[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 2000 
_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS
                              FIRST 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                 JOHN W. OLVER, Massachusetts
 HAROLD ROGERS, Kentucky            ED PASTOR, Arizona
 RON PACKARD, California            CAROLYN C. KILPATRICK, Michigan
 SONNY CALLAHAN, Alabama            JOSE E. SERRANO, New York
 TODD TIAHRT, Kansas                JAMES E. CLYBURN, South Carolina
 ROBERT B. ADERHOLT, Alabama
 KAY GRANGER, Texas                 
                                    

 NOTE: Under Committee Rules, Mr. Young, 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
                                                                   Page

   DEPARTMENT OF TRANSPORTATION:

     Amtrak Reform Council........................................  515
     Federal Railroad Administration..............................  267
       Grants to Amtrak...........................................    1
     Research and Special Programs Administration.................  587
     Surface Transportation Board.................................  779

                              

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 60-844                     WASHINGTON : 2000 


                   COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                    DAVID R. OBEY, Wisconsin
 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               STENY H. HOYER, Maryland
 TOM DeLAY, Texas                      ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                    MARCY KAPTUR, Ohio
 RON PACKARD, California               NANCY PELOSI, California
 SONNY CALLAHAN, Alabama               PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York              NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina     JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio                 ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma       JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas                  JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan             ED PASTOR, Arizona
 DAN MILLER, Florida                   CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas                  DAVID E.PRICE,North Carolina
 JACK KINGSTON, Georgia                CHET EDWARDS, Texas
 RODNEY P. FRELINGHUYSEN, New Jersey   ROBERT E. ``BUD'' CRAMER, Jr.,
 ROGER F. WICKER, Mississippi          Alabama
 MICHAEL P. FORBES, New York           JAMES E. CLYBURN, South Carolina
 GEORGE R. NETHERCUTT, Jr.,            MAURICE D. HINCHEY, New York
Washington                             LUCILLE ROYBAL-ALLARD, California
 RANDY ``DUKE'' CUNNINGHAM,            SAM FARR, California
California                             JESSE L. JACKSON, Jr., Illinois
 TODD TIAHRT, Kansas                   CAROLYN C. KILPATRICK, Michigan
 ZACH WAMP, Tennessee                  ALLEN BOYD, Florida
 TOM LATHAM, Iowa
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama
 JO ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania     
                                    

                 James W. Dyer, Clerk and Staff Director

                                  (ii)



 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                                  2000

                              ----------                              

                                           Thursday, March 4, 1999.

            NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK)

                                WITNESS

GEORGE D. WARRINGTON, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMTRAK

                U.S. DEPARTMENT OF TRANSPORTATION (DOT)

                               WITNESSES

JOLENE M. MOLITORIS, ADMINISTRATOR, FEDERAL RAILROAD ADMINISTRATION
JAMES T. McQUEEN, ASSOCIATE ADMINISTRATOR FOR RAILROAD DEVELOPMENT, 
    FEDERAL RAILROAD ADMINISTRATION
KENNETH M. MEAD, INSPECTOR GENERAL
MARK DAYTON, DIRECTOR OF COMPETITION, ECONOMICS, AND TECHNICAL ISSUES, 
    OFFICE OF INSPECTOR GENERAL

                              Introduction

    Mr. Wolf. Maybe we can begin, Mr. Warrington, you can begin 
and then we'll go to Mr. Mead and Ms. Molitoris.

                        Amtrak Opening Statement

    Mr. Warrington. Thank you very much, Mr. Chairman.
    I want to thank you for the opportunity to appear here 
today. Amtrak has made tremendous progress since I testified 
here before you last April in my role as acting president of 
the Corporation. I know well that Amtrak must present 
consistent, accurate and verifiable proof of our progress to 
transform this corporation into a commercially oriented, 
customer focused and financially sound business enterprise.
    I fully understand that you have issued a challenge to this 
railroad to become financially sound. I take this challenge 
very seriously, otherwise, I would not have accepted the 
position of president and chief executive officer this past 
December.


                         new board of directors


    Since my last appearance before you, Mr. Chairman, Amtrak 
has undergone tremendous change. In accordance with the Amtrak 
Reform and Accountability Act of 1997, the corporation has a 
new board of directors, led by Governor Tommy Thompson from 
Wisconsin. I wholeheartedly share this board's goal to make 
Amtrak the envy of transportation providers worldwide.
    This past December, the board appointed me to lead the 
corporation's turnaround as its president and chief executive 
officer. You may remember last April, as the interim president, 
my interest level was not quite as high as it is today. At that 
time, I looked forward to returning to my position as president 
in Philadelphia of the Northeast Corridor operation.


                       amtrak's financial future


    However, after a few months here in Washington, I realized 
that the challenge as well as the promise of the Northeast 
Corridor really was a microcosm of the bigger whole, the 
national passenger rail system. I began to see how the lessons 
that I learned leading the Northeast Corridor could be applied 
to other parts of this country. I saw the possibilities for 
bringing the national railroad passenger system forward to make 
it not only operationally self-sufficient, but also one of the 
best service providers in the marketplace.
    I know, and I truly believe that this corporation can 
become profitable, operating a national system.
    Over the past year, I have led Amtrak's management team, 
with the advice and support of the board of directors, in 
crafting a business plan to revitalize the national passenger 
rail system by transforming Amtrak into a business-like, 
market-driven company that delivers services customers want. 
Amtrak is putting in place a business planning process and an 
internal discipline, an internal management discipline, to 
stick to that process that will incrementally move this 
corporation forward and prove to you and the American public 
that we are genuinely making progress toward our shared goals.
    I am proud to report that, since last April, Amtrak 
achieved record passenger revenues, topping $1 billion. This 
record was powered by the largest ridership increase in a 
decade, 4 and a half percent. On-time performance, which is the 
single most critical attribute for our customers, reached 78 
percent, the highest it has been in 13 years.
    In the first quarter of this fiscal year, Amtrak is 
sustaining that trend, with ridership up another 3 percent and 
revenues hitting the targets set in our strategic business 
plan. We are accomplishing this despite competing against 
extremely low fuel prices.
    On-time performance now stands at 80 percent system-wide as 
of January 30th. In fact, at the end of the first quarter of 
fiscal year 1999, we are $41 million ahead of where the DOT 
Inspector General's report projected we would be at this time 
in the fiscal year.
    We have a commercially focused business plan that will 
maintain this momentum. It contains valuable lessons we've 
learned from successful businesses we have incorporated to fit 
Amtrak's unique environment, and frankly, our unique culture. 
Our core objective is to increase our market share in the 
travel market, squeezing every dollar of revenue we can by 
leveraging our assets and never, ever missing a business 
opportunity. It's all about making money and building and 
delivering a consistent quality operation.


                   northeast corridor high-speed rail


    We will achieve success by introducing high speed rail in 
the Northeast, by developing other high speed corridors 
nationwide, by forging partnerships, genuine partnerships, with 
State governments, private businesses--including freight 
railroads, operating a market based national route structure 
and improving and guaranteeing consistency, and quality of 
service. All of this will contribute to improving our image, 
which will attract more travelers and ultimately improve our 
bottom line.
    At the end of this year, Amtrak will phase in America's 
first high speed rail service on the northeast corridor. We 
will make America proud. High speed rail in the northeast is 
one of the cornerstones, that underpins Amtrak's financial 
turnaround. We conservatively estimate that it will reap $180 
million in net incremental revenue annually by the end of 2002. 
This money will help to support our entire system across this 
Nation.
    I have no doubt in my mind that high speed rail in the 
Northeast will revitalize train travel throughout America. 
Amtrak has gained a unique expertise in planning, buildingand 
soon operating high speed service. We are ready to leverage that 
experience to develop high speed corridors in other densely populated 
regions, another key component of our strategic business plan.

                     other regional high-speed rail

    In January, along with Chairman Thompson, Secretary Slater, 
Administrator Molitoris, Board Member Amy Rosen, and I traveled 
to Chicago to announce a $25 million investment in high speed 
service in the midwest, linking cities such as Chicago, 
Milwaukee, Detroit and St. Louis. Late last year, I joined 
other Amtrak board members, Federal, State and local officials 
in New Orleans for the designation of a high speed corridor 
along the Gulf Coast.
    We are also making tangible investments in the Pacific 
Northwest, the Southeast, upstate New York, New York-Albany-
Buffalo, Southern California along Amtrak's second busiest 
corridor in this country, from Los Angeles to San Diego. Long 
term capital funds will be critical over the long haul in 
making these high speed rail corridors a reality.
    You will note that these are regional corridors that cross 
State lines. In other words, it's a cooperative effort, 
partnerships which will make improved rail service a reality in 
these regions. Building these partnerships is another key 
component of our blueprint to fiscal solvency. This corporation 
will aggressively forge alliances with States, with local 
governments, with freight railroads, and commercial leaders to 
generate additional revenue as well as savings.

                     market-based network analysis

    I also understand there is a tremendous potential to 
increase revenue and market share within the passenger rail 
market by increasing and stimulating, not unlike what Southwest 
Air has done, demand either in areas that Amtrak now serves or 
by expanding service where it will positively impact the bottom 
line. To accomplish this, Amtrak is undertaking a market based 
analysis of our entire national system with an eye on growth 
opportunities. It is another key strategic component of our 
business plan that will speed our path of profitability and 
better tailor our service to the needs of the transportation 
marketplace.
    I want Amtrak to have an expanded national system, one that 
actually increases our market share. We must become a relevant 
part of the country's transportation infrastructure, which 
will, over the long haul, require long term capital investment. 
We can't do that continually by cutting routes, services or 
frequencies on our trains. We cannot cut ourselves to 
prosperity.
    However, Amtrak can only expand in those markets where 
research, hard facts and data, not hunches, not nostalgia or 
historical precedent, indicate a strong chance for commercial 
success. While the market-based network analysis will give us 
the demographics and the transportation trends, we need to 
increase market share and revenue. We will never reach 
prosperity if we do not deliver a high quality and consistent 
level of service to our customers. Without a doubt, the single 
most significant challenge before Amtrak today is to 
fundamentally alter the way that we interact with our customer.

                        management improvements

    We have put together a top level management team to 
establish and implement company-wide service standards in 
cooperation with all of our labor organizations. The team has 
benchmarked the best practices in customer service at many 
enterprises around this Nation: Ritz-Carlton, Sears Roebuck, 
Continental Airlines, and the U.S. Postal Service, for that 
matter.
    Our road map to excellence relies on several tactics. 
First, it will improve and expand our employee training. We 
can't expect even the most competent and professional employees 
to deliver consistent service without a fundamental and intense 
training standard.
    Second, we are thoroughly overhauling our hiring practices 
and procedures. It is vital that we hire the right people for 
the right job. We have not always done that in the past. We are 
doing it now.
    Third, we will offer our employees incentives and 
recognition for exemplary job performance. It is crucial to 
reward hard work and extra effort, particularly around customer 
service. Finally, since none of these initiatives is effective 
without excellent management, we are instituting a 360 degree 
evaluation program for all managers in the company. Management 
performance will be evaluated from above, from peers and from 
direct-report employees. This is the only way to build 
effective leadership.

                              labor's role

    Recognizing labor's role in this initiative, I would like 
to commend all union leadership for its shared commitment with 
Amtrak for a prosperous future. It is clearly a cooperative 
effort, and to that end, collective bargaining agreements have 
been ratified or have been tentatively agreed upon with almost 
90 percent of Amtrak's work force. I expect we will soon reach 
agreements with the two remaining unions. Together, the leaders 
of Amtrak's unions and management are working very hard to 
ensure financial stability for the 22,000 employees covered by 
collective bargaining agreements.

                             business plan

    Without this cooperation to improve service standards, we 
cannot maintain and grow our customer base, no matter what our 
demographic studies might tell us about population and 
transportation trends. If we can't deliver enviable service, 
and service delivery is the one thing that we can always do 
better than our competition, no number of studies and market 
assessments will be worth the time and effort to implement.
    I want to assure you that Amtrak is turning the corner to 
become a commercially oriented, customer focused and 
financially sound business enterprise. We have put in place the 
most aggressive and commercially focused strategic business 
plan in this corporation's 25 year history. I stand behind this 
plan, and so does Amtrak's board of directors. For us, it is 
about making money and putting customers first. It's about 
keeping our commitment to you to achieve operating self-
sufficiency by following through on our business initiatives. 
To do this will require a commitment from the Congress as 
agreed to in the Amtrak Reform and Accountability Act of 1997, 
to provide adequate capital investment funds which will enable 
our business plan to succeed.
    Let me share with you an example of wise capital investment 
in technology. Three years ago our telephone reservation call 
centers were the laughingstock of the travel industry. After 
$10 million in capital investments, our call centers were named 
the best in the travel industry by Call Center Magazine just 
last month. Our call centers now generate more revenue per call 
at less cost. For our customers, it means they spend less time 
on hold. They receive more thorough, professional information, 
and we sell more tickets less expensively. In the end, we will 
end up saving about $17 million as a result of that $10 million 
investment.
    So you see, Amtrak's need for long-term Federal 
capitalsupport is no different than all the other modes of 
transportation: highways, airways, transit and maritime. As I have 
stated, adequate capital enables Amtrak to enter more substantial 
investment sharing partnerships with States and private businesses, to 
boost our revenues, increase savings and grow ridership.

                        AMTRAK'S BUDGET REQUEST

    To this end, Amtrak is asking the Subcommittee to support 
the Administration's fiscal year 2000 budget request for $571 
million for Amtrak, Mr. Chairman. This amounts to $38 million 
less than Congress approved for Amtrak in fiscal year 1999, and 
reflects Amtrak's genuine commitment to lessen our dependence 
on Federal operating support. As with last fiscal year, our 
budget request is a capital only grant.
    The other key component of our grant request is Congress' 
confirmation of Amtrak's ability to invest these funds in the 
same manner as every other transportation mode does. Amtrak's 
grant request asks that you renew our ability to use these 
funds as other modes do for maintenance of equipment, as you 
did in last year's bill, and to extend this flexibility to 
cover maintenance of way investments as well.

                         working relationships

    To prove beyond a shadow of a doubt that we are making real 
progress, and to ensure you that Amtrak is using Federal funds 
prudently, I will see to it that Amtrak continues to work 
closely with you, Ken Mead, the DOT Inspector General, and his 
Deputy, Mark Dayton and the Amtrak Reform Council.
    Amtrak has established an excellent working relationship 
with the ARC and its Chairman, Gil Carmichael, and Vice 
Chairman, Paul Weyrich. I personally look forward to continuing 
to work with them closely in the future and relying upon their 
guidance.

                        amtrak's closing remarks

    Let me close by telling you again how confident I am that 
we will succeed in turning around Amtrak. Our performance 
results for last year and the first quarter of this fiscal year 
are evidence of that turnaround. As you watch us for the rest 
of 1999, you will see more of the pieces of our business plan 
unfold, business partnerships, the launch of high speed rail in 
the Northeast, investment in corridor service, improved 
customer service, and ridership and revenue growth.
    Amtrak, all 24,000 employees, have been entrusted with a 
national asset. It is in good hands today, and it will be in 
even stronger hands tomorrow.
    Thank you very much, Mr. Chairman.
    [The prepared statement and biography of George Warrington 
follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Wolf. Thank you, Mr. Warrington.
    Ms. Molitoris, do you want to go next? Then Mr. Mead can 
follow.

                         FRA Opening Statement

    Ms. Molitoris. Thank you, Mr. Chairman. It's a pleasure to 
be here and testify before you and the Committee about Amtrak 
and our observations of its status today.

                          fra's amtrak request

    There have been significant changes as have been outlined 
by Mr. Warrington. I'll try not to repeat those he has 
mentioned, but to mention others. The President's budget asks 
for $571 million, which is the third installment of the five-
year, $5 billion plan to re-energize and recapitalize Amtrak.
    In addition, that amount of money plus the capital 
definition that is requested are the two ingredients, that are 
foundational to continue the kind of success Mr. Warrington has 
described. We have a new Board of Directors, as you know. The 
chairman is Governor Tommy Thompson. Governor Thompson has said 
very often during these past months to all that there is a 
renaissance of passenger rail. That is underscored by the kind 
of State investment that Amtrak is receiving.

                           state investments

    In fact, over 20 percent of its public funds are now coming 
through State investments. In your own State of Virginia, for 
example, just last month, the Virginia Commonwealth 
Transportation Board endorsed high speed improvements to the 
Washington-Richmond corridor totaling $370 million in the next 
15 years to raise Amtrak speeds to 110 miles an hour, reducing 
the Washington to Richmond trip time to 90 minutes.
    This is just a microcosm of what's happening all over the 
country. People are demanding good rail passenger service as an 
alternative, whether it's the Northwest, California, North 
Carolina, Virginia. States are saying they need rail, they need 
high speed rail. And the partnership between Amtrak and the 
States, I believe, is a clear example to you that people think 
this investment is worthwhile and important for the next 
millennium.

                         fra/amtrak partnership

    I'd like to comment on the change in the working 
partnership between FRA and Amtrak. I can tell you that in the 
last year, I have seen a real change in responsiveness. FRA is 
vigorously pursuing all safety implications of the Northeast 
high speed rail plan, as we are on all of the other Amtrak 
routes. Mr. Warrington and his staff have become very 
responsive. They are standing with us on all the safety 
elements. I think this is crucial to their credibility. I can 
testify to the fact that there has been a real change.

                            amtrak's future

    The upsurge in ridership and revenues on Amtrak is 
crucially important. We know that Amtrak must grow its way to 
fiscal health and viability for the 21st century. The kind of 
growth that Mr. Warrington has described is an indicator. I 
think no one is more pleased than the Inspector General himself 
to hear that Amtrak is so far ahead of projections, because it 
means that the investments the Congress has approved in the 
last several years, including the TRA funds, have really netted 
the taxpayer the kind of return on investment that is so 
important.
    I want to underscore the performance standards that are 
being instituted at Amtrak, because money alone cannot do it. 
The kind of service that you receive and that I receive and 
that all customers receive will get us return customers, and it 
will also encourage that person to person marketing that's 
going to be part of the upsurge and the return on investment 
that we're seeking.

                        high-speed rail service

    We look very much forward to the high speed rail 
institution of service. As you know, the Pueblo test track is a 
leased facility of the Department of Transportation. We 
invested funds through the Congress' approval to upgrade the 
track at Pueblo to assure that there would be testing 
facilities for the high speed trains. Locomotives are being 
tested right now; the trainsets will be there very soon.
    If there was ever an opportunity in your schedule, it would 
be a real eye opener to see what goes on at Pueblo, Mr. 
Chairman. The testing, the rigorous testing, can assure all 
Americans that these will be thesafest trainsets in the world.

                       amtrak board of directors

    We appreciate the guidance that this committee and the 
Congress has given us. The new Board of Directors at Amtrak is 
a Board of real synergy with the leadership of the Chairman, 
Governor Thompson, the Vice Chairman, former Governor Dukakis, 
and all the members of the Board in concert with the Secretary. 
It's a very exciting time for passenger service. If the 
discipline continues, and I think the Board and the Corporation 
are committed to pursuing that discipline, we are going to see 
a continuation of these encouraging signs.

                       state funding flexibility

    I might also mention, Mr. Chairman, that the National 
Governors Association took the unprecedented step, just about a 
week and a half ago, to pass a resolution encouraging the 
Congress to consider more flexibility for the States in 
investment in Amtrak, if a State so desires. That is an 
indicator, a quite extraordinary indicator, of the kind of 
national groundswell there is for passenger service in this 
country.

