1. Word has come from Gil Carmichael, former Federal Railroad Administration Administrator and Chairman of the Amtrak Reform Council.
   

   PRESS RELEASE

   For Immediate Release

   ITI’s Gil Carmichael Calls for holistic transportation policy

   - Says Two, New Intermodal Trust Funds Should Subsidize “Ethical” Intermodal Transportation System -

   DENVER, CO, September 18, 2009 – In recent comments to the 68th Annual Meeting of the Southeastern Association of State Highway and Transportation Officials (SASHTO), held in Biloxi, Mississippi, Gil Carmichael, Founding Chairman of the Board of Directors of the Intermodal Transportation Institute (ITI) at the University of Denver, said the key to solving the nation’s 21st century transportation problems lies in establishing a holistic approach funded by two, new intermodal trust funds – one for freight movement, the other for passenger transit, and both based on miles traveled.

   Speaking to a technical session of 1,200 government and association members from 12 states and the Commonwealth of Puerto Rico, addressing today’s transportation challenges, Carmichael said the nation needs to establish an ethical and sustainable “intermodal” transportation system that incorporates both freight and passenger rail in order to produce a new transportation structure that meets 21st century needs. This system should be a joint public- and private-sector initiative that builds and expands upon the success of the Interstate Highway System of the last century.

   “The Interstate Highway System that was built has served us well,” he said. “But today we have a population that has doubled in 50 years; we have a deteriorating and badly congested transportation infrastructure that cannot meet consumer demand; and we have a growing global economy that requires interconnected, intermodal transportation. The solution to meeting this century’s challenges lies in building ‘Interstate 2.0′, an ethical, fuel efficient, intercity, rail freight and passenger transportation system that reconnects our center cities, bus and transit lines, energizes our economy,  and sustains our environment. It is a logical and necessary next step forward.”

   Among the challenges addressed by the two-day conference was the major dilemma of how a new transportation policy and such a massive intermodal transportation system would be  paid for – especially with the end of the highway trust fund and declining gas tax revenues in sight. Carmichael offered several paradigms to address this concern:

   • Develop a Holistic Transportation Policy. “Historically, this nation has had a ‘single mode’ mindset.” he said. “Our federal government and state DOTs have not addressed transportation as an interconnected, intermodal system, choosing instead to address each mode independently. That myopic approach will no longer work in our global business environment. Today, the public and private sectors need to partner and address our transportation requirements as they relate to two intermodal modes – freight and passenger rail. This involves utilizing our 240,000 miles of existing (and paid for) rail Rights of Way (ROW) and upgrading about 30,000 miles of it to high-speed, grade-separated track. We should provide the private railroads with a 25 percent investment tax credit to encourage them to upgrade and double- and triple-track their main lines to increase speeds and double capacity. A high-speed rail network that reconnects our center cities, major airports, and ports is vital to 21st century transportation and economic development.”
   • Create Two Intermodal Trust Funds. “One of the dilemmas we are faced with is: how do we pay for this intermodal system?” he asked. “We paid for the Interstate Highway System with a highway trust fund from gas tax usage. The gas tax worked well for the highway and it is about to expire. To replace it, I strongly recommend the U.S. put into place two, new intermodal trust funds to pay for this new multimodal transportation system. There would be one tax for intermodal freight movement and another for passenger transit. And it would be simple to implement cost per mile traveled rather than cents per gallon.”
   • Reorganize State DOTs to Oversee Intermodal Transportation. “With a new intermodal transportation system in place, we should reorganize our state DOTs so we have two separate departments that are responsible for intermodal freight transport and passenger transit, respectively,” he explained. “We can no longer afford to administer effective transportation policy on a single mode basis. States would also build or lease high-speed track on the private railroads’ ROWs to allow new, modern, intermodal freight and passenger trains.”
   • Utilize Our New Technologies. “We have the technology, such as GPS and PTC, to make this intermodal transportation system work, and technology continues to advance,” said Carmichael. “High-speed tracks could be grade separated just like the Interstate Highways so we can safely run passenger trains at 110-125 MPH and freight trains at up to 90 MPH, vastly increasing freight capacity. This could cut highway fatalities by at least 50 percent and drastically reduce the stress, wear and tear, and cost of maintaining the highways, thus extending its life.”
   • Increase Freight Capacity and Stimulate the Economy. “A major public-works project of this magnitude will add millions of new and permanent jobs, will produce a prosperous economy, just as Interstate I did, and will build a long-lasting, truly sustainable transportation system,” said Carmichael. “We can electrify the rails by mid-century, producing a new source of energy and weaning ourselves off of our dependence on foreign fossil fuels. It will then be an ethical and sustainable system that increases freight capacity and protects our environment.”

   In closing, Carmichael said: “A new holistic, ethical transportation policy will build upon the strengths of each mode, will reduce injuries and deaths, will be environmentally benign, will not waste fuel, will not cost too much to use, and will provide ongoing economic stability. This 21st century intermodal transportation infrastructure will use the ‘steel wheel and steel rail’ – the same as it did in the 19th century – as its fundamental element of transport.”

   About ITI

   The Intermodal Transportation Institute at the University of Denver offers an Executive Masters Program that awards a Master of Science in Intermodal Transportation Management from the University of Denver. This graduate degree program prepares transportation industry managers for the increasingly complex, global business environment where knowledge of finance, quantitative processes, supply chain, law, and public policy issues as well as freight, passenger, and intermodal transportation operational strategies are critical management tools for success.  For more information on the ITI Executive Masters Program call: 303-871-4702 or visit: www.du.edu/transportation.

