The National Railroad Passenger Corporation (Amtrak) is a government-owned corporation established in 1971 to provide intercity passenger train service throughout the United States. The name Amtrak comes from a combination of “American” and “track.” The members of Amtrak’s board are appointed by the President and are subject to confirmation by the Senate. Amtrak operates passenger service on 21,000 miles of track that connect 500 destinations in 46 states and select Canadian cities. Although the federal government owns all of Amtrak’s stock, it is widely considered to be valueless. In recent years, Amtrak’s financial struggles have led to Republican calls to privatize parts of the railroad and end federal subsidies that keep the railroad going. Attempts by Amtrak to improve its service in key parts of the country have backfired, resulting in more bad publicity for the beleaguered business.
Between 1920 and 1970, private passenger rail services in the United States were in an advanced state of decline. From the middle 1800s until 1920, almost all travelers in the United States went by rail. Each of the major railways was owned by a private company, and the system continued like this until 1929.
Rail travel decreased sharply between 1929 and 1934, as the stock market crash and Depression curtailed available funds. To combat this, railroad companies developed new, diesel-powered streamliners such as the Pioneer Zephyr and Flying Yankee. But profits continued to dwindle until World War II when troop movements and shipping of supplies increased passenger traffic sixfold.
After the war, railroads tried to rejuvenate passenger traffic and briefly enjoyed a revival. But the increased traffic was short-lived. Between 1946 and 1964, passenger numbers decreased significantly, and by the mid-1950s losses totaled $700 million. Equipment suffered and stations emptied as neighborhoods around them declined. Experts attributed these declines to several factors. Some claimed that the industry was hobbled by government regulation and labor inflexibility, which occurred just as airline and private automobile travel were expanding. By the time the Interstate Commerce Commission (ICC) approved the mergers of several existing railroads in the 1960s, the federal government had disinvested in Amtrak, and years of deteriorating equipment and station facilities had taken their toll. These mergers were unsuccessful.
Railroads also carried a substantial tax burden (15% on passenger rail travel). Local governments charged additional property taxes on land owned by railroads, which also had to deal with antiquated work rules and unyielding trade unions. Meanwhile, the widening highway system (subsidized by the federal government) and ease of obtaining post-war automobile loans drew greater numbers to the roads.
In the 1960s, several major railroads declared bankruptcy. The Pullman Company became insolvent in 1969. In 1970, President Richard Nixon signed the Rail Passenger Service Act, which was sponsored by the National Association of Railroad Passengers (NARP). The bill sought funds to ensure the continuation of train service in the United States. The National Railroad Passenger Corporation (NRPC) was originally a public-private entity that received taxpayer funding and assumed operation of intercity passenger trains. It was originally called Railpax, but before it began operations, the name was changed to Amtrak.
The law provided as follows:
President Nixon and his administration considered this an experiment that was likely to fail and wanted to give railroad travel one last chance. They expected public support to wane, and that Amtrak would quickly support itself, but neither proved true. Amtrak began operations in May 1971, and 20 out of 26 existing railroads joined the national system. After they switched over, Amtrak continued service on 182 of 364 trains previously in service.
Amtrak inherited problems with the existing train stations. Maintenance had been shoddy, and in several cases, facilities were redundant. Merging trains, services, and train stations made train travel more efficient, and soon Amtrak had the opportunity to acquire additional railways. As several northeastern railroads went bankrupt in the early 1970s, Congress passed the Railroad Revitalization and Regulatory Reform Act of 1976. This law created Conrail, and also enabled the Northeast Corridor Railway to be transferred to Amtrak. This was a crowded route and generated much revenue for Amtrak. But the route’s costs were also higher. Federal subsidies increased substantially, but Amtrak fell far short of financial independence in its first decade, as ridership increased. Fuel shortages in the 1970s increased costs for automobile and airline travel, which helped drive even more customers to Amtrak.