                        amtrak safety statistics

    We are pleased that the safety statistics at Amtrak 
continue to improve. We will coordinate with Amtrak to assure 
that these safety statistics continue to improve. And I might 
say to you that we have even engaged in a memorandum of 
understanding to assure every safety element of the plan that 
Amtrak is pursuing. We are working together to assure that kind 
of result for America.

                          fra closing remarks

    So with the President's request, $571 million, the expanded 
capital definition, which I might emphasize puts Amtrak on the 
same plane as all other transportation modes who have this 
ability, and really lets them operate more like a business: 
that's what you want and that's what we want.
    We appreciate the opportunity to be here, and to testify 
today.
    [The prepared statement and biography of Jolene Molitoris 
follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                  Inspector General Opening Statement

    Mr. Wolf. Mr. Mead.
    Mr. Mead. Thank you, Mr. Chairman, Mr. Sabo, Ms. 
Kilpatrick. Good to see you again.
    Mr. Chairman, as you know, we are required to do an 
independent assessment of Amtrak's financial profile every year 
as it goes down the glide path toward 2003. That was issued 
earlier, and some of our testimony will be based on that.
    With me today is Mark Dayton of our senior management. 
Among his other duties, he directs our Amtrak work. I often 
feel he's both our right and left hand in the Amtrak area.

                          assessment of amtrak

    Let me get to the point. Our overall assessment is that 
with strong leadership, intense management and continued 
favorable economic conditions, it will be possible--albeit 
difficult--for Amtrak to meet its Congressional mandate and 
become operationally self-sufficient by 2003. Nevertheless, 
even if Amtrak does reach operating self-sufficiency, it will 
continue to require indefinite, substantial capital funding.
    Our testimony will address five areas related to Amtrak's 
financial outlook. They are Amtrak's 1998 operating results; 
Amtrak's ability to achieve operating self-sufficiency by 2003; 
cost and schedule for the Northeast Corridor high-speed rail 
project; Amtrak's funding needs for capital, and Amtrak's 
request for funding flexibility.

                       amtrak's operating results

    First, Amtrak's operating results. They were indeed better 
than the $845 million operating loss projected for 1998, but 
the loss still totaled $823 million. I should point out that 
the loss did not include an $107 million cost-adjustment 
related to Amtrak's labor settlements. Those costs, which 
Amtrak had planned to record in 1999 raised the operating loss 
to around $930 million, but the cash loss remained unchanged. 
Of the $823 million, over $500 million is a cash loss, and the 
remainder--about $300 million--was attributable to 
depreciation.
    Also, Amtrak's ridership and passenger revenue increased in 
1998, as Mr. Warrington indicated--not quite as much as Amtrak 
has projected, but it did increase. Non-passenger revenues from 
activities such as commuter operations, mail and express 
service, and commercial development have become very important 
to Amtrak.
    I want to stress this, due to the importance of the non-
passenger revenue category to Amtrak's survival. In 1998, non-
passenger revenue sources accounted for 37 percent of all 
Amtrak revenue. That's $626 million out of about $1.7 billion.
    Mr. Chairman, expenses for the railroad also were less than 
projected. Amtrak had projected a 7 percent increase. Expenses 
actually came in around 4 percent.

                            financial status

    Second, our review of Amtrak's March 1998 strategic 
business plan indicated that Amtrak would sustain an additional 
$823 million in operating losses between 1999 and 2003. In 
2003, Amtrak's unfunded cash loss, would be about $304 million. 
That figure is $167 million more than Amtrak was forecasting.
    Amtrak management, I should say, is aware of our concerns. 
It is now executing plans projected to increase revenues and 
reduce costs.
    We made several recommendations in our assessment, and we 
understand that Amtrak is in the process of addressing all of 
them.
    To reach operating self-sufficiency by the year 2003, first 
and foremost Amtrak must provide good and timely service to its 
customers. I think the on-time performance indicates that 
Amtrak is moving clearly in that direction. It must also 
implement--and this is essential--the high-speed rail service 
in the Northeast Corridor. That is a key revenue driver. It has 
to improve ridership and revenue on the intercity and Amtrak 
West trains as well.
    Amtrak also must vigorously pursue new mail and express 
package business. This is a very promising area. We think it 
has a lot of potential.
    The west coast States also have proved to be big financial 
supporters of Amtrak. Amtrak needs to pursue similar 
partnerships, bottle that strength that they have in the west, 
and get it to other States as well.

                   northeast corridor high-speed rail

    Third, the cost of the high speed rail program in 
theNortheast Corridor has grown to about $2.5 billion. That's about a 
$500 million increase. That's happened for two reasons. First, Amtrak 
expanded the size of the project, adding more trainsets, electric 
locomotives, and other programs. Second, the cost of the 
electrification project north of New Haven experienced some rather 
significant cost overruns.
    I hope we have experienced all the cost overruns and cost 
increases, because if they go any higher, you're basically 
going to have to divert capital funds that are targeted for 
other projects in the system to that corridor.
    The electrification project experienced repeated delays and 
is on a very tight schedule, for implementation in October 
1999. Full-system testing was originally scheduled for July of 
this year. But that has slipped, and it won't occur until 
October. The same month, the electrified service is scheduled 
to begin.
    Now, Amtrak, we think, can do it. But it's going to be 
extremely tight. Three things have to come together in the 
Northeast Corridor. First, the electrification has to be 
completed. That has to work. Then we have to bring the high-
speed trainsets on, and they have to be tested, and they have 
to work. The third thing--where the Northeast Corridor 
intersects with the Central Artery in Boston, work on the 
Central Artery has to be completed as well. The Central Artery 
work appears to us to be on schedule.

                           CAPITAL INVESTMENT

    Fourth, I'd like to speak to Amtrak's needs for capital 
investment. I'm not talking about maintenance--I'm speaking 
strictly about traditional capital investment. These investment 
needs range from a minimum level of about $2.7 billion to a 
developmental level of about $4 billion. The $2.7 billion will 
keep the railroad infrastructure in good operating condition 
until 2003. And the $4 billion would allow Amtrak to expand and 
develop new business opportunities.
    If Congress provides the funding consistent with the 
Administration's request for this year, through 2003, Amtrak's 
funding, we think, will fall short of even the minimum capital 
needs by about $500 million. That amount will increase if 
Amtrak's operating losses are higher than the railroad is 
projecting.

                      expanded capital definition

    Finally, Amtrak received Congressional approval to spend 
its 1999 Federal ``capital appropriation'', and I put capital 
appropriation in quotes, for maintenance of equipment. Amtrak 
is now requesting permission to also spend its Federal funding 
for what's called ``maintenance of way''. If Amtrak does not 
get that approval, Amtrak will not be able to cover its 
operating losses in 2000, and could be forced to default on 
current obligations.
    That could occur, ironically, even though Amtrak is likely 
to have about a billion dollars in the bank which would be 
Taxpayer Relief Act money. That's because that $1 billion in 
TRA funding can't be used for maintenance of way. It can be 
used for maintenance of equipment. So they are likely to have a 
billion dollars in their bank account that they may not be able 
to use.
    I would just like to close, Mr. Chairman, by saying that 
Amtrak has been cooperative and responsive in all phases of our 
work. That's not to say there haven't been disagreements--some 
sharp ones on occasion--but they have always been resolved 
forthrightly and respectfully.
    Thank you, sir.
    [The prepared statement and biography of Kenneth Mead 
follow:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            Opening Remarks

    Mr. Wolf. Thank you very much. I appreciate the testimony. 
Your testimony, Mr. Mead, was much more optimistic than it was 
a couple of years ago, clearly. If you recall two years ago 
when Mr. Downs was here, we were talking in terms of 
bankruptcy. So it looks like things have turned around a little 
bit.
    Let me also say before we get to the questions, I was 
pleased with your appointment, Mr. Warrington. I think you 
bring a degree of professionalism. I think it was Cicero or 
Plato who said, they ought to give jobs only to people that 
don't want them. You didn't appear to want the job very much 
last year when we talked. I remember when you left the office, 
I made a comment to one of my staff that I thought you probably 
would do a good job, simply because you didn't want it. You 
knew how tough it was.
    So this Committee, in a bipartisan way, has always been 
very, very supportive, in some respects more than the Congress 
as a whole. So I hope that you can do well. We want to 
cooperate in every way possible to give you every opportunity 
to do well.
    I have a number of questions, a long list, I'll go through 
that we prepared. But based on some of the testimony, I just 
wrote down some questions here.

                 scoring of expanded capital definition

    As you know, there were scoring problems, Mr. Mead, with 
regard to the operating of the way, the definition. Do you have 
any comments about that? We're going to have to obviously check 
with OMB on that. But have you looked at the scoring 
implications of, for example, permitting money to be used for 
operations of way as well as maintenance?
    Mr. Mead. It presents a problem. As I understand it, you 
have a 40 percent score on the current appropriation. Which 
means that in the year thereafter, they can score a remaining 
60 percent. And if you expand the definition to include 
maintenance of way, they will need access to more of that 
money, in the current fiscal year. So you'd have to jack up the 
scoring a bit.
    I don't think you'd have to get in the neighborhood of 80, 
90 percent or anything like that.
    Mr. Wolf. Well, we're going to look at that, and maybe the 
Administration could work with us and help us with regard to 
that. At one point I read in the paper stories about lifting 
the caps. Now it looks like the caps will not be lifted, which 
will make this whole process much more difficult.
    Mr. Mead. I just wanted to say, there's almost an irony 
here of Shakespearean proportions. If the definition isn't 
changed, it could drive almost absurd behaviors. Forexample, 
equipment that could be repaired--that is perfectly good equipment that 
just needs to be repaired--might drive Amtrak to go buy new equipment, 
or just not maintain it.

               capital definition in taxpayer relief act

    Mr. Wolf. Is there any way the definition could be changed 
in the Taxpayer Relief Act (TRA)? Could we go and do that, to 
allow that $1 billion to be used?
    Mr. Dayton. We haven't looked at it directly. But one thing 
that Amtrak might be able to do is, if they had the maintenance 
of way definition in the Federal appropriation, they could tap 
TRA for maintenance of equipment. Right now there is an overlap 
between TRA and the annual appropriation, but they can't spend 
the same money twice. If they had maintenance of way out of the 
Federal appropriation, then with maintenance of equipment from 
TRA, Amtrak could cover its operating expenses. But Amtrak 
would have to address that in terms of the actual cash flow.
    Mr. Warrington. Mr. Chairman, we made very firm commitments 
and assurances to the Congress when the TRA was enacted that we 
would reserve and use that money for high yield capital 
investments. So as a matter of policy generally, the board has 
taken a fairly aggressive position about trying very hard to 
earmark and reserve that money for capital investments that 
provide a high rate of return.
    At the same time, the annual appropriation for operating 
support reduces itself to zero by 2003, except for funds needed 
for mandatory railroad retirement payments. In other words, we 
will be reducing the share of that amount of money that we 
would be allocating through this capital maintenance definition 
over this period of years. As a matter of fact, the total 
amount which we would be drawing down in 1999, this fiscal 
year, $484 million, which is really two years' worth of 
maintenance of equipment. Since we did not do it last year, 
declines to $361 million in 2000 and $242 million in 2001.
    So the share of that annual capital appropriation that we 
would be using for capital maintenance will be declining as a 
result of our other successful enterprises and commercial 
enterprises and revenue streams. That was all with an eye 
toward working hard to drive down the share of that money that 
goes to that purpose, and reserving the TRA to the greatest 
extent possible for the kind of capital investments that allow 
us to ultimately reduce the requirement for capital maintenance 
out of the actual appropriation by improving our cost structure 
or generating revenue.

                revised trip times on northeast corridor

    Mr. Wolf. I think that's appropriate, and I think the 
integrity of that amount was expected. And I think to go into 
that would probably shatter your credibility.
    On the issue of high speed rail, what will the change be in 
trip time from Washington to New York, compared to now? What is 
it now on Metroliner?
    Mr. Warrington. Right now Metroliners, Mr. Chairman, have a 
three hour running time between Washington and New York. Our 
original planning for the high speed program was going to bring 
that travel time down to about 2 hours and 45 minutes.
    Some of the reasons why we have increased the costs 
associated with the high speed program, which Ken referenced, 
were conscious decisions to recategorize expenses and allocate 
money toward investments that would further improve those 
original estimates around travel time. We will run several peak 
hour trains, once we're fully operational. We'll run several 
peak hour Washington to New York trains at 2 hours and 28 
minutes. Our original planning was 2:45, down from 3 hours.
    With that kind of competitive performance, based upon the 
modeling that we've done, we will have a very, very attractive 
service, especially when you couple it up with the onboard 
amenities and the basic appeal around high speed trainset 
design, which we spent a lot of time and effort modeling and 
researching with customers. On the North end, between New York 
and Boston, today's 4 hour and 45 minute trip to 5 hour trip 
will be reduced to about 3 hours and 10 minutes. We will get 
that down to just over 3 hours over a period of 12 or 15 
months.
    Once again, we have modeled that travel time performance. 
It's all about travel time, frequency and price. Today we will 
be a very competitive and very attractive downtown to downtown 
option for auto users, bus travelers and air shuttle 
passengers.
    Mr. Wolf. These 2:28, the stops would be in what?
    Mr. Warrington. The 2:28 would be express, New York-
Philadelphia, which is our largest----
    Mr. Wolf. It won't stop in Baltimore?
    Mr. Warrington. Probably just Philadelphia. There is a lot 
of MARC service today out of Baltimore. And we will make other 
trains stop at Baltimore that have more local stops for that 
local traffic.

                     maintenance of way definition

    Mr. Wolf. Have you been told by the authorizing committees 
in both the House and the Senate what their position is on the 
maintenance of way definition change?
    Mr. Warrington. We have not had that discussion yet, Mr. 
Chairman.
    Mr. Wolf. Will you inform us if you do? And I'll ask them, 
too.
    Mr. Warrington. Certainly we will.

                 funding flexibility within the states

    Mr. Wolf. The issue of flexibility, I saw that the 
Governors had voted for that. I think that was very, very 
healthy. I would favor that. I think that's very positive. 
Governor Carper wants to--I mean, you can't build many more 
roads through Delaware, and they've got that toll so high as 
you go through the booth as it is now. And that is a cash cow 
for the State of Delaware.
    But if he wants to put that money in rail, I think he ought 
to have the opportunity. Are you following up, or is the 
Administration? Are you looking for a change or have you 
approached the authorizing committees, asking them for that 
change? I know the highway lobby would probably go bonkers. I 
would support it, frankly, I want you to know that.
    But are you going to make a major effort to ask this 
Congress to give the Governors the flexibility?

                  flexibility in tea 21 authorization

    Ms. Molitoris. Mr. Chairman, I presume you're asking me. 
Two things. First, if you recall TEA 21, the Administration's 
proposal did include that. It was on the table primarily until 
the end. You are probably quite astute in finding out where the 
opposition was.
    But I think there are certain discussions going on about 
tweaking TEA 21 in this Congress, and perhaps that will be part 
of the discussion. I know that the Administration continues to 
support it, because we believe that people at the local level 
know what they need most, especially since there is the 
requirement that they be involved in funding from a variety of 
levels. That would be an opportunity for them to invest in what 
they think they need most.

                  governors' statement on flexibility

    We certainly think the Governors' statement is a powerful 
one in expressing to the Congress the will of the State 
leadership. We will be following up on that, and are working 
with Governor Thompson, who is taking a lead role.
    Mr. Warrington. Mr. Chairman, that really was an 
unprecedented action by the National Governors Association. And 
we appreciate that deeply. It's the first time there's been 
that kind of consensus.
    Frankly, one of the things we're trying to do is build 
those kinds of State----
    Mr. Wolf. Was there any opposition to it at all?
    Mr. Warrington. Very little, I understand. None, as a 
matter of fact, they tell me. Across the board, we really felt 
very good about it.
    And you know, it's a reflection on our building 
partnerships with States and regional entities. They have a 
real stake in the economics associated with passenger train 
service and inter city service. Building that kind of 
infrastructure, both politically and financially, with States 
and regions, really is one of the partnership futures that I 
talked about earlier.
    Specifically, we have followed up with the Senate Committee 
on Environment and Public Works. We think there may be 
opportunities around a TEA-21 technical corrections bill. And 
Governor Thompson and Governor Carper and many other Governors 
from the Midwest as well as the Northeast and the South, have 
been following up with members, lots of members of Congress, 
around the importance of that flexibility to their States.
    It is particularly important because as we move forward 
around mirroring Northeast Corridor styled high density rail 
service around this country, in the Midwest, West, the 
Southeast, it's very important that Governors who recognize the 
critical economic role of inter-city rail passenger service--
high density, higher speed inter-city service--have the 
flexibility to provide Federal highway money from such programs 
as NHS or STP or CMAQ money, and devote it to those kinds of 
programs, which would match or work very well with Amtrak 
capital funding. That's the real partnership.

                       federal/state partnerships

    That's something we've had success in a handful of States, 
in the West, California, for example, the State of Washington, 
New Jersey, Delaware, New York State recently with Governor 
Pataki. We would really like to enable all the Governors to 
establish those kinds of partnerships with us. Many of those 
partnerships are basically 50-50 deals. They have been very 
successful, and it creates a lot of local momentum and buy-in 
and interest in rail passenger service. It really offloads the 
hundred percent responsibility from the Federal Government. 
It's something that we feel very good about.
    Four or five years ago, if you quizzed or queried many of 
the Governors in States around this country about their 
relationship with and willingness to partner with Amtrak, you 
would receive a very different kind of picture than the kind of 
picture that I feel and I hear about today. There is a genuine 
interest in recognizing the value of inter-city rail service, 
and a genuine interest in financially participating in making 
it happen. Why? Because it means improvements to the local 
economy. We feel good about that.
    Mr. Wolf. Well, I hope you're able to do that. Because you 
have Governor Thompson who is a very capable person, he is a 
sitting Governor, but you also have two former Governors, 
Governor Dukakis and Governor Holton from my State. They are 
both very talented, and very persuasive at times on the issues.
    This is really important, particularly with the budget 
numbers, as close and as tight as they are and this committee 
wanting to help as much as it can. Flexibility, I think, is 
where the future lies. I would urge you to try to do something 
in this Congress.

                               air rights

    One last question, then I'm going to recognize Mr. Sabo. 
Are you looking at all of the air rights and your ability to 
generate revenue from the use of them, around Union Station? I 
guess the air rights are mainly with the Federal Government, is 
that correct?
    Mr. Warrington. Some of the air rights were sort of stolen 
from us at midnight one night, by some technical action 
occurring over here somewhere. But frankly--
    Mr. Wolf. And those air rights now belong to the Federal 
Government?
    Mr. Warrington. I believe they belong to someone in GSA.
    Mr. Wolf. Well, are you looking? Because I know Mr. Mead 
said 37 percent is the figure, or from sources other than, the 
air rights at Union Station, the air rights in Baltimore, the 
air rights--you don't own 30th Street Station, do you?
    Mr. Warrington. Yes, we do.
    Mr. Wolf. They told me there is an effort to modernize the 
30th Street Station. Are you looking at that as a possibility?

