[Congressional Record Volume 144, Number 85 (Thursday, June 25, 1998)]
[Senate]
[Pages S7220-S7222]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          AMTRAK REFORM BOARD

  Mr. McCAIN. Mr. President, the Senate has confirmed three members to 
the new Amtrak Reform Board, as provided for under the Amtrak Reform 
and Accountability Act, P.L. 105-134. That law required a new 7-member 
Reform Board to replace Amtrak's current Board of Directors. By today's 
confirmation of Governor Tommy Thompson, Governor Michael Dukaskis, and 
Mayor John Robert Smith, along with the automatic confirmation of 
Secretary Rodney Slater, a quorum of new members will be constituted 
and in turn, the new Board will immediately assume the old Board's 
responsibilities. This action ensures Amtrak's authorization remains in 
tact.
  I think it is important to discuss the background leading up to 
today's confirmations. As my colleagues know, the Amtrak reform 
legislation enacted last December required Amtrak to operate more like 
a real business. After 27 years and more than $22 billion in taxpayers 
subsidies, that new law finally



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sends a real signal that this is Amtrak's ``last chance'' to turn 
itself into a viable operation. The status quo has been, and remains, 
unacceptable. If Amtrak cannot find a way to free itself from its 
subsidy ``fix,'' then the Amtrak we know today will cease to exist.
  Amtrak has been directed to institute substantive changes to enable 
it to operate free of subsidies by 2002. As such, Congress and the 
Administration agreed that new leadership at Amtrak was imperative, 
which is why we provided for a new Reform Board to replace the current 
Amtrak Board of Directors. It is absolutely necessary to instill a `new 
culture' among Amtrak employees and management if Amtrak is ever to 
become a legitimate business. And that new culture necessitates changes 
that start from the top.
  Let me remind my colleagues that during the last days of negotiations 
on the reform legislation, three members of the Amtrak Board of 
Directors, along with Secretary Slater who is also a Board member, 
negotiated a new labor agreement to give union employees a raise. In 
the real world it is not very typical for Board members to negotiate 
labor deals. Yet these three--and at times four--did. They agreed to 
raise salaries, which is projected to cost Amtrak $35 million in FY 
1998 alone, as it is assumed its terms will be extended to all its 
other unions. It is further projected these costs will grow to $60 
million in future year obligations.
  One must ask, how could these Board members have been upholding their 
fiduciary responsibilities by agreeing to increase Amtrak's obligations 
at the very time Amtrak is looming on the brink of bankruptcy? Amtrak's 
projected net loss for FY 1998 is greater than the previous year's due 
in part to the current Board's own actions. Its losses are growing, Mr. 
President, even though under the law Amtrak has less than two years to 
demonstrate it can achieve its financial goals, or risk dissolution.
  Mr. President, the Democratic Presidentially-appointed Board Members 
who negotiated the union salary hike assured us at the time that their 
high-priced labor agreement would require no action by Congress--nor 
more importantly, would the labor agreement place any additional 
obligations on the American taxpayers. That was their assurance, even 
though one of the agreement's contingencies was that the Administration 
had to request $1.4 billion in additional funding above Amtrak's 
glidepath projections. So, what has the Administration done?
  The Administration didn't request the additional funding, yet the 
Board did nothing to nullify the contract. Instead, the Administration 
and Amtrak are now asking Congress to agree to shuffle Amtrak's 
operating and capital costs. Specifically, they want us to agree to 
shift labor costs into Amtrak's ``capital'' account so that Amtrak can 
pay for the Board's labor agreement with funds currently directed for 
capital investment.
  When are we going to say enough is enough? Just how long are the 
American taxpayers going to be forced to cover the expenses stemming 
from Amtrak's poor management decisions? It surely won't be hard for 
Amtrak to tell Congress it met requirements to be free of operating 
subsidy if the current group at Amtrak can pull this one off. All 
operating costs could essentially vanish with the stroke of a pen and 
become capital costs.
  And, if Amtrak and the Administration are successful--and I 
acknowledge Amtrak's political clout in the Congress--how will Amtrak 
make up for its loss in capital? If Amtrak is permitted to shift 
capital funds to cover wage increases and other items traditionally 
considered operating costs, would someone please tell me how Amtrak 
will make up for the corresponding loss in funding for its capital 
improvements. I think I know how. Amtrak will just come a calling to 
Congress to bail it out, just like always.

