroads from an industry on the brink of collapse into an industry where total collapse is no longer looming - yet the threat of decline remains. Any industry that can't recover its capital costs is heading for an unpleasant fork in the road where push comes to shove. The freight railroad competitors in the trucking industry have no such problems since their infrastructure, the massive Interstate Highway System, is publicly underwritten.

The Rockefeller bill says the Surface Transportation Board (STB) "shall" (rather than "may") require that another rail carrier "if practicable in the public interest" use terminal facilities. It would forbid the STB (which replaced the ICC) to require showing an anti-competitive conduct before invoking the open access provision.

Under Congressional "reform" legislation, "no capacity constraints would prevent a competitor from winning 100 percent of the traffic previously handled by the owner." Never mind that it's the host railroad that is stuck with the "sunk costs" of the infrastructure investment. Hausman asks, "How fair is that?"

Railroads have estimated that bottleneck regulations "would reduce their net revenues by $2.4 billion annually, cutting investment and curtailing service."

Hausman includes a section citing the "privatization" of the rails in Great Britain as "a regulatory disaster." Many people have seized on the U.K. experience as a shining example of the inherent failure of any rail privatization of any kind.

Au contraire, said Hausman, who charges the British government "vertically disintegrated British Rail." Railtrack, a regulated monopoly provider of trackage service was formed, as were a number of separate passenger and freight operator companies that would buy access to Railtrack.

Hausman confirms suspicions that many are learning the wrong lesson from the British debacle. Was Railtrack a good idea?

"The answer to date is no," he claims.

"The major problem," he said, "is that Railtrack provides no service to the final customer. Its financial performance is only indirectly affected by the quality of service through regulation. Thus, Railtrack has the economic incentive to minimize its costs subject to a minimum quality constraint. The downstream operators, of course, want the best quality performance at the lowest price, while the British regulators can only exhort Railtrack to improve the quality of its service."

Does that sound like a" train wreck" waiting to happen? As of this writing, the British government is refusing further subsidies to Railtrack. We anxiously await the outcome of this showdown.

Back here in the USA, one other issue should be spotlighted: "Revenue-adequacy."

In her May, 2000 statement, ARC's Diane Duff urged the STB to change the revenue-adequacy criterion for the railroads to simply "a measure of 'allowable return on equity,' similar to the public utility industry."

But Hausman notes, "Financial analysts on Wall Street uniformly agree that railroads are not recovering their cost of capital." In essence, he said, these are the folks who make decisions for top line investors who are not in the habit of chasing good money after bad. Railroads' performance, the CEI study notes, "is still far below that of the S&P 500 over the past six years." Further, "equity markets do not expect the railroads' financial performance to improve significantly in the near term."

Here then, is the latest chapter in the ongoing saga of whether U.S. railroading survives in a healthy state. Underlying all of this, as we have said before, is that while the government has shoveled more money into the infrastructure of its competitors, railroads have shrunk over recent decades, with many of them single-tracking long sections of their main lines. Once again, it draws attention to an inequity that cries out for a solution as we enter the 21st Century.

The Competitive Enterprise Institute argues that "reregulation," as the industry calls it, would only make a precarious situation worse.

BNSF plans bigger tunnel for double-stacks
Burlington Northern Santa Fe Corp. plans to make a big hole in the ground at Stampede Pass even bigger so double-stack container trains can roll through it - when traffic warrants.

The Seattle Post-Intelligencer reported October 31 the change would give Puget Sound regional ports a third route out of the region to the east, the rail company's chief executive said, but BNSF president and CEO Matt Rose said the tunnel project is on hold until container traffic on two other routes build to justify it - at Stevens Pass and the Columbia River Gorge. Just when that will be depends in large part on when the economy rebounds from its current slump.

Rose, who was in Everett, Wash., for employee meetings, said BNSF is, like other American companies, watching expenses closely and holding back on major capital projects until it gets a sense the economy is turning. Rose said BNSF was seeing a slowing of economic activity well before September 11 in such industrial sectors as Pacific Northwest aluminum smelters that curtailed operations because of high power costs.

