This Week in Amtrak

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This Week at Amtrak; November 17, 2008

A weekly digest of events, opinions, and forecasts from

United Rail Passenger Alliance, Inc.

America’s foremost passenger rail policy institute

1526 University Boulevard, West, PMB 203 • Jacksonville, Florida 32217-2006 USA

Telephone 904-636-7739, Electronic Mail info@unitedrail.org • http://www.unitedrail.org

Volume 5, Number 29

Founded over three decades ago in 1976, URPA is a nationally known policy institute that focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, and New York. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.

URPA is not a membership organization, and does not accept funding from any outside sources.

1) (Sigh) Another day, another departed Amtrak president and chief executive officer. Add Alex Kummant to the roster of Amtrak stewards who have lasted three years, or less.

After two years and less than two months, Mr. Kummant resigned from his Amtrak post on Friday, November 14, 2008, and left the building. Literally. Longtime Chief Operating Officer William Crosbie is the interim Amtrak President and CEO.

There have been no hard facts which have emerged about the departure, but the best information available at the moment points to enough of a disagreement between Mr. Kummant and Chairman of the Board Donna McLean over how to handle certain financial matters to force Mr. Kummant into the unemployment line. Mr. Kummant was hired by the board chaired by the now departed David Laney, and succeeded by Ms. McLean, a professional Washington lobbyist.

As another Amtrak departed steward, David Gunn, discovered, it’s not a good idea to squabble with the real boss and expect to win. Tom Downs, Amtrak chief steward back in the Clinton years, discovered that, too.

The usual obligatory and nice things were said by Ms. McLean about Mr. Kummant in a written statement on Friday. Beyond that, and the general noise emanating from the National Association of Railroad Passengers – which never met an Amtrak president, executive, manager, or employee that it didn’t like, always hoping to curry favor instead of having to take real positions – not much has been said about Mr. Kummant’s departure. He came, he warmed the seat, he glad-handed a lot of folks, had an unworkable business plan for the future of Amtrak, he departed in a huff.

We wish him well in his future endeavors, and thank him for his service.

2) So, where does all of this and the recent change in administrations in Washington leave us?

It’s not a pretty picture.

President-Elect Obama made lots of campaign promises about transportation and Amtrak. They were enunciated in a letter the campaign sent to the October 10^th passenger rail summit held in Meridian, Mississippi, and sponsored by the respected Southern High Speed Rail Commission, under the chairmanship of former Amtrak Chairman of the Board John Robert Smith. Here is the relevant content of the letter.

[Begin quote]

We appreciate the opportunity to share our thoughts with you about the importance of supporting our nation’s freight and passenger railroad systems. Thank you for gathering here to work on national solutions to this critical infrastructure challenge, and for your ongoing work to formulate a regional rail strategy to spur growth across the South.

I don’t have to tell you that Governor Dukakis and Mayor Smith are highly knowledgeable on rail issues and that they bring decades of experience and leadership in crafting and implementing policy solutions in this area. Their work together, and with all of you, shows that this is not a partisan issue. In the face of economic crisis, we must not forget: our economic future and long-term competitiveness depend on strengthening our critical infrastructure. This is not a Democratic or a Republican challenge, it is an American challenge.

Amtrak, freight rail and commuter rail are absolutely vital to America’s transportation system, and we need to strengthen them now, not starve them. Metro Chicago is a central rail hub for North America and Joe has been riding Amtrak to work throughout his career, so we know how important rail is to our country. That’s why we support substantial investment – investment in infrastructure and investment in the rail workforce.

Rail is a highly efficient way to transport freight and relieve congestion on our highways. And Amtrak is the only reliable form of transportation in many parts of the country. Rail modernization is central to a safer, more reliable, cleaner and more energy-efficient transportation future that helps address traffic problems and climate change. We cannot afford to wait on funding for updated infrastructure and technology to meet increasing passenger and freight demand. That’s why we have both supported rail transportation throughout our careers. As you may know, we both cosponsored the Passenger Rail Investment and Improvement Act in the U.S. Senate, and supported the successful effort to get this important legislation to the President’s desk this year.

And we will continue fighting for rail when we’re elected. Our National Infrastructure Reinvestment Bank will be funded with $600 billion over 10 years to expand and enhance, not replace, existing federal transportation investments. We must invest in rail projects for economic and environmental reasons, and this proposal is key to long-term investment.

... (A) strong national transportation infrastructure system is in our national interest – for our economy, national security and quality of life.

Rail infrastructure is important, and it’s just as important to take care of the workers who operate and maintain it. Building, operating and maintaining a modern rail network will create good jobs that can’t be outsourced. That’s why we are proud to stand with the men and women who build and operate our rail systems and their unions. We will fight for the pay and benefits they’ve earned, and the training that they and the next generation of workers will need to stay at the cutting edge of innovation.

We see a future where a modernized rail system plays an increasingly important role in our transportation mix. ...

Sincerely,

[Signed] Barack Obama/Joe Biden

[End quote]

Again, lots of good campaign promises were made in the letter above. All of the rhetoric is good, and the promises all sound good. But, what about the cost?