   Whatever plan moves us into the future – and Mr. Carmichael usually has the sharpest eye on the future – is going to have to find new ways to pay for the next generation of railroads and highways. The original highway trust fund at one time was sacrosanct, and left alone. Too many uninspired members of Congress kept looking at the pool of money and thinking about how many local pork barrel projects in their districts could be funded with someone else’s money, and ever since then, the highway trust fund lost its integrity. If Congress has the will to plan correctly for the future, it will have the necessary nerves of steel to set up new funding mechanisms which again become sacrosanct and are dedicated to the very important cause of surface transportation. It’s time for Congress to adopt the stepchild and call it its own.

2. The gun haters are going nuts. This week, the Senate passed a bill requiring Amtrak to restore the rights of gun owners to transport guns on Amtrak under proper safety precautions in baggage cars.

   To read some of the hilarious, delirious ravings of the gun haters, you would think the Senate is inviting known terrorists to a tea party and asking them to bring along their weapons of choice.

   Amtrak used to allow guns onboard trains in baggage cars, prior to September 11, 2001. Since then, Amtrak – acting on its own after 9/11 and the later Madrid train bombings – banned guns from its trains.

   However, the Senate, in an overwhelming majority vote, has told Amtrak either figure out a way to get the guns safely and securely back on trains, or your free federal monies go away, as soon as March of 2010.

   The gun haters, with great whining and gnashing of teeth, have said it’s impossible to make this happen.

   More rational people have reminded one and all we have this controlling document in our lives as Americans – it’s know as the Constitution for those who may have forgotten about it with everything going on in Washington these days – which plainly and loudly says Americans have the right to own and carry guns.

   These same rational people also like to point out the TSA (Those same passenger-friendly people who love to watch us take off our shoes in airports.) already has lots of plans in place for things like guns on Amtrak.

   The sooner they return, the better.

3. Union Pacific Railroad, the railroad everyone thinks loves to hate passenger trains, apparently is willing to make some money embracing one particular passenger train.

   The Chicago Tribune reported today, in a story datelined Denver, the Ski Train may be back this winter, operating between Denver and the Winter Park resort. Previously operating for 69 years, the Ski Train was thought to be dead when its previous owner ended the operation and sold his passenger rail equipment to a Canadian scenic passenger operator.

   In came Iowa Pacific Holdings, with former Amtraker Ed Ellis now as President of Iowa Pacific, and the Ski Train is back on schedule. Iowa Pacific operates other short passenger routes, mostly as scenic and entertainment trains.

   Mr. Ellis said Iowa Pacific would use Iowa Pacific equipment and contract with Amtrak to provide train and engine crews. A deal has not been finalized with Amtrak.

   Okay, let’s take a roll call.

   Union Pacific, which, through its official spokesman once described Amtrak as “novelty transportation,” is striking a deal with an operator to allow a seasonal, regularly scheduled passenger train operate over its tracks, which it could have easily let go away after the original operator pulled out.

   Then, Amtrak, which sometimes thinks of itself as “novelty transportation” instead of being an important part of our domestic surface transportation network, is in the process of cutting a deal with someone else to run passenger trains.

   Gosh (gasp!), could capitalism in passenger rail be rearing its allegedly ugly head and someone has figured out how a passenger rail operation can make money for all parties concerned?

   What’s wrong with these people? Aren’t they listening to all of the alleged experts that continuously drone on and on and on that only government is capable of running any sort of passenger train in the proper manner (Which means at a loss.)?

4. Lots of mail came into the This Week at Amtrak e-mailbox after the last issue of TWA calling for another operator to replace Amtrak. Here’s a sample.
   

   As the British would say: “Here, Here” to your latest newsletter! What about a new corporation formed by a consortium of freight railroads to run a national passenger railroad system? Since there is little more consolidation to be done between the big boys, perhaps the congress and courts would approve such a novel arrangement as there would be no freight competition issues. The freight lines would benefit from aid in infrastructure construction, and having open knowledge of all passenger operations, the freight lines would certainly be more flexible in schedule development/alternate routes even over competing lines since the passenger business would benefit all of them. Now, that “by George” would be a nice trick to pull off, especially since it might even make sense!

   The message both Joe & Joe (Boardman and Biden) should hear is: If you can’t do it right, don’t do it at all. Give it up!

   I like the idea of shutting-down Amtrak, but suggest a slight variation.

   Keep Amtrak in operation. However, quarantine Amtrak between Washington, DC; Boston, Springfield, Massachusetts; Albany, New York; and Harrisburg, Pennsylvania. Transition the remainder of the inter-city passenger rail network, and the franchise rights for additional rail services, to one or more other entities.

   If Amtrak believes their NEC is so profitable and is the only part of their network deserving investment, as demonstrated by their actions, and trains in the remainder of the country are bleeding amounts of red-ink exceeding the combined inventory of all retail stationery stores, give Amtrak what it wants!

   Let’s see how long Amtrak can survive with the NEC and a reduced or zero subsidy.

