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By M.E. Singer

HOW NORTHEASTERN POLITICAL CLOUT RAN AMTRAK OFF THE TRACKS AT THE EXPENSE OF A NATIONAL SYSTEM

By “getting down in the weeds at the level the goats graze” will show cause for how Amtrak has been deliberately mis-managed to the benefit of the Northeast. How
historically the congressional delegation and governors of the Northeast have used their clout to assure their region’s dominance over Amtrak, by loading Amtrak’s board of directors (“the board”) with a majority of political appointees tied to their clout.* Such total political control over the board has assured Amtrak’s focus on the Northeast by their selecting political appointees from federal administrative and commuter rail agencies only from that region.**

Perpetuating this cycle of Amtrak’s board dutifully following the desires of their political mentors by exclusively picking political appointees inexperienced in Class 1 railroad operations to run Amtrak as a national system is best exemplified by Amtrak’s current CEO for the past eight years, Joseph Boardman, from New York. Although he came to Amtrak via the Federal Railroad Administration, Boardman was an administrator, not experienced in actual railroad operations. Running up a plethora of financial and safety issues related to his lack of railroad experience, not compensated by his focused sensitivity to appease political powers, Boardman has been desperately attempting to hold out before his exit on 30 September 2016.

As the issues related to Boardman’s mis-management see the light,Amtrak’s board is
caught up in what Senator Howard Baker skillfully inquired during the Watergate
hearings, to paraphrase: “when did you know and what did you do about it; if you did not know, why not?” Despite how in business it is well accepted that “the fish rots from the head,” as far as the board’s knowledge and approval of Boardman’s misdeeds, there has been no push by the Obama Administration to inquire, or even dismiss, these board members for malfeasance, with such questionable actions not attributable to the two most recent administration appointees from California.

Consequently, without any guilt or remorse over their questionable stewardship of
Amtrak,and continuing to bask under the protection of their clout heavy political bosses in Congress, the Northeastern/Illinois members of the Board persisted on continuing their fealty to their regional political powers by ignoring reality. Indeed, during the recent recruitment for CEO, this board actually looked to appoint yet another Northeastern commuter rail agency administrator as Amtrak’s next CEO. However, recent actions of mis-management at least known, if not even approved by the board, have evidenced cause for concern to intervene now to break this repetition compulsion cycle of Amtrak’s board to fail in its expected stewardship.

Highlighted here are the most significant inter-related issues why Amtrak’s next CEO
had to be a real railroader, steeped in operations, finance, and safety; whose integrity is respected by the unions; whose credibility will restore congressional relations. By re-building these vital relationships will enable the newly ordained CEO, Charles “Wick” Moorman, to reverse Amtrak’s national misfortunes, including:

D.C. COURT OF APPEALS DEFROCKS AMTRAK’S FAILED ADMINISTRATIVE
LEADERSHIP AS SUPPORTED BY NORTHEASTERN BOARD CLOUT

• The recent legal decision (29 April) by the D.C. Court of Appeals exemplifies
what has happened as Amtrak has morphed into an administrative bureaucratic
body. Consequently, Amtrak has evolved into no longer being being a railroad run
by a railroader, as last remembered under the leadership of W. Graham Claytor,
Jr. and David Gunn. Just ask the unions calling out the lack of a safety culture,
despite Amtrak spending $70 Million on such a program. Did the board vote on
this program; were any “residuals” promised to management re future
employment?

• Ignoring its diminished relationship with the Class 1 private railroads, Amtrak
apparently felt it could administratively bully these freight railroads into accepting its own defined metrics for passenger schedules, despite Amtrak’s own
maintenance issues that caused their trains to lose their track access slots.
However, unlike our interstates and air system, the private railroads built-and
maintain-their own infrastructure, to the extent of being taxed by every jurisdiction on every mile of right-of-way and buildings. Indeed, although Congress required the public to pay for the Air Traffic Control Safety System, it created an unfunded mandate for Positive Train Control–at the cost of the railroads.

• Importantly, now that Amtrak will be run by a railroader respected within his
industry and the unions, such court action will be unnecessary. A true
railroader will successfully evidence such competency and depth of experience
to facilitate fruitful negotiations with the Class 1 railroads dispatching
Amtrak’s trains over their own right-of-way; to accomplish this out of court. The
last time this was obviously evidenced was by W. Graham Claytor, Amtrak’s
finest CEO, from 1982-1993.