The letter promises a $600 billion National Infrastructure Reinvestment Bank to be funded over the next 10 years, to pay for federal projects above and beyond existing federal transportation investments. That sounds good. Where’s the money coming from? We’re talking about six-tenths of a trillion dollars in addition to other money already committed.

Which brings us to Amtrak’s piece of the pie in the newly minted reauthorization bill just signed by President Bush. Amtrak has been promised a lot of money in that bill – again, in the billions every year – but, only promised. Amtrak still has to go through the appropriations process, where the checks are written, but there are no guarantees the priority of Amtrak has risen at all in the minds of Congress, who writes the checks.

For those who forgot and didn’t notice, Congress has in the past few weeks written over $1 trillion dollars in rescue monies for various financial institutions and related problems. It also looks like Congress is about to carve about another stimulus package for taxpayers (and, lower end non-taxpayers, too) and maybe ship some money to Detroit for the automakers. We’re talking more hundreds of billions of dollars.

Forget about millions of dollars. These days, projects in the millions are chump change. Today, we talk in billions and trillions in Washington. Scary, huh?

Let’s look at Amtrak’s typical priority in Washington budget-making circle, no matter who is in charge.

There’s national defense and foreign aid. Homeland security. There are all of the entitlement programs like Social Security and Medicare and Medicaid. Add on the needs of the education folks. Don’t forget the ethanol subsidies and other agriculture subsidies. There’s the cost of government itself. Plus running federal law enforcement and all sorts of aid to states and cities through the pork process. Add on hundreds of other routine federal government expenditures which are favorites of various worthies elected to represent us in the House and Senate. Typically, after all of that, you come to transportation.

In line in front of Amtrak are the highway interests (don’t ever get in the way of the highway interests, or you could become a foundation for a new highway overpass), and the aviation interests, which will tell you they are barely in any better financial shape than the banks. There are the maritime interests, which remind us how important they are to keep the goods we buy from foreign countries flowing so we can continue to run up the foreign trade deficit. Then, the regional and local transit folks get in line, because each one of them has a guardian angel in Congress. What’s left? Amtrak, usually with its hat in hand, hoping for some table scraps from the federal smorgasbord.

3) Why isn’t Amtrak in a stronger position with the federal government? If you have a decade or so, we can get into that in detail. If you don’t, just sum it up in two words: corporate hubris.

Amtrak is the Britney Spears of the federal government. It wants everyone to love it and give it money, but it continues to do impossibly reckless things and ignore any helping hand that is offered to it.

Amtrak’s current Alex Kummant business plan is to emphasize expensive-to-operate, impossible-to-make-money-on, short distance corridors, mostly paid for by state government money. All this does is create cash flow for Amtrak, since it usually operates these services at breakeven or at a very modest profit. These services do little in the big picture to bolster prospects for Amtrak’s future.

Amtrak’s long distance system, where the majority of its congressional support comes from, continues to languish in a mild stupor of neglect. Even though the long distance trains, when honest accounting methods are used, do much better financially than short distance trains, Amtrak ignores them in favor of the Northeast Corridor and short distance routes.

Let’s have just the briefest reviews of the NEC and Acela service. All trains in the Northeast use the NEC infrastructure between Washington and Boston, which is mostly owned by Amtrak. A short part of it between New York City and New Haven, Connecticut is own by the State of New York, and operated by the honorable Metro North commuter system.

Two types of Amtrak trains trundle through the NEC every day; Acela, and the newly named Northeast Regionals. Other trains, such as the Southeast long distance trains, and the Keystone Service trains also operate along the corridor, as also do a huge number of local commuter service trains owned and operated by state and regional authorities.

Keep in mind all of these trains use the identical tracks, identical stations, identical power generating system, identical reservations system, identical personnel, and have identical Amtrak corporate overhead. Since, in the unique situation of the NEC Amtrak owns and operates the track and infrastructure, one supposes every Amtrak train which visits this infrastructure is charged similar usage fees.

But, Amtrak claims the Acela service is profitable, and the Northeast Regional service is not. How can that be? Same track, same maintenance, same infrastructure, same stations, same, same, same, everything. Since an Acela trains operates at higher speeds than a Northeast Regional or long distance train on the NEC, shouldn’t it cost more to host an Acela train than one of the other trains? After all, the cost of track maintenance is based on the need for speed, not the color of the railroad ties. How can a few Acela trains, as opposed to a larger number of Northeast Regional trains and long distance trains, operate at a profit, and the others operate at a loss? Inquiring minds want to know.

This is the type of situation Amtrak constantly placed itself in with official Washington. It places itself in all sort of awkward scenarios, and tries to convince everyone the sky is green when we know it’s blue.

4) So, here we are in November of 2008. A new Congress will convene in January, with both houses of Congress firmly in the hands of the Democrats. We have a Democrat as president, and a decades-long Amtrak NEC daily rider as vice president.