5. And, finally, this advertisement for a vacant position for a qualified person at Amtrak came floating in to TWA.
   

   Inspector General – Eff. 09/04/09
   Location:     District of Columbia-Washington
   Req. Number:     90000243
   Description:     THE SAFETY OF OUR PASSENGERS, OUR EMPLOYEES, THE PUBLIC AND OUR OPERATING ENVIRONMENT IS OUR HIGHEST PRIORITY!
   Position Title: Inspector General
   Department: Office of Inspector General
   Location: Washington, DC
   Posting #: 90000243

   INTERNAL AND EXTERNAL APPLICANTS

   SUMMARY OF DUTIES: Amtrak’s IG reports to the Chairman of Amtrak’s Board of Directors and the Congress. The IG will keep them currently informed, by means of periodic reports required by the IG Act, concerning fraud and other serious problems, abuses, and deficiencies relating to the administration of programs and operations administered or financed by Amtrak, to recommend corrective action concerning such problems, abuses, and deficiencies, and to report on the progress made in implementing such corrective action. Amtrak’s Inspector General will:

   • Serve as the conscience of Amtrak.
   • Work with Amtraks Board of Directors and the Congress to improve program management.
   • Maximize the positive impact and ensure the independence and objectivity of Amtrak OIGs audits, investigations and other reviews.
   • Use Amtrak OIGs investigations and other reviews to increase integrity and recommend improved systems to prevent fraud, waste and abuse.
   • Be innovative, question existing procedures, and suggest improvements to programs.
   • Where appropriate, build relationships with program managers based on a shared commitment to improving program operations and effectiveness.
   • Work with Amtrak to address company-wide issues, both independently and collectively.

   EDUCATION: An undergraduate degree is required.

   PERFERRED EDUCATION: An advanced or Masters degree in an applicable field is preferred.

   WORK EXPERIENCE: The Inspector General should have the following:

   • Be an independent-minded leader who possesses the integrity to ensure Amtrak’s full compliance with the IG Act.
   • Either be a sitting Inspector General or Deputy Inspector General, or have recent similar experience.
   • A minimum of 10 years cumulative progressively responsible administrative, managerial and supervisory experience that provides extensive knowledge of auditing and inspection practices, law enforcement policies and procedures, accounting, internal controls, financial analysis, law, management analysis, public administration, and/or investigation techniques.
   • A comprehensive knowledge and understanding of the audit, investigation and evaluation standards issued by the Council of Inspectors General on Integrity and Efficiency and the Government Accountability Office.
   • Direct experience working with upper management, the media and Congress.
   • Significant experience in management and a thorough understanding of Federal and IG audits, investigations, law enforcement and evaluations involving large scale companies and operations.
   • Evidences familiarity with the Comptroller General’s auditing standards.
   • Ideally, have an understanding of railroad operations.
   • Strong analytical skills and judgment to support critical decision making.
   • Unquestioned ethical standards, high level of integrity, sound professional judgment, strong leadership skills, an understanding of business acumen, a high level of common sense and the ability to think logically.
   • The ability to work under pressure and make sound decisions with limited information.
   • Significant experience with leadership, human capital, and managing budgets.
   • The ability to build a strong team; the IG should not be intimidated by a talented staff.
   • Strong coalition-building and interpersonal skills to form solid relationships both internally and externally; s/he can work through internal conflicts and/or disagreements successfully.
   • Excellent written and oral communication skills, including a strong ability to present to audiences both large and small.
   • High energy and committed work ethic.
   • No personal or professional relationships with Amtrak that would hinder the candidate’s ability to be objective and independent with respect to audits and investigations of Amtrak and its operations.

   OTHER REQUIREMENTS: The Amtrak Inspector General will have the responsibility of assuring best practices in the Amtrak OIG. The Inspector General will supervise over 90 OIG employees in conducting independent, objective audits, evaluations and investigations relating to Amtrak programs and operations.

   This individual must demonstrate credibility, integrity and objectivity, be a strong communicator internally and externally, and have extensive relevant experience.

   The successful candidate will have a strong commitment to the Amtrak mission. The candidates commitment should reflect an interest to help build the Amtrak enterprise, creating best practices for a “first class” organization for the passengers, employees and stakeholders. The successful candidate must also demonstrate an equally strong commitment to implementing all requirements of the IG Act.

   SUPERVISORY RESPONSIBILITIES: 99 employees and 8 ARRA employees

   TRAVEL: Less than 25%

   AMTRAK EMPLOYEES MUST COMPLETE A JOB OPPORTUNITY APPLICATION TO APPLY FOR THIS POSITION.

   Hiring Range:     $246,000.00 – $268,000.00 Annually
   Last Date to Apply:     09/30/09
   Position Type:     Permanent
   Job Category:     Inspector General
   Years of Experience:     10 – 15
   Travel Requirements:     <25%
   Relocation Benefits May Apply:     Yes
   Classification Agreement:     No
   Referral Bonus:     2500 pts

   Well, Amtrak ASKED for all of the right things. It’s another story as to whether or not the new IG will be able to accomplish anything without the type of interference which seems to have occurred in the immediate past.

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1. There has been so much going on these past couple of weeks that needs to go on the record, we’re producing a third This Week at Amtrak in less than a week. We have read about the sudden departure of Amtrak former Inspector General Fred Weiderhold, Jr. and the follow-up to that departure by Senator Chuck Grassley of Iowa. Also making a buzz in the past 10 days was the presentation of a report by the United States General Accountability Office entitled “High Speed Passenger Rail: Effectively Using Recovery Act Funds for High Speed Rail Projects.” Reading all the way through it could prove to be a snoozer for some, but this report by the GAO’s director of physical infrastructure issues raises some important points about the need for clarity and focus in government, particularly relating to the subject of passenger rail. That report is presented at the end of today’s TWA.
2. First, some good news from here in Florida. We’ve been following the saga of Tri-Rail, South Florida’s commuter rail system which operates in three counties, Palm Beach, Broward (Ft. Lauderdale), and Miami-Dade. (Note, if you’re like this writer and wondered how Dade County suddenly got to be Miami-Dade County in recent years, you are not alone. It seems the county fathers decided since Miami pretty much completely dominates Dade County, the county should officially be renamed Miami-Dade County. Which, if you’re a map printer, created some headaches for you. One interesting note: further north, in Central Florida is Seminole County, which is adjacent to Orange County the home of Orlando and partially to Walt Disney World. Originally, Seminole County was named Mosquito County, and the name was changed sometime prior to the Florida Land Boom. It would be tough to draw tourists to a location named Mosquito County.)

