By Ron Thaniel
August 4, 2003

As reauthorization of TEA-21 slows to a crawl and a week before Congress heads home for the August recess, the Bush Administration sent to Congress July 28 its reform plan for passenger rail.

Known as The Passenger Rail Investment Reform Act of 2003, the plan essentially calls for states to assume responsibility of providing intercity passenger rail service.

"Our nation's current system of intercity passenger rail has failed to deliver on its promise for American travelers," said U.S. Transportation Secretary Norman Y. Mineta. "I believe that our states and localities, in partnership with the federal government, are best suited to decide how and when to operate passenger rail service."

Differing from the Administration's proposal, Texas Senator Kay Bailey Hutchinson, Chairwoman of the Surface Transportation Subcommittee, joined with Senators Trent Lott (MS), Conrad Burns (MT), and Olympia J. Snowe (ME), introduced the American Rail Equity Act calling for significant investment in the national passenger rail system. "If you turn Amtrak over to the states, it's gone," Hutchison said through a spokesman. "Train tracks, just like our highways and airways, do not stop at the state line."

"I am extremely disappointed with what the Administration came up with," Lott said. Lott further noted, "what they have proposed on Amtrak is a total non'starter."

Amtrak's President David Gunn said, "Amtrak wasn-t asked to work on developing the [Bush Administration] plan and hasn-t been consulted or briefed on it. Consequently, we-ll withhold commenting until such time as we are briefed."

He added, "That said, we expect the Administration to continue a responsible course of action supporting Amtrak's present operations, capital projects and improved efficiency and service. At the same time, Amtrak will continue its critical mission and responsibility to serve our passengers and run the railroad."

Highlighting the gravity of continuing to spend money on capital projects while the long-term policy debate evolves, Gunn noted "two weeks ago, aging catenary wires fell apart in New York. This incident resulted in a 24-hour service disruption between New York and Boston."

North Little Rock Mayor Patrick Henry Hays, Chair of the Amtrak Mayors Advisory Council and Meridian Mayor John Robert Smith, Vice Chair for Railroads and Passenger Rail of the Transportation and Communications Committee and past Chairman of the Amtrak Board, joined by Brian Kristjansson representing Seattle Mayor Greg Nickels, Chair of the Conference Transportation and Communications Committee, received a briefing from the U.S. Department of Transportation on the President's proposal.

Thanking U.S. Department of Transportation Assistant Secretary Emil Frankel and Federal Railroad Administrator Allan Rutter for their outreach effort to the Conference, Mayors Hays and Smith raised significant issues including the questionable ability and interest of states raising resources to operate intercity passenger rail service as well as the elimination of vital national service not located on short haul intercity corridors.

Summary of Administration's Passenger Rail Investment Reform Act of 2003

The Passenger Rail Investment Act of 2003 replaces federal subsidies to Amtrak with a system of 50/50 matching capital grants and operating assistance grants to states which would be phase down to zero. Under the plan states would assume the responsibility of operating the railroad including the transfer of current and projected future operating deficits.

The transition would be accomplished over six years, during which Amtrak would be split into three entities:

• A private passenger rail company that would operate trains under contract to states and multi'state compacts;
• A private rail infrastructure company that would maintain and operate the infrastructure on the Northeast Corridor under contract to a multi'state Northeast Corridor Compact. Title to Amtrak's current tracks, stations and other infrastructure on the Northeast Corridor will be held by the federal government and leased to the Northeast Corridor Compact; and
• The National Passenger Rail Corporation, which would continue as a government corporation that would retain Amtrak's current right to use the tracks of the freight railroads, and the Amtrak corporation name. Both the track-access rights and the Amtrak brand would be provided under contract to states and multi'state compacts for qualifying passenger rail service they sponsor.

Critics of the Administration's proposal of splitting Amtrak into three separate companies noted that each company would require the creation of a separate overhead functions, including president, human resources, labor relations, finance - including CFO, controller, treasury and payroll, as well as legal, diversity and procurement.

Eventually, all rail service could be privatized. After the transition period, states could choose to contract out rail service in their area to a private company or public agency.

Summary of American Rail Equity Act

The American Rail Equity Act provides a plan for Amtrak over the next six years, including an allocation of $12 billion in operating expenses.

The plan also creates an independent non-profit organization, the Rail Infrastructure Finance Corporation (RIFCO), to underwrite $48 billion in government-backed tax credit bonds for capital expenses, which will be used for repairs and improvements to the National System and the Northeast Corridor, divided at a ratio of 4-1.

Senator Hutchison's proposal also calls for the separation of the North East Corridor from Amtrak and turns it over to the Department of Transportation. The Department of Transportation is required to seek proposals within one year of enactment on how to best handle the Northeast Corridor.

The proposal provides a framework for dispute settlement between freights and Amtrak with the condition that freights accepting federal funds for improvements must allow Amtrak to meet its schedule. If Amtrak is unable to meet an 80% on-time arrival rate on a route, that route will be opened for bidding by other operators.

Summary of American Railroad Revitalization Investment Enhancement for the 21st Century

We are expecting a third Amtrak reauthorization proposal known as ARRIVE-21 early September from South Carolina Senator Ernest F. Hollings, New Jersey Senator Frank Lautenberg, and Delaware Senator Thomas R. Carper that will address on a comprehensive level intercity and national passenger rail as well as freight rail investment. The Conference will provide a legislative analysis when this measure is introduced.

Outlook

The outlook for the proposals is unclear with Congress heading for the August recess. As a result, the Administration and Congressional members will only have September to push their bills through Congress which at that time will be focused on completing the annual appropriations bills, including Amtrak's $1.8 billion FY04 requested supported by the Conference of Mayors.

Amtrak, formed in 1971 from defunct private passenger railroads, serves 500 communities in 46 states throughout a 22,000-mile route system.