[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                    DEPARTMENT OF TRANSPORTATION AND
                    RELATED AGENCIES APPROPRIATIONS
                                FOR 1999

========================================================================

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION
                                ________

 SUBCOMMITTEE ON THE DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES 
                             APPROPRIATIONS

                    FRANK R. WOLF, Virginia, Chairman

TOM DeLAY, Texas             MARTIN OLAV SABO, Minnesota
RALPH REGULA, Ohio           ESTEBAN EDWARD TORRES, California
HAROLD ROGERS, Kentucky      JOHN W. OLVER, Massachusetts
RON PACKARD, California      ED PASTOR, Arizona
SONNY CALLAHAN, Alabama      ROBERT E. (BUD) CRAMER, Jr., Alabama
TODD TIAHRT, Kansas          
ROBERT B. ADERHOLT, Alabama  

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

John T. Blazey II, Richard E. Efford, Stephanie K. Gupta, and Linda J. Muir,
                           Subcommittee Staff
                                ________

                                 PART 5

   DEPARTMENT OF TRANSPORTATION:
                                                                   Page
     Federal Railroad Administration..............................    1
       Grants to Amtrak...........................................    1
     Research and Special Programs Administration.................  533
     Surface Transportation Board.................................  709

                              

                                ________

         Printed for the use of the Committee on Appropriations
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                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director


















 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                                  1999

                              ----------                              

                                         Wednesday, March 11, 1998.

                    FEDERAL RAILROAD ADMINISTRATION

                               WITNESSES

JOLENE M. MOLITORIS, ADMINISTRATOR
DONALD M. ITZKOFF, DEPUTY ADMINISTRATOR
KATHRYN B. MURPHY, DIRECTOR, OFFICE OF BUDGET
S. MARK LINDSEY, CHIEF COUNSEL
JAMES T. McQUEEN, ASSOCIATE ADMINISTRATOR FOR RAILROAD DEVELOPMENT
GEORGE A. GAVALLA, ACTING ASSOCIATE ADMINISTRATOR FOR SAFETY
CHARLES H. WHITE, JR., ASSOCIATE ADMINISTRATOR FOR POLICY AND PROGRAMS 
    DEVELOPMENT (DESIGNATE)

            NATIONAL RAILROAD PASSENGER CORPORATION (Amtrak)

                               WITNESSES

GEORGE D. WARRINGTON, ACTING PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
    NATIONAL RAILROAD PASSENGER CORPORATION
SYLVIA deLEON, AMTRAK BOARD MEMBER
AMY ROSEN, AMTRAK BOARD MEMBER
ALFRED S. ALTSCHUL, VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER, 
    AMTRAK

                            Opening Remarks

    Mr. Wolf. The House is in session and we are going to have 
a couple votes during the middle of this hearing. I also have 
an amendment up in about 20 or 30 minutes, so we are going to 
try to get somebody else to briefly chair.
    I welcome you to the committee. Perhaps it may be a better 
idea to just summarize your statement. But before you do, let 
me just begin with a statement.

                              Introduction

    Today, we will hear from Ms. Molitoris, Administrator of 
the Federal Railroad Administration, and from George 
Warrington, Acting President of Amtrak. We have also invited 
two of Amtrak's board members, Ms. deLeon and Ms. Rosen, to 
testify on the Brotherhood of Maintenance-of-Way agreement they 
negotiated for the Corporation.

                       amtrak's financial future

    Last year, former President Tom Downs outlined for the 
Subcommittee what needed to be done for Amtrak to avoid 
bankruptcy. This approach included a restructuring of Amtrak to 
reduce the Corporation's deficit, decreasing operating costs by 
making investment in the Corporation's infrastructure, and 
reducing costs through legislative reforms.
    By the end of 1997, all three of these actions had 
occurred. Amtrak had been able to restructure the company and 
its route system, thereby reducing its annual costs by 
approximately $400 million. Congress enacted a reform and 
reauthorization bill that provided statutory relief from some 
of its most onerous labor provisions, made various legislative 
reforms, and freed up $2.2 billion in tax credits for Amtrak to 
spend on various capital needs.
    In fiscal year 1999, the administration and Amtrak are 
requesting $621 million in capital funds and are seeking 
permission to use the capital appropriations for preventive 
maintenance. This recourse is quite different from prior years, 
when Congress provided a grant for operating and capital, as 
well as funding for the Northeast Corridor Improvement Program.
    With all of these changes, you would think that I would be 
optimistic about Amtrak's future. However, I must say that I am 
concerned. I have heard from a variety of experts about the 
precarious position Amtrak is in. For example, GAO testified 
last month that Amtrak is still in ``dire financial straits.''
    Other knowledgeable sources have said that the 
administration's 1999 request would simply be shifting costs 
from operating expenses to capital expenses, in essence, moving 
the pea from under one shell to under another shell and causing 
Amtrak to spend down its needed capital appropriations on the 
daily operation of the system instead of on long-term 
investments, ultimately, perhaps, bringing about the bankruptcy 
of the Corporation in the year 2000.
    Secretary Slater was more optimistic about Amtrak'sfuture 
when he testified last week. However, he noted that Amtrak will 
continue to need Federal support well after the year 2002 in the form 
of a capital appropriation.
    During this hearing, I would like to get to the bottom of 
Amtrak's financial conditions and hope to have the following 
questions answered. Does Amtrak continue to operate in a 
fragile state, as many have testified, or have these recent 
legislative actions placed the Corporation on a more stable 
footing? Will adopting this new structure for Federal 
appropriations be robbing Peter to pay for Paul, diverting the 
TRA and capital appropriations to pay for traditional operating 
expenses?
    I personally, and I am sure most members, would like to see 
or want to see Amtrak survive. It actually serves my 
Congressional district to a certain degree and many people in 
the Washington metropolitan area use it. I believe America 
needs a cost-effective and efficient national rail passenger 
system. Preserving a national rail system is vital for a 
balanced transportation network, but we really have to get the 
answers to all of these questions.
    We welcome you and your staff and we will, as I said 
earlier, insert your full statements in the record. You can 
summarize them.
    Let me recognize Mr. Sabo first.
    Mr. Sabo. Thank you, Mr. Chairman. I look forward to 
hearing our witnesses testify, both as to the future of Amtrak 
and also the Federal Railroad Administration continuing on rail 
safety. Thank you, and welcome.
    Ms. Molitoris. Thank you.

                         FRA Opening Statement

    Mr. Wolf. Ms. Molitoris.
    Ms. Molitoris. Thank you, Mr. Chairman. Thank you for the 
opportunity to testify today in defense of our budget request 
for 1999. Mr. Chairman, I will focus on two subjects in my oral 
statement: rail safety and Amtrak.

                              rail safety

    Mr. Chairman, safety is and has always been a priority of 
President Clinton and the Department of Transportation. In 
fact, Secretary Slater calls safety his north star. We are 
focused on safety results and I am going to highlight today 
those results which I believe have flowed from the investments 
requested by the President and approved by Congress in the last 
couple of years.
    The railroad industry today is changing dramatically and 
quickly. Freight traffic has increased by more than a third 
since 1990, to the highest level in history, while rail 
employment has decreased to the lowest level in a century. The 
evolution of mega-railroads, large Class I railroads, poses 
challenges to our safety oversight never contemplated by FRA 
history or our regulations. Mega-railroads impose a huge 
distance between corporate decisionmaking and the men and women 
on the front lines who are most at risk for their lives in the 
pursuit of their work.

                     safety and compliance program

    Traditional inspection techniques alone cannot reach the 
root of safety hazards quickly enough to prevent tragedy in 
this new rail structure. Consequently, FRA has evolved its 
safety program through a coalition of labor, management, and 
FRA to attack safety hazards at their roots.
    If we look at Union Pacific in 1997, I think we have a good 
example. In 1995 and 1996, Union Pacific safety statistics were 
all going in the right direction. The safety issues, both 
service and safety, that occurred in 1997 could not have been 
foretold by the traditional site inspection method alone. Only 
because of the new SACP program could we respond as quickly as 
we did to uncover safety hazards such as insufficient employee 
and supervisory levels; training, fatigue, and crew management 
issues that were really at the heart of both safety and service 
problems. Traditional inspections alone will not enable us to 
make safety gains in a timely fashion to get preventive rather 
than just a reactive mode.
    We also should mention that SACP has leveraged a lot of 
dollars right to the safety issues that men and women on the 
front lines face. For example, Union Pacific has focused on 
training, in hiring of new dispatcher personnel, train and 
engine crews, and track specialists, and initiated a new 
fatigue countermeasures program. Fatigue is one of the biggest 
issues in transportation and Union Pacific has already, since 
our impact in the late summer, invested $4 million in a fatigue 
countermeasures program. They have also invested very 
significant dollars in training, a three- to four-fold increase 
in hiring from the previous year, and tripled the number of 
dispatching supervisors.
    The SACP work of labor, management, and FRA brought the 
1997 series of collisions and yard tragedies to a halt. It has 
brought management, labor, and FRA into a partnership for 
safety that goes well beyond issues involved in collective 
bargaining. It is only through this intense and continuing SACP 
activity that FRA can adequately carry out its safety 
oversight.
    One more example, the Conrail acquisition proposed by CSX 
and Norfolk Southern. With the experience of the UP-SP merger 
results so vivid for all of us, we proposed to the STB that it 
was extremely important that safety implementation plans be 
presented as part of the railroad submissions. They required 
that, and as a matter of fact, we are now developing a rule 
which will mean that these safety implementation plans must be 
a part of any future major reorganization or transaction.

                         Results and statistics

    We have achieved safety results. Since 1993, with the new 
comprehensive approach, we have achieved a 19 percent decrease 
in railroad-related fatalities, a 42 percent decrease in on-
the-job casualties, a 17 percent decrease in accident rates, 
and a 16 percent decrease in grade crossing incident rates. 
These indicators mean safety is increasing. They are important 
signs that the program is working, but we have lots more to do.
    Our request includes $62 million for railroad safety, which 
includes 32 additional rail safety employees and related costs 
to support all of these programs. In addition, safety research 
and development focused on safety initiatives is also included. 
Our request will enable us to carry out our safety mission and 
advance it to help reach the zero goal that we have.

                          fra's amtrak request

    On the issue of Amtrak, Mr. Chairman, 1997 was a critical 
year for Amtrak. Labor agreements were reached. Service issues 
were resolved. Reform legislation that you mentioned was so 
critical was enacted. And the Taxpayer Relief Act, which 
provided much-needed investment funding, was also passed. The 
Clinton administration continues to have the same focus as it 
has all through the first term, that we continue to further 
transform Amtrak into a cost-effective provider of high-quality 
transportation service.
    Our five-year goal remains that Amtrak only come to the 
Federal Government for the investment necessary to undertake 
capital projects to assure safety, improve service, reduce 
cost, and protect the public's interest in Amtrak. To 
accomplish this, we are proposing the minimum funding necessary 
to implement Amtrak's September 1997 strategic plan to move the 
Corporation to financial viability within the next five years. 
To ensure the prudent and effective use of these funds, our 
proposal calls for the release of all funds, including TRA, to 
be contingent upon Amtrak's creation of a thorough and 
thoughtful capital plan.
    This administration considers passenger rail service to be 
a critical element of the nation's transportation network and 
we propose $621 million in capital in addition to the $2.2 
billion through the Taxpayer Relief Act.
    I look forward to working with you, answering your 
questions and those of the subcommittee today. I believe that 
we have many opportunities to talk about what we can do in 
safety and in passenger service throughout this country. I look 
forward to working with you, Mr. Chairman.
    Mr. Wolf. I thank you much.
    [The prepared statement and biography of Jolene Molitoris 
and the biographies of James McQueen and Kathryn Murphy 
follow:]

[Pages 6 - 37--The official Committee record contains additional material here.]


                        Amtrak's Opening Remarks

    Mr. Wolf. Mr Warrington.
    Mr. Warrington. Thank you, Mr. Chairman. Mr. Chairman, I 
have been Acting President of Amtrak since this past December. 
Over the past three-and-a-half years, I have served as 
President of Amtrak's Northeast Corridor operations, 
headquartered in Philadelphia, Pennsylvania, and frankly, I am 
very proud of all of our accomplishments over the past three 
years. While I served as President of the Northeast Corridor, I 
was also a member of Amtrak's management committee, and in that 
capacity I have had a voice in virtually all of the important 
changes we have made at Amtrak over the last three or four 
years.
    My experience is based primarily in operating and running a 
railroad. Testifying before Congress is not a part of my normal 
routine. My instincts, however, tell me that in either of these 
capacities it is best to be direct and straightforward and that 
is what I intend to do here today, Mr. Chairman.

                        amtrak from 1994 to 1998

    While we finished one of the most difficult years in 
Amtrak's history, I feel very confident--very confident--that 
we at Amtrak are in a much more stable position, both 
commercially, financially, and operationally, than we have been 
in a very long time, certainly in my three-and-a-half years at 
Amtrak. In the past three years, we have significantly improved 
the bottom line by over $300 million through very aggressive 
revenue development and cost-cutting actions.
    The bottom-line improvements include redeployment of our 
fleet assets, very aggressive passenger and commercial revenue 
development, maximizing real estate assets, and elimination of 
poorly performing routes, about 17 to 20 percent of our route 
miles. Though a significant amount of savings has been and will 
continue to flow from much better business practices internal 
to the company, we have also been turning our attention to 
strengthening and creating new lines of business, such as 
expanding high-speed rail, commuter business, the mail 
business, and express services. All of this has been done 
within the context of reductions in Federal operating support 
by about 50 percent.

                       investments and ridership

    Although we have reduced the number of system miles we run 
every day, we have retained our customer base and we have begun 
to see increases in both ridership and passenger revenue. 
Between fiscal years 1995 and 1997, revenues have climbed from 
$851 million to $970 million. This year, our plan calls for a 
further increase in passenger revenues, which will carry us 
over the $1 billion mark for the first time in the company's 
27-year history.
    Our strategic investments, for example, in new locomotives 
and Viewliner sleeping cars have reduced our operating expenses 
and measurably increased customer satisfaction. We are less 
than two years away from inaugurating high-speed service on the 
Northeast Corridor. We have just ordered new equipment for our 
San Diego to Los Angeles service in California.
    Ridership has increased over this past year by 2.6 percent, 
with the highest increases actually occurring in the West Coast 
operations. Based on our first quarter results, this trend 
continues with a seven percent increase in the first quarter of 
this fiscal year over the first quarter of last year, and, in 
fact, last month, in February, our Northeast Corridor ridership 
and our Northeast Direct ridership was up by 9.5 percent over 
February last year, and that is a very positive, continuing 
trend.

     maximizing operating efficiency commercial revenue development

    While our business plans are forward-looking and aggressive 
in terms of operating efficiency and commercial revenue 
development, one of our priorities over the next six to 12 
months will be to develop a long-term vision for maximizing the 
core business potential in the marketplace; that is growing 
market share. We have to better understand all the forces that 
affect our market. It is not enough to know who our customers 
are. Rather, we need to know where they want to go, what we 
need to do to get them there, and how we can get them to buy 
our service again once they try us. In other words, we need to 
know how we can be relevant, not relevant based upon a system 
that operated in 1958 but relevant in today's economy and in 
today's marketplace.
    In the last few years, we have tried to reduce costs 
through the elimination of service. Of all the actions we have 
taken, this one, as you know, has been very emotionally 
charged. Some said we cut too much service. Others felt we 
should have cut far deeper and eliminated virtually all of our 
long-distance trains.
    Last year, in fact, a blue ribbon panel advocated that we, 
Amtrak, should be privatized and be reborn in a fashion 
analogous to the British Rail model. We now know from recent 
reports in the London Times that the British experience has 
resulted in fewer trains, poor reliability, customer 
satisfaction at an all-time low, while public subsidies have 
actually doubled. A study published in Britain last year 
estimated that the entire cost of privatizing British Rail will 
be 5.6 billion British pounds, or $9.4 billion U.S. So far, 
this has yielded mostly promises of future improvements. 
Finally, there are those in this country who believe that we 
should only operate short-haul trains in highly-populated 
corridors.
    I suggest, Mr. Chairman, we lay aside for the moment 
whatever ideological feelings we all have about Amtrak, 
intercity passenger rail service, subsidies or privatization. 
Last year, as I mentioned, Congress told us it wanted a 
national system, but it also wanted Amtrak tooperate like a 
business. That is a real challenge, and frankly, it is often a very 
real conflict.
    Yet, as I have said, we need to know much more about the 
travel demand market and our role in the marketplace. There is 
a world of difference in the expectations of our Metroliner 
passengers and those who travel on our long-distance trains. We 
need to know more about those differences, what it will take to 
make customers in different markets use our service again, and 
what we can do to expand and grow market share. Understanding 
those differences and understanding our financial and operating 
capability to satisfy them is the key to long-term stability 
and growth. In my view, knowing the answers to these questions 
is the difference between providing a public service and truly 
running a relevant business with a market-driven plan and an 
economic objective.

                    fiscal year 1999 budget request

    As you know, last year, as part of the Taxpayer Relief Act, 
Congress granted Amtrak what essentially was a tax refund of 
$2.2 billion to be used for capital investments. This is about 
half of the amount our planning assumes if we are to reduce 
operating expenses through high-yield capital investment. This 
balance of the required $4 billion in Federal capital support 
would be requested through the annual appropriations process.
    The administration's budget for fiscal year 1999 
recommends, as the Administrator said, $621 million of capital 
for Amtrak, all of it flowing from the Highway Trust Fund. When 
this budget was first proposed, frankly, it was met with some 
skepticism at Amtrak. After much thought and much discussion 
and much working together with the administration, we have 
offered and crafted a modification that enables the proposal to 
work well for Amtrak, not only this year but over the next 
several years.

          capital for maintenance of equipment and facilities

    Last year, this subcommittee added language, originally 
contained in the administration and Senate ISTEA bills, to the 
FTA section of your funding bill. This language gives transit 
agencies greater flexibility in how they may spend their 
capital dollars. With this definitional change, the transit 
community can now spend its capital dollars on maintenance of 
equipment and facilities that heretofore had been considered or 
defined as operating expenses. This makes good business sense 
and it has the effect of taking great pressure off of operating 
costs.
    This year, in addition to requesting full funding of the 
administration's budget, the $621 million, we and the 
administration support applying the transit capital maintenance 
definition to Amtrak, consistent with all, not just transit, 
but all Federal transportation programs, thereby enabling 
Amtrak to technically eliminate immediately the entire 
requirement for operating subsidies.

                    use of taxpayer relief act funds

    It is critical to Amtrak that the $2.2 billion in TRA funds 
be used only for projects which provide a high rate of return, 
leverage other external private and public funds, or 
significantly improve the bottom line. We want to reserve that 
fund for those purposes. In fact, our capital investment 
strategy will contribute approximately $1 billion in bottom-
line improvements over the plan period. Without these 
investments, the financial performance of the Corporation will 
worsen, we will lose revenue opportunities and incur additional 
costs that would otherwise be avoided.
    As I believe you know, we originally anticipated submitting 
a funding request for fiscal year 1999 with clearly delineated 
lines of operating and capital support, as we have 
traditionally done in the past. The administration's proposal, 
as you know, contained no request for operating support and 
recommended that we use our TRA funds to cover these operating 
needs. While we differed with the administration over the use 
of TRA, we do believe that using the newly-appropriated capital 
for maintenance of equipment and facilities as the transit 
industry does will work very well for us and for the committee.
    Specifically, the approach will give us equity with other 
modes, all Federal transportation programs; will require no 
operating subsidy; it will create a very low, 40 percent, 
outlay rate for this committee; it will allow us to make better 
business decisions and not gold-plate our capital programs; and 
frankly, we believe it will permit easier tracking of the 
appropriation that is given to Amtrak by the committee and by 
the Congress.

                              labor issues

    With respect to labor, Mr. Chairman, I would like to say a 
few words. One of the critical needs any business faces 
revolves around investing in its human assets. Amtrak is no 
different. Recruiting, training, and employing a skilled, 
qualified, and productive workforce in a very competitive 
environment, particularly in our urban centers, is a very 
serious challenge for us every day. New agreements we hope to 
be reaching with our unions will help us in this regard.
    Our ability to recruit and retain employees is highly 
dependent on competitive wages. Amtrak's craft wages have 
generally lagged behind the commuter and freight railroad 
industries. For instance, an Amtrak electrician is paid $16.10 
an hour compared to the Long Island Railroad or Metro North, 
where an electrician is paid $23.10 or $21.49 per hour, 
respectively. An Amtrak catenary lineman earns $16.93 an hour, 
compared to a Metro North lineman who earns $21.91 an hour. As 
a matter of fact, Con Edison pays $29 an hour for an electric 
traction lineman. An Amtrak train dispatcher in our joint 
Amtrak/Long Island control center in Manhattan is paid nearly 
$10 less an hour than his Long Island Railroad counterpart.
    Needless to say, Amtrak's efficiency erodes when it hires 
and trains its workforce to perform specific and highly-skilled 
technical functions, only to lose that investment to a 
competitor's wages. Some positions require considerable 
investment in training. In direct costs alone, today, Amtrak 
spends nearly $77,000 and nine months to train a new locomotive 
engineer, nearly $99,000 and two years to train an electric 
traction catenary lineman, and $89,000 and two years to train a 
signal maintainer. I have to look at all sides of this issue, 
not just the impact of wage hikes on the bottom line but also 
what it costs to retain our investment in training.
    We are currently in negotiations with 12 of our 13 labor 
organizations. With the exception of the nearly 2,500 BMWE 
members, most Amtrak contract employees have been without a new 
agreement since 1995. Other than COLA, cost-of-living payments, 
these employees have seen no wage increases. If Amtrak is 
expected to act like a business, we cannot ignore the wage 
issues which impact our workers. Yet we also must demand that 
wage improvements be coupled directly with productivity 
improvements and work rule reform by our labor organizations.
    Last year, it became clear that Amtrak was faced with 
making a decision about entering into new contracts whichcould 
potentially extend to all 13 labor organizations in Amtrak if we were 
to avoid a disrupting and damaging work stoppage in the Northeast, 
which would have impacted 600,000 daily commuters. PEB, Presidential 
Emergency Board 234, which specifically dealt with the BMWE dispute, 
determined that Amtrak employees deserved wage increases consistent 
with the full national settlement on the freight railroads, but it did 
not address any productivity, efficiency, or work rule improvements.
    Amtrak was not in a position to voluntarily agree to wage 
increases without significant productivity and work rule 
changes. Had the PEB simply been imposed on the parties, Amtrak 
would have had to pay wage increases and not receive the 
benefit of productivity improvements. The agreement we reached 
with the BMWE not only provided for wages less costly than the 
national settlement, but also provided Amtrak with significant 
work rule changes unique to our own operating needs. I might 
add, quite frankly, that we have among the best work rules and 
productivity opportunities in the country, particularly when 
stacked up against virtually, if not all, commuter and freight 
railroads in the entire nation.
    Mr. Chairman, if we reached no agreements with any of our 
unions, our obligations, primarily cost-of-living payments, 
under existing contracts would have amounted to $182 million 
during the current five-year contract period. With the BMWE 
agreement as the pattern, we project a five-year incremental 
cost for all agreements across the entire operation of 
approximately $248 million. With cost-saving productivity and 
work rules changes, again along the lines of the BMWE 
settlement, we estimate savings or cost offsets of more than 
$56 million during this same period. In other words, with these 
negotiated savings, the actual cash costs to Amtrak over five 
years will be less than $200 million, or on an annualized 
basis, about $38 million a year.
    Given the critical need to retain skilled workers, secure 
work rule and productivity gains, improve morale, which is 
vital in a customer service business, and avoid a very costly 
strike to Amtrak and the Northeast region, an annual increment 
of $38 million in the context of a $1 billion annual payroll is 
not only defensible, but I believe personally, the right thing 
to do.

             separate accounting system for wage increases

    Given the sensitivity of this issue, however, Mr. Chairman, 
I want you to know that I have instructed Amtrak's Chief 
Financial Officer to establish a separate accounting system for 
any wage increase, including the BMWE agreement and future 
agreements, which would assure that all new increments would be 
funded through and by passenger revenues. Under this mechanism, 
this committee would not be financially responsible for any 
negotiated wage increases and would have the ability to better 
track all Federal dollars appropriated to Amtrak.
    In addition, paying for new wage increases out of Amtrak 
passenger revenues imposes a discipline on Amtrak that 
encourages the company to drive toward productive outcomes. 
This makes sense for Amtrak and, we believe, it makes sense for 
this committee. It also encourages Amtrak management and labor 
to maximize revenues, passenger revenues, so that the source of 
future wage increases will be secure.
    Along the lines of productivity, you know we have been 
reengineering our railroad and we have implemented and invested 
in a wide range of efficient fleet, facility, production, 
maintenance, business management, and engineering processes and 
procedures as a way of reducing costs and increasing 
productivity.
    Several examples include better utilization of rolling 
stock by creating run-through operations across the nation on 
several long-distance trains which has cut maintenance costs 
and provided additional flexibility in the deployment of our 
equipment. Uniform consisting of all single-level trains again 
gives us greater flexibility in our fleet deployment and allows 
us to reduce the number of our maintenance facilities and 
costs.

                           northeast corridor

    On the Northeast Corridor, Amtrak maintains the most dense 
railroad in North America and maintains it to the highest FRA 
Class VII standards ever established. Yet our capital cost per 
mile is the lowest among the major commuter railroads in North 
America. Amtrak invests $39,600 on average annually of capital 
per mile, compared to SEPTA in Philadelphia, which spends 
$259,000, METRA in Chicago, which averages $126,000, and New 
Jersey Transit, which invests about $123,000 on an average 
annual basis.
    Through better management of our track and switch renewal 
programs, we have reduced delays resulting from maintenance of 
way work by 51.5 percent between 1994 and 1997. Our practices 
and techniques for repairing large segments of aging 
infrastructure, such as 1900s vintage bridges, has saved the 
company tens of millions of dollars in new construction costs 
and, from a Research and Development point of view, has led the 
railroad industry. Between 1994 and 1997, we have increased our 
measurable engineering field productivity and efficiency by 106 
percent.

                         high speed rail update

    With respect to high-speed rail, I know there were several 
questions about the status of the program. I assure you that 
the project is on budget and on schedule. We expect to have all 
of the Northend, New Haven to Boston, electrification work 
completed by next summer, on schedule. Twelve of the 24 
electrical substations are well underway. Approximately 9,000 
of the 14,000 catenary pole foundations have been installed, 
along with 4,000 poles and about 120 of the 1,500 miles of 
overhead wire is up.
    Trackside, we built the required sidings in the Northeast 
Corridor, installed 138 of 140 miles of continuous welded rail 
and 330,000 of 332,000 required concrete ties. We have modified 
119 of the 127 curves, and of the 146 bridges that need to be 
undercut, raised, or eliminated, 95 have been completed. It has 
all been done on schedule and on budget by those same employees 
who we negotiated with last fall.
    With respect to trainsets, we have 18 on order. Five will 
be in the house and ready for service by late 1999, with the 
balance of 13 delivered by July of 2000.
    I want to reiterate, Mr. Chairman, that I believe the 
future looks better for Amtrak, frankly, than it did a year 
ago, and certainly much better than it has over the last 
several years. The monies released to us by way of the Taxpayer 
Relief Act have given us the opportunity for the first time in 
our history to genuinely plan our capital needs over time.

                       summary of amtrak comments

    In summary, the administration's budget as modified can and 
will work for Amtrak and this committee if it does not depend 
on using TRA for maintenance of equipment but instead preserves 
it for high-return capital investments; it enables Amtrak to 
use the same rules used by other recipients of Federal 
appropriations; it allows Amtrak to make better, wiser business 
decisions about how to invest and use capital; it eliminates, 
technically, Federal operating subsidies; itreduces outlays for 
the committee; and it allows the committee to better track where funds 
appropriated to Amtrak are spent.
    It is critical, though, that we receive full funding of the 
President's request, the $620 million, and it is vital that we 
also be permitted to spend our capital with the type of 
flexibility now enjoyed by the transit industry. We are 
encouraging the administration and the Congress to undo the 
language, as well, with respect to the $199 million that was 
reversed last fall.
    I will tell you, Mr. Chairman, I am genuinely excited about 
the business challenges and opportunities we face. Ridership 
and revenues are steadily growing across the country. We have a 
very good product which honestly and genuinely is getting 
better, and we have a future which looks much more stable over 
the next several years than we have been accustomed to in many, 
many years, frankly, thanks to the TRA, thanks to a lot of hard 
work by a lot of employees at Amtrak, and thanks to a long-
range proposed funding plan with flexibility that enables us to 
achieve the kind of stability that we have not seen in a long, 
long time in the company.
    Thank you, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Warrington.
    [The prepared statement and biography of George Warrington 
and biographies of Amy Rosen, Sylvia deLeon and Alfred Altschul 
follow:]

[Pages 45 - 73--The official Committee record contains additional material here.]


