ONE HUNDRED FIRST CONGRESS THOMAS A LUKEN, OHIO, CHAIRMAN THOMAS J. MANTON, NEW YORK WJ. BILLY" TAUZIN, LOUISIANA JIM BATES, CALIFORNIA JOHN D. DINGELL, MICHIGAN (EX OFFICIO) JOHN G. ARLINGTON CHIS COUNSEL AND STAFF DIRECTOR TO: U.S. House of Representatives SUBCOMMITTEE ON TRANSPORTATION AND HAZARDOUS MATERIALS COMMITTEE ON ENERGY AND COMMERCE WASHINGTON, DC 20515 ROOM H2-324 HOUSE OFFICE BUILDING ANNEX NO. 2 FAX (202) 225-0173 BOB WHITTAKER, KANSAS (EX OFFICIO Members and Staff, Subcommittee on Transportation and FR: Thomas A. Luken, Chairman DA: May 16, 1989 OVERVIEW BACKGROUND MEMORANDUM ON AMTRAK REAUTHORIZATION The National Railroad Passenger Corporation (Amtrak) was created by the Rail Passenger Service Act of 1970 for the purpose of providing intercity and commuter rail passenger service on lines previously operated by a variety of individual railroads. Amtrak began operating on May 1, 1971. Amtrak currently operates a national system of rail Amtrak now operates about 220 intercity trains a day over 24,000 miles of track, serving more than 480 communities located in all but 5 states in the continental United States. In addition, Amtrak is the operator for commuter operations in the States of Massachusetts and Maryland. Amtrak annually carries about 35 million passengers--20 million on its intercity trains and about 15 million commuters. In Amtrak operates several types of services. Its long 1 -2 Amtrak also operates so-called 403(b) trains, pursuant to Section 403(b) of the Rail Passenger Service Act. These are trains which are supported in part by states under a cost-sharing formula. Under the current formula, the state must pay 45% of the short term avoidable loss in the first year of operation and 65% of the short term avoidable loss in each subsequent year, as well as 50% of the capital costs. There are currently 12 routes in 6 states (California, Illinois, Michigan, Missouri, New York, and Pennsylvania). Under the Rail Passenger Service Act, Amtrak is exempt from the following provisions of the Interstate Commerce Act: (1) regulation of fares, rates, and charges; (2) abandonment or extension of lines of railroads utilized solely for passenger service, and the abandonment or extension of operations over such lines of railroads, whether by trackage rights or otherwise; (3) regulation of routes and service and the discontinuance or change of passenger train service operations; and (4) the issuance of securities or the assumption of any obligation or liability with respect to the securities of others. The Rail Passenger Service Act provides that Amtrak is subject to remaining provisions of the Interstate Commerce Act, as well as "the same laws and regulations with respect to safety and with respect to the representation of its employees for purposes of collective bargaining, the handling of disputes between carriers and their employees, employee retirement, annuity and unemployment systems, and other dealings with its employees as any other common carrier subject to the Interstate Commerce Act." Amtrak employs about 23,000 people, including engineers, conductors, computer programmers, ticket agents, police, shop personnel, real estate planners, and others. FINANCES Like all other passenger railroads in the world, Amtrak does not make a profit, but must rely in part on subsidies. It receives an annual federal appropriation to cover its operating deficit and capital costs. The Consolidated Omnibus Budget Reconciliation Act of 1986 included a three year authorization for Amtrak in the amount of $600 million for FY 1986, $606.1 million for FY 1987, and $630.3 million for FY 1988. The actual amounts appropriated for these years were considerably less: $590.7 million for FY 1986, $602 million for FY 1987, and $580.8 for FY 1988. At present, there is no authorization for the current fiscal year or future years. However, Amtrak received an appropriation of $584 million for FY 1989. Amtrak's financial performance has shown steady improvement during the past few years. Its revenue-to-cost ratio has increased from 48% in FY 1981 to 69% in FY 1988, with a projected ratio of 71% for FY 1989, indicating a decreased reliance of federal funding. -3 Amtrak maintains that it needs to replace and augment its current fleet of passenger cars by a significant degree in order to meet its growing demand. Approximately 31% of its existing fleet of passenger cars (about 430 out of 1350 total cars) belong to Amtrak's Heritage fleet, which consists of cars purchased from freight carriers in 1971. These older cars are more costly to maintain and operate. To upgrade and replace a portion of its aging fleet, and in order to serve a growing passenger population, Amtrak estimates it will need to acquire about 450 cars during the next five years. Amtrak would prefer to be included in the transportation trust fund, supported by an additional one-cent gasoline tax, to cover these and other capital needs, instead of relying on a specific, annual appropriation. Amtrak points out that other countries, including Germany, France, Great Britain, and Japan, have made a much greater commitment to government funding of such operations, including the imposition of significant gasoline taxes. It should also be noted that a growing portion of Amtrak revenues are derived outside of its intercity passenger activites. These sources include real estate operations (such as Chicago's Union Station), regional commuter operations on a cost-plus basis (in Massachusetts and Maryland), and other services (such as assembly of Washington, D. C. Metro cars at Beech Grove, Indiana). AMTRAK'S LEGISLATIVE PROPOSALS Following is a brief summary of legislative proposals supported by Amtrak: * Funding--Amtrak requests federal funding of $656 million for FY 1990 and $684 million for FY 1991. * Exemption from FELA--Amtrak has proposed an alternative to the Federal Employers' Liability Act (FELA), the tort-based compensation statute which governs injury claims by railroad workers. Amtrak believes employee liability claims should be resolved under no-fault state workers' compensation programs, instead of FELA. Amtrak proposes a three-year test program under which Amtrak employees would be placed under state workers' compensation