[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
LEGISLATIVE HEARING ON THE
COMMITTEE PRINT ``COMPETITION FOR
INTERCITY PASSENGER RAIL IN AMERICA''
=======================================================================
(112-42)
HEARING
BEFORE THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
JUNE 22, 2011
__________
Printed for the use of the
Committee on Transportation and Infrastructure
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
ANDY HARRIS, Maryland MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri HEATH SHULER, North Carolina
BOB GIBBS, Ohio STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania LAURA RICHARDSON, California
RICHARD L. HANNA, New York ALBIO SIRES, New Jersey
JEFFREY M. LANDRY, Louisiana DONNA F. EDWARDS, Maryland
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
(ii)
CONTENTS
Page
Summary of Subject Matter........................................ vi
Discussion draft, H.R. ____, a Bill to develop high-speed rail in
the Northeast Corridor through a public-private partnership,
and to encourage private sector competition on intercity
passenger rail corridors, 112th Cong., 2011.................... xiv
Section-by-Section Analysis of Competition for Intercity
Passenger Rail in America Act.................................. lviii
TESTIMONY
Boardman, Joseph H., President and Chief Executive Officer,
Amtrak......................................................... 38
Geddes, R. Richard, Adjunct Scholar, American Enterprise
Institute...................................................... 38
Hart, Thomas A., Jr., Esq., Vice President for Government Affairs
and General Counsel, US High Speed Rail Association............ 38
Millar, William, President, American Public Transportation
Association.................................................... 38
Stubbs, Anne D., Executive Director, Coalition of Northeastern
Governors (CONEG).............................................. 38
Wytkind, Edward, President, Transportation Trades Department,
AFL-CIO........................................................ 38
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Cohen, Hon. Steve, of Tennessee.................................. 71
Cummings, Hon. Elijah E., of Maryland............................ 72
Larsen, Hon. Rick, of Washington................................. 79
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Boardman, Joseph H............................................... 82
Geddes, R. Richard............................................... 86
Hart, Thomas A., Jr., Esq........................................ 93
Millar, William.................................................. 113
Stubbs, Anne D................................................... 117
Wytkind, Edward.................................................. 123
SUBMISSIONS FOR THE RECORD
Mica, Hon. John L., a Representative in Congress from the State
of Florida, request to submit the following:
Rahall, Hon. Nick J., II, a Representative in Congress from
the State of West Virginia, and Brown, Hon. Corrine, a
Representative in Congress from the State of Florida,
letter to Hon. John L. Mica, a Representative in Congress
from the State of Florida and Hon. Bill Shuster, a
Representative in Congress from the State of Pennsylvania,
requesting a legislative hearing on the draft bill, June
15, 2011; and the letter in reply from Hons. Mica and
Shuster, June 16, 2011..................................... 17
2011 Hearings on Intercity Rail Competition.................. 22
Federal Rail Safety Improvements, Pub. L. No. 110-432, 122
Stat. 4959-4970, 2008...................................... 24
International Competition Success Stories.................... 37
ADDITIONS TO THE RECORD
American Train Dispatchers Association; Brotherhood of Railroad
Signalmen; International Association of Machinists and
Aerospace Workers; International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers;
International Brotherhood of Electrical Workers; National
Conference of Firemen & Oilers, SEIU; Sheet Metal Workers
International Association; Transportation * Communications
International Union/IAM; Transport Workers Union of America;
United Transportation Union; letter to Hon. Bill Shuster, a
Representative in Congress from the State of Pennsylvania, June
21, 2011....................................................... 129
Association of American Railroads, Concerns and Questions on the
Discussion Draft............................................... 130
Boardman, Joseph H., President and Chief Executive Officer,
Amtrak, letter to Hon. John L. Mica, a Representative in
Congress from the State of Florida, June 21, 2011.............. 131
Broadley, John, John H. Broadley & Associates, P.C.:
Letter to Joyce Rose, Staff Director, Subcommittee on
Railroads, Pipelines, and Hazardous Materials, June 21,
2011....................................................... 135
Comments on the Discussion Draft............................. 138
Capon, Ross B., President and CEO, National Association of
Railroad Passengers, written statement......................... 183
Chambers, Ray B., Senior Transportation Advisor to RAILCET,
submission of written testimony of Michael Goetz, Executive
Director, RAILCET, on behalf of Organized Rail Construction
Management and Labor, originally submitted for the May 26,
2011, hearing of the Committee on Transportation and
Infrastructure entitled, ``Opening the Northeast Corridor to
Private Competition for the Development of High-Speed Rail''... 191
CONEG Policy Research Center, Northeast Regional Issues--
Competition for Intercity Passenger Rail in America Act
(Discussion Draft dated June 15, 2011)......................... 195
Doulton, Romm, Chairman, Pullman Palace Car Company, letter to
Joyce Rose, Staff Director, Subcommittee on Railroads,
Pipelines, and Hazardous Materials, June 21, 2011.............. 198
Drake, Thelma, Director, Virginia Department of Rail and Public
Transportation, Comments on the Discussion Draft............... 200
Hartman, Ronald J., CEO--Rail Division, Veolia Transportation,
letter to Hon. John L. Mica, a Representative in Congress from
the State of Florida, July 22, 2011............................ 203
Hoffa, James P., General President, International Brotherhood of
Teamsters, letter to Hon. John L. Mica, a Representative in
Congress from the State of Florida and Hon. Nick J. Rahall II,
a Representative in Congress from the State of West Virginia,
June 21, 2011.................................................. 207
Jayanti, Ignacio, Initial Comments on Mica-Shuster Discussion
Draft.......................................................... 209
Kinstlinger, Jack, P.E., Chairman of the Board Emeritus, KCI
Technologies, Inc., letters to:
Mica, Hon. John L., a Representative in Congress from the
State of Florida, June 16, 2011............................ 212
Rose, Joyce, Staff Director, Subcommittee on Railroads,
Pipelines, and Hazardous Materials, June 23, 2011.......... 214
Little, James C., International President, Transport Workers
Union of America, letter to Hon. John L. Mica, a Representative
in Congress from the State of Florida and Hon. Nick J. Rahall
II, a Representative in Congress from the State of West
Virginia, June 21, 2011........................................ 215
Mortensen, Stacey, Executive Director, San Joaquin Regional Rail
Commission, letter to Hon. John L. Mica, a Representative in
Congress from the State of Florida, June 9, 2011............... 217
News Release, Coalition of Northeastern Governors, ``CONEG
Governors: The Northeast Rail Corridor is Uniquely Positioned
as a National Model for High Speed Rail and Improved
Connectivity''................................................. 218
North Carolina Department of Transportation, Comments on the
Discussion Draft............................................... 220
Patterson, Dave, President and Chief Operating Officer, RWL
Leasing, letter to Hon. John L. Mica, a Representative in
Congress from the State of Florida, June 23, 2011.............. 221
Pierce, Dennis R., National President, Brotherhood of Locomotive
Engineers and Trainmen, letter, June 20, 2011.................. 222
Press Release, The Congressional Bicameral High-Speed & Intercity
Passenger Rail Caucus, ``Rail Caucus Chairs Say Northeast
Corridor Should Stop Being Used as a Political Pawn,'' June 15,
2011........................................................... 223
Press Release, United States Senator Jay Rockefeller for West
Virginia, ``Rockefeller Concerned About Threat to Amtrak
Service in West Virginia,'' June 20, 2011...................... 225
Redeker, James P., Acting Commissioner, Connecticut Department of
Transportation, Comments on the Discussion Draft............... 226
Simpson, Freddie N., President, Brotherhood of Maintenance of Way
Employes Division of the International Brotherhood of
Teamsters, letter to Hon. John L. Mica, a Representative in
Congress from the State of Florida and Hon. Bill Shuster, a
Representative in Congress from the State of Pennsylvania, June
21, 2011....................................................... 228
States for Passenger Rail Coalition, Statement from States for
Passenger Rail Coalition Chair Paula Hammond on House
Transportation and Infrastructure Committee Passenger Rail
Proposal--the Competition for Intercity Passenger Rail in
America Act of 2011............................................ 230
Stem, James A., Jr., National Legislative Director, United
Transportation Union, letter to Hon. John L. Mica, a
Representative in Congress from the State of Florida and Hon.
Nick J. Rahall II, a Representative in Congress from the State
of West Virginia, June 21, 2011................................ 231
Swaim-Staley, Beverley K., Secretary, Maryland Department of
Transportation, letter to Hon. John L. Mica, a Representative
in Congress from the State of Florida and Hon. Bill Shuster, a
Representative in Congress from the State of Pennsylvania, June
17, 2011....................................................... 234
Transportation Trades Department, AFL-CIO, Labor Problems with
Mica-Shuster Competition for Intercity Passenger Rail in
America Act.................................................... 237
Yaro, Robert, President, Regional Plan Association, Comments on
the Competition for Intercity Passenger Rail in America Act of
2011........................................................... 240
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LEGISLATIVE HEARING ON THE
COMMITTEE PRINT ``COMPETITION FOR
INTERCITY PASSENGER RAIL IN AMERICA''
----------
WEDNESDAY, JUNE 22, 2011
House of Representatives,
Committee on Transportation and Infrastructure,
Washington, DC.
The committee met, pursuant to notice, at 11:10 a.m. in
Room 2167, Rayburn House Office Building, Hon. John Mica
(Chairman of the committee) presiding.
Mr. Mica. I would like to call this legislative hearing of
the House Transportation and Infrastructure Committee to order.
The purpose of this hearing today is to review the committee
print, which is entitled, ``Competition for Intercity Passenger
Rail in America.'' We have assembled a list of witnesses.
The order of business will be, first, opening statements by
Members. And then we will turn to our witnesses that we have.
And I recognize myself, as we get started here.
Ms. Brown. Mr. Chairman? The people have not been permitted
to----
Mr. Mica. Yes. And I, as the chair--the people will be
seated. But in the effort of moving forward at the appointed
time, which is 11:00, Members will have the opportunity to
present their opening statements.
And as the witnesses are recognized--as you know, some
Members took extensive time during the last markup, biting into
our time of this important hearing, this bipartisan hearing
that I had agreed to at the request of Ms. Brown, the ranking
member, at the request of the full committee chairman, Mr.
Mica, and the ranking member, Mr. Rahall.
We are going to proceed with a full hearing, and everyone
will have an opportunity, as far as the Members, to give
opening statements. And then we will hear from the witnesses
who are being assembled, and will be seated as we proceed.
Ms. Brown. Mr.----
Mr. Mica. As I said, the order of business will be opening
statements. I will proceed with my opening statements, then we
will turn to the ranking member or the others who wish to be
recognized.
Let me again welcome everyone today, and say that I am
pleased to comply with a request both in writing and verbally
that I had from Mr. Rahall, from Ms. Brown, to convene a
legislative hearing on the committee print of the proposal by
myself and Mr. Shuster, which is entitled, ``Competition for
Intercity Passenger Rail in America.'' We are very pleased to
move forward and try to improve passenger rail service, not
only in the Northeast Corridor, not only for high-speed rail,
but also for passenger rail in America.
As a very strong advocate of passenger rail, I believe it
can not only benefit us as far as energy and as far as
improvement in the environment, but in many other ways. I think
it is a segment of the economy that has been stuck in neutral
for many years. We are celebrating the 40th anniversary of
Amtrak, which has a history of a Soviet-style train operation.
While train operations and systems around the world have
moved into the 21st and sometimes the 22nd century, achieving
speeds of 150 miles an hour on average not uncommon in Europe
and Asia, some of them going much faster than that on average.
While we have our snail-speed trains that Amtrak promotes
at great expense, underwriting every ticket last year by
approximately $50.80, some of the routes in the hundreds of
dollars--and I have no problem with subsidization of any forms
of transportation, so long as they are reasonable and
accomplish what we set out to do by moving people efficiently,
economically, by the best possible infrastructure that we can
work together to provide.
Let me say that we have two reasons for this legislation
that Mr. Shuster and I have introduced, as I continue with my
opening statement as we get settled here and get everyone
together.
The first reason, of course, is my great disappointment in
high-speed rail. I was excited when President Obama, even as
President-elect, had stated one of his goals was to create
high-speed rail systems like we have in Europe and Asia. He
came to the floor of the House of Representatives during his
State of the Union and said that that was his goal, and
repeated it.
And then the second reason we had, of course, was the
money, which was thrown at several projects. And to go back for
just a second, Mr. Shuster and I worked aggressively during the
Bush administration, and prior to that I worked back as far as
Susan Molinari, previous chairs of this committee, to try to
bring good reforms and improve passenger rail service across
the United States, including the PRIIA Act, which we worked on
in a bipartisan manner with Mr. Oberstar.
I helped author and promote the high-speed rail provisions,
working in the House and Senate, with both Republicans and
Democrats, and we actually got the President of the United
States to sign that law that, again, set out a blueprint for
creating high-speed rail, involving States and localities and
others in the process, setting up, again, a participatory
outline and framework.
All that was sort of blown apart when some of the grants
were announced. We threw $8 billion in stimulus money and
another $2.5 billion through regular appropriations at high-
speed rail. And when those decisions were made behind closed
doors without proper consultation of Members of Congress and
others, you see exactly what you got: people rejected snail-
speed trains, they rejected 39-mile-an-hour systems that would
be slightly improved, and you could still ride a bus and get
there faster than you could by Amtrak-proposed service.
So, money came back from Ohio. The 70-, 80-mile-an-hour
snail-speed proposals for Wisconsin and Florida that were sold
as high speed were also rightfully rejected. And I am not very
pleased with the inglorious start that we have had in throwing
money at projects that had no possibility of succeeding, either
in providing high-speed service, or in moving this country into
the 21st century of high-speed rail.
Even by Federal definition that we put in the law, high
speed is 110 miles an hour, which was watered down by Amtrak in
negotiations. And, in fact, you will find the world's standard
is 120 miles per hour.
We have ended up with a horrible start. I couldn't think of
a worse launch of high-speed rail in the United States,
undermining the efforts that we worked so hard for to launch
true high-speed service around the Nation.
I am not even happy with the one project that retains the
possibility of high-speed rail in California. We went out to
Fresno, and we actually did a hearing out there, and the
section that has been chosen between Fresno and Bakersfield has
neither the population nor the intercity connections to make
that route a success. And yet we are throwing billions of
dollars at that marginal project, instead of a successful
project.
What we have tried to do is turn our focus to the Northeast
Corridor. And people--any of the people who say that we are not
going to succeed, I can tell you right now, Mr. Boardman,
representatives of labor and others, that we are succeeding.
Because the first thing we got done was the recognition by this
administration and others to designate the Northeast Corridor
after some time waiting as a high-speed rail corridor.
And we do have some recognition by Amtrak, who is now
considering--and we will hear the plans from Mr. Boardman--of
bringing the private sector in, because he knows as well as I
know and every Member knows, that you will be turning blue
before Congress ever gives $117 billion or waits 30 years for
high-speed rail in this Nation.
So, yes, we will have a full hearing on this, and as we
rolled this out, we tried to do it in a bipartisan manner,
bringing in people from around the United States, not just the
bigshots in Washington. We connected people, hundreds of people
from around the country, who had an opportunity to participate
both by teleconference and by webcast. We offered later--and
everyone saw it when I saw it--a committee print which you see
before you today.
We will have a hearing every week, if we have to, until we
get this done, or we get high-speed rail moving and intercity
passenger service that meets an adequate world standard.
And all along the way, Mr. Shuster and I have guaranteed,
promised, committed to preserving labor's existing benefits,
wages, and whatever else they have; I don't want that to be an
issue. Anybody who thinks that the glorious future for Amtrak
is to continue with the status quo, as some have said we should
do, are sleeping at the switch, as far as labor is concerned.
Labor, look at the future that labor has had with Amtrak
and with what's going on. We have gone from 29,000 Amtrak
employees when I came to Congress to 19,000. Do you want to
continue to lose jobs in an industry where other parts of the
world they are actually gaining and are moving people? Is that
the history you want?