    Mr. Wolfe. I will have a large number of questons. Mr. 
Regula has to go to another meeting. I will yield my time to 
him and then we will go to Mr. Sabo. Mr. Regula.

                          conrail acquisition

    Mr. Regula. Thank you, Mr. Chairman.
    I want to say that the Federal Railroad Administration has 
been very helpful to us on questions on the Conrail merger 
issue in Ohio and I would have some questions about that. Ms. 
Molitoris, you are familiar with the merger I am talking about. 
What other States are impacted as much as Ohio by this proposed 
Conrail acquisition?
    Ms. Molitoris. Mr. Regula, Ohio is impacted very heavily by 
the merger. Certainly, the State of New York is also impacted, 
and certainly other States. However, I think when you look at 
the State of Ohio, you see the presence of the so-called ``X'', 
which is where the two railroads almost intersect leading to an 
opportunity, if not handled correctly, for congestion problems 
to arise. That is why we have been very focused as an 
administration on the whole safety impact of this merger 
proposal.
    We have submitted to the Surface Transportation Board our 
information about the potential safety impacts and the Surface 
Transportation Board did respond quickly and required the 
submission of Safety Integration plans of both the proposed 
railroads who would be involved in the acquisition.
    I think that it is important to say to you that just the 
plans are not enough. We are committed to working consistently 
with the railroad companies to enhance these plans and to be 
very close to them to assure that implementation continues 
throughout any approval process that may go on.
    Mr. Regula. Do you look at competitive access, also, as 
part of your overview?
    Ms. Molitoris. The submission by the Department of 
Transportation includes both competitive issues and safety 
issues, and we submitted a fairly comprehensive filing to the 
Department. Of course, all competitive issues are related to 
the public interest and so our focus has emphasized both 
competitive issues and safety issues.
    Mr. Regula. As you know, the Governor and also many of the 
Members of Congress from Ohio have raised issues about this 
merger and the impact that it would have. Have any of the other 
States become involved in opposition to the Conrail 
acquisition?
    Ms. Molitoris. Mr. Regula, several other States are parties 
of record and they have certainly proposed issues of concern 
with regard to safety and service and competitive issues and we 
have tried to work diligently with each of them to provide 
technical assistance and to incorporate their concerns into the 
Department's filing.
    Mr. Regula. The last question, you do, in responding to 
this, take a position on the competitive situation and try to 
keep the options available to shippers, particularly the small 
shippers on the regional or short-line railroads?
    Ms. Molitoris. Our filing, which was submitted February 23, 
says that there are a fairly long laundry list, Mr. Regula, of 
issues that we feel require mitigation before this proposal 
would be in the public interest.
    Mr. Regula. Do you monitor the negotiations that are going 
on among the interested parties?
    Ms. Molitoris. We try to be available to support these 
talks, but the negotiations really are between companies and 
cities or locales, States in some cases. We try to be 
responsive to all the citizens' issues that are raised as we 
have with some of your concerns, and provide technical 
assistance. Thank you.
    Mr. Wolf. Mr. Sabo.

          amtrak's funding request and outlay savings proposal

    Mr. Sabo. Thank you, Mr. Chairman.
    Let me understand the Amtrak request. Your request is about 
$620 million in capital funds with the change of definition of 
how you could use it, rather than a significant operating 
appropriation. That means less outlays for us, but it also 
means less cash flow for you in the first year. Where are you 
going to get the additional cash flow in the first year of this 
change?
    Mr. Warrington. Our assumption, Mr. Sabo, is that we have 
established an outlay rate of 40 percent, which is about $248 
million, the first of the fiscal year. To cover the balance of 
that fund, we would short-term borrow through the TRA.
    Mr. Sabo. So you would escalate your borrowing during the 
first year to make up for that cash flow shortage?
    Mr. Warrington. Short-term, internal TRA borrowing, and 
then when the----
    Mr. Sabo. What is TRA?
    Mr. Warrington. Taxpayer Relief Act. As I was saying, 
short-term borrowing for cash purposes through the fiscal year 
for qualified expenses, replenished with the balance of the 
appropriation at the end of the fiscal year when the 60 percent 
share is provided.
    Mr. Sabo. What you are suggesting may make sense long term. 
It clearly is a budget gimmick for the first year to lower our 
outlay pressures, and we have lots of them. I expect before the 
year is over, there will be other gimmicks that will offend me 
much more than this proposal. [Laughter.]
    But it really is an outlay savings for us for only one 
year, because by the second year, by the year 2000, we have the 
obligation for the balance of 1999 and the 40 percent of 2000. 
So in the second year of the biennium, there is no outlay 
savings for us.
    What does concern me is that this is one of many proposals 
that when combined put this subcommittee in a difficult 
position in this and future years. As another example, I think 
the Federal Railroad Administration has certain fees proposed 
that are not likely to be adopted, as do several other 
agencies. Your Amtrak adjustment helps us with those kinds of 
problems. I also see substantially increasing contract 
authority for other transportation purposes, which will have 
some impact this year and will have major impact by the year 
2000.
    So the gimmicks will soon lose their effectiveness. We have 
the full burden on our table by the year 2000, plus we have a 
huge increase in outlays from increased contract authority for 
surface transportation. And by the year 2001 and 2002, we have 
discretionary spending limits going down. That gives me pause. 
I do not know the answer, and I do not know that I should 
expect you to have it, but we are headed for a major crunch. 
Then whether we can continue to accommodate requests, in future 
years, it frankly gets more difficult.
    Mr. Warrington. I suppose the short-term alternative to 
that, Mr. Sabo, is operating money, which is scored at a much 
higher rate during the first year.
    Mr. Sabo. Yes. And whatever year we make this switch, it 
saves us, temporarily, money in one year.
    Mr. Warrington. Right. That is correct.
    Mr. Sabo. Then the crunch comes back, and we are building a 
whole series of other crunches. Unless this Committee has a 
huge increase in outlay allocation from some other 
subcommittee, we are going to have immense problems.
    Mr. Warrington. Mr. Chairman, it is still less than the 
outlay rate----
    Mr. Sabo. In the first year.
    Mr. Warrington. In the first year, yes, that is right.
    Mr. Sabo. But it is a one-year savings for us in outlays, 
basically.
    Mr. Warrington. Yes.

                           user fee proposal

    Mr. Sabo. The Federal Railroad Administration, how much in 
user fees do you propose in your budget?
    Ms. Molitoris. Eighty-two million dollars.
    Mr. Sabo. Out of how big a budget?
    Ms. Molitoris. Seven-hundred-and-sixty-three million.
    Mr. Sabo. And those are $82 million of new fees.
    Ms. Molitoris. These are user fees recommended for the 
Office of Safety as well as----
    Mr. Sabo. Eighty-two million of new user fees?
    Ms. Molitoris. User fees have not been in effect since 
1995.
    Mr. Sabo. So that is over ten percent of the budget. I am 
not sure if the fee proposals do or do not make sense. My 
observation is that I have seen these recommendations year in 
and year out and somehow they do not get passed. If we do not 
pass them, can your budget accommodate a reduction of that 
amount?
    Ms. Molitoris. As I mentioned in my opening statement and 
certainly in the oral, the money that we are requesting for 
safety is essential for us to carry forward the increases in 
safety which I believe are a priority for everybody.
    Mr. Sabo. Thank you.
    Mr. Chairman, I guess the only thing I hope as I look down 
on your side of the table, is that I hope Mr. Regula and Mr. 
Packard and Mr. Callahan will be very generous to our 
subcommittee when it comes to 602(b) allocations.
    Mr. Wolf. Well, Mr. Callahan does not like foreign aid. I 
think he will give us half of it, so we are going to be in good 
shape. [Laughter.]
    I think Mr. Sabo is exactly right, though. Before I 
recognize Mr. Callahan, I must say that the Coast Guard user 
fee is not going to take place. The FAA user fee has been 
thrown out by the courts. I think what OMB and what the 
administration have done is to put these user fees in the 
budget to fill it out and they know the fees are not going to 
stay. I think Mr. Sabo makes a very good point.
    Mr. Callahan.
    Mr. Callahan. Thank you, Mr. Chairman.

                  flood damage to shortline railroads

    Let me just ask a couple of quick questions, Madam 
Administrator. We just recently had some severe flooding in 
South Alabama, and as a result we had some short-line railroads 
that have severe damage to their track. I know that the LRFA 
has not been funded. Do you have a working relationship with 
FEMA whereby you can join with them when we request disaster 
aid resulting in washed-out short-line railroads?
    Ms. Molitoris. Mr. Callahan, we work closely with FEMA and 
try to provide technical assistance. Of course, we in many 
cases know these railroads from previous relationships and just 
from our safety work. You point out a very important problem. 
Short-line railroads move just under 20 percent of the commerce 
by rail in this country, so they are very crucial for rural 
areas and other areas. We work closely with the association, 
but there is no specific fund for that right now.
    Mr. Callahan. Do you have any unobligated funds from the 
1996 supplemental appropriations?
    Ms. Molitoris. No, there is not.
    Mr. Callahan. Is there any way you can contact Mr. Witt, 
who is the head of FEMA, and explain to him your concern from a 
safety standpoint for these short lines, because they are going 
to need some immediate relief in Conecuh County, Alabama, and 
Escambia County, Alabama. I would appreciate you contacting 
him. I think he is down there in Alabama. But I do not know if 
he will have the opportunity to look at the short-line 
railroad.
    Ms. Molitoris. Mr. Callahan, we have, in fact, in the past, 
when there have been emergencies of this nature, actually 
administered the monies that were identified for railroads.
    Mr. Callahan. It is not necessary for us to pass a 
supplemental bill assign money to you? Can you work through 
FEMA with the supplemental?
    Ms. Molitoris. Yes, we did. Yes, we did, and we will----
    Mr. Callahan. So you worked through FEMA?
    Ms. Molitoris. Yes.
    Mr. Callahan. You actually can get money through FEMA for 
this type of relief?
    Ms. Molitoris. Well, this is FEMA's money that is 
identified as emergency funds. We work as their partner on the 
technical side and try to help the small railroads.

                  highway trust funds used for amtrak

    Mr. Callahan. Briefly, let me just make a couple of 
comments to Mr. Warrington. Mr. Warrington, you want the 
Highway Trust Fund to fund the $621 million you are requesting. 
Do you know what funds the Highway Trust Fund? I am sure you 
do. Do you know where the money comes from?
    Mr. Warrington. Motor fuel taxes.
    Mr. Callahan. Do you know where most of that money comes 
from, what industry?
    Mr. Warrington. No, I do not, Mr. Callahan.
    Mr. Callahan. The trucking industry. So what you are saying 
is that you think the trucking industry ought to pay taxes and 
continue to pay highway use taxes so we can fund Amtrak or 
other railroad needs. Do you think that is fair?
    Mr. Warrington. Mr. Callahan, if we had our druthers, we 
would prefer to be funded out of the general fund. Frankly, we 
are small potatoes when stacked up against the highway 
interests in this country and we would rather not be squeezed 
in that position.
    Mr. Callahan. I appreciate that, and I am not going to 
squeeze you too badly today, either. But let me just ask 
another rather mundane question. Do you have a telephone in 
your car for when you need to talk to someone? Do you have one 
of those?
    Mr. Warrington. Yes, I do.
    Mr. Callahan. Do you know how to use it?
    Mr. Warrington. Yes, I do.
    Mr. Callahan. Well, your predecessor was not good at it, 
and sometimes when some of the Members of this Subcommittee 
would call him, he would never return our calls. I would 
encourage you to use that cellular phone in the back of your 
car. When a Member of this Subcommittee calls you, I hope you 
would be kind enough to return our telephone calls. By doing 
so, you might have a little bit more cooperation with some of 
the members of the committee.
    But we are going to give you the benefit of the doubt at 
this point. You are new on the job and we are going to try to 
cooperate with you. That does not mean I am not going to try to 
cut $621 million for Amtrak, because I am going to try to cut 
it. But it does mean that common courtesy by returning phone 
calls might aid you better in the future.
    Mr. Warrington. I understand that, Mr. Callahan. I assure 
you that you and all members will receive prompt responses to 
any phone calls, number one, and for the record, I do not ride 
in a limousine. [Laughter.]
    Mr. Callahan. I guess you came over here by train. 
[Laughter.]
    Thank you. Thank you, Mr. Chairman.
    Mr. Wolf. Mr. Olver.

                    MONTANA RAIL-SCHOOL BUS ACCIDENT

    Mr. Olver. Thank you, Mr. Chairman.
    Ms. Molitoris, I do not know, maybe this is an unfair 
question, but do you have any sense of what happened in the 
accident out in South Dakota or North Dakota, the rail-bus 
collision? As it is such a short period of time, if you do 
not----
    Ms. Molitoris. Mr. Olver, let me just say that it is 
certainly preliminary, but we have people that are there. We do 
know--we were concerned at first that maybe there was perhaps a 
blizzard condition and that there was some sight problem. But 
what we know at this point, and again, it is preliminary, that 
it was a clear day and, at least from our preliminary 
information, the school bus stopped at the crossing and then 
for some reason proceeded. We do not know what that is.
    As I think you know, Mr. Olver, we have through the whole 
administration focused on school bus safety at crossings with a 
major initiative of working with school bus owners and drivers. 
We are going to reemphasize this--we have a larger database of 
these people through NHTSA--to again highlight for them how 
crucial these behaviors are in operating a school bus at a 
crossing.
    Mr. Olver. I have just been handed from the Subcommittee 
staff a pretty good, but probably still preliminary, set of 
details, so I will leave where I was on that for the moment.
    Ms. Molitoris. Okay.

               CONRAIL ACQUISITION TIMETABLE AND PROCESS

    Mr. Olver. Let me ask you a couple of other questions. I am 
curious about the Conrail takeover. More directly, what is the 
timetable? What is exactly the FRA's role in these 
negotiations? Are you just a bystander or are you an arbitrator 
or what is the role of FRA in this proposal?
    Ms. Molitoris. Mr. Olver, we are a party of record. The 
independent institution which will make the final decision 
about the character or approval of such a proposal is the 
Surface Transportation Board. However, as I have mentioned, 
especially because of our experience with the results of two 
other mega-mergers, BN-SF and Union Pacific-Southern Pacific, 
we realized the huge safety implications of this kind of 
transaction. This would be the largest kind of transaction the 
East has ever known, and----
    Mr. Olver. Is the Surface Transportation Board entirely 
independent of the Federal Railroad Administration?
    Ms. Molitoris. Yes, it is. It is an independent agency, 
although located within the structure of an organizational----
    Mr. Olver. In the structure of the FRA?
    Ms. Molitoris. Of the Department of Transportation.
    Mr. Olver. The Department of Transportation.
    Ms. Molitoris. But totally independent. We filed, as I 
mentioned, for the first time in history, focusing on safety as 
part of the surface transportation environmental impact 
statement. Safety was included and our comments identified the 
potential safety hazards that had to be mitigated and addressed 
individually and in detail----
    Mr. Olver. So as a party of record, you get to comment and 
recommend at various stages in what the STB is doing?
    Ms. Molitoris. That is correct.
    Mr. Olver. Okay. And what is the route to which they take 
into account? Are they required to take into account, or do 
they look at it and say, well, yes, we do it, or no, we do not, 
or what do they do there?
    Ms. Molitoris. The STB makes an administrative decision, of 
course. They make a judgment about all of the filings, but in 
relation to our submission which talked about safety, they 
reacted very quickly and then required the railroads to submit 
safety implementation plans. And I should mention, as I did to 
Mr. Regula, that the implementation of these safety plans will 
be our bailiwick to be very involved at every step along the 
way, now and into the future, that those safety implementation 
plans are done and done in a very detailed and accurate way.
    Mr. Olver. I have very little further time here. Let me 
just say I was particularly curious about your comment on the 
safety aspect that there are at least four major route segments 
of the planned merger with projected safety risk increases of 
greater than 50 percent. That is a little hard for me to 
conceptualize, why that would be the case. Maybe you can give 
me something on that.
    And the other thing, I am wondering whether you have a kind 
of a sense of the timetable in which this is going to function. 
I can see some substantial benefits as one gets upto my part of 
the country in this process. Maybe there are some serious detriments, 
too, that I am not quite so clear on what the cost-benefit analysis may 
be. But would you give me some sense of what the timing is, and also, 
could you explain how those specific route segments where the risk 
increases greater than 50 percent occur?
    [The information follows:]

    During the course of FRA's 1997 formal safety assessment of 
the Consolidated Rail Corporation (Conrail) acquisition by CSX 
Transportation (CSXT)/Norfolk Southern Corporation (NS), an 
analytical model was constructed for FRA by Zeta Tech 
Associates, Inc., Consultants. The model quantifies the safety 
impacts on the acquiring carriers, based on projected changes 
in rail traffic. FRA's safety assessment was filed with the 
Surface Transportation Board (STB) on October 21, 1997 (FRA 
Safety Assessment of CSX/NS Proposed Acquisition of Conrail).
    The model includes 61 line segments covering all Conrail 
mainlines, plus certain lines of CSX and NS on which traffic 
flows would increase as a result of the proposed acquisition. 
The model incorporates train volume, track characteristics, 
operating speed, and historical differences in accident rates 
among three carriers. The model measures the impact on safety, 
in terms of dollars of accident cost, for each segment in the 
analysis both in a base year (1995) and the projected year 
2000.
    Certain segments with large projected traffic increases 
also sustained large increases in risk (cost). There are four 
line segments with risk increases greater than 50 percent. 
These are: NS 7--Ft. Wayne to Kansas--54.5 percent; NS 3--
Buffalo to Cleveland--54.4 percent; NS 1--Hagerstown to 
Roanoke--56.6 percent; and CSX 6--Greenwich to Chicago--62.2 
percent.
    FRA's model and projections assume that Conrail will be 
assimilated into CSXT and NS by the end of Year 2000. If the 
merger is approved by the STB, the pace of the absorption of 
Conrail will be guided by how quickly CSXT and NS can integrate 
Conrail's resources and complete other regional and local 
requirements. Realistically, FRA believes that most merger-
related operating and safety action items identified by CSXT 
and NS in their STB filings and Safety Integration Plans (SIPs) 
will be completed within a 3-5 year post-merger time frame.

    Ms. Molitoris. First of all, there is a July timetable for 
a decision by the STB on the proposal. We filed our comments on 
February 23.
    The particular segments you mentioned, one was in Ohio, as 
brought up by Mr. Regula. There is a shared asset area, for 
example, in northern New Jersey, which serves the New York 
area. There is one in southern New Jersey, which in part serves 
Pennsylvania.
    The kinds of changes that we have identified have to do 
with things like a high percentage of increase in trains. 
Obviously, an efficient operation and a safe operation can 
accommodate these changes. What we said in our filing was that 
you cannot presume or assume that these kinds of changes can 
just somehow magically happen.
    Mr. Olver. Are these all instances where there is a shared 
segment----
    Ms. Molitoris. No, they are not.
    Mr. Olver [continuing]. That most of them will be 
traveling, or is it just because of the way that they are put 
back together, the traffic on each of the segments just becomes 
much greater? Are any of the segments where both are going to 
be traveling, both are going to be running?
    Ms. Molitoris. There are. There are. What I would like to 
do, Mr. Olver, is to respond in detail to this question for the 
record. But let me just say now that those particular areas are 
ones that we identified, because for the first time in history, 
FRA did a pre-proposal safety audit in depth on all three of 
the parties who would be involved, Conrail, Norfolk Southern, 
and CSX, and we reviewed in detail the potential areas for 
increased risk.
    We knew that we had to do something different from the past 
because of what we experienced at the Union Pacific and at the 
Burlington Northern-Santa Fe, that these mega-railroads can 
produce safety hazards that we have to get ahead of time to 
prevent tragedy. But I will be very happy to elaborate on each 
of those elements that you requested.
    Mr. Olver. Thank you, Mr. Chairman.
    [The information follows:]

    The model's risk projections are based upon traffic 
projections, information supplied by CSX and NS in their 
initial filings with the STB, as well as other follow-up data 
requested by FRA. The line segments analyzed were those with 
existing Conrail, CSX or NS desginations. The traffic 
projections for the year 2000 represent the total traffic (CSX 
and/or NS) projected for any given line segment. The increases 
in traffic on some line segments are as a result of traffic 
pattern changes (rerouting of trains to consolidate and 
expedite) and expected new business growth.

                       WEATHER-RELATED ACCIDENTS

    Mr. Wolf. Mr. Packard.
    Mr. Packard. Thank you, Mr. Chairman and thank you for 
being here all of you.
    I will be rather parochial and very short on my questions. 
A lot of damage and floods and mudslides on the west coast. How 
does that impact your ridership, your performance, your 
revenues? Has that been analyzed at this point?
    Ms. Molitoris. Well, are you talking both aboutpassenger 
and freight, Mr. Packard?
    Mr. Packard. Yes.
    Ms. Molitoris. Let me comment on the freight side and 
perhaps Mr. Warrington would be more appropriate to give 
details on the passenger side, although we are certainly close 
to both of these.
    In some of the areas, some rail service had to shut down. I 
would say that, it is--and I could report in writing on all of 
the impacts in detail for your review. The railroads have in 
general gotten back into service within a few days and 
sometimes within one day. Some of the mudslides have been 
extremely damaging. I know that some of the commuter service 
was impacted as well.
    So, any time that these very horrendous natural disasters 
occur, our regional office, which would be Region 7 in 
California was very focused on how they can help. Of course, 
the FEMA involvement was very important. I have to commend the 
actions of the private freight railroads, because they had a 
very good emergency plan. They reacted very quickly and they do 
invest private dollars in the main, especially the major Class 
I railroads. They do fix their own right of way. I think this 
is one advantage of our system as compared to some of the other 
systems around the world and the railroads deserve credit for 
their prompt response.
    Mr. Packard. Some of those main lines go right along the 
bluffs and the coastal areas that have been somewhat 
undermined. In some instances, there has actually been 
sloughing away of some of the bluffs at the coastline. Has that 
jeopardized any significant portion of your lines?
    Ms. Molitoris. We are working closely with the railroads, 
of course, but our inspectors are looking at things like 
bridges and track, but so are the railroads. They are very 
focused on safety. In fact, they have some--especially with 
flood-related and slide-related damage, there are special 
rules, operating rules in place to require very slow speeds in 
the neighborhood of any potential impact on a bridge. It has 
actually saved lives on a number of occasions, because a 
damaged area was able to be identified ahead of time.
    [The information follows:]

    From the standpoint of train accidents, FRA has had seven 
reported through the National Response Center since October 1, 
1997 that were related to severe weather. Other less serious 
train accidents have probably occurred, but these are reported 
through the normal reporting channels and FRA does not have the 
information compiled until several months later.
    Of these seven accidents, two involved passenger trains, in 
which no persons were injured. Five involved freight trains, 
with 4 train crew members having received minor injuries for 
which they were treated and released.
    Of the five freight train accidents, four resulted in a 
release of diesel fuel from the locomotive fuel tanks, and one 
caused a release of hazardous material from three cars, with no 
injuries or evacuation. The accidents occurred in seven 
different states, as follows: Arkansas, 1; Oregon, 1; Kansas, 
1; Virginia, 1; California, 1; Missouri, 1; and South Carolina, 
1.
    All accidents are preventable, but this rate of train 
accidents from weather-related causes is not unusual during 
this time of year. The railroad industry has been diligently 
following the recommendations of FRA in Safety Advisory 97-1 
related to protection of operations during flood warnings, and 
these precautions have been effective. In a passenger train 
accident at Crescent Lake, Oregon, on January 2, 1998, the 
train was operating at reduced speed during severe weather 
conditions, in accordance with the Safety Advisory. The 
derailment was limited to the leading wheels of the locomotive, 
damage was slight and no persons were injured.
    Train accidents reported thru NRC as weather-related 
include:
    Dec 29, 1997 UP Chetopa, KS--Soft track on account of heavy 
rain; also train handling. Freight train, 49 mph, derailed 1 
locomotive, 13 cars. No hazmat, no injuries.
    Jan 2, 1998, ATK/UP Crescent Lake, OR--Rock slide. 
Passenger train, no injuries, no hazmat. Lead truck of 
locomotive derailed and lodged on rock.
    Jan 26, 1998 Kiamichi RR Hope, AR--Soft track on account of 
heavy rain. Freight train, 1 locomotive derailed at 5 mph. 
Minor injuries to locomotive engineer, diesel fuel spill, no 
other hazmat.
    Feb 5, 1998 NS Emil, VA--Washout. Freight train, 23 mph, 
derailed 3 locomotives, 2 cars. Diesel fuel spill, no other 
hazmat, no injuries.
    Feb 20, 1998 ATK/UP Montecito, CA--Tree across tracks, 
weather related. Passenger, no injuries. Train operating at 
reduced speed on account of weather per FRA Safety Advisory 97-
1. One set of wheels derailed.
    Mar 13, 1998 UP Kirkwood, MO--Debris on track. Freight. 
Diesel fuel spill, no other hazmat, 3 minor injuries to train 
crew members.
    Mar 18, 1998 CSX Cheraw SC--Washout caused by failure of 
farm pond dam. Freight train, derailed 2 locomotives, 15 cars, 
speed not reported. Diesel fuel and 3 hazmat cars (1 
Caprolactam, 2 Adipic acid powder) no evacuation, no injuries.

                    weather-related costs to amtrak

    Mr. Packard. Thank you and Mr. Warrington, would you----
    Mr. Warrington. Yes, Mr. Packard, El Nino today has cost us 
about $1.7 million net on the west coast. Most of that has 
affected the Coast Starlight, our premium train. As of about 
two weeks ago, there was a major bridge washout north of Los 
Angeles which has affected service north of LA.
    On the other hand, El Nino has also saved us a few dollars 
in the northeast, where the winter has been mild and we have 
not had to engage in as much snow removal, weather protection 
or over-time. So, on balance, hopefully, we will come out 
ahead. It has had a disruptive effect, a significant disruptive 
effect on our passenger operations and some of our mid-distance 
operations in addition to the Coast Starlight in California.

