ARC Says Amtrak Suffers "Fundamental Institutional Flaws"

WASHINGTON, D.C. -- Amtrak, which has lost money every year since its creation in 1971, suffers from "fundamental institutional flaws" and should no longer be expected to balance business and governmental responsibilities, a reform panel says in a new report.

The Amtrak Reform Council proposes dividing Amtrak's responsibilities into a profit focused company responsible for train operations, a separate government-owned corporation to oversee assets like tracks and stations, and a new government oversight agency.

"Today, public policy is made in many instances by Amtrak, rather than by an entity whose job it is to protect the public interest," the council wrote in a report released Tuesday.

Congress formed the council in 1997 as part of the Amtrak Reform and Accountability Act, which provided billions of dollars in support for Amtrak but gave it five years to prove it can run without annual operating subsidies.

The 11-member council recommends improvements to Amtrak's operations and monitors its progress toward self-sufficiency.

Amtrak has consumed more than $23 billion in subsidies since 1971. Amtrak officials say the railway is set to wean itself from operating subsidies by 2003, though they maintain the government will have to continue providing capital funds for projects like construction of high-speed rail corridors.

Government watchdogs have expressed doubts about whether Amtrak will meet the 2003 deadline. The council's report raises similar questions.

Amtrak currently operates the nation's passenger rail system, owns tracks in the Northeast Corridor from Washington to Boston, pursues side businesses including a package-delivery service and lobbies Congress for federal support of the rail system.

To the reform council, Amtrak is wearing too many hats.

In its report, the council proposes five options but immediately rules out one -- full privatization of the rail system.

In three other options, a newly created government corporation would own and operate Amtrak's physical assets, including the tracks between Boston and Washington. In the fourth option, the states would assume ownership of the physical assets.

The council says its goal is to "stimulate debate." It already has. On Friday, four days before the report was publicly released, Amtrak distributed a letter by the railway's president criticizing the idea of creating a new government entity.

"The ARC proposal clearly moves away from the statutory mandate to make Amtrak more businesslike and less reliant on the government," Amtrak President George Warrington wrote to Gilbert Carmichael, chairman of the Amtrak Reform Council.

The council says it intends not to create a new level of government, but to consolidate existing governmental functions now distributed among Amtrak, the Federal Railroad Administration, the Department of Transportation's inspector general and the General Accounting Office.

Warrington did praise the report for urging a stable source of federal funds for capital projects.

Charles Moneypenny, who represents organized labor on the council, dissented from the report.

"While I agree that Amtrak, like any U.S. institution, faces certain political pressures, I do not understand how simply separating Amtrak's functions and creating separate units would address this issue," he wrote.

Nine members of the council supported the report. Transportation Secretary Norman Y. Mineta, who represents the Bush administration, abstained.

The council will hold hearings on the report to receive comments from government officials, freight railroads and the public.