I made part of the record today the outline of what Amtrak
did to labor, and they argued for years over wages and
salaries, minor benefits for their employees. I went to those
meetings with Mr. Oberstar and tried to get off dead center, so
that labor could--that's in Amtrak, and the great people who
work in that, could get the benefits and some of the other
terms of employment that they have in the private sector that
they got from privatization of our freight rail, which we did
years ago, and again, Amtrak left in neutral.
No one is trying to harm labor in any way. And I will go
out to the unions, if I have to go from shop to shop, and
explain it to them again on train to train, and let them know
that they will be protected by whatever we do here.
Now, in an unprecedented fashion, too, we rolled out that
measure last week, the committee print, and I saw it in the
afternoon when everyone else did. We discussed the general
outline of what Mr. Shuster and I proposed, both for high-speed
rail in the Northeast Corridor and other corridors, and then
long-distance and intercity passenger service. His intent is
also a follow-up of what we put in PRIIA. He asked for just a
couple of lines that are money-losers to be put up for bid to
allow the private sector--and I ask you why can't you--why
can't we ask the private sector to bid on some of these routes,
if we are guaranteeing, again, labor all of their
opportunities, their wages? Why can't we do that? Why are we so
closed minded that people can't consider an offer that may be
better?
We did protect Amtrak in the case, again, that service will
continue to be provided. And no one said that we want to
dismantle Amtrak. In fact, if there wasn't an Amtrak already,
there would have to be--you would have to create an Amtrak that
would be the franchisee and oversee some of the passenger
service.
So, we put provisions into PRIIA, both for high-speed rail
and for intercity passenger service, that we think we can build
upon, and that we think that we can have an opportunity to
provide more service, more employment, and true high-speed
rail, while opening the door to competition and leaving Amtrak
intact. But what we get, in fact, are just negative comments.
And we will move this forward, one way or the other. We
will move it forward in this Congress or in future Congresses.
And I guarantee that Amtrak will tell us today and in the
future that they will have to move in that direction, because
they are not going to find $117 billion that Congress can give
them, and we aren't going to wait 30 years to have that service
in the Northeast Corridor or any place else in the United
States.
So, I think that gave everyone an opportunity to get
settled.
[Laughter.]
Mr. Mica. And, Ms. Brown, you think that everyone got an
opportunity to be settled?
Ms. Brown. We appreciate that, Mr. Chairman.
Mr. Mica. And I wanted to make certain that everyone
understands with clarity my position. If there is anything I
didn't amplify, I will be glad to do it as we proceed.
So, with those brief opening comments, I am pleased to
yield to Mr. Rahall.
Mr. Rahall. Oh, thank you, Mr. Chairman. I was asleep at
the switch. Not that your comments would ever put me to sleep,
but I do want to thank you for holding today's hearings at the
request of subcommittee ranking member, Corrine Brown, and
myself, as the proposal you and Mr. Shuster have put forth
raises a great many questions and concerns.
Amtrak is a for-profit corporation. It is not an agency of
the Federal Government. Yet your proposal would divest Amtrak
of its assets in the Northeast Corridor and leave it
responsible for its debts.
The nonpartisan Congressional Research Service has
determined that this proposal is unconstitutional because it
violates the appointments clause of the Constitution. It is
also likely that the proposal violates the takings clause,
because it takes Amtrak's private property without just
compensation.
As a for-profit corporation, I believe Amtrak's standing is
very little different than that of any other for-profit
corporation in America. Yet I do not think anyone would dream
of, say, legislatively stripping CSX or Norfolk Southern of its
assets if one was unhappy with the freight service they were
providing.
There are many other peculiar aspects to this proposal.
Under it the Secretary of Transportation would solicit
expressions of interest from entities interested in replacing
Amtrak as the operator in the Northeast Corridor. The Secretary
would then select up to three entities to be awarded $2 million
in Federal funds to develop more detailed proposals.
Subsequently, the Northeast Corridor Executive Committee
established by the measure would accept the detailed proposals
and select the best one. There is no criteria contained in the
measure as to what qualifications or restrictions might pertain
to these entities. In fact, under a clear reading of the
measure, China could qualify and operate the Northeast
Corridor. Now, I don't believe that is something we really want
to see happen.
I also fail to see why we would hand over $2 million in
taxpayer dollars to up to three entities in order for them to
develop a detailed proposal. That is rather odd, paying
somebody to develop a proposal to submit to yourself. I do not
think that is how things of this nature are normally done.
There is also no guidance or criteria governing which
proposal the committee would select, other than it being the
``best.'' What does that mean, ``the best''? The best what?
Would we amend Federal aviation or highway statutes to say that
the goal of those programs is to have the best aviation system,
or the best highways?
The answer is, of course, that while we all want to do the
best, we would not use that term, as it is not a statutory term
of art.
In the case of your measure, Mr. Chairman--and I do commend
you for your vigorous pursuit thereof--I think any overreaching
goal as to what constitutes the best would include creating and
retaining jobs, and provide the highest level of safety and
security.
As to other aspects of the measure, Amtrak relies on an
operating profit from the Northeast Corridor to offset less
profitable long-distance lines in other parts of the country,
areas that rely heavily on passenger rail service. This
includes--and accuse me of being parochial or whatever--but
this includes the Cardinal that runs in my home State of West
Virginia, a route connecting New York to Chicago.
With the establishment of Amtrak in the Northeast Corridor,
the Cardinal will suffer a fatal blow under this proposal,
along with many other vital routes that connect rural areas of
our country coast to coast, including the Auto Train, Capital
Limited, California Zephyr, Coast Starlight, Empire Building,
and Texas Eagle. Right now, Amtrak serves about 40 percent of
America's rural population. All of this service will be lost
under the draft legislation.
I also have serious concerns about the implications of this
proposal on rail labor. Under this measure, the existing
contracts of some 19,000 Amtrak workers would be abrogated, and
new workers would have no Davis-Bacon protections, and no
protections under the Railroad Retirement Act, railroad
unemployment compensation, and the Railway Labor Act. In other
words, this proposal leaves rail labor sitting at the station.
While proponents of this proposal claim this will save
money, I fear it will have just the opposite result. Under
existing contracts, Amtrak workers who get displaced receive up
to 5 years of protection. As such, under this proposal, Amtrak
would be responsible for up to $4.4 billion for displaced
workers, an obligation that Amtrak would not be able to meet.
This would undoubtedly fall on the U.S. Government. This is
just one of the many ways that this proposal will cost, not
save, the American taxpayers money.
And then finally, as I conclude, Mr. Chairman, in its
present form this proposal will have serious consequences for
commuter rail agencies and freight railroads. And, frankly, I
am not sure that the proposal can even be fixed. My fear is
that if it is enacted, it will result in a transcontinental
tragedy.
I thank you for the time, and look forward to today's
witnesses.
Mr. Mica. Well, thank you. And, as I said, we offered this
committee print online last Wednesday and asked any Members who
had amendments to offer them by the close of business Friday.
We extended that until Monday at noon. We did agree on this
legislative hearing.
And I do want to say--and I have taken notes of the issues
that the ranking member has--that we are interested in crafting
legislation that can have bipartisan support, and move this
process forward. And when I saw the draft myself I had some
concerns about some of the same issues that you raise.
And we will be glad to take amendments from, again,
committee members and others to make certain that our intent to
provide good service, not to eliminate any, or interfere with
any existing service, is achieved.
So, again, just comments. We will, as we continue and move
towards markup on the legislation, welcome everyone's
participation.
Mr. Shuster, chairman of the rail subcommittee, you are
recognized.
Mr. Shuster. Thank you, Mr. Chairman. I appreciate you
holding this hearing today. I appreciate the ranking member for
calling for it--Ms. Brown of the subcommittee.
This is an important issue. The ranking member, Mr. Rahall,
talked about Amtrak being a for-profit corporation. But if it
were a bona fide for-profit corporation, it would be bankrupt
by now. Amtrak would be gone. It would be sold off into pieces,
or somebody would have come in and taken it over for $.10 on
the dollar.
It has never lived up to what it was established to be: a
for-profit corporation. And those out there today and on this
committee talking doomsday for Amtrak, I think it's doomsday
for Amtrak if we do nothing.
We have to look around the world at what is going on.
Private sector capital, private sector operations, are coming
in all over Europe and they are taking over the operations of
these railways and making them profitable, or at least moving
them towards break-even or profitability. And I think the same
thing can happen with passenger rail in this country.
I remember back 15, 16 years ago, 20 years ago, even 30
years ago, when we deregulated--that is what we are doing here,
I believe, we are deregulating passenger rail in this country,
just like we deregulated freight rails, just like we
deregulated the trucking industry in this country, just like we
deregulated the airline industry. And two of the three have
been great successes. The trucking industry and the freight
rail systems have had great success. For the airline industry,
the consumer has had success, I believe. We have got a lot of
options for inexpensive flights around the country. The
industry, though, has struggled; 9/11 didn't help at all.
But still, we deregulated those modes of transportation.
And, on all accounts, I think we would come down saying that it
was a very successful deregulation. I think we can do that
here, with passenger rail.
I don't like to mention this to people, but I think it is
important--they were Democratic Presidents that deregulated
these industries. My friends on the other side of the aisle, I
hope they look back at history. When we deregulated aviation
and we deregulated freight rails in this country, Jimmy Carter
was the President of the United States. Today you would think
that was heresy, for a Democrat to do that, but in fact, that
is what happened. Same with the trucking industry. Bill Clinton
was the President of the United States.
Deregulation works. And it can work in passenger rail. And
I believe it can save passenger rail in this country. And, as
the chairman said, if we didn't have Amtrak, we would probably
would have to, in this bill, create Amtrak. It is not saying
Amtrak is going away. Amtrak can participate, Amtrak will
probably be here. I am quite sure it will be here in some shape
or form. But it is going to be different, and it needs to be
different if we want to have a vibrant passenger rail system in
this country. And I believe we need to.
I say in a lot of hearings about the population of the
United States. It went from 200 million to 300 million people
and we crossed that threshold about 4 or 5 years ago; it took
us 65 years. We are now going to cross the 400 million
threshold in about 30, or even 25 years from now. Passenger
rail has to be a viable part of our transportation system,
especially in the Northeast Corridor, where the population
density is incredible. You look around the world, it is one of
the most populous corridors in the world. We need to do better.
And I believe this proposal does that.
When I look around the world--and there is debate, but
there are facts that have been shown to me--and when you talk
about the West Coast rail that Virgin Rail took over in
England, it was started out by the British Government by giving
them $400 million in subsidies. Today, they pay the British
Government $240 million, plus they make a profit of $80
million. They have gone in there using marketing and best
practices and over the last 6 years, they doubled the ridership
from 14 million to 28 million people.
I talked to a number of companies that are very interested
in coming into the United States and investing in some shape or
form in the Northeast Corridor. They believe that today's
numbers of 10 million passengers could grow to 30 million or 40
million passengers, which is incredible. And that is what we
have to do.
The proposal also affects State-supported routes. My State
of Pennsylvania is very eager to have competition on the
Keystone Corridor, which has been a great success between
Amtrak, the State, building that line and increasing the
ridership by 40 to 50 percent over the last 4 or 5 years.
Both you and I look at examples on the negative side. And,
of course, I am going to ask Mr. Boardman--I don't believe he
was there at the time, but in Florida, the Florida Rail South,
the Veolia bid that got the contract was $97 million; Amtrak
was $162 million. I was in business. I couldn't stay in
business if my prices were that much higher. And why is that?
And then, to add insult to injury, Amtrak is suing Veolia
because of four employees they say were stolen from Amtrak. As
I said, I was in business, and I had people come to work for me
and people who went to work for somebody else, and I also had
other business owners say to me, ``Oh, you stole my employee.''
You can't steal something you don't own. So I don't know why
Amtrak is pursuing, with Federal taxpayer dollars, a court case
about four employees that changed where they wanted to work. I
think it is ludicrous.
And there are many examples. We had, the other day, the
person that runs ACE Rail in southern California, where the
bids came in. Amtrak bid double what the private sector company
bid--I don't remember which private sector company it was.
I believe bringing competition to passenger rail is the way
to save it. I don't believe that we are going to kill it. We
are going to save it and make it stronger, I believe, for the
future, for the future generations of American passengers. And
I look forward to working with Mr. Rahall and other
colleagues--Ms. Brown, on the other side of the aisle. If there
are provisions that we need to add to this, let's talk about
it.
Because I think, at the end of the day, as history marches
forward, passenger rail is going to need to be deregulated.
Competition in the transportation industry is what makes it
stronger, as it has in the past. So, with that, Mr. Chairman, I
went over my time. But thank you, and I yield back.
Mr. Mica. I thank the chairman. Let me recognize the
ranking member of the rail subcommittee, Ms. Brown.
Ms. Brown. Thank you. My notes say that I am supposed to
say, ``Thank you, Mr. Mica, for holding today's hearing.'' I
don't think so, because I think legislation that affects the
entire passenger and freight rail system in the United States
deserves a hearing, examination, and debate. There are numerous
legal, financial, and operational questions that need to be
answered before we auction off Amtrak to Wall Street investors.
We have, as we sit here today, no surface transportation
reauthorization bill, and no way to pay for it. This week we
will be forced to delay the Federal Aviation Administration
bill for the twentieth time, at the very moment that we should
be working together to solve problems.
We have this bill before us today that will be dead on
arrival in the United States other body, the Senate. We
absolutely need to find a way to get these transportation
programs reauthorized so we can put people back to work. But
this legislation will do the exact opposite. This legislation
turns over one of our Nation's most valuable transportation
asset to Wall Street investors with little or no regulation or
service outcome. No safety or security mandates after being
targeted by--given a private or possible foreign entity the
right to take the land and property of the United States
citizen and provide no protection for labor, all the while
jeopardizing the railroad retirement system.
This legislation also put the American taxpayers on the
hook for billions of dollars in Amtrak debt, environmental
clean-up, windfall profits for billionaires, and largely
subsidies for--assuming that they would ever survive. In fact,
this is unheard of. We are giving $6 million to encourage
people to bid.
We all agree that we need better service on the Northeast
Corridor. But no one is going to operate trains at 200 miles
per hour on infrastructure built in the 1800s. Amtrak has an
operating profit on the corridor, and is steadily increasing
passengers. And we can tear apart Amtrak and hope for the best,
or we can give Amtrak the tools that it needs to run true high-
speed rail along with the numerous other services that they
provide.
The United States used to have the best passenger rail
service in the world. Now we are being left behind because we
refuse to invest necessary money for the true national
passenger rail service. Japan and Great Britain--which is often
talked about on this committee--Japan invested $30 billion--
30--I am sorry, $300 billion in infrastructure. That cost never
passed on to the operators.
Great Britain, which is often talked about, recently
invested $15 billion to improve the West Coast Line, which
Virgin Rail runs. Virgin pays only $160 million annually to
Great Britain for the infrastructure improvement. Amtrak is
expected to do less, yet they have a higher operating profit on
the Northeast Corridor than Virgin on the West Coast Line. In
fact, I think about $130 million.
The American people deserve better. And privatizing Amtrak
rail along the Northeast Corridor is definitely not the way to
improve our Nation's passenger service. It will kill our
Nation's passenger rail, and dismantle Amtrak, which I believe
is the true goal of this legislation, and has always been the
true goal from the Bush administration, when they zero out the
funding for Amtrak.
Mr. Chairman, I have received a number of letters and
statements of concerns regarding this draft bill, including
statements from Amtrak, the National Association of Railroad
Passengers, and a number of labor unions, the Brotherhood of
Locomotive Engineers and Trainmen, the International
Brotherhood of Teamsters, just to name a few, and several other
Members. I would ask unanimous consent that they be included in
the hearing record, and given 30 days to get that information
to the committee.
I yield back the balance of my time.
Mr. Mica. I thank the gentlelady. Other Members seek
recognition? Mr. Southerland, gentleman from Florida.
Mr. Southerland. Thank you, Mr. Chair. I commend you for
having this hearing, and I appreciate bringing this incredibly
important issue to the forefront of the full committee.