                        commuter service update

    Mr. Packard. As you have articulated with some of the local 
services, passenger services, Metrolink and some of your 
commuter systems that are operated by our local entities and 
agencies, has that worked out well? Are there any problems that 
exist as you articulate with your Amtrak services and those 
local commuter services?
    Mr. Warrington. No. As a matter of fact, Mr. Packard, we 
are the dominant operator under contract of virtually all of 
those services. It is a little known fact that Amtrak is the 
largest contract operator of commuter services around this 
nation. It is one of the things of which we are actually very 
proud. On those commuters which we operate, we tend to average, 
across the entire country, a 97 percent on time performance. We 
have about a $300 million annual business on that front. We are 
the major operator in California. We are the operator in Boston 
and we operate service right here in Virginia for the VRE and 
for the State of Maryland.
    We are an operator which runs a very competitive and 
effective service across the country and our relationships with 
local commuter agencies and states around those contracts, in 
my experience, have been very, very good and very positive.
    Mr. Packard. Thank you very much. Thank you, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Packard.
    Mr. Cramer.

                 maximizing potential amtrak ridership

    Mr. Cramer. Thank you, Mr. Chairman.
    Mr. Warrington, welcome aboard. I know you are no stranger 
to Amtrak and you have served well under different titles. I 
would like to have the benefit--and you may have had an 
opportunity to go into this in your original statement--of some 
information from you about your vision for maximizing the 
potential for Amtrak in the marketplace. What do you see under 
the circumstances that Amtrak is doing right, and what has not 
worked so well.
    Your west coast ridership has increased somewhat 
significantly and tell me a little bit why you think that is 
and how we can help here on the east coast as well.
    Mr. Warrington. Let me maybe work backwards. On the west 
coast, we have an organization that focuses intensively on 
customer service and customer quality. We have a lot of travel 
demand. There has not been a historical railroad orientation 
there and when you introduce it for the first time, provide 
good quality, and focus on customer service, what we find is, 
people come. You have to have sufficient amounts of demand to 
make it work economically. California, Oregon and Washington 
have clearly been success stories.
    In the northeast, what we have done over the past three 
years is thoroughly assess what the market wants, what the 
market needs. As a result we have tailored and designed our 
high speed program around what the marketplace wants and needs. 
We have a 12 percent market share today in the northeast. We 
have a 50 percent air/rail market share between New York and 
Washington and with the introduction of high speed rail in the 
northeast, based upon extensive modeling and planning work 
around what the market wants and needs, that market share will 
grow in the year 2000 by three or four points, which is very 
significant.
    I would say that we need to do the same type of market 
research around the rest of the system, particularly around 
long distance inter-city services; the same kind of thorough, 
market-based, business-like, customer-driven research around 
what people want and what people need if the system needs is be 
relevant. Our route system needs to be relevant from a business 
point of view. It needs to be relevant from an economic point 
of view.
    Frankly, we operate services today over routes and in 
frequencies that tend to be driven by either historical travel 
patterns, going back, frankly, to the 1950s or based upon 
various cost cutting initiatives. What we have not done is 
thoroughly assess what the market wants, what the market needs 
and what we have to do--what we can do--economically and 
financially in order to grow market share.
    If you do not do that, you will stagnate and you will tend 
to spin your wheels around a growing market. We have to be 
relevant in the marketplace. We have to be competitive in the 
marketplace. We have to go places and deliver service in a way 
that people will come once and come again.
    We have not conducted that kind of research, good business-
like research in the 27-year history of this company. We have 
done quite a bit of it around the west coast. We have done a 
lot of it around the northeast operation, which is why we feel 
so confident about the commercial and cash flow that will come 
from the high speed program in the year 2000.
    We need to do the same kind of analytics and the same kind 
of business-like planning around what people want and what 
people need for the rest of the system.

                        high speed rail service

    Mr. Cramer. That is a challenge and you need to be 
encouraged to keep meeting that challenge. Are you, in fact, 
within two years of the high speed service in the northeast.
    Mr. Warrington. As a matter of fact, it is a $2.6 billion 
program. I will tell you that the program is on schedule and on 
budget. We will be extraordinary leaders in late 1999 and the 
year 2000, frankly, for the country andfor the world around 
delivering an on schedule, on budget, quality high speed operation that 
we can all be very proud of. It is all on schedule and on budget.
    Mr. Cramer. Good luck. Thank you, Mr. Chairman.

                  administration's request for amtrak

    Mr. Wolf. Thank you, Mr. Cramer.
    With regard to the President's budget for fiscal year 1999 
of $621 million in capital funds for Amtrak, the request is 
quite different, as you mentioned, from prior years when you 
requested an operating grant, a capital grant and funding for 
the northeast corridor. If you can tell us, why has the 
administration request proposed such a radical departure from 
the past years?
    Ms. Molitoris. Mr. Chairman, the administration sees Amtrak 
as it always has said in the times we have been here before, as 
a crucial part of the 21st century. Amtrak's strategic plan 
called for $5 billion to enable them to meet the operating 
self-sufficiency goal that we jointly, the administration and 
Congress had set for them. The administration proposes over the 
next five years to fund such a plan.
    I know that you and others have identified it with a 
variety of words. I think it is a significant amount of money. 
I think you have heard Amtrak say that they feel that this will 
work. It gives Amtrak the flexibility to operate as a business, 
something that we all want. Amtrak----
    Mr. Wolf. Excuse me.
    Ms. Molitoris. Sure, go ahead.
    Mr. Wolf. No, you go ahead.
    Ms. Molitoris. We believe that this plan can work. We agree 
actually with Mr. Sabo, that the first year is a hard year, but 
I am encouraged--and perhaps Mr. Warrington will go into more 
detail--about some of the ways that Amtrak is trying to improve 
revenues, which will serve them well. For instance, express 
service, wheeling power on the northeast, the same kind of 
business initiatives that other passenger services around the 
world are doing to get better.
    Mr. Wolf. We have heard them over the years and you have 
heard them over the years. I would put myself in the forefront 
of the supporters in the Congress for Amtrak. I was raised in 
Philadelphia, a block away from the tracks, if you will, as it 
goes by John Bartrom High School.
    We have heard the stories over and over and we do not want 
to do a shell game whereby we are moving funding around and 
then they come back and they say, well, we did not understand. 
I think we have a moral obligation to the American people to 
make sure that what we are doing is appropriate.

                capital funds for preventive maintenance

    You are asking that Congress allow Amtrak to use its 
capital funds for preventive maintenance. Why, in your opinion, 
is it necessary?
    Ms. Molitoris. Well, Mr. Chairman, this definition is one 
that the Congress approved last year for FTA. It is a way that 
maximizes Amtrak's ability to flexibly use this money to get 
the best bang for the buck, quite frankly. We believe that 
since not only are we proposing a fairly unique option as 
compared to the past budget proposals, but it also includes a 
requirement that none of the funds be released without a very 
thoughtful and comprehensive capital plan.
    I think this requirement is a governing measure to assure 
both you and us that this money is used in the very best way 
possible. I would agree with you on your comments in this 
regard.
    I think we are making this proposal and we are living with 
some of the things of the past that make people a little 
skeptical about whether it can work.
    Mr. Wolf. You know, Amtrak came up here for years and said 
things were fine, when the system was beginning to decay from 
within.
    Ms. Molitoris. I know that, Mr. Chairman. If you recall, in 
the first few times I appeared before you, I talked about the 
difficulty we had, as a new administration, coming in and 
trying to find out what things really cost. When you run a 
business, you have to be able to identify what things cost. 
Costs were so bundled that we could never really sort it out. 
We spent a lot of time and invested money to get systems to 
track costs and to be able to give you correct answers and to 
give ourselves correct answers.
    Also, I think, we ought to give Amtrak credit for the 
improvements that they have made in the last four years. They 
have a strategic plan now which gives them goals that they must 
meet. They are increasing ridership. They are pursuing business 
initiatives like express business, wheeling power, doing those 
kinds of things which are netting them a real bottom line 
improvement.
    In fact, I would be happy to submit for the record a whole 
sheet of the financial, operational and, I think as you heard, 
business relationships with their customers and labor that are 
much better than they have every been.
    Mr. Wolf. Please do.
    [The information follows:]

[Pages 87 - 90--The official Committee record contains additional material here.]


                capital used for preventive maintenance

    It is my understanding that, should Congress permit Amtrak 
to use its capital appropriation for preventive maintenance, 
approximately $520 million of the $621 million request or more 
than 80 percent could be spent on these items. In the past, 
Amtrak funded these funds from its operating grant. Isn't the 
administration and Amtrak simply shifting costs from operating 
expenses to capital expenses,in essence, moving a pea from one 
shell to the other shell?
    Ms. Molitoris. Mr. Chairman, I believe that this new 
proposal gives us an opportunity to give Amtrak the challenge 
to use this money in the very best way. It is a definition that 
was approved by Congress for transit last year and, I think, 
for a good reason.
    Mr. Wolf. Does it concern you that Amtrak will use more of 
their capital fund for traditional operating expenses and less 
for traditional capital investment, like new cars? Does this 
bother you a little bit?
    Ms. Molitoris. Well, the first year, Mr. Chairman----
    Mr. Wolf. You are an expert.
    Ms. Molitoris. In the first year, we are going to have a 
very--we will be pressed in all of these areas. I think the 
role of the Federal Railroad Administration, the department and 
the board is, to hold Amtrak to a very high standard. I think 
that Mr. Warrington is doing a very commendable job. He is 
very--as with you, he is very direct with us at the board.

                            amtrak president

    Mr. Wolf. Let me just say this is the second time I have 
met Mr. Warrington. I was impressed when he came by my office. 
He seemed to be no nonsense. I understand Mr. Warrington asked 
not to have the job. [Laughter.]
    I understand that, several of you hope to be reappointed to 
the board and you will be on the board.
    Ms. Molitoris. I represent Secretary Slater.
    Mr. Wolf. Secretaries never attend, except for the one 
meeting. I used to work for a cabinet officer. You will be 
there probably most of the time.
    I think it is important that you appoint someone with 
railroad experience and not a political person. I think if you 
come out with some of the names--and I have heard you rolling 
out political people--I think you are going to begin to raise 
questions in this Congress and, frankly, in the minds of a lot 
of people. So, the person who is appointed--and if Mr. 
Warrington is not the person, fine--it ought to be someone who 
really understands this and is not just another political face 
who is coming along. I think the credibility here in Congress 
will just drop dramatically.

                    use of taxpayer relief act funds

    During fiscal years 1998 and 1999, Amtrak will have $1.1 
billion (per year) in Taxpayer Relief Act funds available for 
traditional capital investment. Are we not setting Amtrak up 
for failure in the year 2000 where there are no supplemental 
TRA funds?
    Ms. Molitoris. Well, Mr. Chairman----
    Mr. Wolf. Wouldn't we be setting them up for failure?
    Ms. Molitoris. This administration wants to set Amtrak up 
for success.
    Mr. Wolf. They will be gone after 2001.
    Ms. Molitoris. I think the work that we do from now until 
the year 2000 is critical. I think the strategic plan that was 
agreed to by the board of Amtrak and the staff of Amtrak is a 
very challenging but a strong plan that can lead them to 
operational self-sufficiency.
    I also believe that the high speed service and the new 
business initiatives are really going to contribute to the 
bottom line of Amtrak. We believe it can work. Until we 
continue this track record of success, which has been real in 
the last couple of years, the only way we can prove it to you 
is by each of our actions, each day of each year and to come 
back and talk to you about the success that Amtrak has reached.
    Mr. Warrington mentioned some and I am going to submit 
several pages for you.
    Mr. Wolf. Excuse me.
    Ms. Molitoris. Mr. Chairman, could I just mentioned, too 
that I appreciated your comments about Mr. Warrington, because 
I too think that he is doing a very good service for us. The 
Deputy Secretary, Mortimer Downey and members of the board, are 
developing a very business-like outreach and search to really 
look for very highly qualified and experienced people to work 
with the new board. So, there will be a basis of information 
for them.
    Mr. Wolf. TRA allows Amtrak to use some of its funds for 
preventive maintenance, specifically maintenance of equipment, 
which costs Amtrak roughly $340 million per year. Why should 
Congress expands Amtrak's eligible use of its capital 
appropriations to include maintenance of facilities and 
equipment as requested, since Amtrak already has flexibility 
with the TRA funds?
    Ms. Molitoris. Well, we believe and the administration 
believes that--the definition is one that applies throughout 
the transportation industry. It is important.
    For example, Mr. Chairman, you recall in the transit 
industry, for example, often because there was more of an 
incentive to buy new, the maintenance area was not given its 
full potential. I believe the judgment of management at Amtrak 
can make good decisions on what the best use is. That is what 
we are trying to do, give them accountability on how they use 
the money.

                         availability of funds

    Mr. Wolf. Of the total appropriation of $621 million in the 
administration's budget, you are seeking $200 million to be 
available on October 1, 1998, for the northeast corridor-
related expenses and the remainder of the funding to be 
available July 1, 1999. Why are you seeking this split in the 
availability of the funds?
    Ms. Molitoris. This method of use by Amtrak is one that 
seems to respond to their needs and their use.
    Ms. Murphy. Mr. Chairman, traditionally we have always 
asked for capital outlays beginning in the fourth quarter. Part 
of that has been a scoring issue, but the administration is 
open to revisiting that as long as both the administration, 
Amtrak and the committees agree that, Amtrak will not draw down 
more than 40 percent in the first year. That is for the total 
capital fund. That is $621 million.
    So, regardless of how much of the funds they obligate, 
during fiscal year 1999, Amtrak and the administration has 
agreed that not more than 40 percent of the $621 million will 
be drawn down in fiscal year 1999.
    Mr. Wolf. For the scoring now?
    Ms. Murphy. Correct.
    Mr. Wolf. If Congress were to adopt this proposal, the 
general capital appropriations would not be available to Amtrak 
until July 1. In the interim, would Amtrak use funds provided 
under the Taxpayer Relief Act for maintenance of equipment, 
infrastructure and facilities and then subsequently repay these 
costs from the capital appropriation?
    [The information follows:]

    If the fourth quarter restriction on Amtrak's capital grant 
is maintained in the FY 1999 appropriation language, then 
Amtrak would ``borrow'' funds from the Taxpayer Relief Act 
(TRA), for this purpose, then ``repay'' its TRA account when 
the capital grant is made. It should be noted that Amtrak has 
requested the elimination of the fourth quarter restriction and 
the Administration has no objections to this request.

    Mr. Wolf. That is not a great way to run a railroad though, 
in the sense that you have to do that. I do understand what you 
are saying.
    If Congress were to adopt the administration's budget 
request for Amtrak, including the preventive maintenance 
definition, can you assure us that Amtrak will not go bankrupt 
in the year 1999 or in the year 2000?
    Ms. Molitoris. Well----
    Mr. Wolf. This is, I think, what some people are saying.
    Ms. Molitoris. I believe, Mr. Chairman, that this gives 
Amtrak a good foundation. I think Amtrak's business plan shows 
that, even in the difficult first year, which we all 
acknowledge is difficult, that as in many capital-intensive 
transportation businesses, some borrowing may be necessary. 
That, in fact, Amtrak can get through the first year 
successfully and then increase the success of their operation 
as the years go forward.
    I think it is a good and workable plan. It is not without 
challenge.

                         AMTRAK REFORM COUNCIL

    Mr. Wolf. Challenge.
    How does the ARC work? After several years, does it have to 
make a statement that Amtrak will or will not be successful? 
Help us; walk me through that.
    Ms. Molitoris. Well, the ARC, I believe, is a method 
Congress has identified to support and advise Amtrak.
    Mr. Wolf. We have an amendment coming up briefly. So, I am 
just going to go through a few more of these questions and then 
we can break.
    Ms. Molitoris. Mr. Chairman, their primary goal after a 
couple of years is to advise Congress on what they observe and 
what they evaluate.

                     AMTRAK REFORM COUNCIL MISSION

    Mr. Wolf. Is it set up in such a way that says if they will 
make it or they will not make it? If they will not make it, 
then do they have to submit a plan to shut down?
    Mr. Warrington. Mr. Chairman, the ARC will regularly review 
our financial plan. We have a financial plan that the board 
officially adopted last September which, in fact, we updated 
yesterday to bring us as much in the way of up to date market 
and other information and cost information to the table. We 
will work off of the fiscal year 1998 baseline about where we 
start.
    What the ARC needs to do, working with us quarterly over 
the next two years, is determine if by the year 2000 Amtrak is 
on a path toward self-sufficiency and not requiring operating 
support. We will be working with them closely on a quarterly 
basis in order to make that determination.
    Right now, we have a plan in place that gets us to 2002 and 
2003. There are lots of events that will occur between now and 
then against which we need to regularly update.
    I will tell you, in response to your question to the 
administrator, I personally feel comfortable and confident 
that, with the proposed budget, not only for this year, but for 
the five-year period that the administration has recommended, 
we can make it. We will need the flexibility provisions--they 
are critical--and the proposed level of support is absolutely 
critical. With that combination, on a five-year basis, I can 
tell you confidently that this organization is not going to go 
bankrupt and is not going to liquidate.
    We have a stable environment in order to conduct the right 
kind of market-based, business-like research and planning 
around the national network. So, together we can, as a public 
policy matter, decide over the next several years, within the 
context of a stable environment, what the national system needs 
to look like and what is economically defensible in 2002 and 
for the long haul, rather than on a year-to-year basis where it 
appears like we are always on the edge.
    Mr. Wolf. Okay, I am going to give these questions to Mr. 
Aderholt and then if Mr. Aderholt has to leave, if Mr. Olver 
can do it. This amendment should be over in about 5 minutes. 
So, I will be right back.
    Just to move on, so you do not break the pace, as a part of 
the request, the administration is seeking $500,000 for 
secretarial expenses and expenses related to the Amtrak Reform 
Council. Do you believe that Amtrak should pay for its own 
oversight? Would that not be a conflict of interest?
    Ms. Molitoris. Mr. Chairman, I am glad you brought that up, 
because I wanted to mention to the members of the committee 
that, our request, we believe, is appropriate because it is the 
FRA's responsibility to support and provide support staff and 
services for the ARC. We have already received calls from 
members who have been appointed to the ARC, talking about some 
of their ideas and some of the needs that they see for us to 
support them.
    So, we will be working with them closely and this kind of 
support is important so that they can do their job and we can 
pay for the things that they are going to ask us to do.

                 AMTRAK FUNDING FROM HIGHWAY TRUST FUND

    Mr. Aderholt [presiding]. Why do you believe it is 
appropriate that Amtrak funding be derived from the highway 
trust fund, as you have proposed in the budget request?
    Ms. Molitoris. Mr. Aderholt, we believe that Amtrak is part 
of a national transportation system. It has been the 
administration's position for some time that, it is appropriate 
for all of the surface modes to be together in the budget that 
is offered to Congress. In fact, I think it was Mr. Callahan 
who mentioned the relationship to trucks. There actually is a 
very identifiable benefit to Amtrak.
    For example, in the northeast and other congested areas, 
the ability for Amtrak to take cars off the road actuallygives 
trucks more opportunity to pursue their business. There certainly is, I 
think, a reasonable debate and discussion that could go on about why we 
want to have a unified system. That is really what ISTEA is all about, 
for us to look at transportation as a system and how each element 
affects each other because, in fact, they all do. In fact, there are so 
many more interrelationships today than there ever were ten or 20 years 
ago.
    In fact, there are tremendous contracts for freight 
movements between trucks and railroads. So, the whole concept 
of one national transportation system is really the thrust 
behind this concept.

              TAXPAYER RELIEF ACT FUNDS FOR WAGE INCREASES

    Mr. Aderholt. If the Committee included bill language to 
prohibit TRA or the 1999 capital appropriations from being used 
to pay for union wage increases, wage increases that Amtrak 
says it can ill afford, would you support this?
    Ms. Molitoris. Mr. Aderholt, I think you have already heard 
or perhaps this was before you came in that, Amtrak and Mr. 
Warrington has already directed his fiscal officer to set up a 
separate account so that all of the dollars that might need to 
be paid out of the agreement, the BMWE agreement and any future 
agreements would come out of revenues.
    Mr. Aderholt. Mr. Olver, do you have some questions?
    Mr. Olver. I can always fill time with questions? 
[Laughter]
    Mr. Aderholt. I am at the bottom of the page here, so let 
me just turn it over to you for a few minutes.

                    NORTHEAST CORRIDOR CAPITAL NEEDS

    Mr. Olver. Thank you, Mr. Chairman, for passing the baton 
on here for a moment.
    Since you stopped at that particular point, I would like to 
examine a couple of things. I notice, Mr. Warrington, that you 
had mentioned--I think it is on page 10 of your testimony--the 
comparisons of capital expenditure for a group of railroads on 
a per mile basis, including SEPTA and down through Amtrak. 
Amtrak was by far the lowest capital expenditure. One-sixth of 
SEPTA's and others go down the line between SEPTA and Amtrak. 
Is there a proportionality there in some way to growth of 
trackage to the development of new trackage that would put some 
of those numbers like SEPTA's and others up to very high 
numbers? Are they in capital campaigns that are far more 
extensive, new lines and so forth, where Amtrak is not in the 
mode of establishing new lines, but it is rather in the mode of 
trying to figure out which ones to triage essentially?
    Mr. Warrington. I think there are a couple of factors, Mr. 
Olver. One is, we tend to be more productive and we get more 
out of every dollar that we invest. We run a Class 7 railroad. 
It is the highest class of railroad operation in the country. 
We have a very skilled workforce and we are very productive. As 
a matter of fact, prior to going into this BMWE agreement last 
fall, we had among the best work rules in the country.
    We are the only railroad in the country that can establish 
gang sizes that we want. We can make starts any seven days of 
the week, including Saturdays, Sundays and evenings, 24 hours a 
day and not pay overtime. There is no other railroad in this 
country that can organize its work and execute it as 
productively as Amtrak can. I can tell you that with 
confidence.
    In addition, we tend historically to have been under-
capitalized around a very aging infrastructure, an electric 
traction system that is 1920s vintage, a Baltimore tunnel 
complex that is 1900s vintage, Susquehanna River Bridge which 
is 1920s' vintage. It is an old, antiquated plant and frankly, 
we have not been able to invest the amount of money necessary 
in that plant for reliability over the long haul. The TRA will 
get us a long way there over the next several years, to both 
make up for some state of good repair that we need to deal with 
and, at the same time, provide us with the kind of reliability 
we need for high speed rail service and reducing our travel 
times between New York and Boston to under three hours and 
between New York and Washington to two hours and forty-five 
minutes from today's three hours.
    At the end of the day, it is a combination of productivity, 
which is good and lack of capital, which is not good.
    There may be a handful of major capital investments that 
are included in those commuter agency numbers. I suspect that 
the SEPTA number includes their massive railworks project, 
which may tend to drive their numbers a bit. But over time, on 
average, the amount of capital which has been invested in this 
infrastructure pales in comparison with the amount of federal 
and local money which has been invested in the plant of all 
those commuter agencies.
    Mr. Olver. Well, that is an interesting answer that covers 
a lot of ground, but I am trying to devise for myself some way 
of comparing these railroads to see how they fit. I do not know 
whether we are talking about apples and oranges as we look at 
them. I would have thought there would be, if one wanted to 
make comparisons, that one might add columns like the 
passengers per mile of the amount of the subsidy, the 
percentage which is a subsidy that goes into each one of those. 
I think every one of them is subsidized and we are, at this 
point, pushing Amtrak into a position essentially of reducing 
the subsidy, although the creative financing here for a period 
of time is at least a form of subsidy along the way.
    My guess is, maybe the percentage of subsidy covers this. I 
will not think of other columns to put in that. I think I could 
devise a few if I thought about it a little bit longer.
    I went about that a little bit obliquely and you have come 
back to me with some comments about productivity and so on. 
Your comment about your using old capital means we have not 
been putting capital in here at the rate--I guess, this is the 
age of the system. You addressed that maybe there is an age 
factor that one ought to throw in here to better understand 
what it is that is going on. I am curious.
    Are we keeping up with the safety in these age factors and 
some of the items like you mentioned, like the bridge, the big 
bridge that you mentioned across the Susquehanna? Are we in any 
danger on that? I trust we are not.
    Mr. Warrington. Absolutely not, we are in no danger at all. 
As a matter of fact, I will tell you that we are fixated. We 
are fixated as operating people on safety. We have a 
responsibility to our employees and to our customers. I will 
tell you, it is a fixation in our operation. It always has been 
and always will be. It is a track record of which we are very, 
very proud.
    What we have been forced to do, Mr. Olver, is invest wisely 
and invest efficiently. Let me give you a good example of what 
you can do with capital.
    Right now, I will pick an interlocking in New Jersey, 
County Interlocking which is a complex array of tracks 
andcrossovers that you have to operate over, at 125 miles an hour. Due 
to the lack of capital over the years, what we have done is have a 15-
man gang go into that interlocking once a week and do what we call 
resurface, which is bring the railroad into proper alignment and cross 
elevation. You should not go into a railroad and do resurfacing more 
than once every two and a half to three years. We were into that 
interlocking once a week.
    What we decided to do was, take scarce capital, $200,000 
and rebuild that interlocking. We did it last July and we have 
not been back there to resurface since last July, six, seven 
months. That 15-man gang can now be used for much more 
productive results. That is the kind of benefit you get from 
wisely investing capital and the organization has been forced 
to over the last several years, given its small amount of 
capital availability, to make those kinds of wise investments. 
I will tell you, it is entirely driven number one as a priority 
by safety.

                labor agreement and amtrak productivity

    Mr. Olver. Okay, well, I guess I, from the data you have 
given, I can accept that you are under-capitalized. So, the TRA 
is a fine thing to move us along.
    Mr. Warrington. Yes.
    Mr. Olver. Now, there are no measures of productivity 
showing here that I can particularly see in the testimony. You 
asserted very strongly that the productivity was the best Class 
7 railroad and so forth and the best of the railroads. I 
suppose it must bear some comparison with these others that are 
better capitalized than Amtrak is capitalized.
    If we are so productive, how can we justify--the business 
of the use of the capital appropriations, any of the TRA monies 
might be used for pay of union wage increases that Amtrak can 
ill afford. Certainly Amtrak can ill afford the pay increases 
in a global kind of a way. On the other hand, if we are so 
productive as you assert that we are--and in your testimony, on 
page 6, you give at least one instance, the only instance I see 
is one of an Amtrak electrician paid $16 an hour compared with 
LIRR, 23 or $21 an hour and then the catenary lineman, where it 
is $16.93 versus Metro North, where the earnings are $21.91.
    I mean, this is very tantalizing to me. It is sort of an 
appetizer, in essence, to see how your analysis of productivity 
fits with the pay scales that are being afforded for our Amtrak 
personnel. If, in fact, you are correct on the assertion of 
high productivity and other kinds of comparisons, which you 
have only given me two very scattered on point sources here.
    There must be a lot of different categories in all these 
different railroads that would be part of a matrix that one 
could see on the different railroads and on the measures that 
would allow me to better compare apples with apples in these 
rail systems. The other kinds of columns that ought to be in 
there would help a lot in understanding where we are in these 
discussions about Amtrak to have a much better matrix to look 
at to make comparisons on.
    If the productivity was so great, I would have thought that 
the proper question ought to be, how under those circumstances 
of productivity can we not pay for pay increases that would get 
people closer to what is being paid in all these other rail 
systems?
    Mr. Warrington. Mr. Olver, the thrust and the spirit of my 
testimony and what I believe is that, the most important thing 
for us to do is to be competitive on the wage front, because we 
invest a lot in our people and in how we train them. The issue 
really is not--and should not be--what wages are.
    What is most important is, coming to grips with what the 
real labor costs are in a competitive environment, and assuring 
that that labor force is paid fairly and equitably, but also 
working productively and efficiently.
    This agreement with the BMWE and our prospective agreements 
with the other crafts really enable us to move in that 
direction, to begin to assure competitiveness, in an urban 
environment, but at the same time stress not what we are paying 
people, but if we are paying them appropriately given their 
level of productivity. Are we getting a fair day's work for a 
fair level of pay? I will tell you, going into the BMWE 
agreement, Amtrak had, in this industry, among the best work 
rules in the country and we emerged with significant 
improvements to those work rules that make us feel good about 
the way we carry out our business from a management and 
workforce point of view.
    I can feel very good and very proud about the efficiency 
with which we dispatch our work on the northeast corridor 
around our maintenance of way activities. I would stack it up 
against all other railroads. Mr. Olver, I would be happy to 
furnish you and the committee with the matrix that details and 
documents those kinds of productivity improvements we have 
secured, but also ways of doing business around productivity 
and efficiency which enables us to declare that we are among 
the leaders in this industry around the way our workforce does 
its work in the field.
    Mr. Olver. Are you the only Class 7 railroad?
    Mr. Warrington. Yes.
    Mr. Olver. How many Class 6s are there in passenger rail?
    Mr. Warrington. There is a--the Long Island Railroad is 
Class 5. MBTA is Class 4. Metro North is Class 5. New Jersey 
Transit is Class 4 and Class 5.
    Mr. Olver. Are there any 6s?
    Mr. Warrington. I do not have any on the list here.
    Mr. Olver. If you do not have any on the list----
    Ms. Molitoris. No, sir, no 6s.
    Mr. Olver [continuing]. That is of some significance. There 
are no 6s?
    Ms. Molitoris. No, sir.
    Ms. Rosen. Mr. Olver, if I may. I serve on the board of 
directors at Amtrak, but statutorily as the representative for 
commuter agencies that operate over Amtrak property. I have 
served on the board of New Jersey Transit as well for over ten 
years and currently serve as Vice Chairman.
    The matrix that you talk about is something that I think we 
should provide this committee.
    Mr. Olver. I certainly hope to see it.
    Ms. Rosen. It is readily available and the American Public 
Transit Association actually tracks it very well.
    If you look at the last ten year of the history in terms of 
the levels of capital, it is astonishing that when you look at 
the properties on the northeast corridor, how much larger the 
commuter agencies' capital programs are than Amtrak.
    What I think that you are addressing in Mr. Warrington's 
comments was the establishment of the Productivity Council 
within the BMWE agreement. All of us who represent commuter 
agencies are hoping that this Council will be something we will 
be able to model in our future agreements.
    [The information from Amtrak follows:]

