[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
                  CURRENT GOVERNANCE ISSUES AT AMTRAK

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

                                (109-41)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON

                               RAILROADS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 15, 2005

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure

                                   ____

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                      DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-    JAMES L. OBERSTAR, Minnesota
Chair                                NICK J. RAHALL, II, West Virginia
SHERWOOD L. BOEHLERT, New York       PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
WAYNE T. GILCHREST, Maryland         Columbia
JOHN L. MICA, Florida                JERROLD NADLER, New York
PETER HOEKSTRA, Michigan             CORRINE BROWN, Florida
VERNON J. EHLERS, Michigan           BOB FILNER, California
SPENCER BACHUS, Alabama              EDDIE BERNICE JOHNSON, Texas
STEVEN C. LaTOURETTE, Ohio           GENE TAYLOR, Mississippi
SUE W. KELLY, New York               JUANITA MILLENDER-McDONALD, 
RICHARD H. BAKER, Louisiana          California
ROBERT W. NEY, Ohio                  ELIJAH E. CUMMINGS, Maryland
FRANK A. LoBIONDO, New Jersey        EARL BLUMENAUER, Oregon
JERRY MORAN, Kansas                  ELLEN O. TAUSCHER, California
GARY G. MILLER, California           BILL PASCRELL, Jr., New Jersey
ROBIN HAYES, North Carolina          LEONARD L. BOSWELL, Iowa
ROB SIMMONS, Connecticut             TIM HOLDEN, Pennsylvania
HENRY E. BROWN, Jr., South Carolina  BRIAN BAIRD, Washington
TIMOTHY V. JOHNSON, Illinois         SHELLEY BERKLEY, Nevada
TODD RUSSELL PLATTS, Pennsylvania    JIM MATHESON, Utah
SAM GRAVES, Missouri                 MICHAEL M. HONDA, California
MARK R. KENNEDY, Minnesota           RICK LARSEN, Washington
BILL SHUSTER, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
JOHN BOOZMAN, Arkansas               ANTHONY D. WEINER, New York
JIM GERLACH, Pennsylvania            JULIA CARSON, Indiana
MARIO DIAZ-BALART, Florida           TIMOTHY H. BISHOP, New York
JON C. PORTER, Nevada                MICHAEL H. MICHAUD, Maine
TOM OSBORNE, Nebraska                LINCOLN DAVIS, Tennessee
KENNY MARCHANT, Texas                BEN CHANDLER, Kentucky
MICHAEL E. SODREL, Indiana           BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania        RUSS CARNAHAN, Missouri
TED POE, Texas                       ALLYSON Y. SCHWARTZ, Pennsylvania
DAVID G. REICHERT, Washington        JOHN T. SALAZAR, Colorado
CONNIE MACK, Florida                 JOHN BARROW, Georgia
JOHN R. `RANDY' KUHL, Jr., New York
LUIS G. FORTUNO, Puerto Rico
LYNN A. WESTMORELAND, Georgia
CHARLES W. BOUSTANY, Jr., Louisiana
JEAN SCHMIDT, Ohio

                                  (ii)



                       SUBCOMMITTEE ON RAILROADS

                  STEVEN C. LaTOURETTE, Ohio, Chairman

THOMAS E. PETRI, Wisconsin           CORRINE BROWN, Florida
SHERWOOD L. BOEHLERT, New York       NICK J. RAHALL II, West Virginia
JOHN L. MICA, Florida                JERROLD NADLER, New York
SPENCER BACHUS, Alabama              BOB FILNER, California
JERRY MORAN, Kansas                  ELIJAH E. CUMMINGS, Maryland
GARY G. MILLER, California           EARL BLUMENAUER, Oregon
ROB SIMMONS, Connecticut             LEONARD L. BOSWELL, Iowa
TODD RUSSELL PLATTS, Pennsylvania    JULIA CARSON, Indiana
SAM GRAVES, Missouri                 PETER A. DeFAZIO, Oregon
JON PORTER, Nevada                   JERRY F. COSTELLO, Illinois
TOM OSBORNE, Nebraska                EDDIE BERNICE JOHNSON, Texas
MICHAEL E. SODREL, Indiana           JOHN BARROW, Georgia
LYNN A. WESTMORELND, Georgia, Vice-  JAMES L. OBERSTAR, Minnesota
Chair                                  (ex officio)
DON YOUNG, Alaska
  (ex officio)

                                 (iii)

                                CONTENTS

                               TESTIMONY

                                                                   Page
 Castle, Hon. Michael N., a Representative in Congress from the 
  State of Delaware..............................................    12
 Costa, Hon. Jim, a Representative in Congress from the State of 
  California.....................................................    13
 Cummings, Hon. Elijah, a Representative in Congress from the 
  State of Maryland..............................................    17
 Gunn, David, former President and CEO, Amtrak...................    27
 Hughes, David, acting President and CEO, Amtrak.................    27
 Laney, David M., Chairman of the Board, Amtrak..................    27
 Lautenberg, Hon. Frank, a United States Senator from the State 
  of New Jersey..................................................     4
 Menendez, Hon. Robert, a Representative in Congress from the 
  State of New Jersey............................................    15
 Rosen, Jeffrey A., General Counsel, U.S. Department of 
  Transportation.................................................    27
 Schumer, Hon. Charles, a United States Senator from the State of 
  New Jersey.....................................................    10