You know, I will tell you. At least--you know, we have
talked about this issue, and we talk about other countries that
are doing well. I applaud us for often times, in referring to
those countries, countries that are our allies, countries that
do appreciate freedom and do appreciate free enterprise and
free markets. Often times we hear on the Hill raising up
countries that in no way exemplify the values that we hold true
in this country.
And so, I think sometimes you don't have to redesign or
reinvent the wheel. There are some good ideas out there around
the world that I think we need to be learning from, and using
them as our R&D, and trying to implement on the issue that is
before us today.
You know, it blows my mind that Amtrak's long-distance
routes operated a deficit of $527 million, requiring an average
subsidy per ticket of $177.84. I, too, as Chairman Shuster made
mention, stuck on to the ranking member's comments about how
Amtrak is a for-profit organization. You know, I am new to this
whole world, being here in Congress for 6 months. But I will
tell you my family has been in business, a business my
grandfather started. And I will tell you that if we were having
to subsidize to the percentages that Amtrak is having to
subsidize, it is just real clear we would have gone bankrupt
and we would have ceased to exist, and we would not have
perpetuated our business, our family business, to three
generations now.
There are just some brutal realities out there, just brutal
realities. When you are in a hole, stop digging. Spoken like a
true funeral director, because that is what I am. I know about
digging holes. And what I see here just violates common sense.
I understand how critically important this issue is
regarding the transportation, and as far as the sector we are
looking at. We want it to survive, we want it to thrive. And I
think that, in looking at how we can best do that, to inject
some private--public-private partnerships, makes sense. But the
one thing that doesn't make sense is digging a deeper hole.
And so, I am eager today to hear from our panel. I thank
you all for being here. We are going to disagree, and that is
OK. But I will tell you your ideas, they either fill the hole
in, or dig it deeper, one of the two. We are broke. We are
broke.
And so, Mr. Chairman, I thank you. I look forward to
hearing from our--from those that are going to testify here
today, and I yield back.
Mr. Mica. Thank the gentleman. Mr. Sires, the gentleman
from New Jersey.
Mr. Sires. Chairman Mica, Ranking Member Rahall, I thank
you for holding this hearing today. As a Member whose district
is in the Northeast Corridor, and as someone who travels home
nearly every weekend on Amtrak, I have some concerns and
reservations about this bill, which proposes to separate
Northeast Corridor from Amtrak.
The Northeast Corridor is important to Amtrak because it
generates revenue which can be used to make up the--for losses
in long-distance routes. However, more important than this,
Amtrak provides an essential service to millions of passengers
each and every day, and is a key component of our regional
economy.
The Northeast Corridor is not owned by Amtrak. And if the
Northeast Corridor is to be split, it would split up into
different private corporations. The ramification must be known.
For example, the tunnel between New Jersey and New York are
easements held by New York City. This legislation seems to
assume that New York City would be willing to transfer these
easements. Homeland Security concerns could be triggered. What
would be the security requirements for private corporations to
take over Amtrak routes? Where would labor jobs go?
Additionally, under this plan, what would be the
implications for the commuter railroads such as the New Jersey
Transit?
I am much--I am very much looking forward to the testimony
of our witnesses, and thank the chairman and the ranking member
for holding this hearing.
Mr. Mica. Thank you. Mr. Nadler.
Mr. Nadler. Thank you, Mr. Chairman. Thank you, Chairman
Mica and Ranking Member Rahall, for holding this hearing on the
chairman's bill to privatize the Northeast Corridor.
I am glad we are holding a hearing, instead of a markup, as
I think was originally intended. This is a pretty drastic
proposal that makes sweeping changes to the intercity passenger
rail system. It requires careful thought and deliberation, and
I appreciate the chairman's willingness to slow the process
down, so we can begin to address the many questions and
concerns raised by the legislation.
The bill requires Amtrak to redeem common stock and
transfer its assets to DOT. At the same time, it directs the
Secretary to solicit ``expressions of interest'' from private
entities to build and operate high-speed rail service, and then
it gives $2 million to the top contenders to prepare a more
detailed proposal. It is not clear why an entity that
supposedly has enough funding to build and operate a high-speed
rail line needs taxpayer support just to write a proposal.
Then the Executive Committee establishing the bill would
evaluate these proposals, select the best one, and notify
Congress of its decision. Congress would have no role in the
decision. Congress would just be told what will happen, and the
Secretary is directed to implement the Executive Committee's
selected plan and grant a 99-year lease to the Executive
Committee to carry it out.
One of the biggest problems with the bill is that it sets
in motion the elimination of Amtrak before any proposals are
reviewed or recommended. We have no idea if there are any
viable private financing schemes that adequately meet the
desired criteria.
We have already requested proposals in PRIIA, and none were
submitted for the NEC. I understand the chairman has indicated
that he thinks DOT didn't really act in good faith in search of
proposals, but his bill setting up a new RFP is also in the
hands of the DOT. Regardless, the logic doesn't follow that,
therefore, we should first eliminate Amtrak and then hope that
a solution will magically appear.
As the chairman knows, I have supported his quest to
research and review privatization proposals. But why should we
take the drastic actions laid out in this bill until a detailed
plan has been presented and properly evaluated? Why should we
disrupt or eliminate current service and potentially lose good
paying jobs until we know what will replace it? And why
shouldn't we keep investing in Amtrak in the interim, and allow
it to compete, as well?
Another major problem is that this bill grants broad
authority, including eminent domain authority and preemption of
several State and local laws, to this Executive Committee which
is eventually to be staffed by the private entity with a lot of
unanswered questions. There might be legitimate reasons to have
such authority. And, generally speaking, I support it. When
furthering interstate transportation and commerce, that is
clearly in the public interest.
But under this bill we don't know exactly who we are giving
this authority to, or when or how it will be used. This is a
monumental states' rights issue, and a very broad grant of
authority to an unknown, unaccountable entity over our
districts.
There are simply too many unanswered questions to allow
such broad Federal preemption, and to place it in the hands of
a private entity.
I also question the provision of the bill requiring Amtrak
to redeem all common stock at the book value. DOT performed the
evaluation and determined the stock is worthless, which--an
evaluation the courts have upheld. Under this bill, Congress is
stepping in, providing a direct windfall to at least one of the
shareholders. I have concerns about the takings issue in the
bill. But beyond that, this could create a real problem of
unjust enrichment.
I am, frankly, surprised that, as my friends on the other
side of the aisle are pushing drastic cuts across the Federal
budget, that they would agree to just handing someone a
windfall of hundreds of millions of dollars.
These are just a couple of the big picture concerns. There
are many other troubling aspects of the bill, such as
inadequate labor protections, the potential impact of the
railroad retirement system, and the increased cost for the
freight railroads, the probable loss of State-supported and
long-distance routes, and the shifting financial burden to
States and local governments.
If one of the main goals of privatization is presumably to
reduce Federal funding, it seems odd to leave the Federal
Government with such significant costs and liabilities. I would
rather take that money and invest it directly in Amtrak's plan
to eliminate the $9 billion backlog created by Federal under-
investment, and to implement Amtrak's plan to upgrade its high-
speed rail service.
My biggest problem with this bill is that it throws the
entire passenger rail system off a cliff, and hopes the safety
net will suddenly appear. At least it hopes the NEC is saved.
It doesn't deal effectively with other routes, except to remove
the cross-subsidy from the Northeast Corridor that now supports
them. These are risks I am not willing to take.
As of now, I must oppose this bill. But I do commend the
fact that we are holding a hearing, and hope we can explore
many of the subjects raised by the bill. But we certainly
shouldn't take the approach that the bill does of, in effect,
abolishing Amtrak, and then hoping a proposal will emerge that
can adequately replace it. I think that is, to put it mildly,
putting the cart before the horse.
I thank you, I yield back.
Mr. Mica. Thank the gentleman. Mr. Cravaack?
Mr. Cravaack. Thank you, Mr. Chairman, and I want to begin
by commending you and Mr. Shuster for this bold, new direction.
I think that Amtrak needs to go. And I thank all the panel for
being here, as well, and I look forward to your testimony, and
I hope to learn a lot along the way.
Just some comments. I am a pilot from Northwest Airlines--
or now Delta--and living through deregulation, or not--but
living as a result of deregulation, I can tell you that it is
good for the consumer. Some of the arguments I am hearing here
today were probably some of the same arguments that we heard
about the airline deregulation, as well.
Quite frankly, Amtrak is broken. And the other fact is we
are broke. I hear about investment. Where is that investment
money going to come from? Right now, 47 percent of our debt is
foreign-owned. Do we plan to go to over 50 percent of that
debt? Have foreign-owned entities own our debt, and begin to
start telling us where we can and cannot invest our money? I am
not willing to put my children and my grandchildren at that
risk.
When I see investment, or what I think the private sector
should be doing, and what they can do, is start investing. The
demand is there. And with the demand being there, you are going
to see the private sector slip right in and start making
profits, accordingly.
When I see competition, what I see is increasing
flexibility of schedules, affordability, and quality
increasing, as we have seen all through the competition model.
I have seen this with the airlines itself.
Einstein had it right. Keeping--doing the same thing over
and over again and expecting different results is the true
definition of insanity. We cannot continue on with this model.
I look forward to hearing what you have to say, and hopefully
joining with you and partnering with you in a private
enterprise that can create a significantly profitable model
that will actually benefit the consumer and have long-term
viability without increasing the debt on this country. I thank
you very much, and I--Mr. Chairman, I yield back.
Mr. Mica. Thank you. Ms. Norton?
Ms. Norton. Mr. Chairman, I appreciate this hearing. I mean
the last hearing Amtrak wasn't here to talk to--it is like I
talk about you while you are not here. It is important to about
them and to talk to them, with them here. And so this is an
important hearing.
I also think you have every right to be impatient with the
backwardness of the United States on high-speed rail. May I
remind the chairman that for decades, for almost 75 years, we
have sat here and watched every advanced country--and some not
so advanced--develop high-speed rail, and never lift a finger
to do anything about it, until the administration, in fact,
initiated a stimulus package in the middle of the great
recession. It was aimed at finally, finally, starting up a
nationwide high-speed rail system, while at the same time
offering jobs to the many troubled areas of our country.
That is why we didn't, for example, concentrate on the
Northeast Corridor, which would have been more efficient, but
that was not what those times called for. In fact, starting it
up all across the country made a lot of sense. But we see some
States even have decided to give back the money--including your
own, Mr. Chairman, despite your best efforts to encourage the
State of Florida, one of those most in need of high-speed rail,
to proceed.
The criticisms of Amtrak that I have heard here are no
substitute for hard thinking about how to fix that system and
get high-speed rail. That is the easy part. And I regret that
this is an easy solution.
The bill has an encyclopedia of flaws I will not--I will
focus on only two of them. I am particularly troubled, by the
way, by the cavalier treatment of American workers who have
worked for Amtrak for decades. Because this bill surely wipes
out their contracts, and undermines their retirement system.
But let me focus on two fatal flaws. It is really
surprising to see the Majority introduce a bill that has such
Fifth Amendment-taking violations. This bill, if it were ever
to get through the Senate--and I don't think anyone entertains
the illusion that it would--would be in court if any President
ever signed it. I don't want--the constitutional Fifth
Amendment takings violations are replete throughout the bill.
That, itself, is a fatal flaw.
But there is another fatal flaw in the thinking behind this
bill. The authors do not take into account that there is no
passenger railroad service in the world today that is not
heavily subsidized. The authors wipe out 1970, when the
railroads came begging the Federal Government to ``Take this
off our hands.'' Do you think the Federal Government wanted to
take on a railroad and subsidize it the way we have done? Of
course not. But both then and now, the private sector was not
prepared to do what you would have them do now.
Now, they do have a recourse. And, mind you, they will go
to that recourse as quick as they were to--to get control of
the Northeast Corridor. That recourse is available now. It is
prohibited in the United States. It is prohibited is Asia. It
is prohibited in Europe. And that is why passenger rail service
is heavily subsidized throughout the globe. If you think we are
the first country in the world to invent a privatized railroad
system, I ask you to look at the history of the world.
This is not deregulation. This is privatization, where the
private sector would begin by depending on a Federal subsidy,
``Give me the money to write the proposal,'' and then would
either be begging us for money to keep the fares down or, God
help us, would be raising the fares themselves.
This is an interesting exercise, but we ought to understand
it is no more than that at a time when we need to get serious
about the business of Amtrak and the hard challenges and
problems it poses for this committee. I thank you, Mr.
Chairman.
Mr. Mica. I thank the gentlelady. Ms. Napolitano.
Mrs. Napolitano. Thank you, Mr. Chair and Ranking Member
Rahall.
I would like to ensure that I agree totally with Ranking
Member Brown's comments, am in strong opposition for this bill.
It would end intercity passenger rail. And it goes beyond that,
especially in my State of California. It gives those assets to
the Northeast Corridor and et cetera, et cetera, as we have
heard. It Would have a tragic impact on my State of California,
most definitely.
We have three of the top five busiest passenger rail
corridors in the United States: the Surfliner, the Capital
Corridor, the San Joaquin Corridor. And many long-distance
Amtrak routes travel through California, including Sunset
Limited, which does stop in my district. Metrolink, which is a
commuter rail agency of southern California, is operated by
Amtrak.
The only way Amtrak would be able to continue operating in
California is if the State itself incurred the enormous cost of
operation of its equipment, of its maintenance, the station
services and support services. And, as we well know,
California, along with many other States, is in the doldrums.
Their budgets--they are going bankrupt.
So, there will not be any ability to have those States
support, due to their major budget constraints. They would
help--would actually hinder hundreds of thousands of people
ability to travel, and would be able to further clog our
California freeways, which are already called parking lots in
the sky.
We want, we should, we must assist Amtrak become a more
profitable entity, instead of trying to encourage demise.
Again, I strongly oppose the Competition for Intercity
Passenger Rail in America Act, and I yield back.
Mr. Mica. Mr. Larsen?
Mr. Larsen. Thank you, Mr. Chairman. At a time when we
ought to be improving our domestic infrastructure to remain
competitive in the global economy, and to promote growth and
efficiency and feed the American market, I think this is
exactly the wrong bill at the wrong time. Instead of
jeopardizing 20,000 jobs and shutting down an economic driver
in many regions in this country, we ought to be investing in
our transportation and infrastructure to create jobs in our
local community.
This proposal would seriously threaten the promising
future--and the promising present, actually--of passenger rail
in the Pacific northwest. Without revenues from the Northeast
Corridor, Amtrak would shut down their long-distance routes.
And certain portions of my State would end, as well. Washington
State's passenger rail service is operated by Amtrak, and would
face huge cost increases if Amtrak continued to operate.
I also note Washington State, as a State government, is a
major contributor to this service in Washington State. The
commuter rail, which is operated by Amtrak, would also have to
find a new operator.
Washington State's passenger rail ridership has experienced
strong growth over the past few years, and our State remains
committed to its future. Our State has received over $700
million in high-speed rail funds, and these dollars are going
to work right now in our local communities, creating jobs and
helping commerce to move more efficiently from point to point.
And this proposal would be a serious set-back to these efforts.
I am also concerned about this bill's effect on the men and
women who work on our railroads. It would abrogate all existing
contracts for workers on the Northeast Corridor and other
privatized routes, and provides no protections for dismissed
personnel. For rail workers in the new system, Davis-Bacon
protections would not apply, and they would be exempt from the
Railway Labor Act and the railroad retirement and unemployment
systems. Without RLA protections, workers would lose their
longstanding right to collectively bargain. It would also
undermine their railroad retirement system that provides
pensions for many people.
This is a job-killing proposal, Mr. Chairman. If you are
indeed open to making fixes to it, we look forward--I look
forward--to hearing from our witnesses to see what kind of
fixes we can make to it. So I look forward to the testimony
today, and after a short meeting upstairs I will return to
listen to the testimony. Thank you.
Mr. Mica. Any other Members seek recognition?
[No response.]
Mr. Mica. No other Members seek recognition? We have had a
request for submission to the record from Ms. Brown of letters,
articles, and reports, and they will be made part of the
record.