[Pages 100 - 101--The official Committee record contains additional material here.]


                    ridership and revenue increases

    Mr. Olver. Mr. Chairman, if you do not want to take over, I 
will ask one more, if you would allow. Let me go into one other 
piece of your testimony that has been mentioned earlier. I 
notice, Mr. Warrington, you point out that, between fiscal '95 
and '97, passenger revenues have climbed from $850 million to 
$970 million. A substantial part of that must be rate 
increases, I take it. What portion of that represents rate 
increases?
    Mr. Warrington. I do not have that off the top of my head, 
Mr. Olver, but I can certainly furnish that to you for the 
record. I would speculate that about 60 percent of that is 
probably fare increases, 40 percent ridership. The rate 
increases occurred during the early years and the ridership 
increases have occurred during the latter part of that period.
    Mr. Olver. Please, you had better go back and answer that 
for the record, because it could not be 40 percent. Let me just 
say, your passenger revenues between '95 and '97--well, if we 
are talking about three fiscal years, that would be a little 
bit more--you have made a big thing about the ridership 
increase in 1997. Was there a ridership increase in 1996 or 
1995?
    Mr. Warrington. It began turning around in late '96 and 
through '97 and has continued into '98.
    Mr. Olver. That was when we were also closing down some 
lines----
    Mr. Warrington. That is right.
    Mr. Olver [continuing]. To reduce some ridership. It would 
be very difficult to come up with a set of calculations when 
there is only 2.6 percent ridership increase in fiscal '97 when 
you are turning things around in '96 that could produce a 14 
percent increase in the actual revenues in a three-year period 
if a very large portion of that were not related to the actual 
increase in rates rather than in anything related to the 
ridership. I will let you answer that one. Maybe that is 
another matrix, a different matrix with ridership increases 
year by year.
    Mr. Warrington. Sure.
    [The information from Amtrak follows:]

----------------------------------------------------------------------------------------------------------------
                                                                               Percent change from prior year   
                                     Passenger    Intercity    Revenue ($ --------------------------------------
              Period                   miles      ridership    millions)    Passenger                           
                                     (millions)   (millions)                  miles      Ridership     Revenue  
----------------------------------------------------------------------------------------------------------------
Fiscal year:                                                                                                    
    1994..........................        5,921         21.2      1,412.8         -4.5         -4.1          0.7
    1995..........................        5,545         20.7      1,496.9         -6.4         -2.4          6.0
    1996..........................        5,050         19.7      1,554.8         -8.9         -4.8          3.9
    1997..........................        5,166         20.2      1,673.7          2.3          2.5          7.6
    1998 budget...................        5,385         21.7      1,766.0          4.2          7.4          5.5
----------------------------------------------------------------------------------------------------------------
Note: The table does not include riders on commuter trains that Amtrak operates for State/Commuter agencies.    

                         amtrak grant requests

    Mr. Wolf [presiding]. Mr. Warrington, Amtrak has submitted 
two grant requests which you call option A and option B. Option 
A seeks $621 million in capital grants, similar to the 
administration's request. Option B asks for a status quo, 
although there are no numbers in it, as you know. First, let's 
discuss option B. What funds are you requesting under option B? 
Can you answer in the total and then specify for operating 
capital in the northeast corridor in option B?
    Mr. Warrington. Yes. The option B proposal, as I recall 
is----
    Mr. Wolf. Can you just use a couple of sentences?
    Mr. Warrington. Yes, $376 million for operating, which 
includes $145 million for railroad retirement, $200 million for 
NECIP and $129 million for Amtrak general capital.
    Mr. Wolf. For a total of?
    Mr. Warrington. $705 million is my recollection.
    Mr. Wolf. $705 million to $621 million?
    Mr. Warrington. Yes, we prefer $705 million. [Laughter.]
    Mr. Wolf. If Congress provides Amtrak with funding in the 
usual structure, operating capital northeast corridor, will you 
still seek to prevent a maintenance definition?
    Mr. Warrington. Yes. We believe that the flexibility 
provisions are useful for all general capital appropriations. 
So, the answer is yes, Mr. Chairman.

         amtrak grant request--differences with administration

    Mr. Wolf. How does your grant request $621 million differ 
from the administration's request?
    Mr. Warrington. Initially, we had differences on several 
fronts. I think over the past four to six weeks, we have come 
together and I believe Amtrak and the administration are on the 
same page. I think initially the administration proposal did 
not include the transit definition. The administration proposal 
assumed from the beginning use of the TRA for capital 
maintenance. Also, the administration proposal did not assume 
an October 1 release date of at least a portion of the funds. 
Over the past four to six weeks, we have worked closely with 
the administration.
    Frankly, initially there was some anxiety around the 
original provisions and I think we have very successfully 
gotten on the same page. That level of effort, $621 million, 
coupled with flexibility, works for us. I believe the 
administration and we agree with that.

                   senate reaction to budget request

    Mr. Wolf. I saw that several senators were upset with this, 
I think including Senator Roth. Where are they now? Have you 
been in communication with them?
    Mr. Warrington. We had heard from Senator Roth. We had 
heard from Senator Lautenberg. We have communicated to both of 
those senators and others that, this provision, with 
flexibility, actually works for us, not just this year, but 
when tied to the five-year proposal that OMB has put forward. 
We believe it gives us the kind of stability we need to assure 
that we are not on a precipice in '99 or 2000 or 2001. So, I 
cannot assure you exactly where they are, but I believe they 
understand that we believe this is a workable solution.

                            funding options

    Mr. Wolf. If Congress were to enact option A and include 
bill language making $421 billion available as of July 1, 1999. 
Will this create any short term funding shortfalls?
    Mr. Warrington. Frankly, off the top of my head, Mr. 
Chairman, I cannot answer that. I would have to refer to staff. 
I would like to ask the staff to review that from a cash flow 
point of view.
    [The information follows:]

    Option A would not work for Amtrak on a cash basis. The 
current NECIP grant agreement does not allow for a 100% draw on 
October 1st. Draws are made as reimbursement of actual 
expenses. Therefore, on October 1st no funding would be 
available to Amtrak. With a 9-month delay of funding, Amtrak 
would require borrowings which would exceed the amount 
available to Amtrak under short-term borrowing facilities.

                           northeast corridor

    Mr. Warrington. I do know that the proposal, the 
administration proposal included a $200 million earmark for 
NECIP. That earmark is not received on the first day of the 
fiscal year. Historically NECIP comes through a grant agreement 
and we receive it only when we are reimbursed for the actual 
expenses. So, what we know works best is a $621 million level 
of effort, with 40 percent of that being actually made 
available to us on day one and the balance being made at the 
end of the fiscal year. We would prefer that, frankly, without 
the NECIP earmark, but we could probably live with it with the 
NECIP earmark.
    Mr. Wolf. Would you need to borrow funds from the Taxpayer 
Relief Act in order to meet your operating expenses or are 
there other ways to address this type of shortfall?
    [The information follows:]

    Since Amtrak does not have sufficient short-term credit 
lines to cover the FY 98 cash deficit, Amtrak anticipates 
temporarily borrowing up to $100 million from the TRA fund in 
order to meet qualified capital maintenance expenses.
    In FY 99, Amtrak expects to receive only 40% of its capital 
appropriation due to the anticipated scoring. This will create 
a substantial cash shortfall FY99. To cover this cash 
shortfall, Amtrak will again need to borrow up to $100 million 
from commercial banks. The additional cash shortfall will be 
covered by temporarily borrowing from the TRA funds for 
qualified capital expenses as defined by law. These borrowed 
funds will be repaid to the TRA on October 1, 1999 when Amtrak 
will gain access to the remaining FY 99 appropriation.

    Mr. Wolf. One reason that Congress has carried the July 1 
availability date for capital funds is to keep your outlays 
low, as was talked about earlier. We recognize the board has 
voted to hold capital expenses to a 40 percent outlay rate 
during fiscal year 1999. However, a new board will be appointed 
soon. What assurances can you provide this committee that the 
new board will agree to keep your outlay rate of 40 percent, an 
action which limits how quickly Amtrak can spend it is capital 
appropriations? If both of you hope to serve on the new board, 
you might want to comment, too.
    Mr. Warrington. Yes. Management has strongly endorsed and 
recommended that approach as part of this package. It is the 
way that this entire program works and there are several 
elements that make it work. As management, I would strongly 
recommend to a successor board that that is the deal; that is 
the understanding. For all of this to work, it requires a 
continuing commitment to that deal.
    If the Congress or the committee feels it necessary to 
impose obligation ceilings, we could certainly live with that 
as well.
    Mr. Wolf. Okay, do you have any difference with that?
    Ms. deLeon. I certainly cannot speak for the new board 
since the President has not announced his intentions to 
nominate or present a slate of nominees to the Senate. I would 
say that the current board has directed management to proceed 
accordingly and there is a plan underway. I would say that 
George Warrington has directed the staff and that once this 
becomes established practice, I believe that without 
justification it certainly would become much more difficult for 
a new board to undo.
    Mr. Wolf. Ms. Rosen.
    Ms. Rosen. I would concur with that. The existing board 
feels very strongly and has institutionalized that. I would 
agree with Mr. Warrington that, if the committee decided they 
needed to put some language in there, that would not be 
aproblem for the institution.

                     highway trust fund for amtrak

    Mr. Wolf. The administration has requested that Amtrak be 
entirely funded from the highway trust fund in 1999. Mr. 
Warrington, what is your opinion of that. I know Mr. Callahan 
asked you, but how do you feel about that?
    Mr. Warrington. I am advised that it is not a great 
position to be in. [Laughter.]

        taxpayer relief act: internal revenue service conditions

    Mr. Wolf. Okay, that is enough.
    Under the Taxpayer Relief Act of 1997, Congress provided 
Amtrak with $2.3 billion in capital funding over the next two 
years. Once funding was deducted for the non-Amtrak states, 
Amtrak will receive roughly $1.1 billion in 1998 and 1999. What 
conditions must be met for the Internal Revenue Service to 
release these funds to Amtrak?
    Mr. Warrington. Off the top of my head, I cannot tell you 
that, Mr. Chairman. Mr. Alshul, who is our chief financial 
officer can do that.
    Ms. Rosen. I can say as the Chair of the Financial 
Committee I have been briefed on this. It mirrors the same 
exact regulations that are in the TRA language.
    Mr. Wolf. Have you received the first installment on the 
funding?
    Mr. Warrington. No, we have not.
    Mr. Wolf. How many installments are there and how much will 
be included in each installment?
    Mr. Warrington. I believe the first installment is expected 
within the month and the first installment will be in the 
neighborhood of $1 billion.
    Mr. Wolf. What agreements do you have with IRS in order to 
spend these funds?
    Mr. Warrington. We have an agreement which is about to be 
executed or recently executed.
    Al?
    Mr. Altshul. We have an agreement with the IRS that is 
consistent with the Tax Reform Act. It mirrors the exact 
language in terms of what we are allowed to spend the money on.
    [The information follows:]

[Pages 107 - 110--The official Committee record contains additional material here.]


                  taxpayer relief act: projects funded

    Mr. Wolf. How will the first installment of the TRA funds 
be spent?
    Mr. Warrington. One of the things that management 
recommended to the board about a month ago, Mr. Chairman, was a 
specific initial program of projects, all oriented toward high 
yield cost reductions over the next several years. We have----
    Mr. Wolf. Can you share that with us?
    Mr. Warrington. Sure, we can provide that to the committee. 
For the record, it is a very detailed list of projects, spread 
out across this entire country, all oriented around driving 
down operating costs.
    [The information follows:]

[Pages 112 - 115--The official Committee record contains additional material here.]


                      taxpayer relief act funding

    Mr. Wolf. Will you have to keep a separate account to show 
how the TRA funds are being spent?
    Mr. Warrington. Yes and we need to provide that accounting 
on a quarterly basis to the Amtrak Reform Council as well.
    Mr. Wolf. As part of the TRA agreement, states that do not 
have Amtrak service receive one percent each of the TRA fund. 
That amounts to $138 billion over two years. Is Amtrak 
responsible for providing those funds to the states?
    Mr. Warrington. Amtrak will serve as a pass-through for 
those funds, Mr. Chairman.
    Mr. Wolf. Are you obligated to be sure that the states 
spend these funds on eligible items?
    Mr. Warrington. The enforcement responsibility is not with 
Amtrak.
    Mr. Wolf. Who has that responsibility?
    Mr. Warrington. I believe that is a state responsibility to 
the IRS.
    Al, do you want to speak to that?
    Mr. Wolf. What happens if they do not spend it on eligible 
items?
    Mr. Altshul. I need to review what the enforcement 
provisions are in there, but there is some language in there 
that requires that they adhere to what the required 
expenditures are.
    Mr. Wolf. How do you hold them accountable then?
    Mr. Altshul. How do we or how does the IRS?
    Mr. Wolf. The IRS, whomever.
    Mr. Altshul. I need to get back to you. I do not recall the 
language, but we will respond to that.
    [The information follows:]

    There is no formalized process for monitoring these funds 
given to non-Amtrak states. The six states who received these 
funds are expected to abide by all appropriate laws regarding 
the handling of these funds or face prosecution.

  labor issues: brotherhood of maintenance of way employees agreement

    Mr. Wolf. Since some among Amtrak board members negotiated 
the BMWE agreement, we have asked them to participate in the 
hearing, and we appreciate you both taking the time, to explain 
the agreement as ratified.
    Before we begin the questions, could you highlight for the 
committee each of your experience in labor negotiations, 
including how many contracts you have negotiated in the past. 
Are you both labor negotiators?
    Ms. deLeon. Well, first, let me say I am Sylvia deLeon and 
on behalf of the board I am pleased to be here today.
    In my daytime job, I am a partner in the law firm of Akin, 
Gump, Strauss, Haver & Feld. I am a lawyer. I have been a 
lawyer for over 20 years. I have been a partner in the firm for 
16 years and serve on the Firm-Wide Management Committee.


    [I have an active law practice which includes the 
management of the firms transportation practice. I have handled 
labor-related issues in the transportation arena. Within the 
context of my transportation practice, I have dealt with many 
labor-related matters particularly as they have intersected 
with governmental policies and intervention.]


    During the course of that time, I think I have negotiated 
everything under the sun. I have negotiated everything from 
full funding grant agreements to the termination agreement on 
behalf of the State of Texas for the Super Collider.
    On balance, over time, I think that I have probably 
negotiated more with this subcommittee than I have with labor 
unions, and I must say it has been excellent experience to 
prepare me for the tough unions.
    Over the course of my career, I have always represented 
both public sector clients and large and small corporations, 
many in advising them and many in negotiating for them.
    Ms. Rosen. My name is Amy Rosen. As I said before, I sit on 
the board of directors in the seat that is designated for 
commuter representatives.
    In that capacity, I have spent, I would say, at least 20 
years involved with the delivery of transportation services 
and, specifically, I have spent the last ten years on the board 
of New Jersey Transit. I have spent ten years as a corporate 
officer of the Lockheed Martin Corporation and was deeply 
involved in all of the strategic mergers that have happened, as 
well as work force consolidations.
    In my experience in the transit business, I authored the 
legislation that created New Jersey Transit as Deputy 
Commissioner of Transportation. In a former life before that I 
was directly involved in the negotiations with Conrail when 
they ceased to provide commuter services in New Jersey. I have 
been directly involved in and, in fact, chaired the committee 
that has overseen all of the labor matters related to New 
Jersey Transit for the last ten years.
    We have been asked this question, Mr. Chairman, by several 
people, and I think that it is interesting to note when our 
board gave Sylvia and I, and Governor Carper authority to enter 
into this process, they, at the time, noted that we were the 
three board members that had some specific background in those 
matters.

                       bmwe labor agreement costs

    Mr. Wolf. What are the yearly costs associated with the 
agreement?
    Ms. deLeon. With respect to the BMWE--we have a chart that 
we will submit for the record, but I think the net cost would 
be roughly $5 million total.
    Ms. Rosen. If you take the net cost to the corporation of 
the BMWE agreement on an annual basis, after you remove the 
COLAs, which were already obligated and budgeted and include 
the offsets with the productivity, as well as the work rule 
agreements, the net costs associated are about $5 million.
    The interesting part is that if you take that assumption, 
which everybody does, that will help structure the remaining 13 
agreements that we have to sign. On a billion dollar payroll 
which, of course, includes the railroad retirement obligations, 
that would amount to a total of about $38 million on the same 
calculation.
    [The information follows:]

[Page 118--The official Committee record contains additional material here.]


                          productivity savings

    Mr. Wolf. What long-term cost savings does Amtrak expect to 
gain through work rule changes negotiated in the agreement and 
what are the short-term costs, if any? Also what happens if 
Amtrak does not meet these anticipated savings?
    Ms. deLeon. I am glad you asked the question, Mr. Chairman, 
because I think in hindsight, that is probably the area that 
we, on the board, are most proud of.
    When we entered into these negotiations, we faced a very 
difficult situation. We faced a strike possibly days, if not 
hours, away. The Presidential Emergency Board and the National 
Mediation Board had run its process, and we were faced with a 
Presidential Emergency Board recommendation that we simply 
could not afford and that would have landed squarely on your 
desk to pay for.


    [Moreover the PEB recommendation made no allowance for work 
rule changes.]


    At the end of the day, we committed to a contract that made 
perfectly clear we would not commit beyond our ability to pay 
and that we would insist upon work rule changes and 
productivity gains that would be a model for future agreements.
    We will use this structure for future agreements, we will 
probably have work rule changes and productivity savings in the 
range of $56 to $58 million for Amtrak.


    [With respect to the short term cost savings of the BMWE 
productivity gains, they should be in the range for $7 million 
over the next 2\1/2\ years.]


    Finally with respect to the savings for Amtrak, this only 
calculates one portion. As George Warrington pointed out very 
directly in his testimony, the cost of not having labor 
agreements or losing employees is far greater than the cost of 
the salary and the measurement of productivity.
    We have training programs, and other employee management 
partnerships and we now have a contract that is competitive and 
is also a model. It is a contract that is far better than any 
freight railroad or any commuter railroad has ever been able to 
negotiate with the unions with respect to productivity gains 
and work rules. And so, for a company like Amtrak, it is 
critically important.
    Mr. Wolf. They told me you have to be at the airport at 
Dulles at what time?
    Mr. Warrington. National.
    Mr. Wolf. National.
    Mr. Warrington. By 6 o'clock.
    Mr. Wolf. Oh, well, you are okay then. They said Dulles. 
[Laughter.]
    Ms. Rosen. Beats me at 5:00. What about your board members? 
[Laughter.]
    If I may, Mr. Chairman----
    Mr. Wolf. Sure.
    Ms. Rosen. I think your specific question on that, if I 
recall, and correct me if my numbers are wrong, please, that 
the productivity savings in the BMWE agreement specificallycall 
for $3 million of savings on an annual basis and the work rules I think 
totaled around $8 million.
    I have to echo what Ms. deLeon said, in that, for many of 
us involved in the transit industry, work rules and 
productivity, hand-in-hand with management and labor, are 
really where we see that the future of running efficient 
operations less dependent on Federal subsidies will be.
    I also would just like to add that, at the beginning of, 
whenever it was, late last October when we were actually two or 
three days away from facing a strike was that it was going to 
cost the organization $3.8 million a day for every day that we 
took that strike. The question of our own liquidity, which you 
have raised earlier, would have been on the line within a 
matter of days.
    So, if one wants to think of this in another fashion, it 
might be fair to also add what, in fact, we did not lose. 
Because from my personal interest in terms of the commuter 
agencies, we did not stop running the trains for one day.
    New Jersey Transit has 140 trains. Amtrak has 600,000 
commuters which also use our infrastructure or we contract to 
provide service for. 450,000 of those are state-operated 
agencies which provide commuter service and another 60,000 
Amtrak intercity passengers.
    So, at the time, there was no way that we could have been 
told that the conclusion would be that positive, but that is 
the part that I stand here and am proud that occurred.

          labor issues costs associated with labor settlement

    Mr. Olver. Mr. Chairman, would you yield?
    Mr. Wolf. Sure. Mr. Olver.
    Mr. Olver. Thank you very much. I have to come in here with 
your indulgence because I am getting a lot of numbers, and I 
can usually assimilate them reasonably well, but I am getting a 
little bit lost.
    Ms. Rosen, did I understand you to say that there were--
there must be a difference in our comparisons here.
    Ms. deLeon, I guess I should go to you. Were you giving the 
number of $58 million for a five-year period? Is that what you 
were giving?
    Ms. deLeon. Yes.
    Mr. Olver. For five-year savings on productivity and on 
work rules that could be attributed----
    Ms. deLeon. For all of the crafts.
    Mr. Olver [continuing]. For all crafts if you followed the 
same----
    Ms. deLeon. Perhaps one way to clarify this is to look at 
the BMWE agreement, as the first agreement reached among all of 
our contracts that have expired. We went into this knowing we 
had to set a structure and make a statement about what we would 
insist upon achieving in any future agreement. We have budgeted 
and put together our numbers based on the savings that we will 
insist upon achieving through negotiations for new contracts 
with all of our crafts.
    Mr. Olver. So then, if it is all, if the BMWE was 
extrapolated to all of your unions, all of your crafts, that is 
how you would get $58 million over a five-year period?
    Ms. deLeon. That is correct.
    Mr. Olver. To go back to Ms. Rosen's comment, you said that 
$3 million was productivity and $8 million was work rules. I 
take it that was one year out of the five or is that only from 
BMWE by itself?
    Ms. Rosen. That is why I think we are confusing you, and we 
will submit the chart.
    What I was referring to was based on the Chairman's 
original question, strictly the BMWE savings.
    Mr. Olver. Oh, I see. The BMWE was then $11 million of 
savings----
    Ms. Rosen. Well, the BMWE
    Mr. Olver [continuing]. It would save between the two over 
five years.
    Ms. Rosen. To put that in context--no, because they are two 
slightly different things, if I may, and please key in if the 
numbers are wrong.
    The Productivity Council savings will be established and 
will be ongoing. The specific work rules that were established 
have a specific dollar amount. They also will provide way out 
beyond five years differences--and you can do those different 
numbers--but those numbers are related to one year on the work 
rules and annual basis on the Productivity Council.
    Mr. Olver. On just the BMWE.
    Ms. Rosen. Yes.
    Mr. Warrington. Maybe I can clarify, Mr. Olver. Let me try 
to help here.
    The overall five-year cost of BMWE is $33.9 million. 
Against that we----
    Mr. Olver. The overall five-year cost----
    Mr. Warrington. Five-year cost of the BMWE of new cost.
    Mr. Olver. That is the net, whatever savings----
    Mr. Warrington. No, no, no.
    Mr. Olver. That is the wages.
    Mr. Warrington. That is the wages. The wages are $33.95 
million over five years. Against that, as an offset, we have 
$8.7 million of productivity and work rule economies for a net 
cost to Amtrak of $22.25 million.
    Mr. Olver. Over five years.
    Mr. Warrington. Over five years. That is the net cost over 
five years or about $5 million a year net cost of the BMWE 
agreement, No. 1.
    No. 2, what those numbers do not include, they do not 
include any of the benefits, work rule benefits, productivity 
improvements which would be associated with a newly formed 
Productivity Council between Amtrak senior management and the 
Brotherhood of Maintenance of Way Employees were together.
    We would identify opportunities together, not as part of a 
contractual relationship, but as part of a general incentivized 
improvement program to look for additional ways to save money 
that flows back to the company and back to employees.
    Mr. Olver. So now I remember another number, someone said 
that there was a $5 million--to a previous question--that there 
were $5 million yearly associated costs with this agreement. 
That, more or less, fits with what you have said, $25 million 
net when you take the total wage costs versus the productivity 
and work rule benefits and so forth.
    What then would that mean if you take that $5 million up 
and extrapolate it upward for all of the trades, all of the----
    Mr. Warrington. Why don't I walk through those numbers in 
the same fashion for----
    Mr. Olver. Maybe you ought to just give me the total. You 
can walk me through it and, ultimately, I think probably we 
need to sit down and see this walk-through. I have been asking 
while you were away for matrices. We are now up to matrices 
rather than just a matrix.
    Ms. Rosen. The number is $38 million for all crafts on a 
yearly basis.
    Mr. Olver. $38 million----
    Ms. Rosen. Take the $5 million as compared to the $38.If 
you took the same assumptions, which we did in the BMWE agreement, and 
applied them to all of the same crafts the number would----
    Mr. Olver. For all of them would be $38 million per year 
for all crafts. So, for a five-year period, that would be 
running into--what?--$195----
    Mr. Warrington. $191.65 million.
    Mr. Olver. $195----?
    Mr. Warrington. $191.65 million.
    Mr. Olver. I guess I would like to see these things laid 
out.
    Ms. Rosen. We will be happy to submit to the record.
    Mr. Olver. If it is possible.
    Mr. Wolf. Sure. Absolutely. Absolutely.
    [The information follows:]

[Page 123--The official Committee record contains additional material here.]