Political battles over funding followed over the next decades. The federal government, as Amtrak’s only investor, demanded greater accountability and trimmed budgets. By 1997, Amtrak faced a serious cash crisis. As part of the Taxpayer Relief Act of 1997 (pdf), Amtrak received a $2.3 billion tax refund that temporarily resolved the cash crisis. George Warrington, the next leader of Amtrak, ran into trouble with Congress when his lavish spending and extensive borrowing resulted in him trying to mortgage Penn Station in New York. After this elicited a firestorm of controversy, Warrington was forced to step down. This set in motion a series of political maneuverings with Congress that culminated in Amtrak having two managers over the next three years (David Gunn and Alexander Kummant, both former agency president & CEO).
Ridership increased again in the 2000s after capital improvements were made to the Northeast Corridor, Amtrak set ridership records in seven of the last eight fiscal years. During FY 2010, Amtrak reported more than 28.7 million passengers, which was its highest total to date, and it predicted 30 million riders for 2011. Although the federal government has invested a total of $36 billion in Amtrak during the 40 years that it has been in operation, recent years of under-funding have caught up with the agency. Congress issued increased funding and instituted a new path to financial self-sufficiency, but these plans failed. Amtrak’s express freight delivery caused problems with competing freight operators and the trucking industry. As a result, Amtrak was not able to add enough revenue, or cut enough expenses, to break even. Although it was clear that Amtrak was unlikely to achieve financial self-sufficiency, Congress again approved funding in 2002 and released Amtrak from its requirement to become financially independent.
As of 2011, while still operating at a loss, Amtrak succeeded in covering 85% of its operating costs with ticket sales and other miscellaneous revenue, with the balance paid for by the federal government. That year, the American Recovery and Reinvestment Act provided $1.3 billion in funding. In May 2011, President Barack Obama proposed placing Amtrak under federal agency budget—so that it receives funding under the Federal Railroad Administration—rather than continuing to depend on direct Congressional appropriations. Many Republicans are opposed to federal government financing of the agency, with House Transportation Committee Chairman John Mica (R-Florida) calling Amtrak a “Soviet-style operation.”
The National Railroad Passenger Corporation (Amtrak) is responsible for operation and maintenance of a national rail network. The agency serves more than 500 destinations in 46 states on 21,000 miles of routes. Amtrak employs nearly 19,000 people and welcomed more than 28.7 million passengers in 2010.
The Boston-New York-Washington portion of the Northeast Corridor is Amtrak’s busiest with more than 10 million riders in 2010. The next three routes also had ridership over a million each:
Pacific Surfliner Service (San Diego-Los Angeles-San Luis Obispo) 2,613,604
Capitol Corridor Service (San Jose-Oakland-Sacramento-Auburn) 1,580,619
Keystone Corridor Service (Harrisburg-Philadelphia-New York City) 1,296,838
Amtrak owns 1,518 Amfleet, Superliner, Viewliner and other railroad passenger cars, 459 locomotives, 80 Auto Train vehicle carriers and 101 baggage cars. State-owned equipment includes 140 railroad passenger cars and 22 locomotives.
Amtrak also owns property, including 363 miles of the 456-mile Northeast Corridor connecting Washington, Philadelphia, New York, and Boston, as well as three heavy maintenance facilities in Wilmington and Bear, Delaware, and Beech Grove, Indiana, and other maintenance facilities in Washington D.C., New York City, Rensselaer and Niagara Falls, New York, Boston, Hialeah, Florida, Chicago, New Orleans, Los Angeles, Oakland, and Seattle.
Approximately 70% of Amtrak travel is done on track owned by other railroads. Amtrak pays these host railroads for use of their track (more than $136.9 million in 2010) and other resources required to operate Amtrak trains. Host railroads also receive incentives for on-time dispatching.
The six largest host railroads for Amtrak trains are:
6.8 million train miles
Union Pacific Railroad
6.19 million train miles
5.90 million train miles
Norfolk Southern Railway
2.49 million train miles
Canadian National Railway
1.46 million train miles
Metro North Railroad
1.34 million train miles
Fifteen states contract with Amtrak for operation of trains that supplement the national Amtrak network. State and regional agencies pay for most of these services and continued operation of these routes is subject to annual contracts and legislative appropriations. These supplemental train routes include:
Several states, including Connecticut, Delaware, Maryland, New Jersey, New York, Pennsylvania, and Virginia, make payments to Amtrak through transit agencies or state transportation departments for use of the Amtrak-owned Northeast Corridor facilities by commuter trains. Amtrak operates more contract commuter services than any other company. These agencies or states also provide other funding on the Northeast Corridor, including capital funds for infrastructure and/or stations. Amtrak currently provides commuter service for the following state and regional authorities: Caltrain (California); MARC (Maryland Area Regional Commuter); Shore Line East (Connecticut); and Metrolink (Southern California).