                           commercial revenue

    Mr. Warrington. Over the past three years, we have improved 
our commercial revenue streams. And a lot of it is around real 
estate, about $200 million, primarily in the Northeast 
Corridor. Every square foot of commercial real estate space, in 
Penn Station, New York, for example, is leased out today at 
midtown Manhattan rates. This is the first time in the 
company's history we have 100% leased space at Penn Station.
    Every facility between Washington and Boston is being 
explored with the development community around air rights 
development and commercial development, particularly tied to 
the attractiveness of high speed rail, serving those 
facilities. In Washington Union Station, for example, the New 
York Avenue development group, the New York Corridor 
development group gave spent quite a bit of time with around 
air rights development. We see some opportunity for developing 
the parcel out by the IBCD maintenance facility that we 
continue to have the rights to.
    In Delaware, we've got lots of opportunity in development 
around the Wilmington station. Just yesterday, I met with Craig 
Weiss, the President of Greyhound in Baltimore. He and I have 
struck an agreement which deals basically with Greyhound and us 
partnering at the Baltimore station. Amtrak and Greyhound would 
invest, and joint ticket, making the facility a true intermodal 
facility. And we've got negotiations hopefully concluding 
within the next several months, for a hotel development on top 
of today's Baltimore Union Station, all of which will generate 
revenue streams for us.
    At 30th Street Station in Philadelphia, we are in the final 
stages of negotiating an arrangement around a combination 
hotel, conference center, tied to high speed train service, and 
perhaps a movie theater on the air rights, a 60 acre site just 
north of the 30th Street Station. Every single locationthat 
we've got on the Northeast Corridor we're exploiting around real estate 
and commercial development opportunity and taking down revenue streams 
from that. We are very, very aggressive about that, Mr. Chairman.
    And on the north end, as the high speed program takes off 
and electrification wraps up, stations like 128 and New London 
and South Station in Boston, will see increasing commercial 
activity, commercial development, office development. All of 
that just works to generate more attractive ridership for us.

                      expanded capital definition

    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman.
    Mr. Warrington, do you disagree with Mr. Mead's assessment 
of your need for change in the capital definition in next 
year's appropriation?
    Mr. Warrington. We agree that we need the definition of 
capital maintenance expanded. Without the expansion of that 
definition, there's about $45 million or $47 million worth of 
expense that we can't assign to that pot. We don't have any 
other pots to assign it to. And we have basically borrowed 
commercially up to our limit. We may have a very little bit of 
flexibility there, but not enough to be able to cover that 
requirement.

                       taxpayers relief act funds

    Mr. Sabo. I am curious about the money from the Taxpayers 
Relief Act. Is that money in hand? Are you getting interest 
earnings off that? Or is that simply money we retain and you 
draw?
    Mr. Warrington. We have that money invested in three 
different investment houses, Morgan Stanley, Bank of America 
and Merrill Lynch. Through last month, it was earning an 
average of between 5 and 5.6 percent, depending on which fund 
it was in. And we have earned year to date about $39 million, 
which goes back into that capital fund.
    Mr. Sabo. Do the same restrictions apply to the interest 
earnings?
    Mr. Warrington. Yes.

                        long term capital needs

    Mr. Sabo. I would also like, Mr. Warrington, if you'd 
respond to Mr. Mead's assessment of your long term capital 
needs. If I understand correctly, you're saying we're 
underfunding basic capital needs through 2000.
    Mr. Warrington. Yes. I'll be very focused about that, Mr. 
Sabo. I firmly believe that Amtrak needs to demonstrate to you 
and to the Congress credibly that we are making serious 
progress around reducing and ultimately eliminating the 
requirement for operating subsidies. That's going to come in 
lots of forms. It's going to get more commercially oriented, 
around real estate development, around mail and express as Ken 
said, on the rear end of long distance trains.
    All of those factors have been and will continue to combine 
to improve our bottom line. It's going to require an 
extraordinary amount of work, a lot of focus and a lot of 
management discipline. But we need to demonstrate that we can 
credibly chip away and get where we need to get to. I firmly 
believe that as we establish that kind of credibility as an 
institution, Amtrak has an obligation, to be very straight and 
very between-the-eyes about what the real and genuine capital 
requirements are for America's railroad. They are sizeable and 
significant on a sustained basis.

                       federal capital investment

    We believe that over the past 25 years, the modal equity 
issue has seriously injured us. Every other federally funded 
transportation mode in large measure indirectly, in some cases 
directly, receives sizeable capital investments in 
infrastructure that are not borne basically by the carrier, but 
they are borne by the Federal Government, in highways and 
marine dredging and the like. Amtrak has never fully received 
the kind of sustained annual, regular capital funding that will 
really enable us to grow.
    And frankly, the way the argument has been going for 20 
years is that Amtrak doesn't deserve that capital since Amtrak 
only has 1 percent market share. Amtrak will not get more 
market share unless Amtrak invests capital. It's a cyclical 
argument.
    I will assure you that with steady, sustained capital, 
which we need to clearly define, and we need to do that over 
the next year, as we conclude all of our market analysis, and 
high density corridor planning work. We would like next fall to 
begin the public policy discussion about what's a fair and 
appropriate, reasonable and defensible, long-term sustained 
annual Federal as well as State and local and regional level of 
support. It has never been fully defined, and we have never 
established the kind of credibility around operating subsidies 
that enables us to make that case.
    The number is probably sizeable. But until we conclude all 
our planning work around the economics of the high speed 
corridors around the country, and the economics of all of our 
long distance trains, I feel uncomfortable asserting fair share 
argument around capital requirements. But they will be there 
and they will be sizeable.
    I fully endorse Ken's assessment that we will need that if 
we are going to grow. The only way we are going to be 
successful is if we grow. We have nickel and dimed ourselves to 
death in this organization over the last 20 years. It is no way 
to run a business, and it's no way to be competitive in the 
marketplace. What's behind success for this enterprise over the 
next 5 to 10 to 15 years is a steady stream of sizeable, 
significant capital. Our challenge is to build the right kind 
of partnerships with the freight railroads and with the States 
that make that capital investment attractive and enable it to 
pay off for us.
    Mr. Sabo. I'm not sure if I understand the answer, though.
    Mr. Warrington. I agree with Ken.
    Mr. Sabo. I think the answer is, you are ready for 2000 but 
we may hear it for 2001 with additional justification. Is that 
the answer?
    Mr. Warrington. Yes. Mr. Sabo, frankly, the TRA fund will 
basically expire. We will have basically spent it down by the 
time we get to 2001. And we will have a public policy 
discussion that we're going to need to have about what's the 
right fix for the long haul around a regular, predictable, 
steady infusion of capital.
    What I can tell you today is, and I don't want to split 
hairs with Ken about exactly what that number is, because it's 
not just a 2001 or 2002 or 2003 issue. It's a 2000 to 2020 
issue, as a matter of public policy. What's the appropriate and 
fair and equitable allocation to inter-city rail service in 
this country by the Federal Government, and as well by State 
governments and regional entities.

                                outlays

    Mr. Sabo. Thank you. Let me just follow up in asuggestion 
the Chairman made. That is, you put your minds together on how we deal 
with the scoring problem of outlays. The problems we're going to have 
are immense here. They're going to be much tighter than what the 
problems the Administration had in putting their budget together. I 
assume that's the reason it's not explicitly in your budget.
    Mr. Warrington. Okay.
    Mr. Sabo. We look for your creativity.
    Mr. Warrington. We'll try hard, Mr. Sabo.
    Mr. Wolf. Ms. Kilpatrick.
    Ms. Kilpatrick. Thank you, Mr. Chairman. Delighted to see 
that we didn't go by seniority on this one, Mr. Pastor.
    Mr. Pastor. This one is first come, first served. 
[Laughter.]
    Ms. Kilpatrick. Thank you, Mr. Chairman, and Mr. Pastor, 
too, for being late, I guess I should say. [Laughter.]

                    revenue and operating assistance

    Ms. Kilpatrick. I appreciate all the comments that have 
been made this morning. It's refreshing to see the IG and the 
CEO on the same page. You don't see that a lot. I come from a 
state legislature where I did transportation issues in Amtrak 
and the department did not get along as well. It's good to see 
that.
    I'm concerned about the 2002 phase-out of Federal 
assistance on the operating side. I commend you, Mr. 
Warrington, for the initiative you have in place in looking at 
others to expand so the revenue stream will be what you need it 
to be as you get beyond 2002.
    Are you confident that you'll make that, that you'll reach 
that and have the revenues you need without coming back and 
asking us to extend it a year or two more?
    Mr. Warrington. I feel very comfortable that it is 
achievable. It is going to require a lot of work. Frankly, I 
appreciate all of the oversight and analysis and second 
guessing that goes on around it. Because it just makes us 
sharper and smarter, more focused and disciplined about getting 
there. There is a lot, a lot of oversight and focus and review 
of every move we make and everything we do. It does nothing but 
just keep us focused on the long haul and getting there, and 
not getting tied up and lost in short-term problems.

                          business projections

    We have a vision. We have a very clear plan about how to 
get there. Ken is right, part of this depends upon a robust 
economy that needs to continue to grow. Part of the reason why 
we've been very successful over the past year on Metroliners 
and in the Northeast Corridor and in exceeding our original 
ridership projections last year and this year is because of the 
business economy in the Northeast. It is doing very well in 
every State in the Northeast.
    I can't control that entirely. But we can make reasonable 
projections. There are lots of opportunities to control things 
that are at our disposal that are in management's doorstep 
relating to the quality of service that we operate; the 
controlling of costs that we incur in connection with the 
delivery of this service; the training and the development of 
our employees; and the on-time performance of our trains. There 
are lots of things that are within our control.
    The general economy of this country is not within our 
control. We are reasonably optimistic that we can get there. 
But, it's going to require a lot of work.

                             business plan

    It's going to require in particular a commercial and 
business focus. We tend to be an organization that is dominated 
by railroad operating people. You have to have that. In 
particular, operating people who know how to run trains safely. 
Because safety is number one, as Jolene reminds me and I remind 
her on a regular basis.
    But once you get beyond the fundamentals around safety, we 
are an operating railroad, and we operate trains very, very 
well. We have an extraordinarily professional railroad 
operating organization. The challenge over the past several 
years, and looking forward, is to also build on that and 
reorient that around commercial business smarts and sense, both 
in terms of train operations and back office management. We're 
getting there.
    Ms. Kilpatrick. Refreshing. Thank you.
    Mr. Mead. I would just like to add, when we sit in this 
room a year from today, I expect that then we'll be able to 
tell you a lot more about whether the concern you have about 
the operating subsidies drying up at the end of 2002 is a real 
concern. Right now, the imperative is to deal with getting 
Amtrak through this year, and what the allowable objects of 
expenditure will be for Amtrak's capital appropriation. If you 
can fix that, you've done about all you can be expected to do 
for this year.
    Ms. Kilpatrick. Okay, I appreciate that.
    Ms. Molitoris, or Mr. McQueen, I was in an 8:00 o'clock 
meeting and it kind of ran over, I wasn't sure if he spoke, I 
spoke with my staff, he has not. So I would acknowledge you at 
the table, sir. Thank you, I know you work closely with her in 
that regard. You are speaking through her. You work for her as 
an administrative deputy, I would call an associate, as you 
speak.

                           capital definition

    The change in the definition, so that you're able to use 
operating capital, how important is that? It's my understanding 
that you got that approval last year from this committee. Has 
it ever happened before? And if you don't get it, will we see 
what Mr. Mead has said in terms of, well, really, things that 
can be fixed not being fixed, and looking for new capital money 
instead?
    Ms. Molitoris. Ms. Kilpatrick, the definition is very 
important. We think it is essential, along with the level of 
$571 million that the Administration has requested. I think 
it's important to continue to remind people who are considering 
this that it really just puts Amtrak on the same level as all 
the other transportation companies and modes. It's very 
important for Amtrak to be able to operate as a business, to 
make choices.
    The chairman has commented and reminded us, as has Mr. 
Sabo, that we need to work with the committee about scoring 
issues. But we believe these two pieces are essential to our 
request. And I don't believe that Amtrak can manage to its full 
potential this year or in future years unless they have that 
definitional expansion.
    Last year, what was approved was the maintenance of 
equipment. What we are asking Congress for today, or in this 
request, is to have that expanded to include maintenance of 
way.
    Ms. Kilpatrick. And if not, if it's not granted, then the 
maintenance of way that you're seeking, in the 2002 that's upon 
us, will not happen, according to your projections and what 
you're wanting to have? You have to have it, is it that strong?
    Ms. Molitoris. Yes, it is.

                  midwest high-speed rail initiatives

    Ms. Kilpatrick. I think my last question, in terms of high 
speed rail, and I had some discussion with Mr. Warrington, 
Northeast Corridor, we know that's America's famous corridor 
and doing well and really probably the most effective train 
service that we have in our country, I would think, or the most 
anyway. I come from the Midwest. I know there has been some 
Amtrak service throughout the State, certainly on the west 
corridor of the State, from the Chicago border into Kalamazoo. 
Can I anticipate any high speed rail service over the next few 
years as we move out of 2002? What's that timetable?
    Mr. Warrington. Yes, very much so. As a matter of fact, I 
mentioned earlier that Governor Thompson, Secretary Slater, 
Administrator Molitoris and I were in Chicago about a month 
ago. We announced a $25 million investment to jump start what 
we call the Midwest Regional Rail Initiative. It really is 
taking the same approach which we've taken in the Northeast 
Corridor, which is to incrementally build on a partnership with 
the States, all the nine midwest States are involved in this 
effort. We've done the planning together and we've done the 
economic forecasts together.
    The difference at Amtrak today is that rather than being 
passive and just looking at this as an operating opportunity, 
we are leading the planning, the development, the engineering, 
the design work, because it's important to our economic future 
to be the operator. The difference is that we are today willing 
to invest. We don't want to invest alone. We want to invest as 
partners with States, which is why this flexibility provision 
is so important to Governors.
    We invested $25 million, made a pledge of $25 million, to 
begin the incremental investments to do a number of things. But 
mostly, to reduce travel times on existing trains, and to 
conclude the planning, design and engineering for an 
incremental approach to introducing high speed service and more 
frequencies over the next several years. Concerning Chicago-
Milwaukee, Minneapolis-Chicago-Detroit, Chicago-St. Louis, 
Chicago-Cleveland, there is a basic Chicago hub service that 
has lots of economic promise. This is based upon the basic 
definition of attractive, potentially profitable service being 
relatively short distance, 250, 300 miles, fairly reasonable 
frequencies, attractive price, and good onboard amenities and 
travel time.
    The difference this year rather than in the past years is 
that Amtrak is providing the leadership, the engineering, the 
design, the procurement, the management, the vision around what 
those kinds of opportunities are. We are forcing, leading and 
building coalitions regionally with States, and the freights, 
freight railroad industry, around launching these kinds of 
services. It's not going to happen overnight. It has to be an 
incremental approach. It's all about reducing travel times to 
make train travel much more attractive.
    It's a model which we have used and will continue to use 
effectively in the Northeast Corridor. It can be mirrored in 
all of those corridors in the Midwest and the Southeast. 
Washington to Richmond to Charlotte ultimately New Orleans or 
Jacksonville, over the next 10 or 15 years, that is our future. 
Those are some of our growth markets. We cannot continue to 
stagnate around the existing network. We have to grow market 
share on the existing network, and improve our operating 
performance through mail and express, for example, on the 
existing network.

                   partnership with freight railroads

    But our real long term vision has to be around high density 
corridors and being the operator and the investor in these 
corridors. One of the single most important factors that will 
make that program a success for us and for those regions is 
building partnerships with States, partnerships with the 
freight railroad industry.
    Generally, Amtrak has historically had a very combative 
relationship with the freight industry. I will tell you that, 
you can win battles and you can lose wars. Amtrak has always 
lost the wars with the rail freight industry. It is not the 
right way to do business. We need to be genuine about 
partnering with them, and we need to be genuine about investing 
in freight railroad trackage, and signal systems, and other 
operating needs in order not to negatively affect freight 
service, and to accommodate Amtrak passenger trains.
    It has historically been a struggle. Our trains have often 
suffered at the expense of a robust freight network that's been 
growing around this country. We need to establish trust and 
good communications with the rail freight industry, the Union 
Pacific, the Burlington Northern, Santa Fe, CSX, and the 
Canadian Pacific. If we're going to do this and do it right, we 
need to do it right with the rail freight industry, rather than 
be adversaries. There are lots of opportunities for doing that.
    But I will tell you, frankly, it's also going to require 
capital. We need to be willing to invest in capacity and 
mitigation on rail freight lines in order to make passenger 
train travel work and work at high speeds. We need to be able 
to stand up to the cost and the expense of doing that. We've 
never effectively stared that one straight in the face. What we 
have chosen to do instead is issue press releases and go to 
war. It doesn't work. It doesn't get you anywhere, because in 
the end, they have you.

                  midwest high-speed rail initiatives

    Ms. Kilpatrick. Mr. Chairman, one last one.
    Have the nine Midwest Governors and their departments of 
transportation bought into this like Amtrak has?
    Mr. Warrington. Yes, very much so. As a matter of fact, we 
have been true partners. At the NGA meeting last Sunday, I met 
with Governor Carper who sponsored as Chairman of NGA, the 
first roundtable around Amtrak and high speed corridor 
opportunities around the country. We had terrific participation 
by lots of Governors around the country.
    The next day, last Monday, Governor Thompson sponsored a 
Midwest Governors discussion around this high speed initiative. 
All of the Governors and all of the secretaries of 
transportation are very much on board.
    Ms. Molitoris. Ms. Kilpatrick, may I just mention with 
regard to that corridor that the State of Michigan and FRA have 
been investing over the past several years during the Clinton 
Administration on high speed rail between Chicago and Detroit. 
We've invested $20 million, the State has invested $40 million. 
We are working on positive train control and although it won't 
be 100 miles per hour in the year 2000, we believe that the 
service will begin around that time at a lower speed.
    We are having a test site between Kalamazoo and Nileswhere 
we'll be testing that technology. It's really one of the premier pilots 
for positive train control in the country. It's a very strong State 
commitment to this, and we continue to partner with them as part of 
this midwest rail initiative.
    One thing I didn't mention, Mr. Chairman, in addition to 
the National Governors Conference and the meeting that Mr. 
Warrington mentioned, there were Governors you might not 
expect, Nevada, Nebraska, Iowa, places that don't jump out as 
huge population centers, who are saying, we need to get 
connected some way. In addition, Mayor Smith from the Board of 
Amtrak, has organized a Mayor's Amtrak committee, because there 
are hundreds of stations around the country that really serve 
as economic drivers to cities and communities.
    So we think the State of Michigan is really a tremendous 
partner for high speed rail.
    Ms. Kilpatrick. We are truly primed for Amtrak, coming from 
the west through Niles and Kalamazoo, right on over to Detroit 
and the other eastern part of the State. We're waiting for you. 
Thank you.
    Mr. Wolf. Mr. Pastor.

                             Y2K and AMTRAK

    Mr. Pastor. Thank you, Mr. Chairman. First of all, let me 
apologize for being late. I had an Energy and Water 
Subcommittee hearing that I had to attend.
    Thank you for being here. Let me ask a few questions that I 
have in mind. The first one is, everybody's concerned about the 
computer problem, Y2K. Maybe you want to give us an update of 
where you're at. I'm assuming that computers are very important 
in your business.
    Mr. Warrington. Yes, we've always had lots of problems. 
That's one, fortunately, that we're not overly concerned about. 
Frankly, we've got a very good information technology 
organization ourselves. I have a lot of confidence in our guys. 
If there are problems, they will show up on several fronts. 
Number one, if you don't make payroll, you have catastrophe. 
Number two, if you can't make reservations, have catastrophe. 
And number three, our signal systems on our Northeast Corridor, 
which are driven by software, will not function properly.
    I have been assured, and I have spent a significant amount 
of time with our folks being briefed, that we have system 
requirements well under control.
    Mr. Pastor. What train do you expect to be on New Year's 
Eve?
    Mr. Warrington. Hopefully I'll be on a high speed train. 
We're going to be launching high speed trains toward the end of 
the year. We haven't nailed down precise dates yet. As Ken 
said, the electrification project has had a few bumps.
    But we're going to be launching toward the end of the year, 
and perhaps it might be on New Year's Eve. We'll let you know.

