[Congressional Record Volume 148, Number 15 (Friday, February 15, 2002)]
[Senate]
[Pages S898-S900]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN:
  S. 1958. A bill to provide a restructured and rationalized rail 
passenger system that provides efficient service on viable routes; to 
eliminate budget deficits and management inefficiencies at Amtrak 
through the establishment of an Amtrak Control Board; to allow for the 
privatization of Amtrak; to increase the role of State and private 
entities in rail passenger service; and, to promote competition and 
improve rail passenger service opportunities; to the Committee on 
Commerce, Science, and Transportation.

 Mr. McCAIN. Mr. President, the time has come for us to have an 
open debate to consider the future of rail passenger service in this 
Nation. Given Amtrak's financial situation, which is extremely 
precarious, I strongly believe we must work together to pass 
legislation this year that will provide for a restructured, 
revitalized, and streamlined rail passenger network. This will be no 
easy task. It will take commitments by all parties, including the 
Administration, Congress, Amtrak, states and municipalities, and the 
private sector.
  No one can argue with the fact that Amtrak is in a financial crisis, 
with growing and substantial debt obligations already totaling over 
$3.3 billion. The Department of Transportation Inspector General, DOT-
IG, issued a report just two weeks ago which found that Amtrak 
experienced its largest losses in history in Fiscal Year 2002. 
Specifically, the DOT-IG found ``Amtrak lost $1.1 billion last year'' 
and ``Amtrak is no closer to operating self-sufficiency now than it was 
in 1997.''
  The Amtrak Reform and Accountability Act of 1997, provided Amtrak 
with the statutory reforms Amtrak said were needed to enable it to 
address its financial and operational problems existing at the time. In 
turn, the Act directed Amtrak to reach operational self-sufficiency 
five years after enactment, which is December 2, 2002. The Act also 
established the Amtrak Reform Council, ARC, to oversee Amtrak and 
notify the Congress if it found Amtrak would not be able to meet its 
statutory obligations.
  Despite repeated press statements and testimony by Amtrak officials 
over the past four years that Amtrak was well on its way to fulfilling 
its statutory directives, on November 9, 2001, the ARC issued a finding 
that Amtrak will not be operationally self-sufficient as required by 
law. The ARC found there are major inherent flaws and weaknesses in 
Amtrak's institutional design and that it must be restructured. The 
recent DOT-IG report confirmed the ARC's finding that Amtrak would not 
meet its statutory mandate.
  Finally, two weeks ago, even Amtrak officials admitted it cannot live 
up to the claims they had been making. At a recent press conference 
Amtrak's President stated, ``Everybody knows that you can't make a 
profit while running a network of unprofitable trains''. Unfortunately, 
Amtrak officials are

[[Page S899]]