Amtrak provides equipment maintenance services for the Sound Transit in Seattle, dispatching and maintenance of way service to the Massachusetts Bay Transit Authority and dispatching services for the South Florida Regional Transportation Authority's Tri-Rail operation.
In September 2010, Amtrak announced plans to build a Northeast Corridor “Super Express” rail—a 426-mile system reported to cost $117 million, with a targeted completion date of 2040. The agency predicts a near-tripling of ridership and the creation of 160,000 jobs as a result of this project. In 2011, a proposal surfaced in Congress for the privatization of the Northeast Corridor, which would take it out of Amtrak’s hands.
From the NRPC Web Site:
As a federally funded corporation, National Railroad Passenger Corporation (Amtrak) expenditures go toward costs associated with the operation of its passenger train system, and fall into one of three large categories: operating costs, capital, and debt service. Eighty-five percent of Amtrak’s operating costs are paid for with ticket sales and other miscellaneous revenue; the balance is paid for by the federal government. The agency’s FY 2013 budget proposal includes $450 million for operations to support the national network of corridor, state-supported and long-distance trains; $1.435 billion for national capital and infrastructure projects; $212 million for debt service; and $60 million for Northeast Corridor (NEC) development projects, the Gateway Project (total project cost is $13.5 billion, which is for the building of two new tunnels into Manhattan and expanding New York Penn Station capacity), and the high-capacity 220 mph high-speed rail system from Washington D.C. to Boston.
Amtrak’s FY 2012 budget proposal included $1.285 billion for capital investments to improve infrastructure and existing lines, including in the NEC; $616 million to operate more than 300 daily trains nationwide, and $271 million for debt service. Also included was a request for funds to purchase 40 Acela Express coach cars to add capacity to the high-speed rail line from Washington to Boston, which would be ready to roll in 2014. There was an additional $50-million request to begin preliminary work on the Gateway Project. In its Grant and Legislative Request, Amtrak reported that it had $5 billion in deferred maintenance costs, including 140-year-old tunnels in Baltimore, and 224 bridges that have exceeded their designed lifespan.
In the past, Amtrak has purchased some of its passenger cars from Talgo, a Spanish manufacturer of railway cars. When it set out to create a billion-dollar, high-speed service for cities in the northeast, Amtrak turned to a joint project involving Bombardier (75%), a Canadian conglomerate and largest maker of passenger cars in the world, and Alstom (25%), a French multinational conglomerate.
Senator Proposes No-ride List Following bin Laden Revelation
Concerned over al Qaeda’s terrorist plans involving trains, a Democratic U.S. senator proposed in 2011 that the government create a “no ride” list for Amtrak, similar to what airlines use to prevent suspected individuals from flying on commercial jets. Senator Charles Schumer of New York suggested the idea after it was learned al Qaeda was considering an attack on American trains.
Amtrak officials said they were open to using a no-ride list to screen passengers. But, they added, the Transportation Security Administration would have to be involved, and the process would have to be “implemented in a way that respects civil rights and allows for the rapid flow of persons and trains, necessary for effective mass transit.”
Proposal For A 'No Ride List' For Train Travel Ignites Controversy (by Andrea McCarren, WUSA9.com)
Amtrak Backs Schumer Proposal For “No Ride List” (by Paul Joseph Watson, Prison Planet.com)
Amtrak IG Fired
Amtrak was roundly criticized by congressional Republicans in 2010 for firing its longtime inspector general.
Representative Darrell Issa (R-California) and Senator Charles Grassley (R-Iowa) launched an investigation of Fred Weiderhold’s termination. Weiderhold was an Amtrak employee for 35 years, including 21 as its first inspector general.
