Published June 25, 2002
WASHINGTON – Transportation Secretary Norman Y. Mineta expressed confidence Monday that the nation's passenger rail system will not be shut down this week, but he offered no immediate solution to Amtrak's financial problems.
Breaking from an emergency meeting of Amtrak's board of directors, Mineta said a solution will require both a cut in Amtrak's expenses and federal financial help.
"I am confident that we will be able to avoid a shutdown of services," Mineta said. "We have much more work to do but we will continue to work on an effective solution."
Amtrak President David Gunn and board Chairman John Robert Smith welcomed Mineta's pledge but said it does not prevent the first systemwide shutdown in the railroad's 31-year history, only delays it.
"There has been no reconciliation of the simple fact that Amtrak is running out of cash and [there is] no agreement on how to provide a loan guarantee or appropriation that will continue train service to the end of the fiscal year," the Amtrak officials said.
The closed-door meeting ended in early evening. Transportation Department spokesman Chet Lunner said the board had not made a final decision and would meet again this week.
Gunn said last week that Amtrak needs about $75 million a month to operate, but he planned to spend the railroad's last $40 million on an orderly shutdown that would begin as early as this week.
Since its inception 31 years ago, Amtrak has received more than $25 billion in federal funds for operations and capital expenditures. This year, the railroad is receiving $521 million from the federal government.
The Amtrak statement suggests that the railroad may be able to operate for another week or two while officials continue to work with the administration and Congress for a solution. Given Mineta's pledge, Amtrak may feel confident enough to spend the $40 million on normal operations.
Mineta said the administration and Amtrak will work with Congress to make sure passenger rail service continues. He said the administration should not bear the responsibility alone for Amtrak's problems.
"This must be a team effort," he said. "The burden is not on the administration to save the rail system from bankruptcy, nor should it be."
But Sen. Joseph Biden, D-Del., disagreed. "The shutdown of the system, quite frankly, is in the president's hands right now," he said. "I hope he acts responsibly."
Amtrak has a standing line of credit that normally can help it get through the final months of a fiscal year. This year, however, Amtrak has had trouble tapping its line of credit because lenders are unsure how long it will remain in business.
Amtrak last Monday applied for a loan guarantee from the Federal Railroad Administration, a part of the Transportation Department. But Mineta has said the application is difficult to approve because Amtrak has borrowed heavily against its assets in recent years.
If the railroad administration were to rule that Amtrak does not qualify for a loan guarantee, the only options would be a congressional appropriation or an order by lawmakers that the agency grant one.
Sen. Robert Byrd, D-W.Va., chairman of the Senate Appropriations Committee, spoke Monday with Gunn and Mineta about an emergency funding package to keep Amtrak running.
Byrd is insisting that help for Amtrak be part of negotiations between the Senate and the White House over an anti-terrorism bill.
"Without Amtrak, the nation's transportation network would be thrown into disarray. We cannot allow that to occur," Byrd said.
Earlier Monday, Sen. Robert Torricelli, D-N.J., said Mineta and President Bush assured him they would help Amtrak weather the financial crisis.
Torricelli discussed Amtrak with Bush and Mineta on Monday during a visit by the president to New Jersey. He said Bush also "made clear his insistence that there be some changes in Amtrak, some reform in structure and operation."
White House spokeswoman Claire Buchan said Bush stressed the importance of reform at Amtrak. She said the president wants an Amtrak "driven by sound economics."
Torricelli said he agreed that reform is needed, but "right now we don't have time to worry about the long term. We have to worry about people not getting to work on Thursday."
Amtrak trains carry about 60,000 riders per day. About 35,000 of those ride in the Boston-New York-Washington Northeast Corridor.
A shutdown of Amtrak also could affect commuter railroads serving hundreds of thousands of people, mostly along the Atlantic Seaboard.
Amtrak owns tracks and tunnels in the Northeast that are used by commuter rail services in New Jersey, New York and Massachusetts. It also operates or maintains commuter railroads under contracts with state and regional authorities in California, Connecticut, Maryland, Virginia, and Washington.