seeking to place blame for its financial problems everywhere other than 
where it most justly belongs.
  As I mentioned, the 1997 Reform Act provided Amtrak with the tools it 
said it needed to reinvent itself. It was provided labor, liability, 
and procurement reforms. The Act even eliminated the mandated route 
structure established in the 1970 act that created Amtrak, and 
authorized Amtrak to run like a private business.
  Following the Senate's passage of the Act in 1997, Amtrak's President 
at the time, Tom Downs, sent a letter dated November 5, 1997 to Senator 
Hollings and myself praising the compromise legislation. He stated 
that, ``enactment of the Amtrak Reform and Revitalization Act of 1997 
would be the single most significant action the Congress can take to 
aid Amtrak in achieving operating self-sufficiency by 2002.'' Mr. Downs 
further commended ``The legislation reforms contained in the bill will 
allow Amtrak to operate in a more businesslike, cost effective manner, 
thus allowing greater productivity and increased savings.''
  Although Amtrak has received over $5 billion in Federal assistance 
since the reform bill's enactment, and received the authority to 
implement management and structural changes, little if anything has 
been accomplished since the Reform Act's enactment. Amtrak loses money 
on almost all of its 41 routes, but instead of cutting even one 
unprofitable route, Amtrak added routes. One such route initiated in 
Janesville, WI, resulted in a per passenger subsidy of over $1,000.00. 
Where is the rationale in such a business decision? Moreover, Amtrak's 
debt load has tripled since we approved the Reform Act, and now amounts 
to over $3.3 billion. Clearly, Amtrak officials did not take the 
statutory mandates seriously.
  Today, I am introducing legislation to fundamentally transform rail 
passenger transportation in America. The bill offers a new approach to 
reform Amtrak's 30-year subsidy program that has funded rail passenger 
service. It is designed to promote rail passenger service on viable 
routes or where States will provide support when it is considered a 
necessary form of public transportation. That does not equate to a 
route in every Congressional district and may not even equate to a 
route in every State, but nor, it should be noted, does the present 
``national system.''
  The legislation I am offering today is one approach for how our 
Nation's rail passenger system can be permitted to evolve. I recognize 
that it may not garner the support of every member, but I encourage my 
colleagues to approach the debate on the future of rail passenger 
service with an open mind. The American public demands more than the 
status quo. We should as well. The public's expectations must be 
balanced with the level of financial commitment that the Nation can 
afford. I ask that a summary of the Rail Passenger Improvement Act of 
2002 be printed in the Record immediately following my remarks.
  I don't believe that the measure I am introducing could be the only 
approach that Congress considers. There are many proposals and ideas 
that merit our consideration. For example, on February 7th, the Amtrak 
Reform Council submitted its report on a restructuring and 
rationalization plan. I hope the Congress will give careful 
consideration to the ARC's proposal. Other ideas to restructure 
Amtrak's route system include the creation of a Route Closure 
Commission modeled after the Department of Defense's Base Realignment 
and Closure Commission. This is an idea that has been raised in recent 
years and should not be disregarded. Above all, we must get to work now 
and determine how best to address Amtrak's financial and operational 
crisis.
  While it might seem easier to simply throw more money at Amtrak 
instead of making tough policy decisions, we would be failing in our 
Congressional responsibilities if we were to do this. To put rail 
passenger service back on track in this country, we need to address a 
number of tough questions. For example, what is the future for 
intercity rail passenger transportation? Where does it attract 
passengers and where doesn't it? Does rail passenger service have to 
equate to ``Amtrak'' or can we accept the fact that after 30 years, it 
is time to find a new approach? Where might high-speed rail service 
actually attract enough passengers to be economically viable? How does 
it fit into our national transportation system? What financial 
obligation will we be imposing on American taxpayers to pay for rail 
passenger service and what can they realistically expect for their 
payments?
  I have continually doubted Amtrak could live up to the promises it 
has made over the years. I reached this conclusion after years of 
listening to promises from Amtrak officials about what it could deliver 
if Congress gave it more money. Those promises have been broken time 
after time. There has been an endless flow of subsidy requests from 
Amtrak since its creation 30 years ago, even though it was to be free 
of all Federal assistance two years after it was established. Instead, 
Amtrak has received over $25 billion in direct subsidies.
  The ARC, the DOT-IG, the General Accounting Office (GAO), and others 
warned us that Amtrak was not going to live up to the rosy scenarios it 
had been painting over the past several years. Ironically, while we are 
criticizing private auditors for failing to ensure disclosure of the 
true financial picture of Enron, Congress has had clear indication from 
public auditors that Amtrak was not financially solvent but chose to 
ignore those warnings. Shouldn't we halt the double standard with 
respect to our reaction to public and private audit findings?
  We all need to face the fact that Amtrak is in dire financial straits 
and action must be taken once and for all to address the underlying 
problems with Amtrak. The findings presented by the ARC and the DOT-IG 
make it clear that Amtrak's Board and management have been unable to 
execute the changes that need to be taken to turn Amtrak's finances 
around. As the DOT-IG recently stated: ``Amtrak is no closer to 
operating self-sufficiency now than it was in 1997.''
  Amtrak's management has recently started to question publicly the 
statutory requirement for Amtrak to achieve operational self-
sufficiency. At a press conference held last week when Amtrak admitted 
it was not living up to its repeated claims of success, Amtrak's 
President referred to the self-sufficiency deadline as an 
``impractical, inappropriate and destructive concept to move forward 
with.'' I find this statement shockingly untimely.
  In the four years that have passed since the Reform Act became law, 
Amtrak officials have repeatedly said they were on the ``glide-path to 
operational self-sufficiency.'' Not once in testimony before Congress 
did Amtrak officials raise concerns now held by Amtrak's President that 
the once highly regarded Reform Act was no more than an ``impractical, 
inappropriate and destructive concept'' that would hamper Amtrak's 
ability to produce results and turn Amtrak around. So I have to ask, 
why now? Were these same views held by Amtrak officials during the 
reform bill's enactment? That would not appear to be the case given the 
November 1997 letter I quoted from earlier. Why haven't we heard Mr. 
Warrington's critical views until now?
  Again, the Reform Act provided the statutory reforms that Amtrak 
requested so it could operate more like a private business. Why has its 
President suddenly decided to call its mandates into question? Maybe 
it's because management has made no progress towards meeting the 
requirements mandated by the law, requirements that Amtrak agreed to in 
exchange for the reforms it requested and was granted? Requirements, 
that until now, Amtrak said it would meet.
  Since we now know Amtrak officials cannot make the tough decisions 
necessary to improve Amtrak's operating and financial condition, the 
legislation I am proposing creates an Amtrak Control Board, modeled 
after the D.C. Control Board that was so successful in turning around 
the financial crisis of the Government of the District of Columbia. The 
Amtrak Control Board would be directed to help address Amtrak's 
financial crisis and facilitate Amtrak's privatization.
  Moreover, I believe we need to allow the States to take a greater 
role in determining where rail passenger service should be provided. 
Perhaps it is only in the Northeast, or maybe just on State-supported 
corridors. To help States retain passenger rail service