What made the firing so disturbing in the eyes of Republicans was Weiderhold had been investigating excess payments by the agency’s law department for outside legal services. The IG also was looking into Amtrak’s decision to sell off railcars and then lease them back.
The following year news surfaced that Weiderhold may have violated the law himself, by lobbying Congress to adopt $450 million in spending for “capital security grants.” Federal statutes forbid inspectors general from lobbying lawmakers on legislation.
Amtrak Accused of Illegally Dismissing Its Inspector General (by Noel Brinkerhoff, AllGov)
Credibility Derailed: The Controversy over Amtrak Firing Inspector General Fred Weiderhold (by Kevin Latchford, Fairfax Libertarian Examiner)
Going Off The Rails With Amtrak (by John Hayward, Human Events)
Amtrak Top Cop Paid Hush Money? (Pennfedbmwe.org)
Former Amtrak Inspector General Accused of Inappropriate Lobbying (by Fawn Johnson, Government Executive)
Amtrak Board Stirs Trouble
Among the many problems that have plagued Amtrak, its board of presidential appointees has proved to be a source of plenty of bad publicity. Dominated by President George W. Bush’s selections, the board led an unsuccessful effort several years ago to force Amtrak to privatize its northeast train service. At the height of the push, the board fired Amtrak’s president and CEO, David Gunn, who had resisted the administration’s attempts to sell off the best revenue-generating line Amtrak owned.
Amtrak supporters in Congress were outraged by the dismissal. Sen. Charles Schumer (D-New York) called Gunn’s dismissal, “a crushing blow to Amtrak’s hopes for success and reform” and praised Gunn as “a brilliant manager who stood up for Amtrak.” He also said the decision to fire Gunn was a sign the Bush administration wanted to “decapitate Amtrak and end Amtrak as we know it.”
Amtrak’s then-Chairman David Laney praised Gunn’s tenure, but said that the railroad needed immediate changes and that Gunn resisted those changes. Shortly before the firing, the Government Accountability Office issued a report that said Amtrak needed fundamental improvement in many areas, including cost control, goods and services purchasing, and overall accountability.
In the wake of Gunn’s removal, some experts and members of Congress began to scrutinize the board, claiming it had been operating illegally. More than once, the board lacked a quorum, with only four of its seven seats filled. Also, according to Rep. Steven LaTourette (R-Ohio), chairman of the railroad subcommittee of the House Transportation and Infrastructure Committee, some directors had served without proper appointment as stated under a 1997 law meant to reform the railroad.
In addition, an Amtrak shareholder claimed the board was making changes in Amtrak’s structure without consultation with the holders of common stock.
Finally, those appointed to the board had come under attack as cronies of President Bush. Laney, a Texas attorney, raised more than $100,000 for the Bush-Cheney campaign before receiving his appointment, while Floyd Hall, former CEO of Kmart and the Museum Co., was responsible for $360,000 in “soft money” contributions to Bush-Cheney since 2000. Donna McLean, a former Department of Transportation official who started her own Washington D.C. consulting business, gave $2,000 directly to President Bush in 2004.
Amtrak's Own Board Sows Alarm About System's Future (by Matthew L. Wald, New York Times)
Cronyism Strikes Again (by Edward Wytkind, Baltimore Sun)
Amtrak firing draws critics (by Jennifer A. Dlouhy, Albany Times-Union)
Amtrak Fires President Days After Bad Report: Tenure Included Clashes With Bush Administration (by Keith L. Alexander, Washington Post)
House Explores Actions of Amtrak Board (by Matthew L. Wald, New York Times)
In 1996, the National Railroad Passenger Corporation agreed to build high-speed locomotives and passenger cars as part of the Northeast High Speed Rail Improvement Project. Since that time, Amtrak has experienced multiple challenges related to this program and performance of the trains. Railroad officials became so frustrated with the trains’ manufacturers, Bombardier and Alstom, that they stopped paying the companies. Bombardier and Alstom sued Amtrak in 2001 for withholding payments. Amtrak countersued, and each party sought $200 million in damages. In March 2004, Amtrak and the two companies reached a negotiated settlement.
