Passenger Trains > Who owns Amtrak?

I hardly ever read or post on the Passenger Board of Trainorders, but I am on other boards regularly. This post refers to an Editorial in Railway Age magazine by the well known Frank Wilner in the January 2013 issue, titled 'Want to privatize Amtrak? Not so fast" I'll admit to being months behind in my reading, so if this topic was discussed here months ago ignore. If not, you may want to try to get on Railway Age's website and check it out if you have an opinion about the future of Amtrak.

In short, the past actions of Amtrak participating railroads, the Federal Government, and subsequent mergers and acquisitions mean that Amtrak may be owned by an unusual assortment of interests that involves some of the biggest names in American markets and railroad companies. and it is all in extended litigation. The right wing always wants to get rid of Amtrak, meaning sell it to private investors, of which there would be few available because no one makes money on passenger travel, regardless of mode, in any country, if all costs are covered. But this article suggests it may be virtually impossible to 'sell' Amtrak.

Do not come down on me. I'm rather ambivalent, having had, as young management employee of one of the biggest railroads that made up Amtrak, a sleeping car pass. When Amtrak came, it was reduced to almost nothing. By the time I retired after 31 years of railroad service it was nothing. But I still think the country should have a national passenger rail system, and it would not be possible under 'privatization'. But for us, right now, it is still cheaper to fly, which I abhor, to see my kids 700 and 1700 miles away, but I'd much rather be on a train.

Please read Wilner's article in Railway Age, if you have not, and form your own opinions.

Amtrak is legally structured as a corporation. Like any other corporation, whoever owns the
stock, owns Amtrak.

There is PREFERRED Amtrak stock. It is held by the United States Government which claims a
certain value for it; and only preferred Amtrak stock has any vote, if ever Amtrak were
to take a stockholder ballot.

There is also COMMON Amtrak stock. It was handed out to the private railroads when Amtrak was
formed...those that did not simply take a tax write-off in exchange for giving away their business
and paying an "entry fee" (for instance Penn Central was losing money so it couldn't USE a tax write-off).
The Government says the common stock has no voting interest and is worth about as much to the stockholders
as if they had been given counterfeit dollar bills instead of stock.

So, the US Government, in effect, owns Amtrak.

EDIT: The other private railroads that took Amtrak stock instead of a write-off were Burlington
Northern, Canadian National and Canadian Pacific.



Edited 6 time(s). Last edit at 11/25/13 16:57 by GenePoon.

I think Amtrak had an offer to buyback stock for pennies a few years back, but the holders refused.

Practically speaking, Gene is correct. The question has been a subject of litigation, which hasn't yet been totally resolved. See http://law.justia.com/cases/federal/appellate-courts/ca6/11-4054/11-4054-2013-03-05.html



Edited 1 time(s). Last edit at 11/25/13 17:00 by ctillnc.

I recall that some many years ago the U.S. Supreme Court ruled that Amtrak was an "entity" of the US Government, because the (voting stock) is owned by the US Gov't., it receives funding from the Congress and it engages in a typical government function--public transport. Does anyone have the details? So who owns Amtrak? We do, lock, stock and pork barrel!



Edited 1 time(s). Last edit at 11/25/13 17:14 by railwaybaron.

My attitude has always been that since Amtrak is a public corporation then it is owned by the taxpayers. That is you and me. We are in essence, it's shareholders and as such we can, thru the political process, direct and influence it's direction.

John Webb
Trinidad, CA

railwaybaron Wrote:
-------------------------------------------------------
> I recall that some many years ago the U.S. Supreme
> Court ruled that Amtrak was an "entity" of the US
> Government, because the (voting stock) is owned by
> the US Gov't., it receives funding from the
> Congress and it engages in a typical government
> function--public transport. Does anyone have the
> details? So who owns Amtrak? We do, lock, stock
> and pork barrel!

true.

on another thread I mentioned that Amtrak's owned highway vehicles have federal government license plates, like the department of defense, post office, forest service, etc. The general heading is a government sponsored entity, owned or controlled by the government. The feds appoint the leadership, hand out appropriations, control major decisions, etc. That doesn't necessarily mean employees of Amtrak, or the post office or Freddie Mac or the Federal Reserve are government employees.

As an analogy to business, Amtrak is akin to a wholly owned subsidiary, with US government being the parent company.

Dave

well, I don't want to be too involved in this, but the article i referred to says the Gov 'did issue prefered stock to DOT , but later Congress stripped preferred shares of voting rights and any liguidation preference, effectively leaving common sharehlders in control' there is a lot more too it than that, and i do not understand it all; I'm no laywer and have no stock interest. But it is far from resolved. Read the article, please, if you can access it, on Railway Age site. Might save you some unnecessay typing.

Legally speaking Wilner is sort of correct, but practically speaking he is 100% correct. There are lots of trademarks, business processes, privileges and, for lack of a better word, "gentlemans agreements" to which Amtrak owes its operating rights on the Class 1 railroads' property that date back to before Amtrak's existence and that the railroads either allowed Amtrak to inherit or agreed to establish in exchange for the US government allowing them to cease operating passenger trains. Those arrangements absolutely will not be extended to any for-profit successors of Amtrak at the "Amtrak price."

This is why the only practical way to "privatize" Amtrak, even on heavily traveled corridors, is to give enormous amounts of money to the class 1's and ask them to run the trains themselves, because the class 1's have the sole power to make or break passenger rail service in the USA and right now their choice is to make it, because that is what they agreed to in 1971.

For anyone who wants to read the article the OP referenced, I could not find it on the Railway Age web site but I did find it in their on-line version of the January 2013 print edition, which is available on issuu.com

http://issuu.com/railwayage/docs/jan_2013_railway_age_magazine

The article starts on page 14.

