The Amtrak Reform and Accountability
Act of 1997 and Related Developments

Stephen J Thompson
Specialist in Transportation
Economics Division

Updated January 28, 1999

97-1023

Selected Provisions of the Act

Authorization of appropriations. The Act (§301) authorizes appropriations of $5.163 billion over 5 years to Amtrak for payments that benefit freight rail retirees (about $140 million annually),⁽¹⁾ operating expenses, and capital expenditures, as follows:

$1.138 billion for FY1998

$1.058 billion for FY1999

$1.023 billion for FY2000

$0.989 billion for FY2001

$0.955 billion for FY2002

Interstate rail compacts. The Act (§410) grants consent to states to enter into interstate compacts to promote the provision of intercity rail passenger service.

Transportation service requested by states, authorities, and other persons. The Act (§105) repeals the requirement ((49 U.S.C. §24704) (1997)) for Amtrak to provide intercity rail passenger service requested by states, authorities, and other persons.

Route discontinuances. The Act (§101) provides for Amtrak to discontinue routes without having to preserve the "basic system" formerly mandated by Congress, so long as the remaining route structure "ties together existing and emergent regional rail passenger service and other intermodal passenger service." Some believe this language allows Amtrak to provide service on various regional routes, without being required to connect them together into a national network. Amtrak no longer has authority (with some exceptions) to prevent others from providing intercity rail passenger service over routes its serves.

Liability claims. The Act (§161) provides for a limit of $200 million on all liability claims in the event of an accident.

Payments to dismissed Amtrak employees. The Act (§142) repeals federal provisions ((49 U.S.C. §24706(c) (1997)) regarding payments to dismissed Amtrak employees in the event that Amtrak service on a route is discontinued or reduced below 3 trips per week. Further, the Act (§141) provides that notice of intent to begin negotiations regarding such provisions in collective bargaining agreements between Amtrak and its employees "shall be deemed served and effective on the date which is 45 days after the date of the enactment of this Act."

Any such dispute which is unresolved 120 days after enactment of the Act, and which has not already been submitted to arbitration by that date, shall be submitted to arbitration as provided by the Act. The recommendations of the arbitrator shall be due within 150 days after enactment of the Act. A 30-day "cooling off period" begins on the date the arbitrator issues his or her recommendations.

If the parties to the dispute do not resolve the dispute by the end of the cooling off period, they may thereafter take self-help measures. The term self-help measures means that Amtrak labor organizations may strike, and Amtrak may "lock out employees" and/or change payments to dismissed Amtrak employees in accordance with its offer during negotiations.

The Act bars establishment of a presidential emergency board regarding such a dispute. The Act is silent regarding legislation to prevent or end such a strike or lockout. The Act states that the provisions regarding payments to dismissed Amtrak employees shall not affect the level of protection provided to freight rail employees or employees of transit systems.

Contracting out. The Act (§121) repeals the prohibition on contracting out ((49 U.S.C. §24312(b) (1997)) except as it applies to collective bargaining agreements in effect on the date of enactment of the 1997 Act. Proposals on the subject of contracting out "shall be included" in negotiations to re-open collective bargaining agreements, and such re-opening of collective bargaining agreements "shall be commenced by ... November 1, 1999." Provisions to conclude such negotiations, including submission of disputes to arbitration, are not provided, in contrast to provisions in the Act regarding payments to dismissed Amtrak employees (summarized above).

An Amtrak Reform Board of Directors. The Board, consisting of 4 members, was confirmed by the Senate on June 25, 1998, pursuant to section 411 of the Act. The Act provides for a 7-member Board. Three nominees were not confirmed by the Senate. The Act provides for the Board to serve for 5 years and then be replaced by a new Amtrak Board of Directors. The Board that is to be selected in 5 years is to be selected the same way the Amtrak Reform Board was selected, if Amtrak receives federal assistance during FY2003. If Amtrak does not receive federal assistance during FY 2003, the Board is to be selected pursuant to bylaws to be adopted by the Reform Board (which shall provide for employee representation).