I ask unanimous consent that also----
Ms. Brown. Mr.--I asked for an extension of 30 days.
Mr. Mica. Extension of 30 days. That is excellent. If Mr.
Rahall agrees, we cannot wait to not comply with a 30-day
request. Mr. Rahall agrees, so the record will be open for a
period of 30 days. And we will hold as many additional hearings
as we need to take testimony. Maybe by that time some Members
will have had time to read the bill and find out that what they
are talking about isn't even in the bill.
But additional unanimous request consents, I have several
here. A copy of the letter to myself and Mr. Shuster from Ms.
Brown, Mr. Rahall.
[No response.]
Mr. Mica. Without objection, so ordered part of the record.
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Mr. Mica. This is a list of the hearings on intercity rail
competition that we did so far in the committee: January 27th
in New York City; March 11, 2011, here in Washington; and then
May 26th here in Washington. Also, a list of the witnesses who
testified on bringing competition into the passenger rail
service. That will be made part of the record.
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Mr. Mica. And also made part of the record, I want to
reference the cover page of the PRIIA Act--the gentlelady from
the District said that nothing had been done relating to high-
speed passenger rail service--which is signed by President
Bush. I helped author the high-speed rail provisions signed by
the President October 2008.
In the first passenger rail reauthorization in some 11
years undertaken by Congress, and then the point also that
there are not systems that make money, we will take a page from
our introductory document that is entitled, ``International
Competition Success Stories,'' and show exactly where some
routes have been, in fact, turning a profit, increasing
employment dramatically, and providing good economic
opportunity. So we will put that in the record, too.
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Mr. Mica. Anyone else have anything they would like to add
to the record?
[No response.]
Mr. Mica. OK. There being no additional unanimous request
consents, we will now turn to our witnesses, who have been
waiting patiently. We thank them for coming in today and having
the opportunity to hear from them.
We will start--I won't introduce all of them, they are
likely suspects we have had before, and are pleased to see.
Incidentally, I think what has been customary in the past
is we were offered one witness in the past, and the last time I
think there was a reference that we didn't have Mr. Boardman,
because the one witness chosen by the Minority was a labor
representative. But today I wanted to make certain that we had
both Mr. Boardman and a labor representative. So they have been
chosen by the Minority.
And to lead, we will start with Mr. Boardman, who has been
requested to testify.
The other thing, too, I would like you to do is please
don't rattle on about Amtrak going, you know, to Hades and all
of that. What I would like to do is focus--this is a hearing on
the committee draft. If you have suggestions for language, we
would like to have them. For changes--I have already discussed
some of the changes I would like to see with Mr. Rahall from
the committee print. And that is what the purpose of this
hearing is, how we can craft legislation that will allow us to
increase passenger rail service and create high-speed rail
service in the United States of America. That is the whole
purpose, no other purpose that we are here for. And I will cut
you off.
So, if you got statements to read that just go on and on,
you are going to get cut off. I want to hear specific--this is
committee print, ``Competition for Intercity Passenger Rail
Service in America,'' and a hearing on that draft, and I want
to hear specifics on the language, positive recommendations or,
if you have something critical of them that we can work
together on, we would love to hear from you. But that is the
way we are going to proceed.
I am very pleased and--he takes a beating from time to
time, sometimes from me unwarranted, and I apologize publicly
for that--but he does as good a job with the cards he is dealt.
I am just trying to rearrange the cards for Mr. Boardman.
Welcome, Mr. Boardman.
TESTIMONY OF JOSEPH H. BOARDMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMTRAK; R. RICHARD GEDDES, ADJUNCT SCHOLAR, AMERICAN
ENTERPRISE INSTITUTE; ANNE D. STUBBS, EXECUTIVE DIRECTOR,
COALITION OF NORTHEASTERN GOVERNORS; WILLIAM MILLAR, PRESIDENT,
AMERICAN PUBLIC TRANSPORTATION ASSOCIATION; THOMAS A. HART,
JR., ESQ., VICE PRESIDENT FOR GOVERNMENT AFFAIRS AND GENERAL
COUNSEL, US HIGH SPEED RAIL ASSOCIATION; AND EDWARD WYTKIND,
PRESIDENT, TRANSPORTATION TRADES DEPARTMENT, AFL-CIO
Mr. Boardman. Thank you, Chairman Mica, and Ranking Member
Rahall, and all. Good afternoon.
For 40 years, Amtrak has been America's only high-speed
rail operator, and it has managed the Federal investment on the
Northeast Corridor to transform infrastructure and operations.
Today we are a world leader, in terms of cost recovery and
operating efficiency, the most efficient passenger railroad in
America, and one of the most efficient in the world.
We share your advocacy for high-speed rail development in
the Northeast Corridor, and support some of the broad
objectives your bill seeks to advance, such as encouraging
private sector investment, reducing Northeast Corridor trip
times, and increasing Northeast Corridor high-speed rail
service frequency.
Amtrak is well along in its own initiatives on this front.
Amtrak has created a ``Next Generation High-Speed Rail'' plan
for the Northeast Corridor, which has received many positive
international peer reviews, and we are now moving forward on
implementation.
A key to that progress will be for Amtrak to secure private
funding, using more creative approaches than we have been open
to in the past. The world's infrastructure needs have created
new financial tools for major world-class projects, such as
ours.
Amtrak intends to use those tools to realize our plan with
our experience with positive peer reviews, with recent
agreements developed with respected partners, and with our
improved financial performance on the Northeast Corridor, we
can do it. We have a plan.
We know how to gain partners. We have the knowledge and
experience to make our vision a reality. This is a serious
effort which offers practical solutions to the situations that
exist on the Northeast Corridor, which are not easily
understood, and no other entity can offer. In order for any
public-private partnership to work, you need a partner that
understands the key facts. And that partner is Amtrak. That
ensures that Amtrak will have a key role under any structure.
Perhaps you will rename Amtrak, but it will be the same women
and men who understand the situation today, and understand the
necessary solutions that will be required to carry out the
plan.
We believe the approach outlined in this legislation risks
slowing, rather than advancing, the development of high-speed
rail in the Northeast Corridor. It will introduce unrealistic
time schedules and assumptions. It will fail to provide
adequately for transportation safety and security. And it will
be more expensive.
It is important to look at the world leaders of high-speed
rail in other nations to understand best practices, to study
solutions. We should adopt and adapt where warranted. However,
we must deal with the facts of the Northeast Corridor. There is
no one that understands the facts of the Northeast Corridor
better than the women and men of Amtrak. No one.
The risk associated with applying foreign business models
in a different context such as the Northeast Corridor is too
high. The potential for service disruptions, safety failures,
and the failure to understand the environmental protections is
too great for us to run.
Amtrak's Acela service has demonstrated that this mode can
be competitive in the United States. Without it, this debate
would not exist, and there would not be such a clear
alternative.
Many people travel around the world, and are impressed with
the modern high-speed systems--rail systems--they experience in
Europe, Japan, or China, and they wonder, ``Why not in the
United States?''
First of all, every one of those central governments wrote
a huge check, and they continue to do so. We have not been
willing to do that. And second, we prioritize matters
differently. System safety is our number one concern. We will
need to avoid the mistakes that were made in Britain and China
on safety. We also require a longer environmental process to
protect those that will receive an impact from the construction
of high-speed rail.
In closing, I will note that the theme of the bill's
provisions would set back the development of high-speed rail by
10 years or more, and will cost the economy of the northeast
and the United States taxpayer a great deal more money. Thank
you.
Mr. Mica. I thank you, Mr. Boardman, and we will be back
for questions when we have completed all of the witnesses.
Mr. Richard Geddes, he is an adjunct scholar with the
American Enterprise Institute.
Welcome, sir, and you are recognized.
Mr. Geddes. Thank you, Chairman Mica and Ranking Member
Rahall and members of the committee, for the opportunity to
participate today in this important hearing. And thank you for
the introduction. I enthusiastically support the bill under
discussion today. The bill would facilitate private
participation in the provision of passenger rail service in the
United States through the use of public-private partnerships,
or P3s.
P3s in transportation have been used successfully for
decades in countries around the world, and in countries such as
France for over 3\1/2\ centuries. A P3 also provides the best
chance for the United States to achieve true high-speed rail in
the foreseeable future.
The bill contemplates using P3s in at least two distinct
ways: through the introduction of competition in the Northeast
Corridor, and through the introduction of competition on the
country's longer distance, lower density routes.
There is absolutely nothing mysterious about a P3. It
simply refers to a contractual relationship between a public
sector project sponsor and a private sector firm to provide a
good or service. There are many salient benefits of the P3
approach, and I will discuss just a few.
First, the introduction of competition. A key social
benefit of the P3 approach is that it allows competition.
Competition may be--and I believe is--the single most powerful
and socially beneficial force that can be introduced into the
provision of a good or service. Competition is widely
recognized by scholars to encourage competitors to provide
quality service at low cost, to be responsive to customers'
needs, and to encourage innovation.
A second key benefit of this proposal is the transparent
and least cost provision of any desired subsidies. Competition
introduced by the P3 approach allows for any desired subsidies
to be delivered transparently and at the lowest possible social
cost. While the Northeast Corridor may have sufficient density
to generate net private investment, non-Northeast Corridor
routes may require subsidies to operate under a P3, as they do
presently, although I firmly believe that the amount of those
subsidies would certainly be significantly less.
Open competitive bidding will ensure that the taxpayer is
protected. Any socially desirable subsidies will be provided at
least cost to the taxpayer, and will also be transparent, which
is key. In other words, the taxpayers will know what they are
paying for, and the transparency of subsidies will lead to
better policy decisions.
The third benefit I would like to articulate is the
articulation and enforcement of key performance indicators. A
critical social benefit of the P3 approach that is recognized
internationally is simply that a contract exists. The contract
will, of necessity, include clauses laying out what actions
constitute desired performance on that contract.
This, then, requires the public sponsor to articulate
precisely how excellent or poor performance will be measured,
and to consider what penalties and rewards will be used to
incent that performance. This will certainly result in better
service provision. The contract can include basic metrics, such
as on-time performance and frequency of service, as it does in
many other industries where P3s are used, but also other
considerations, such as the cleanliness of cabins and
restrooms.
A fourth benefit is the provision--and that is absolutely
key in this context--is the provision of fresh capital that
would otherwise never be provided. One of the most obvious
benefits of the P3 approach is that it taps into a vast pool of
fresh capital that can be now injected into our passenger rail
system. This allows for renovations, upgrades, and maintenance,
including safety improvements, to be made much faster. This, of
course, saves money. But it also results in more efficient
service. This is capital that the public sector simply does not
have, and will not be forthcoming.
High-speed rail is a potentially viable service that could
offer the public a valuable alternative to current
transportation options in the Northeast Corridor. However, it
will be costly to inject fresh capital, mitigate taxpayer
costs, create competition--which we recognize is key, improve
performance, and enhance innovation. The public sector should
be engaged--the private sector should be engaged as a full
partner with the public sector through public-private
partnerships.
Once again, thank you for this opportunity to appear, and I
look forward to answering your questions.
And in my remaining 13 seconds I will just note to Mr.
Cravaack and Mr. Mica that there is a memorial service for
Alfred Kahn this Saturday at Cornell University that was so
over-subscribed that they moved it from the university chapel
to the largest auditorium on campus, in reference to airlines.
Mr. Mica. Thank you.
And we will now hear from Anne Stubbs, executive director
of the Council of Northeastern Governors.
Welcome.
Ms. Stubbs. Thank you, Chairman Mica, Ranking Member
Rahall, Chairman Shuster, and Ranking Member Brown. Thank you
for the opportunity to be here today. I am with the Coalition
of Northeastern Governors, which is a nonpartisan association
of the governors that works together for issues of mutual
interest in the northeast.
Before touching on comments for the bill, I would like to
offer just a few comments, which are elaborated in the
testimony, on why the corridor is so important to the
northeast, and some of the principles that underlie the
comments that I will offer today.
The governors have long supported the Northeast Corridor
and the larger regional transportation system, because it is
both a transportation and an economic asset for our region.
That includes the main stem linking Boston and Washington. It
includes the branch services to Harrisburg; to Albany and
points in upstate New York, Canada and Vermont; as well as the
service up through Massachusetts, Connecticut, into Vermont;
and to Portland, Maine. That asset is very important for our
larger regional transportation system, for our economic
vitality, and our community.
The CONEG goals for this northeast network are really quite
straightforward. We look for greatly expanded rail ridership in
an integrated, multimodal regional transportation system that
works for all of the users on the Northeast Corridor, be it the
intercity traveler, a business person, a tourist, a retiree, a
student, or military personnel; for the commuters; as well as
the freight railroads that need access to the corridor in order
to get to their markets.
And the States believe that this will happen with quality
service, that is safe, reliable, frequent trip time and price
competitive. We are looking for ways to reduce the travel time,
increase the frequency and the reliability for both the
intercity and commuter traveler, and we are looking for higher
speed, both premium and regional service, including express
service.
So the States, a number of years ago, adopted several
principles that guide how we look at this network. Again, I
want to touch just very briefly on some of the highlights
before I get into my comments. First, the Northeast Corridor we
do see as a critical regional and national joint use asset,
that should be operated as a public transportation corridor.
And public oversight and control of the infrastructure, we
believe, is very important to achieving that goal.
States are also co-owners, and they share in the financing
and operations of intercity and commuter service on the
corridor. They need to be very closely consulted with any
changes in governance, funding, and management that does affect
them directly.
We believe that the Federal Government has a lead role in
bringing the Northeast Corridor, particularly the main stem,
back to a state of good repair. And change must occur--any
change must occur--in a timely and orderly manner, (with States
consulted) in a way that does not jeopardize the current
intercity commuter and freight services.
So, drawing upon those principles, I would like to offer a
few initial remarks as the committee considers the appropriate
balance of Federal, State, Amtrak, and private sector roles in
the future of intercity rail, and particularly on the Northeast
Corridor.
First, we do see a continuing Federal role. The Federal
Government, as we understand it, would retain the underlying
ownership of the Northeast Corridor right of way. And so,
greater clarity is needed on that ongoing Federal role,
particularly as it may affect the future planning and oversight
of the public interest in the corridor.
As I said earlier, States need to be closely involved in
any of the changes that are contemplated that affect their
intercity and the commuter services on or off the corridor.
Both current and future service is very much going to need
the Northeast Corridor to be brought to a state of good repair.
That is a significant financial investment that is needed. It
is not clear, based upon our current reading of the bill, how
that would be done for both existing and future high-speed
services under the proposed new ownership and control of the
corridor.
Shifting control of the Northeast Corridor from a public
entity could also impose a number of financial and liability
risks to the States. The proposed bill is very clear that one
of the evaluation criteria is to reduce the need for Federal
subsidies. States are likely to have many other concerns
associated with a shift in responsibility, such as the
potential to transfer the subsidy costs from the Federal
Government to State and local governments, which, as has been
noted already, are suffering under severe financial strain.
We would be looking at the implication of shifting greater
liability and insurance exposure to the State, if the corridor
was shifted to private control and ownership.
We would be looking to see anything that might impinge upon
the State's sovereignty. We particularly noted the broad
condemnation authority that is proposed for the new Northeast
Corridor Executive Committee. And the States will also be
looking to see how there will be some consideration or
protection of the investments they have already made in the
Northeast Corridor infrastructure, as well as existing
intercity passenger rail projects that are underway.
Connectivity with other rail services, both on and off the
corridor, is very, very important. Again, we see this as a
regional network. The current bill does acknowledge that the
current commuter and freight rail services would continue to
have access to the Northeast Corridor infrastructure and
facilities, but there is no similar assurance that is offered
for the intercity service, such as the Keystone, the Empire,
the Vermonter, that originate off the corridor but need access
to it.
Likewise, if you separate the main line from the critical
branch lines, we are not sure what the details would be on any
terms and provisions and conditions of such a separation, or
the implications for a continued ownership and operation of
that integrated service, if a State chose not to take--seek
title.
