January 12, 2002

Amtrak council OKís plan to privatize rail lines 
Congress to make ultimate decision 


WASHINGTON ó The Amtrak Reform Council decided Friday to recommend to Congress that the nationís intercity
passenger rail lines be opened to private competition.

The plan was approved in concept, 8-1, with one member abstaining. The federal oversight panel will release its final, detailed report Feb. 7.

But Congress will make the ultimate decision on whether any changes take place.

Council chairman Gil Carmichael predicted the report would be positively received on Capitol Hill and said he expects the
Bush administration to incorporate some of the ideas in his upcoming budget proposal to Congress.

Amtrak "is running out of money and itís running out of support," Carmichael said.

The Amtrak Reform Council, which Congress created in 1997, reported in November that Amtrak lost more than $1 billion in
fiscal 2001 and cannot be self-sufficient by December 2002 as Congress required.

Nevertheless, Amtrakís supporters in Congress voided the councilís order that Amtrak begin to prepare liquidation plans and appropriated $600 million in additional funding.

The council recommends separating Amtrakís operating system from its infrastructure so it can concentrate on running the
trains. The plan calls for creating a separate entity to oversee the tracks and stations, which could be transferred to state,
regional and private groups.

Amtrak spokesman Bill Schulz declined to comment.

All three options considered by the panel Friday acknowledged continued federal subsidies would be needed. The panel
recommended that subsidies be based so that they provide incentives to work toward a more efficient operation.

The only council member voting against the recommendation encouraging competition was Charles Moneypenny, who
represents labor unions on the council.

"Itís a foolish proposal," Moneypenny said, contending private companies wouldnít be interested without a guarantee of a
federal subsidy.

He objected to the restructuring recommendation, although he had won a language change to ensure that collective bargaining
agreements would remain intact in case of a private takeover.

The debate broke largely along partisan lines with Republican appointees advocating more privatization and Democratic
appointees arguing that Amtrak never has been funded as generously as airports and highways.

Besides Moneypenny, two of the councilís three other Democratic appointees Milwaukee Mayor John Norquist and St. Louis banker Lee King voted approval. Chicago lawyer James Coston abstained.

Several proposals are pending in Congress that would require Amtrak restructuring and would fund rail improvements.

Congress and President Nixon created Amtrak in 1970 after the competition from automobiles and airlines made passenger rail
lines less lucrative. Although it was expected to break even in three years, Amtrak required $25 billion in federal subsidies to
keep afloat.

Under the recommendation, Amtrak would have two years to reorganize and another three years to consider contracting out.

"Good management will look at it and do it," Carmichael said, acknowledging it may need additional prod from Congress at
that point.

"The new Amtrak company will be in the same competitive position as Greyhound and American Airlines," Carmichael said.
"They have one job and thatís concentrating on people and mail and express delivery operations."

Caitlin Hughes, a spokeswoman for the States for Passenger Rail Coalition, which includes Illinois, praised the
recommendation, saying the council "was getting closer to something we could all support."

In a letter to the council, the coalition had warned that states would need federal support until the rail infrastructure is updated.