Amtrak Chairman Admits Secret Talks to sell Assets

Wednesday, November 16, 2005

WASHINGTON -- The chairman of the board that oversees Amtrak told a House subcommittee yesterday that the board is not scheming to sell off Northeast Corridor assets, though he acknowledged conducting secret meetings with people interested in buying them.

David Laney, the Amtrak chairman, told the House railroads subcommittee that he has had closed- door discussions with private parties interested in purchasing 500 miles of track and other assets along the Northeast Corridor from Washington to Boston.

"I've had conversations, listening to the concept" of selling off the infrastructure, Laney said. Pressed by Rep. Robert Menendez (D-13th Dist.), Laney said he couldn't recall whom he had spoken to about the idea, but promised to provide the committee with answers later.

Amtrak's backers have long feared that the administration wants to dismantle the nation's passenger rail service and sell off its assets, including the Northeast Corridor. In addition to Amtrak trains, the track carries commuter rail lines including NJ Transit, and freight traffic.

In September, the board voted to begin the process of separating the Northeast Corridor from the rest of the system, a step that Amtrak backers saw as a prelude to a sale. Last week the board voted to fire Amtrak president and CEO David Gunn, who opposed the Northeast Corridor plans and differed with the board on other issues.

Laney came under intense questioning from both Republicans and Democrats on the panel, who criticized his decision to fire Gunn and the plan to separate the Northeast Corridor from the rest of Amtrak.

"The Amtrak board of directors has become a front for the Bush administration and people who want to destroy Amtrak," said Rep. Jerrold Nadler (D-N.Y.).

Nadler questioned Laney about a no-bid contract the board awarded to a public relations firm to help control publicity about Gunn's firing. Laney said the board felt it could not use Amtrak's existing press operation, working under Gunn, to announce his ouster.

Laney also was questioned sharply by District of Columbia Delegate Eleanor Holmes Norton and others about his testimony before Congress in September in which he praised Gunn as "splendid" and "terrific."

"I was being polite about it. He was part of the team. I was trying to make it work," Laney said, explaining that at the time he made the statements, the board already was having deep differences with Gunn.

Gunn, who also testified yesterday, said he was fired because "I just became an obstacle to dismantling Amtrak."

"The board has the right to fire me. If they have an agenda that is different from the one I have, they have the right to fire me," he said.

Gunn's backers, including many members of Congress, say his 40 years in the railroad and transit business served Amtrak well, helping to control losses and boosting ridership to an all-time high.

"Mr. Gunn's firing by the Amtrak board came as a shock not only to me, but to my Senate colleagues on both sides of the aisle," said Sen. Frank Lautenberg (D- N.J.), who also testified yesterday.

"I'll be very blunt here," Menendez said to Laney. "I don't trust you. And I don't think this Congress can trust you."

Menendez explained later that he suspects Laney met with at least one group -- the Pennsylvania-based Rail Infrastructure Management -- which has floated plans to purchase the Northeast Corridor infrastructure. There may be other suitors, he added.

Such a sale, Menendez said, would generate tax breaks for the buyer while allowing a private group to decide how much it will charge Amtrak, NJ Transit and other train operators for use of the tracks.

"How do you guarantee you have maintenance continuing?" Menendez said. "It's very dangerous."

Meanwhile, Sen. Charles Schumer (D-N.Y.) continued to question the legality of Gunn's firing, noting that the administration has filled only four of seven seats on the board and only one member, Laney, has been confirmed by the Senate.

Jeffrey Rosen, general counsel to the Department of Transportation and the department's representative on the board, said "the statute is explicit that all Amtrak officers serve at the pleasure of the board." He said his review of the law shows "questions about the validity of the board are just plain wrong."

"We play the hand we're dealt and we have to have a functioning board," Laney added. "I believe we can act" without a full seven-member board.


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