  Mr. President, time and again we have been told Amtrak faces critical 
infrastructure investment needs which must be met if Amtrak is to have 
any chance of becoming a viable operation. Time and again we have been 
told Amtrak needs capital resources to invest in its future. But as I 
see it, the change they propose has the potential for completely 
jeopardizing Amtrak's abilities to meet its capital needs which it has 
sought so long to accomplish.
  Mr. President, it is unconscionable that while Congress was under 
intense negotiations to reach agreement on reform legislation, which 
was required to release the $2.3 billion so-called ``tax credit'' to 
Amtrak, the Amtrak Board was doing anything it could to appease the 
labor unions. Of course, it is no secret who the democratic party is 
beholden to. While Amtrak's financial situation is in dire straights--
looming on the brink of bankruptcy--its democratic Board members agreed 
to raise union salaries, increasing Amtrak's opperating--and I stress 
operating--costs by millions of dollars annually. By adopting these 
wage increases, the current Board failed to fulfill its fiduciary 
responsibilities not only to Amtrak, but to the American taxpayer as 
well. Is it any wonder the Congress decided that the Board has to go?
  The Congress should be concerned about this situation because two of 
the six Presidential nominees for the new board are holdovers from the 
current Board. Another holdover is the Secretary of the Department of 
Transportation. That makes THREE holdovers according to my count. And 
these are three of the four that negotiated this sweetheart deal for 
labor. Surely we did not call for a new Board only to maintain the 
current members? Doesn't the Administration have any respect for 
Congressional intent?
  The Administration can not argue that it was unaware of Congressional 
intent because Administration representatives participated in the 
reform legislation negotiations. Let me remind the Administration about 
the provisions we discuss today. First, a new 7-member reform Board is 
to be established. Second, specific eligibility criteria was 
incorporated in the new law in an attempt to ensure that the new Board 
members would be qualified to perform their duties. Third, the law 
requires the new Board to be comprised of individuals with 
transportation, corporate, or financial expertise.
  To further enhance Amtrak's operations, several provisions were 
included to prompt timely action by the Administration and Congress on 
filling the new Board. Unfortunately, the spirit of these provisions 
was met with little respect by the Administration.
  The law required the new Board to be in place by March 31, 1998--more 
than 2 months ago. Yet, the Senate did not receive even a single 
nomination from the President until the eve of the Memorial Day Recess. 
Due to concerns that the Administration may drag its feet 
indefinitely--which only would hurt Amtrak--Amtrak's authorization was 
linked to the nomination and confirmation of a new Board. Specifically, 
the law provides that if the new Reform Board has not assumed the 
responsibilities of the Amtrak Board of Directors before July 1st, 
Amtrak's authorization lapses. The law also automatically discharged 
pending Board nomination from the Senate Commerce Committee if the 
Committee had failed to act by June 1st.
  As I said, the new Reform Board was to be in place more than two 
months ago. Presidential nominations require Senate confirmation, with 
hearings and review by the appropriate Senate Committees accompanying 
nominations. Yet due to the lack of timely action by the 
Administration, the Commerce Committee had no opportunity to carry out 
its duties prior to the statutory automatic June 1st discharge. I must 
ask, was the Administration's timing a direct attempt to circumvent the 
Commerce Committee's authority in this regard?
  Mr. President, my position regarding the new Board was made clear 
from day one. I repeatedly voiced my concerns to the Administration 
each time I heard rumors of its plans to reappoint current members. I 
was very clear that the Commerce Committee would not report favorably 
any Board hold-overs and I remained firm on that position. I truly 
believed even the Administration would acknowledge we didn't create a 
new Board only to reappoint the same members.
  So what happened? The Administration sent up the nominations as 
Congress headed into the Memorial Day recess. Two of the six 
nominations needing confirmation were Board holdovers--that is, one-
third. The Administration must have known that the Commerce Committee 
would be unable to fulfill its hearings and review prior

[[Page S7222]]

to the statutory discharge date, given the Administration's stealth 
nomination submission.
  Mr. President, if a new board is not constituted before July 1st, 
Amtrak's authorization will lapse. That is why the Majority Leader, 
myself and others are seeking to move forward with some of the 
nominations in order to meet that deadline. But I stand firm that we 
should not take these or any other confirmations lightly.
  We should demand the intent of the law be fulfilled. We should demand 
that the new Board not be riddled with potential conflicts of interest 
by members representing competing transportation businesses and serving 
on state transit agencies. We should demand some legitimacy to this 
operation if we really expect Amtrak is to ever become a viable 
transportation provider.

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