Res Ipsa Loquitur (The Matter Speaks for Itself)

Written by M. E. Singer
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Amtrak Executive Vice President Stephen Gardner.

Perhaps former Congressman John Mica had a point, after all, to claim that Amtrak operates like a relic of the Soviet Kremlin? That, and knowing we have the best politicians money can buy, tells a clear story: Beyond the history of outrageous corporate failures due to illegal manipulation of their financial data, like Enron, is there any other example of a company operating in such an egregious manner as Amtrak that defies Congress, lies to states, and spits in the face of the public interest, all the while scooping up even more taxpayer funding?

Realizing how Amtrak’s Board and executive management team are playing “good guy, bad guy” over the long-distance routes, we saw Amtrak Chief Operating Officer Scot Naparstek testify Sept. 13 at a House Railroad Subcommittee hearing on Positive Train Control: “Exactly how we accomplish this will vary across our network, based on the specifics of each route, but … we believe we will have strategies in place that will permit us to continue operations until operational PTC or PTC equivalency is achieved for all of our network.”

Who else reads into that bland, non-specific statement how Amtrak continues to hedge, keeping the door open for implementing bus substitutions in lieu of a contiguous rail route?

The facts delineating the failure of integrity, credibility and character within Amtrak’s leadership are incontrovertible to clearly evidence Amtrak’s creation of a “poison pill” to destroy the long-distance network in order to focus on the Northeast Corridor (NEC), including:

1) Despite a requirement by PRIIA (Passenger Rail Investment & Improvement Act of 2008) to commence collecting full charges for operating fees and infrastructure depreciation from all commuter lines utilizing the Northeast Corridor, Amtrak elected to pass on this responsibility to appease the political powers of the Northeast, until mandated by Congress—but not until December 2015.

2) Amtrak consistently and deliberately pursued a policy to fool Congress by machinating its performance and financial data by subverting and not adhering to GAAP (Generally Acceptable Accounting Principles).

3) Deceptively producing this incorrect data historically enabled Amtrak to camouflage the high-cost “black hole” of the NEC by siphoning PRIIA-mandated funds from state-supported corridors (note: No states along the NEC are charged for their Amtrak services). As well, Amtrak has historically re-directed funds intended for the long-distance routes to the NEC.

4) Although Amtrak utilized this deceptive data to secure from Congress a separation of the NEC from the National Network in 2015, apparently Amtrak mistakenly drank its own Kool-Aid, for by 2017, it was already maneuvering to attack and subvert the long-distance routes. By 2018, with a straight face, Amtrak had deceptively introduced malignant, incorrect data on the Southwest Chief, usurping a negative antidote from the 1960s to kill that train quickly by inserting a bus substitute between Dodge City and Albuquerque. In parallel, Amtrak continues to downgrade dining service on the long-distance routes.

Giving further credence to its “poison pill” strategy to negate the long-distance routes, we hear of Amtrak’s most recent confidential proposal to raise the hurdle bar for state-supported routes outside the NEC by revising the financial responsibility of those states for routes under 750 miles to routes of 400 miles and under—and shift a certain amount of funding from the National Network to the NEC. Obviously, both actions are to shore-up the deficit-prone NEC to increase its subsidies already derived by further robbing from the state-supported and long-distance routes.

What is obvious is how the FRA must step forward and advise Congress to request a detailed audit by a reputable external source to clarify:

1) How Amtrak identifies and allocates all costs for the NEC, state-supported routes and long-distance routes.

2) To verify how funding provided by Congress, and specially directed by Congress, is actually spent in which sector—NEC, state-supported and long distance.

3) To identify revenues secured through PRIIA since 2013; how those revenues have been categorized and spent, including what percent has been directed to the NEC, and what percent is re-invested directly back into those states that provided the payments.

4) In a review of management practices since 2010, to what extent have management bonuses been inserted into the new budget year as a “plug” in the budget? Was this with the knowledge and approval of the Board, including was the Board involved at any point in identifying the amount of bonus; and did the Board verify the requirements to achieve the bonus?

Frankly, we do not need a “Spartacus” moment to realize that we are not benefiting from a National Network that is slipping away by being continuously undermined by unacceptable misinformation produced by its own operator.

As well we are made vulnerable by the surreptitious conduct of Amtrak’s Board Chair and certain political powerhouses of the Northeast, scheming to free-up even more long-distance route funding to further subsidize the NEC.

M. E. Singer is an observer and commentator on the passenger rail industry, identifying shortfalls and growth opportunities. He is currently Principal at Marketing Rail Ltd. in Chicago, a consultancy to achieve passenger rail customer experience and product branding. Singer has prior corporate experience in turnaround operations management, marketing, and mergers and acquisitions in the health care field.

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