laws. Under the proposal, GAO would study the financial and safety impact of the change and would report its findings to Congress. At the end of the three year period, Amtrak would revert to the FELA system, unless Congress took affirmative action. ⭑ Railroad Unemployment Insurance--The Railroad Unemployment Insurance Act (RUIA), enacted in 1938, governs unemployment and short-term sickness benefits for rail workers, including Amtrak employees. Under legislation passed by the 100th Congress, premiums paid into the RUIA fund will be based on experience ratings based on each railroad's specific employment record. This change is phased in over a four year period. Amtrak -4 proposes to include itself in the definition of "publicly funded rail carriers" providing commuter rail service, under the recent amendment. Because of Amtrak's record of relative stable employment, it claims it would save $15 million in 1989 and 1990 if its proposal were adopted. Tort liability--Amtrak proposes to prohibit the award of punitive damages against it and other publicly funded commuter rail authorities. Amtrak notes that any such award against Amtrak is ultimately borne by the federal government and that this is inconsistent with the prohibition against puntive damages in claims against the United States under the Federal Tort Claims Act. Amtrak also believes the risk of liability under current law makes other carriers wary of entering into additional agreements with Amtrak for new service. Amtrak also seeks an exemption from payments of prejudgment interst and attorneys' fees. ⭑ Environmental liability--In 1976, Congress transferred title to several properties formerly owned by the Penn Central Railroad to Amtrak. Subsequent environmental laws impose strict requirements for cleaning up contamination and pollution on such properties, including any such contamination which occurred prior to 1976. Amtrak claims that clean-up costs may bankrupt the carrier and that such costs for cleaning up any contamination which occurred prior to 1976 should be borne exclusively to the person or corporation who caused the problem. ⭑ Freedom of Information Act--Amtrak is subject to the Freedom of Information Act (FOIA) under the provisions of the Rail Passenger Service Act. Amtrak argues that the time and expense involved in meeting such requirements outweigh the minimal public benefits gained therefrom. It also argues that the vast majority of FOIA requests it recieves are from its suppliers, who use FOIA to inflate prices charged to Amtrak. Amtrak proposes a limited exception to FOIA to deal with this concern. * Police authority--Amtrak also requests that its police force be granted limited federal authority for the purpose of performing law enforcement duties with respect to offenses committed against the corporation, its passengers or employees, or against its property. * Board compensation--Amtrak requests that the per diem fee for paying official expenses of Amtrak Board members who are not paid by Amtrak or the federal government be increased from $300 to $500, to account for inflation. ⭑ Tax-exempt bonds--Amtrak seeks legislation to allow it to issue tax-exempt bonds to the public for the purpose of funding capital improvements. ⭑ Secondary boycotts--Amtrak seeks legislation to abolish secondary strikes against it, under the Railway Labor Act. Amtrak argues there is no compelling public interest in allowing freight labor disputes to shut down all rail passenger service. -5 ADMINISTRATION POSITION The Reagan Administration took the position early on that public assistance for Amtrak was not consistent with its philosophy. Thus, during the past few years, President Reagan's budget sought to eliminate federal funding for Amtrak (or, alternatively, to sell Amtrak). It was only through the intervention of Congress that funding was preserved, although the amount of federal funding for Amtrak has steadily declined in real and nominal terms. For example, Amtrak's appropriation for FY 1981 amounted to $896 million, compared to only $584 million for FY 1989. The Bush Administration was not required to submit a formal line-by-line budget to Congress this year, therefore it is impossible to determine what precise amount of funding would be recommended by the current Administration for Amtrak. Administration has included Amtrak within the broad category of discretionary programs which would be subject to the so-called "flexible freeze." FY 1990 BUDGET RESOLUTION The Bush The conference between the House and Senate Budget Committees on the budget resolution for FY 1990 was completed on May 11, 1989. The budget resolution will be voted on in the House during the week of May 15, 1989. The resolution allocates funding for Function 400 (Transportation), which includes funding for Amtrak, Coast Guard, FAA, FRA, and many other transportation programs. The budget resolution does not contain a specific assumption for Amtrak funding, and it will be up to the Appropriations Committee to make a final allocation within the broad transportation budget function. However, while the budget resolution assumes funding increases for certain FAA and Coast Guard programs, it assumes a freeze level for remaining programs, as well as an across-the-board reduction of .86 percent, to be determined by the Appropriations Committee. Therefore, while a precise number is impossible to ascertain at this time, it is reasonable to assume that Amtrak will receive no funding increase, in real terms, for FY 1990, and may be subject to a decrease. THE LUKEN BILL H.R. 2364, the Amtrak Reauthorization and Improvement Act of 1989, was introduced by Chairman Luken on May 16, 1989. The bill provides for the following authorization levels: $630 million for FY 1989; $656 million for FY 1990; $684 million for 1991; and $712 million for 1992. The bill also provides that railroad employees who work in more than one state shall only be required to pay taxes in the state where the employee maintains his or her residence. The bill also requires Amtrak to prohibit smoking (including cigarettes, cigars, and pipes) on all passenger trains operated by Amtrak, unless separate cars for all passengers who request a smoke-free environment are provided. |