An independent assessment of Amtrak's financial requirements through FY2002. The asessment is to be conducted by an entity not associated with Amtrak or the U.S. Department of Transportation (DOT). (§202 of the Act) That study was completed in November 1998.

Amtrak financial plan, and federal operating assistance after FY2002. The Act (§201) states that "Amtrak shall prepare a financial plan to operate within the funding levels [shown above in this report] including budgetary goals for fiscal years 1998 through 2002. Commencing no later than the fiscal year following the fifth anniversary of the [Act], Amtrak shall operate without Federal operating grant funds appropriated for its benefit." We found no enforcement mechanism for this provision, other than there being no appropriations to Amtrak.

An Amtrak Reform Council. The Act (§203) provides for appointment of an Amtrak Reform Council (Council) comprised of 11 members as follows: the Secretary of Transportation, 2 appointed by the President, 3 appointed by the Majority Leader of the Senate, one appointed by the Minority Leader of the Senate, 3 appointed by the Speaker of the House, and one appointed by the Minority Leader of the House. The appointees are to meet specified qualifications. By early July 1998, the Council, comprised of 9 members, had met twice. Two other members had not yet been appointed.

The Council is directed by §209(b) of the Act to report quarterly to Congress on the use of funds by Amtrak received pursuant to section 977 of the Taxpayer Relief Act of 1997 (TRA) (P.L. 105-34).

The Council is given specific duties by §203(g) of the Act as follows:

"(1) EVALUATION AND RECOMMENDATION. -- The Council shall --

(A) evaluate Amtrak's performance; and

(B) make recommendations to Amtrak for achieving further cost containment and productivity improvements, and financial reforms.

(2) SPECIFIC CONSIDERATIONS.--In making its evaluation and recommendations under paragraph (1), the Council shall consider all relevant performance factors, including --

(A) Amtrak's operation as a national passenger rail system which provides access to all regions of the country and ties together existing and emerging rail passenger corridors;

(B) appropriate methods for adoption of uniform cost and accounting procedures throughout the Amtrak system, based on generally accepted accounting principles; and

(C) management efficiencies and revenue enhancements, including savings achieved through labor and contracting negotiations.

(3) MONITOR WORK-RULE SAVINGS. -- If, after January 1, 1997, Amtrak enters into an agreement involving work-rules intended to achieve savings with an organization representing Amtrak employees, then Amtrak shall report quarterly to the Council --

(A) the savings realized as a result of the agreement; and

(B) how the savings are allocated."

The Council is directed by §203(h) of the Act to submit an annual report to Congress including an assessment of Amtrak's progress on the resolution of productivity issues; or the status of those productivity issues. The annual report also is to include recommendations for improvements, and recommendations for any changes in law that the Council believes are necessary or appropriate.

Sunset provision. The Act (§204) provides that "If at any time more than 2 years after the date of enactment of this Act and implementation of the financial plan ... [referred to above], the Amtrak Reform Council finds that (1) Amtrak's business performance will prevent it from meeting [those] financial goals; or (2) Amtrak will require operating grant funds after the fifth anniversary of the date of enactment of this Act, then the Council shall immediately notify the President" and Congress.

Within 90 days after making such a finding, the Council "(1) ... shall develop and submit to the Congress an action plan for a restructured and rationalized national intercity rail passenger system; and (2) Amtrak shall develop and submit to the Congress an action plan for the complete liquidation of Amtrak, after having the plan reviewed by the Inspector General of the Department of Transportation and the General Accounting Office for accuracy and reasonableness."

A Senate procedure for consideration of an Amtrak liquidation disapproval resolution. The Act (§205) provides for the Senate to introduce and act on a liquidation disapproval resolution if a restructuring plan has not been passed by Congress within 90 days after a restructuring plan is submitted to Congress by the Amtrak Reform Council pursuant to section 204 of the Act (referred to above).