Under the new Amtrak reauthorization, the Amtrak Board of Directors is expanding from seven member to nine members. The new president of Amtrak, no matter who he or she will be, will again, for the first time in several years, be a voting member of Amtrak’s board.

The current members of the Amtrak board, Republicans Ms. McLean, the chairman, and Nancy Naples of New York, will remain on the board until their terms expire. The Democrats, Vice Chairman Hunter Biden (38 year-old son of the new Vice President), and Thomas Carper of Illinois, will also remain until their terms expire. The current fifth member of the board, Mary Peters, the Bush administration Secretary of Transportation, will leave the board in January when the new Obama administration comes to town.

Since, under the new authorization, the Secretary of Transportation is no longer an automatic board member, the board will have four functioning members after January 20, 2009, with five vacant slots for appointment by Mr. Obama.

You ask what are the legal requirements for these new board appointees? According to the new law, only that they were recently breathing on a regular basis. Otherwise, the board is open to any appointee a president chooses to make, and a senate chooses to confirm.

Based on how things work in Washington, don’t look for these five board seats to be filled and confirmed by the Senate as swiftly as an Acela train allegedly operates. There is a good chance a new president and chief executive office of Amtrak will be chosen by the current board’s remaining four members after January.

Simply put, Amtrak can’t afford to go many months virtually headless, as it did between the departed David Gunn and Alex Kummant when David Hughes warmed the president’s seat on an interim basis.

Current Interim President William Crosbie is not a favorite on Capitol Hill for testimony, and even though professional Capitol Hill lobbyist Amtrak Chairman of the Board Donna McLean will be at his side advocating Amtrak’s positions, it’s going to be tough to make a lot of performance promises to congressional committees when no one knows what direction a new, permanent president will take Amtrak.

Expect a holding action, and continuation of business as usual for Amtrak for the time being. Don’t expect any flashy initiatives, investments in new passenger rolling stock or locomotives, or route changes. Expect things to remain the same. And, in that vein, don’t expect any requests for huge amounts of money, beyond Amtrak’s usual annual requests. It’s unlikely Amtrak funding will meet the authorization levels simply because there isn’t much money to be had in Washington.

Within 48 hours of the end of the presidential election, victorious Democrats wisely started immediately lowering expectations on how many campaign promises would be met and how quickly they would be met. Phrases like "in the next two years," "late in the first term," and, even "sometime in the second term" were suddenly popularly in play and applied to every facet of federal spending, including Amtrak.

Fair? Probably, not. Real? Yes. Campaign promises and the reality of budgets and the associated horse-trading often don’t go hand in hand.

5) Now, let’s look at the positive side of things. We simply don’t know what the new board appointments over the next year will bring. We have no idea if another Haley Barbour, Ralph Kerchum, Charlie Luna, or Paul Weyrich is waiting out there. We may be especially fortunate and have former World Bank railroad wiz Lou Thompson, a well-respected Democrat, make it to the board. To balance the board, who knows, maybe even one of America’s best visionary railroaders, former FRA Administrator Gil Carmichael, may be appointed?

At this point, we just don’t know. We also don’t know what criteria will be used by the board to select a new president and chief executive officer. We’ve had the Transit Trio, we’re had a freight railroader, and we’ve had various others, from retired freight railroad execs to Washington insiders. Maybe we’ll be fortunate, and someone like former Amtrak Vice President Bob Vanderclute will enter the contest, or maybe someone from the inside, like Amtrak Vice President Richard Phelps, will step up to the plate.

Hopefully, the board will look at a broad variety of skills needed by a new Amtrak president, the most important being the ability to have a vision beyond the NEC. Hopefully, the next Amtrak president will understand the value and power of the national long distance system, and appreciate the proven fact and long history showing when healthy long distance trains exist, a robust system is created which can then mutually exist and cross-support short distance trains, and the two types of trains feed each other and share infrastructure costs.

Hopefully, the board will begin immediate work on selecting a head hunting firm (better than the last one selected) which understands a resume with lots of entries shouldn’t be the sole criteria for Amtrak’s next president. We tried that, and he just left last Friday.

7) Here’s an interesting idea. We’ve talked about this before, and it’s worth repeating. The current issue of Amtrak’s system timetable is excellent. Every year, they get better and better, with useful information, good presentation, and the addition of outside advertising which helps pay for the cost of the publication.

Since the printed timetables are one of Amtrak’s consistently bright spots, here’s a proposal: Whoever is in daily charge of Amtrak’s timetables should be Amtrak’s new president. Where else in Amtrak do we see constant improvement, from both a customer and financial standpoint? Where else in Amtrak do we see innovation and clarity? Where else in Amtrak do we see consistency and accuracy? Whoever is in charge needs a promotion. All of this good work should be immediately spread to other parts of Amtrak, too.

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J. Bruce Richardson

President

United Rail Passenger Alliance, Inc.

1526 University Boulevard, West, PMB 203

Jacksonville, Florida 32217-2006 USA

Telephone 904-636-7739

brucerichardson@unitedrail.org

http://www.unitedrail.org