And then, finally, the Northeast States are already
actively engaged with the Northeast Corridor Infrastructure and
Operations Advisory Commission, which was created by this
committee, and the States are very delighted that they are full
and equal partners on that commission. We are not quite sure
how this proposal, which does not repeal that commission, but
creates a new Executive Committee and gives it future control
over the Northeast Corridor and has some similar
responsibilities, how the roles and responsibilities of the
existing advisory commission and their proposed new Executive
Committee would relate to each other.
And so, thank you for the opportunity to share these
comments. And I hope they will be helpful to the committee.
Mr. Mica. Thank you.
There has been a vote called.
We will hear first from Mr. Millar.
Mr. Millar. Thank you, Mr. Chairman, Mr. Rahall. Thank you
for including APTA in today's hearing.
As you know, APTA membership is very diverse. Many of the
international rail operating and management companies, as well
as the domestic companies, including Amtrak, are APTA members.
Our members include the oldest commuter rail operators in
America, and the brand new one in Denton, Texas, that opened
just this past Monday. So we have a very diverse membership.
Understandably, we haven't had a chance to really distill a
comprehensive position, given the diversity of that membership.
And I am sure you will hear from many of our members, and it is
our intention to take you up on your offer, and supply you with
additional information in the coming weeks ahead.
That said, I have been asked to testify specifically on the
experience of the U.S. commuter rail operators with competitive
contracting. By way of background, there is some 27 different
commuter rail operators in the U.S.; 8 of those 27 operate with
their own--or what are known as directly operated systems,
completely with their own employees, and own all their right of
way, et cetera, et cetera, and 19 are purchase of service
operators.
Of those 19, 17 have been around long enough to report to
the Federal Government in the national transit database, which
is operated by the Federal Transit Administration. And it is
from that database that I draw much of my information today.
Also, I should point out that, while there are only eight
directly operated systems, they have the lion's share of the
business. Over 80 percent of the passenger miles, 80 percent of
the passengers who use commuter rail are on those 8 systems.
Now, there are many factors that affect the cost of
operating a system. The 2009 national transit database shows an
average per-passenger mile cost of directly operated or
contracted to be remarkably similar: $.41 for directly
operated, almost $.39 per-passenger mile for purchased service.
But there is a great deal of variance.
In the directly operated you can find it for as little as
$.33, as much as $1.51. For the contract service, as little as
$.30, as much as $2.55. So, clearly, it is not just competition
that affects the cost.
If you add in fare box recovery to these systems, the
picture, unfortunately, gets murkier, with the direct operating
having an average of 49 percent cost recovery and the purchased
service 40 percent recovery and, again, with very wide ranges.
I think, as this legislation proceeds, one of the things
that will be very clear from our commuter rail operators, most
commuter rail operators choose to compete their services. And
whether Amtrak or others win the competition, they want to
continue to have the right, because they believe the
opportunity for competition is beneficial.
Let me give you a couple of closing thoughts before my time
expires. First, we need to be clear. All major rail systems in
the world, including America's world-leading freight network,
have required large capitalization from Government. It may have
occurred many years ago, it may occur on a continuing basis,
but we cannot escape the fact it requires large public
investment.
Second, public-private partnerships and competitive
contracts, as I have hopefully demonstrated here, can be
useful. But they are no substitute for major public investment.
And, because of the necessity to integrate rail, passenger
rail, with other forms of transportation, we certainly hope--
and know this committee has been working hard to try to develop
a major piece of transportation funding legislation that would
set a policy not only in this area, but across all other
surface modes.
Third, particularly as Mr. Boardman has said today, the
Northeast Corridor is incredibly complex. It is one of the most
complex rail corridors anywhere in the world, and we cannot
lose sight of that. It is old, it must be updated, regardless
of who owns it, regardless of who runs it. And we can't forget
that every day about 700,000 Americans use the service on that
corridor, and they expect to get to work, and they expect to do
the other things in their life that are necessary. So we must
be careful as we move forward.
Fourth, as Mr. Boardman said, Amtrak does have extensive
railroading, extensive Northeast Corridor experience. And--just
as when Conrail was taken over and the private carriers on the
freight side realized that some of it was just too complex to
disentangle. So we--they kept the private companies, they kept
a piece of Conrail, as well. So we need to be careful here. We
think the expertise that Amtrak has, that our commuter rail
operators have, is quite useful to you. And we pledge to work
with the committee as you consider these important issues.
Thank you.
Mr. Mica. For 10 minutes the committee stands in recess.
Until Mr. Shuster returns as stand-by, the committee is in
recess.
[Recess.]
Mr. Shuster. [presiding.] We will bring the hearing back to
order and continue. Chairman Mica should be back momentarily.
With that, I believe, Mr. Hart, you are up.
Thomas Hart, who is the Vice President for Government
Affairs and General Counsel for the United States High Speed
Rail Association. It is a good thing I remembered some of that,
because I could not read it.
With that, Mr. Hart, please proceed.
Mr. Hart. Mr. Shuster, I would like to thank Chairman Mica
for calling this hearing. I would like to also thank Ranking
Member Rahall and the Subcommittee Ranking Member Corrine
Brown, and acknowledge my Congresswoman, Eleanor Holmes Norton.
Thank you for having me here. This is honestly my fourth
time before this committee on this subject this year. I am glad
to be back.
I have put a lot of time and thought in this testimony over
the last 6 months. I am really glad we have advanced the
discussion and debate on the need for private investment and
increased competition in our rail system nationwide, but
particularly, the Northeast Corridor.
As most of you know, the United States High Speed Rail
Association is a non-profit trade association committed to
advancing a state-of-the-art nationwide true high-speed rail
system, to be completed in phases across the country.
I am the Vice President for Government Affairs and General
Counsel for the Association. I also am here as the Director of
the Washington Office of the national law firm of Quarles &
Brady.
This is a real opportunity for progress to be made within
this committee and within the body of Congress.
The US High Speed Rail Association works with everybody,
and that is truly committed to advancing high-speed rail.
That is reflected in just my schedule this week, where
Monday I spent a number of hours with Senator Mark Kirk in
Chicago. He advanced on Monday and proposed private/public
partnership legislation in the Senate called the Lincoln Legacy
Infrastructure Development Act.
Also, while I was in Chicago, I spoke before Reverend Jesse
Jackson's Rainbow PUSH Coalition, and brought them up to speed
on the initiatives for high-speed rail across the country.
We speak to everyone. We engage with everyone. That
includes the staff of this committee, both on the minority and
majority side. I commend their work on this piece of
legislation, and look forward to working with them and the
Members going forward.
This is a real key opportunity, and I hope that the members
of this committee take advantage of it.
This issue divides the committee pretty much down the line,
as you mentioned at the last hearing, Chairman Shuster.
Fifty percent of the group here wants to zero out Amtrak,
wants to basically eliminate funding for them and possibly
privatize the entire system.
The other 50 percent, some of them feel that Amtrak is a
sacred cow, should receive additional funding without oversight
and real strict accountability.
The United States High Speed Rail Association is somewhere
in the middle, literally. We are a firm believer in competition
and a firm believer of private capital investment in high-speed
rail.
We also recognize Amtrak as an unique service, and we do
not support the pure privatization of Amtrak in its totality.
With this divide in Congress and the divide in the Senate
and the leadership at the Presidential level, it is important
that we compromise to achieve our goal of bringing private
capital into the Nation's rail system and move quickly to do so
with the type of bill that has been presented by you, Chairman
Shuster, and Chairman Mica.
Unfortunately, the political reality is the bill will not
pass the Senate in its current form.
At the same time, the status quo is unacceptable. We do not
accept Amtrak's monopoly position in the Northeast Corridor. We
do not support the monopoly position, and we do not frankly
accept many of the reasons why Amtrak has been delayed in
advancing high-speed rail across the country.
We take what we consider to be the best parts of the
concept behind the bill that is presented, and offer our own
suggestion.
We have actually proposed legislation back in March called
the Private Investment in High Speed Rail Act of 2011. At that
time, we proposed private investment in Amtrak through
increased offering of stock and bonds.
Amtrak only has one shareholder, that is the United States
Government.
Specifically, Chairman Shuster, we have outlined a proposal
that would split Amtrak into two entities, Amtrak Operations
and Amtrak Infrastructure.
Operations would run the trains. Infrastructure would
maintain and manage the rail infrastructure in the Northeast
Corridor, and it would increase the opportunity for investment
up to 40 percent.
I think that is a fair compromise. We can bring up to 40
percent of private equity into Amtrak, sell off 40 percent of
the infrastructure subsidiary or infrastructure company, that
is currently totally owned by Amtrak.
That is a significant investment that will get the
attention of Wall Street, but it will maintain Government
control over the infrastructure, and will provide for safety
and security concerns as Mr. Boardman indicated.
We need to bring in the private sector, and by offering up
40 percent of the infrastructure facility, that would bring
substantial money.
After 5 years, we could re-evaluate that structure, and
possibly increase, give the investor an opportunity to increase
its investment by another 20 percent, and move them into a
majority position.
We also suggest that we add an infrastructure bank
provision. That is supported in the Senate on a bipartisan
basis now. We need to include that.
Also, a small business provision. Amtrak has gotten $450
million just recently for procurement. They want the money but
they do not necessarily want the responsibility and
accountability for increasing small business participation in
this sector.
A small business provision should also be added to this
bill. That will go a far way in getting more bipartisan
support.
I look forward to your questions, Mr. Chairman, and other
members of this committee, and working with you in the future.
Thank you very much.
Mr. Shuster. Thank you very much, Mr. Hart, for your
testimony. I just want the record to show I have always been
one in the middle on this issue, too.
My colleagues on my side have for the last 20 years talked
about killing Amtrak, selling it off, doing away with it, where
my colleagues on the other side of the aisle say it can never
succeed without the Government running it.
I come down in the middle. It is somewhere in between
there. I think we can do it, and our bill is a start in that
direction, I believe.
Next, Mr. Ed Wytkind. It is always good to have him here
and hear his views. He is the President of the Transportation
Trades Department, AFL-CIO.
With that, Mr. Wytkind, proceed.
Mr. Wytkind. Thank you, Mr. Shuster. I want to thank
Chairman Mica for allowing me the chance to participate, and of
course, Ranking Member Rahall, for his strong support for our
members, and for his support in having the labor movement
present its views.
I have appeared twice before this committee in the last few
months to express our strong opposition to the wholesale
privatization and break up of Amtrak.
You will be surprised to learn that my position has not
changed today.
While it may be interesting to discuss different operating
models for passenger rail in America, we have always argued
that if permitted to cherry pick lucrative routes, permitted to
keep the cost of infrastructure replacement and upgrades off
the books, a carrier might find a profit on some routes
somewhere in the system.
On the Northeast Corridor, Amtrak is operating in the
black, above the rail. That may seem interesting but it has
nothing to do with how you run a national passenger rail
system.
Amtrak's network, a victim of decades of chronic under
funding, receives Federal subsidies, but so does our entire
transportation system, and so does every rail transportation
system in the world, whether it is privatized or not.
Our transportation is not just about the wealth it creates
for transportation providers. It is about the wealth it creates
for the users of our economy, for the people, for the
businesses that need transportation to be safe, reliable, and
efficient.
It is about the millions of good skilled jobs that are
created in the system.
Mass transit systems do not make money. The employers who
rely on those systems to transport their employees do.
Airports and air traffic control are not about profits.
They are about the billions of dollars in wealth they create
transporting people and cargo around the world.
Highways and ports are not profit centers in and of
themselves. They are profit centers for the people in the
businesses that rely on them for commerce, for exporting, and
for making sure we have a global economy that we are
competitive in.
None of this works without proper public oversight of the
taxpayers' transportation assets, without significant public
investment, as Mr. Millar pointed out, and without the cross
subsidies that have always been the cornerstone of our national
transportation network.
That seems to be like a dirty secret that no one wants to
talk about, our transportation system has always been based on
having cross subsidies, and it works.
Our passenger rail system is no different, which is why we
need Amtrak as the national network provider for the Nation.
Let me offer our preliminary analysis, we just got a hold
of it a few days ago, of the Mica-Shuster legislation.
First, despite comments made earlier, this is an Amtrak
bankruptcy plan. I believe 20,000 jobs are placed at risk by
this legislation.
Removal of the Northeast Corridor from Amtrak is taking
away its most prized asset, and with it goes the entire
national system and up to 20,000 jobs.
Second, it gives the green light to Wall Street to cherry
pick the parts of the network that can make the most profit,
and let the rest of the system wither.
I am sure there are some panelists here who think that is a
good idea. I do not.
That approach will not unleash the private sector's
capability to provide passenger rail service to a Nation that
is starving for more train service. No. It will unleash Wall
Street's ability to make money for Wall Street.
Third, longstanding employee protections are eliminated in
this legislation. I wish Mr. Mica was in the room to discuss
it.
Despite public claims that Amtrak workers would be held
harmless, there is nothing in this legislation that holds these
employees harmless.
The bill would eliminate Railway Labor Act coverage,
thereby stripping employees of current bargaining rights and
union representation. Amtrak employees would lose all wage
rates and benefits and protections in their union contracts.
So, contrary to public claims, nothing in the bill
guarantees anything to the employees of Amtrak.
The Mica-Shuster proposal also eliminates coverage under
the Railroad Retirement Act, the railroad pension, unemployment
and disability benefits system that has been around for
decades.
Thousands would be siphoned from the system in the new
entities, the long-term sovereignty of the rail retirement
system would be jeopardized, and enormous tax increases, yes,
tax increases, would be imposed on the current employers,
including, by the way, the private freight railroads.
We do not think 547,000 retirees, spouses and survivors
should see their benefits threatened so that billionaires like
Richard Branson can get richer and evade railroad pension
obligations, which is exactly what is on the table.
Assurances have been made that our members at Amtrak will
also be able to follow their work. The problem is the
legislation does not do that. All it does is give them some
hiring preferences, which means they are guaranteed a chance to
be considered for a job.
I do not think anybody can pay a mortgage, child care or
college tuition bill with that sort of promise.
Lastly, let me talk about Virgin Trains. It has been
discussed in this committee, and I thought it was important to
inject some new facts about Virgin Trains' operation.
First of all, the system is 35 percent more expensive than
the State-owned European railways, according to a study done on
the ground there.
Between 1996 and 2009, revenues from the U.K.'s privatized
system more than doubled. That is great. The problem is the
public subsidy grew 500 percent.
Virgin Trains received $1.75 billion in direct Government
subsidies for its West Coast franchise, and $14 billion in
indirect subsidies to upgrade the infrastructure on the West
Coast line.
As one labor leader described it in Great Britain, people
are getting filthy rich on public subsidies.
We have heard from the committee that Virgin Trains is
repaying the Government. The fact is that Virgin Trains takes
more money from British taxpayers than it gives back.
Since 2002, it received $2.6 billion in direct public
subsidies. It is true that in 2008 and 2009, it repaid back $81
million. That is a single year. In 2009 and 2010, they were
again receiving more money than they repaid.
Repeatedly discussing this as if one single year sets out a
context for the entire Virgin Trains' operation is not
accurate.
Lastly, service complaints at Virgin Trains are 600 percent
higher than the average train operator in Great Britain.
It is safe to say that the labor movement is not for this
proposal. We have a long history in the Transportation Trades
Department of working with both sides of the aisle.
I have enjoyed developing a relationship with both Mr. Mica
and Mr. Shuster on all sorts of important transportation
issues, but this bill written as we see it today is too harmful
to Amtrak.
Our employees are placed at risk, and we think the
Northeast Corridor is too vital an asset to put at risk with a
privatization program that we think has many risks inherent in
the ideas in there.
Having said that, we are happy to be here. I am happy to
take any questions you might have. Thank you.
Mr. Shuster. Thank you very much, Mr. Wytkind. Mr.
Chairman?
Mr. Mica. [presiding.] Thank you for taking over the chair
on this important oversight hearing.
Let me say first that we did conduct three hearings on
trying to improve passenger rail service. We focused first on
high-speed rail, and met in New York City and had a great turn
out.