    Ms. deLeon. Mr. Olver, I would also like to add that it 
might be useful to consider within the context of Amtrak's 
labor budget of a billion dollars this is roughly a total cost 
of----
    Mr. Olver. A five-year period it is a----
    Ms. deLeon. $38 million.
    Mr. Olver. Yes, $38 million a year over all of the crafts 
in a situation where, at least on the basis of what Mr. 
Warrington said earlier, I see only two. Again, my head is 
bursting with figures at this point. I almost have a headache 
trying to sort them out.
    But I see only a couple of contact points of where the 
comparisons are with this organization versus other 
transportation organizations of an ostensibly similar nature. 
Because I have seen only a couple of points at which we see 
what the salaries are, and I do not see other aspects of the 
benefits. It is very difficult to make these judgments as we 
are being asked to make them.
    Ms. deLeon. We would be happy to provide anything for the 
record.
    I will tell you, in my opinion, in terms of making a 
judgment, my judgment is it was a very good deal.
    Mr. Wolf. Let me just interrupt for a second, if I can.
    We have a problem, and we are going to ask you if you can 
postpone your flight. We do not want to leave tonight without 
finishing the hearing, and we might be here until 6:00 or 7:00, 
I do not know. Because in a half-an-hour or 45 minutes there 
are votes, and the members will be running back and forth. 
There are going to be at least three votes. That is probably 40 
minutes.
    What I plan on doing, too, is taking all of this testimony 
and giving it to the GAO and giving it to the IG to look at it.
    So if you can look and see if you can stay longer, 
otherwise we are going to have to come back. Everyone else is 
in town; is that correct?
    Ms. Rosen. You know, Mr. Chairman, I am sorry to indulge 
you, but I have a daughter who goes on stage for the only night 
tonight at 7:30. If it is possible----
    Mr. Wolf. In Washington?
    Ms. Rosen. No, in New Jersey. If it is--I will have Mr. 
Warrington ask, but----
    Mr. Wolf. Absolutely. Yes, absolutely, you can--I would 
never make somebody miss this day. We are going to go through 
all----
    Ms. Rosen. Let me let Mr. Warrington answer your question.
    Mr. Wolf. We are going to go through a number of questions 
on the union agreements and then after that I think both of you 
ought to feel comfortable to leave, particularly since you are 
billing at $35 an hour [Laughter.]
    Ms. Rosen. I am billing at my usual rate. [Laughter.]
    Mr. Wolf. Zero--pro bono. More lawyers should do that. That 
is wonderful. I think that is great. [Laughter.]
    I have some poor clients we might want to send to you. They 
are starving and----
    [Laughter.]
    Ms. Rosen. Though I am not an attorney, sir, my current 
clients raised----
    Mr. Wolf. But if we could do that, jump ahead, go through 
them, and can you see if you can move----
    Mr. Warrington. I can be here until about 6 o'clock. Will 
that work, do you think?
    Mr. Wolf. That should do it.
    Mr. Warrington. Because I have got to go back home--well, 
it is a long story, but I need to be on a plane.
    Mr. Wolf. That should do it. We will just go to the labor 
issues so you both can----
    Ms. Rosen. We really appreciate that.

                  labor agreement (bmwe) contingencies

    Mr. Wolf. So if your answers can be relatively succinct and 
then expand them for the record.
    What specific contingencies are contained in the agreement?
    Ms. Rosen. The BMWE agreement had five contingencies, and I 
think you probably have them for the record. Roughly,if you 
want me to state them, they were the enactment of the authorization 
bill resulting in the release of the TRA, the submission by the 
administration and enactment by Congress of the operating support 
equivalent as that laid out in Amtrak's glidepath, and submission by 
the administration and enactment by Congress of a ``get-well'' 
appropriation of an additional $84 million in operating support to make 
up for prior years' underfunding the glidepath, no reduction in the 
first installment of the TRA; and, there is a parenthesis there of the 
$199 million general capital appropriation.
    The fifth was the appropriation of the general capital 
grant in Fiscal Year 2000 no less than that appropriated in 
1999.
    In addition to those contingencies, there was a very broad 
contingency stating that should the Amtrak Board of Directors 
determine that any of the set of contingencies or any other 
significant funding event related to the wage and funding event 
failed to occur within a reasonable time, the BMWE agreement 
provisions related to wage increases not yet paid shall be 
void, unless the Amtrak board of directors determines that 
Amtrak is financially able to continue such payments.
    In the context of this, I would like to speak for myself, 
and Ms. deLeon will probably have to add to this.
    The purpose of these contingencies were not representative 
of anything other than the board's interest not to sign an 
agreement that we did not have the ability to pay; the same 
thing that I would do in my life as a corporate manager, the 
same thing I would do in my life as a board member of New 
Jersey Transit.
    At the time, there were many Federal funding questions up 
in the air. We did not have the TRA authorization. We, in fact, 
did not have an appropriation. Those were designed to represent 
a level of Federal support generally required in order to be 
able to support the levels of funding in that agreement.
    Mr. Wolf. What was the justification for the board 
negotiating a contract based on a number of conditions that are 
not controlled by the negotiating parties?
    Ms. Rosen. Sylvia should add her own things in there, too.
    The actual contingencies were developed and devised by 
management at the time, and the board's direction, which was to 
come up with some contingencies that deal with, represent the 
level of Federal support that would be necessary for us to be 
able to meet our payroll. They were never intended to be stand-
alone, any individual one of them whatsoever.
    Mr. Wolf. Are there other examples in the private sector 
where a private corporation negotiated a contract with its 
unions that is contingent upon subsequent actions by the 
Congress?
    Ms. deLeon. If I may answer that. I think there has been a 
lot of misinformation about the contingencies in this 
particular agreement. These contingencies are, in effect, 
protective options for management. The contingencies are there 
simply to ensure that we did not commit beyond our ability to 
pay.
    The contingencies do not require any action by the BMWE. 
They simply give management an opportunity to take a look at 
any particular funding event, and should management conclude 
that it did not have the ability to pay, it could, in fact, 
walk away from the agreement.
    Mr. Wolf. But it did involve the Congress, though. That was 
the thing.
    Ms. deLeon. Amtrak involves the Congress. The purpose of 
this agreement with the contingencies, it might be useful to 
take a look at the circumstances at the time. The Congress had 
not passed the Taxpayer Relief Act. The President had not 
submitted a budget. We did not know how we would fare with 
appropriations.
    If we were to sign an agreement and later have disastrous 
consequences from this committee or any other funding event, we 
simply, as board members, have a fiduciary obligation to not 
commit the corporation, and so it is really the reality is that 
any labor agreement, ultimately, is inextricably tied to the 
appropriations that the Congress awards.
    I think the President's budget request more than meets the 
resources that the contingencies in total reflect. So, looking 
at that contract today, I would say, based on the current 
situation and based on our hope that this committee will fully 
fund Amtrak, there is no reason to dream of walking away from 
this agreement. I think it would be a mistake for the company 
and a mistake for the Congress or the administration to put us 
in that position.
    Mr. Wolf. I understand that. And, again, this committee 
handles a bill on the floor, where I have, with others on both 
sides, had to fend off cuts at Amtrak over the years. These are 
all going to be questions that are going to be asked on the 
floor. They are going to be asked in the full committee, and 
they are going to be asked by members who, frankly, who have no 
love for Amtrak and there are a significant number. So we have 
to know the answers.
    Ms. Rosen. Mr. Chairman, if I just may add--I am sorry.

      effect of administration's budget request on bmwe agreement

    Mr. Wolf. It is clear that the President's 1999 budget 
request does not meet the specific contingencies set out in the 
agreement. It does not include a request reinstating the 1998 
capital funds of $199 million. It does not take into account 
prior year under funding of $84 million, or provide funding for 
an operating grant at the glidepath level of $150 million.
    How does the administration's budget submission not renege 
on the BMWE agreement? Is it still valid because of the 
reneging?
    Ms. Rosen. Mr. Chairman, if I may answer that question and 
also go back to something Mr. Warrington said. I think it is in 
all of our interests to be frank and direct here. During the 
negotiating process, we, very frankly, were just as concerned--
we being Amtrak management and Amtrak's board--with the 
administration's position on what our future funding was.
    If you look at the contingencies, I could easily argue that 
all five of them related to what the administration's position 
was going to be, and in many of those instances we were still 
unsure. We were still unsure at the time whether or not the TRA 
would be passed. We were unsure at the time what the 
administration, as option 2 clearly lays out, would be 
submitted by the administration, how we would make the 
glidepath whole, et cetera.
    In response to your specific question, the administration's 
budget, as it relates to the contingencies, are two separate 
issues. They are not separate issues. They are related, but 
they are not invalidated or negated because, in the context of 
what the administration is now proposing,and we, frankly, were 
very pleased on the total numbers, in the five-year plan it includes 
$4.9 billion. If you take the TRA money out of that it comes out to 
$2.75 billion.
    Amtrak's board has consistently been, as long as I have 
been on the board, talking about a business plan that roughly 
related to $5 billion over a five-year period.
    In fact, if you look at that breakdown and look at the 
$2.75 billion that is in the 1999 through the 2003 budget 
submitted by the administration, that, in effect, is more than 
was included in our plan which was $2.73 billion.
    So, if you look at the contingencies, which really 
represented to us a level of Federal support required for 
Amtrak to meet its obligations, in order for us not to sign an 
agreement that we did not have the ability to pay, the 
characterization of that Federal support, whether it be in 
capital, whether it be in operating, whether it be in RRTA, or 
any other column, from the board's perspective and 
management's, is really irrelevant.
    Mr. Wolf. Well, let me ask you: The agreement includes 
contingencies which the Congress must enact legislation that 
provides: (1) An operating assistance grant consistent with the 
glide path; (2) an appropriation for previous operating 
shortfalls; and (3) a general cap or appropriation of at least 
$199 million.
    Should Congress enact the President's budget structure, 
would Congress, in your opinion, violate the terms of the BMWE 
agreement?
    Ms. Rosen. No.
    Ms. deLeon. As a lawyer, if I may try to clarify, none of 
these contingencies, whether they are met or not met, violate 
or nullify in any way this contract. What these contingencies 
were clearly designed to do was to provide Amtrak with the 
control that it needed to take a look at the contract, evaluate 
our fiscal situation following the appropriations process, and 
make our own business judgment as to whether we have the 
ability to pay.
    There is no specific contingency that must be met that 
would nullify this contract. The purpose of this was to ensure 
our ability to pay. The President's budget meets the resources 
collectively that are reflected in the contingencies.
    If this Committee, in its wisdom, chooses to fully fund the 
President's budget request, I cannot conceive of this board or 
the next reaching a decision that for the next fiscal year it 
did not have the ability to carry through with this agreement.

               costs of bmwe agreement on amtrak's budget

    Mr. Wolf. What must occur for Amtrak to void the agreement 
and what is the minimal level of funding needed for Amtrak so 
that the corporation is financially able to pay the BMWE wage 
payments?
    Ms. deLeon. Our management has come up with a plan that 
would pay for this contract and future labor contracts out of 
passenger revenues. We do not intend to use Federal dollars to 
pay for this or any future labor agreement.
    Therefore, in order to be able to do that, the company has 
to have enough Federal money to run and to make its capital 
investments. If this committee fully funds the President's 
request of $621 million we will be able to do that for this 
fiscal year.

                        labor strike possibility

    Mr. Wolf. Should the Congress be concerned about a possible 
strike if the administration's 1999 request is enacted, or does 
Amtrak have other means to meet the contingencies laid out in 
the agreement?
    Are there any concerns with regard to that?
    Ms. Rosen. If the administration's budget is fully funded, 
we see no current situations that would lead us to a strike 
situation.
    Mr. Wolf. Also, too, you mentioned the savings before. We 
remembered that the BMWE said they were not going to strike 
against commuter rail. Is that accurate or not accurate?
    Ms. Rosen. I was deeply involved in those negotiations----
    Mr. Wolf. If you could say, yes or no. I am trying to help 
but----
    Ms. Rosen. We were in constant negotiation up until the day 
we got the extension to see if there was a way to work out with 
our labor forces whether or not we would be able to safely 
operate commuter rail.
    Mr. Wolf. Okay.
    Ms. Rosen. That is a question we had not ever approached 
before and it had not been fully resolved by the time that the 
intervention occurred.
    Mr. Wolf. If we did not fully fund the President's budget, 
would you expect a strike?
    Ms. Rosen. I really cannot answer that on hypothetical 
terms. If you give us levels of funding, we will be happy to 
run the numbers and talk about what we can do and what we 
cannot do.
    Ms. deLeon. If I may answer that question.

    [If the President's budget is not fully funded, the least 
of my concerns would be a strike. I would indeed be Amtrak's 
immediate viability]

    Mr. Wolf. The point that I am trying to make is that you 
are paying for the salary increases out of your revenue and, 
therefore, you are shifting revenues around. I want you to have 
enough money. So, you know, this is not an adversarial process 
here or at least it is not meant to be.
    But, so, even though you do fence it, it is kind of like 
the off-budget/on-budget issue.
    And, so, even if you do fence it and it does not come out 
of the federal appropriations, it does come out of some other 
place and, therefore, if it comes out of that, there is a hole 
there that has to be filled. You understand that.
    Go ahead, you wanted to say something, Mr. Warrington?
    Mr. Warrington. Yes, that is true.
    Mr. Wolf. Thank you. [Laughter.]
    Okay. We have----
    Mr. Warrington. At the end of the day it all has to add up 
to a number that is a cost associated with doing business, Mr. 
Chairman, and frankly, what I am sharing with you is that at a 
$621 million level, all revenues, all expenses across-the-
board, commercial, commuter, reimbursable, all labor expenses, 
all material expenses, all supply expenses, utility expenses, 
electric expenses, when you put it altogether with $621 million 
and flexibility the dog will hunt. It will work and it will not 
only work this year but at the President's, the OMB level of 
recommended aid over the five-year period by providing 
stability to an institution that desperately needs it.

                negotiations on future labor agreements

    Mr. Wolf. The BMWE agreement sets the pattern for 
otherunion agreements. It is the Committee's understanding that Amtrak 
has to negotiate a similar agreement with 12 other unions and two joint 
councils. In the past, Amtrak has said it could ill-afford the BMWE 
agreement. If up to 12 other unions and two joint councils come to 
agreements at a level similar to the BMWE, press accounts have cited a 
total cost of $442 million by the year 2002. Do you believe that figure 
is accurate, $442 million?
    Ms. deLeon. Mr. Chairman, I do not agree with those press 
accounts. There were a lot of inaccuracies reported throughout 
the course of this negotiation. I think the total cost actually 
would be $247 million.
    Mr. Wolf. Whatever, well, if you could elaborate that on 
the record, because I am glad to hear you say that. But if it 
were $442 or whatever it is, how much would be for this fiscal 
year 1999?
    Ms. deLeon. For fiscal year 1999, the total cost after 
productivity savings for all crafts would be $88 million.
    Mr. Wolf. And if you could break it down?
    Ms. deLeon. We will give you the decimal point for the 
record.
    [The information follows:]

[Page 130--The official Committee record contains additional material here.]


    Mr. Wolf. Are any of these costs retroactive?
    Mr. Warrington. Yes. A portion of them are retroactive and 
what we tried to do, Mr. Chairman, is add up the value of those 
agreements on a presumption that over the next several months 
we will execute more agreements based similar to the BMWE 
settlement and there is a specific distribution plan for those 
funds based upon some reasonable assumptions about concluding 
those agreements.
    Those have been factored into the cash flow.
    Mr. Wolf. If you would just elaborate for the record, how 
you are going to pay for those costs.
    Mr. Warrington. We will do that, Mr. Chairman.
    [The information follows:]

    Wage increases due to the BMWE wage settlement, and 
increases due to settlements reached with other craft unions 
will be paid out of passenger revenue fare collections. Amtrak 
will separately track each craft union's settlement's 
incremental wage costs over and above the union's existing wage 
agreement, and compare the resulting amount to total monthly 
passenger revenue fare collections. Incremental wage costs 
would include any lump sum payments, retroactive wage increase 
payments, and the net increase to current wages under the new 
agreements compared to the existing/old agreement.

    Mr. Olver. Mr. Chairman, would you yield?
    Mr. Wolf. Yes.
    Mr. Olver. Ms. deLeon, again, I thought I got the answer 
that it was $191 million of nets over five years, and you have 
just said 242. What have I missed? What is the difference?

    [$248 million is the cost for total wages for all crafts 
over five years. Mr. Warrington said that roughly $191 million 
is the cost after subtracting out our productivity gains.]

    Ms. deLeon. He asked for one----
    Mr. Olver. Without the offset?
    Ms. Rosen. Without the offsets.
    Mr. Olver. Oh, that is without the productivity and work 
load rule offsets.
    Ms. Rosen. Yes.
    Mr. Olver. Okay. So, that if you net it, then it comes down 
to 191. But we really ought to be talking about and we really 
ought to be understanding what this cost is with the offsets, I 
think.
    That is the true number that we should be dealing with. But 
in the matrix you are going to provide, we will see it.
    Thank you very much.

                    tracking operating expenditures

    Mr. Wolf. Thank you.
    We are moving. I think this is going to be the last 
question for the Board Members. At the end of the day your 
daughter will remember more that you made her performance than 
that you were here in Washington.
    After the last question, I do not see any need for you to 
stay either. Funds provided by the Taxpayer Relief Act are only 
to be used for capital investments not to pay for wage 
increases. How can the board assure this committee that these 
funds will not be used for wage increases?
    Mr. Warrington. Yes. We have an accounting system that will 
enable us to do that. So, in fact, we have a very complex 
accounting system. And what we have designed is a methodology 
which will account for those increments and cost them through 
passenger revenue accounts.
    And our chief financial officer has assured me that we have 
the capability to do that, Mr. Chairman.
    Ms. deLeon. If I may respond to that, as well?
    Mr. Wolf. Yes, please.
    Ms. deLeon. Capital investment is the key to Amtrak's long-
term success. It is the key to improving the bottom line and to 
improve operating efficiencies. The board feels very strongly 
that the TRA should be reserved for high priority capital 
investments.
    I think that we can assure you that while there may be 
differences of opinion on the authority as to how the TRA money 
can be used and, in fact, the original administration proposal 
requested use of the TRA in a much more aggressive way.

    [The Board believes it is important to try to preserve it 
for capital.]

    It was after our modified discussions with the 
administration that they agreed to our modifications to their 
proposal. The board feels very strongly that it will be only 
back here again at the end of the day with greater problems if 
we do not preserve the TRA for high priority capital 
investments.

                     future of amtrak route system

    Mr. Wolf. I assume and maybe this is not accurate, both of 
you may be on the next board, who knows? But, assuming that you 
are on the next board and Mr. Warrington, if you would also 
answer this, do you believe that there are routes that ought to 
be shut down to make the corporation much more successful?
    We originally tried to get a base closing commission. We 
could not get it because members did not want to do it. So, 
now, we are down to a GAO report saying which ones ought to be 
closed.
    But I would like to know, because my sense is if we really 
want to have a good system, and we know there are unprofitable 
routes. This is the political process, that is why I think it 
is good to have somebody who is not involved in the political 
process, who just shoots straight down the middle, analyze this 
issue for us.
    I mean there have been routes kept open because there have 
been powerful individuals on this end or that end and if you 
terminate these routes, you are going to make X mad or Y mad. 
That is not a good way to run, particularly with the taxpayers' 
money.
    I mean if you want to run your local bar, or your hoagie 
shop or your cheese-steak operation that way and give things 
away, that is your own choice, but not the taxpayers' money.
    So, I would like all of you to tell us, do you believe 
there are routes that need to be closed and do you believe the 
next board ought to be looking at some of these things?
    Ms. deLeon. Mr. Chairman, I watched carefully as you 
attempted to proceed with your model of a base closing 
procedure for Amtrak. We cut a significant amount of Service 
within the company over the past three years. And I will just 
tell you, speaking personally, we went around the country to 
town hall meetings in various cities, and the outcry was 
amazing.
    And, at the end of the day, it was Congress that was 
saying. ``You cannot cut this, or you cannot cut that.'' 
Joining with me here today (I believe she may have just left) 
was the Mayor of Marshall, Texas, which is very dependent on 
the Texas Eagle. When you meet with mayors around the country 
and they have lost air service and are left only with rail 
service it is, in fact, difficult.
    Nevertheless, we stand by George Washington's testimony 
that we must be a market driven corporation. And I think the 
difficulty and the misunderstanding--we know you do the best 
you can, you have incredible pressures put upon you as you 
ultimately end up in conference making these decisions--but 
Congress has mandated that we be a national passenger rail 
system and that we serve the entire country.
    On the other hand----
    Mr. Wolf. That definition is not clear to everyone what 
that actually means.
    Ms. deLeon. That is right. And we would like to come back 
to you, perhaps next time, with some market driven analysis and 
it will be up to the Congress to maybe make some of these 
decisions.
    The Northeast Corridor is very profitable. Amtrak West, 
because of the initiatives and the joint partnerships we have 
entered into with the State of California. Similar initiatives 
in other States, provide great models. But there are a lot of 
parts of this country that will never be profitable under this 
model.
    And the difficulty is that at the end of the day we come to 
this committee, having trimmed our appropriation request as 
tight as we can get it and having already gone through the 
layers at OMB and the Department of Transportation, and we come 
in here and for you to cut it even more makes it impossible to 
fulfill our mandate to serve all of these places.
    I understand what you are saying but ultimately the 
decision rests with the Congress.

    [Congress must face the fact that to provide a nationwide 
service requires an ongoing federal investment.]

    Ms. Rosen. I would hope in response to your question that 
the new board is able to pursue and willing to pursue the type 
of market-based research that Mr. Warrington raised and which I 
have really, personally, observed being done in the Northeast 
Corridor.
    On the other hand, I also believe that there are 
institutional issues with Amtrak. I think that the board has 
come up with and really believes that we have a viable five-
year plan if everything goes right. It is really, really tight 
and one of the reasons that it is tight is that our mandate, 
and we have a lot of mandates beyond the fact we are supposed 
to be a national rail passenger system. You raised the question 
of the ARC earlier.
    The ARC, from the day of enactment, has two years, to 
certify that we, as a corporation, are on the way to self-
sufficiency or have, by law, a requirement to come up with the 
restructuring or liquidation plan.
    If necessary, if we cannot make this plan work--and it is 
going to be tough to make it work; we do not want to pretend 
anything else--then I would hope that the new board and the ARC 
may find themselves faced with having to address some of the 
institutional issues. I do not think they are impossible to 
address. But by the nature, as long as we are requiring massive 
Federal subsidies, which we are today, then the institutional 
conflicts are going to exist.
    Mr. Warrington. Mr. Chairman, I agree with that. I think 
the challenge is, as a matter of public policy, agreeing on 
getting comfortable with what a national system is, what it 
will look like, and how it can be made relevant, so that you 
grow market share rather than stagnate?
    I am not comfortable that today's national system, as it is 
defined, is the most appropriate or most effective economical, 
market-driven system. I think if we all agree that we need and 
want to have a national system that is relevant, our challenge 
as businessmen and operating folks, is to define and operate a 
system that makes sense within that context.
    And I think our challenge over the next year, frankly, is 
to understand what the market wants and try, strenuously, 
todefine and articulate a national system that works but works within 
reasonable economic parameters.
    And I cannot tell you what that picture is going to look 
like today. I think we will have a much better picture of that 
over the next year.
    Meanwhile, the level of aid, the level of effort which is 
included within the OMB proposal--with the flexibility 
provisions--gives us the ability to have stability over the 
next couple of years as we try to decide over the long haul--
this is not a two or three year issue, it is really a long-term 
issue--as to what a national system should look like, what 
should it be, what is an appropriate role for the Federal 
Government, what is an appropriate role for regional 
government, and what is an appropriate role for State 
government?
    I think we have not confronted those issues in any way 
directly over the last several years, probably in 27 years.
    Mr. Wolf. Well, I do agree and I think it is important to 
make a greater outreach with the governors. You know, several 
years ago we put an additional, $22.5 million to keep some of 
those routes going.
    I think all but one now may be closed. Or is it just only 
one? I am not sure.
    Ms. Rosen. Yes, all but the Texas Eagle.
    Mr. Wolf. There was literally money poured down a rat hole. 
I mean it was all gone. And if you had that money to add here, 
imagine what you could have done.
    So, I think that more outreach with the governors. And I 
appreciate your comment.
    I think that is all for both of you. I appreciate your 
taking the time to come to the hearing and you are excused, if 
that is the word, you can go if you want to.
    Ms. deLeon. Thank you.
    Ms. Rosen. Thank you very much, Mr. Chairman.

                         amtrak borrowing needs

    Mr. Wolf. Thank you.
    Mr. Warrington, at the end of fiscal year 1997, Amtrak had 
$75 million cash shortfall and needed to borrow to cover these 
costs. In fiscal year 1998 Amtrak anticipated $100 million cash 
shortfall. Based on your first two quarters of revenues, what 
do you believe Amtrak's current budget deficit will be at the 
end of fiscal year 1998? $100 million or what do you think it 
will be?
    Mr. Warrington. Yes. I think that right now we have $170 
million of borrowing authority and our plan is that we will 
borrow about $100 million.

                      borrowing from foreign banks

    Mr. Wolf. Why do you borrow from foreign banks?
    Mr. Warrington. Foreign banks have a lot more experience, 
confidence and certainty around the prospects for railroading 
than most financial institutions do in this country.
    They have a lot of experience.
    Mr. Wolf. What percentage of your loans are with foreign 
banks and American banks?
    Mr. Warrington. Recently, most of our equipment and capital 
related financing has been through foreign banks. Most of our 
short-term borrowing has been through domestic banks, Chase 
Manhattan and the like.

                    amtrak mail and express service

    Mr. Wolf. In the past, the corporation has provided some 
limited express service largely small packages and baggage 
which netted the corporation $5 million a year. However, last 
year Amtrak began to aggressively pursue an expanded express 
service. In your fiscal year 1998 plan, Amtrak estimated that 
it would collect $60 million in revenues from this expanded 
service.
    Before Amtrak could begin, the Union Pacific brought a suit 
to the Surface Transportation Board asking for the board to 
define what Amtrak could and could not do. The board has not 
yet reached a decision in the case and, as a result, Amtrak has 
not been able to expand its express service nearly as much as 
specified in your plan.
    After two quarters of service, what do you believe Amtrak 
will collect in revenues for the express service in 1998?
    Mr. Warrington. Probably somewhere, Mr. Chairman, in the 
neighborhood of $8 to $11 million. We have scaled back those 
projections.
    Mr. Wolf. Big time.
    Mr. Warrington. Big time by about $47 to $50 million. I 
have confidence that, over the longer haul, 12-to-18 months, we 
will ramp up. I do not believe we will ramp up to the $60 
million level. I think a more reasonable assumption is around 
$30 million a year. But we have to get a reasonably favorable 
STB ruling there.
    And we have got to be practical, frankly, about what type 
of express service we can run and not materially injure the 
performance of our core business passenger train.
    Mr. Wolf. How will the delay in implementing the express 
program affect Amtrak's net loss in fiscal year 1998?
    [The information follows:]

    The delay in the express program implementation is expected 
to adversely impact Amtrak's planned net loss in fiscal year 
1998 by approximately $48 million.

    Mr. Wolf. What do you plan on doing--I suppose it is in 
your plan--but to mitigate these losses?
    Mr. Warrington. We factored that in our plan. And I will 
tell you, frankly, Mr. Chairman, our plan on an annual basis 
has dozens and dozens of plan actions and that we have got to 
compensate for on a regular basis.
    And this is one of those plan actions which, over the short 
haul, we have to compensate for and we will probably at the end 
of the day end up doing a bit more borrowing to cover for that, 
to fill that gap over the short haul while the program ramps 
up.
    On the other hand, Mr. Chairman, we have had instances, as 
an example, where we did not have revenues in our plan which 
have materialized including the lease of locomotives to freight 
railroad, particularly the UP, out West, where we will draw 
down probably $10 or $11 million this year, because we have got 
locomotives available.
    So, there are puts and takes that go on during the course 
of the year and, at the end of the day, we have some borrowing 
flexibility but not a lot of borrowing flexibility to cover 
those eventualities.
    Mr. Wolf. In 1999, the Corporation thought that it would 
collect $75,000,000 from express services. Have you 
recalculated this? If so, what is your current revenue 
projection for express?
    [The information follows:]

    Based on the delay of implementing Express service in 
fiscal year 1998, the Corporation is conservatively estimating 
a net contribution of $21 million for fiscal year 1999. This 
includes $55 million of express revenue. The revenues from 
Package Express service are excluded from these numbers.

