This Week at Amtrak; August 6, 2009

This Week at Amtrak; August 6, 2009

A weekly digest of events, opinions, and forecasts from

United Rail Passenger Alliance, Inc.
America’s foremost passenger rail policy institute

1526 University Boulevard, West, PMB 203 • Jacksonville, Florida 32217-2006 USA
Telephone 904-636-7739, Electronic Mail info@unitedrail.org • http://www.unitedrail.org


Volume 6, Number 28

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1) There’s more, on the recent “retirement” of former Amtrak Inspector General Fred Weiderhold, and it’s not good.

This came out today from Project on Government Oversight, at www.POGO.org. POGO classifies itself as an independent, non-profit organization which investigates and exposes corruption and other misconduct in order to achieve a more effective, accountable, and open federal government. POGO is based in Washington.

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Aug 06, 2009

New Documents Detail Threats to Fire Amtrak Inspector General

A pair of new, just-released documents show that Amtrak, America’s federally subsidized rail network, wanted to fire its independent Inspector General, who was effectively forced to resign several weeks ago. One of the documents, a June 2009 draft letter was to be signed by Amtrak chairman, Thomas C. Carper. The language in the letter is blunt. Addressed to Vice-President Biden – in his capacity as President of the Senate – and to House Speaker Nancy Pelosi, the letter was to inform Congress – as required by law – of Amtrak’s plan to dismiss Inspector General, Fred E. Weiderhold, Jr. Citing a long list of alleged lapses, shortcomings and failures, Amtrak’s chairman wrote that Weiderhold, "is no longer the effective Inspector General that our Company needs" and that he "will be removed from his position."

The letter was never sent. Instead, Amtrak’s management apparently threatened to give it to Congress last month as a none-too-subtle inducement for Weiderhold to step aside, retiring from his role as one of Washington’s longest-serving inspectors general. In a subsequent separation deal with Amtrak, Weiderhold agreed not to disclose details of his retirement, involving a package worth more than $310,000 that included compensation for unused vacation, severance, health care and outplacement assistance.

In a recent interview, which did not mention the draft-firing letter, Weiderhold told Politico that his departure arrangements were typical for Amtrak executives, adding that he had been planning to leave his job anyway.

But the draft firing-letter reveals deep and bitter conflicts between Amtrak management and their Inspector General. Included in Carper’s reasons for firing his IG are allegations that Weiderhold:

"… failed to keep the Chairman and the Board fully and currently informed concerning fraud, waste, abuse and other deficiencies within the Company."

"…has not properly manage the investigations function within the Office of Inspector General to the quality standards required."

"… is excessively involved in the daily management of the Company to the detriment of his obligation to focus on his fundamental duties."

"… cannot and does not discharge his duties with the independence and objectivity required of the position."

Weiderhold declined to respond publicly. Sources tell POGO that the former Inspector General had grown weary after months of what he viewed as opposition from Amtrak’s management and board. Confronting pressing family issues, and the prospect of more battles with Amtrak, he decided it was time to go.

On the same day Weiderhold opted to retire, June 18, the law firm of Willkie Farr & Gallagher, LLP completed a "Report on Matters Impairing the Effectiveness and Independence of the Office of Inspector General." That report, now public, alleges serious and persistent interference by Amtrak management with its Inspector General in violation of the law. Amtrak earlier released a statement saying there was “no relationship” between the report and Weiderhold’s retirement.

Tensions between Amtrak management and the IG grew heated in 2006, after a joint investigation by Weiderhold and the Inspector General of the Dept. of Transportation found that Amtrak had spent more than $100 million in mismanaged fees to outside lawyers over a five year period, allegedly violating Amtrak billing rules.