                       Y2K AND RAILROAD INDUSTRY

    Ms. Molitoris. Mr. Pastor, I might mention in terms of Y2K, 
it's a priority for the Department of Transportation and the 
whole Administration, of course. We have been pleased as the 
second agency within the Department to be certified Y2K 
compliant within the Department.
    But in addition, we are working with all the freights on 
their Y2K issues. Because outside the Northeast Corridor, 
Amtrak needs those signal systems from the freights to be 
operating and no glitches. So we are working directly through 
the CEOs of all the freights to assure that not only Amtrak but 
of course the freights themselves are Y2K compliant.

                              TILT TRAINS

    Mr. Pastor. Thank you. This last summer, I had the 
opportunity to take the train from Washington to Philadelphia. 
It's one of the few times I've been on a train, in fact, 
probably the only time I've been on a train that I can 
remember. It was a very pleasant experience.
    I remember getting to Union Station and all the 
advertisement about the high speed train that's coming, I think 
it's going to open this fall.
    Mr. Warrington. Late this year.
    Mr. Pastor. So with enthusiasm, I was thinking of probably 
taking the train again. Then I think it was in January, I read 
in the Washington Post, the headlines were, Amtrak's speedy new 
tilt train is a bit wide around the curves. And I thought well, 
maybe my enthusiasm got dampened a little bit. Maybe you want 
to address that problem or that opportunity.
    Mr. Warrington. Yes, the trains actually are not too wide. 
We issued a performance specification to the vendor community. 
There were lots of vendors who responded. The performance 
specification required lots of things, but fundamentally 
required a reduction in travel time. In other words the 
propulsion systems needed to meet certain kinds of acceleration 
requirements in order to make trip times. We provided them with 
the clearance envelope.
    So the vendors could figure out how much they could tilt, 
how wide they could be, and how fast they had to be. We didn't 
specify width and any kind of specific propulsion systems. We 
basically said, you have a clearance envelope for safety 
purposes, and you have a travel time that you have to meet.
    Bombardier has assured, as the lead manufacturer, as part 
of the consortium with Jack Astrom, who manufactured the TGV 
high speed trains in France, that these trains will meet that 
performance requirement. We are very comfortable with that and 
our folks are very comfortable with that. All the engineering 
requirements have been satisfied.
    Mr. Pastor. Do you have a comment, Ms. Molitoris?
    Ms. Molitoris. We are working closely with Amtrak on this 
issue. We believe they can meet their trip time.
    What I think the reference to the newspaper article was 
about the fact that there has to be certain modeling and 
certain levels of tilting in certain areas of the journey to 
assure that safe operations occur within the envelope provided. 
We're going to assure that that happens, and I think Amtrak and 
George are working closely with us to assure that we will be 
vigorous in that pursuit.
    Mr. Pastor. Mr. Chairman, that means maybe I can take the 
train from Washington to New York New Year's Eve and not tilt 
over and get there on time and see the giant ball come down for 
the new century.

                      SHIPMENT OF MAIL AND FREIGHT

    One last question, Mr. Chairman. The Surface Transportation 
Board in 1998 said in a ruling that Amtrak now had wide 
latitude to carry mail and goods. I guess there was guarded 
enthusiasm by the freight industry.
    Since 1998, to this date, from that ruling to now, where 
you talked about battles and wars, where are you on this war 
and this battle? Which have you won? How does it look for you? 
Are you being able to get cooperation?
    Mr. Warrington. I think that's a terrific example, good 
evidence of a turnaround in this relationship. The STB ruled in 
Amtrak's favor across the board. We have established not only 
goodrelationships with the freights around that program, but 
we've actually moved to establish partnerships where we share revenue.
    Matter of fact, just a month or so ago, we executed a 
partnership with the BNSF Railroad around UPS and other shipper 
traffic that was moving on BNSF but they couldn't handle it as 
quickly as needed through their intermodal process. We and UPS 
and BNSF have done a partnership where that traffic is now 
moving on the rear end of our trains.
    One of the advantages of that from an on-time performance 
point of view is, when BNSF customers are on the rear end of an 
Amtrak train and we're sharing in that revenue, there is also 
an incentive for moving Amtrak's train over the road on time. 
So that's a win-win for everybody, and it makes money for us. 
We share it with BNSF and UPS gets their traffic over the road 
on time.
    There are lots of those kinds of opportunities around the 
system that we are exploiting. As Ken said earlier, this is a 
real growth opportunity for us. If you go back to the 1950's 
and 1960's, and you look at the freight railroad industry's 
business, 45 or 48 percent of passenger revenue was 
attributable to mail and express business. That was back when 
the passenger trains were ``profitable.''
    We need to recreate that kind of financial performance, not 
necessarily to that extent. But there is clearly something 
short of a gold mine there for us if we do it right, and if we 
do it in partnership and cooperatively with the freights. I 
will execute an agreement with David Goode and the Norfolk 
Southern very shortly around road railer, express service on 
the Northeast Corridor and the Harrisburg Line. Once again, we 
will be leveraging an asset we've got that's not being used 
between midnight and 6:00 a.m. It's an opportunity for him to 
move traffic in and out of the Port of Baltimore, the Port of 
New York, and Newark quickly and very competitively. It's an 
opportunity for me to make some money.
    Those kinds of deals and opportunities are abound. We just 
simply need to be quick and nimble and take advantage of them. 
And in some cases, it requires us to invest to make money. 
Those are the kinds of places where we want to invest our TRA 
money to get the kind of partnerships and deals that make sense 
for us.
    The short answer is, we're in much better shape with the 
freight industry on lots of fronts, but in particular around 
the mail and express business than we were. In fact, it has 
evolved into actual partnerships, where we're sharing revenues 
and sharing business opportunities.

                        MAIL AND FREIGHT REVENUE

    Mr. Pastor. In the agreement you just explained, what are 
the ball park figures of some of the revenues that you're 
anticipating?
    Mr. Warrington. Each of these are worth several million 
dollars a year. I think the Norfolk Southern arrangement will 
be worth about $2.5 million a year on an annual basis, enabling 
Norfolk to operate their trains over our tracks. There are 
similar arrangements we've made with the other freights around 
these kinds of specific opportunities.
    One of the places where you get the highest yield on the 
express business, and it's a place that the railroads got out 
of many years ago because they had a hard time handling this 
traffic, is the refrigerated car business. You make the most 
money in the express business hauling perishables, fruit, 
vegetables, and that kind of stuff. The freight railroads just 
basically can't handle it these days, they decided it was too 
much of a problem for them over the last number of years.
    We have, in fact our board of directors authorized a pilot 
program around what we call reefer, refrigerated express 
business. Just last month, we began leasing eight refrigerated 
cars. We will be experimenting with several shippers around 
Florida to New York and West Coast refrigerated operations. If 
we can do it and do it right, there is real yield, real revenue 
around the reefer business.
    Mr. Mead. I think it's important to underscore what Mr. 
Warrington is saying here, and to give you some numbers. It's 
plausible, according to our analysis, that they could be 
getting $70 million in revenue from this area by 2002. That's 
excluding mail--the premium express business could be more than 
double what they're projecting for 1999. This is an important 
area, because when Amtrak comes up here and they say they need 
X dollars from the Congress, that figure will be less when you 
have activities like this generating revenue.
    The only advice I would have for Amtrak is, I think they 
can move out more robustly and vigorously and with a sense of 
urgency on this one. It really does hold some promise. The 
market is an interesting one, because it's shippers who can't 
afford, the premium air freight express, but still want to send 
something express and make sure it shows up on time. This is 
the market.

                     BARRIERS TO FREIGHT SHIPMENTS

    Mr. Pastor. Where do you see some of the barriers? If you 
want Amtrak to be more proactive, obviously there are some 
limitations, there are some barriers. Maybe you may want to 
give us some information on that.
    Mr. Warrington. Yes, Ken and I have had several discussions 
about this. One of the things that I need to do, which we're 
working on, is building internal depth and strength around this 
business. It has not historically been our core business. It 
requires a certain amount of talents expertise, depth, and 
strength to handle this kind of business, both operationally 
and commercially. I am personally dealing directly with 
building that kind of capability in the organization.
    I think that's one of the things Ken has recommended to me, 
and I've recognized that and I've had lots of discussions with 
folks about how I can do that and do that quickly.

                             MAIL BUSINESS

    I might mention also, the other real opportunity for us is 
involved with the mail business. We have managed to establish a 
very good relationship with the United States Postal Service. 
As a matter of fact, I had lunch with Bill Henderson, the 
Postmaster General, on Monday, around exploring opportunities 
for us to handle more of their periodical and magazine 
business, we think we can get to the point where we will enable 
them to offload a lot of that mail, to Amtrak from the 11 or 13 
regional postal distribution centers around the country.
    Getting that stuff that clutters their distribution 
centers, we will arrange for trucking deals to go right to the 
printers and deliver it directly to end points without having 
it flow through the Postal Service's regional distribution 
centers.
    We can do that much less expensively than the way it's 
being hauled today, which is principally by air. The issuefor 
the Postal Service is consistency and reliability. We're working very 
hard.

                          mail tracking system

    They are also very interested in a tracking system. In 
fact, they have given us $800,000 to work with us together on a 
tracking system for every mail shipment that's been carried on 
an Amtrak train. The first phase of that system is going to be 
in place in June, the second phase in December. It will make 
them more comfortable with offloading more and more of this 
business to Amtrak.

                       increasing mail efficiency

    The other thing we're working with them on, hope to work 
with them on, is in fact a suggestion Gil Carmichael, who is 
the chairman of the ARC, made to me a couple of months ago 
about looking for ways to get better efficiency around the 
movement of mail such as that from truck across the platform to 
our trains. This would help us not tie up passengers trains 
loading and offloading the mail business.
    One of the things we've talked to the Postal Service about 
is convening the big, big, big shippers or printers, like 
QuadGraphics, the guys who really sort of run that business to 
look for partnerships and investment opportunities for all of 
us to design and invest in the kind of equipment that enables 
us to move that stuff on and off our trains and trucks quickly 
and rapidly.
    Ultimately, we should be designing our station facilities 
across this country to be able to handle that kind of traffic 
as well, efficiently, rather than in, frankly, the fairly 
neanderthal sort of way we do it today. We are really not set 
up operationally or physically the way we were 40 or 50 years 
ago to handle that kind of stuff quickly.
    Mr. Pastor. Mr. Chairman, I want to thank the panel and 
thank you.

                     role of the inspector general

    Mr. Wolf. Thanks, Mr. Pastor. We have a number of 
questions. Just so you know we're not going to adjourn, we're 
just going to go through until we finish.
    Before we get to the questions, I think it's been good to 
have the IG here. Some don't like it, some do. But it's a good 
testing process. Frankly, I think you're doing a good job, and 
I think probably you're handling yourself better today than 
I've seen many of the previous testimony from Amtrak since I've 
been on the committee. I think it's not bad to have Amtrak be 
tested by the IG. I know sometimes you don't like what they're 
going to say.
    But I think it's good, and I think that's good for the 
public interest. We try to do that, and I think you would be 
able to agree with that, because you ought to be able to answer 
any questions they raise, and they may single something that 
you haven't thought about.

                             amtrak subsidy

    I think, too, on the subsidy question, there is going to be 
subsidy for Amtrak for a long, long time to come. I think 
everyone should know that. I think there are two different 
things, though, there's subsidy and poor service and subsidy 
and excellent service. There for a period of time, people were 
putting money in and the windows were dirty, the food was 
terrible, and the trains were not on time. I think what you're 
stressing with regard to excellent service, quality, is very, 
very important.

                          expanded definition

    Ms. Molitoris, the Administration's budget does not request 
in bill language the expanded definition as you did last year. 
Instead, you refer to this need in the detailed justification 
for the fiscal year 2000 budget request. Why are you not 
seeking it in bill language? Are you going to be amending it? 
Was there a reason you didn't do it this way?
    Ms. Molitoris. Mr. Chairman, it has been the 
Administration's position that both the money and the 
definition were essential for the future of Amtrak. Can I check 
on that and get back to you?
    [The information follows:]

    No. The Administration believes that the Committee's 
acceptance of the proposed definition is all that is required 
to permit the Department to allow Amtrak to use its capital 
grant for the uses proposed. Specific statutory language is not 
required.

    Mr. Wolf. Sure. It looked like a de-emphasis.
    Ms. Molitoris. No. I can tell you with certitude that it's 
not. But let me check on the point that you raise and get back 
to the committee, please.
    [The information follows:]

                  Capital Definition in Bill Language

    Mr. Wolf. Will you be amending your bill language to 
reflect this request as you did in fiscal year 1999?
    [The information follows:]
    No. The Administration believes that the Committee's 
acceptance of the proposed definition is all that is required 
to permit the Department to allow Amtrak to use its capital 
grant for the uses proposed. Specific statutory language is not 
required.
    Mr. Wolf. Mr. Warrington, do you believe that Amtrak needs 
this definition explicitly in bill language, as is the case 
with transit, to allow the railroad to use its capital 
appropriations for activities other than traditional capital 
expenses?
    Mr. Warrington. Amtrak should be afforded the same 
opportunities as other modes of transportation. The definition 
of capital allowed for transit agencies is an integral part of 
Amtrak's Strategic Business Plan and critical for cash flow 
management. If Amtrak is not permitted to use capital in the 
same manner as transit and the other modes, it will not have 
sufficient access to cash needed to cover its expenses in 
FY2000.

                          capital expenditures

    Mr. Wolf. Okay. Mr. Warrington, last year the board agreed 
to hold its capital expenditures to 40 percent in the first 
year. Has the board agreed to a similar restriction for fiscal 
year 2000?
    Mr. Warrington. No, Mr. Chairman, the board has not. That 
was a decision that was made in connection with that particular 
budget request. That was a self-imposed constraint.
    [The information follows:]

    Mr. Wolf. The 40 percent first year spending rate meant that of the 
$609,000,000 appropriated, FRA will only release $244,000,000 to Amtrak 
for capital expenditures during fiscal year 1999. What impact has this 
had on Amtrak's short-term cash flow? Does this restriction require 
more borrowing from TRA funds?
    [The information from Amtrak follows:]
    Because Amtrak is prohibited from accessing the balance of the 
funds, it forces Amtrak to borrow against the TRA to satisfy short term 
cash flow needs. This runs completely counter to the purpose of the 
Congress providing the TRA in the first place--to provide much-needed 
capital for high rate of return investments to enable the achievement 
of operating self-sufficiency.
    In addition to forcing borrowings from the TRA funds, it also 
delays our ability to use these appropriated funds for capital 
investment. In the current plan, which reflects the 40% spend out, the 
funds are not available for capital investment until FY2001. If the 
spend out were 100% Amtrak could begin using these funds for capital in 
FY2000.
    Mr. Wolf. At the time the Board made the 40 percent spending 
commitment, Amtrak hoped to use the expanded capital definition to 
cover what had previously been defined as operating costs, such as 
maintenance of equipment and way. However, Congress only permitted a 
limit expansion of traditional capital expenses, to include maintenance 
of equipment. In fiscal year 2000, Amtrak and the Administration are 
again seeking the expanded capital definition. In your grant request, 
Mr. Warrington, Amtrak states that if the expanded definition ``were 
not provided, Amtrak will not be able to remain on the glidepath to 
operational self-sufficiency, nor will the corporation make it, on a 
cash basis, through fiscal year 2000.'' Please explain to the 
Committee, in detail, what you mean by this statement and why. Does 
this mean that if Congress does not provide the expanded capital 
definition this coming year that Congress may need to begin reviewing 
options to liquidate the Corporation?
    [The information from Amtrak follows:]
    If all other elements stay the same, without the expanded capital 
definition, Amtrak would have a $47 million cash shortfall in FY2000. 
The irony would be that even though Amtrak would have $1 billion in the 
bank, we would be unable to use those funds to satisfy our obligations. 
Having exhausted our commercial lending lines of credit, we would have 
no source of funds to pay for the cash need.
    Mr. Wolf. If Amtrak is not allowable to use its federal 
appropriations for maintenance of way, will Amtrak be able to continue 
operating past fiscal year 2000? If so, how will the Corporation change 
its operations?
    [The information from Amtrak follows:]
    Amtrak will not be able to make it through FY2000 on a cash basis 
without the ability to spend federal capital appropriations on 
maintenance of way. Despite having significant cash balances in TRA 
funding, Amtrak would not be able to meet its operating cash flow 
obligations without the expanded definition of capital.

                      Expanded Capital Definition

    Mr. Wolf. Mr. Mead, your testimony states that if Amtrak does not 
receive the expanded definition of capital, ``Amtrak will not be able 
to cover its operating losses and could be forced to default on current 
obligations. This could occur even though Amtrak is likely to have $1 
billion in Taxpayer Relief Act (TRA) funds in the bank''. How is this 
possible?
    [The information from the IG follows:]
    Taxpayer Relief Act (TRA) funds have the same restrictions on their 
uses as do the current federal appropriations Amtrak is receiving. That 
is, this funding can only be used for maintenance of equipment, not 
maintenance of way. Therefore, once Amtrak's annual federal 
appropriation is used to fully fund maintenance of equipment, no TRA 
funds can legally be used to cover any additional operating expenses.

    Mr. Wolf. We're going to have a number of other questions 
in the whole area. Last year, the House expressed concern that 
if approved the expanded capital definition that Amtrak would 
use almost all the appropriated funds on what was traditionally 
categorized as operating expenses. Mr. Warrington, it appears 
from your strategic business plan that this has actually 
occurred. Would you highlight for the committee how much Amtrak 
plans to spend on traditional capital items in fiscal year 
1999, and how much Amtrak plans to spend on maintenance of 
equipment?
    Mr. Warrington. Yes. In fiscal year 1999, the capital 
maintenance number is about $484 million. And beyond that, 
since our appropriation is $609 million, on top of that $484 
million, the first roughly $50 million is being used for 
principal on debt service, which is a legitimate capital 
expense. The balance is being used for capital.