But troubles continued for Amtrak as it was forced to remove all Acela trains from service in April 2005 until faulty brakes were replaced. The brake problem produced more acrimony between Amtrak and Bombardier over whether the warranty on the parts would cover the costs of replacing them. Amtrak was losing money with the Acela trains, its best money-making operation, out of service, and didn’t want to absorb the cost of fixing the brakes, especially since future maintenance work (as of October 2006) would be Amtrak’s to handle, under the 2004 legal settlement.
Acela is back on the map for 2012, as Amtrak has included in its budget a request for funds to purchase 40 Acela Express coach cars to add capacity to the high-speed rail line from Washington to Boston. Target date for the cars to become operational is 2014.
2 Equipment Makers Settle Dispute With Amtrak (by Don Phillips, New York Times)
Amtrak Mired in New York High-Speed Plan Debacle
Another effort to bring about high-speed rail also caused Amtrak considerable grief. In the late 1990s, the federal railroad decided to team up with New York to bring faster train service between New York City and Albany. Millions were spent to revamp existing trains with high-powered turbine engines instead of purchasing new locomotives. The engines didn’t burn diesel gasoline like ordinary locomotives but jet fuel—one of the many things that created problems for the project. After cost overruns and delays kept the trains from going into service, New York officials and Amtrak began pointing fingers at each other for the mess.
A Fast Train, Running Late (by Michael Luo, New York Times)
Pricey Food Costs Amtrak
An investigation by Amtrak’s inspector general in 2005 found that the railroad was spending $2 for every $1 it made from selling food to passengers. Expenses for labor and food were costing about $83 million more than the food service brought in. Even worse, when the costs of maintaining dining cars on long-distance trains and the cafe cars used on short-haul routes were factored in, the losses came to about $130 million.
Amtrak’s biggest problem was its labor cost, which is about three and a half times the average for restaurants. Amtrak’s work force is unionized and receives health and other benefits, which most restaurants employees don’t. Also, the study found Amtrak spends about two and a half times as much as restaurants to supply its trains, due to its need to store food and then move it on and off trains.
In 1999, in an effort to save money, Amtrak laid off its commissary workers and hired a private contractor to provide its food and put it on trains. That contract, auditors concluded, was flawed because it gives the contractor no incentive to reduce costs. The American Energy & Infrastructure Jobs Act, introduced by House Republicans in 2012, included the same type of privatization provision—with the same flaw.
Beyond Brakes, Amtrak's Woes Hit the Cafe Car (by Matthew L. Wald, New York Times)
Allow Guns on Amtrak Trains?
The National Railroad Passenger Corporation (Amtrak) in late 2010 lifted its ban on passengers bringing unloaded guns aboard trains, after congressional Republicans pushed for the change. The restriction was first put into place after the Sept. 11 terrorist attacks.
Under the new policy, riders can check firearms, including handguns, rifles and shotguns, and up to 11 pounds of ammunition at any train station that offers checked baggage.
Passengers are required to notify Amtrak at least 24 hours before their departure, and the gun must be stored unloaded in a locked, hard-sided container.
Senator Roger Wicker (R-Mississippi) pushed to allow guns on Amtrak, calling the prohibition an “overreaction” to the 9/11 attacks. Wicker and the National Rifle Association argued the rule was not based on any facts, and that sportsmen, hunters and gun owners were treated unfairly by it. They also said it made no sense to ban guns from trains when airlines allow their passengers to check unloaded weapons before boarding.
Gun control advocates opposed the lifting of the restriction. They objected to the argument that just because airlines allow checked guns, so too should Amtrak. “A baggage car is not like an airplane cargo hold,” Daniel Vice, senior attorney at the Brady Center to Prevent Gun Violence, told USA Today. “Baggage cars are not as secured,” making it possible for a passenger to gain access to their gun while in transit. Vice and others noted that Amtrak does not screen all its passengers before they board trains.
Amtrak Lifts Ban on Guns (by Donna Leinwand, USA Today)
Sen. Murray's Anti-Gun Bigotry Shows in Amtrak Debate, Says CCRKBA (Citizens Committee for the Right to Keep and Bear)
(by Rick Johnson, United Transportation Union