   Tri-Rail has been publicly struggling with its upcoming annual budget since once again, no permanent funding source was declared for the commuter system by the gutless, do-nothing Florida legislature this year. Tri-Rail officials have been publicly wringing their hands, hoping for a government miracle to save having to slash all weekend and holiday service, and cut huge amounts out of daily service, effectively creating a revised system which would meet very few needs of its total ridership, and drive passengers away. Add to all of that the feds telling Tri-Rail if it didn’t run a full complement of service, the United States Government would demand all sorts of money be repaid in full for infrastructure improvements made (Double tracking the system, and more.) with signed contracts saying Tri-Rail would operate a certain size schedule, no matter what.

   Suddenly, it was a miracle. Well, no, not really. What it was amounted to was transit officials accustomed to lots and lots of funding from other sources (Mainly, the county governments.) and never having to say you’re sorry for anything “finding” some money for operations.

   So, what happened? Gosh, golly, gee, wow, it turns out the money for next year’s full operations was there all of the time, just sitting unused and unloved in another account. Yes, you guessed it, Tri-Rail bosses figured out money could be borrowed from accounts to improve parking and some other equipment upgrades to keep the system operating while a final solution is found for a permanent source of funding.

   The transit-riding public, and all of the businesses in the Tri-Rail area which support the system with paid subsidies for employees and other programs read account after account in the news media saying Tri-Rail was in crisis. Yes, it was – a crisis of its own making. It would have been wonderful if the gutless, do-nothing Florida legislature had done something this year about solving the funding problem for Tri-Rail on a permanent basis. But, keeping true to form, they punted and said it was someone else’s problem.

   What the various denizens of Florida’s legislative branch of government fail to recognize in a huge state such as Florida (Fourth in the nation for population.) is what brings prosperity to one corner of the state brings prosperity to all of the state. Transit is not a regional issue for Florida; it is a state issue. It’s a given in state government highways and other infrastructure will be built and maintained; why isn’t it a given commuter rail should be built and maintained, too, as long as it’s a viable system like Tri-Rail?

3. The plight of Tri-Rail is similar to the plight of Amtrak. There was a belief at Tri-Rail someone else would bail them out and keep the system running, while the real answer to the immediate problem was just sitting in a Tri-Rail bank account.

   Much the same is true at Amtrak. As long as it’s business plan – a favorite of the fans of failure – continues to emphasize money from outside sources instead of first finding every possible way to generate revenues by full use of the company’s various assets, Amtrak will lurch from crisis to crisis.

   Amtrak probably thinks the failed experiment of the heartstrings-pulling Heartland Flyer, funded by the State of Oklahoma for seven figures a year, is a good train. Harrumph. The Heartland Flyer is a waste of good Superliners and locomotives which could be producing far more revenue elsewhere, and could be replaced by a bus or two for the average of a total of 111 passengers per day the train hauls over its 206 mile, two-state route. Amtrak nationally only captures one tenth of one percent of domestic transportation output; the taxpayers of Oklahoma are taking a huge bath with the Heartland Flyer as on a statewide basis it falls far below Amtrak’s national average.

   Rational people hope this more than decade-long operating junior train will one day grow into a real, productive, adult train if the consortium of states working together right now figures out a way to correctly stretch this route north of Oklahoma City and connect it with the route of the Southwest Chief in Kansas. When you consider the tiny consist of the Heartland Flyer still has only a 43% load factor, one has to wonder if anything at all is being done to bolster this train. While it does serve as a feeder to the Texas Eagle in Fort Worth, Texas, (And, the Eagle itself only has a 53% load factor, well below what it should be.) the Heartland Flyer is an example critics can point to and say, “Look at the millions of dollars Oklahoma has fed into this train, and the impact on the mobility of Oklahomans is near zero in the overall picture of state transportation output.” While a tiny, vocal, misinformed minority group of supporters of this train can boast and say Oklahoma has Amtrak service, the real question is, “at what price?”

   Amtrak’s critics constantly point to the high cost of low return on many routes, and the Heartland Flyer is a prime example of when a real, gut-wrenching decision has to be made whether or not to provide a transportation alternative at an exorbitant price, or use those assets elsewhere. Having a train for the sole sake of having a train helps no one except those who like to stand by the side of the track and watch the train go by.

   From the standpoint of Amtrak’s business plan, it doesn’t care where government money comes from, as long as it comes. The only states which have a viable train that can be pointed to by other states as a success story are North Carolina and the Carolinian, with a load factor of 77.9%, Pennsylvania’s Pennsylvanian with a load factor of 74.3%, and Michigan’s Pere marquette, with a load factor of 67.3% (But, as reported earlier this month in TWA, even the State of Michigan is looking cross-wise at continued funding for this train as ridership has slipped this fiscal year.). If North Carolina’s model can be followed, it would be easier for other states to justify the cost of state-funded passenger rail service.