When we talked to folks on high-speed rail, most of the
people that we talked to believed the best possibility for
success in the country is the Northeast Corridor.
Amtrak owns the Corridor basically. We do have some
indebtedness. We have the connections. We have regional
transportation systems that can link and distribute people. It
is a real natural. We own that.
The 21,000-22,000 miles of freight rail, we do not own.
Amtrak has some other little pieces here and there, but that is
the most conducive.
I was disappointed with the money that was spent. We had a
total of $10.5 billion, an $8 billion stimulus. A lot of that
has been returned--projects that were just destined to fail.
They just did not make sense. You could not get State support
for them, whether it was Florida, Wisconsin, Ohio, or maybe
even other States.
I think as a benefit to the Nation, the high-speed rail
corridor in the Northeast should be our focus. It was not
eligible for some of that money in the beginning. I think an
important step the Obama administration took a couple of months
ago is designating it as high speed, and then also awarding it
some money.
But it was only three-quarters of a billion dollars that
came back that was redirected to the Northeast Corridor.
The problem is that is just of taking shears around the
edges and trying to develop high-speed rail piece by piece, a
little appropriation by appropriation, or throwing money at it
on a fractional basis, which is not going to give us true high-
speed rail or what we hope to achieve.
Mr. Boardman, you opened your testimony with saying that
the key to Amtrak getting into that service is attracting
capital. Was that not your comment?
Mr. Boardman. Yes. We think that is one of the keys.
Mr. Mica. I have looked at it, too. Again, I have told
people you are going to turn blue waiting. We have challenged
you. You came back with a plan. It was 30 years, $117 billion
to do the whole thing.
If I had my druthers and I could assist you with getting
that kind of capital all at once, we would do it. That is not
going to happen.
What we want to do is take the funds that we can get from
Congress, and then leverage them with the private sector
capital.
You have already had some of these proposals out, is that
not correct, to attract some private capital?
Mr. Boardman. We have a solicitation that came back on the
20th, which was Monday, on looking at what we needed to do to
finance what our plans were.
Mr. Mica. One of the reasons I proceeded legislatively is
we put together PRIIA. PRIIA was a good faith blueprint to
establish sort of an outline of how we proceed with high-speed
rail.
The money came before actually we were able to move forward
in an expedited fashion. That is why I think we have to
approach this legislatively.
In talking with folks to get the private sector to invest
capital, they are going to want a return. To do that, they are
going to have to either get a return from operating the
infrastructure in the Northeast Corridor, the rail itself and
be in charge of it, or the operational part of the high-speed
rail or the passenger rail service.
By increasing the ridership, it will increase revenues and
pay the Government rather than having it subsidized. It still
is subsidized. We can debate on the figures, not that we do not
have to subsidize some rail service, but what you want to do is
minimize that, and with a great route like we have in the
Northeast Corridor, we can maximize, and I think actually bring
capital into Amtrak.
Part of the question we faced in crafting this legislation,
Mr. Shuster and I, we were told we should consider two models.
One, infrastructure separate, and operational separate, and
then also a turnkey to offer to someone.
Are you looking at it on that basis, too, Mr. Boardman, and
do you have the authority to offer it on that basis?
Mr. Boardman. The way we are really looking at this is that
in order for profits to come to the Corridor, you have to have
a Corridor that can actually increase the amount of service
that is available. The trains have to be reliable. They have to
be faster.
The credibility first is being able to have a vision that
an infrastructure will work. It was not just us looking at a
vision for the future; the vision of 220 miles an hour. It was
also having others look at that vision as well, and looking
across the globe at some leaders, JR East from Japan.
Mr. Mica. Was your proposal based on doing a turnkey or
division of operation and the infrastructure? Is that what you
discussed with these folks, or did you invite both?
Mr. Boardman. I recognize the answer you want, and I will
get there for you. I think what we needed to understand first
was whether we had a competent plan, whether there was a plan
that would really work, was it too expensive, was it realistic.
That is why we had these peer reviews, SNCF, and looking at
JRjst and Deutsche Bahn and all, coming and looking at what we
were doing, asking, ``Is this the right thing or is it not?''
What I said in my testimony is that we could adopt or we
could adapt the things that made sense. As they looked at it,
we began to learn some things.
First, they thought it was a little too expensive. The
Japanese said you can make your tunnels a little bit narrower.
You could really think about this differently. We have taken
that in. We understand it.
We think that is probably a good thing in the way
Government and business works today, if our plan was more now
than what it is really going to cost. It is not an escalation
of cost.
They also said they thought we would have a lot more
ridership, and that would improve the revenues. Again, in my
own experiences, if you start proposing that it is going to do
so much more than what you originally started with, and then
you have to see it is not, then again, you lose credibility.
The key was to get this vision to be looked at by folks
that says is this credible, and it is.
Amtrak is a transportation operating company. There is no
doubt. That is the core of our business. We do have a very
strong engineering department, and we are the only ones, and I
think you know this, that really does electric rail in the
United States.
When you get to your question, are you going to split it up
this way or are you going to do it another way, we do not know
that.
Mr. Mica. You are looking at all the options.
Mr. Boardman. We need to do what is necessary for us to get
the financing and the investments.
Mr. Mica. For financing, someone is going to want a piece
of the action. If they see there is a potential for revenue,
they are going to want to pay their investors. That is the only
way we are going to attract private capital.
The private sector just does not come in and do things for
the sake of charity. They are going to want a return.
We are going to have to find some way to bring them in.
They are either going to have to control--again, ownership, we
have always said, would stay with the United States or Amtrak.
They are going to have to control the management of that
infrastructure.
Mr. Boardman. The venture capitalists want their capital
back. We understand that.
Mr. Mica. They are going to also want to increase service
for commuters because they are going to get revenue if there is
increased commuter service for freight, for high-speed rail,
maximizing the Corridor.
The second thing is you get an operator. People do use the
U.K. model and say it all went bad, but the U.K. was a totally
different model.
They took all that rail infrastructure in the whole country
that deteriorated over years, and put it into Rail U.K., or
whatever it was called. It did collapse. It was a huge thing.
It took everything, even some of the local commuter routes, and
it had very aging, decrepit infrastructure.
That is not the case in the United States. Most of what you
run, a service, 20,000 and some odd miles, is over freight
rails.
We are talking about specifically the Northeast Corridor
and how to maximize its development.
You do have some challenges in-house.
When I saw the proposal that was brought out, I am not sure
if that is really what I want to do, to create another entity.
It was done for several purposes, one, because there was a
model that was recommended by some people who might want to do
this, and they said it would be attractive in that fashion, to
have those options available.
We did exactly the same thing you did. We said look at the
Corridor and tell us how this could remain--I am not opposed--
first, I am not trying to do away with Amtrak. I am not trying
to limit any service they provide or privatize all of Amtrak.
The most important part of this is do you have the
authority to move forward and create those entities I
described, either to offer as a turnkey or to offer separate
operations and rail infrastructure? Do you think you have that
ability?
Mr. Boardman. I think we are going to have some of the same
problems everybody would have. We do not own the whole
Corridor. The States own almost 100 miles of the Corridor.
There are issues that need to be worked out.
Mr. Mica. Can your attorneys look at it and see if you have
that? I have had oh, we want to do that, Mica, but our charter
is this, intercity passenger service and whatever we have now.
They always come back and say we really do not have that
charter or that ability.
What I want from your counsel is--I do not mind giving
authority to Amtrak to do what we are trying to achieve. I do
not know that we need to create a second entity to do this.
I have to make certain that you have the power to do this,
then I am going to direct you to do it, to take those offers.
I cannot believe for the life of me that people here would
not welcome the private sector making an offer. I know there
have been some bad examples around the world, people taking
advantage, the private sector not writing the RFP right or the
terms.
I do not want to model it after that. I do not want to
model anything on what the Virgin Rail did or they did wrong.
Certainly, you are going to need significant amounts of
Federal capital to subsidize some of the infrastructure
improvements.
Like you stated today, the key is to attract private
capital. We have to have the ability for whatever entity, if it
is Amtrak or another entity, to attract that private capital.
Right, Mr. Boardman?
Mr. Boardman. I think that is correct.
Mr. Mica. Would you say the same thing? I know you have
looked at this, Mr. Geddes.
Mr. Geddes. Do you mean on the need to attract private
capital?
Mr. Mica. Yes. You represent the American Enterprise
Institute. Can you attract private capital if it is structured
the way we are talking? I think you did testify affirmatively.
Mr. Geddes. Absolutely, yes.
Mr. Mica. I want everybody to have a chance here, the
gentlelady representing the Governors of Northeast.
What we tried to do, in PRIIA, we created a blueprint for
going forward. The money got ahead of us, as I said, and we
have now had a history of some failures on high-speed rail.
We created the different commissions to try to bring local
governments into the process, whether it is the Northeast
Corridor, or wherever they may pursue this, but what we were
trying to do was empower and also have some transparency in the
selection process of an operator.
If you wanted to select Amtrak who partnered with--I told
Mr. Rahall he could put in a Build America provision or
whatever he wants, if we want to do that. Whoever they want to
partner with.
What we thought would be good is to empower you to go back
and revise PRIIA provisions. We set up the commissions. I have
been before them. They are working. We wanted to empower them
in the process.
If we kept it with Amtrak, we could still do this, too.
Do you see what we are trying to do there? You have to be
happy, because you have to be satisfied, like you said, your
concern was on commuter rail, freight service, utilization of
the Corridor, but we do not want you outside that loop.
It is nice to be advisory and everyone ignored you. We were
trying to empower the locals and States who have a stake in
this, not only some ownership.
Do you see what we are trying to achieve? If you can look
at our language, and if you see that it needs to be better
crafted, we welcome that.
Ms. Stubbs. We will look very closely at the language. One
of the concerns is not just two or three members from the
Northeast, but all of the States' interests, on and off the
Corridor would need to be addressed.
Mr. Mica. Mr. Wytkind, you worked with us when we did the
PRIIA. Again, we are trying to find a way. We set a blueprint
so we can move forward and protect labor.
I know we have some language in here that probably is not
the language you would like, but we had to write something
initially. We want to make sure that labor is protected.
I firmly believe that you can dramatically increase your
membership. You can actually significantly improve the benefits
with your folks. I saw how they got treated in the past versus
their brothers and sisters in the private rail operation.
I think there is hope. I welcome your suggestions in
language. I may not be able to buy everything you give me, but
I am trying to craft as much as I can to protect labor.
The secret to this is attracting private capital. They are
going to go. They are not going to be able to do this in-house.
They are going to have to have somebody who has done it before
take the project on and work with them.
They may be a partner. They may be able to contribute. They
may be able to help direct the project. Actually, to construct
and then to operate, I do not think in the future----
Mr. Wytkind. Do you want me to respond?
Mr. Mica. Yes, go right ahead.
Mr. Wytkind. First of all, I did not hear Mr. Boardman say
anything other than he is looking for private capital partners.
I did not hear him say he is going to be sending his operation
to a private entity to run it for him.
Second of all, the reason I made the comments I made
regarding your draft legislation is because this legislation
does not hold Amtrak employees harmless.
None of the statutes that apply to railroad workers are
applied in this legislation, including Railway Retirement.
Mr. Mica. I welcome your language.
Mr. Wytkind. I am not trying to sort of cook the books
here. We read the bill. The bill does not apply railroad laws
to railroad workers.
This Florida example that keeps being raised----
Mr. Mica. If I add your language, then you will be----
Mr. Wytkind. No. There are a lot of concerns that we have.
One last point. The Florida example that Mr. Shuster points
out, that company does not pay railway retirement. If the model
of the draft bill is applied in this case, the new entities
will not pay railway retirement either.
Mr. Mica. I have no problem moving the train along whatever
track we get to. It is going to require private capital.
Mr. Wytkind. We are not against that. We have not been one
time against that.
Mr. Mica. The private capital will require a piece of
either operational pie, from an infrastructure standpoint,
operations, or both. That is going to happen or you are not
going to get the private capital. Then we will just chug along
at our 83 miles an hour and 60 some miles an hour.
I am taking an awful lot of time. I wanted to cover these
things before I scoot.
Again, I welcome your suggestions. We are keeping the
record open. If I have to do more hearings and drag you back in
and others back in--a lot of people did not obviously read the
bill. We are going to try to educate Members slowly on this, if
we have to cut it up, slice it, and feed it so people
understand it.
It is nothing outrageous. It is nothing to do away with
passenger rail service or harm Amtrak.
In fact, I think Amtrak could end up operating many more
trains, hiring many more people, and being a very viable entity
in the future if we work together in finding some means of
attracting capital to this process, with private sector
initiatives, efficiencies, and ingenuity, that always has made
this country and the system great.
I apologize, Mr. Shuster, for taking so long. I wanted to
get a couple of questions in.
Mr. Shuster. [presiding.] Thank you, Mr. Chairman.
With that, I will recognize Ms. Norton for questions for 5
minutes.
Ms. Norton. I am informed that Mr. Nadler has to leave.
Mr. Shuster. I will recognize him and then come back to you
later. Mr. Nadler?
Mr. Nadler. I thank the Chairman. I thank Ms. Norton.
Mr. Boardman, first of all, given that Amtrak is a for
profit corporation, owns the Northeast Corridor, I think the
bill raises a serious Fifth Amendment problem with the taking.
Under your reading of the bill, when Amtrak transfers the
Northeast Corridor to the Department of Transportation, what
compensation would Amtrak receive?
When Amtrak transfers their only stock to the DOT, where
private interest is required under the bill, what compensation
would Amtrak receive for that?
Mr. Boardman. The way we read it right now is we would
receive no compensation for either. In fact, in the history of
the taking, that is not what we do in this country, and that is
not what happened when the Corridor was transferred to Amtrak
back in 1976. The private owners were paid substantially, even
though they were bankrupt for that.
Mr. Nadler. You think this would be a taking of both the
rolling stock and the infrastructure?
Mr. Boardman. The rolling stock is a little different
because we owe enough debt on that, that debt would have to be
satisfied before they could take it at all. That is owned by
the banks. It would not have that availability.
Mr. Nadler. Do you have financing for most of that rolling
stock now?
Mr. Boardman. For most of our rolling stock, yes.
Mr. Nadler. How do you transfer the rolling stock if you
are still making payments on it?
Mr. Boardman. As I said, we could not, because we would not
have the money to pay off the debt. It would not happen. We
would not have revenue any more.
Mr. Nadler. Could you transfer it if it assumed the balance
of the debt?
Mr. Boardman. That is not what the legislation said.
Mr. Nadler. No, but would that work?
Mr. Boardman. If they took the debt with the equipment and
all of that, it certainly makes it so it does not get lost.
Mr. Nadler. Amtrak makes a considerable profit on the
Northeast Corridor, and cross subsidizes all the other routes;
is that correct?
Mr. Boardman. For operating, yes.
Mr. Nadler. If this bill or something like it were enacted,
what would happen to the other corridors, other than the
Northeast Corridor?
Mr. Boardman. What would happen, especially with us being
left with the debt, is we could not service it, and we could
not operate without additional Federal subsidy.
Mr. Nadler. The other corridors, you would have to shut
unless you had additional Federal subsidy?
Mr. Boardman. That is correct.
Mr. Nadler. Do you know what the magnitude of that
additional subsidy is that would be required?
Mr. Boardman. One of the difficulties of that, and Rick and
I were talking about transparency, is that the allocation
formula across both the direct and indirect makes it difficult
to figure out completely accurately what should be applied to
those other corridors.
In this particular case, it would be a lot easier, because
all the indirect costs would then be applied to the other
corridors.
I have not added them up. It would be very expensive.
Mr. Nadler. It would be very expensive. Let me ask you one
other thing. The dialogue a moment ago with Mr. Wytkind, he
made very clear that the labor protections that labor now has
with Amtrak would not be carried through by this bill as
currently drafted. Those people who are now under the Railway
Labor Act, et cetera.
Let's assume that were changed, and all the labor
protections were in fact carried through. What would that do to
the financing structure of this bill?
Mr. Boardman. I am not sure I quite understand the
question.