                             capital needs

    Mr. Wolf. Ms. Molitoris, in your testimony you state, 
``Approximately $361 million of the $571 million requested will 
be used to maintain equipment and facilities necessary to 
ensure Amtrak's safe operation and preserve and improve the 
quality of service experienced by Amtrak.'' If the request is 
enacted, that means 63 percent of the appropriated funds will 
go for traditional operating expenses.
    Won't allocating this much for traditional operating 
expenses adversely impact the corporation's extensive capital 
needs, such as the $3.2 billion needed for the northeast 
corridor?
    Ms. Molitoris. Mr. Chairman, I think we have said, last 
year and this year, that fiscal years 1999 and 2000 were very 
tight years. Those were going to be very difficult years.
    I think the request, as it stands, is the best business 
decision that Amtrak could make. It was our recommendation, in 
terms of our budget analysis. I think that the description that 
we have given in our testimony, as well as Mr. Warrington and 
Ken Mead, tells you that we are pursuing other revenue streams 
to lessen that percentage in the years to come. This is a very 
tight budget; that is why I continue to stress that $571 
million as being a crucial number, along with the flexibility 
of the capital definition. It was our best judgment that that 
is what would occur in the pursuit of a viable Amtrak.

                      expanded capital definition

    Mr. Wolf. If we adopt the expanded capital definition, 
would this mean that Amtrak will continue to use a large 
percentage of its capital dollars for what had traditionally 
been operating costs, which was 80 percent in fiscal year 1999 
and 63 percent in fiscal year 2000? And would you specify for 
the committee, Mr. Warrington, what you plan on using capital 
dollars for during the next three fiscal years?
    Mr. Warrington. Could you please repeat the question, Mr. 
Chairman?
    Mr. Wolf. Yes. If we adopt the expanded capital definition, 
does this mean that Amtrak will continue to use a large 
percentage of its capital dollars for what had traditionally 
been operating expenses? I think we know the answer to that. 
Please specify for the committee what you plan on using capital 
dollars for during the next three fiscal years.
    Mr. Warrington. Yes. A significant proportion of that 
appropriation would be for what were, heretofore, operating 
expenses.
    Mr. Wolf. The percentage would be?
    Mr. Warrington. Well, in fiscal year 1999 it's $484 million 
out of $609 million, and in fiscal year 2000 it would be $360 
million----
    Mr. Wolf. That was $484 million, right?
    Mr. Warrington. Let's see, $484 million out of $609 
million. And in fiscal year 2000, it would be $361 million out 
of $571 million, right, and in fiscal year 2001 it would be 
$242 million out of $521 million. And then in the last year, 
fiscal year 2002, it would be $185 million.
    [The information follows:]

    Mr. Wolf. If capital dollars are disproportionately used 
for operating expenses, how can the Corporation claim to be 
self-sufficient beginning in fiscal year 2003?
    [The information from Amtrak follows:]
    Amtrak's Strategic Business Plan provides the blueprint to 
reach operating self-sufficiency by the end of FY2002. It is 
defined by the Amtrak Reform and Accountability Act as 
requiring no federal support for operations except for excess 
Railroad Retirement (excess RRTA) costs. In FY2002, Amtrak will 
use only $185 million of capital appropriations for capital 
maintenance. This amount is equal to the amount of excess 
Railroad Retirement cost Amtrak anticipates carrying in FY2002.
    Mr. Wolf. What percentage of federal funds from 
appropriations does Amtrak plan to use for maintenance purposes 
to meet its fiscal year 2002 plan?
    [The information from Amtrak follows:]
    The only amount of the $521 million of federal funds from 
appropriations which Amtrak plans to use for maintenance 
purposes in FY 2002 is the value of excess RRTA--those 
contributions Amtrak makes to the railroad retirement system in 
excess of what is required for its own retirees. For FY 2002 
this amount is projected to be $185 million or 35% of $521 
million.
    Mr. Wolf. Amtrak cannot use federal funds for operating 
expenses after fiscal year 2002. Does Amtrak plan to use 
federal funds for progressive overhauls after 2002? If so, is 
clarification of this policy needed?
    [The information from Amtrak follows:]
    Amtrak has consistently used capital funds for progressive 
overhauls since FY 1996. This overhaul plan replaces major 
components of equipment on a more timely basis before component 
failures. This program was determined to be more effective for 
certain lines of equipment than heavy overhaul. It accomplishes 
the same upgrades to equipment as a heavy overhaul but changes 
the timing. Since they are of a capital nature Amtrak plans to 
use federal funds for these overhauls after FY2002 in order to 
maintain its equipment in a state of good repair.
    Mr. Wolf. Mr. Mead, do you support Amtrak's request for greater 
flexibility, so that the railroad can use its federal subsidy for 
maintenance of way as well as maintenance of equipment?
    [The information from the IG follows:]
    Yes, I do. The inclusion of maintenance of way as well as 
maintenance of equipment in the permissible uses of Amtrak's federal 
appropriation would permit Amtrak to use its capital funds in the same 
manner as rail transit systems financed by the Federal Transit 
Administration. Amtrak needs the ability to decide whether refurbishing 
its existing capital assets--a traditional operating expense--makes 
better economic sense than investing in new replacement--a traditional 
capital expense. Restricting Amtrak to capital use that only permits 
new investment will ultimately bias its decisions regarding 
replacement, rather than the maintenance, of assets--even when 
maintenance is a less-costly and more economically efficient 
alternative.
    Besides making good economic sense, expanding Amtrak's permissible 
uses for its federal appropriation is financially imperative next year. 
If the same funding restrictions as in the FY 1999 appropriation are 
applied next year, Amtrak will not be able to cover its operating 
losses and could be forced to default on current obligations.
    Mr. Wolf. Would it be reasonable to go even further and remove all 
constraints on the use of the federal subsidy through fiscal year 2002?
    [The information from the IG follows:]
    Yes. We believe that the financial and political confusion these 
restrictions have engendered have further complicated Amtrak's struggle 
to achieve operating self-sufficiency.
    By giving Amtrak an unrestricted grant through Fiscal Year 2002, 
Amtrak would be able to spend the appropriation where most needed, with 
the full knowledge that it must reach operating self-sufficiency by the 
end of Fiscal Year 2002. We believe that any concerns about Amtrak 
unwisely using its appropriation for operating costs, rather than 
investing in capital needs, are unfounded. The foundation of Amtrak's 
current strategic business plan, and thus its long-term viability, is 
grounded on the revenues that are expected to flow from critical 
capital projects. Amtrak fully understands that every dollar spent 
unnecessarily on operating losses is a dollar taken from these capital 
investments. We believe there is a strong argument to be made for 
giving management, and the Reform Board, the flexibility to make the 
business decisions they believe are necessary to meet their mandate 
without the hindering financial restrictions encumbering them today.
    Mr. Wolf. Mr. Warrington, what does operating self-sufficiency mean 
to Amtrak? How does this differ from where we are now--no federal 
appropriation for operating assistance?
    [The information from Amtrak follows:]
    Operational self-sufficiency is defined as a net operating loss of 
zero, less the excess Railroad Retirement Tax Act (RRTA) payments that 
Amtrak makes to cover the costs of the Railroad Retirement program for 
non-Amtrak employees. While Amtrak is required to pay these costs, this 
historical anomaly should not be an indicator of Amtrak's financial 
performance.
    Though Amtrak no longer receives an operating grant, our 
operational costs have not changed--these costs are met by an internal 
borrowing against Taxpayer Relief Act funds. This is also why adoption 
of the expanded capital definition is critical; it will allow Amtrak to 
use our capital appropriation on both maintenance of way and 
maintenance of equipment expenses, which have previously been 
considered operational costs.

    Mr. Wolf. Mr. Mead, obviously, from your testimony, you are 
in support of Amtrak's request for greater flexibility or was 
it that if they didn't get it, they were going to go bankrupt?
    Mr. Mead. Probably both. [Laughter.]
    No, we do support it. It is going to encourage undesirable 
behaviors if we don't adopt it. As I pointed out before, they 
either won't do the maintenance, or they will go buy new 
equipment when they don't need to. It just makes sense during 
this period of time, I think, to expand it. I recognize the 
difficulties on the scoring----

                     scoring of expanded definition

    Mr. Wolf. Yes, the scoring is the problem. There were two 
problems last year, the scoring, and also the mixed signals 
with regard to the authorizers.
    What if we just didn't do anything? What if we just gave 
you $571 million? I mean, I think we either have to have 
confidence in you, or we don't have confidence in you; and I 
think to be kind of picking around, why don't we just say, 
``Here's $571 million,'' or as Mr. Sabo knows much better than 
I do how that works, having been Chairman of the Budget 
Committee, that would probably score fairly high. The question 
is, then, would it be better to take the $571 million with no 
strings, you do as you see fit, we have confidence in you, and 
then--if that were scored, and knowing that we're going to have 
to live up here with what we have--would you then want to come 
in and say, ``Well, I'll take $540 million'' or whatever the 
figure is that we could fit into the overall numbers with no 
restrictions.
    Do you want to both comment on that?
    Mr. Mead. I think you can make a textbook-type argument 
that that is desirable. But this is a request for taxpayer 
funds, and I think Amtrak can make a case that we find sound, 
that the definition should be expanded to include maintenance 
of way. Therefore it would include both maintenance of 
equipment and maintenance of way.
    Mr. Wolf. But if you just gave it to them, then you don't 
even get into the definition. They could use it for whatever 
they wanted to.
    Mr. Mead. Well, you don't. But at the same time, Amtrak 
knows that it is under the gun to focus this money on capital-
related items.
    You can make the case, Mr. Chairman; I think what the facts 
support right now is expanding it to include maintenance of 
way. If you go all the way, it's basically an appropriation 
that says, ``Here, go do with it what you want.''
    Mr. Wolf. Right. That's true.
    Mr. Warrington, what is your response?
    Mr. Warrington. I would not have a problem with that, Mr. 
Chairman. As a matter of fact, it would provide us with the 
kind of flexibility that you're talking about. The level of 
effort though, $571 million, is important.
    Mr. Wolf. I know that. But you understand our problem here. 
I don't think any committee has been more sympathetic, and, 
obviously, I was raised a half a block from your line up in 
Philadelphia and I'm very, very supportive. But I think we're 
going to have to work with whatever we have here, and I'm just 
wondering--it's just an idea that if you were to do it, and Mr. 
Mead seems to have a little bit of a problem, but if you were 
to do it, would you rather have $571 with no restrictions, or 
since that's so good, you could go to $550 if we had to work 
out something.
    You should discuss this with your staff, but I'm just 
trying to get some sense of how do you feel about that. I know 
you're not backing off of that $571.
    Mr. Warrington. Right.
    Mr. Wolf. And I'm not trying to trick you. This is not a 
game.
    Mr. Warrington. I understand.
    Mr. Wolf. We're trying to find out what would be the best 
way to do it.
    Mr. Warrington. I would need to understand technically, Mr. 
Chairman, whether or not a number other than $571 million 
without those kinds of constraints would work for us. I can't 
tell you that it would work for us today. But we can certainly 
have the staff take a look at it.
    Mr. Wolf. Why don't you.
    Mr. Mead. And a practical problem, as I listened to Mr. 
Warrington speak here, a practical problem in saying ``No 
strings attached, here's the money'' is the scoring. It goes 
way up.
    Mr. Wolf. Yes. We said subject to the scoring, all right. I 
know that.
    Ms. Molitoris. Mr. Chairman, just let me mention, I think 
the idea that Amtrak would be on the level playing field with 
transit and highways system is a reason for an expanded 
definition that makes sense. You're going to have to deal with 
scoring in any event, but at least we have some consistency 
within the surface modes with the definition, the expanded one 
that we're asking for. And we will go back and look at the 
scoring and see if we can bring anything to the committee that 
will help. But I think the Administration would like to have 
this consistency, if possible.
    Mr. Warrington. Mr. Chairman, my staff reminds me here that 
one possible thing that we could explore is the $571 million 
but with directed scoring or an obligation limit, that that 
might be a reasonable outcome here for us and the committee as 
well.

                     fra and amtrak budget request

    Mr. Wolf. We'll be talking.
    Ms. Molitoris, your Amtrak request is for $570,976,000. Mr. 
Warrington, you use the figure of $571 million. The difference 
is slight; is it just kind of a mathematical mistake or is it 
just sort of----
    Mr. Warrington. I think it's a rounding issue.
    Mr. Wolf. You would rather round it up than down?
    Mr. Warrington. Yes. But I can concede the $24,000 I think.

                     financial obstacles for amtrak

    Mr. Wolf. Ms. Molitoris, what do you think are some of the 
obstacles to improving Amtrak's financial health that they may 
not be looking at?
    Ms. Molitoris. I think the strategic plan is the blueprint 
for the rehabilitation, renovation, and rejuvenation of Amtrak. 
I think really talking about the culture of the railroad 
probably would hit all of the elements that are barriers. There 
are 24,000 employees who are very dedicated; they have taken 
lower rates of pay foryears, they're dedicated to this 
railroad, they're very important elements. But through the very, very 
hard years, Mr. Chairman, there have been issues of service that have 
become somewhat ingrained.
    I think Mr. Warrington's stress on performance standards is 
also going to include a high level of training for these 
employees, because there are elements that make people want to 
come back as passengers and a lot of that has to do with how 
one is treated, how one is greeted, the body english, the 
smiles or lack of. I think that whole cultural change is 
somewhat underestimated, often very underestimated. It is 
difficult to assure behavioral change in people who have been 
doing something for a long time. So I think that's going to be 
a challenge for Amtrak, but I think they're up to that 
challenge.
    I think that things like mail and express are also key, I 
recall criticism last year because Amtrak's budget did not, in 
fact, in the IG's report, did not produce the kind of revenue 
that was at first anticipated. What was the reason for that? 
The person in charge of that initiative, who is no longer at 
Amtrak, did not get into the business of the operating changes 
that were needed. George mentioned, that hasn't been their core 
business for a long time, so you can't just have a conceptual 
initiative without the operational training and changes that 
were needed.
    So I think all the nuts and bolts of the business, all the 
detail of the business are crucially important. I'm very 
encouraged by the business initiatives. For example, people are 
actually trying to recruit Amtrak as a partner. Mr. Mead has 
talked to me about Swift Trucking, one cadillac of trucking 
companies, and they are very desirous of forming a business 
partnership with Amtrak because, if you look at the Northeast 
and the upcoming merger acquisition of Conrail, there's going 
to be much more congestion on much fewer lines. We see it 
across the country with the mega mergers. That means that these 
kinds of express lanes that shippers need can occur through a 
partnership with Amtrak.
    I personally believe that as the percentage of revenues 
from non-passenger revenue increases, Amtrak is going to become 
more and more solid. Around the world, in Japan, for example, 
there are business plans where they have as a goal 15 percent 
non-passenger revenues.
    So I think Amtrak is going in the right direction. I don't 
think it's easy at all. I think that Mr. Mead is right, it is a 
difficult challenge, but it's doable. And I am very excited 
about the fact that they're $42 million ahead of the 
projection. That says to me things are going better.

          Obstacles in Improving Amtrak's Financial Condition

    Mr. Wolf. Ms. Molitoris, what are some of the obstacles to 
improving Amtrak's financial health and how does the 
President's fiscal year 2000 budget request address these 
obstacles?
    [The information from FRA follows:]
    To achieve operating self-sufficiency, Amtrak must 
successfully initiate high-quality, high-speed service on the 
Northeast Corridor; expand its transportation of mail and 
express shipments; develop a consistent high standard of 
quality service throughout the company; and continue to drive 
out expenses form the Corporation. Amtrak needs capital to 
implement these initiatives. Amtrak also needs flexibility in 
its use of Federal funding, in the form of the eligibility of 
maintenance for capital investment for the next four years, to 
provide the opportunity for the initiatives identified above to 
mature to the point that they are positively impacting Amtrak's 
bottom line. The President's request for FY 2000 addresses 
these needs by providing capital for investment in high-yield 
projects which, when taken with the funds made available under 
the Taxpayer Relief Act, will permit Amtrak to make the 
investments identified for FY 2000 in the Strategic Business 
Plan. The President's request also provides the funding 
necessary to keep the Corporation operating while these 
investments come on line.

                         possible improvements

    Mr. Wolf. Have you hired a company to come in to look and 
make recommendations as to other places you go, or do you feel 
you have the skill and knowledge within the corporation now to 
do that? For example, ads on trains, as you talked about, the 
wrapping of the trains, the air rights. Someone to look and see 
what is out there that is potentially possible. Do you feel you 
have the knowledge within the corporation, or have you gone 
outside to bring somebody in who has looked at that for an 
airline or looked at that for another company?
    Mr. Warrington. It's a combination of factors depending 
upon the area and the opportunity. There are some places where 
we've built over the past couple of years a very deep internal 
expertise, particularly around real estate, real estate 
development, real estate negotiation. And there are other 
places where we need to supplement with outside forces, 
particularly around advertising, promotion, and branding.
    Mr. Wolf. Have you looked at what foreign rail corporations 
are doing? They may not be doing any better, but have you 
looked to see? You mentioned what they're doing in Great 
Britain and Germany and places like that.
    Mr. Warrington. Yes. We've spent a lot of time with senior 
management of most of those outfits. As a matter of fact, just 
yesterday I met with the chairman and president ofVia Rail 
which is the Amtrak equivalent to the passenger rail system in Canada. 
We have many similarities. As a matter of fact, we have lots of 
partnering arrangements with them today from a marketing point of view, 
joint ticketing and joint pass privileges. Beyond that, we're looking 
at opportunities to share equipment design and specification 
development, perhaps procurements around locomotives, such as FRA's new 
high-horse-power diesel locomotive. We talked about their requirement 
for them as well as some economies of scale around that.
    We've spent a lot of time with SNCF, the French national 
railroad, and the German national railroad around sharing of 
opportunities. They've spent a lot of time here with us and we 
have people who spend time over there with them, both from the 
technological level and from an engineering and equipment point 
of view. We also discussed marketing, design, transportation 
planning, and management practices. We do a fair amount of that 
with foreign carriers.

                          airline partnerships

    Mr. Wolf. Have you teamed up with--this is going to sound a 
little strange--but have you teamed up with any airlines with 
regard to frequent flyer mileage, things like that?
    Mr. Warrington. Yes. As a matter of fact, we do lots of 
work with United Airlines partnerships around fly-train, like 
fly-drive, we do fly-train deals with United.
    Mr. Wolf. Do you do any frequent flyer miles?
    Mr. Warrington. And we do some of that with Delta, yes. But 
the real opportunity is around the high-speed service in the 
Northeast and interline agreements with Continental, for 
example. We've had discussions with Continental at Newark 
Airport in New Jersey. That's their gateway--center of their 
entire system, and partnering with them around bringing traffic 
and distributing it in the Northeast along the Northeast 
corridor is something we're working on.
    We are having similar discussions with Southwest Air and 
USAir down here and at BWI. And we are having very good 
discussions in Providence where there will also be a rail 
station that connects to the new airport there, Green Airport.
    Mr. Wolf. Good.

                              amtrak image

    Ms. Molitoris. Mr. Chairman, can I just mention one other 
barrier because I think it's very real?
    Mr. Wolf. Sure.
    Ms. Molitoris. And that is, you mentioned a couple of years 
ago all of the stories about potential bankruptcy and so on. I 
would call it ``Amtrak bashing'' to coin a phrase. I think 
people get concerned about Amtrak's viability and they wonder 
whether they ought to be passengers. I think the whole feeling 
among the workforce was a very depressed feeling at that time. 
I think as we together with the governors and the mayors and 
the new Amtrak leadership and the Congress and the 
Administration continue to press the success and the growth in 
the right direction, and if we can get some coverage about 
those kinds of things in the press, I think it's an 
encouragement to passengers that this is a viable 21st century 
system. That's why high-speed is so important, because that's 
going to be attractive and it will get some press.
    Mr. Wolf. Well, I agree. With regard to the bashing, I 
think Amtrak--and, again, I would stipulate that I've been a 
good, strong supporter over the years--I think it was its own 
worst enemy. Have you ever been in your repair facilities out 
in Indiana in January? No wonder the employees had bad morale, 
they had frostbite. [Laughter.]
    Mr. Wolf. Everything was just going down. I take Amtrak a 
lot; I have a daughter who lives in New York City. But the 
trains were dirty, the stations were unclean. It was not a 
pleasant experience. So I think a lot of the bashing was 
because of Amtrak. People in the marketplace moved off to an 
airline or they decided to drive. There were some members here 
who were not overly enthused about Amtrak, but I don't think 
there's any strong anti-Amtrak feeling as much as people were 
concerned about, what I said earlier, subsidizing poor service 
and subsidizing quality service.