   While starter projects are important, the 11-year run of the Heartland Flyer has proven nothing more than a half of a blip on the transportation radar in Oklahoma, and realistic people have to seriously look at this train and how the assets to operate this train could create a better return on investment elsewhere. It’s notable North Carolina’s other state funded train, the Piedmont, with a load factor of 44.6%, operates solely with equipment owned and maintained by the State of North Carolina.

   So, in summary, Tri-Rail found fiscal religion in its own bank account, and will live to fight another day for better state funding, perhaps in the form its has advocated for years, a small, local sales tax on rental cars only in the three tourist-laden counties Tri-Rail serves. Oklahoma has shelled out millions of dollars for a junior train (If there were any Rail Diesel Cars still available for intercity service, this train as it is today would be a good candidate for those.), and, unless a solution is found to extend the train to its logical endpoint further north in Kansas, will have to make some serious decisions about the worth of the Heartland Flyer.

   Amtrak, as our national passenger rail provider, still lacking a long term vision, has got to make some decisions, too, before someone else makes them for it. Amtrak has to decide whether it is happy to drain money out of state bank accounts or develop its own plan for as much self-sufficiency as possible. As long as there are annual fights over money being paid to Amtrak to run these small routes, there will be anxiety and wonder every budget year. As one president of a state passenger rail association so eloquently said, “it’s not a matter of making 55% return at the farebox, it’s a matter of straining every muscle and ounce of energy and squeezing out every dime of assets to get to 56% that’s important.” Amtrak and its various fans of failure have been too happy for too long to never worry about reaching that extra point of self-reliant liberty.

4. Something fun from half-way around the world: Fox News reported in mid-June many Japanese women choose to commute in female-only passenger rail coaches during rush hour to avoid being groped by men, and now men are requesting men-only coaches for fear of being accused of groping.

   You can’t make this stuff up. Ten representatives of male commuters petitioned the commuter train operator for men-only coaches, noting there have many cases of groping, as well as false charges of groping, so, since the female-only coaches have been successful, in the spirit of gender-equality, men-only coaches should also be available.

   No word on whether married couples would be allowed to ride in the same car.

5. Here is the GAO report mentioned above.
   

   Testimony Before the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, Committee on Commerce, Science and Transportation, U.S. Senate

   HIGH SPEED PASSENGER RAIL

   Effectively Using Recovery Act Funds for High Speed Rail Projects

   Statement of Susan A. Fleming, Director Physical Infrastructure Issues

   For Release on Delivery Expected at 2:30 p.m. EDT, Tuesday, June 23, 2009

   Mr. Chairman, Ranking Member Thune, and Members of the Subcommittee:

   I am pleased to be here today to discuss the implementation of high speed intercity passenger rail projects in the American Recovery and Reinvestment Act of 2009 (the Recovery Act). The $8 billion provided by the Recovery Act for high speed and other intercity passenger rail projects has focused more attention on and generated a great deal of anticipation about the possibility of developing high speed rail systems in the United States. These projects are seen by some as serving an important transportation role, by moving people quickly and safely, reducing highway and airport congestion, and being environmentally friendly. My statement today focuses on (1) the factors that we have identified that affect the economic viability of high speed rail projects and (2) how the Federal Railroad Administration’s (FRA) recent strategic plan incorporates those factors. ¹ My testimony is based on our recent report on high speed rail, our review of FRA’s strategic plan, and discussions with FRA and selected transportation experts. ²

   In summary, we found that while the potential benefits of high speed rail projects are many, these projects—both here and abroad—are costly, take years to develop and build, and require substantial up-front public investment, as well as potentially long-term operating subsidies. Determining which, if any, high speed rail projects may eventually be economically viable will rest on factors such as ridership potential, costs, and public benefits. FRA largely agrees with our March report. FRA’s strategic plan for high speed rail outlines, in very general terms, how the federal government may invest the $8 billion in Recovery Act funds for high speed rail development. However, this plan does not establish clear goals for the federal government in high speed rail—other than establishing a “longer term goal of developing a national high speed intercity passenger rail network of corridors”—and does not define a clear federal role for involvement in high speed rail projects other than providing Recovery Act funds. As such, in our view, it is more a vision than a strategic plan. As part of a discussion to prepare for this hearing, FRA told us that it sees its strategic plan as a first step and that it intends to seek structured input from stakeholders and the public to help develop strategies to implement its vision.

   Factors That Affect the Economic Viability of High Speed Rail Projects

   The factors affecting the economic viability of high speed rail projects include the level of expected ridership, costs, and public benefits (i.e., the benefits to non-riders and the nation as a whole from such things as reduced congestion), which depend on a project’s corridor and service characteristics. High speed rail is more likely to attract riders in densely and highly populated corridors, especially where there is congestion on existing transportation modes (such as highways or airports). Characteristics of the proposed service are also a key consideration because high speed rail is more likely to attract riders where it compares favorably to travel alternatives in terms of trip times, frequency of service, reliability, and safety. Costs largely hinge on the availability of rail right-of-way, and a corridor’s terrain. To stay within financial or other constraints, project sponsors typically make trade-offs between cost and service characteristics.