Mr. Nadler. Let's assume that the bill were changed, and
every labor guarantee that Amtrak employees have, whether
Railway Labor Act or whatever, were in fact carried forward.
They were held harmless.
What would that do to the financing of the bill? How much
cost would that impose on whom?
Mr. Boardman. It is going to cost, if everything goes down,
a little over $4 billion over a 5-year period of time. You have
the rest of the labor protections that are existing out there
that would be transferred to whoever would be the operator for
the future on the Corridor.
Again, I have not added up those numbers.
Mr. Nadler. Presumably, they would have to put that in the
bids as cost factors.
Mr. Boardman. I see. That is correct.
Mr. Nadler. That would be very expensive?
Mr. Boardman. That would be as expensive as what it costs
for us.
Mr. Nadler. Thank you. Mr. Wytkind, last question. You said
that even if all the workers are held harmless and every
protection was carried through, you still have other problems
with this. Could you just briefly outline what the other
problems are?
Mr. Wytkind. Sure. Thank you, Mr. Nadler. I do not think
Balkanizing our passenger rail system and allowing private
sector interests to chase profits is the way you run a national
transportation system. That is exactly what this bill would do.
Those with wealth would try to create more wealth with that
wealth, and the rest of the system, which relies on cross
subsidies, relies on services into communities that do not have
the density of the Northeast Corridor, would all completely
wither.
As Mr. Mica said very appropriately, capitalists do not
chase investments that lose money. They are going to chase
investments that make them money.
We think this is a flawed model. It has been tried in many
industries around the world and around our country, and it
always ends up giving the public sector the shaft, and the
workers the shaft.
Mr. Nadler. Thank you. My time has expired.
Mr. Shuster. This is already a flawed model; what we are
trying to do is save it. There are 28 million passengers on
Amtrak every year. There are 750 to 800 million that ride
airlines. I do not even know the number of people that drive
their cars back and forth to work. Millions of people.
Based on the will of this country, what we have now is not
going to work, and we are going to end up with a situation
where the American people at some point are going to say
enough, we do not want to fund Amtrak any more.
I think we have a golden opportunity right now in this time
in our history to deregulate passenger rail in this country.
For labor, you talk about the 20,000 jobs that are at risk.
Well, 10,000 of them have been lost in the last 10 years. We
can make an argument for whatever reason.
This is about, I believe, saving passenger rail in this
country, getting private sector involvement, injecting the
Federal funds into it, and as Mr. Mica points out, nobody is
going to put money into an operation that they do not have at
least some control over.
How will this all look at the end of the day? Maybe it is
Amtrak as the operator, the entity that takes care of the
infrastructure, and somebody else comes in to operate, which
has been shown in other examples.
You mentioned the Florida situation. That is going to be
the next question, Mr. Boardman. How is it that you bid $265 to
$97 million? Is that all railroad retirement?
If that is the case, at least they are going to be there in
the future paying a wage instead of not having a wage.
We are dealing with Social Security and pensions in this
country. We have to figure out how to make things pay for
themselves or we are not going to have them for the future.
That is what we are trying to do in this bill.
Mr. Boardman, on that Florida Tri-Rail situation, $70
million difference in the bid. Why so much?
Mr. Boardman. First of all, let me tell you this, there are
about 250 million riders of rail in this country. Amtrak is
responsible for most of those riders because a large portion of
that comes from the Northeast Corridor.
The company that bid against us in Florida did not have
liability costs to pay, like Amtrak does. It did not have the
legally obligated Railway Labor Act. It did not have railroad
retirement to protect the employees. There is always an
additional amount of cost to the reality of what they were
really trying to do.
Furthermore, and I want to come back to something you said
earlier, Mr. Shuster, and that is you are not supposed to go to
work for the other company until you have left the company you
are in. That is what the lawsuit is about.
It is not about the fact that people cannot move from one
company to the other. I have been lobbied by all the political
people to tell me that we should drop this lawsuit and it will
not be dropped.
Mr. Shuster. Again, I think it is taxpayer dollars that
should not be spent.
As far as accounting, and you have been over there now for
2 or 3 years, I think things have improved, especially when it
comes to accounting.
I understand you took somebody from FRA to come over to
your shop, and it improved.
In the past, accounting on all accounts has not been a
strong suit. It has been miserable as far as I can tell at
Amtrak.
What are you doing to improve accounting? If we are to
attract private capital, they want to do due diligence. They
want to look at the books. Right now, I am not so sure they
could figure out what is up at Amtrak.
Mr. Boardman. One of the most important things for Amtrak
was to be stable and continue to follow through and not be
distracted by everything that comes down the pipe for Amtrak,
and that has been one of my efforts at Amtrak for over 2 years,
really to try to stabilize, not go in and change the entire
management team like has been done in the past.
There was a series of almost seven different presidents for
this company, and they changed the CFO, and they changed the
senior management, and they changed this and they changed that,
and it is extremely difficult for a major company like this to
be able to sustain that and continue to provide the
improvements organizationally, financially, and otherwise that
are necessary.
There have been 8 years' worth of labor difficulty at
Amtrak, and there has been a culture of blame as opposed to
being a culture of accountability. That is beginning to change.
I get somewhat depressed when I see all of this occurring
because we can see so many things that are improving for Amtrak
and for the customers of Amtrak and for the safety of Amtrak,
and it is just another disruption that throws us again to the
wind.
Mr. Shuster. Ms. Stubbs, I have word from the
administration in Pennsylvania they are very interested in what
we are putting forward here. I would like to hear what the
other Governors out there are saying.
Former Governor Ed Rendell is very much on board, excuse
the pun, with what we are trying to move forward here. He has
been out traveling the country talking about these types of
private/public partnerships.
Could you let us know?
Ms. Stubbs. The comments I made today are based upon a
longstanding policy. What we want to do is look very closely at
the bill, hold it up against the principles that we have, and
look at how it would work, both for intercity and for commuter.
I think I have indicated some of the areas that we feel
would need to be addressed.
Mr. Shuster. Any particular States that have been more
aggressive or positive?
Ms. Stubbs. It is still undergoing review in all of our
States.
Mr. Shuster. I think you will find Pennsylvania is going to
be very, very interested.
Ms. Stubbs. I know they are.
Mr. Shuster. Mr. Geddes, could you talk a little bit about
what you have studied, looking at Europe and Japan, and the
findings of competition there and its impact? From what I see,
it has been positive. Can you talk a little more about that,
the competition aspect of it?
Mr. Geddes. I can, Mr. Shuster. I was on sabbatical last
year studying public/private partnerships in transportation in
Australia, which began with the Sydney Harbor Tunnel in the
mid-1980s.
The Government simply did not have the money to build the
tunnel under Sydney Harbor. The bridge that we are all familiar
with in Sydney Harbor was completely and utterly congested, and
that has been an extremely positive piece of infrastructure.
They moved on to do competitive bidding.
My main focus has been in highways, roads, bridges and
tunnels.
They did an extremely complicated P3 in Melbourne called
CityLink, which has been very successful according to accounts
of everybody I was able to talk to in Australia.
It introduces competition. It is a competitive bidding
process to win that. Financing on CityLink was provided by the
private sector, which I think is the main focus here. Now, the
State of New South Wales, Sydney is in the State of New South
Wales, which is predominately a labor Government in Australia,
is dedicated to doing all highway transportation projects going
forward through P3s.
They moved completely away from the traditional financing
model and moved in the P3 direction because they are such firm
believers in the P3 approach.
It has been successful. One issue I did not have time to
discuss in my testimony but I think is important is not only
competition, which we all agree competition is socially
beneficial, but the transfer of some risks to private
investors.
Private equity investors are getting a rate of return, of
course, but they are being compensated for taking on real risks
that are not illuminated through the traditional model. They
are simply hidden and absorbed by taxpayers. Taxpayers are
absorbing risks.
I think a major benefit of the P3 is to do that.
If I may, one thing I think I have learned from that
experience, and this really addresses Mr. Mica's point of
emphasis on what specifics we recommend as a panel in the
legislation.
If you want to attract private sector investment to sunk,
long-lived assets of this nature, you need to provide in this
bill the institutional stability that ensures those people that
they will get that return in the future, and the Government
will not do something to reduce the value of that asset.
If I had one lesson from my sabbatical experience, it would
be to design the legislation to provide a stable institutional
structure, to which the investors from around the world, which
is good, would look and say hey, I am going to put my dollars
in there. These are long lived socially beneficial investments,
and I know they will not be ex-appropriated by the Government
down the road.
The worse possible thing is what happened in Pennsylvania.
I know Governor Rendell tried up and down to get it done with
the lease of the Pennsylvania Turnpike, which would have been
wonderful for that State, and the investors came up with their
bids, which were multimillion-dollar costs to produce the bid,
and then at the last minute, the State legislature changed its
mind.
That type of time in consistency is what I would hope in
the bill you could try to avoid in the future.
Mr. Shuster. That is a great point. With the Pennsylvania
Turnpike situation, there was not as much money as was
projected, number one, but second, the taxpayers need that same
kind of guarantee. If you lease an asset, you are not going to
squander the money and 20 or 30 years down the road look in the
bank and say, ``Oh, we have spent it all.''
The last thing I want to say is not a question, Mr.
Wytkind, it is a request. You have a very clear stance, and I
understand that, but you talked about discussing other models.
Not today, but I would love for you to put together your
ideas on how you do this, as long as it has a private element
to it.
I just do not believe we can go forward if your solution is
the Federal Government ought to give $3 billion a year for the
next 10 years to Amtrak--it is not going to happen.
We are in a world where we have to be realistic about where
we are going with this. I believe that what we are proposing is
realistic. That is why we are having this hearing today, to
talk about other ways to do this.
I would welcome you to present me with something that is
reasonable, and it does not have to be a 40-page paper, but it
should include a private sector element talking about the
various labor guarantees and things we can do to get you to
consider moving in a different direction.
Mr. Wytkind. I will not give you the 40-page answer now. I
think you would throw me out for good.
I am happy to come back to you with all of our thoughts. We
have provided some of them today. As I have said publicly, and
we are going to continue to say, Amtrak needs to be the
centerpiece of this proposal.
We are not against private sector participation. A
significant portion of my membership that I am elected to
represent works in the private sector.
Mr. Shuster. And they make more money.
Mr. Wytkind. That is debatable depending on the job. The
point I am making is we are not all biased and saying the
private sector's role is not important and therefore we should
ignore it.
As long as you understand the proposals I come back to you
with are going to be with the centerpiece of the proposals
being Amtrak as the primary high-speed rail provider for the
country.
Mr. Boardman. Can I add, Mr. Shuster?
Mr. Shuster. Yes.
Mr. Boardman. I thought Mr. Geddes brought up an excellent
point on institutional stability. I did not have the term of
art when I was trying to explain what we were trying to do.
It is critical. I would not want to see this legislation
damage our ability to move forward now. He may not have been
applying it exactly how I am using it right this minute, but
the fact is the stability of Amtrak and its future are critical
to have any confidence in us as the centerpiece or anything
else.
This legislation and the way that we are characterized on a
regular basis does not sustain that confidence in the investing
public, and it is not accurate.
Mr. Shuster. Mr. Hart?
Mr. Hart. Yes, Chairman Shuster. I define it as a political
sustainability, and it is a very key factor. That is why it is
important to generate bipartisan support.
I believe you can do that. There are 29 States in the
country that have public/private partnerships in operation now.
There are many countries, including the nine models that I
referred to for public/private partnerships in rail in my long
form testimony today.
It is nothing to be afraid of. It is something to be
encouraged. The private sector is ready, Congresswoman Norton,
to invest in Amtrak and invest in the Northeast Corridor.
In my preparation for today and in my preparation for
earlier testimony, I met with major financial institutions in
New York, in and around the world, that are willing to invest
capital under the right circumstances, that do not necessarily
exploit the opportunity. They do want a return on their
investment. They do want to minimize their risks.
There is a key factor regarding political sustainability
that overrides everything.
I think this is an opportunity for the committee,
bipartisan committee, one of the most bipartisan committees in
Congress, to show real leadership.
The timing is now. As we approach the debt ceiling debate,
which is going to really tear Congress apart and possibly the
entire country apart, this opportunity here, the leadership of
this committee, can impact even that debate.
Public/private partnerships are the way of the future. To
deny that fact is to deny the reality that we are not going to
be able to fund public transportation to the levels that we
have in the past. I wish we could. We just cannot.
Public/private partnerships let the money players come to
the table. That is one of the things that is absent on this
panel. I am hoping there can be another hearing where we bring
the real money players to the table and give them an
opportunity to put their proposal and their money on the table.
That was one of the big problems with the move to reject
the Florida plan. It did not give the private sector the
opportunity to show they were willing to put money up.
Frankly, the folks that advocated for the rejection of that
money played right into Amtrak's hands. They could not create
the competitive environment to bring in other international and
domestic players that wanted to compete with Amtrak on a true
high-speed system in Florida. That was wiped away, and
everything fell back to Amtrak by default.
We have to create an opportunity for the private sector to
speak for itself, put in the terms and conditions that are
acceptable, and then let the Congress, DOT, Amtrak and others
evaluate it. The money will speak for itself at the time they
are given the opportunity.
Mr. Shuster. Thank you very much, Mr. Hart. With that, I
yield to Ms. Holmes Norton.
Ms. Norton. Thank you, Mr. Chairman. I did not say the
private sector did not want to invest in Amtrak or anything
else. I said there was no passenger rail system that was never
subsidized, and that is the operative word here.
I just want to say for the record, the chairman indicated
that when I said there had been no high-speed rail bill before,
he indicated he would correct me and cited a bill actually
passed when the Democrats were in control of Congress, although
in fact, President Bush signed this bill.
It was a bill for good repair for Amtrak. It was not a
high-speed bill. It had a small, small subsidy for private
proposals for high-speed rail.
Bush will not be remembered for high-speed rail or even for
Amtrak. He will be remembered for year after year trying to
zero out Amtrak.
Actually, Mr. Shuster was on the Floor with me. There were
scores of Members trying to save Amtrak from being zeroed out
and put through bankruptcy. That is all you can give Mr. Bush
credit for.
I find it very interesting. The majority here has had
conniptions about the affordable health care bill, too big to
swallow.
Can you imagine what would happen if in its present form we
were to pass this bill. It would be a nuclear shock to States
all around the country. This has no chance of passage.
That is what annoys me about the bill. This is a serious
matter. This is a committee that has always been very
practical. How can we get something done. This is not the way
to get something done.
For example, Mr. Boardman, you indicated, I believe I read
in your testimony, that this proposal would actually set back
the development of high-speed rail. I think you said by a
number of years, 10 years. I do not have it before me now.
I do remember reading something that you wrote that said
this proposal would mean the end of our national passenger rail
system.
I would like you to comment on both of those.
Mr. Boardman. I think the end of the system, let me just
say it simply, with the debt we would be left with, we would
not be able to service that debt, and as a result of that,
without an increase in additional Federal assistance, there
would be no way for us to continue to operate any of the non-
profitable----
Ms. Norton. That is what I want to focus on. This has been
about biting off the only profitable part of the system.
If in fact Amtrak operated today with only that part with
no obligation to a national system, then Amtrak would indeed be
profitable. That ought to be said and that ought to be
understood. Amtrak in fact pays for itself, but it also pays
for a lot else.
I want Mr. Geddes, for example, to tell me what we do with
the 23 States and 233 local communities all over the country
who depend upon Amtrak with subsidies coming in part from
Amtrak, of course, they come from the Federal Government, but
they also come in part from Amtrak.
What do you want to do with them, while you are out making
money with one section of the railroad?
Mr. Geddes. Thank you for the question. I have been waiting
to address that question for a while. It is terrific.
I am in no way, shape or form opposed to those subsidies,
as long as subsidies are (a) transparent; (b) provided in the
least possible cost.
Ms. Norton. Which subsidies?
Mr. Geddes. Subsidies to the routes you are referring to,
to these small communities.
Ms. Norton. Part of those subsidies come from Amtrak, the
Northeast Corridor.
