Statement of Administration Policy: H.R. 1788 - Amtrak Reform and Privatization Act of 1995

(House)
(Molinan (R) New York and Shuster (R) Pennsylvania)

The Administration supports House passage of H.R. 1788, with the amendments outlined below.

H.R. 1788 establishes a framework for developing an entrepreneurial Amtrak that could respond to consumers and the market without the need for Federal subsidies. The bill permits changes to Amtrak's current statutory operating requirements to be negotiated between Amtrak and the unions, which is similar to the negotiated approach originally proposed by the Administration in its Amtrak reform proposal.

Although it is a significant step forward, H.R. 1788 can be improved. In particular, the Administration will work for amendments to:

• Delete the provisions which would subordinate the Federal interest as a creditor in the event of a default. Such provisions increase the risk, and therefore the subsidy rate, of loans guaranteed under this program, thereby reducing the number of loans which could be made with the resources available.
  
  
• Delete the proposed borrowing authority for Amtrak. Authority for Amtrak to borrow already exists. Moreover, absent data to the contrary, almost all borrowing by Amtrak would require Federal subsidies for repayment. OMB and CBO scoring conventions would therefore call for scoring the subsidy rate of such loans at, or approaching, 100 percent.
  
  
• Delete the provision which would replace the current Amtrak Board of Directors with a new Board. The current Board has proved capable of directing Amtrak during these sensitive times. (The Administration supports (1) removing existing restrictions on the President's authority to appoint future members of Amtrak's Board and (2) requiring that such appointees be confirmed by the Senate.)
  
  
• Guarantee that Amtrak's assets, which represent a substantial Federal investment, continue to be used to provide intercity rail passenger service. Such protection is currently afforded by the terms of the Northeast Corridor mortgage, and by the preferred stock held by the Federal Government. These mortgage conditions and prepared stock voting rights should not be eliminated without a professional determination of the value of these taxpayer rights and assets, and equivalent guarantees that these assets will continue to be used for rail passenger service.
  
  
• Provide for appropriate involvement of the Executive branch, including the Treasury Department, in the development and implementation of any Amtrak privatization plans.
  
  
• Avoid the imposition of arbitrary caps on punitive damage amounts.