    Mr. Wolf. What impact does the BMWE agreement have on your 
bottom line in 1998? In 1999?
    [The information follows:]

    The BMWE agreement is expected to be approximately $3 
million over our business plan bottom line expenses in both 
fiscal 1998 and 1999.

                       electric power initiatives

    Mr. Wolf. In 1996, you estimated immediate savings of up to 
$30 million to be realized from purchasing power wholesale for 
its own use. In addition, Amtrak anticipated that it could 
increase revenues by up to $75 million from reselling its power 
to transit agencies.
    Did Amtrak realize any revenue in Fiscal Year 1997? If not, 
what did Amtrak to do compensate for the revenue shortfall?
    Mr. Warrington. A whole host of actions, particularly 
around other commercial----
    Mr. Wolf. What happened? What----
    Mr. Warrington. What happened? Well, that plan assumed two 
things. Number one that we would successfully secure wholesale 
status for our purchase and resale to commuters of electric 
power.
    It also assumed and we continue to assume that there is 
value in a competitive electric market place for the 
transmission of electric power from low-cost areas of the 
country to high-cost areas of the country, like the Northeast, 
and that the Northeast Corridor asset, itself, could be 
available for that use. We continue to engage in discussions 
and assessments with third parties, both domestic and 
international interests, around the potential of mid-to-long-
term use of the corridor asset for transmission purposes.
    With respect to wholesale power purchase pricing we spend 
$40 million a year right now in the Northeast Corridor for 
electric traction costs for our trains and commuter trains. We 
spend another $10 to $15 million a year for house power 
stations and the like.
    We have before the Federal Energy Regulatory Commission, as 
does ENRON a proposal to enable us to purchase power through 
ENRON on a wholesale basis. That application is pending right 
now, and upon its successful determination by FERC, which we 
are keeping our fingers crossed about, those savings will be 
implemented immediately.
    Mr. Wolf. Have you weighed-in on their behalf with FERC?
    Ms. Molitoris. No, we have not.
    Mr. Wolf. Should you?
    Ms. Molitoris. I think FERC's deliberations are quite 
independent.
    Mr. Wolf. Well, I understand that but, you know, when you 
are in the wall it is an amicus brief if for nothing else. But 
I think if this is so critical, you are basically their parent, 
or if not their foster parents----
    [Laughter.]
    Mr. Wolf [continuing]. You might want to weigh in.
    They are all politically appointed by the administration. I 
think this is something that you might want to do. That is 
important. You could get a significant amount of money, could 
you not?
    Mr. Warrington. Yes. It has got significant benefit. I will 
tell you, Mr. Chairman, that we have secured a whole host of 
endorsements and support and communications to FERC on our 
behalf by members of Congress, commuter agencies and States up 
and down the Northeast Corridor.
    Mr. Wolf. Would it be helpful if the FRA supported your 
effort?
    Mr. Warrington. I think it would be very helpful.
    Mr. Wolf. Last year, Amtrak's proposed wholesale power 
supplier, Enron Power Marketing, was denied access to a 
transmission network that would allow it to supply electricity 
to Amtrak. Enron filed a complaint in December, 1997 with the 
Federal Energy Regulatory Commission (FERC) petitioning access. 
As long as this matter is in dispute, Amtrak will continue to 
purchase power at retail prices, which is twice the cost of 
wholesale power. Has FERC made any ruling? What impact might 
this ruling have on Amtrak's revenue projections?
    [The information follows:]

    FERC has not made a ruling as of this date. If and when 
FERC makes a favorable ruling, the contract with Enron would 
impact expenses, not revenues, i.e. it would result in savings. 
The Northeast Corridor's fiscal year 1998 budget originally 
projected $11 million in savings from this contract. The 
revised fiscal year 1998 budget assumes no savings from this 
contract. The Northeast Corridor has covered the shortfall with 
other actions. The fiscal year 1999 budget does assume the $11 
million savings. The FERC process does not have a regulatory 
time clock built in for when FERC must make a ruling, and so a 
projection time-wise cannot be made.

    Mr. Wolf. How did the ice storm in the Northeast affect 
Amtrak's 1998 revenues?
    [The information follows:]

    The ice storm impacted the Northeast Corridor's Empire Line 
service, reducing revenues and ridership, particularly on the 
Adirondack and Vermonter trains. It is estimated that between 
$300,000 and $400,000 of ticket revenue was lost.

    Mr. Wolf. At this point, do you believe that Amtrak will 
need to borrow to cover any budget deficit in 1998? Will this 
amount be greater or less than the amount required in 1997?
    [The information follows:]

    Amtrak's original FY98 Strategic Business Plan assumed a 
cash shortfall at yearend of $100 million. It was assumed that 
Amtrak would cover this through accessing commercial credit 
lines.
    Due to deterioration of the express business, incremental 
wage costs and other expenses, Amtrak now expects to have to 
cover approximately $200 million at year end, worst case. This 
$200 million maximum cash shortfall will be covered by $100 
million short-term bank borrowing and temporary borrowing from 
the TRA fund for qualified expenses of up to $100 million.
    In FY97 Amtrak accessed short-term credit lines at year end 
for $75 million.

    Mr. Wolf. The reforms contained in Amtrak's reauthorization 
bill provide the Corporation with additional flexibility to 
address its financial problems. Specifically, how will these 
reforms contribute to Amtrak's short-term and long-term 
financial viability?
    [The information follows:]

    With the passing of the Amtrak Reform and Accountability 
Act, many of the barriers imposed in the past have been 
removed.
    These included the repeal of the requirement that Amtrak 
operate a federally-mandated basic route system for passenger 
services, and the statutorily prescribed protections for 
employees affected by a route discontinuance, authorization for 
Amtrak to negotiate changes in how it contracts out certain 
labor functions and significant liability reforms.
    In the short-term contracting out certain labor functions 
will not have an immediate effect on Amtrak's financial 
performance. This is because under the terms of the 
Authorization Bill, the contracting out language in the Rail 
Passenger Service Act was eliminated in law and placed in each 
labor agreement. Negotiations over contracting out must begin 
no later than Nov. 1, 1999, under the terms of the Railway 
Labor Act.
    The liability reforms will also have little or no effect on 
Amtrak's financial performance in the short-term. The $200 
million liability limit will likely only come into play 
following an incident resulting in a large number of severe 
injuries to passengers and passenger deaths. Such an event has 
not yet occurred.
    It is also unclear of how the liability reforms will affect 
Amtrak's financial viability in the long-term. Amtrak has had 
only one accident where the total losses exceeded $100 million: 
Chase, MD. Unless the future brings several larger 
catastrophes, this $200 million liability limit for 
compensatory and punitive damages for passenger injuries or 
death will function mainly as ``unused insurance''.

                  high speed rail revenue projections

    Mr. Wolf. To be free of Federal operating subsidies by the 
year 2002, Amtrak has placed a great deal of importance on the 
timely completion of high-speed rail between New York and 
Boston which would reduce the trip time between these two 
cities by almost two hours.
    Amtrak is also trying to reduce the trip time by 15 minutes 
between Washington, D.C., and New York, by getting the southern 
end of the corridor back into a state of good repair. If high-
speed rail is implemented as planned, how much additional 
revenue is the corporation anticipating in the year 2000?
    Mr. Warrington. The net revenue increase will be in the 
neighborhood of $180 million a year.
    Mr. Wolf. And that is realistic?
    Mr. Warrington. Yes, absolutely. Mr. Chairman, when we did 
the modelling for this we modelled around several variables: 
travel time, and frequency and price. Also, we never modelled, 
never used econometric models which factored in the 
attractiveness of high-speed trains, themselves, and we believe 
that our estimates are, if anything, conservative.

                 high speed rail construction schedule

    Mr. Wolf. If a delay occurs in the program, what is more 
important to complete on time, the electrification or the high-
speed train sets?
    Mr. Warrington. The electrification, Mr. Chairman. I assure 
you that the train sets are right onschedule as is the 
electrification.
    Mr. Wolf. You told me you had five in.
    Mr. Warrington. We will have five in by the close of 
business December 31, 1999.

                Northeast Corridor Construction Problems

    Mr. Wolf. The Department of Transportation IG just 
completed an audit of Amtrak's high-speed rail program on the 
Northeast Corridor. The auditors found that Amtrak has 
experienced problems with its project over the past year which 
have negatively impacted the project's costs and schedule.
    Specifically, the IG found that due to some construction 
problems the completion date for electrification slipped from 
July 1999 to October 1999. This is the same month that Amtrak 
originally planned to begin its high-speed service between New 
York and Boston. Would you highlight for the committee what the 
construction problems were and how you are rectifying them?
    Mr. Warrington. The construction problems initially had to 
do with the contractor encountering rock and field conditions 
which stretched out their construction schedule. The problem 
revolved around the catenary foundation poles, basically 
digging holes and pouring concrete.
    They ran into some field problems for the first six-to-
eight months of the program. Initially there were also were 
some safety problems that caused us to shut them down until 
they could correct the situation.
    Now that the safety problems were corrected, and the 
production line began humming, they have gotten back on 
schedule and actually we have compensated for these delays by 
doing much of the work concurrently rather than sequentially to 
recover that time in the schedule.

                    High Speed Rail Service Testing

    Mr. Wolf. In order to begin high-speed rail service in 
October 1999, Amtrak has developed an aggressive recovery plan 
and, as part of this, the corporation plans to test each block 
of construction as it is completed, instead of testing the full 
corridor for three months as originally proposed.
    Even though each block will be tested, how can you assure 
the committee that every block will work with every other block 
without doing a full-scale testing?
    Mr. Warrington. The engineers assure us that it will work.
    I am not an engineer, myself, but----
    Mr. Wolf. What if it does not work?
    Mr. Warrington. It will work. [Laughter.]
    Mr. Warrington. If it does not work, Mr. Chairman, we 
have----
    Mr. Wolf. I mean what if it does--I take you at your word--
but do you have a contingency plan if it does not work?
    Mr. Warrington. Mr. Chairman, we feel very comfortable and 
I have been assured by all of our engineers that this is, 
number one, a very simple design. This is not rocket science. 
This has been done all around the world. In fact, it was done 
between New York and Washington in 1932. We do not have to 
reinvent the wheel. This is a system that has been well-
designed and will work.
    Ms. Molitoris. Mr. Chairman, I just want to mention, I 
think although they are not going to test over the whole system 
for three months, it is not as though they are not going to run 
trains over the whole system in getting ready for the high-
speed service.
    So, I do not know exactly how your question was written 
there but they certainly are going to use the whole system 
before they actually institute the service.
    Mr. Wolf. Do you believe that high speed rail service will 
be delayed any further because of the construction problems?
    [The information follows:]

    Amtrak's high speed rail program remains on-track for its 
1999 debut. Electrification construction work is scheduled to 
be completed in May, 1999, with testing and commissioning 
expected to be completed by the end of August, 1999. 
Electrified service to Boston is tentatively scheduled for our 
regular seasonal change in the fall of 1999. Service using the 
new high speed trainsets will be phased-in beginning in the 
late fall of 1999 (when the first trainset is delivered), and 
continuing through July, 2000 (when the final trainset is 
delivered).

    Mr. Wolf. A second problem the IG cited was catenary wire. 
The original supplier delivered unacceptable catenary wire and 
Amtrak had to find another supplier for this wire. Has this 
problem been rectified?
    [The information follows:]

    An alternate supplier has been found to supply the wire, 
with no significant impact on the project schedule.

    Mr. Wolf. At this point in time, the Corporation was 
supposed to have 40 percent of the wire hung. However, no 
catenary wire has been hung along the Corridor yet. When will 
the new wire be delivered?
    [The information follows:]

    Actually, nearly 200 miles of wire have been hung. A 
revamped schedule and an alternate supplier of contact wire are 
allowing the hanging of wire to remain on schedule.

    Mr. Wolf. Amtrak does not plan to complete installation and 
testing of the catenary along the entire Corridor until mid-
October 1999, the same month that the system is supposed to be 
operational. Aren't you cutting this short?
    [The information follows:]

    Construction of the electrification system is scheduled to 
be completed in May 1999, with commissioning and testing 
planned for completion by the end of August 1999. Amtrak 
believes this provides a sufficient cushion until the start-up 
of electrified service in late October. Amtrak's experience in 
operating an electrified line on the southern end of the 
Corridor, as well as its close oversight of the project since 
its inception, will help ensure timely electrification start-
up.

    Mr. Wolf. Will weather impede the stringing of the catenary 
wire?
    [The information follows:]

    Weather has not been a factor in the rate at which wire is 
hung, and Amtrak does not expect this to change.

            Use of Infrastructure for Commercial Development

    Mr. Wolf. Okay. We have other questions on that and I will 
just give them for the record.
    Are you using the corridor for monopole? Have you granted 
out for use of monopoles along the corridor to the different 
telephone companies and communications?
    Mr. Warrington. Yes, we have got several telephone 
communications transactions, probably four or five. We have 
some with MCI.
    Mr. Wolf. How many monopoles are there in the corridor from 
Washington to Boston?
    Mr. Warrington. I am not sure what a monopole is.
    Mr. Wolf. It is for the use of cellular phones.
    Mr. Warrington. We have executed agreements with several 
carriers. I cannot recall, off the top of my head, who they 
are, Mr. Chairman, but they place antennae on the top of 
catenary poles, and we have several locations in Pennsylvania, 
Philadelphia, and elsewhere, where they are actually in 
construction as we speak.
    Ms. Molitoris. Mr. Chairman, Quest was one I might bring to 
mind, which was actually a fiber optic contract as opposed to 
the monopoles, but it was a $45 million infusion to Amtrak on 
the positive side.

           Connecticut Service Reliability: Catenary Problems

    Mr. Wolf. A third problem the IG cited was the reliability 
of service in Connecticut. Amtrak owns most of the track 
between New York and Boston except for a segment in 
Massachusetts and 56 miles between New Rochelle, New York, and 
New Haven, Connecticut.
    This 56-mile stretch is owned by the Connecticut Department 
of Transportation and has experienced several catenary problems 
recently.
    Because of the age of the wire on the 56-mile portion, 
Metro North has torn the catenary out twice, and there have 
been some numerous slow orders from a portion of the track. In 
order to achieve three-hour service, Amtrak needs to operate at 
90 miles per hour along this section, but may not be able to do 
so if the catenary is not reliable or if there is inclement 
weather.
    What are you doing to ensure that your trains can operate 
reliably and quickly over that portion?
    Mr. Warrington. We factored Metro North limitations into 
our schedule modeling and, as a result of the restrictions that 
Metro North feels comfortable placing on their territory, we 
have accommodated that through several investments elsewhere to 
gain the handful of minutes that flow from the reduced speeds 
through that section of track in Connecticut.
    At the end of the day, it is probably worth two to three 
minutes.
    Mr. Wolf. Connecticut DOT plans to replace this catenary 
wire by 2012, at a cost of $200,000,000. With increased traffic 
along the northern end of the Corridor, already above the 
levels originally planned for, and the unreliability of the 
current catenary wire, has Amtrak factored in these problems in 
your calculation of three hour service?
    [The information follows:]

    Amtrak's three hour service plan requires traveling 
approximately 90 miles per hour through Metro North territory 
between New Rochelle, New York and New Haven, Connecticut. If 
Amtrak is limited to 75 miles per hour between Stamford, 
Connecticut and New Haven due to the condition of the catenary 
wire, a two to three minute increase in trip time could occur. 
Improvements elsewhere in the train operation--scheduling, 
adjusting stops, etc.--would be required in order to maintain a 
three hour trip time. Amtrak is factoring all such 
contingencies into its operating plan.
    However, it is also important to note that infrastructure 
condition is a concern for the entire Northeast Corridor, not 
just Connecticut. If the condition of the Connecticut catenary 
is maintained to current standards, the travel time objectives 
can be achieved.

    Mr. Wolf. Is Amtrak working with the Connecticut DOT to 
speed up the replacement of the catenary wires between New 
Rochelle and New Haven?
    [The information follows:]

    The catenary system between New Rochelle and New Haven was 
installed in the early years of this century. Metro North--the 
owner and primary user of the tracks--has completed replacement 
of the system between New Rochelle and the Connecticut state 
border with a constant-tension Overhead Catenary System capable 
of supporting speeds up to 110 miles per hour. Connecticut has 
developed a 12-year program to replace the 47 miles of catenary 
within the State. Amtrak and Connecticut have been working 
together to address measures that could be taken either to 
accelerate the 12-year replacement program or to prioritize the 
location for initial work in order to more quickly achieve 
higher operating speeds. Amtrak will be meeting and working 
with the State on this in the coming months.

                   High Speed Trainset Change Orders

    Mr. Wolf. Another problem the IG cited was change orders. 
Specifically, Amtrak has had over 230 change orders in an 
electrification program for a cost of $140 million and 20 
change orders to the train sets at a cost of $35 million.
    Why were there so many? That does seem high, doesn't it?
    Mr. Warrington. On the electrification project, we have a 
contractor who was very aggressive around claims, and we have a 
management that is very aggressive around fighting claims. We 
feel confident that the claims that the contractor has 
submitted will be reduced significantly and, at the end of the 
day, we will negotiate an outcome which is extremely reasonable 
and within our overall project budget.
    On the trainsets themselves, there have been a number of 
change orders. Most of them relate to--and through market 
research we have done, both internally with employees and 
externally with customers--around changes which, over the long 
haul, will cost us a lot less money because we do not have to 
retrofit equipment.
    Mr. Wolf. Mr. Olver.
    Mr. Olver. Mr. Chairman, I have heard the phrase from both 
sides of the table so many times today that at the end of the 
day I am beginning to think that this is an effort to make me a 
Pavlovian dog. [Laughter.]
    Mr. Olver. And I think that I am going to succumb to that. 
I am going to adjourn myself. [Laughter.]
    Mr. Wolf. I was hoping you would go for another minute or 
two because I have a call.
    Let me move on. We will ask more for the record.
    Mr. Wolf. Who is responsible for these costs?
    [The information follows:]

    In the case of the electrification contract, 15 major 
claims have been filed. Most of these relate to correcting 
design flaws in the original uncompleted Morrison Knudsen 
design. The contractor has also filed numerous other small 
claims relating to changed site conditions or specific field 
conditions--changes that are not unexpected in any significant 
construction contract, which often require modifications as 
construction progresses and site-specific issues are uncovered. 
It is important to keep in mind that Amtrak is dealing with a 
contractor that is extremely aggressive about pursuing claims 
and change orders. In return, Amtrak will be just as aggressive 
in defending the legitimacy of these claims.
    As for trainsets, the number of change orders remains 
relatively minor. However, the largest, by far, have involved 
major design changes to the trainset interior to develop a 
First Class car, enhance handicapped accessibility throughout 
the train and restrooms, improve lighting, and upgrade the food 
service car. These changes were driven by an extensive survey 
of over 20,000 rail, air and highway travelers to evaluate 
their travel needs and the types of amenities that will 
increase market share. In addition, Amtrak worked with hundreds 
of employees to develop designs for the locomotive cab, food 
service areas, and other passenger areas, to ensure that the 
designs achieve both employee and customer requirements and 
preferences. In short, while these change orders will cost 
Amtrak money in the short term, the long-term revenue gains 
will far outweigh the short term costs.
    Amtrak and the contractor are involved in a dispute 
resolution process that will ultimately allocate financial 
responsibility between the parties for changes in the design 
and for additional construction costs. Amtrak's liability is 
reasonably limited and manageable. However, funds have been set 
aside for claims that are ultimately determined to be Amtrak's 
responsibility.

    Mr. Wolf. Does Amtrak have enough money set aside to pay 
for these change orders?
    [The information follows:]

    Amtrak's project budgets include reserves for change orders 
and claims that we project remain sufficient to pay for 
electrification and trainset change orders.

    Mr. Wolf. How many change orders do you project will occur 
in these two projects before they are completed 18 months from 
now?
    [The information follows:]

    Any further changes to trainsets would be minimal, as the 
trains already are in construction. Amtrak expects the 
electrification contractor to continue its practice of 
submitting large numbers of small claims relating to field 
conditions, and there may be some claims filed regarding 
catenary wires. These issues will be resolved through the 
dispute resolution process or through other negotiations. The 
existing project reserve is sufficient to support any liability 
for anticipated claims.

                      rail-highway crossing safety

    Mr. Wolf. It has been reported that our pedestrian railroad 
fatalities are on the rise again, up 14 percent from 1996 to 
1997. Is this accurate and why?
    Ms. Molitoris. Yes, it is accurate, Mr. Chairman. But let 
me clarify the difference between highway-rail crossings and 
pedestrian.
    Highway-rail crossing incidents have reduced significantly. 
It is the so-called trespasser or people on property who are 
not legitimately authorized to be there where we are having the 
most difficulty.
    Mr. Wolf. If you took them out of the category, what would 
it show?
    Ms. Molitoris. It would show an increase in safety. We have 
decreased highway-rail crossing fatalities by 28 percent 
between 1993 and 1997. We feel our focus there, which has been 
hand-in-hand with Operation Lifesaver and four of the surface 
administrations in the Department, we feel that we are doing 
well in terms of awareness, education, and closing crossings as 
well.
    Mr. Wolf. Okay. Just----
    [Pause.]
    Ms. Molitoris. May I finish on that particular question?
    The issue of trespasser fatalities is a very difficult one, 
Mr. Chairman, because it involves such things as recreational 
use of railroads, people fishing off of railroad bridges, 
hiking on railroad properties. It involves homelessissues, 
where people set up little camps in those areas. It also involves 
tragedies where people commit suicide on the railroad right of way.
    So it is a very difficult issue. We are, however, working 
closely with law enforcement agencies, cities and communities 
to come up with a program to try and stop this increase, but it 
is just extremely difficult because the media often glamorizes 
the use of railroad right of way by nonauthorized persons.
    If you, per chance, saw the American Express ad for Tiger 
Woods, it began with him standing right in the middle of a 
series of tracks.
    Mr. Wolf. How long has the ad been going on?
    Ms. Molitoris. I do not know the exact time when it 
started.
    Mr. Wolf. That is tragic for young people to see that ad.
    Ms. Molitoris. And also there are movies----
    Mr. Wolf. Would you check and let us know?
    [The information follows:]

    The American Express advertisement ``What I Want'' is a 30 
second commercial supporting American Express business 
services. The commercial was intended to highlight Tiget Woods' 
aspirations and bigger dreams for himself. There is a 3 second 
vignette featuring an actor standing between railroad tracks. 
The actor is not Tiger Woods. The commercial was aired in 
September 1997 and is still being aired, but not at the same 
rate.

    Ms. Molitoris. Yes. There are a whole host of things on the 
Internet, movies, hobo manuals in the bookstores. It is a very, 
very difficult issue because, for some reason, this has become 
glamorized, and it is hard to address. We are addressing it on 
all of the fronts that we can. In terms of highway-rail 
crossings, even just as I told you been 1993 and 1997 we 
decreased the deaths by 28 percent, but last year by 8 percent 
alone.
    Mr. Wolf. Your goal was to reduce by 50 percent the number 
of accidents, correct? That was your goal between 1994 and the 
year 2004?
    Ms. Molitoris. Yes.
    Mr. Wolf. Do you think that is still practical?
    Ms. Molitoris. Yes. In fact, we are----
    Mr. Wolf. Is it attainable?
    Ms. Molitoris. We are actually ahead, if you would divide 
from the Year 2004, we are ahead on the highway-rail crossing. 
The trespasser is the difficult one right now.
    Mr. Wolf. You had 55 action plans. What of the 55 actions 
have been the most effective?
    Ms. Molitoris. As I mentioned last year, Mr. Chairman, they 
really all need to happen. There is not one silver bullet on 
this issue.
    I think the awareness program, the national campaign for 
education and awareness of drivers, I think the outreach to law 
enforcement and judges, all of these have been very effective. 
Also, the new ways of warning people at crossings, the 
photographic enforcement has been very effective. New ways of 
putting different techniques like four-quadrant gates, concrete 
median strips to help prevent people from going around gates 
when they are activated, all of these have had a positive 
impact.
    I think nothing more than education and awareness, however.

[Pages 145 - 151--The official Committee record contains additional material here.]


                  amtrak grade crossing safety issues

    Mr. Wolf. How is the safety record for Amtrak? Because you 
go through a very congested area, I mean, from Washington to 
New York is----
    Mr. Warrington. Fortunately, Mr. Chairman, Washington to 
New York is an entirely grade-separated railroad, so we do not 
have those kinds of problems.
    Mr. Wolf. How about for young kids coming on the track?
    Mr. Warrington. That is definitely a problem, and we do a 
lot of local work with our own police department, local law 
enforcement and school education programs. We invest a lot of 
money, time, and effort through our own police department----
    Mr. Wolf. Any guess on the----
    Mr. Warrington. Yes. Unfortunately, it has been all too 
frequent.
    Mr. Wolf. Could you submit for the record how many, say,for 
the last seven years?
    Mr. Warrington. Sure. We will give you the entire record 
over the past decade.
    Mr. Wolf. And where they took place.
    Mr. Warrington. Certainly.
    [The information follows:]

    Listed below are the number of trespasser fatalities by 
state that were struck by Amtrak trains on the main line 
between Washington D.C. and New York.

                      Ten Year Period--(1988-1997)

    1997--(2) Total--Maryland (1), New York (1).
    1996--(6) Total--Maryland (1), New Jersey (2), Pennsylvania 
(3).
    1995--(4) Total--Maryland (2), New Jersey (1), Pennsylvania 
(1).
    1994--(4) Total--Pennsylvania (2), New Jersey (2).
    1993--(5) Total--Maryland (1), New York (1), New Jersey 
(3).
    1992--(5) Total--New York (3), New Jersey (1), Pennsylvania 
(1).
    1991--(6) Total--New York (1), New Jersey (2), Pennsylvania 
(3).
    1990--(11) Total--Maryland (3), New Jersey (4), 
Pennsylvania (4)
    1989--(22) Total--Maryland (4), New York (7), New Jersey 
(5), Pennsylvania (6).
    1988--(9) Total--New York (3), New Jersey (3), Pennsylvania 
(3).