Mr. Geddes. Some of the subsidies come from the Northeast
Corridor.
Ms. Norton. The other comes from the Federal Government. Do
you want more from the Federal Government?
Mr. Geddes. There is absolutely no policy reason why those
subsidies need to come from riders in the Northeast Corridor.
There is no solid social policy reason why a rider between
Washington, D.C. and New York should be cross subsidizing a
ride on Amtrak say from Des Moines to Seattle, wherever, pick
your towns.
Ms. Norton. That is a very interesting notion of
transportation. Some States, Mr. Geddes, in our system
regularly subsidize other States. This is a 70 percent
federally funded corporation.
Some States fund smaller States, and the other way around.
This is a union. Maybe you do not think there should be cross
subsidy, but I do not understand why.
Mr. Geddes. No, madam. This comes from 20 years of teaching
Economics 101 after I received my Ph.D. from the University of
Chicago.
A cross subsidy of the nature you are referring to
generates social losses because it distorts the price system.
We have recognized that in economics for over 40 years.
There is a problem, a serious problem associated with
building cross subsidies into a system like this.
Ms. Norton. I get your point, Mr. Geddes. The people of the
United States will subsidize these 23 States and 233
communities rather than getting it from the private sector or
the fare box of Amtrak.
I would like to ask you another question. What do you think
about the proposal to pay people $2 million to write a
proposal, in light of your notion that the private sector
should take responsibility? Should it not take responsibility
for writing its own proposal?
Mr. Geddes. Absolutely, and they would take responsibility.
Ms. Norton. They should not give $2 million from the
taxpayers for people to write a proposal?
Mr. Geddes. We have a giant body of law called antitrust
laws that is intended to promote competition. We as a society
believe that competition is per se good and positive.
One of the things that this proposal would do is encourage
that competition.
Ms. Norton. We pay corporations in order to encourage
competition among corporations? Do I hear you right?
Mr. Geddes. You want to get more bidders into the process.
Ms. Norton. Should there not be an indication of whether or
not a bidder, a serious bidder, was willing to put his own
capital up to bid?
Mr. Geddes. They are at risk of losing that if they do not
win the bid.
Ms. Norton. Mr. Geddes, I am chair of a subcommittee that
has to do with construction and leasing for Federal buildings
throughout the United States. Regularly, they engage in
competition. We put out an RFP. They engage in a competition.
They lose--of course, there is a way of taking care of that in
the tax system or at least part of it--they lose millions of
dollars every year competing for Federal contracts. Indeed,
that is the way it has been throughout the Federal system.
Why should this be an exception to how the Federal
Government does business with the private sector if it wants to
do business with us? Put up your own money. We will know you
are serious. I am not going to pay you.
Mr. Shuster. I would ask the gentlelady to wrap up. We want
to make sure we get to Mr. Sires. They are going to call votes
here shortly.
Ms. Norton. I will wrap up very shortly. I just could not
stand it.
Mr. Geddes. It is used throughout the world, Congresswoman.
Ms. Norton. It is not used in the United States of America.
That is one part of this proposal that has to go or be laughed
out of the proposal. I think the reason it is in the proposal
is nobody was willing to put up his money in the first place
when the word went out for private proposals.
I just want to say Amtrak is itself a public/private
corporation. The public part is us.
Mr. Shuster. I am going to ask the gentlelady to wrap up.
Mr. Sires has been here for most----
Ms. Norton. I am going to defer then to the gentleman.
Mr. Shuster. I thank the gentlelady very much. Mr. Sires?
Mr. Sires. Thank you very much. Mr. Hart, I have to say you
scared the hell out of me with your statement to bring money
players to the table.
It seems that every time we bring money players to the
table, look at the housing industry when we brought the money
people, the entities, to the housing industry, today, we have
more foreclosures than ever, with some of the practices that
were going on.
I am very concerned because the outcome of privatizing this
is the bottom line is profits and a lot of little people are
going to get hurt in this process.
If we do not find a way of protecting some of those little
people, the pensions, the retirements, we are hurting a lot of
Americans.
I am very concerned about that. Briefly, because I want to
ask a question to Mr. Boardman.
Mr. Hart. The analogy of the financial industry is a little
bit misplaced, but I do recognize your overall concern and
sincerity in raising the issue.
There are provisions and ways in which the financial sector
can be beneficial. They can increase the quality of service for
Amtrak. Put Amtrak to the test of a true business case.
How much is the Northeast Corridor worth? How much is the
infrastructure in the Northeast Corridor worth? I have not
heard a number from anybody to actually tell me what is the
value of the asset we are talking about.
It seems to me Amtrak should have that answer. Certainly,
if it was a true for profit operating company, we would have
that answer, and also a number of other answers to how to
improve the operations of Amtrak.
It is a very tough question. The private sector does bring
more than just money. They do bring money, which we absolutely
need. They also bring a business discipline and a focus to
detail and operations that would be helpful.
I am not suggesting in our proposal that the private sector
take over. I am suggesting that up to 40 percent of Amtrak's
infrastructure be given the opportunity for private investment.
Mr. Sires. They will need subsidies then.
Mr. Hart. Public/private partnerships are not a replacement
for public investment in rail. They are a supplement to that.
Mr. Sires. I just want you to know that I came from the
private sector. I had a business for 20 years. I had to meet
payroll, health benefits and everything else.
Mr. Boardman, what percentage of the business that Amtrak
does now is privatized? Do you do any privatization of any of
the functions of Amtrak now?
Mr. Boardman. I think in terms of looking at contracts out
there, we probably have about 60,000 contracts that are private
contracts for the work we get done. Amtrak itself is a private
business in so many ways.
We have clearly a solid way to bring the private sector in
and do work, and we have that all over our railroad.
Mr. Sires. The concern that I have also is in my district,
the New Jersey Transit brings people into New York. The New
Jersey Transit moves a lot of people.
I am also concerned about the freight lines. I have the
ports in my district, and we have to move some of this freight
away from the highways. I do not think the New Jersey Turnpike
can take another truck, quite frankly.
How is that going to impact it if we go through this
privatization? We may not have the right-of-way on some of
these lines.
Mr. Boardman. I think there is a lot of complication to
that. We really do not know that. We know we need to improve
the weight capacity for a lot of the freight that is out there
on the Northeast Corridor to 286,000 pounds per car.
I think it is something we have to get into the detail of,
of what the economic and industrial development opportunities
there. There are additional people that can invest in the
concept, but we have to have that institutional stability to
really get people to understand that we are going to be around.
The agreements that we have made now will continue to be
held for the future. I think this bill has created a lot of
concern about that happening.
Mr. Sires. How about the commuter lines?
Mr. Boardman. Same way. The New Jersey Transit in
particular really has been the largest growth on the Corridor,
and yet when they get into Penn Station, there is nowhere for
them to go, so they have to come back through the tunnel, so
they demand a large percentage of our capacity.
We need to find another place to put them in Penn Station
to really make the fluidity work on the Corridor.
Mr. Sires. The other concern that I have is the security.
In my district, I represent the two most dangerous miles in the
country. We have the Lincoln Tunnel. We have the Harlem Tunnel.
You name it. We have it in our district.
How do you think the security is going to be impacted if
you privatize a lot of this service, they may not go through a
screening process for some of these people going through these
tunnels.
Mr. Boardman. I do not know how it will be impacted. Right
now, it is not addressed at all.
Mr. Sires. Mr. Geddes?
Mr. Geddes. That is the very beauty in the core of the P3,
that you write that detail into the contract. You say that the
security procedures will be followed this way, and if they are
not, there are penalties associated with that and they are
articulated.
Mr. Sires. I heard you talk about contracts before. I was
an elected official. I put out things to bid. We put out that
certain things have to be done in the contract. It is just
another layer for the supervisor to make sure it happens.
Really, most people out there, when you are going to make
money, a lot of the stuff in the contract gets cut, including
employment for some of the people that are there.
Mr. Shuster. I thank the gentleman from New Jersey. A
question to Mr. Boardman. How difficult would it be for Amtrak
to provide an inventory of what they had and the value? Do you
have a valuation of what the Northeast Corridor is worth?
Mr. Boardman. I will look and see what we have, Mr.
Shuster, and provide it.
Mr. Shuster. I would appreciate that. Mr. Millar, you have
been very quiet and very patient. I would like to ask you a
question concerning the fact that there are 27 commuter rail
systems in the country, 19 contracted out.
Mr. Millar. Yes, sir.
Mr. Shuster. Four of them actually are contracted to
Amtrak. Can you talk a little bit about the difference in
operations, the success or lack of success?
Mr. Millar. Yes. Certainly, Amtrak as a management company,
if I can speak of it in that way, has been a very successful
provider. They have won competitive proposals, as was pointed
out earlier. They have also lost some competitive proposals.
I think the fundamental point I was trying to make is that
our commuter rail members who choose to purchase service want
to make sure that they continue to have that right, that it is
in fact beneficial to them, and in terms of service quality,
that is a judgment they and ultimately their customers have to
make as to what is the best, what is the worse.
We certainly know of examples with all kinds of different
providers where one provider will do very well in one city.
They will go to the next city and not do so well.
It is very difficult to generalize beyond the basic point,
which is competition tends to be something that works and makes
things better.
Mr. Shuster. That is one of the things in this draft bill.
We want the States to have the ability to do exactly what you
have done. It sounds like it has been overall positive.
Mr. Millar. Yes, sir.
Mr. Shuster. Thank you very much. With that, I will yield 5
minutes to the gentlelady from Florida.
Ms. Brown. Thank you, Mr. Chairman. First of all, Mr.
Boardman, I want to thank you for your leadership and service,
and for all of the Amtrak employees.
The feeling of the chairman and others is not the feeling
of all of the Members. It is not the feeling of the traveling
public.
Last Friday, just for your information, I was flying from
Washington to Connecticut. I sat at the airport, after going
through security for 3 hours, the flight was cancelled. The
next morning, I took the flight to Connecticut.
Saturday morning, I took the train from Connecticut to New
York. It was on time. It was clean. There were a lot of
students and traveling public. It was wonderful. I was able to
do my work as I traveled. I know you do the same thing in the
winter time when that plane would not have left even the next
day in the snow.
I want to thank you all. The Congresswoman mentioned
something about providing money to Amtrak. For years, it was
zeroed out funding.
Only with this administration, I want to be clear, it was
the Obama administration that put the money for Amtrak, not
just for Amtrak, for high-speed rail, based on the bill that we
passed. They did not make it up. We passed the bill and they
implemented it based on that.
My question to you, you wrote a letter yesterday to the
Congress. Would you elaborate on that letter, saying what this
bill would do as far as demolishing Amtrak?
Mr. Boardman. Sure. I think this bill really does not go to
the depth, the understanding, the subtleties, the complexities,
the difficulties that it takes to operate a railroad.
I think I am hearing today that a lot of people agree with
that, there are other things that need to be done here that
really would make this bill, if you had a bill, a practical
one.
You do not need to do this bill. Almost everything that is
available in this bill and that you want to do with the
railroad in the United States is available to be done with and
through Amtrak.
There has to be stability. There has to be a stable funding
source. I think Mr. Geddes said the right things about the
long-distance trains, quite frankly. It is a policy decision.
If you are going to decide that you are going to provide
the services across the country, you need to pay for those
services. Those services should be rendered at as low a cost as
we can get them to. It is not always easy to get to that low
cost.
Especially as we look today, and it gets more complicated
for the future, you have to understand the capital that needs
to be applied and given and paid for to the freight railroads.
You have to understand you are going to need to make continuing
investment in the capital of the Northeast Corridor.
If questions did not get answered, I think Anne brought it
up, are we going to bring the Northeast Corridor back to the
state of good repair, and the master plan there today, even
without high-speed rail, is $52 billion to bring that back, to
bring it where it really needs to be to provide that
reliability.
The private sector is going to be interested in whether
that is there or not, and if they are going to put part of
their dollars forward, they need to know they have that public
partner along with an operating partner like us.
When high-speed rail comes to really be looked at and when
this whole program comes to be looked at, it has to be looked
at in its whole.
If you take away the Corridor and you decide you are not
going to have a policy of having a connected mobile rail system
in the country, you have begun to destroy Amtrak.
Ms. Brown. I attended every single hearing. I did not hear
maybe what the chairman and others heard. He asked for
recommendations on the bill. I would say strike everything and
start somewhere else.
I want to ask about the labor protection. The chairman
constantly mentions the protection is there for labor, and
maybe you all discussed it when I was out of the room.
Mr. Shuster. He did.
Mr. Wytkind. Let me explain it to you. I did discuss it
with him. Nothing in this legislation guarantees anything to
Amtrak's employees. The Railway Labor Act, Railroad Retirement
Act, none of the statutes apply to railroad workers, despite
public comments made that employees of the company will be held
harmless.
Secondarily, not even the hiring preference really has much
value to Amtrak workers. All they are guaranteed is a chance to
be considered for a job. That is it. That is really all I can
find in this bill that gives Amtrak employees any confidence
they will have at least a chance to be gainfully employed.
As far as I am concerned, our public comments say close to
20,000 jobs are at risk, and that is perfectly valid based upon
the current draft legislation.
Mr. Shuster. The gentlelady has 1 minute for a final
question or remark.
Ms. Brown. The chairman constantly talks about Virgin Air
and how they make a profit. The point is the British put in
over $50 billion; is that correct? $15 billion. This is the
second round. I had been over there for the first round when
they took all of the system back and bid it out again.
They put $15 billion in recently, but they only receive
$168 million profitability.
Mr. Boardman. We talked about that a little bit earlier. I
think one of the things that came to light is that we were
really talking about 1 year where there was any profitability,
and for the rest of the time, there has been additional
subsidies applied, not just Virgin, but the other private train
operating companies that are over there.
The way they get that subsidy is to bid for the cheapest
subsidy for that particular line.
Britain is going through another soul searching again about
taking this back to a more vertically integrated system. The
public share of the operating cost is now about 50 percent of
the total, as opposed to 40 percent, even though they have a
great deal more ridership, their subsidy levels have increased,
and the total cost to them is about six times where it was back
in the late 1990s.
Ms. Brown. I went to the hearing up in New York. One of the
things is there were people from the Governor's Office. It was
elected officials.
The point is it is not just one system. It is working
together. The point is Big Government is going to come in and
take over.
I cannot believe that is the mindset of the Republican
leadership on this committee.
Mr. Shuster. The gentlelady's time has expired. They have
called a vote. I want to wrap this up so we can all get out of
here.
I appreciate the gentlelady's passion for rail in this
country, and I appreciate her requesting to have this hearing
today.
Again, I want to thank all of you for being here today. I
believe it is time to make a change in this country, to
deregulate passenger rail.
Mr. Wytkind, I am looking forward to seeing your proposals.
Forty pages is fine, if it is that kind of detail, and I would
like to see it.
Again, I appreciate everybody being here. I thank you all
for coming, and I am sure we will be talking again.
Ms. Brown. Can I have an additional 30 seconds to close?
Mr. Shuster. Sure. Thirty seconds and then I am going to
gavel you down.
Ms. Brown. That is fine.
Mr. Shuster. I have been here for 4 hours. You have not.
Ms. Brown. Let me just say one thing. This proposal, I
promise you, is dead on arrival in the Senate. It is going
nowhere. We should be dealing with the aviation bill, but what
we are dealing with is a pipe dream that will end when it
arrives at the Senate.
Thank you very much.
Mr. Shuster. I appreciate those closing remarks. I
certainly disagree with them.
I think this is going to be a talking point in the House,
and I think for people across the country as well; as I
mentioned earlier, there are 350 million passenger train rides
in the country, but only 28 million of them occur on Amtrak.
The American people are going to stand up. I have already heard
them in circles, even liberal circles in this country, saying
the one thing we should do is end Amtrak as it exists today.
We are going to have a lot of conversations.
I believe, as Chairman Mica believes, that eventually there
are going to be significant changes to the way we provide
passenger rail in this country.
Again, thank you all for being here, and this hearing is
over.
[Whereupon, at 2:03 p.m., the committee was adjourned.]