[[Page S900]]

where they believe it is needed, I also think that we should allow the 
States to spend their Federal transportation dollars on rail passenger 
service.
  In some areas of the country, such as the Northeast and on the West 
Coast where service is supported by State contributions, rail passenger 
service seems to be working. We cannot ignore the fact, however, that 
all but two of Amtrak's intercity lines operate at a substantial 
financial loss. And while Amtrak has experienced an increase in its 
ridership, the actual ridership numbers are dismal compared to other 
passenger modes, including intercity bus transportation and air travel. 
After 30 years and over $25 billion of taxpayers' investment, Amtrak is 
used by less than 1 percent of the traveling public.
  Our urban areas are facing ever-increasing transportation congestion. 
Americans are spending more and more time sitting in traffic as they 
try to get to and from work. And each and every one of us has 
experienced first hand the frustrations of flight delays due to new 
security measures and capacity limitations in our aviation system. It 
is our responsibility to work to remedy these problems by developing 
and enacting sound federal transportation policies.
  Amtrak is a failed experiment. While the legislation I am offering 
may not be the approach the majority of the members will support, I 
assure my colleagues that I will do everything in my power to halt the 
historical authorization pattern that has taken place for 30 years. I 
will strongly oppose any measure simply to reauthorize Amtrak in 
exchange for Amtrak promises. If we do that again, in a few years 
Amtrak will be back again explaining why it was unable to fulfill its 
promises and Amtrak will be seeking yet even more money and making even 
more promises. This same pattern has continued for 30 years.