   Once projects are deemed economically viable, project sponsors face the challenging tasks of securing the significant up-front investment for construction costs and of sustaining public and political support and stakeholder consensus. We found that in other countries (France, Japan, and Spain) with high speed intercity passenger rail systems, the central government generally funded the majority of the up-front costs of high speed rail lines. ³ The $8 billion in Recovery Act funds for high speed rail (and other intercity passenger rail) lines represents a significant increase in federal funds available to develop new or enhanced intercity passenger rail service. This amount, however, represents only a small fraction of the estimated costs for starting or enhancing service on the 11 federally authorized high speed rail corridors. For example, the San Francisco-Los Angeles portion of the California high speed rail corridor alone, which already has about $9 billion in state bonding authority, is estimated to cost about $33 billion dollars. ⁴ Furthermore, federal funds for high speed rail in the past (as with the Recovery Act) have been derived from general revenues, not trust funds or other dedicated funding sources. This makes ongoing capital support for high speed rail projects challenging, as they compete for funding with other national priorities such as health care, national defense, and support for ailing industries. In addition, the challenge of sustaining public-sector support and stakeholder consensus is compounded by long project lead times, the diverse interests of numerous stakeholders, and the absence of an established institutional framework for coordination and decision making.

   FRA’s Strategic Plan Is a First Step

   FRA’s strategic plan attempts to address the absence of an institutional framework for investments in high speed intercity passenger rail service. In our recent report and in 2005, ⁵ we discussed the need for:

   1. Clear federal objectives and clear roles for all stakeholders (federal, regional, state, and local governments and freight, commuter, and passenger railroads).
   2. Clear identification of outcomes expected.
   3. Ensuring the reliability of ridership and other forecasts to determine the viability of high speed rail projects.
   4. Including high speed rail with a reexamination of other federal surface transportation programs to clarify federal goals and roles, link funding to needs and performance, and reduce modal stovepipes that hinder financing transportation improvements that will lead to the greatest
      improvements in mobility.

   FRA’s plan, which the Recovery Act required the FRA to issue 60 days after the act was signed, outlines in very general terms how the FRA will allocate the Recovery Act high speed rail funds. It does not define goals for investing in high speed rail, how these investments will achieve them, how the federal government will determine which corridors it could invest in, or how high speed rail investments could be evaluated against possible alternative modes in those corridors. In our opinion—and as FRA recognizes—this strategic plan is a first step in planning federal involvement. FRA has emphasized that its approach is to involve the ultimate “owners” of high speed rail—the states and communities in which they will reside—to help flesh out the approach to developing high-speed rail that are under its control. FRA officials also told us that it plans to spend Recovery Act funds in ways that show success to help keep longterm political support for these projects at the local level.

   Overall, FRA generally agrees with the issues that we raised in our March report, with the report’s recommendations, and with the observations that we are making today. Last week, FRA took its next step by issuing interim guidance for applying for Recovery Act funds. ⁶ The guidance lays out the evaluation criteria for grant funding, the weights to be applied to the criteria, and the selection criteria.

   In conclusion, the infusion of up to $8 billion in Recovery Act funds is only a first step in developing potentially viable high speed passenger rail projects. The host of seemingly intractable issues that have hampered development of these projects remain as challenges, and these issues will need to be resolved to effectively spend Recovery Act funds. Surmounting these challenges will require federal, state, and other stakeholder leadership to champion the development of economically viable high speed corridors and the political will to carry them out. It will also require clear, specific policies and delineations of expected outcomes, and objective, realistic analysis of ridership, costs, and other factors to determine the viability of projects and their transportation impact.

   Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you or other Members of the Subcommittee may have.

   ¹ By economically viable, we mean that a project’s total social benefits offset or justify the project’s total social costs.

   ² See GAO, High Speed Passenger Rail: Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role, GAO-09-317 (Washington D.C.: Mar. 19, 2009); and Federal Railroad Administration, Vision for High- Speed Rail in America (Washington D.C.: April 2009). We conducted this performance audit from May 2009 to June 2009 in accordance with generally accepted government auditing standards. These standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

   ³ GAO-09-317.

   ⁴The corridor would extend from Sacramento and San Francisco through Los Angeles to San Diego.

   ⁵ GAO-09-317 and GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP (Washington D.C.: February 2005).

   Please contact Susan Fleming at (202) 512-2834 or Flemings@gao.gov about this statement. Contact points for our Offices of Congressional Relations and Public Relations can be found on the last page of this statement. Greg Hanna and James Ratzenberger made key contributions to this statement.

Volume 6, Number 19

1. Things are getting interesting regarding the sudden departure by retirement of Amtrak’s well-respected Inspector General, Fred Weiderhold.

   No one seems to know where this is going, but, fortunately for Amtrak and the American taxpayers, Senator Chuck Grassley of Iowa has taken a strong interest in this situation.

   It’s important to note throughout Amtrak’s decades-long corporate life, Amtrak has often been remiss in following normal rules and procedures and courtesies (Not to mention settled law.) in Washington.

   Back in the late 1980s, this was the identical case with VIA Rail Canada, run by our cousins in the cold north. Since the Canadian federal government is a parliamentary system of government, things can happen more quickly and dramatically there versus what happens in the United States. The bottom line for VIA at the end of the 1980s was the government of Prime Minister Brian Mulroney felts it was constantly being submarined by the board of directors and management of VIA, and, in a meeting of just a handful of members of the Prime Minister’s cabinet, suddenly, half of VIA Rail Canada disappeared due to a tremendous slash in VIA’s government funding.