A former CEO of the Southern Railway, Claytor knew how to work with his peers
in the railroad industry in behalf of Amtrak. The failure of Amtrak by relying upon
the court process as a weak substitute for respectful working relationships
predicated on in-depth experience cannot be lost in remembering the leadership
of Amtrak under Mr. Claytor, and why he was successful. Amtrak desperately
needs to re-embrace those characteristics of a rail industry leader, as Mr.
Moorman clearly evidences, as he assumes the CEO position.

LOST OPPORTUNITIES: CUTTING LOSSES AND EXPANDING SERVICES WITH
CLASS 1 FREIGHT RAILROADS: RESULT OF NO OVERSIGHT TO CONTROL
AMTRAK’S POLITICAL HOMAGE AND LODESTAR DIRECTED BY THE NORTHEAST

• Here is a classic example of the nation’s taxpayers suffering at the hands of
Amtrak’s politically appointed management team motivated to appease its
political crony board, exemplifying what has been missed for so long by not
relying upon an experienced railroad officer as CEO, with solid credentials and
respectful relationships with the Class 1 railroads.

• Lacking such industry relationships, does anybody at Amtrak understand that just
in April, 2016, national freight traffic reported almost 12% down from 2015;
containers traffic alone was down nationally approximately 7.5% from 2015? How
could Amtrak’s political board and administrative appointees in leadership fail to
recognize this vital data as the ultimate opportunity to cut losses and even
expand services by directly negotiating with the freight railroads? The Class 1s
would be only too interested to respond to the economic incentive to supply their
own crews and equipment, to avoid furlough and storage in the desert.

• Regrettably, without the requisite talent at the top of an experienced and
respected railroader, the current political administrative team is too handicapped
to think beyond the Northeast; without appropriate oversight, content to lose this
economic opportunity.

NO LIGHT AT THE END OF THE TUNNEL EXISTING OUT OF THE NORTHEAST

The above two revelations are a direct result of the Northeast congressional delegation and governors inserting their tentacles for control over and within Amtrak,to the exclusive benefit of only the Northeast; apparently at the acquiescence of the Boardman administration. Amtrak’s politically appointed administrative team serving at the political crony board’s discretion has voiced no problem carrying out the board’s mandate,seeing how two former ex-railroad CEOs were forced out for non-compliance with the board’s mantra for subservience to the Northeast. Most interesting is how the continued deception and mis-information has been carried out without an objection from the administration or Congress.

Importantly to appreciate the Northeast vise containing Amtrak to inhibit it serving as a true national system is to bring factual clarity to a continuing misnomer perpetuated by Amtrak and its Northeastern political supporters, widely dispersed in the Northeastern media, of Amtrak’s claim of the “profitability” of its Northeast Corridor (between Boston- NewYork-Washington):

1) The claim of such profitability defies the Generally Accepted Accounting
Principles (GAAP), by omitting infrastructure costs and investments, which if
included, would certainly eliminate all “over the rail” profits.

A) Common sense dictates that the U.S. Department of Transportation
should assume control over the Northeast Corridor to assure timely
commitment of necessary funds to re-build and maintain its decayed
infrastructure; to assure collection of full payment by Northeast commuter
lines and Amtrak for dispatching and operating rights for track access; to
cease Amtrak from mis-directing operational funds towards the Northeast
Corridor’s vast, deferred infrastructure maintenance and repair needs.

B) Why has Amtrak, under the guise of being a national system, persisted in
objecting to this concept, other than how would the Northeast politicos
maintain control over Amtrak through its board appointments and their
obedient past selection of an administrative, non-railroad CEO?

2) To ensure this “profitability,” Amtrak has also dumped the Corridor’s infrastructure and overhead, and corporate overhead costs into its other business sectors:long distance and state-supported corridors.

A) Where has the GAO and independent auditing agencies been to tolerate
this abuse of GAAP; non-transparency of data to falsely improve the
obvious poor numbers of the Northeast Corridor?

3) Until Congress finally demanded enactment of its own requirements from years
ago, Amtrak has been subsidizing the Northeastern commuter lines utilizing the
Northeast Corridor to the tune of $300-$500 Million per annum.

A) How did Amtrak get away for all those years from Congress identifying this
unauthorized, gaping subsidy, which obviously came out of support for the
national system?

