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Transportation Secretary, Amtrak to Meet on Bailout Options

Trains: Rail service throughout the country could be affected if bankruptcy is declared.

June 23, 2002|From the Washington Post

WASHINGTON -- Transportation Secretary Norman Y. Mineta said Saturday that the Bush administration "is not interested in allowing Amtrak to shut down," and he arranged to meet with the railroad's board Monday afternoon to determine what the administration can do to prevent it.

The administration also no longer insists on wholesale "reforms" of Amtrak as part of a rescue, but it wants assurances that the passenger train corporation will impose fiscal discipline and increase the flow of information to the government, administration sources said.

Amtrak President David Gunn has said the rail line is so low on cash that it will have to begin an "orderly shutdown" and declare bankruptcy when Congress goes into recess, probably Wednesday or Thursday, unless the administration gives it a loan guarantee or Congress grants it $200 million. A shutdown would end all the country's intercity passenger train service and would stop or seriously affect most of the country's commuter trains.

Federal Railroad Administration workers are trying to determine whether the government can legally guarantee a loan under a law intended for long-term capital needs, the Railroad Rehabilitation and Improvement Financing Program. Deliberations so far indicate that there may be a way to do it, a source said.

Administration sources said Mineta's meeting with the Amtrak board is partly intended to assure the nation that a shutdown almost certainly would not occur, and particularly to reassure commuter railroad operators wary about being caught up in a shutdown.

The sources also said administration officials don't think they've received adequate financial information from Amtrak and want to determine if there are alternatives to loan guarantees or appropriations, including the release of un- obligated funds or transferring money in the budget.

"I think people [in the administration] are focusing on the problem," Gunn said in an interview, adding that Mineta's request for a meeting "sounds positive to me."

Mineta said that, even though the administration doesn't want Amtrak to shut down, "Amtrak must face the reality that difficult decisions need to be made and fundamental management changes need to take place to keep the company alive."

Mineta proposed last week that states pay more of passenger train costs, that Amtrak's Boston-Washington Northeast Corridor be spun off to an unspecified "public partnership" and that some Amtrak routes and jobs be contracted out.

Some congressional sources viewed Saturday's Transportation Department news release as a dig at Gunn, who's known to have angered some administration officials with his outspokenness in only five weeks on the job.

The news release noted that only the Amtrak board can shut down operations and declare bankruptcy. The release also seemed to criticize Gunn's testimony Thursday to the Senate Appropriations subcommittee on transportation, in which he said that the orderly shutdown would have to start sooner than some had expected and that Mineta's proposals were misguided and unworkable.

"DOT officials and others found Gunn's testimony alarming since it described a significant acceleration of deadlines reported to the board of directors as recently as three weeks ago," the Transportation Department statement said.

Gunn said, however, that he thought the department was stating the obvious because legally only the board can declare bankruptcy.

"The goal of Amtrak's board meeting on Monday should be to ensure the continuation of rail service .... The goal should not be to chastise a CEO for sharing his frank and experienced views," said Sen. Patty Murray (D-Wash.).

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