  The Rail Passenger Service Act of 1970, which created the National 
Rail Passenger Corporation, also known as Amtrak, to free the freight 
industry from the burden of running passenger trains, was enacted with 
the intent to provide Amtrak Federal support for only two years. 
Clearly, that did not occur. After receiving appropriations for $40 
million in direct grants, $100 million in loan guarantees, in addition 
to capital acquired from participating railroads, Amtrak was unable to 
fulfill the intent of the authorizing legislation. Two years later, 
Amtrak was back before Congress asking for more money in exchange for 
more promises.
  By 1978, after four trips to Congress to ask for more Federal money, 
Amtrak had received $2.5 billion in federal funding. But that level of 
funding was still not enough. When Amtrak came back seeking more 
Federal assistance, Congress responded like it always had. It passed 
legislation authorizing millions for operating, capital and debt 
reduction expenses. In exchange for this funding, Amtrak agreed to be 
operated and managed as a for-profit corporation and to turn around its 
money losing ways. Again, Amtrak failed to fulfill its promises.
  This pattern has continued during the past 30 years. Amtrak has come 
to Congress year after year seeking a handout. Each time, Amtrak has 
made promises in return for more federal assistance. Each time, Amtrak 
has failed to achieve what was expected. Enough is enough.
  It is interesting to note that before the 1978 law was enacted, the 
GAO warned that Amtrak would have to make serious cuts in its route 
structure if it was to avoid continual dependence on Federal subsidies. 
And here we are nearly 25 years later and the GAO and the DOT-IG are 
repeating these same realities. Is the Congress finally going to give 
credence to these auditors' findings?
  If rail passenger service is ever going to be successful, we must 
take action to provide for a restructured and rationalized system. We 
need to hear from the Administration, the States, and the American 
public in order to develop sound Federal policy to permit safe, 
efficient, and cost-effective rail passenger service in areas that can 
attract riders. Now is the time for all interested parties to come 
together and chart a new course for intercity rail passenger 
transportation.
  The summary follows.

The Rail Passenger Service Improvement Act--Summary of Major Provisions

       Purpose: to enable the emergence of a new rail passenger 
     system that would be overseen by the Department of 
     Transportation, but operated by competing franchises, 
     including Amtrak; to require Amtrak's restructuring, 
     financial stabilization and privatization through the 
     creation of an Amtrak Control Board; and to require States to 
     play a bigger role with regard to routing decisions and 
     financial responsibilities. Specifically the legislation:
       Directs the Secretary of Transportation to establish a Rail 
     Passenger Development and Franchising Office within the 
     Federal Railroad Administration (FRA). Beginning October 1, 
     2003, the Secretary would be authorized to contract out rail 
     passenger service to franchises that meet specified safety 
     and liability requirements, provided such operations would 
     not result in a significant downgrade in rail freight 
     service. Franchises would be required to demonstrate efforts 
     to reach mutual agreements with freight carriers to obtain 
     trackage access prior to being awarded a contract.
       Directs Amtrak to restructure into three separate 
     subsidiaries to be managed as for-profit businesses with 
     transparent accounting systems: Amtrak Operations, Amtrak 
     Maintenance, and Intercity Rail Reservations. Each subsidiary 
     would be privatized no later than four years after enactment.
       Establishes an Amtrak Control Board, modeled after the DC 
     Control Board, to help address Amtrak's financial crisis. The 
     Amtrak Control Board would direct Amtrak's operational 
     restructuring, approve budgets and financial plans, and 
     oversee privatization.
       Requires States to play a greater role, both in route 
     decisions and financial contributions, to allow for a more 
     utilized route system to evolve, with service provided on 
     viable routes or where States contribute to cover operating 
     losses. Beginning October 1, 2003, Amtrak would halt service 
     over any route where revenues do not cover expenses unless 
     states contribute financial support to cover losses.
       Gives States flexibility to use highway trust fund dollars 
     on rail passenger service at each state's discretion.
       Authorizes funding to address rail passenger security and 
     tunnel life-safety needs.
       Authorizes funding for Amtrak operating and Railroad 
     Retirement obligations on a reduced sliding scale. Authorizes 
     funding for the Secretary of Transportation to address rail 
     passenger capital costs and the backlog of infrastructure 
     investment identified by the DOT-Inspector General to bring 
     the Northeast Corridor up to a ``state of good repair.'' 
     Other users and states along the corridor would also 
     contribute to capital costs, much like States must contribute 
     toward highway and airport infrastructure. In exchange for 
     eliminating financial obligations, Amtrak must give up rights 
     and ownership to the Northeast Corridor for which the 
     Secretary already holds a 999-year mortgage.
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