4) If Amtrak abided by the common metric in the travel industry to measure traffic as “passengers/mile,” it would not be dissing its own long distance routes, as they
now meet the same metric as the airlines: average 800 miles/passenger.
Typically overlooked is how coach seats and compartments turnover en route an
average of 2.5 times. In reality, lack of investment in equipment, frequencies,
services, and route expansions due to the subsidization of Northeast commuter
lines for years (see #3) actually has impacted and denied the success of
the long distance routes.

A) In actuality, the long distance trains are not really “the dogs” for Amtrak, as
they serve multi-segmented markets not reached by air, bus, or auto; their
costs are lower as Amtrak does not have to maintain their infrastructure as
on the Northeast Corridor.

B) If Amtrak invested in equipment for more frequencies, the incremental cost
would be more than covered by the increased revenues due to
convenience of schedule frequency and connections.

5) To visualize how Amtrak’s singular focus on the Northeast Corridor has skewered
the interpretation of numbers, note how under the Passenger Rail Investment
and Improvement Act of 2008 (PRIIA), as designed by Amtrak for Congress was
foisted upon the states to collect operational funds for all state services under
750 miles. This maneuver became an “Animal Farm on rail,” as the Northeast
Corridor was the exception to the rule of all states being equal, despite the fact
that Boston-New York is 220 miles and New York-Washington is 225 miles.
This is a classic example of how Amtrak has been governed by the Northeast, for
the Northeast; to exclusively serve those regional parochial political interests at
the expense of a truly national system. Add to this how only the non-Northeast
states have been mandated to pay each year, since 2013, 85% of all costs for
their trains as identified by Amtrak’s quite deliberate opaque cost accounting
system.

A) The lack of transparency in Amtrak’s cost accounting is deliberately
structured as a disincentive to non-Northeast states seeking to increase
schedule frequencies, or, to expand with new routes.

B) Given Amtrak’s continued death spiral under current CEO Boardman’s
financial mis-management (you cannot blame lower gas prices for
everything!), when does the curiosity of Congress, the Administration, or
the GAO finally get peeked to question and audit how can Amtrak’s
fortunes be tanking concomitantly with the increased revenues derived
from these states for past three years? In essence, the logical answer is
how those new found funds are being siphoned off to cover the increasing
losses attributable to the Northeast Corridor.

In summary, these issues scream out for Amtrak’s new CEO, Mr. Moorman, to
immediately contend with, including

1 With the overt machinations by the political powers of the Northeast, politically
appointed cronies from that region have historically been successfully inserted on
Amtrak’s board to ensure the perpetuation of administrative-type management,
also secured from that region’s commuter agencies or federal agencies. This
parochial approach ensured share responsibility in rubber-stamping the nonfactual
data to distort costs and revenues in favor of only the Northeast.

2 Unlike the airlines with private and institutional investors to express intolerance for such excesses of repetitive compulsion, Amtrak does not enjoy that level of oversight.

3 As the incoming CEO of Amtrak, Mr. Moorman defines our expectations of a real
railroader, far from another Northeastern political administrative-type appointee,
or, again, somebody from a Northeastern commuter rail agency. Such an
experienced railroader like Moorman can be expected to demand financial
transparency. As well, this CEO will embrace the employees who want to perform
well, know how to solve the problems, and need a CEO to sincerely listen to their
suggestions; cease patronizing them and infuriating their unions with a noninclusive
environment.

If Amtrak is to survive its current fiscal malady and lack of credibility on Capitol Hill, it must firmly break with the past of single regional dimensional decisions that solely reflect the power of the Northeastern congressional delegation, at the expense of the national system.

*Current Amtrak Board of Directors:
Joseph Boardman-NY
Anthony Coscia-NJ (Chairman of Board; AND Director Audit & Finance Committee
Jeffrey Moreland-PA (Vice Chairman)
Christopher Beall-NY
Albert DiClemente-DE
Thomas Carper-IL (votes with Northeast members)
Yvonne Brathwaite Burke-CA
Derek Kan-CA

**Note: two most prominent disastrous CEO regimes were back-to-back ex New Jersey
Transit CEOs; later a non-railroad federal administrator from the FRA:
-Tom Downs (1993-1998)
-George Warrington (1998-2002)
-Joseph Boardman (2008-2016)

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