The Federal Investment in Amtrak's Assets Should Be Secured

PAD-81-32: Published: Mar 3, 1981. Publicly Released: Mar 3, 1981.

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Kenneth W. Hunter
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Amtrak has not become the profit-making corporation that was originally planned on in 1970. Instead, it has become dependent on Federal funds and subject to greater Federal control while legally remaining a private corporation. As of fiscal year 1980, the Federal Government had given Amtrak over $3 billion for its capital acquisition and improvement programs.

Only $2.5 billion of the Government's investment in Amtrak is subject to Federal security arrangements. The only probable condition that would cause the Government to exercise its security rights would be under a liquidation of Amtrak's assets. Because of the Government's commitment to rail passenger service and Amtrak's dependence on Federal funds, liquidation is only likely to occur if Congress stops funding the railroad. If liquidation did occur, however, the market for Amtrak's equipment would not be good since the equipment is unique to rail passenger service. Since the Government has funded the majority of Amtrak's assets, this amount should be fully secured so that the Government can recover as much of its investment as possible should liquidation occur.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: This recommendation is still valid, however, because of the budget impact no action will be taken.

    Matter: Congress should further amend section 601(b) of the Rail Passenger Service Act of 1970 so that any future appropriations for Amtrak's capital program can only be available after Amtrak and the Secretary of Transportation have entered agreements creating a Federal claim and securing, in favor of the United States, all assets acquired in the past and the future using Federal capital funding.


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