"Sept. 11 just galvanized" that slowdown by extending it to the consumer sector, affecting such rail customers as Wal-Mart, Target and The Home Depot. Rose said he's expecting the first half of 2002 to be an extension of current conditions. "I don't see any impetus to move off this."

The second half of the year holds promise for a rebound, he said what with a combination of low interest rates and inflation and an economic stimulus bill now in Congress.

The Stampede Pass line and tunnel were closed in the early 1980s, but increased congestion on other routes prompted BNSF to spend $135 million on reopening it. The route is currently used for grain and mixed-freight trains.

"At some point we'll make the final decision to clear the tunnel" to allow double-stack containers to pass through the 113-year-old bore, he said.


November 10-14

National Industrial Transportation League

94th annual meeting
Charlotte, N.C.
Fax 703 524 5017

December 15

Citizens' Forum for Transportation

Sierra Club of Connecticut, Transportation Choices Coalition of Connecticut and NCI 9:30 a.m. to 3:00 p.m., New London, Conn. Radisson Hotel. Creating an integrated transit-based transportation system for New London, southeastern Connecticut and southwestern Rhode Island region.

Speakers to include former Rhode Island Governor's Counsel William G. Brody; Rhode Island Public Transportation Authority's GM Dr. Beverly Scott; Frank Guzzo, Siemens Transportation Systems of North America; transportation expert Marla Hollander; NCI President Jim RePass, and others.

For reservations, contact Sierra Club of Connecticut Transportation Chair Molly via e-mail at with your name and credit card information. Registration is $25 for Sierra Club, TCCC, and NCI members, $30 for non-members. Luncheon.

January 11-15 2002

National Railroad Contractors Assn.

Annual exhibit and technical meetings
Coral Gables, Fla.
Contact Ray Chambers, 800 883 1557

We get letters...

Dear Editor:

Your November 5 issue probably has a typo in the population statistics. The eleventh paragraph talks about population densities in Japan and New York. Your article says there are approximately 2,500 people per square mile in New York City. According to the Geospatial & Statistical Data Center (, there are 23,671 people per square mile in New York City based on its 1992 population... So, you probably just dropped a zero in typing "2,500." It should be "25,000." Minor detail you might want to correct. Take care.

Taylor Sharpe
Texas Rail Advocates

Budd Cars as the Susie-Q

NCI: Leo King collection

Are you old enough to remember Budd cars? These self-propelled cars were the rage on virtually all railroads in the 1950s, which tried to continue passenger service on light density lines. Railroads from the mighty New York Central to the New York, New Haven & Hartford to the "Susie-Q" - the New York, Susquehanna & Western and its Speedliners - found them useful. The Susie-Q operated them between New Jersey and New York City. Question: Where did the NYS&W terminate? This post card was published in the 1950s by Dexter Press of Pearl River, N.Y., and states on the back, "direct from Kodachrome and Ansco Color," the trains were "The finest suburban passenger service in the country offered by Susquehanna Speedliners. These modern stainless steel diesel electric trains provide air conditioned comfort from Paterson [N.J.] to New York every hour on the hour."
End Notes...

We try to be accurate in the stories we write, but even seasoned pros err occasionally. If you read something you know to be amiss, or if you have a question about a topic, we'd like to hear from you. Please e-mail the crew at Please include your name, and the community and state from which you write.

Destination: Freedom is partially funded by the Surdna Foundation, and other contributors.

Journalists and others who wish to receive high quality NCI-originated images that appear in Destination: Freedom may do so at a nominal fee of $10.00 per image. "True color" .jpg images average 1.7MB each, and are 300 dots-per-inch for print publishers.

In an effort to expand the on-line experience at the National Corridors Initiative web site, we have added a page featuring links to other rail travel sites. We hope to provide links to those cities or states that are working on rail transportation initiatives - state DOTs, legislators, governor's offices, and transportation professionals - as well as some links for travelers, enthusiasts, and hobbyists.

If you have a favorite rail link, please send the uniform resource locator address (URL) to the webmaster in care of this web site. An e-mail link appears at the bottom of the NCI web site pages to get in touch with D. M. Kirkpatrick, NCI's webmaster in Boston.

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