   That one cut cost the original Canadian on Canadian Pacific Railway lines to be gone, and the lesser route of the Super Continental on Canadian National Railroad lines to become the premier train of the system (With the “Canadian” moniker.), but to this day only operating a tepid tri-weekly service between Toronto, Ontario and Vancouver, British Columbia via Edmonton and Jasper, Alberta. Also soon gone was the Atlantic, which operated between Montreal, Quebec and Halifax, Nova Scotia via St. John, New Brunswick.

   The tourist service VIA Rail Rocky Mountaineer survived, but was transferred to private ownership where it has flourished and grown by being freed of the oppression of government ownership.

   Several other routes, such as service to Sudbury, Ontario, also disappeared.

   Amtrak for decades has played – like VIA Rail Canada – fast and loose with federal law, mostly often obeying federal statutes and mandates when convenient and otherwise doing as it pleased, often ignoring propriety.

   Understand, it really didn’t matter who was on the Amtrak Board of Directors at the time or who was running the White House at the time, these games have continued unabated for decades.

   Perhaps, a century from now, when a true and deep history of Amtrak is compiled and written by a neutral historian, there will be an understanding of why so many directors of Amtrak chose to either look the other way or did what they did for the sake of expediency.

   Maybe, some of what was done was done to get around the vagaries of attempting to run a business in a cesspool like Washington.

   But, for whatever reasons things have happened in the past, it looks like a day is dawning when business as usual at Amtrak may have to be radically changed. We saw the many great efforts of departed Chairman of the Board David Laney to put Amtrak on a more transparent and businesslike track. We saw a reduced board after his departure struggle to get through the wrong hiring of Alex Kummant and his subsequent merciful departure. And, we now see a continuing reduced board with buckets of free federal money and lots of extraneous infrastructure projects going on, but without a clear vision of what Amtrak will be later this year or next year.

   Here’s hoping Senator Grassley will continue to work to bring the light what is really going on at Amtrak.

   Amtrak Interim President and CEO Joseph Boardman, a creature of government and not accustomed to working within or for private sector boundaries needs to take the lead with Senator Grassley and reveal what his management team is doing to solve any problems being identified as holding Amtrak back from greatness.

2. This is a press release, published in full, from Senator Grassley’s office. Keep in mind this is a press release from a politician, not a news story.
   

   For Immediate Release
   June 25, 2009

   Grassley asks Amtrak to respond to report describing interference with IG work

   WASHINGTON — Senator Chuck Grassley has asked Amtrak about the circumstances of the Inspector General’s unexpected retirement seven days ago and invited Amtrak to provide  information about the interference by Amtrak in the work of the Inspector General described in a report prepared at the request of the retired watchdog.

   Grassley said the report indicates that Amtrak’s policies and procedures have systematically violated the letter and spirit of the Inspector General Act.

   “As I continue my investigation into whether the independence of the Inspector General was undermined by Amtrak officials, I want to make sure I have any and all information Amtrak wants to provide,” Grassley said. “The allegations are serious, including third parties being told to first send documents under subpoena by the Inspector General to Amtrak for review, and the Inspector General being chastised for communicating directly with congressional appropriations and authorizing committees,”

   Grassley asked the Office of the Inspector General last week for a copy of the report, which was prepared by the law firm of Willkie Farr & Gallagher. Grassley said his office had been in communication with former Inspector General Fred Weiderhold about the issues before Weiderhold’s retirement on June 18, 2009.

   Also this month, Grassley has been investigating the President’s decision to fire the AmeriCorps Inspector General, after the Inspector General issued two reports of mismanagement and abusive spending by AmeriCorps grantees. Grassley also has asked the International Trade Commission to account for its termination of its Inspector General who had been repeatedly hired for six-month increments and been given outstanding performance reviews. In both cases, Grassley said the administration failed to comply with a law enacted last year requiring Congress to be notified 30 days in advance of the dismissal of an Inspector General and given the reasons for the firing. Then-Senator Barack Obama co-sponsored the legislation along with Grassley.

   “Inspectors general are watchdogs over the federal bureaucracy, and the Inspector General Reform Act of 2008 is supposed to better safeguard their independence so they can do their jobs for taxpayers and program stakeholders,” Grassley said. “The President has said he wants more accountable government, and keeping good watchdogs on the job is fundamental to that goal.  Inspectors general need to be strengthened, not undermined.”

   Last week, Grassley asked the Treasury Secretary to put an end to documented resistance from the Treasury Department to requests for information from the Special Inspector General for the Troubled Assets Relief Program. Senator Grassley was an advocate for creating a Special IG for TARP to try to hold the program accountable and co-sponsored legislation to strengthen the ability of the Special IG to conduct oversight after the TARP program changed its original mission. Earlier this year, Senator Grassley also battled the White House after it tried to subject requests of the Special IG to the red tape of the Paperwork Reduction Act. Grassley subsequently introduced legislation to exempt the Special IG from the Paperwork Reduction Act.

   Grassley has long worked to empower inspectors general to conduct effective oversight of the federal bureaucracy and he has held inspectors general themselves accountable for meeting the requirements of the jobs.

   The text of Grassley’s letter to Amtrak is below, along with his letter of last week to the Amtrak Office of the Inspector General, which sought a copy of the report. The attachment to today’s letter, including the “Report on Matters Impairing the Effectiveness and Independence of the Office of Inspector General,” are posted here.