    Mr. Wolf. We held this hearing in the afternoon because 
your board was meeting in the morning. Afternoon hearings are 
difficult because of votes. In the morning we do not have vote 
interruptions. I do apologize, but there is nothing I can do.
    We have two votes, and then we may have a motion to 
recommit and final passage. We are going to just let you go. We 
will have other questions for the record.
    Since you are here----
    Ms. Molitoris. I would be happy to wait, sir.
    Mr. Wolf. Maybe you can go down and get a sandwich or get a 
coke. The staff will let you know how long we are going to be.
    Ms. Molitoris. That would be fine.
    Mr. Wolf. Just so you know, what I would like to do is 
submit the transcript to the GAO, John Anderson, and have him 
look at it. I want to also send it to the IG, Ken Mead. I am 
also going to send it to former Amtrak President Tom Downs. I 
am also going to try to find two or three financial experts 
that can look at this and come back to us in two weeks or three 
weeks to give us their sense of Amtrak's viability.
    Is there anything else you want to add?
    Mr. Warrington. No. I think that is very fair, Mr. 
Chairman. I think, at the end of the day, while Mr. Olver does 
not like to hear that----
    [Laughter.]
    Mr. Warrington. At the end of the day, I think we can 
confidently assert and be reassured that, with that level of 
effort over five years, with flexibility provisions, we can 
finally stabilize this place and really focus our attention on 
defining what a national railroad is and ought to be.
    Mr. Wolf. I appreciate it. We are going to recess.
    I really hope the new board, which is not in existence 
because they are yet to be appointed, will pick a professional 
railroad person for President, somebody who is not driven by 
fear and intimidation. Because if this thing slips back into 
the political process again I think the confidence level will 
decline. You will give enough ammunition to those who would 
like to see the railroad go, that I think it could end up 
having only corridor service--obviously, the Northeast Corridor 
is always going to be there. That is going to do well and 
certain parts of California.
    I guess you have a say with regard to who serves on the 
board or the administration does. They ought to pick a good 
person for President, who understands this and who is going to 
just call it the way that they see it.
    Thank you for your testimony, and we will recess.
    Mr. Warrington. Thank you, Mr. Chairman.
    [Recess.]
    Mr. Wolf. I am sorry for the delay, and I hope it has not 
inconvenienced you, but we had the votes, and there was nothing 
we could do.
    Ms. Molitoris. No problem, Mr. Chairman.

                safety assurance and compliance reviews

    Mr. Wolf. We will try to get you out of here pretty soon.
    Systematic reviews of Union Pacific and CSX. FRA conducted 
safety assurance and compliance problems reviews of systemic 
safety problems at Union Pacific, Southern Pacific, and CSX 
during Calendar Year 1995.
    As part of that, FRA identified systematic problems and 
root causes at each railroad and worked with the railroads to 
address these problems.
    In the summer of 1997, Union Pacific, which merged with 
Southern Pacific in 1996, and CSX together experienced ten 
major train collisions resulting in eight fatalities. In 
response, FRA escalated its inspection efforts by sending 80 
federal and state inspectors to the situation at UP and more 
than 75 federal and state inspectors to review CSX's 
operations. FRA found a number of safety deficiencies at both 
railroads and made several recommendations targeted to 
improving rail safety.
    What problems did FRA identify during its intensive 
inspections of UP and CSX in 1997?
    Ms. Molitoris. Mr. Chairman, of course, there is a list of 
issues for each of the railroads, but let me say that there 
were some similarities and some differences. At CSX, for 
example, the result of our SACP was 252, I think, action steps 
of safety issues systemwide over the whole railroad that had to 
be fixed, and they have pursued those.
    Our SACP, let me just define, is an ongoing thing. It is 
not something that starts and stops. It has different elements. 
The big audit of Union Pacific with the 80 inspectors was a way 
to get a level of in-depth information that is not possible to 
get in the traditional site inspection technique.
    The SACP, also, is a process which includes labor at the 
beginning. So you sit down with the railroad, with railroad 
management and labor----
    Mr. Wolf. Some of these concerns come from labor?
    Ms. Molitoris. Absolutely. I will give you an example of 
the difference between site inspection results and SACP.
    Part of SACP is what is called listening posts, where our 
people go and listen at a labor organization meeting to the 
safety issues that they are concerned about.
    In one particular instance, this was----
    Mr. Wolf. Is management there?
    Ms. Molitoris. Not at the listening posts.
    Mr. Wolf. So they are willing to speak out.
    Ms. Molitoris. Yes. And actually, now that the SACP is more 
mature, the level of communication is much more open, even at 
the SACP, where everybody sits down.
    In the one I was going to explain to you, the listening 
post our people heard that engineers were experiencing signals 
at intersections which were falling red right in front of their 
face, so they could either go into emergency and risk 
derailment or they could go through it and risk decertification 
of their own license. Neither one of those is a choice anybody 
should have to make.
    So we went to the headquarters and examined with 
management, started digging. The bottom line is we found that 
this was occurring, not only at this one particular location 
where the railroad labor people were talking to us about it, 
but at 400 locations across the whole system, and we were able 
to fix the software problem before it hurt anybody.
    Mr. Wolf. Did the railroad cooperate with you?
    Ms. Molitoris. Absolutely. We could not have done that 
without----
    Mr. Wolf. Do you think they knew this was taking place 
before this?
    Ms. Molitoris. No. No, they did not.
    Mr. Wolf. Why didn't the workers tell the management?
    Ms. Molitoris. Well----
    Mr. Wolf. Why wouldn't the engineer call up and say, This 
is what happened to me the other day at ``X'' location?
    Ms. Molitoris. Well, I believe that, first of all, we are 
dealing with a history where communication has not been, maybe, 
the strong suit.
    No. 2, people were dealing with it as an ad hoc problem in 
a certain location. It was our process to try and find root 
causes----
    Mr. Wolf. But shouldn't the company have come up with that, 
if you have got a problem here, and a problem there? It would 
seem to me that if this engineer said it, this engineer said it 
and, therefore, there might be a problem throughout the system. 
They should have known.
    Ms. Molitoris. Mr. Chairman, certainly in an ideal 
condition you are absolutely correct. What we are trying to do 
with SACP is facilitate the kind of communication on safety 
issues that is always welcomed by a supervisor or anybody along 
the chain of command. I believe that is why the SACP process 
has been really a positive one, a win-win for both management 
and labor on CSX, on BNSF, on the Union Pacific.

                  railroad response to safety reviews

    Mr. Wolf. Have the leadership of the railroad companies 
responded in a positive way?
    Ms. Molitoris. Very much so.
    Mr. Wolf. So you have no complaints? They are not dragging 
their heels or have not been recalcitrant in dealing with these 
problems?
    Ms. Molitoris. They have not. Let me say that the 
leadership has been very responsive, and I think labor has been 
very responsive. I think all of us would agree that the 
difficulty often is in middle management.
    Mr. Chairman, when you have a company with 53,000 employees 
who have done business in one way for a long, long time. It is 
not easy to change the safety culture, the behavior, the 
thinking, the modus operandi of 53,000 people, and that is the 
only way we are going to get to zero is if we get safety first 
above and beyond everything into everybody's behavior.
    Mr. Wolf. Is there an adversarial process? Do the workers 
not feel comfortable citing problems? What is the problem?
    Ms. Molitoris. As a matter of fact, historically, the 
relationship between management and labor was really around 
collective bargaining which, of course, is often or maybe we 
should say almost always an adversarial situation. So what we 
are trying to do, and with some success, is say safety is not 
negotiable. Safety is the win-win for everybody.
    In some sense, it is, I think, a very good role for 
government to be the facilitator and the bridge, which gives 
labor a level of confidence about speaking forth directly and 
also has an opportunity to give information to management that 
they may not have been getting.
    Mr. Wolf. Is there a way for the worker to communicate that 
without putting his or her name?
    Ms. Molitoris. Oh, yes, there is. In fact, we have an 800 
number. We have made videos, as a matter of fact, on the Union 
Pacific, where I, personally, give them my business phone, my 
fax, my e-mail, and we have gotten hundreds of communications. 
They feel comfortable putting their name down for us.
    If we have a name and a place to contact, we have responded 
to each and every one of them. In fact, we have a project 
manager now on the Union Pacific, and we have begun to realize 
we have to reorganize our own structure to respond to the kind 
of changes that we have had in the past few years.
    Mr. Wolf. Where is the project manager located?
    Ms. Molitoris. Right now he is located in Kansas City, but 
he spends a great deal of time in Omaha. In fact, he was 
actually on site in Omaha for over three months.
    Mr. Wolf. During the 1995 SACP reviews, did FRA identify 
systemic problems at the railroads that, if properly addressed 
at that time, would have prevented the cluster ofaccidents in 
1997?
    Ms. Molitoris. First of all, the SACP began in 1995 and UP 
was not our first stop. In addition, Mr. Chairman, we had to 
evolve the process. We are a lot better at it today than we 
were when we started the first one because it was a totally new 
process, and we had to develop and train our own people to be 
facilitator, to find ways to get people in a room and be able 
to talk directly and come up with action plans.
    We did not begin the first SACP on Union Pacific until 
1997. The events of 1997 really overrode the normal time table 
for SACP. So that is why we jump-started it beyond the normal 
time table to go into the big safety audit and get the kind of 
response from UP, which has netted literally tens of millions 
of dollars in investment and safety for the company, and it is 
benefitting both service and safety.
    Mr. Wolf. Are there any railroads that are not cooperating?
    Ms. Molitoris. No. We are not involved at the same level 
with every railroad. First of all, we only have 400 personnel 
directly related in the field, and we have to point our 
resources at the most safety-intensive problems.
    Mr. Wolf. Would you let the committee know, as the year 
develops, if there are railroads that are not cooperating?
    Ms. Molitoris. We certainly will.

                  positive train control demonstration

    Mr. Wolf. The FRA has been involved with the railroad 
industry in the development and testing of positive train 
control systems, with train separation and wayside signals for 
years, yet there has not been a working demonstration, as there 
was with the Burlington North Railroads former ARES system.
    Why and when will there be a working demonstration?
    Ms. Molitoris. I feel encouraged by the story I am going to 
tell you, Mr. Chairman.
    PTC, in 1994, we presented the Congress with a report on 
the status of positive train control and an action step program 
that we were committed to. We have fulfilled all of those 
action steps.
    They have resulted in demonstrations in the Northwest, 
which was a joint UP-BNSF project. It resulted in 
demonstrations in Michigan, which is on high-speed service, 
preparatory to go to Chicago.
    Just in February, the beginning of February, the board of 
the AAR--the American Association of Railroads--for the first 
time committed to support a comprehensive positive train 
control project in Illinois from Springfield, north 100 miles. 
Not only have they supported it, but they are investing their 
money in it, and the product will be a comprehensive positive 
train control software package that can be adapted by every 
railroad for their use.
    Mr. Wolf. They are committing how much?
    Ms. Molitoris. $20 million.
    Mr. Wolf. And it is one of your priorities.
    Ms. Molitoris. Yes.
    Mr. Wolf. It has been on the Safety Board's most wanted 
list since 1990 and, yet, you are only requesting $600,000 for 
it in 1999 Fiscal Year. Do you think that is an adequate 
amount?
    Ms. Molitoris. Well, we have invested in positive train 
control throughout the Clinton administration, and we have 
money for the----
    Mr. Wolf. Mr. Hall, when he testified, did say your 1999 
request was inadequate.
    Ms. Molitoris. May I suggest all of us would like to see 
positive train control tomorrow. The time table for the 
Illinois project is four years. Additional resources could 
reduce the time table, possibly.
    I have asked our staff to look at the technical feasibility 
of reducing the time table, but I believe that the money that 
we have requested can move this project forward to its 
resolution, to the end of the time period where we would have 
this product. It must be interoperable. It must be able to be 
used by all of the railroads to adapt to their own systems.
    I am sure that Mr. Hall would like to see an earlier time 
table, as would we all, but operating within the constraints of 
balanced budget, which is No. 1 priority, I believe the 
administration has been very focused on, and I think Mr. Hall 
would tell you it really started to move in 1994. It really was 
a priority of mine when I came in.
    Mr. Wolf. In comparison, the Association of American 
Railroads has committed $20,000,000 (in increments of 
$5,000,000 annually over four years) to develop positive train 
control technology along a corridor in Illinois. Congress has 
provided some funding to this project in prior years. The total 
cost of this project is estimated to cost about $60,000,000 and 
this figure does not include the cost of track improvements 
needed to accommodate high speed passenger trains. Are you 
expecting the freight railroads to fund the rest of this 
project? Why hasn't FRA requested any funding in its 1999 
budget for this project?
    [The information follows:]

    FRA and the state of Illinois DOT (IDOT) presently have 
about $15 million of public funds available for this project, 
to be added to the $20,000,000 committed by the Association of 
American Railroads. One major precept of the joint effort 
already agreed is that program procurements will be 
competitive, based on the principles of open architecture, and 
cost shared to the maximum possible extent by supplier 
organizations.
    FRA did not request funding in FY 1999 as prior year 
funding was adequate to continue work through FY 1999.

                  fra's commitment to illinois project

    Mr. Wolf. What is the commitment to the Illinois project in 
terms of funding from FRA?
    Ms. Molitoris. Illinois DOT is putting in $3 million. We 
are putting in $11 million in 1998--or 1999. My finance 
director will help us here.
    Ms. Murphy. Right now there is a total of $15 million; $12 
million from FRA from previous fiscal years and $3 million from 
Illinois IDOT. There is no funding in the 1999 budget at this 
time because of the $15 million and the funding that AAR has 
committed for the first year, which is $4 million.
    Ms. Molitoris. So it is $20 million over four years.
    Mr. Wolf. Do you have any other things on the most wanted 
list?
    Ms. Molitoris. No, I do not believe so. That has been the 
primary one.

               response to trb review of high speed rail

    Mr. Wolf. The Transportation Research Board, in its 
biannual review of the high-speed rail program for Congress, 
stated that, ``development of positive train control is the 
number one priority for the successful development of 
incremental high-speed passenger service on freight railroads. 
However, all of the potential safety and productivity benefits 
of PTC will not be realized for high-speed passenger service or 
other freight and passenger rail services unless development of 
components is undertaken.''
    Do you feel that the development of components are being 
undertaken, and it is not slipping, and it is on-line?
    Ms. Molitoris. You are talking about high-speed rail now, 
sir, aren't you?
    We met with Joe Sussman, who is the chair of that 
committee, and I think when we completed our discussion he was 
much more clear. The report that you got from that committee 
was about a year behind, by the time it comes out through the 
votes and the committees.
    Our focus is on having next-generation high-speed rail do 
the things that are too expensive for one state or a group of 
states to do; such as positive train control, nonelectric 
locomotives, and research on grade crossing protection. Those 
are the things which have been very helpful to states, 
including California, and Florida, Illinois, Michigan, the 
State of New York.
    Mr. Wolf. What about with regard to Amtrak, are you doing 
that much with them?
    Ms. Molitoris. Absolutely. First of all, we are very 
involved with high-speed rail on the Corridor. We have been 
very much on top of the electrification because, like you, we 
are very concerned that it be on time. I, myself, have been up 
there.
    Mr. Wolf. What about the commuter trains that use that, 
too?
    Ms. Molitoris. All of them are concerned and interested. 
The commuter trains are concerned about the protection, the 
positive train protection process that has to be in place 
because they are going to have to equip their vehicles, also.
    There is a dialogue going on right now, Mr. Chairman, 
between Amtrak and the commuters to come up with a viable 
sharing of costs because everybody is going to benefit. Those 
people who run on the Corridor will be safer because of these 
systems.

         amtrak compliance with americans with disabilities act

    Mr. Wolf. Whatever happened with the recommendations and 
the requirements of Amtrak having to upgrade its stations with 
regard to the Americans with Disabilities Act?
    Ms. Molitoris. I believe all of their stations are meeting 
ADA requirements, but I, personally, could not give you a 
report on each station, but I would be happy to do it for the 
record.
    Mr. Wolf. If you would do that.
    Ms. Molitoris. Certainly.
    [The information follows:]

    Amtrak currently provides service to 516 stations in 44 
states and is making measurable progress toward meeting 
Americans with Disabilities Act (ADA) station requirements. 
Most Amtrak stations in major cities across the country are 
fully accessible to passengers with disabilities. Approximately 
60 percent of all stations provide wheelchair access to the 
trains. Of the eight Amtrak designated key stations: 
Washington, DC Union Station; New Carrollton, MD; BWI Airport, 
MD; Baltimore, MD, Pennsylvania Station; Wilmington, DE; New 
York City, NY, Pennsylvania Station; Old Saybrook, CT; and 
Chicago, IL Union Station, all are accessible.
    Amtrak shares joint use with 29 commuter key stations, 
nineteen of which meet ADA compliance. The compliance at the 
other key stations must be completed by 2001. As new stations 
are build and old ones renovated, every Amtrak station in 
America will be in full compliance with the ADA station 
requirements by 2010.

                           railroad user fees

    Mr. Wolf. In the President's budget request, FRA is seeking 
the reinstatement of railroad user fees. In the past, these 
fees were collected to fund FRA's rail safety program. However, 
this year, the administration is seeking to broaden the 
programs covered by these fees to include rail safety, railroad 
research and development, and some general counsel activities, 
for an estimated $82,900,000.
    Why are you broadening the eligible programs?
    Ms. Molitoris. The administration's position has always 
been that those who benefit the most from the service should 
contribute through user fees. The $62 million is for the direct 
Safety Office activities. The $20 million is for counsel and 
safety R&D.
    So those are areas that directly contribute to the safety 
program, and so the administration's position has been that 
user fees should cover them.

                     safety of railroad passengers

    Mr. Wolf. The staff gave me information with regard to most 
wanted issues. You, actually, have safety of passengers in 
railroad passenger cars on the NTSB most wanted list also.
    Ms. Molitoris. And we have just come out with a report on 
that. We have a proposed rule on passenger equipment safety.
    Mr. Wolf. Does the report get you to the point that you are 
off the list or how does that deal with it?
    Ms. Molitoris. Not until it is final. This is a proposed 
rule. That means it has been published. It goes into the 
Federal Register and then has its whole process of hearings and 
people responding. So as soon as that is final, I would be 
hopeful, but it is ``open acceptable response'' at this time.

                    railroad opposition to user fees

    Mr. Wolf. Even though the railroads paid the user fees 
through fiscal year 1996, now they oppose the reinstatement of 
this fee because they believe it is inequitable text.
    In a recent Senate Commerce hearing, the railroad stated 
that $420 million would be collected over the next five years 
if this fee was reinstated and that these dollars could be 
better spent on infrastructure projects that would have a 
direct impact on safety and service.
    How do you respond to that argument?
    Ms. Molitoris. The administration's position has been that 
user fees are appropriate with regard to those who benefit from 
the service.
    Mr. Wolf. What about for Amtrak having to pay these user 
fees?
    Ms. Molitoris. Amtrak is in the same category as all of the 
railroads, so they pay it as well.
    Mr. Wolf. What does Amtrak pay?
    Ms. Molitoris. In 1994 they paid about $2 million.
    Mr. Wolf. Excuse me. I did not hear that.
    Ms. Molitoris. In 1994 Amtrak paid about $2 million.
    Mr. Wolf. And you think they should have to keep on paying 
it.
    Ms. Molitoris. That has been the administration's position, 
sir.
    Mr. Wolf. Mr. Warrington, in the past Amtrak had to pay 
these user fees. What is your position on the reinstatement of 
these fees?
    [The information follows:]

    Amtrak opposes the reinstatement of these fees.
    The President's budget proposal for fiscal year 1999 calls 
for not only reimposing, but expanding ``railroad safety user 
fees,'' which are estimated to be $410 million over the next 
five years. Over the same five year period, Amtrak is required, 
by law, to reach operating self-sufficiency. At a time when 
Amtrak is working toward achieving operating independence, the 
imposition of another user fee siphons off scarce resources 
that could otherwise be spent on other critical needs that have 
a direct impact on safety, service and operational reliability. 
Addressing these needs would also have the effect of bringing 
us closer to operating self-sufficiency. We feel the imposition 
of a federal user fee would be counterproductive to the goals 
Congress has already laid out for Amtrak.
    The railroad safety user fees were originally imposed by 
Congress in 1991. During the debate on the 1995 Budget 
Reconciliation Act, Congressional committees decided not to 
extend these fees, and neither the House nor the Senate Budget 
Committees included these fees as part of the FY98 
Congressional Budget Resolution. We believe these latter 
actions are appropriate and oppose the reinstatement of these 
fees.

                       gps funding from user fees

    Mr. Wolf. The administration is proposing the collection of 
user fees for GPS in the Year 2000. How much will that----
    Mr. McQueen. The request is for $3 million, and so user 
fees will cover that.
    Mr. Wolf. Would you give us a justification why.
    Ms. Molitoris. Do you want me to give it to you now, sir?
    Mr. Wolf. Why don't you do that.
    Ms. Molitoris. DGPS is really a crucial element to expand 
the reach of GPS. It is going to help on the positive train 
control project. We are working with the Air Force to take GWEN 
towers that are being decommissioned to put them into use for 
this purpose. There will be about 60 of them. This won't just 
cover railroads. There will be benefits to trucking and other 
transportation modes.
    Mr. Wolf. FAA is doing it. Are they going to be charging 
aviation users and will other agencies be charging?
    Mr. McQueen. FAA--you already pay user fee and ticket 
taxes.
    Mr. Wolf. There is a different user fee, though.
    Ms. Molitoris. Yes.
    Mr. McQueen. Right, different user fee.
    Mr. Wolf. That is you and I when we----
    Mr. McQueen. That is right. The railroads would pay the 
user fees for----
    Mr. Wolf. It is a little different, though, isn't it?
    Mr. McQueen. It is different.
    Ms. Molitoris. Can we respond for the record on what FAA is 
doing? Because I do not know how they are looking at this 
directly. I know that the towers are being donated by the Air 
Force. There is not a charge. Those are being transferred, so 
they can go to this use because they are being decommissioned.
    [The information follows:]

    The Administration proposes that the FAA impose a user fee 
to recover the cost of their Wide Area Augmentation System 
(WAAS).

       direct link between user fees and research and development

    Mr. Wolf. OMB directives require that proposed user fees 
involve a direct link between the fee and the service provided. 
What is the direct link between the proposed fee and the 
services FRA provides under the railroad research and 
development program?
    Ms. Molitoris. Mr. Jim McQueen is head of that office, and 
I could have him give you detail.
    Primarily, it is only the research and development on 
direct safety-related research and development, not other 
things. So that would be the direct link, but we would be happy 
to annotate for the record which projects. I know track, for 
example, is one.
    [The information follows:]

    FRA's R&D program addresses safety-related research in the 
following ten areas: human factors, rolling stock, track and 
structures, track-train interaction, train control, grade 
crossings, hazardous materials, safety of train occupants, 
safety of high-speed ground transportation, and facilities and 
equipment.

    Mr. McQueen. Mr. Chairman, 96 percent of the research and 
development budget is dedicated to railroad safety.
    Mr. Wolf. We have some other questions that we will submit 
for the record.
    Mr. Wolf. Railroads already share the costs of the research 
and development program with FRA. Wouldn't enacting this user 
fee be double billing?
    [The information follows:]

    FRA and the railroads share the cost of R&D work. FRA's 
budget generally covers 66 percent of the total work performed 
with the industry funding the balance. The user fee, if 
enacted, would recoup FRA's appropriated funds.

                  compensation to amtrak board members

    Mr. Wolf. One other question: Do the people who serve on 
the Amtrak board get paid?
    Ms. Molitoris. Mr. Chairman, as far as I know, they are 
only paid for their travel, their expenses.
    Mr. Wolf. So they do not get a per diem?
    Mr. McQueen. There is a per diem.
    Ms. Molitoris. Yes, there is a per diem, but not a salary.
    Mr. Wolf. Per diem, not a--I do not mean for their travel 
down here, but do they get a salary for that day?
    Mr. McQueen. No.

                            Closing Remarks

    Mr. Wolf. I guess that about does it. I appreciate your 
taking the time. We will just send you some other questions.
    Ms. Molitoris. And we will include all of these several 
things that you asked for.
    Mr. Wolf. Any last comment you want to make about safety?
    Ms. Molitoris. Mr. Chairman, in our talk yesterday I was 
hopeful that we could find a time when you could come to visit 
some of our initiatives--maybe just an in-and-out day trip. I 
hope that that will be possible because I think your leadership 
can be a wonderful bully pulpit for safety, which is No. 1.
    Mr. Wolf. I will disguise myself, and we will go to the 
railroads to see what we can find out.
    Ms. Molitoris. There you go.
    Mr. Wolf. Thank you very much.
    Ms. Molitoris. Thank you, Mr. Chairman.
    [Questions for the record follow:]

[Pages 163 - 808--The official Committee record contains additional material here.]












