Federal Panel Says Amtrak Must Come Up With Liquidation Plan

WASHINGTON – Amtrak will miss its 2002 deadline to become financially self-sufficient and must therefore liquidate, a federal oversight panel decided Friday.

The Amtrak Reform Council's 6-5 vote will not force Amtrak to shut down, but to come up with a proposal to restructure its national passenger rail system. Congress will then make a final decision about the future of Amtrak and rail service.

Amtrak, a government-subsidized national rail system, has been a financial loser since its inception in 1970, when President Nixon and Congress created the National Rail Passenger Corp. to respond to the decline of rail service with the expansion of car and air travel.

From the beginning, Amtrak failed to meet its promise to become profitable but was repeatedly bailed out as Washington concentrated on other distractions.

To stem its losses, Amtrak cut train service by about 12 percent and laid off about 2,000 workers in 1995. In 1997, Congress created the council to come up with a plan to insure its financial viability.

Amtrak President George Warrington rejected the idea of cuts and announced Amtrak would pursue new routes and business opportunities such as time-sensitive package delivery.

Last year, the rail seemed briefly to overcome its problems with the advent of the Acela Express, a European-style high-speed train that reaches 150 miles per hour.

But by late summer this year, Warrington admitted that ridership and revenue projections for Acela Express had fallen short. The drop set Amtrak off from its target, he said.

Congress already has proposals on the table to help Amtrak. Sen. Robert Torricelli, D-N.J., pushed a $7 billion development plan for high-speed rail that will be voted on as part of an economic stimulus package the Senate is considering next week.

In October, Sens. John McCain, R-Ariz., and Gordon Smith, R-Ore., also proposed a $3 billion plan that would increase security operations for Amtrak.

The Bush administration was working on a plan for passenger rail, but deliberations have been delayed by the terrorist attacks.

The Associated Press contributed to this report.