                                net loss

    At the end of last fiscal year, Amtrak's unaudited cash 
loss was calculated at $823 million. However, your recently 
released annual report calculates this cash loss at $930 
million, a difference of $107 million. About $100 million of 
this was due to retroactive wages and taxes due employees after 
new labor contracts were signed.
    What was the reason for the higher than planned net loss in 
fiscal year 1998, besides the retroactive labor payments?
    Mr. Warrington. I've been asked that question many times 
about if you're doing better, why is your operating loss 
growing. One of the reasons is the cost of the labor 
agreements. We basically included two years of retroactive 
labor settlements in fiscal year 1999.
    Mr. Wolf. That was $100 million.
    Mr. Warrington. Yes, $106 million, actually. But beyond 
that, depreciation has grown significantly and that's a non-
cash item. But as the plant gets older and the accountants 
assign depreciation, that's an added expense that looks like a 
greater loss but it's not funded and it's not cash.
    So in order to get a true picture of what the trend line 
looks like, you need to subtract out depreciation, non-cash; 
you have to subtract out that labor retroactive payment; and, 
you also need to subtract out progressive overhauls, which 
accountants expense as an operating cost. But these aremajor 
capital overhauls that we transfer over to capital. So when you take 
those expenses out, the numbers move in the right direction. But the 
biggest share of that, Mr. Chairman, is depreciation.
    [The information follows:]

    Mr. Wolf. Why is Amtrak realizing the entire lump-sum labor 
adjustment in 1998?
    [The information from Amtrak follows:]
    Generally accepted accounting principles required the 
recognition of the entire retroactive portion of the labor 
agreements in 1998.
    Mr. Wolf. How would the operating results have looked in 
prior years if the labor adjustment had been allocated to the 
years (1995-1998) in which the cost had actually occurred?
    [The information from Amtrak follows:]
    Although related to agreements from 1995 the amount of the 
labor adjustment is largely attributed to FY 1996 through FY 
1998. For analytical purposes to review trends, an allocation 
of one-third of the adjustment per year or $35 million per year 
is reasonable.

----------------------------------------------------------------------------------------------------------------
                                                                  FY94      FY95      FY96      FY97      FY98
----------------------------------------------------------------------------------------------------------------
Revenues......................................................     1,413     1,497     1,555     1,674     1,708
Expenses......................................................     2,246     2,305     2,318     2,436     2,638
                                                               -------------------------------------------------
Operating Loss................................................     (833)     (808)     (763)     (762)     (930)
    Less Adjustment For Retroactive Labor Costs...............  ........  ........      (35)      (35)      (70)
    Less Depreciation.........................................       255       254       240       248       299
    Less Capital For Progressive Overhauls....................  ........  ........        36        37        63
                                                               -------------------------------------------------
Net Operating Loss............................................     (578)     (554)     (522)     (512)     (498)
Adjusted Operating Ratio......................................      1.41      1.37      1.34      1.31      1.29
----------------------------------------------------------------------------------------------------------------
Note: FY98 revenues exclude Federal payments and TRA interest.

    Mr. Wolf. Okay. The Inspector General, in its review of 
your March 1998 Strategic Business Plan, stated that ``several 
of Amtrak's financial projections are at risk of not being 
achieved, and thus threaten to increase Amtrak's projected cash 
loss.'' It appears that we could be seeing this.
    In your current Strategic Business Plan, the Corporation 
will incur a cash loss of $426 million at the end of fiscal 
year 2002. This is an increase of $58 million above what was 
anticipated in your March 1998 Strategic Business Plan. Why is 
this greater loss projected?
    Mr. Warrington. In fiscal year 2002?
    Mr. Wolf. Yes.
    Mr. Warrington. Frankly, Mr. Chairman, I don't know the 
answer to that question and I'm not following those numbers. 
Maybe I could supply that to you. I just don't know that off 
the top of my head and I don't have the numbers arrayed that 
way in front of me. We can certainly supply that to you.
    Mr. Wolf. Okay. If you would, please.
    [The information follows:]

    The $426 million is the baseline net budget result in 2002 
before plan actions and does not reflect a cash loss. In 
Amtrak's 1999-2002 Strategic Business Plan, the net budget 
result in 2002 after plan actions is zero.

    Mr. Wolf. Mr. Mead, you are in the process of updating your 
report on Amtrak's financial situation. Based on your work to 
date, have you found any additional cash losses above those 
projected in March 1998 that will make it difficult for Amtrak 
to be free of a Federal operating subsidy by fiscal year 2003?
    Mr. Mead. No, I don't think we've found any additional cash 
losses, sir.
    [Questions for the record to Amtrak follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Wolf. Mr. Warrington, how did the IG's projections 
compare to your first quarter of 1999 performance?
    Mr. Warrington. Actually, at the end of the first quarter, 
we were doing about $25 million better.
    Mr. Wolf. Better?
    Mr. Warrington. Better than projections. And by January 
30th, we're doing about $40 or $41 million better than that 
forecast.

                     fy 1999 first quarter results

    Mr. Wolf. In your testimony, you stated that Amtrak's first 
quarter fiscal year 1999 results were $25 million ahead of what 
the DOT Inspector General report projected. The IG's projection 
was calculated with a retroactive lump sum labor payment 
included in your fiscal year 1999 expenses. Is the $25 million 
improvement you note the result of shifting a lump sum payment 
to fiscal year 1998?
    Mr. Warrington. No. The answer is, no.
    Mr. Wolf. No.

                projected revenues and self-sufficiency

    Mr. Wolf. We have some other questions here. On the 
Northeast corridor, one of the key restatements the IG made was 
to adjust Amtrak's Northeast Corridor high-speed rail passenger 
revenue projections by decreasing the anticipated revenue by 
$219 million. The IG explained that it believed that Amtrak 
would not likely achieve the levels projected during the first 
few years of service. However, the revenue Amtrak earns from 
high-speed rail is the keystone to achieving self-sufficiency.
    If the revenues are less than Amtrak has projected, what 
impact will this have on operating self-sufficiency?
    Mr. Warrington. Well, if they are significantly less than 
projected, that will be a problem for us. But we have 
confidence and stand behind the modeling work that we have 
done. We have some basic disagreements with some of the 
baseline assumptions alone by the modeling folks under contract 
with the IG. I think Ken agrees with some of those 
disagreements and maybe doesn't agree with others.
    But there were some basic differences in the inputs and the 
assumptions and the variables that the firm that did the 
modeling for Ken used compared to KPMG who did our modeling. A 
couple of examples are: The original modeling assumed the use 
of 18 trainsets, and we're using 20 new trainsets. That 
original modeling assumed 12 months of expenses and 3 months of 
revenue for the first year, and we believe that they need to be 
equalized. There was a modeling assumption that any auto trips 
travelling less than 75 miles would not divert to a high-speed 
train, and our folks don't believe that's correct. There was an 
assumption that because our conventional rail service has 
significant travel time improvements as well, in addition to 
the high-speed trainsets, that more of the traffic might divert 
to the conventional train service and less to the high-speed 
trains themselves, and, consequently, the revenue stream would 
be less. Our response to that is, if the marketplace is going 
there, we're going to adjust our prices on the conventional 
trains.

                             ticket prices

    Mr. Wolf. What will the ticket price difference be?
    Mr. Warrington. Between the conventional trains and the 
other trains, probably in the 20 to 30 percent range.
    Mr. Wolf. So the ticket from Washington to New York this 
December on the high-speed will be?
    Mr. Warrington. Right now you're Metroliner fare from 
Washington to New York is $114. Your airfare is $204, I 
believe, on the shuttle. We expect that our fare between 
Washington and New York will go to about somewhere between $135 
and $145, that's up from today's $114.

                          airline competition

    Mr. Wolf. How does the new service by USAir at Dulles 
impact you?
    Mr. Warrington. Very little. Our revenue projections around 
high-speed rail modelled every origin and destination that all 
those trains will serve. First of all, travel time matters a 
lot, and Dulles really is not a competitive location for the 
market that we have and the market we will attract from the air 
shuttle. It's a downtown-to-downtown destination, number one.
    Mr. Wolf. I completely agree with that. You're smarter 
about this than I am, but I, myself as an example, I live near 
Dulles and I usually take the train. Yet, when I saw USAir come 
out with a $49 introductory fare shuttle out of Dulles, it kind 
of gets your attention.
    Mr. Warrington. We also believe firmly that this is about 
quality as well the on-board experience and value. I will tell 
you that for our price, which will be generally competitive, 
the value one will achieve and the on-board service and 
amenities that one will experience will be far superior than 
anything anyone will experience on an airline these days. I can 
virtually assure you of that.
    Number two, the other thing we did was very carefully model 
the fact that this is not just about endpoint destinations. 
What we can do that even the most inexpensive discount airline 
can't do is stop at every station along the Northeast corridor. 
Most of our traffic, for example, intermediate traffic, New 
York-Philadelphia, Philadelphia-Washington, Wilmington-
Baltimore. That is noncompetitive with air service. It is a 
market that we can't lose, that we will only grow.
    So the risk around our projections has to do with endpoint 
markets, in particular. They're not the largest share of our 
markets today but they do provide the highest yield because the 
trip length is longer, so we like to get more of those. But 
they're not the driving force behind our revenue projections.

                      start of high-speed service

    Mr. Wolf. Okay. Is there any chance that the service will 
slip, or can you pretty much guarantee that will start by the 
end of this year? You were tentative about taking the train up 
on New Year's Eve. Are you pretty confident that there will be 
high-speed service before the end of the year?
    Mr. Warrington. Yes. I'm confident that we'll begin 
phasing-in that service by the end of the year. But I will tell 
you, it is going to be very tight. The trainsets are in testing 
and they're in good shape. The electrification contractor has 
been slow and he has been somewhat unresponsive. Amtrak has had 
to incur a larger share of cost. As a matter of fact, we've had 
to involve ourselves much more deeply to push, prod, and, in 
fact, do some of the work ourselves because the contractor has 
not performed the way we would like. But we keep pushing and it 
is one of our number one priority.
    As a matter of fact, this past Monday, I spent the entire 
day in Boston and made an inspection trip with the contractor, 
Mass Electric Balfour Beatty. We got on an inspection car in 
Boston and rode all the way down to New Haven and went over 
every aspect of the job. What I've basically told them is we at 
Amtrak will do anything we need to do around accommodating 
construction in order to get this job done on time. If that 
means we need to provide more outages, if it means we need to 
supply them with more equipment, our own equipment, if we need 
to supply them with catenary cars, anything and everything that 
we have within our control to enable them to conclude this 
project on time we will do. But there are no guarantees and 
this is not entirely within our control. But to the extent it 
is within our control, we're going to make it happen.

    Mr. Mead, do you agree with this assessment?
    [The information from the IG follows:]
    We are not currently aware of any specific condition that will 
cause high-speed rail service implementation to be delayed. The 
schedule is very tight, however, and any delay will adversely affect 
the overall project.
    Mr. Wolf. Last year, the Surface Transportation Board ruled that 
Amtrak could provide express service, with some limitations. Amtrak has 
made claims that its mail and express line of business will enable it 
to realize a profit that could be used to offset operating losses in 
other areas. What increases in revenues has Amtrak realized from the 
express service to date?
    [The information from Amtrak follows:]
    Through February, express revenues have increased by more than 500% 
over FY1998. For the five months ended February 1999, express revenues 
total $5.2 million, versus $785,000 for the same period last year. 
Express revenues have experienced dramatic increases since the positive 
Surface Transportation Board ruling last year.
    Mr. Wolf. I read, with interest, that Amtrak has signed a contract 
with UPS to transport part of their goods, and that anticipated revenue 
is estimated at $2,900,000. What other firm commitments does Amtrak 
have to increase revenue in this area?
    [The information from Amtrak follows:]
    Other commitments will include contracts with ExpressTrak, Triple 
Crown, Swift, and Norfolk and Southern as well as the U.S. Postal 
Service. In combination with the UPS contract, these new partnerships 
are expected to generate over $20 million in additional annual revenue 
and $28 million in long-term savings for the corporation.
    Mr. Wolf. What impact will adding increased mail and express 
business have on the passenger rail business, in terms of 
infrastructure needs and train performance?
    [The information from Amtrak follows:]
    Additional terminal facilities will be needed to load or unload 
mail and express. In many cases a partnership with a local warehouse 
operation is most effective. With effective scheduling and motive 
power, train performance impacts will be minimal.
    Mr. Wolf. Amtrak's business plan indicates that it will have to 
generate and additional $985,000,000 in revenues between 1999 and 2002. 
These revenues are in addition to those expected from high-speed rail 
and express. Mr. Warrington, what key initiatives are responsible for 
the planned $985,000,000 revenue increases? How much certainty do you 
have in their success?
    [The information from Amtrak follows:]
    Amtrak's FY1999-2002 Strategic Business Plan calls for increases in 
gross revenues of $789,000,000 from FY1998 and FY2002, including 
increases from high speed rail and express revenues.
    The revenues include increases in gross revenues of $322 million 
from high speed rail in the Northeast, $138 million from the expansion 
of mail and express, $234 million in passenger related revenues related 
to restructured and improved services, $20 million from increased 
commuter services, $15 million from increased operating support from 
states, and $60 million from reimbursable and other activities. While 
Amtrak's plan will require significant attention and aggressive 
management, we believe that this plan is achievable.

                            electrification

    Mr. Wolf. The test schedule for Stars at FAA, there's a 
very good parallel here between the amount of time that FAA had 
to test the Stars this month and the test schedule for the 
electrification and high-speed rail.
    Mr. Warrington. Yes, I know.
    Mr. Wolf. At least Amtrak's is not as software intensive as 
the Stars acquisition to FAA.
    Mr. Warrington. One of the differences is the testing is 
really commissioning. The commissioning of the electrification 
system will be done in sections. The testing is occurring 
incrementally as sections are sectionalized and juiced up.
    The other important test that needs to occur is, even with 
the electrification system running itself, the trainsets and 
the pantographs need to work and contact the wire. We need to 
test the train operation on that electrical system. We're 
working with the contractor for them to free up, as early as 
possible, several blocks, probably Blocks 8, 9 and 10, or close 
to 40 miles of fully energized electrical system early on, as 
early as possible, so that while they're still doing the 
balance of their construction work, we can be actually testing 
trainsets.
    So all of this is not sequential. Much of it is being done 
currently.

                           contingency plans

    Mr. Wolf. If all the major plan initiatives, high-speed 
rail, mail/express, labor savings, don't meet the projected 
levels, do you have any contingency plans? Everything sounds 
good, but if something were to happen, do you have anything 
else in the bag that you have thought about that you haven't 
told us?
    Mr. Warrington. No. [Laughter.]
    Frankly, Mr. Chairman, I will tell you that we do our 
business plan every year and there are literally dozens and 
dozens, hundreds and hundreds of individual items that we focus 
on in that plan. Every year, dozens of them don't materialize 
or don't materialize on a timetable that we project. We are 
regularly, on a monthly and a quarterly basis, making those 
kinds of adjustments to accommodate for wins and losses in that 
plan. And a lot of those actions that we have in our plan are 
not entirely within our control; a lot of them depend upon 
partners and other folks. We always have in our backpocket 
fillers to help us accommodate for places where we're not 
successful. And while we do have some of them, we don't have 
hundreds of millions of dollars worth of fillers.
    [The information follows:]

    Mr. Wolf. Mr. Warrington, the Inspector General's 
assessment indicated that Amtrak would need significant capital 
resources in fiscal year 2001 and beyond, resources above those 
already contemplated, to achieve future financial returns. What 
do you expect your capital needs to be in the future?
    [The information from Amtrak follows:]
    Amtrak has consistently stated that it will require a 
significant, stable source of capital funding if it is to 
become and remain operationally self-sufficient. The planning 
process for the FY2000 Strategic Business plan will identify 
Amtrak's future capital funding needs and will incorporate the 
results of the market-based network analysis which is currently 
underway. The business plan will be completed by October 1999. 
The Northeast Corridor has demonstrated that passengers, even 
premium fare business travelers, will flock to trains when rail 
service is trip time competitive, downtown-to-downtown, with 
alternative highway and air modes. On the Northeast Corridor, 
rail is generally competitive for trips that take less than 
five hours for the discretionary traveler and less than 3' 15'' 
for the business traveler. Trip time competitiveness will vary 
from corridor to corridor, depending on the convenience of 
other travel modes to the passengers' actual destinations (not 
just the airport). High-speed rail also offers passengers a 
more productive means of travel--passengers can work, meet with 
peers, use cell-phones and computers, or sleep while traveling 
between corridors. This is rarely the case on airline flights 
characterized by slow taxi rides and cramped airlines seats.

    Mr. Wolf. We have a vote, so we will finish up here so we 
don't keep you.

                        self-sufficiency by 2002

    Mr. Mead, do you believe Amtrak will be operationally self-
sufficient by the year fiscal year 2002?
    Mr. Mead. As I said in my testimony, I think it 
isplausible, it is possible, there is a lot of potential--though 
package, express mail, and high-speed rail service--but it will be 
extremely difficult. So I would not say that it is a sure thing.
    [The information follows:]

    Mr. Wolf. Mr. Mead, if Amtrak reaches self-sufficiency by 
2002, will it be able to sustain self-sufficiency beyond 2002?
    [The information from the IG follows:]
    There is a good chance that Amtrak will be able to sustain 
operating self-sufficiency beyond 2002. We believe this 
primarily because our projectons for Northeast Corridor 
passenger revenues, while lower than Amtrak's during the 1999-
2003 time period, reach and exceed Amtrak's projections by 
2006. In following years, we have no reason to expect that this 
trend of increasing revenues will not continue, giving Amtrak a 
substantial revenue source and contributing to operating self-
sufficiency.
    A caveat to this statement, however, is our assessment of 
Amtrak's capital needs. Even the minimum capital needs level 
that we estimated for Amtrak, $2.7 billion, is $125 million 
more per year than current projected federal appropriations. 
This level would be enough to keep Amtrak operating in a steady 
state through the end of 2003, but would make amtrak vulnerable 
to equipment deterioration and schedule reliability problems 
after that date. If Amtrak can not continue to invest in its 
capital needs at a sustainable level, this could negatively 
impact its reliability and its ability to maintain operational 
self-sufficiency.

    Mr. Wolf. Mr. Olver, is there anything you would like to 
add?
    Mr. Olver. Nothing at the moment, Mr. Chairman.

                 Non-Subsidized Passenger Rail Systems

    Mr. Wolf. Ms. Molitoris, in your testimony, you stated that 
few, if any, national passenger rail systems have achieved 
independence from a federal operating subsidy. Who has been 
able to do this, if any?
    Ms. Molitoris. Probably the premier service would be East 
Japan Railway.
    Mr. Wolf. They have no subsidy?
    Ms. Molitoris. No, they're private now. But it is important 
to note that the government of Japan took over a huge debt from 
them some ten years ago. So I suppose it's how you evaluate it. 
It was their way of privatizing. Of course, they have literally 
hundreds of millions of passengers each year which provides a 
very good revenue stream, but they also have many of these 
other sorts of business partnerships where they get revenues.
    Mr. Wolf. We will have a number of other questions for the 
record.
    Mr. Olver, if you have something, just chime in.

                       High-Speed Rail Corridors

    Mr. Wolf. TEA-21 allowed FRA to designate eleven high-speed 
rail corridors. Eight corridors have been designated to date. 
What are they?
    Ms. Molitoris. Jim McQueen is our Associate Administrator 
of Railroad Development. Do you have that list, Jim? We have 
already mentioned the Chicago hub and we extended that into 
Cincinnati. We were in New Orleans, the Gulf Coast corridor. We 
have been in North Carolina making announcements on 
designations.
    The five original corridors, Mr. Chairman, Chicago hub; 
California; Pacific Northwest, which is Washington and Oregon; 
Southeast, North Carolina, and Virginia; three designated 
corridors in TEA-21, the Gulf Coast, the Keystone, which is 
Pennsylvania, and the Empire. We have also extended the 
Southeast corridor which had been designated under ISTEA; we've 
extended that to Atlanta, Macon, and Jacksonville. And we 
announced, as I just mentioned, the extension from Chicago to 
Cincinnati via Indianapolis.
    Mr. Wolf. What about the Northeast corridor?
    Ms. Molitoris. Well, that was not one of the ISTEA. That's 
already established.

