Federal panel says Amtrak, missing deadline, must come up with liquidation plan

Friday, November 9th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ A federal oversight panel declared Friday that Amtrak will not meet a congressional deadline for achieving financial self-sufficiency, a finding that forces Amtrak to draw up a plan for its own liquidation.

The 6-5 vote by the Amtrak Reform Council does not mean Amtrak trains will stop running. Congress will review Amtrak's liquidation plan and a proposal to be drawn up by the council for a restructured national passenger rail system. Congress then will make a final decision about the future of Amtrak and rail service.

Both studies must be done within 90 days.

Congress already is considering Amtrak's future and what role if any the railway will play in developing high-speed trains around the country. The Bush administration also is working on a plan for passenger rail, though deliberations have been delayed by the terrorist attacks.

Congress created the council in 1997 to evaluate Amtrak's finances and to make a definitive judgment about the railway's financial viability. Since then, Amtrak has made progress toward weaning itself from federal operating subsidies but the council said it still won't meet Congress' deadline of Dec. 2, 2002.

The council's chairman, Gilbert Carmichael, a former federal railroad administrator, insisted the panel is united in support of passenger rail despite its split on whether Amtrak should continue to provide it.

``All this council is trying to do is come up with a strong new national passenger rail system,'' Carmichael said. ``This country wants it and needs it.''

The key issue Friday was whether the council should vote immediately on its finding or wait until January.

Mark Yachmetz, associate administrator for railroad development in the Federal Railroad Administration, said he spoke for the Bush White House in urging no action until January.

Council members, three of whom were attending by teleconference, split 5-5 on whether to approve the declaration. One council member, Milwaukee Mayor John Norquist, was neither present nor connected by telephone. The meeting tensely adjourned while he was located.

``The future of Amtrak rests on whether we can find the mayor of Milwaukee in the next 10 minutes. This is absolutely nuts,'' said council member Charles Moneypenny, who represents rail unions and supports a continued role for Amtrak.

Norquist's voice came over a phone speaker moments later, and council members publicly lobbied for his vote.

Paul Weyrich, president of the Free Congress Foundation and the leading advocate of making the declaration immediately, said that even if the council votes yes, ``no trains are going to stop, (and) we're not going to have any employees laid off. What is going to happen is we will have the opportunity to really face up to this issue.''

James Coston, managing partner of a Chicago law firm, countered that a vote was premature because the council still is awaiting an update on Amtrak's finances from the Transportation Department inspector general, as well as audited 2001 financial statements from Amtrak.

Norquist then cast his vote with the group favoring immediate action.

``I think we all know Amtrak as it is currently structured can't produce more revenue than it has to pay out,'' Norquist said. ``It has a structural problem that has to be addressed.''

Amtrak service began in New York on May 1, 1971. Then-Transportation Secretary John Volpe predicted a new era in rail service and said Amtrak would break even financially in about three years. Amtrak fell far short of that promise.

To stem losses, in 1995 Amtrak cut train service by about 12 percent and laid off about 2,000 workers. Last year, Amtrak President George Warrington rejected more cuts and announced Amtrak would pursue new routes and business opportunities such as time-sensitive package delivery.

Amtrak staked its future on European-style high-speed rail. Its first effort, the Acela Express, began service a year ago and reaches a top speed of 150 mph for a short span between Boston and New York.

Thanks in part to revenue from Acela Express, Warrington said last spring Amtrak was on track to meet the deadline for self-sufficiency. But by late summer Amtrak acknowledged Acela Express was falling short of ridership and revenue projections.