   June 25, 2009
   The Honorable Thomas C. Carper
   Chairman of the Board
   Amtrak
   National Railroad Passenger Corporation
   10 G Street, NE
   Washington, DC 20525

   The Honorable Lorraine A. Green
   Interim Inspector General
   Amtrak
   Office of Inspector General
   National Railroad Passenger Corporation
   10 G Street, NE
   Washington, DC 20525

   Dear Chairman Carper and Interim Inspector General Green:

   Thank you for your response dated June 23, 2009. My staff is currently in the process of reviewing information from various sources concerning the Amtrak Office of Inspector General (OIG). I am interested in the facts regarding former Inspector General Fred Weiderhold’s (IG) retirement. Interestingly, he retired on the same date that the law firm of Willkie Farr & Gallagher, LLP completed a “Report on Matters Impairing the Effectiveness and Independence of the Office of Inspector General” (“Report”). I understand that there was a meeting with Mr. Weiderhold and the Board of Directors on that same date as well, and that his decision to retire was made during that meeting. Accordingly, please:

   1. provide a description of the circumstances surrounding former IG Weiderhold’s unexpected retirement, specifically the relationship between the timing of his retirement and the Report;
   2. produce any and all internal as well as personal materials relating to: (a) the former IG’s departure; and (b) the Report; and
   3. produce any and all materials cited in footnote 7 of the Report.

   For definitions related to this request and all future requests, please refer to Attachment 1.

   The Report prepared by Willkie Farr & Gallagher, LLP and Attachment 2 suggests a long-term and unrelenting interference with the activities and operation of the OIG. The Report seems to indicate that Amtrak’s policies and procedures have systematically violated the letter and the spirit of the Inspector General Act, as amended. However, in order to ensure that Amtrak has an opportunity to respond, please identify any factual representations with which you disagree, or about which you wish to provide additional information. Please be sure to provide documentation in support of your position(s).

   I also want to thank you both for offering to “maintain an open line of communication” with my office, and look forward to my staff receiving a briefing from you. In addition, I would appreciate your making the following individuals immediately available for interviews:

   1. D. Hamilton Peterson, Deputy Counsel to the Inspector General;
   2. Edward Puccerella, Director of Congressional & External Affairs;
   3. Colin C. Carriere, Counsel to the Inspector General; and
   4. E. Bret Coulson, Deputy Inspector General.

   It was also reported to my staff that some OIG staff members may be fearful of retaliation if they were to discuss the matters set forth in this letter with anyone, including Congress. As you may be aware, 18 U.S.C. § 1505 prohibits obstruction of Congressional inquiries. Denying or interfering with employees’ rights to furnish information to Congress in any way will be considered an obstruction of our inquiry. Amtrak and Amtrak OIG employees should be free from fear of retaliation or reprisal, and authorized to freely answer questions from Congress without representatives from Amtrak present, if they so desire. Accordingly, I would appreciate your advising the OIG and all full-time, part-time and contractor employees at Amtrak of the fact that they are free to contact Congress without advising Amtrak management or their respective supervisors.

   Thank you again for your continued cooperation and assistance in this matter. As you know, in cooperating with the Committee’s review, no documents, records, data or information related to these matters shall be destroyed, modified, removed or otherwise made inaccessible to the Committee.

   Sincerely,

   Charles E. Grassley
   Ranking Member

   Attachment

   June 18, 2009
   E. Bret Coulson
   Deputy Inspector General Management & Policy
   Office of Inspector General
   Amtrak
   National Railroad Passenger Corporation
   10 G Street, NE
   Washington, DC 20525

   Dear Mr. Coulson:

   As a senior member of the United States Senate and as the Ranking Member of the Senate Committee on Finance (Committee), it is my duty under the Constitution to ensure that Inspectors General, which were created by Congress, are permitted to operate without political pressure or interference from their respective agencies. Inspectors General were designed for the express purpose of combating waste, fraud, and abuse and to be independent watchdogs ensuring that federal agencies were held accountable for their actions. I understand that Inspector General Fred Weiderhold, Jr. has retired today.

   Based on contacts that my staff had with Mr. Weiderhold on two recent occasions (April 2, 2009 and June 4, 2009), I understand that the OIG has suffered from repeated and continuous interference from the agency. After the most recent discussion, it was agreed that the OIG would provide, among other things, a White Paper and specific examples of agency interference with OIG audits and/or investigations. To date, the OIG has not yet provided any documents. As you know, any interference such as that was described in these previous discussions is a direct violation of the Inspector General Act of 1978.

   In light of Mr. Weiderhold’s unexpected retirement, please provide the previously requested documentation immediately. I am deeply troubled that these aforementioned meetings with my staff and discussions of the OIG’s independence concerns predicated this personnel action with IG Weiderhold. Furthermore, I am even more concerned that there is a lack of accountability, based on the OIG’s reported lack of independence, for the $1.3 billion in stimulus funds that Amtrak has received from American taxpayers.

   Due to these recent events, I specifically request all materials at the IG’s office be preserved immediately.

   In addition to providing the requested documentation, please provide an immediate briefing to my staff on the level of proper oversight the OIG has over of the $1.3 billion dollars of American taxpayer money, and what role the previously discussed independence issues with the agency played in the elimination of former IG Weiderhold.

   Thank you in advance for your assistance and I would appreciate a response to this inquiry by June 19, 2009.

   Sincerely,

   Charles E. Grassley
   Ranking Member of the
   Committee on Finance
   cc: The Honorable Thomas C. Carper
   Chairman
   Amtrak
   National Railroad Passenger Corporation
   Joseph H. Boardman
   President and Chief Executive Officer
   Amtrak
   National Railroad Passenger Corporation