                               I N D E X

                              ----------                              

                    Federal Railroad Administration

                                                                   Page
1-800 Telephone Answering System.................................   367
    Nationwide Facility..........................................   370
    State Projects...............................................   370
Accident Rates:
    Class I......................................................   498
    Class II.....................................................   499
Accident Trends..................................................   463
Accidents:
    Employee.....................................................   445
    Grade Crossing...............................................   373
    Hazmat.......................................................   440
    Train......................................................452, 462
    Weather Related..............................................    81
Accomplishments, Amtrak..........................................    87
Additional Safety Positions, Request for.........................   354
Administration's Budget Request, Effect on BMWE Agreement........   126
Administration's Request for Amtrak..............................    84
Administrative Services/Working Capital Fund.....................   499
Alaska Railroad:
    Status of Funding............................................   523
    TRA Funds....................................................   523
Allocation of Amtrak's Appropriation.............................   287
ALPS Project, Status of..........................................   326
Altschul, Alfred--Biographical Summary...........................    73
Americans with Disabilities Act, Amtrak Compliance with..........   158
Amtrak:
    Accomplishments..............................................    87
    Administration's Request for.................................    84
    Allocation of Appropriation..................................   287
    Availability of Funds........................................    92
    Board Members, Compensation to...............................   161
    Borrowing Needs..............................................   134
    Borrowing from Foreign Banks.................................   135
    Commercial/Revenue Development...............................    39
    Compliance with Americans with Disabilities Act..............   158
    Financial Future.............................................     2
    Financial Health, Obstacles to...............................   288
    Fiscal Year 1999 Budget Request..............................    40
    From 1994 to 1998............................................    38
    Funding Options..............................................   104
    Funding Request..............................................    75
    Grade Crossing Safety Issues.................................   152
    Grant Request................................................   102
    Grant Request--Differences from Administration...............   103
    High Speed Rail Service......................................    84
    High Speed Rail Update.......................................    43
    Highway Trust Fund......................................77, 95, 105
    Investments and Ridership....................................    38
    Labor Issues.................................................    41
    Mail and Express Service.....................................   135
    Maximizing Operating Efficiency..............................    39
    Opening Remarks..............................................    38
    Outlay Savings Proposal......................................    75
    President....................................................    91
    Productivity.................................................    97
    Reform Council...............................................    93
    Reform Council--Mission......................................    94
    Request--FRA Opening Statement...............................     4
    Ridership--Maximizing Potential..............................    83
    Route System, Future of......................................   132
    Separate Accounting System for Wage Increases................    42
    Summary of Opening Remarks...................................    44
    Use of Highway Trust Funds for..........................77, 95, 105
    Wage Survey..................................................   100
    Weather Related Costs........................................    82
Attrition Rate, Inspectors.......................................   356
Authorized FTEs, On Board Strength...............................   494
Availability of Funds, Amtrak....................................    92
Biographical Summary--Alfred Altschul............................    73
Biographical Summary--Amy Rosen..................................    68
Biographical Summary--George Warrington..........................    67
Biographical Summary--James McQueen..............................    36
Biographical Summary--Jolene Molitoris...........................    34
Biographical Summary--Kathryn Murphy.............................    37
Biographical Summary--Sylvia de Leon.............................    72
BMWE Agreement...................................................   116
    Costs......................................................117, 120
    Contingencies................................................   125
    Effect of Administrator's Budget Request on..................   126
BNSF/UP:
    Demonstration................................................   291
    Future Train Control Efforts.................................   292
Borrowing From Foreign Banks, Amtrak.............................   135
Borrowing Needs, Amtrak..........................................   134
Budget Request, Reaction to by Senate............................   103
Capital for Maintenance of Equipment and Facilities..............    40
Capital Funds for Preventive Maintenance.........................85, 91
Capital Funds for Preventive Maintenance.........................    91
Capital Needs, Northeast Corridor................................    95
Casualties, Employee on Duty.....................................   442
Casualty Rates, Employee.........................................   441
Catenary Problems, Connecticut Service Reliability...............   141
Change Orders, High Speed Transit................................   142
Charts:
    Class I Railroads............................................    32
    Highway-Rail Crossings.......................................    30
    Safety Improvements..........................................29, 33
    Train Accident Rates.........................................    31
    US Railroad System...........................................    28
Class I Accident Rates...........................................   498
Class I Railroads--Chart.........................................    32
Class II Accident Rates..........................................   499
Commercial Development, Use of Infrastructure for................   141
Commuter Service Update..........................................    83
Connecticut Service Reliability--Catenary Problems...............   141
Conrail Acquisition.............................................74, 463
    Timetable & Process..........................................    79
    Safety Impact of.............................................   465
Construction Problems, High Speed Rail...........................   139
Construction Schedule, High Speed Rail...........................   139
Consulting Services..............................................   522
Correction of Systemic Problems..................................   346
Corridor Risk Model..............................................   306
Cost Sharing, Research and Development...........................   339
de Leon, Sylvia--Biographical Summary............................    72
Duration of Rulemaking Work......................................   504
El Nino, IG Report on............................................   530
Electric Power Initiatives.......................................   136
Electronic Grant Pilot Project...................................   489
Emergency Railroad Rehab & Repair Funding........................   524
Employee Accident/Injuries.......................................   445
Employee Casualty Rates..........................................   441
Employee on Duty Injuries/Casualties.............................   442
Enforcement Cases................................................   520
Equipment Increase, OA...........................................   489
Evaluating Train Control Projects................................   303
Fatalities, Rail.................................................   458
Federal/State Inspection Resources...............................   432
Flexible Block Demo Program......................................   298
Flood Damage to Shortline Railroads..............................    77
Foreign Banks, Amtrak Borrowing From.............................   135
FRA Opening Statement............................................     3
    Amtrak Request...............................................     4
    Rail Safety..................................................     3
    Safety and Compliance Program................................     3
    Safety Results and Statistics................................     4
FRA Unobligated Funds............................................   494
FRA Unobligated Funds, Status....................................   496
FRA's Commitment to Illinois Project.............................   157
FTEs, On Board Strength..........................................   494
Funding Options, Amtrak..........................................   104
Funding Request, Amtrak..........................................    75
Future of Amtrak Route System....................................   132
FY 1999 Budget Request (Amtrak)..................................    40
FY 1999 R&D Projects.............................................   341
Garrett Morgan...................................................   531
Goals, Safety....................................................   357
Grade Crossings:
    Accidents/Fatalities.........................................   373
    Accidents/Fatalities 1986-1997...............................   377
    Accidents/Fatalities 1998....................................   378
    Accidents, States with Most..................................   379
    Activities...................................................   390
    Fatalities, by State.........................................   374
    Fatalities, States with Most.................................   372
    Funding, FY 1998.............................................   380
    Funding, FY 1999.............................................   381
    Plans, Low Cost..............................................   383
    Recommendations, Status of...................................   361
    Review.......................................................   384
    Safety Issues, Amtrak........................................   152
Grant Request, Amtrak............................................   102
Hazmat:
    Accidents....................................................   440
    Cases to the IG..............................................   430
    Criminal Violations..........................................   430
    Enforcement Packages/Actions.................................   394
High Speed Rail:
    Construction Problems........................................   139
    Construction Schedule........................................   139
    Focus of.....................................................   325
    Locomotive Technology........................................   326
    Program Management...........................................   338
    Railroad Crossing Technologies...............................   365
    Revenue Projections..........................................   138
    Service--Amtrak..............................................    84
    Service Testing..............................................   139
    State Investments in.........................................   314
    Technology, Generic..........................................   330
    Test Track...................................................   501
    Transit Change Orders........................................   142
    TRB Recommendation...........................................   331
    Update, Amtrak...............................................    43
Highway-Rail Crossing--Chart.....................................    30
Highway-Rail Crossing Safety.....................................   143
Highway Trust Funds Used for Amtrak.........................77, 95, 105
Hours of Service.................................................   359
Illinois Project:
    FRA's Commitment to..........................................   157
    Level of Public Funding......................................   297
    Link to Other Networks.......................................   299
    State Matching...............................................   297
    Status of....................................................   296
Immediate Office Staffing........................................   486
Impact of RSAC on Expediting Rulemakings.........................   513
Increase in Ridership and Revenue................................   102
Injuries, Employee on Duty.......................................   442
Introduction.....................................................     1
Inspections:
    Federal/State Resources......................................   432
    Federal/State Staffing Levels................................   432
    Level and Effect of Site-Specific............................   352
Inspector Attrition Rate.........................................   356
Inspector General:
    Hazmat Cases to..............................................   430
    Notification, Procedures for.................................   431
    Report on El Nino............................................   530
Inspector Resources..............................................   353
Inspector Workload...............................................   434
Inspectors On-Board..............................................   433
Inspectors, State Participation..................................   436
Integrating Train Control Projects...............................   304
Intruder Alert Systems, Funding for..............................   394
IRS Conditions for TRA Funds.....................................   105
ITS Solutions to Railroad Crossing Safety........................   366
Labor Issues:
    Agreement Contingencies......................................   125
    Amtrak.......................................................    41
    And Amtrak Productivity......................................    97
    BMWE Agreement...............................................   116
    BMWE Agreement--Costs........................................   117
    Costs Associated With Labor Settlement.......................   120
    Negotiations on Future Agreements............................   129
    Strike Possibility...........................................   128
Locomotive Engineers:
    Medical Certification for....................................   529
    Sight Certification for......................................   529
Locomotive Manufacturers, Qualified..............................   330
Locomotive Technology/High-Speed Rail............................   326
Low Cost Grade Crossing Plans....................................   383
Mail and Express Service, Amtrak.................................   135
Maximizing Potential Amtrak Ridership............................    83
McQueen, James--Biographical Summary.............................    36
    Medical Certification for Locomotive Engineers...............   529
Mergers:
    Safety Impact of.............................................   473
    Safety Plans Related to......................................   468
METRA Project....................................................   298
Michigan Train Control Project...................................   293
Molitoris, Jolene:
    Biographical Summary.........................................    34
    Prepared Statement...........................................     6
Montana Rail--School Bus Accident................................    78
Morocco Trip.....................................................   487
Murphy, Kathryn--Biographical Summary............................    37
National Systems Architecture for PTC............................   305
NDGPS:
    Account Designation..........................................   309
    And Current Train Control Projects...........................   310
    Collection of User Fees....................................312, 313
    Contributions From Other Agencies............................   311
    Coordination of Work Outside of DOT..........................   312
    Funding From User Fees.......................................   160
    Funding/PTC Locations........................................   310
    Impact on Rail Safety........................................   309
    Lead Agency..................................................   308
    Operating Costs..............................................   311
    Total Cost to Complete.......................................   311
NECIP:
    Spend out Rate...............................................   314
    Status of....................................................   313
Negotiations on Future Labor Agreements..........................   129
Next Generation High-Speed Rail Projects.........................   324
Non-Electric Locomotive Concepts, Status of......................   329
Northeast Corridor..............................................43, 104
    Capital Needs................................................    95
    Spend out Rate...............................................   314
    Status of....................................................   313
OA:
    Equipment Increase...........................................   489
    Other Services...............................................   488
    Salaries and Expenses........................................   483
    Unobligated Balances.........................................   487
Opening Remarks..................................................     1
    Amtrak.......................................................    38
    Amtrak From 1994 to 1998.....................................    38
    Amtrak Investments and Ridership.............................    38
    Capital for Maintenance of Equipment and Facilities..........    40
    Commercial/Revenue Development...............................    39
    Fiscal Year 1999 Budget Request (Amtrak).....................    40
    FRA..........................................................     3
    High Speed Rail Update.......................................    43
    Labor Issues.................................................    41
    Maximizing Operating Efficiency..............................    39
    Northeast Corridor...........................................    43
    Separate Accounting System for Wage Increases................    42
    Summary of Comments..........................................    44
    TRA Funds, Use of............................................    40
Operating Expenditures, Tracking.................................   131
Operation Lifesaver:
    FY 1999 Funding..............................................   385
    State Participation..........................................   385
Operation Respond................................................   490
Other Services, OA...............................................   488
Outlay Savings Proposal, Amtrak..................................    75
Penn Station Funding.............................................   287
Political Appointees.............................................   492
Positive Train Control:
    Demonstration................................................   156
    Standards....................................................   303
    Work of RSAC and HSR.........................................   304
Positive Train Separation and Advanced Train Control Projects....   295
Possibility of Labor Strike......................................   128
Positive Train Separation, Regulatory Efforts....................   302
Prepared Statement:
    George Warrington                                                45
    Jolene Molitoris.............................................     6
President, Amtrak................................................    91
Productivity, Amtrak.............................................    97
Productivity Savings.............................................   119
Program Evaluation Request, Safety...............................   490
Projects Funded Using TRA Funds..................................   111
Qualified Locomotive Manufacturers...............................   330
Rail Fatalities..................................................   458
Rail Safety:
    FRA Opening Statement........................................     3
    Goals........................................................   357
Rail Safety Institute:
    Funding Needs................................................   503
    Status of Review.............................................   503
Railroad Bridge Regulations......................................   525
Railroad Crossing Safety, ITS Solutions to.......................   366
Railroad Crossing Technologies in HSR............................   365
Railroad Passenger Safety........................................   159
Railroad Response to Safety Assurance and Compliance Reviews.....   155
Railroad User Fees...............................................   159
Railroad User Fees, Opposition to................................   159
Railroad Participating in SACP...................................   345
Railroad Intruder Detection Report, Status of....................   392
Reaction to Budget Request, Senate...............................   103
Reform Council, Amtrak...........................................    93
Reimbursable Authority, R&D......................................   491
Request for Additional Safety Positions..........................   354
Research and Development:
    Cost Sharing.................................................   339
    Five Year Plan...............................................   345
    FY 1999 Projects.............................................   341
    Link to User Fees............................................   161
    Reimbursable Authority.......................................   491
Revenue Increases................................................   102
Revenue Projections, High Speed Rail.............................   138
Review of Crossings..............................................   384
Review of HSR, Response to.......................................   158
Ridership--Mazimizing Potential..................................    83
Ridership Increases..............................................   102
Rosen, Amy--Biographical Summary.................................    68
RSAC:
    Duration of Rulemaking Work..................................   504
    Impact on Expediting Rulemakings.............................   513
    Rulemaking Achievements......................................   512
    Rulemaking Tasks to..........................................   504
    Rulemakings Not Meeting Deadlines............................   509
    Rulemakings Withdrawn From...................................   511
RTL Non-Electric Trainsets:
    Criteria.....................................................   328
    Non-Electric Trainsets, FY 1999 Funding......................   327
    Non-Electric Trainsets, Status of............................   327
    Non-Electric Trainsets, Timetable............................   327
Rulemaking:
    Achievements of RSAC.........................................   512
    Completed in FY 1997.........................................   519
    FRA Key Safety...............................................   514
    Not Meeting Deadlines........................................   509
    Status of FY 1997 Priorities.................................   516
    Tasks to RSAC................................................   504
    Withdrawn From RSAC..........................................   511
    Work, Duration...............................................   504
Running Signals..................................................   360
Safety and Compliance Program:
    FRA Opening Statement........................................     3
    Railroads Participating in...................................   345
    Reviews......................................................   153
    Reviews, Railroad Response to................................   155
Safety:
    Amtrak Grade Crossing issues.................................   152
    Assessment, Actions based on UP/SP...........................   476
    Assessment, UP/SP............................................   475
    FRA's Key Rulemakings........................................   514
    Goals........................................................   357
    Highway Rail Crossing........................................   143
    Impact of Conrail Acquisition................................   465
    Impact of Mergers............................................   473
    Impact of NDGPS on...........................................   309
    Improvements--Chart..........................................29, 33
    of Railroad Passengers.......................................   159
    Plans Related to Mergers.....................................   468
    Positions, Request for Additional............................   354
    Program Evaluation Request...................................   490
    Results and Statistics--FRA Opening Statement................     4
    Trends.......................................................   438
    Workforce....................................................   435
Salaries and Expenses, OA........................................   483
School Bus Accident, Montana.....................................    78
Senate Reaction to Budget Request................................   103
Shortline Railroads, Flood Damage to.............................    77
Sight Certification for Locomotive Engineers.....................   529
Site-Specific Inspections, Level and Effect of...................   352
Staffing:
    Federal/State Levels.........................................   432
    Immediate Office.............................................   486
State:
    Investments in High Speed Rail...............................   314
    Participation................................................   436
Status of FY 1997 Rulemaking Priorities..........................   516
Status of Train Control Projects, (VA to PA).....................   300
Systemic Problems, Correction of.................................   346
Telecommuting....................................................   482
Testing, High Speed Rail Service.................................   139
TRA:
    Funds........................................................   116
    Funds, Wage Increase.........................................    95
    Funds, Alaska Railroad.......................................   523
    Funds, Use of................................................40, 91
    Internal Revenue Service Conditions..........................   105
    Projects Funded..............................................   111
Track Safety Standards...........................................   513
Tracking Operating Expenditures..................................   131
Train Accident Rates--Chart......................................    31
Train Accidents................................................452, 462
Train Control:
    BNSF/UP Demonstration........................................   291
    Corridor Risk Model..........................................   306
    Costs to Install.............................................   307
    Evaluating Projects..........................................   303
    Future Efforts by BNSF/UP....................................   292
    Illinois Project Level of Public Funding.....................   297
    Illinois Project Links to Other Networks.....................   299
    Illinois Project State Matching..............................   297
    Illinois Project, Status.....................................   296
    Integrating Projects.........................................   304
    Michigan Project.............................................   293
    National Systems Architecture for............................   305
    NDGPS and Current Projects...................................   310
    Other States Projects........................................   302
    Positive Train Separation and Advanced Projects..............   295
    Standards....................................................   303
    Status of Projects (VA to PA)................................   300
    Technologies.................................................   288
    Work of RSAC and HSR.........................................   304
Transportation Test Center:
    FY 1997-FY 1998 Work.........................................   501
    FY 1999 Work.................................................   502
TRB Recommendations on High-Speed Rail...........................   331
Trends:
    Accidents....................................................   463
    Safety.......................................................   438
Trespasser Fatalities............................................   373
Unobligated Balances, OA.........................................   487
Unobligated Funds, FRA...........................................   494
Unobligated Funds, Status of.....................................   496
UP/SP Safety Assessment..........................................   475
UP/SP Safety Assessment, Actions Based on........................   476
US Railroad System--Chart........................................    28
Use of Capital Funds for Preventive Maintenance..................85, 91
Use of Infrastructure for Commercial Development.................   141
Use of TRA Funds.................................................    91
User Fees:
    Direct Link to Research & Development........................   161
    GPS..........................................................   160
    Proposal.....................................................    76
    Railroad.....................................................   159
    Railroad Opposition to.......................................   159
Wage Increases:
    Separate Accounting System for...............................    42
    Use of TRA funds for.........................................    95
Wage Survey, Amtrak..............................................   100
Warrington, George:
    Biographnical Summary........................................    67
    Prepared Statement...........................................    45
Weather Related Accidents........................................    81
Weather Related Costs to Amtrak..................................    82
Workforce, Safety................................................   435
Working Capital Fund/Administrative Services.....................   499

            National Railroad Passenger Corporation (Amtrak)

ADA Compliance...................................................   158
Amtrak Reform Council............................................    93
Biographies:
    Alfred Altschul..............................................    73
    Amy Rosen....................................................    68
    George Warrington............................................    67
    Silvia de Leon...............................................    72
Borrowing Needs..................................................   134
Electric Power Initiatives.......................................   136
Funding Requests.................................................49, 75
    Administration Differences...................................   103
    Funding Options..............................................   104
    Senate Reaction to Administration FY99 Budget................   103
High Speed Rail Project..........................................    84
    Construction.................................................   138
    Revenue Projections..........................................   138
    Servicr Testing..............................................   138
Highway Trust Fund..............................................95, 105
Improvements to Amtrak...........................................    87
IRS Closing Agreement for TRA Funds..............................   107
Labor Issues:
    BMWE.........................................................   116
    Contingencies................................................   125
    Costs........................................................   120
    Future Negotiations..........................................   129
    Labor Agreement (BMWE).......................................    97
    Strike Possibility...........................................   128
Mail and Express.................................................   135
Northeast Corridor.............................................104, 190
    Capital Needs................................................    95
Operating Expenditures...........................................   131
Productivity Savings (Work Rule Changes).........................   119
Questions for the Record.........................................   163
    Accidents & Injuries.........................................   267
    Available Cash...............................................   205
    Bankruptcy...................................................   170
    Capital Needs................................................   177
    Consulting Services..........................................   265
    Electrification..............................................   188
    Employment.................................................233, 259
    Environmental Mitigation.....................................   199
    Equipment...................................................224-241
    Expenditures.................................................   206
    Expenses.....................................................   260
    Express Mail.................................................   200
    FELA Payments................................................   235
    Financial History............................................   208
    Freight Contracts............................................   212
    High Speed Rail Trainsets....................................   186
    Inspector General's Findings.................................   282
    Labor Issues...............................................167, 162
    Maintenance Facilities.......................................   242
    Northeast Corridor...........................................   190
    NTSB Recommendations.........................................   272
    Operating Subsidies........................................163, 207
    Penn Station.................................................   195
    Railroad Retirement..........................................   276
    Revenues.....................................................   202
    Rhode Island Rail............................................   198
    Ridership....................................................    13
    Station Renovation...........................................   245
    Taxpayer Relief Act..........................................   174
Rail-Highway Crossing Safety....................................143-156
    Charts............................................146, 149-151, 269
Ridership.......................................................83, 103
Route System (Future)............................................   132
Testimony--George Warrington.....................................    45
    Funding Charts............................................... 61-66
    FY99 Budget Request..........................................    49
    Labor Update.................................................    51
TRA Investments..................................................   112
User Fees........................................................   159
Weather Related Costs............................................    82
Wage Rate Survey.................................................   100
Wage/Lump Sum Costs..............................................   123
Wage Breakdown...................................................   130

          Research and Special Programs Administration (RSPA)

Aircraft Cargo Compartment Study.................................   625
Backlogged Projects at Volpe.....................................   689
Crisis Management Center.........................................   698
Electronic Grants Pilot Project..................................   671
El Nino..........................................................   697
Emergency Preparedness Grants:
    Emergency Preparedness Grants Administrative Costs...........   621
    Emergency Preparedness Grant Funds Awarded...................   617
    Emergency Preparedness Registration Fee Increase.............   615
Emergency Preparedness Grants Administrative Costs...............   621
Emergency Preparedness Grant Funds Awarded.......................   617
Emergency Preparedness Registration Fee Increase.................   615
Emergency Transportation:
    Crisis Management Center.....................................   698
    El Nino......................................................   697
    Emergency Transportation Workload/Staffing...................   699
    Emergency Transportation Operations..........................   536
    Emergency Transportation Response............................   696
Emergency Transportation Workload/Staffing.......................   699
Emergency Transportation Operations..............................   536
Emergency Transportation Response................................   696
Hazardous Materials Safety:
    Aircraft Cargo Compartment Study.............................   625
    Hazardous Materials Safety Staffing..........................   622
    Hazmat Cargo Tanks...........................................   632
    Hazmat Rulemakings...........................................   636
    Hazmat Training..............................................   649
Hazardous Materials Safety Staffing..............................   622
Hazmat Cargo Tanks...............................................   632
Hazmat Incidents.................................................   634
Hazmat Inspections...............................................   648
Hazmat Rulemakings...............................................   636
Hazmat Training..................................................   649
High Risk Areas..................................................   649
Incidents:

    Hazmat Incidents.............................................   634
    Pipeline Incidents...........................................   576
    Serious Hazardous Materials Incidents........................   650
Information Resources Management.................................   670
Inspections:

    Hazmat Inspections...........................................   648
    Offshore Inspection Resources................................   592
    Onshore Inspection Resources.................................   589
    Pipeline Inspection Priority Program.........................   575
    Pipeline Inspections.........................................   579
    Pipeline Inspectors..........................................   569
Morgan Program...................................................   665
National Transportation Safety Board (NTSB):
    NTSB Recommendations.........................................   594
    NTSB Recommendations--Hazmat.................................   625
Natural Gas and Liquid Petroleum Non-Destructive Evaluation......   553
NTSB Recommendations.............................................   594
NTSB Recommendations--Hazmat.....................................   625
Offshore Inspection Resources....................................   592
On Call..........................................................   557
Onshore Inspections Resources....................................   589
Pipeline Safety:

    High Risk Areas..............................................   649
    Natural Gas and Liquid Petroleum Non-Destructive Evaluation..   553
    One Call.....................................................   557
    Pipeline Grant Program.......................................   562
    Pipeline Mapping.............................................   566
    Pipeline User Fees...........................................   574
    Pipeline Safety Rulemakings..................................   601
    Pipeline Safety Authorized Funding Levels....................   540
    Pipeline Work................................................   570
    Reserve Fund.................................................   556
Pipeline Incidents...............................................   576
Pipeline Inspection Priority Program.............................   575
Pipeline Inspections.............................................   579
Pipeline Inspectors..............................................   569
Program Support:

    Electronic Grants Pilot Project..............................   671
    Information Resources Management.............................   670
    Morgan Program...............................................   665
Registration and Grant Fee Receipts..............................   649
Research and Development:

    Registration Grant Fee Receipts..............................   649
    Research and Technology......................................   608
    Threat Assessment Study......................................   692
Research and Technology..........................................   608
Risk Management..................................................   540
RSPA Administration:

    RSPA Travel per FTE..........................................   651
    RSPA Unobligated Balances....................................   651
    RSPA Training Costs..........................................   652
    RSPA Pay Adjustments.........................................   652
    RSPA Positions and FTE.......................................   653
    RSPA Political Appointees....................................   655
    Transfers and Reprogramming..................................   660
RSPA Travel per FTE..............................................   651
RSPA Unobligated Balances........................................   651
RSPA Training Costs..............................................   652
RSPA Pay Adjustments.............................................   652
RSPA Positions and FTE...........................................   653
RSPA Political Appointees........................................   655
Serious Hazardous Materials Incidents............................   650
Statement to Subcommittee........................................   534
Threat Assessment Study..........................................   692
Transfers and Reprogramming......................................   660
Transportation Safety Institute Funding..........................   701
TSI Staffing.....................................................   708
TSI Work.........................................................   705
Volpe Center:
    Backlogged Projects at Volpe.................................   689
    Volpe Center Workload........................................   672
    Volpe Contracts..............................................   690
    Volpe FTE....................................................   693
    Volpe New Obligational Authority.............................   682
    Volpe Unobligated Balance....................................   689
    Volpe Work Outside DOT.......................................   683
    Volpe Workload By Sponsor....................................   694
Volpe Center Workload............................................   672
Volpe Contracts..................................................   690
Volpe FTE........................................................   693
Volpe New Obligational Authority.................................   682
Volpe Unobligated Balance........................................   689
Volpe Work Outside DOT...........................................   683
Volpe Workload By Sponsor........................................   694

                      Surface Transportation Board

Abandonments.....................................................   759
Accomplishments..................................................   711
Acquisition Proposals............................................   758
Amtrak's Express Mail Proposal...................................   752
Availability of Data to the Public...............................   802
Background.......................................................   709
Board Members and Terms..........................................   743
Budget Request:
    Comparison of Budget Requests................................   718
    FY 1999......................................................   710
    Impact on Staffing...........................................   719
    President's Budget Request...................................   720
Canadian National/Illinois Central Merger:
    Fees.........................................................   748
    Merger Filing................................................   745
    Timetable..................................................747, 748
Carryover:
    FY 1998......................................................   737
    FY 1999......................................................   737
    Language.....................................................   738
Caseload.......................................................768, 769
Case Processing Timeframe........................................   770
Comparison of Board's and President's Budget Requests............   718
Comparison of Workload (FY 1997-FY 1999).........................   717
Conrail Merger:
    Safety Plans.................................................   749
    Timetable....................................................   748
Earnings:
    Class I Railroads............................................   777
Environmental Mitigation:
    Union Pacific/Southern Pacific...............................   757
Equipment Costs..................................................   721
Emergency Orders.................................................   753
Exempted Commodities...........................................763, 764
Former Employees:
    Severance Payments...........................................   720
Funding:
    Feasibility of Funding by User Fees..........................   722
    FY 1997 User Fee Collections.................................   736
    FY 1998 User Fee Collections.................................   736
    Options Paper................................................   725
    User Fee Funding Alternatives................................   723
    User Fee Legislation.........................................   723
Garrett Morgan Futures Program...................................   803
Goals.....................................................710, 803, 807
GPRA Performance Goals...........................................   803
ICC Termination Act:
    Railroad-Shipper Transportation Advisory Council.............   786
    Rate Regulation Cases........................................   771
    Rulemakings Imposed by.......................................   784
    Working Within DOT...........................................   802
Independent Body Within DOT......................................   802
Managerial and Supervisory Positions.............................   741
Mergers:
    Canadian National/Illinois Central Merger....................   745
    Conrail Merger...............................................   748
    Staffing.....................................................   751
    Union Pacific/Southern Pacific Merger........................   757
Objectives.......................................................   805
Performance Measures.............................................   806
President's Budget Request.......................................   720
Proceedings:
    Rail and Pipeline............................................   769
    Motor and Other..............................................   770
Public Access:
    Decisions....................................................   802
    Pleadings....................................................   802
Rail Service:
    Emergency Orders...........................................753, 755
    Problems in the Western United States......................753, 755
    Problem Mitigation...........................................   754
    Staffing.....................................................   756
Railroad:
    Acquisition Proposals........................................   758
    Abandonments.................................................   759
    Earnings, Class I............................................   777
    Emergency Orders.............................................   753
    Rate Complaints..............................................   765
    Rate Reasonableness..........................................   761
    Rate Regulation..............................................   771
    Revenue Adequate...........................................774, 775
    Safety Issues................................................   751
    Service Problems in the Western United States................   753
Railroad-Shipper Transportation Advisory Council:
    Annual Report................................................   794
    Members......................................................   786
    Policy Recommendations.......................................   789
    White Paper..................................................   790
Rates:
    Complaints...................................................   765
    Non-Coal Rate Guidelines.....................................   761
    Reasonableness...............................................   761
    Regulation...................................................   771
    Workload and Staffing........................................   762
Regulation:
    Exempted Commodities.........................................   764
    Rate Regulation..............................................   771
Revenue Adequate Railroads.....................................774, 775
Rulemakings:
    Estimated Completion Date....................................   780
    User Fee.....................................................   739
    Imposed by the ICC Termination Act...........................   784
    Priorities...................................................   783
Salaries and Expenses............................................   715
Staffing:
    Current Level................................................   719
    By Function..................................................   744
    President's Budget Request...................................   719
    Managerial and Supervisory Positions.........................   741
    Merger.......................................................   751
    Rail Rate....................................................   762
    Rail Service.................................................   756
Statement of Chairman Morgan:
    Accomplishments..............................................   711
    Background...................................................   709
    Budget Request...............................................   710
    Goals........................................................   710
    Salaries and Expenses........................................   715
    Summary......................................................   714
    Workload.....................................................   712
Union Pacific/Southern Pacific Merger:
    Mitigation Study.............................................   757
    Oversight....................................................   757
User Fees:
    1997 Collections.............................................   736
    1998 Collections.............................................   736
    Attributed to Canadian National/Illinois Central Merger......   748
    Attributed to Mergers........................................   736
    Average Collections per Month................................   738
    Carryover....................................................   737
    Carryover Language...........................................   738
    Exempted Commodities, Impact on..............................   763
    Feasibility of Funding.......................................   722
    Funding Alternatives.........................................   723
    Legislation..................................................   723
    Options Paper................................................   725
    Rulemakings..................................................   739
Working Within DOT...............................................   802
Workload:
    Caseload.....................................................   768
    FY 1998 and FY 1999..........................................   712
    Proceedings..................................................   769
    Rail Rate....................................................   762
    Summary......................................................   717