More recently, Congressional sources received documents showing Amtrak has spent nearly $75 million on outside lawyers in 2007, 2008, and the first half of 2009. That finding, if confirmed, and the accelerating rate of spending on outside counsel – a significant portion of which was spent on battling its own IG – is sure to raise hackles about Amtrak’s government-subsidized expenditures, as well as the conduct of its top lawyer, Eleanor Acheson, who has been the company’s general counsel since 2007, and is Hillary Clinton’s former roommate at Wellesley College.

A second document just made public shows how Amtrak’s chairman and management struggled to get rid of Weiderhold. It is a letter dated July 30, and signed by Charles Grassley, ranking member of the Senate Finance Committee, and Rep. Darrell Issa, ranking member of the Committee on Oversight and Government Reform in the House. Addressed to Jeffrey Zients, Deputy Director of the Office of Management and Budget, the pair describe tactics apparently designed to force Weiderhold to leave his job without a public fuss.

According to Grassley and Issa, Amtrak presented Weiderhold with a separation agreement on June 17, "indicating that if he did not sign it by June 19, the Chairman of the Board (Carper) would send a 30-day notice to Congress to begin the process of removing him as Inspector General." But that proved unnecessary. Instead, the letter says that, on June 18, Weiderhold agreed to leave Amtrak.

In their letter, Grassley and Issa point out that the law requires Congress to receive prior notice when inspectors general are replaced, a provision that Amtrak did not comply with in the Weiderhold case.

The revelations surrounding Weiderhold’s departure are likely to stir controversy, given a string of inspector general firings earlier this year that have drawn Congressional attention.

Amtrak is run as a private company, but is owned and heavily subsidized by the federal government (originally set to receive $2 billion in 2009, it obtained an additional $1.3 billion in stimulus funds). Amtrak’s board appoints the Inspector General. In Weiderhold’s case, he was appointed in 1989, and is the only Inspector General his agency has ever had, a role that has brought him into frequent conflict with both Amtrak’s board and the office of its top lawyer, or general counsel.

Reached by POGO, an Amtrak spokesman said the company stood by its handling of the Weiderhold departure, and emphasized it was working with Congress to resolve questions about the matter. In an earlier statement, Amtrak said its board “is committed to having an OIG that operates under best practices consistent with the Inspector General Act. The Board has been concerned for some time about whether best practices are currently in use in the OIG.”

– Adam Zagorin

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Whew!

Let’s stop for a moment and step back and take a look at a couple of things.

What POGO is telling us above isn’t just hardball, it’s blood sport.

This space has often and loudly been critical of Amtrak’s Board of Directors on any number of topics. But, since the board is advised by management and inhouse legal counsel, we have to look askance at completely blaming any individual member of the board for this one. Also as we have said in the past, it is often in the best interest of the board to look outside of Amtrak to determine real facts; this seems to be another example of that situation.

The majority of this mess, including what is outlined in the Wilkie, Farr document, rests squarely on the shoulders of Amtrak Vice President and General Counsel Eleanor Acheson, and her predecessor in the same job.

While the board probably should have questioned this more closely (nobody gets a free ride on this one), again, the majority of the blame goes to Ms. Acheson.

Congressional staffers and Members of Congress for decades have complained about Amtrak’s cowboy tactics, including flagrantly ignoring the various laws passed by Congress and acting as a law unto itself.

Reality may now be crashing in on Amtrak.

At least the last three presidents of Amtrak, David Gunn, Alex Kummant, and Joe Boardman have to take a hit on this. Every vice president in the company – including the VP for law – reports directly to the president and chief executive officer.

So, has there been a conspiracy between various members of Amtrak’s everyday management to break the law? Has the arrogance grown so very strong (i.e., the recently released and hugely flawed Gulf Coast service report regarding the Sunset Limited) Amtrak simply thinks it can do as it chooses, and is accountable to no one?

Somebody is going to have to pay for this; how much longer are Mr. Boardman and Ms. Acheson going to stay on Amtrak’s active payroll?