                    BENEFITS OF DESIGNATED CORRIDORS

    Mr. Wolf. Are there benefits to being designated?
    Ms. Molitoris. Well, there are benefits in two ways. One is 
a financial benefit in terms of the hazard eliminationfunding 
that is designated in ISTEA and then in TEA-21. But in addition, Mr. 
Chairman, what we have heard from the constituents who request these 
designations is that it gives them a platform on which to recruit 
partnerships, whether it's around station development, whether it's 
around going to their State legislature. For example, the State of New 
York just allocated $185 million to improve Albany to New York. Part of 
that is around the designation; they know that this is something that 
is coming in the future. So it is a way of leveraging partnership 
money, whether it is public money through the State and locals, whether 
it's private investors. This designation helps these coalitions.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                              Fox project

    Mr. Wolf. What about the State of Florida? They recently 
withdrew their support for the Florida Overland Express, 
Governor Bush did. What have you learned is the reason for 
that?
    Ms. Molitoris. I really only learned from the news accounts 
and from those from the Fox project, who I've talked about. It 
seems that the decision was made that there was concern about 
the cost and also environmental impacts were stated.
    But I believe Amtrak actually has an opportunity now to 
step into that State and really work with the Department of 
Transportation about other ways of doing business. Mr. 
Warrington mentioned the non-electric locomotive that FRA has a 
business partnership with Bombardier, it will be able to go 150 
miles a hour without electrification. We think there's an 
opportunity there for the new Amtrak to step in and develop a 
proposal. We don't know of another plan, Mr. Chairman, and the 
fact is, with the numbers of people going into Florida, they 
simply cannot do it with roads alone.
    [Questions for the record to FRA follow:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Wolf. Mr. Olver, do you have anything?
    Mr. Olver. Thank you, Mr. Chairman. My apology for only 
arriving here recently, but my other committee was functioning.
    Mr. Wolf. Excuse me. We have the vote. Would you want to 
come back? Do you have questions? If you have things you would 
like to ask, we only have one vote.
    Mr. Olver. No, I don't really think we need to do that.
    Mr. Wolf. Okay.

                          High-speed corridors

    Mr. Olver. I would like to see a corridor map of these 
corridors. Is it that several have not been designated and 
they're not certain yet? I'm puzzling over your description of 
some of the corridors as I've heard them come out here and what 
they would represent.
    It would seem to me, you're talking about a Gulf Coast 
corridor, it would seem to me that there is exceptionally high 
rationality for a corridor that would go from Atlanta to 
Charlotte to Richmond to Washington and that would tie in with 
the Northeast. If you look at a map, you've got thesebig cities 
at the edge of the piedmont and all the big metropolitan areas along 
the Eastern seaboard are virtually on a straight line, one of those 
products of geology, I think, big cities and big metropolitan areas 
surrounding them, big industrial areas and so forth, a corridor that 
was comprehensive would make exceptionally good sense.
    And I still don't understand the answer to why the 
Northeast corridor is not one of the designated corridors. It 
would seem to me that would be the first corridor and most 
obvious corridor in any designation that was naming high-speed 
rail corridors in this country.
    Ms. Molitoris. Mr. Olver, two things. First of all, the 
Northeast corridor from Washington to New York is a high-speed 
corridor. ISTEA was trying to identify emerging high-speed 
corridors and the money was used for hazard elimination, which 
is the term for either closing, protecting, or using warning 
devices at crossings. The Northeast corridor, owned by Amtrak, 
which is the one area in the country where it owns its own 
track, has virtually no crossings. So it is already a 
designation. Certainly, it is included in any map where you 
would talk about high-speed service. Before you arrived, I 
menioned the Southeast corridor that you are really describing. 
I talked about such kinds of investments as Virginia's, where 
the Commonwealth Transportation Board just designated $370 
million for the connections from Richmond over the next 15 
years to partner with Amtrak to increase service. That's why I 
think it's a good thing to call it the Southeast corridor, 
because there's that Southeast connection to the Northeast 
corridor.
    Mr. Olver. I think it would be useful to have a map which 
shows what has been designated. And numbered one through 
whatever it is in your mapping, I would like to see what's left 
and how many designations there are left since eleven were 
authorized.
    Ms. Molitoris. We will be happy to get that for the 
committee.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Ms. Molitoris. And could I just mention that the commitment 
by the board is to have as part of the announcement for the 
Northeast corridor high-speed service an announcement which 
includes how high-speed rail can evolve around the rest of the 
country, because I think it's a very important element for 
members of the board. And if you look at the demographics of 
the board members today, Mr. Olver, you will see that many of 
them are from outside the Northeast.
    Mr. Olver. Just lastly, Mr. Chairman, I don't want to 
prolong this, but on the questions that you had, are you 
offering these for their formal response? Because under the 
high-speed rail section, your prepared questions have to do 
with both the variability of the speeds for which these 
corridors are being considered and the extreme variability of 
the costs that are associated with these things, seem to me 
very important questions.
    Mr. Wolf. Yes, any questions not asked will be submitted 
for the record.

                            Closing Remarks

    Mr. Wolf. Thank you for your testimony. We appreciate very 
much your appearance before the committee and wish you well.
    Mr. Warrington. Thank you very much, Mr. Chairman. I want 
to thank you and your staff for all of the support that you've 
given us.
    Ms. Molitoris. Thank you, Mr. Chairman.
    Mr. Wolf. Thank you.
    The hearing is adjourned.


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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Dayton, Mark.....................................................     1
McQueen, J. T....................................................     1
Mead, K. M.......................................................     1
Molitoris, J. M..................................................     1
Warrington, G. D.................................................     1


                               I N D E X

                              ----------                              

                         AMTRAK REFORM COUNCIL

                                                                   Page
Accomplishments..................................................   561
Biographies....................................................568, 584
    Carmichael, Gilbert..........................................   566
    Chapman, Bruce...............................................   570
    Cox, Wendell.................................................   571
    Gleason, Christopher.........................................   572
    Kling, S. Lee................................................   573
    Loftus, William..............................................   585
    Monin, Clarence..............................................   576
    Norquist, John...............................................   577
    O'Sullivan, Deirdre..........................................   586
    Sweitzer, Donald.............................................   578
    Till, Thomas.................................................   584
    Vranich, Joseph..............................................   579
    Weyrich, Paul................................................   580
Comparison with GAO/IG Assessments...............................   563
Federal Assistance...............................................   565
Meeting Minutes..................................................   515
    May 26, 1998.................................................   551
    June 2, 1998.................................................   547
    July 6, 1998.................................................   541
    September 17, 1998...........................................   537
    November 24, 1998............................................   527
    January 19, 1999.............................................   517
Membership.......................................................   566
Obligations......................................................   564
Staff Salaries...................................................   583
Statutory Mandate................................................   562
Work Plan........................................................   563

                    FEDERAL RAILROAD ADMINISTRATION

Ability to Reach Self-Sufficiency................................    43
Accident Rates:
    Class I......................................................   450
    Class II.....................................................   451
Additional Safety Inspectors.....................................   285
    Status of Hiring.............................................   286
Advisory & Assistance Services, Increase in......................   290
Air Rights.......................................................    53
Airline:
    Competition..................................................    85
    Partnerships.................................................    74
Alaska PTC Project:
    FY 2000 Funding..............................................   340
    Status of....................................................   339
Alaska Railroad:
    Total Obligations............................................   351
    TRA Funded Projects..........................................   351
Allocation of FY 1999 TEA-21 Grade Crossing Funds................   364
ALPS Project:
    Funding of...................................................   297
    Integration of...............................................   296
    Status of....................................................   296
Amtrak:
    Administration's Policy...................................21-22, 24
    Amtrak's Future.............................................. 17-18
    Budget Request...............................................   335
    Business Plan........................................24, 25, 38, 57
    Capital Needs................................................    45
    Closing Remarks..............................................     6
    Expanded Capital Definition...........................36, 54, 66-68
    Financial Future.............................................     2
    Financial Health, Obstacles to...............................    73
    Fiscal Year 2000 Budget Request..............................    30
    FRA/Amtrak Partnership.......................................    17
    FY 1999 Maintenance Costs....................................   336
    Image........................................................    74
    Labor's Role................................................. 4, 13
    Management Improvements......................................     4
    Market-Based Network Analysis................................     3
    Net Loss.....................................................    75
    New Board of Directors....................................... 1, 18
    Northeast Corridor High-Speed Rail........................... 3, 35
    Obstacles in Improving Financial Condition..................73, 337
    Other Regional High-Speed Rail............................... 3, 12
    On-Time Performance..........................................     2
    Opening Statement............................................     1
    Operating Results........................................34, 38, 40
    Partnerships...................................3, 10-11, 23, 52, 74
    Passenger Revenues...........................................     2
    Reform and Accountability Act...............................1, 5, 8
    Ridership....................................................     2
    Safety Statistics............................................    18
    Spending Flexibility.........................................    46
    State Funding Flexibility....................................    18
    State Investments............................................17, 28
    Subsidy......................................................    66
    Traditional Capital Projects for.............................   337
    Use of Capital Funds.........................................   336
    Will be a Better Deal Tomorrow Under the Clinton 
      Administration Rail Passenger Policy.......................    24
    Working Relationships........................................     6
Authorized FTEs/On Board Strength................................   444
Barriers to Freight Shipments....................................    64
Benefits of Designated Corridors.................................    89
Benefits of Restructuring S&E Accounts...........................   283
Biographical Summary--George Warrington..........................    16
Biograpical Summary--Kenneth M. Mead.............................    48
Biographical Summary--Jolene Molitoris...........................    33
Bridges:
    Aging Railroad...............................................   504
    FY 1999 Earmark for..........................................   504
Business Plan....................................................    57
Business Projections.............................................    57
Canadian National Acquisition of Illinois Central................   495
Capital Definition...............................................    58
    In Bill Language............................................66, 334
    In Taxpayer Relief Act.......................................    49
Capital Expenditures.............................................    67
Capital Investment...............................................    35
Capital for Maintenance of Equipment and Facilities.......5, 15, 36, 39
Capital Needs, Amtrak........................................39, 45, 68
Chart: Designated High-Speed Rail Corridors......................   104
Civil Penalty Collections in Last Three Years....................   496
Civil Penalty Trends.............................................   496
Class I Accident Rates...........................................   450
Class II Accident Rates..........................................   451
Clinton Administration Amtrak Policy is Working...............21-22, 24
Closing Remarks..................................................   105
Commercial Revenue...............................................    53
Contingency Plans................................................    87
Consulting Services..............................................   500
Corridor Risk Model, Results of..................................   330
Corridors Furthest Along to HSR Service..........................    97
Corridors with the Highest Benefit-to-Cost Ratios................    93
Current Highway-Rail Crossing Staffing...........................   288
Designated HSR Corridors:
    and Grade Crossing...........................................   362
    Estimated Costs..............................................    90
Electrification..................................................    87
Employee Accident/Injuries.......................................   466
Employee Casualty Rates..........................................   462
Employee on Duty Injuries/Casualties.............................   463
Enforcement Cases by Class of Railroad...........................   499
Enforcement Cases in Last Three Years............................   499
Equipment Costs..................................................   290
Expanded Capital Definition..............................36, 54, 67, 68
Expanded Definition..............................................    66
Fatalities, Rail.................................................   479
Federal Capital Investment.......................................    55
Federal/State Inspection Resources...............................   452
Federal/State Partnerships.......................................    52
Filling Inspector Positions......................................   286
Financial Obstacles for Amtrak...................................    72
Flexibility in TEA-21 Authorization..............................    51
Fox Project......................................................   101
    Impact on Other HSR Projects.................................   102
FRA and Amtrak Budget Request....................................    72
FRA Opening Statement............................................    17
    Amtrak Board of Directors....................................    18
    Amtrak's Future..............................................    17
    Amtrak Request...............................................    17
    Amtrak Safety Statistics.....................................    18
    FRA/Amtrak Partnership.......................................    17
    High-Speed Rail Service......................................    18
    State Funding Flexibility....................................    18
    State Investments............................................    17
    Closing Remarks..............................................    19
FRA's Participation in Valley Trains and Trails Project..........   508
FRA's Role in HSR Corridors......................................    92
FRA's Summary Statement..........................................   267
Freight Railroads and High-Speed Rail............................   100
FY 1998 Emergency Railroad Rehab and Repair Funding..............   352
FY 1999 First Quarter Results....................................    84
FY 2000 Budget Request (Amtrak)...............................5, 17, 30
FY 2000 Funding of Illinois Flexibility Block Project............   345
FY 2000 Operation Respond Funding................................   501
FY 2000 Staffing Increases.......................................   284
Funding Flexibility Within the States............................    51
Funding Request, Amtrak.......................................5, 17, 30
Future Funding for Operation Respond.............................   502
Governors Statement on Flexibility...............................    52
Grade Crossing:
    Accidents/Fatalities and Trespasser Fatalities...............   422
    Accidents/Fatalities, 1999...................................   430
    Accidents, Top 16 States with Most...........................   421
    Activities...................................................   432
    And Designated HSR Corridors.................................   362
    Collisions by State..........................................   426
    Current Technologies.........................................   366
    Evaluation of Action Plan....................................   372
    Fatalities, 50% Reduction in.................................   370
    Fatalities, by State.........................................   423
    Funding and TEA-21...........................................   364
    Funding, FY 1999.............................................   412
    Funding, FY 2000.............................................   419
    Funding--HGHSR and Rail Initiative...........................   361
    Planned Projects, FY 1999-2000...............................   372
    Status of Recommendations....................................   403
    Trespasser Accidents/Fatalities..............................   429
Hazmat:
    Accidents....................................................   461
    Rail Transport of Radioactive Waste..........................   506
High Speed Rail:
    Corridors...................................................89, 103
    Evaluation of Benefits/Costs of..............................    94
    Freight Railroads and........................................   100
    FRA's Role...................................................    92
    Funding Priorities...........................................    95
    Incremental Approach to......................................   102
    Midwest Initiatives..........................................58, 60
    Service--Amtrak..............................................    18
    Test Track...................................................   486
Highway-Rail Crossing Staffing, Current..........................   288
Illinois and Other Railroads Train Control Work..................   345
Illinois Central, Canadian National Acquisition of...............   495
Illinois PTC Project:
    FY 2000 Funding for..........................................   344
    Matching Funds for...........................................   344
    Public Funding of............................................   343
    Status of....................................................   343
Immediate Office Staffing........................................   441
Impact of:
    Fox Project on Other HSR Projects............................   102
    ITS Projects on Grade Crossing Safety........................   369
    RSAC on Regulatory Process...................................   507
Increase in Advisory & Assistance Services.......................   290
Increase in Travel...............................................   289
Incremental Approach to HSR......................................   102
Information Technology Initiative, New...........................   290
Introduction.....................................................     1
Inspection Data..................................................   453
Inspections:
    FY 1998......................................................   456
    Level and Effect of Site-Specific............................   493
    New Track Technologies.......................................   511
    Track Technologies...........................................   513
Inspector Attrition Rate.........................................   287
Inspector General:
    Amtrak's Operating Results...................................34, 38
    Assessment of Amtrak.........................................    34
    Capital Investment...........................................    35
    Expanded Capital Definition..................................    36
    Financial Status............................................. 34-35
    Northesat Corridor High-Speed Rail...........................    35
    Opening Statement............................................    34
    Prepared Statement...........................................    37
    Report on Amtrak's Viability.................................    78
Inspector Resources..............................................   494
Inspectors Authorized On-Board...................................   453
Inspector and Bridge Safety......................................   503
Inspectors, State Participation..................................   455
Installation of FRA's New IT System..............................   294
Intruder Detection Funding in 2000...............................   437
ITCS:
    Safety Benefits of...........................................   341
    Status of Projects...........................................   342
IT System:
    Total Cost and Completion Date of............................   293
    Installation of..............................................   294
Level and Effect of Site-Specific Inspections....................   493
Long Term Capital Needs..........................................    55
MAGLEV:
    Funding for Research.........................................   326
    Program Status...............................................   327
    Research vs. TEA-21 Funding..................................   327
Mail:
    Business.....................................................    65
    Increasing Efficiency........................................    65
    Tracking System..............................................    65
Mail and Freight Revenue.........................................    63
Maintenance of Way Definition....................................    51
Mead, Kenneth M.:
    Biographical Summary.........................................    48
    Prepared Statement...........................................    37
Michigan Train Control Project:
    FY 2000 Funding for..........................................   341
    Revenue Service..............................................   341
    Testing of...................................................   340
Midwest High-Speed Rail Initiatives..............................58, 60
Molitoris, Jolene:
    Biographical Summary.........................................    33
    Prepared Statement...........................................    20
NECIP, Status of.................................................   299
New Grade Crossing Request--No State Match.......................   365
New Information Technology Initiative............................   290
New Positions--Field or Headquarters.............................   285
Net Loss.........................................................    75
Non-Compliance With Safety Plans.................................   490
Non-Electric High-Speed Locomotive:
    Funding of...................................................   295
    Status of....................................................   295
    Testing of...................................................   295
Non-Electric Locomotives:
    Amtrak Funding of............................................   298
    Completion Date for..........................................   298
    Status of....................................................   298
Non-Subsidized Passenger Rail Systems............................    88
Northeast Corridor:
    High-Speed Rail..............................................    35
    Improvements.................................................    44
    Revised Trip Times...........................................    50
NTSB Voice Recorder Recommendation...............................   509
NTSB Hours of Service Recommendation.............................   510
OA:
    Salaries and Expenses........................................   438
    Unobligated Balances.........................................   441
Ostacles in Improving Amtrak's Financial Condition...............    73
Opening Remarks:
    Amtrak Board of Directors....................................    18
    Amtrak's Future..............................................    17
    Amtrak Safety Statistics.....................................    18
    Capital Investment........................................... 35-36
    Chairman.....................................................    49
    Expanded Capital Definition..................................    36
    Fiscal Year 2000 Budget Request (Amtrak).....................    17
    FRA/Amtrak Partnership.......................................    17
    FRA's Amtrak Request.........................................    17
    High-Speed Rail Service......................................    18
    Inspector General............................................    34
    State Funding Flexibility....................................    18
Operating Results................................................    40
Operation Lifesaver:
    FY 2000 Funding..............................................   432
    State Participation..........................................   430
Operation Respond:
    FY 2000 Funding..............................................   501
    Future Funding...............................................   502
Outlays..........................................................    56
Partnership With Freight Railroads...............................    59
Perspective on Amtrak's Financial Goals..........................    39
Planned Crossing Technologies in FY 2000.........................   368
Planning for High-Speed Rail Projects............................   314
Political Appointees.............................................   442
Possible Improvements............................................    73
Positive Train Control:
    Funding......................................................   346
    Funding--Rail Initiative vs. NGHSR...........................   347
    Projects Funded Under New Rail Initiative Account............   346
    Status of Regulations........................................   347
    Test Between Virginia--Pennsylvania..........................   345
Prepared Statement:
    George Warrington............................................     7
    Jolene Molitoris.............................................    20
    Kenneth M. Mead..............................................    37
Projected Revenues and Self-Sufficiency..........................    84
Projected Unobligated Balances...................................   446
Rail Fatalities..................................................   479
Rail Transportation of Radioactive Waste.........................   506
Research and Development:
    Cost Sharing.................................................   316
    FY 2000 Projects.............................................   319
    MAGLEV Funding...............................................   326
Revenue and Operating Assistance.................................    56
Revised Trip Times on Northeast Corridor.........................    50
Rhode Island Rail Project:
    FY 2000 Funding..............................................   329
    Funding Commitments..........................................   329
    Obligation of Funds..........................................   328
    Project Expenditures.........................................   329
    Proposed Funding Levels......................................   330
    Unobligated Balance for......................................   328
Role of the Inspector General....................................    65
RRIF Program...................................................354, 359
    Administration of............................................   358
    and Amtrak...................................................   358
    Calculation of Premium Rates.................................   355
    Credit Risk of Projects......................................   355
    Distribution of Funds........................................   356
    Interest in..................................................   357
    Preference in Awarding Funds.................................   357
    Regulations..................................................   355
Rulemakings:
    Completed in FY 1998.........................................   498
    FRA's Five Key Safety Key Safety.............................   497
    Status of Last Year's Priority...............................   497
Running Signals..................................................   360
Safety and Compliance Program:
    Number of Railroads in Process...............................   492
    Response to IG's Recommendations.............................   491
    Strengthening................................................   487
Safety:
    Bridge, Shortline-Related....................................   502
    FRA's Five Key Rulemakings...................................   497
    GAO's Table on Performance Goals.............................   459
    Non-Compliance With Plans....................................   490
    Performance Goals, 1994-1999.................................   433
    Revising Performance Goals...................................   435
    Trends.......................................................   457
    Workforce....................................................   454
Scoring of Expanded Capital Definition...........................    49
Scoring of Expanded Definition...................................    70
Sealed Corridor Project:
    Completion Date..............................................   315
    Impact on Other Corridors....................................   316
    Use of 2000 Funds............................................   315
Self-Sufficiency By 2002.........................................    88
Shift Work Strategies............................................   359
Shipment of Mail and Freight.....................................    62
Shortline-Related Bridge Safety..................................   502
Spending Flexibility.............................................    46
Staffing:
    Current Highway-Rail.........................................   288
    FY 2000 Increases............................................   284
    Increase for Grade Crossing Work.............................   288
Start of High-Speed Service......................................    85
State:
    HSR Projects--Cost & Completion Date.........................   312
    Investments in High Speed Rail...............................17, 28
Status of:
    Illinois Train Control Project...............................   343
    Intruder Detection...........................................   435
    ITCS Projects................................................   342
    Last Year's Priority Rulemakings.............................   497
    NECIP Project................................................   299
    Non-Electric High-Speed Locomotive...........................   295
    Sealed Corridor Project......................................   314
    State HSR Initiatives........................................   299
    Upgrade of High-Speed Test Track.............................   486
    Valley Trains and Trails Project.............................   508
TASC Costs.......................................................   485
Train Control, Different Technologies............................   338
Train Control Projects:
    Costs to Place on HSR Corridors..............................   331
    Funding of...................................................   326
    Reporting on.................................................   348
Targareting Limited Funds to HSR Projects........................    95
Testimony:
    George D. Warrington.........................................     7
    Jolene M. Molitoris..........................................    20
    Kenneth M. Mead..............................................    37
Ticket Prices....................................................    85
Tilt Trains......................................................    62
Total Cost and Completion Date of IT System......................   293
TRA:
    Funds........................................................    54
    Funds, Use of................................................14, 30
Travel, Increase in..............................................   289
Train Accidents................................................473, 483
Train Accident Rates-Chart.......................................   474
Train Control: Funding...........................................   346
Transportation Test Center:
    Contracted Work With.........................................   486
FY 2000 Planned Work.............................................   487
Trespass Prevention..............................................   400
    Separate Action Plan for.....................................   402
Unobligated Balances:
    Projected....................................................   446
    Spend Out of.................................................   448
Use of TRA Funds.................................................14, 30
User Fee:
    Broadening Coverage..........................................   348
    Double Billing...............................................   350
    Link to FRA's Services.......................................   350
    Opposition to Proposal.......................................   349
Valley Trains and Trails Project, FRA's Participation in.........   508
Valley Trains and Trails Project, Status of......................   508
Virginia/Pennsylvania PTC Project--FY 2000 Funding...............   346
Warrington, George:
    Biographical Summary.........................................    16
    Prepared Statement...........................................     7
Why Capital Flexibility is Needed................................   334
Work of Technical Resolution Committees..........................   287
Y2K:
    and Amtrak...................................................    61
    and Railroad Industry........................................    61

            NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK)

1994 Environmental Impact Statement........................158, 169-171
    IVY City.....................................................   169
    Southhampton.................................................   170
    Sunnyside..................................................170, 222
Advanced Civil Speed Enforcement System (ACSES)..................    27
Airline Partnership..............................................    74
Amtrak:
    Budget Request...............................................     5
    Financial Future.............................................     2
    Opening Statement............................................     1
    Closing Remarks..............................................     6
Amtrak Business Units (see Northeast Corridor Business Unit, 
  Amtrak West Business Unit, and Intercity Business Unit)
Amtrak Opening Statement.........................................     1
Amtrak Reform and Accountabilit1, 5, 8, 14, 38, 118, 122, 125, 144, 187
Amtrak Reform Board (see Board of Directors)
Amtrak Reform Council............................................     6
Amtrak West Business Unit......35, 38, 43, 137, 199, 214, 215, 222, 223
    Cascades....................................................162-165
    Pacific NW...................................................   109
Board of Directors.................2, 8, 14, 17, 18, 22, 24, 25, 27, 28
Budget gap.................................................22, 144, 145
Business Plan....................................................   4-5
Capitol needs proje4, 5, 10, 14, 45, 55, 68, 132-144, 155, 156, 177-180
    FY 1999 Capital Plan..................................140, 141, 142
Cash................................................34, 75, 80, 181-182
Clinton Administration Amtrak Policy..........................21-22, 24
Commercial Service...............................................   114
Commuter Service...........................113, 114, 165, 168, 175, 176
Contracts...............................................10, 11, 23, 111
    Burlington Northern Santa Fe...........10, 11, 23, 60, 63, 100, 173
    Dobbs International....................................11, 174, 186
    Dynamex.....................................................11, 174
    Express TRAK................................................86, 174
    Fort Worth Transportation Auth...............................    11
    New Pacific Corridor.........................................    10
    Norfolk South.......................................23, 63, 86, 111
    UPS..........................................................   173
Corporate.................................................138, 200, 223
    Administrative costs.........................................   242
    corporate salaries...............................200, 201, 239, 240
    Staffing...............................................200-201, 242
DOT Inspector General..................................6, 25-26, 34, 61
    Annual Assessment......................................2, 9, 78, 83
Depreciation Issues......................................43, 75-76, 242
Employees..................................................13, 239, 240
Equipment...................................11, 23, 35, 38, 50, 203-215
Expenditures per passenger mile................................182, 183
Federal Employers' Liability Act.................................    22
Federal Railroad Administration........17, 19, 20, 26-29, 60, 72, 90-99
Financial performance history...................................183-185
Fiscal Year:
    1998: A Year of Tangible Progress............................     8
    1999: Building for the Future................................     9
    2000: The Resources Needed to Ensure Success.................    14
Fiscal Year 1999 First quarter results...........................    84
Fiscal Year 2000 Budget Request........................5, 14-15, 30, 72
Fox project.....................................................101-102
Freights..................................................100, 173, 186
    Railroad incentive payments..................................   186
George Warrington:
    Biography....................................................    16
    Statement....................................................  7-15
Gross Revenues......................108-110, 171, 173-177, 190, 197-199
    Monthly revenues...........................................111, 112
    General rev.............................................43, 84, 118
    Commercial...................................................    53
    Mail/freight revenues.....................................63-64, 86
    Passenger..........................................2, 9, 23, 38, 40
    Cost savings.................................................    11
    Annual revenue...............................................    30
    Non-passenger revenue....................................34, 41, 44
Hi9, 17, 18, 26-29, 35, 38, 43-44, 50, 60, 62, 77, 78, 84, 85, 89, 90, 
                              104, 108, 109, 117, 145-149, 151, 158-161
    Corridors...........................................90-99, 206, 207
    Electrification.....................................35, 45, 147-154
    Midwest Regional Rail Initiative...........................159, 160
    Roxbury Sub. Station.........................................   154
    Ticket prices................................................    85
    Tilt problems................................................    62
Injury statistics..............................................246, 249
Insurance expenses...............................................   241
Intercity B3, 10, 29, 35, 38, 59, 60, 134, 135, 194, 197, 211, 212, 222
Labor's Role.....................................................     4
Labor/Unions.............................................4, 44, 122-125
    C2 negotiations..............................................   187
Long term investments.......................................14, 31, 156
Mail and Ex11, 35, 38, 43, 67, 68, 70, 108, 112, 113, 171-173, 175, 176
    Express Operations..........................................86, 110
    USPS.........................................12, 113, 171, 172, 174
Maintenance Expenses.................65, 86, 106-108, 120, 139, 210-238
    Maintenance facilities.......................145, 211-215, 221, 222
Management Improvements..........................................     4
Mandatory expenditures...........................................   141
3, 11, 116, 117Air vs. train travel....................................
                                                             3, 85, 194
Marketing expenses...............................................   241
Monthly cash flow....................................114, 115, 181, 182
New Board of Directors...........................................     1
No2, 3, 8, 9, 11, 26, 27, 35, 38, 43, 44, 50, 57, 59, 63, 73, 84, 103, 
                        108, 109, 136, 152, 155-158, 161, 198, 213, 221
Northeast Corridor Improvement Project (see also High Speed Rail)    57
Northeast Corridor High-Speed Rail...............................     3
On board service expenses........................................   240
On time performance................................29, 34, 68, 186, 187
Operating expenses..................42, 46, 139, 206, 207, 227, 240-243
Operating subsidies (see also Operating support)................118-121
Operating support.................................110, 178-181, 217-220
    Federal..................................................5, 14, 121
    State Funding....................................17, 18, 23, 51, 77
Operating results................................................34, 40
Other Regional High-Speed Rail...................................     3
Phase II express plan............................................   172
Questions for the Record:
    Accidents and Injuries.......................................   243
    Actual Versus Budgeted Revenues..............................   176
    Administration and Staffing Costs............................   242
    Available Cash...............................................   181
    Budget Gap...................................................   144
    Capital Needs................................................   132
    Capital Plan Projects........................................   140
    Commuter Service Revenues....................................   176
    Contracts with Freight Railroads.............................   186
    Electrification..............................................   149
    Employment...................................................   239
    Environmental Mitigation.....................................   169
    Equipment..................................................202, 209
    Estimated Equipment Deliveries...............................   204
    Expanded Capital Definition Impact on FY 2000................   139
    Expenditures.................................................   182
    Expenses.....................................................   240
    Express Mail.................................................   171
    Financial History............................................   183
    Grade Crossing Accidents.....................................   247
    High Speed Rail Trainsets....................................   145
    Injury Statistics............................................   246
    Maintenance..................................................   210
    Maintenance Facility Upgrades and Modernization Plans........   221
    Maintenance of Equipment Planned Expenditures................   139
    Mandatory Capital Expenses...................................   141
    Market-Based Analysis........................................   116
    Market Share of Air-Rail Intercity Travel....................   194
    Negotiations.................................................   187
    Northeast Corridor...........................................   155
    NTSB Recommendations.........................................   250
    Operating Subsidies..........................................   118
    Operating Statistics and Equipment Fleets....................   206
    Other High-Speed Rail Corridors..............................   159
    Passenger Cars and Locomotive Fleet Average Age..............   208
    Passsenger Cars and Locomotive Fleets........................   207
    Pennsylvania Station.........................................   166
    Phase II Express Plan........................................   172
    Planned Spending for Maintenance of Equipment................   133
    Projected Federal Resources..................................   141
    Railroad Retirement System...................................   256
    Revenues.....................................................   173
    Rhode Island Rail............................................   169
    Ridership....................................................   188
    Ridership by State...........................................   192
    Rolling Stock................................................   206
    Routes.......................................................   195
    Staffing.....................................................   200
    State-by-State Planned Maintenance of Way Expenses...........   215
    State's Contribution for Passenger Rail Service..............   178
    Station Operating Costs......................................   227
    Station Renovation Costs.....................................   224
    Strategic Business Plan, FY 1999-2002........................   106
    Strategic Capital Plan.......................................   142
    Taxpayer Relief Act..........................................   125
    Trespasser Fatalities........................................   249
    Union Agreements.............................................   122
    Year 2000 Problem............................................   262
Real estate revenue.........................................58, 175-176
Renovations............................143, 144, 151, 152, 167, 223-227
Rhode Island Rail................................................   169
Ridership..................................36, 40, 57, 189-194, 196-199
Routes..........................................................195-199
Railroad Retirement................................39, 47, 144, 256-261
Safety...................................................18-21, 31, 144
    Accidents...................................................243-250
    Grade Crossings.............................................247-250
    Life Safety Program.........................................167-168
    NTSB recommendations........................................250-255
Short term investments...........................................   166
Stations....................................................24, 224-238
    Beech Grove, MD..............................................    23
    Penn Station...........................................53, 166, 167
23, 25, 29-30, 34, 26, 43, 47, 72, 73, 76, 78, 81, 82, 83, 99, 106-115, 
                                                               116, 125
Strategic Partnerships (see Contracts)
Surface Transportation Board......................11, 23, 28, 62-63, 86
Taxpay14, 17, 30, 35, 38, 46, 49, 54, 56, 63, 73, 81, 106, 125-132, 139
TEA 21....................................................51-52, 89, 90
Testimony--George Warrington.....................................     7
Transportation Infrastructure Finance and Innovation Act (TIFIA).    77
Trespasser fatalities (see also Safety)..........................   249
Use of Additional FTEs...........................................   284
Warrington, George D.:
    Biographical Summary.........................................    16
    Prepared Statement...........................................     7
Wages................................................123, 124, 239, 240
Year 2000...................................................61, 262-265

          RESEARCH AND SPECIAL PROGRAMS ADMINISTRATION (RSPA)

Advanced Vehicle Program.........................................   728
Emergency Preparedness Grants Administrative Costs...............   679
Emergency Preparedness Grants Awarded............................   675
Emergency Preparedness Registration Fee..........................   671
Emergency Transportation Response:
    Crisis Management Center.....................................   769
    Emergency Transportation Budget..............................   770
Hazardous Material Safety:
    Aircraft Cargo Compartments Study............................   692
    Hazard Materials Incidents...................................   702
    Hazardous Materials Safety Staffing..........................   691
    Hazardous Materials User Fees................................   688
    Hazmat Incidents.............................................   716
    Hazmat Inspections...........................................   713
    Hazmat Rulemakings...........................................   704
    Hazmat Training..............................................   716
    NTSB Recommendations--Hazmat.................................   693
    Registration and Grant Fee Receipts..........................   715
Morgan Program...................................................   742
NTSB Recommendations:
    NTSB Recommendations.........................................   648
    NTSB Recommendations--Hazmat.................................   693
Pipeline Safety:
    High Risk Areas..............................................   594
    Natural Gas versus Liquid Pipelines..........................   625
    Non-Destructive Evaluation...................................   606
    One-Call.....................................................   610
    Pipeline Safety Authorized Funding Levels....................   593
    Pipeline Inspections.........................................   640
    Pipeline Inspectors..........................................   624
    Pipeline Safety Grants.......................................   618
    Pipeline Safety Rulemakings..................................   655
    Pipeline User Fees...........................................   628
    Reserve Fund.................................................   609
    Risk Management..............................................   594
Research and Technology:
    AVP..........................................................   668
    UTC Program..................................................   667
RSPA Chief Information Officer...................................   725
RSPA Overview....................................................   732
RSPA Position and FTE............................................   732
RSPA Training Costs..............................................   731
RSPA Travel per FTE..............................................   729
RSPA Unobligated Balances........................................   730
Transfers and Reprogramming......................................   737
Transportation Safety Institute (TSI):
    TSI Funding..................................................   771
    TSI Work.....................................................   775
Volpe Center:
    FTE..........................................................   767
    New Obligational Authority...................................   755
    Threat Assessment Study......................................   766
    Unobligated Balance..........................................   762
    Work Outside DOT.............................................   756
    Workload.....................................................   744
    Workload by Sponsor..........................................   768

                      SURFACE TRANSPORTATION BOARD

Abandonments.....................................................   854
Accomplishments..................................................   781
Acquisition Proposals............................................   854
Availability of Data to the Public...............................   895
Background.......................................................   779
Board Members and Terms..........................................   843
Board Reauthorization............................................   851
Board's Top Priorities...........................................   876
Budget Request:
    Comparison of Budget Requests................................   790
    President's Budget Request...................................   790
Canadian National/Illinois Central Merger:
    Fees.........................................................   848
    Merger Filing................................................   845
    Timetable....................................................   847
    FRA Safety Concerns..........................................   849
Carryover:
    FY 2000......................................................   807
    Language.....................................................   807
Caseload.......................................................862, 863
Case Processing Timeframe........................................   864
Comparison of Board's and President's Budget Requests............   790
Comparison of Recent User Fee Schedule Updates...................   809
Earnings:
    Class I Railroads............................................   871
FRA Safety Concerns..............................................   849
Funding:
    Feasibility of Funding by User Fees..........................   792
    FY 2000 User Fee collections.................................   806
    Options Paper................................................   795
    Travel.......................................................   896
    User Fee Funding Alternatives................................   794
    User Fee Legislation.........................................   801
Goals............................................................   780
ICC Termination Act:
    Railroad-Shipper Transportation Advisory Council.............   880
    Rulemakings Imposed by.......................................   877
    Working Withing DOT..........................................   894
Inspector General's Report on User Fees..........................   817
    Board's Response.............................................   836
    Remaining Board Activities...................................   837
Managerial and Supervisory Positions.............................   840
Mergers:
    Canadian National/Illinois Central Merger....................   845
    Union Pacific/Southern Pacific merger........................   850
Objectives.......................................................   780
President's Budget Request.......................................   790
Public Access:
    Decisions and Pleadings......................................   895
Railroad:
    Acquisition Proposals........................................   854
    Abandonments...............................................854, 869
    Earnings, Class I............................................   871
    Rate Complaints..............................................   857
    Rate Regulation..............................................   865
    Return on Investment.........................................   869
    Revenue Adequate...........................................868, 869
    Workload.....................................................   861
Railroad-Shipper Transportation Advisory Council:
    Annual Report................................................   883
    Members......................................................   880
    Policy Recommendations.......................................   882
    Renomination of Chairman Morgan..............................   892
    White Paper..................................................   887
Rates:
    Complaints...................................................   857
    Workload and Staffing........................................   861
Reauthorization of Board.........................................   851
Regulation:
    Obsolete Commodities.........................................   880
    Transferred Rate Regulation Caseload.........................   865
Retirement Eligibility...........................................   839
Revenue Adequate Railroads.....................................868, 869
Rulemakings:
    Estimated Completion Dates...................................   874
    Imposed by the ICC Termination Act...........................   877
    Priorities...................................................   876
Salaries and Expenses............................................   787
Staffing:
    Current Level................................................   839
    By Function..................................................   844
    Managerial and Supervisory Positions.........................   840
    Retirement Eligibility.......................................   839
Statement of Chairman Morgan:
    Accomplishments..............................................   781
    Background...................................................   779
    Budget Request.............................................779, 790
    Fiscal Years 1999 and 2000...................................   783
    Goals........................................................   780
    Salaries and Expenses........................................   787
    Summary......................................................   786
    Workload.....................................................   789
Travel...........................................................   896
Union Pacific/Southern Pacific Merger............................   850
User Fees:
    1999 Collections.............................................   806
    Attributed to Canadian National/Illinois Central Merger......   807
    Attributed to Mergers......................................807, 848
    Average Collections per Month................................   807
    Carryover....................................................   807
    Carryover Language...........................................   807
    Collection Schedule..........................................   808
    Comparison of Recent User Fee Schedule Updates...............   809
    Feasibility of Funding.......................................   792
    Funding Alternatives.........................................   794
    Inspector General's Report...................................   817
        Board's Response.........................................   836
        Remaining Board Activities...............................   837
    Legislation................................................793, 801
    Options Paper................................................   795
Working Within DOT...............................................   894
Workload:
    Caseload...................................................862, 863
    FY 1998 and FY 1999..........................................   783
    Summary......................................................   786

                                
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