Related Events

GAO stated in March, May, and June 1998 that these reforms probably would not accomplish that goal, that Amtrak probably would require federal capital and operating support in FY2002 and well into the future, and that Amtrak's financial condition continues to deteriorate. (GAO/T-RCED-98-134 and GAO/RCED-98-151). The Inspector General (IG) of the U.S. Department of Transportation (DOT) reported in November, 1998, on the basis of an independent outside assessment of Amtrak that, "If the [Amtrak] March [1998] SBP [Strategic Business Plan] were followed, without any modifications, we project Amtrak would have a restated cash loss of $535 million in 2003." (DOT IG Report No. TR-1999-027, Nov. 23, 1998, p. viii) Each year Amtrak borrows money from banks and other sources to meet current expenses above those covered by federal aid. The Amtrak March 1998 Strategic Business Plan states that Amtrak plans to "borrow" federal capital improvement funds in FY1999 and FY2000 to cover operating losses, and Amtrak plans to repay those funds in FY2001, when Amtrak expects increased express freight and faster trains to boost revenues. The DOT IG reported in November 1998 that Amtrak's projected increases in express freight and faster train revenues are optimistic and not likely to be achieved. If the IG projections materialize, Amtrak could be unable to repay some of the funds it plans to "borrow" from federal capital improvement funds during FY1999 and FY2000.

An Amtrak Reform Council (Council), appointed pursuant to the Act, at its meeting in November 1998, officially acknowledged for the first time that it is required by federal law to produce about a half-dozen reports, some on a recurring basis. The Council did not at that meeting or at its meeting in January 1999 set an agenda for meeting those reporting requirements. The Council is to submit an annual report to Congress including an assessment of Amtrak's progress on the resolution of productivity issues; or the status of those productivity issues. The report also is to include recommendations for improvements and for any changes in law that the Council believes are necessary or appropriate. The Council has not discussed whether it will submit an annual report for its first year of operation that ended December 2, 1998. The Council members serve without pay, but receive travel expenses and per diem.

References

CRS Issue Briefs

CRS Issue Brief 97030. Amtrak and the 106^th Congress, by Stephen J Thompson.

CRS Reports

CRS Report 96-22 E. Amtrak and Energy Conservation in Intercity Passenger Transportation, by Stephen J Thompson.

CRS Report 96-471 E. Amtrak Employee Benefits: Some Policy Considerations, by Stephen J Thompson.

CRS Report 95-1199 E. Amtrak: Federal Financial Assistance, by Stephen J Thompson.

CRS Report 96-180 E. Amtrak, Freight Rail, Commuter Rail, and the Federal Employers' Liability Act (FELA): Some Public Policy Considerations, by Stephen J Thompson.

CRS Report 96-189 EPW. The Federal Employers' Liability Act (FELA): Background and Controversy, by Joe Richardson.

CRS Report 98-247E. Labor Issues in the 105^th Congress. The contributions entitled "Emergency Strike Procedures under the Railway Labor Act (RLA) Covering Rail and Airline Labor Disputes" (pages 46-47), and "Amtrak Labor Relations Issues" (pages 48-49) by Stephen J Thompson, address issues associated with Amtrak.

CRS Report 97-1018 E. Rail and Air Carrier Labor Relations: Presidential and Congressional Intervention Since 1990, by Stephen J Thompson.

CRS Report 97-1056 E. Rail and Air Carrier Labor Relations: Presidential and Congressional Intervention, 1980 Through 1989, by Stephen J Thompson.

Footnotes

1. ^(back)Federal law requires Amtrak and its employees to participate in the railroad employee retirement program (made up primarily of freight railroads and their employees) rather than having their own retirement program, causing Amtrak to pay about $140 million more annually than its retirees get. Amtrak employees pay more too. The reason railroad retirement costs Amtrak and its employees more than Amtrak retirees get is that, compared to Amtrak, freight railroads have more retirees per current employee, coupled with the fact that most retirement contributions go to current retirees, rather than being saved for the benefit of future retirees.