2) Speaking of the Gulf Coast report, there are two other major reports waiting their turn to be released regarding reinstatement of abandoned routes. Word has come the report for reinstating the former Pioneer route in the Inter-Mountain and Pacific Northwest is due out Monday, August 10, 2009. No indication if the report is going to take into account the large pool of wrecked Amtrak Superliner equipment, or whether or not again the report will call for years of waiting and huge sums of money while new equipment is being built for a route that was run out of the existing pool of equipment.

3) This summer has brought one of the best collections of reader mail to This Week at Amtrak that has been seen in years. Here’s the latest example.

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Back when I was a pup of 33 in 1971, with the breathless arrival of Amtrak I eagerly looked forward to a new dawn in passenger rail transportation.

Now that I'm ancient and decrepit and thereby unhappily in sync with the National Railroad Passenger Corporation (in body, mind and spirit), the question remains: WHERE DO WE GO FROM HERE?

Amtrak may be destined to follow me to the cemetery.

I'm not sure that's a bad thing.

Aside from New Haven - Boston electrification, the history of the National Railroad Passenger Corporation suggests almost four decades of gargantuan missed and/or botched opportunities. And a litany of excuses! Endless and endless and endless excuses!

So if Amtrak may in fact have a subconscious death wish, why not HERE AND NOW put it out of it's misery? Give someone else a crack at it; that's why I voted for Barack Obama; we older American gentry have especially mucked things up in so many areas of domestic transportation. Encourage those with positive vision and motivation to seize the day and make good things happen! My sense is that members of Congress are oh so very weary of dealing with the annual Amtrak funding crisis, both those who support and those who decry Amtrak. The prez says he wants to get rid of government programs "that don't work;" sounds like a plan to me! And after the new kid on the block takes over, be it Veolia or Richard Branson or SNCF or whoever, how about a fleet of (relatively inexpensive) TALGO trains to blanket the nation outside the Northeast corridor? Their relative light weight and tilting ability should produce quick increases in speed with a minimal of needed infrastructure improvements. And they look good.

We have got to think outside the box. At 71 I'm on a slippery slope, but passenger rail transport should be, and IS, the wave of the future. It's time for those WHO REALLY THINK SO to get on board.

And on a personal note, thanks Bruce, for being a strong voice crying in the wilderness.

– Raymond Nelson

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4) Paul Dyson, the irrepressible President of the Rail Passenger Association of California has been corresponding again with his favorite pen pal, Amtrak Interim President and CEO Joseph Boardman.

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13th July, 2009

Mr. Joseph H. Boardman
President and Chief Executive Officer
NATIONAL RAILROAD PASSENGER CORPORATION
60 Massachusetts Avenue NE
Washington DC 20002

Via Fax

THE SUNSET, EAGLE AND CITY OF NEW ORLEANS ROUTES

Dear Mr. Boardman:

Mr. Bill Crosbie was kind enough to find time for a meeting with me last Thursday (8th July, 2009). A key topic of our conversation was the presentation by Mr. Rosenwald at our May 2 meeting regarding the Sunset route and connections. Mr. Crosbie was very concerned at the lack of operating funds and that any change would produce a negative outcome.

RailPAC’s view of these proposals and of the status of this route is clear.

We do not believe, for political reasons, that it will be possible to abandon the Sunset Route at the west end.

All parties seem to agree that three days a week service is a losing proposition and a poor use of scarce resources.

Even if the service still loses money, it seems highly likely that the overall operating loss will be reduced by changing to a daily service.

Changing the service between Los Angeles and San Antonio to daily will, we believe, receive plaudits from all quarters as representing both a bold entrepreneurial step on the part of Amtrak and an earnest attempt to save taxpayers money by reducing the operating deficit.

RailPAC is willing to support whichever of the many alternatives your staff promulgates assuming this is done with an eye to expanding and improving service to the public. This also goes for what we hope will be a temporary expedient of a “shuttle” between San Antonio and New Orleans, and the much discussed extension of the City of New Orleans to Florida.

