ARC Tells Congress that Amtrak Should Be Split

WASHINGTON -- A panel created by Congress in 1997 to advise on the future of Amtrak said today that the railroad should be broken up and that the job of running trains should be opened to competition, reports the New York Times.

But most of its members quickly added that their report was unlikely to be more than a starting point for a national debate, involving federal, state and local governments, on what to do about passenger rail.

"The stars are lining up" for such a debate, said Gilbert E. Carmichael, the chairman of the commission. He pointed out that Amtrak was due for reauthorization by Congress this year and that its finances had recently taken a turn for the worse. George Warrington, the president of Amtrak, said on Feb. 1 that it would cancel dozens of long-distance trains if it did not receive $2.1 billion in operating and capital money, despite a 1997 law that it meet its operating costs from internal revenues by December 2002.

The inspector general of the Transportation Department said last week that the railroad was no closer to self-sufficiency now than it was in 1997.

While members of the advisory group, the Amtrak Reform Council, derided the railroad for its losses, most agreed that to maintain an intercity rail system, huge public subsidies would be needed for the next 20 years. But Amtrak has not spent its money well, and new money should go into a better-run enterprise, they said.

"All we're doing with these subsidies is subsidizing excessive costs," said Wendell Cox, a consultant who was appointed to the council by Newt Gingrich when Mr. Gingrich was House speaker.

Another member, S. Lee Kling, a finance and banking expert appointed by Richard A. Gephardt, the Democratic leader of the House, said: "Funding should not be provided without the rail system operating like a business, having the controls, the accountability, the planning and the marketing. It has to operate like a business or it shouldn't be funded."

Amtrak said in a statement that the council's report "sidesteps the underlying policy and funding issues that must be determined."

"First, a federal commitment to define, develop and invest in the passenger rail system must be made," the statement said.

The 11-member council called for "relieving" Amtrak of the burden of owning and maintaining the Northeast Corridor, the Boston-to-Washington route that is one of the few stretches of track that it owns, so that it could concentrate on running trains. Mr. Carmichael said that would make Amtrak more like an airline, which did not have to build the airports it used. But critics said the report did not make clear how a new public entity created to handle infrastructure would pay for improvements.

The council sought to break up Amtrak's monopoly on running passenger trains, suggesting that other potential operators be brought in to bid on providing service. A slimmed- down central authority would pick contractors and maintain a unified reservations system.

The report was approved with nine votes; Norman Y. Mineta, the Secretary of Transportation, who is a member of the commission, abstained, and a labor representative, Charles Moneypenny, issued a sharp dissent.

Two Congressional hearings have been scheduled on Amtrak's problems. The president's budget, released Monday, lists $521 million for Amtrak, the amount it received in operating aid in the current fiscal year, but the deputy transportation secretary described the number as "a place-holder," until a policy could be set. Amtrak wants $2.1 billion.

Members of the council said that Amtrak's threat, to simply shut down long-distance trains, did not seem to be a likely outcome.

"We are aware of the groundswell of public support for better trains in this country," said James E. Coston, a Chicago lawyer who managed a program of chartering weekend excursion trains from Amtrak. He was appointed to the council by Senator Tom Daschle, now the majority leader. But members of Congress are not sure how Amtrak should be financed now that the budget has returned to deficits, Mr. Coston said.

The National Association of Rail Passengers, a nonprofit group based here, said that particularly since Sept. 11, trains had proved their utility. While Amtrak said it was suffering the same recession-related declines as other travel-related industries, it showed small gains in the number of miles it carried fare-paying passengers in September, November and December, and a small drop in October, compared with steep declines for the airlines.

The rail passengers' group said that cutting long-distance trains and maintaining only the profitable short-haul trains was not a good strategy because some of the money- losing trains delivered passengers to the ones that make a profit. Concentrating all of Amtrak's overhead on a few profitable routes might make them unprofitable, the group said.