It has an IG, is subject to the Freedom of Information Act,
and the CEO and directors are appointed by the President.

Style of operations and management mimic those of
a good many federal agencies. In what way does it resemble
a real business corporation other than vague references to
that term at it's creation?

Doesn't really matter who the owner is of something you
can't give away.



Edited 1 time(s). Last edit at 11/25/13 19:52 by chugchug.

>I recall that some many years ago the U.S. Supreme Court ruled that Amtrak was an "entity" of the US Government, because the (voting stock) is owned by the US Gov't., it receives funding from the Congress and it engages in a typical government function--public transport. Does anyone have the details? So who owns Amtrak? We do, lock, stock and pork barrel!

Lebron v NRPC, 1995: www.law.cornell.edu/supct/html/93-1525.ZO.html

The NRPC is a "Government Corporation", of which there have been too many to count here (COMSAT was one, as was Conrail). The Court ruled that since the Government appointed a majority of the NRPC board (all of them in fact) and supplied all of its funds via Congressional appropriations, the NRPC was "the Government" as far as having to respect people's Constitutional rights. Their rationale was that if this wasn't the case, it would be all to easy for the Govmint to create a bunch of corporation as a means to circumvent our constitutional rights.

In the case of Conrail, since the government appointed only a minority of the Board and supplied no grants, Conrail wasn't subject to this requirement.

Well, Wilner's article says 'the Federal Gov't issued preferred stock to DOT, representing its security in the federally subsidized Amtrak, but Congress later stripped preferred shares of voting rights and any liquidation preference, effectively leaving common shareholders in control.' And that is the subject of the rest of the article, who really 'owns' Amtrak, and the majority shareholder, a common stock insurance company, which bought PC's shares for $52 million (no date mentioned) has been in litigation for over a decade.

tp117 Wrote:
-------------------------------------------------------
> Well, Wilner's article says 'the Federal Gov't
> issued preferred stock to DOT, representing its
> security in the federally subsidized Amtrak, but
> Congress later stripped preferred shares of voting
> rights and any liquidation preference, effectively
> leaving common shareholders in control.' And that
> is the subject of the rest of the article, who
> really 'owns' Amtrak, and the majority
> shareholder, a common stock insurance company,
> which bought PC's shares for $52 million (no date
> mentioned) has been in litigation for over a
> decade.

The insurance company, American Premier Underwriters, was what was left of PennCentral after the rail related assets were stripped out. I believe it was the real estate, some development rights, the pipelines, several risk management firms including the insurance company, etc.

GenePoon Wrote:
-------------------------------------------------------
> So, the US Government, in effect, owns Amtrak.
>
> EDIT: The other private railroads that took Amtrak
> stock instead of a write-off were Burlington
> Northern, Canadian National and Canadian Pacific.

....And with Canadian National being a Crown Corporation until it was privatized in 1995, I guess you could say the Canadian Government was an original stock holder in Amtrak.

Lackawanna 484, the article says the insurance company is American Financial Group; is that the same company you mention? I do know PC, maybe PRR before, owned Buckeye Pipeline Company, which is very close to the Harrisburg Fuel pad still used by NS, and the reason it is there. cheaper pipeline fuel from the Midwest or even Texas. And the next comment is relavent to, as GTW got 5% (470,000) shares of Amtrak common stock. of course CN owns GTW and a 10% interest in CN is owned by a company controlled by Bill Gates. It's all in the Wilner article.

tp117 Wrote:
-------------------------------------------------------
> Lackawanna 484, the article says the insurance
> company is American Financial Group; is that the
> same company you mention?

Yes

http://www.afginc.com/phoenix.zhtml?c=89330&p=irol-newsArticle&ID=655424&highlight=

chugchug Wrote:
-------------------------------------------------------
> Doesn't really matter who the owner is of
> something you
> can't give away.

Amtrak common stock could be sold in the Over The Counter market on the pink sheets IF one of the railroads (or the heirs of Carl Lindner) wanted to sell. Carl Lindner himself got the stock out of the Penn Central bankruptcy by purchasing it.

That nobody is selling the shares, even at less than $1 per share prices, tells you they actually do have some value. For one thing, they are a legal claim to the ownership of Amtrak's real assets in vehicles, land, and buildings, which are worth billions of $$$'s in lquidation.

abyler Wrote:
-------------------------------------------------------
> chugchug Wrote:
> --------------------------------------------------
> -----
> > Doesn't really matter who the owner is of
> > something you
> > can't give away.
>
> Amtrak common stock could be sold in the Over The
> Counter market on the pink sheets IF one of the
> railroads (or the heirs of Carl Lindner) wanted to
> sell. Carl Lindner himself got the stock out of
> the Penn Central bankruptcy by purchasing it.
>
> That nobody is selling the shares, even at less
> than $1 per share prices, tells you they actually
> do have some value. For one thing, they are a
> legal claim to the ownership of Amtrak's real
> assets in vehicles, land, and buildings, which are
> worth billions of $$$'s in lquidation.

technically true, but it would be very unlikely that the feds would leave much of value in a liquidation. Look at the strip out of value they're doing in Freddie and Fannie, other government sponsored entities similar to Amtrak.

I haven't looked in a while, but the shares entitle the railroads to a seat at any carve-up discussion. Like the unions, bond holders, and various creditors. My guess is the payments to terminating employees, guarantees of various sorts, outstanding mortgages on just about anything of value, etc would chew up most of any funds available.

The disclosures required on a highly illiquid stock where the holder has virtually no rights to elect directors, approve management contracts, etc would be fun to read, however.