Advocacy groups such as ours, and I imagine your staff also, are tired of apologizing for the performance of the Sunset, whether the criticism is justified or not. Now is the time to take on the critics and prove that Amtrak is a forward thinking organization that is willing to take some business risk in the reasonable expectation of a positive outcome for all parties.

We look forward to an early announcement from you regarding this route.

Yours faithfully,
Paul J. Dyson
President
pdyson@railpac.org

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And, a transcript of Mr. Boardman’s handwritten reply to Mr. Dyson.

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7/14/09

Paul:

I have your letter of the 13th. I understand your interest, mine too frankly but we are not ready to pull the trigger on the changes that you want right now. Equipment has become a very complex issue and we are making progress. We rolled out the first stimulus Amfleet rebuild this week. We will roll out the first of 21 Superliner vehicles from Beech Grove August 6th. We are not dilly dallying. Things are getting done.

Joe B.

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Here are Mr. Dyson’s thoughts on the subject.

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THE SUNSET LIMITED - THOUGHTS ON THE BOARDMAN CORRESPONDENCE

RailPAC has consistently supported daily service and restoration of the Sunset Route to Florida. A lot of the Amtrak people we talk to agree thrice weekly service just doesn’t work; the seven day a week costs are still there but the revenue isn’t! At our May 2 meeting in Los Angeles a senior Amtrak marketing official, Brian Rosenwald, give an authoritative presentation regarding service options for the Sunset and Eagle drawing this very conclusion, and we have to assume he was there with the blessing of Amtrak management. His boss, Mr. Boardman, was there earlier in the meeting, and since Mr. Rosenwald is still employed by Amtrak it’s fair to conclude his presentation represented Amtrak thinking on this issue.

But is it? A few weeks later Amtrak published its report on the options of restoring service between New Orleans and Florida. (PRIIA Section 226 Gulf Coast Service Plan Report) It’s hard to believe this report came from the same organization as the Rosenwald presentation. While Rosenwald attempts to look at the issues from a business and dare I say entrepreneurial perspective the Gulf Report simply looks for any cost, real or imagined, that can be logged against this route to try and make service restoration look unaffordable. They are still using discredited costing data that indicate that thrice weekly service is less costly than daily. The objective was either to shake down the states or the federal government for an operating subsidy or to hang up a “do not disturb” sign. It’s just too much trouble to meet the obligation to maintain the national network, let’s make it look as costly and deficit laden as possible and perhaps it will go away.

Mr. Boardman took the time to write to me on July 14 in response to my letter of July 13 supporting Mr. Rosenwald’s ideas for daily service. In spite of hearing the daily service would not require additional equipment, Mr. Boardman’s note stated equipment was the roadblock to making the desired changes. This must be part of the same schizophrenia that produced the both Gulf Coast Report and the Rosenwald plan. There certainly seem to be two agendas at work within Amtrak, probably compounded by the fact Mr. Boardman is the interim President, and is still learning on the job.

So where do we go from here? We need to focus on two facts. One, the Sunset is an existing, Amtrak National System train, and the service is only suspended between New Orleans and Florida. We, together with every rail advocacy group along the route and nationally should insist service be restored immediately. Second, we need to educate legislators and the public that daily service is more cost effective than thrice weekly, and daily service will actually reduce Amtrak’s deficit.

RailPAC will soon be circulating a resolution calling for complete restoration of the route, daily service, and setting up of a connecting hub at New Orleans which will also open up service between Chicago and Florida. It’s time to make some noise.

– Paul Dyson, RailPAC President, 07/28/09

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J. Bruce Richardson
President
United Rail Passenger Alliance, Inc.
1526 University Boulevard, West, PMB 203
Jacksonville, Florida 32217-2006 USA
Telephone 904-636-7739
brucerichardson@unitedrail.org
http://www.unitedrail.org