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Blumenauer, Hon. Earl, of Oregon.................................    79
Brown, Hon. Corrine, of Florida..................................    80
Costello, Hon. Jerry F., of Illinois.............................    87
Cummings, Hon. Elijah E., of Maryland............................    89
 Johnson, Hon. Eddie Bernice, of Texas...........................   112
Oberstar, Hon. James L. of Minnesota.............................   157
Young, Hon. Don, of Alaska.......................................   186

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

 Gunn, David.....................................................    97
 Hughes, David...................................................   111
 Laney, David M..................................................   115
 Rosen, Jeffrey A................................................   160

                       SUBMISSIONS FOR THE RECORD

 Laney, David M., Chairman of the Board, Amtrak, responses to 
  questions from Rep. Brown of Florida...........................   119

 Rosen, Jeffrey A., General Counsel, U.S. Department of 
  Transportation:

   Letter to Rep. LaTourette, October 26, 2005 and attachments...   168
  Memorandum for Alberto Gonzales, Counsel to the President, from 
    M. Edward Whelan III, Acting Assistant Attorney General, 
    Office of Legal Counsel, U.S. Department of Justice, 
    September 22, 2003...........................................   175
  Responses to questions from Rep. Brown of Florida..............   181


                  CURRENT GOVERNANCE ISSUES AT AMTRAK

                              ----------                              


                       Tuesday, November 15, 2005

        House of Representatives, Subcommittee on 
            Railroads, Committee on Transportation and 
            Infrastructure, Washington, D.C.
    The subcommittee met, pursuant to call, at 10:07 a.m., in 
Room 2325, Rayburn House Office Building, Hon. Steven 
LaTourette [chairman of the subcommittee] Presiding.
    Mr. LaTourette. We are going to ask the subcommittee to 
come to order this morning. I want to welcome all of our 
members, our guests and our witnesses this morning.
    It was originally our intention to hold a hearing on rail 
safety today, focusing on 10-car safety and some other things. 
But due to events that have occurred that the National 
Passenger Rail Corporation, Amtrak, within the last week, the 
hearing has been shifted in focus to governance at Amtrak.
    I want to, first of all, indicate that we are not in the 
transportation infrastructure room. It is under construction, 
which is expected from the Transportation Infrastructure 
Committee, and we want to thank the Science Committee and 
Chairman Boehlert for making this room available for us here 
today. A couple of housekeeping matters, I want to ask 
unanimous consent for members to insert additional remarks into 
the record, and additional statements and materials by 
witnesses.
    Also, we have been notified that, and we may expand this, 
but ask unanimous consent that members not on the Rail 
Subcommittee but who have indicated a desire to participate 
today, be permitted to do so, Mr. Baker of Louisiana and Ms. 
Holmes Norton of the District of Columbia, without objection.
    The Chair also has an announcement to make. Pursuant to 
rule 6(f), paragraphs 2 through 4 the Committee on 
Transportation and Infrastructure, and by agreement, with the 
ranking minority member, the subcommittee will be following the 
extended questioning procedure today in today's hearing. Under 
that procedure, one hour of time will be allotted for extended 
questioning of witnesses with the hour evenly divided between 
the majority and the minority.
    The chairman and the ranking member respectively will 
recognize members for use of such extended questioning time. 
Pursuant to the same rule, members seeking to ask questions 
outside of the extended question period may be recognized to 
ask questions under the 5-minute rule. So for members and your 
schedules, after the--we won't have extended questioning of our 
first panel, but on our second panel, because of the complex 
legal issues that I think we need to explore today, the Chair 
will control one half hour and distribute time accordingly. The 
ranking member will distribute one half hour. And then we will 
go to the 5-minute rule.
    Today, we will be examining current governance issues at 
Amtrak, although it may come as a surprise to some, Amtrak is 
not a part of the government, but is a District of Columbia 
corporation. It has a board of directors, shareholders, 
articles of incorporation and bylaws. One of the Board's 
responsibilities is to hire Amtrak officers, including 
president and the CEO. Last week, the current Amtrak board--and 
we will come back to whether or not we have some questions 
about the Board--fired the CEO, Mr. David Gunn. I happen to 
believe that Mr. Gunn was doing a reasonable job with the hand 
that he was dealt.
    As a matter of law, Mr. Gunn, or any other CEO, serves at 
the pleasure of the Board. But there are deeper issues here, 
whether one is a supporter or an opponent of Mr. Gunn.
    The key issues we will examining today is whether Amtrak's 
board of directors is legally functional with the quorum 
required by law. That affects, among other things, the 
company's authority to fire Mr. Gunn and to hire a new CEO. But 
that is just the tip of the proverbial iceberg. There are a 
number of complex legal issues here which we hope to discuss. 
But the sad reality is, even using the quorum standards and 
personnel count of Amtrak and the administration, the company 
has been without a quorum for at least part of the time since 
June of 2003, nearly 2-1/2 years. The best word that I can 
think of for this situation is pathetic. The administration 
knew from day one exactly when each prior director's tenure 
ended, and did not make timely nominations.
    The administration wears two other hats in this saga. As 
the optional holder of one seat on the Board and as Amtrak's 
preferred shareholder, that neither the Department, the 
transportation's legal establishment, nor Amtrak's general 
counsel apparently took any preventive action, except the very 
thin read of authorizing so-called executive committees when 
disaster looms.
    There was a substantial period of time prior to June 2003, 
when the Board's full legal functioning and quorum were beyond 
question, and when any corporation that was not totally 
clueless would have done something if it had still had a fully 
functioning board. The quorum requirements, for example, 
probably could have been lowered by a joint action of the Board 
and the shareholders before the Board lost its quorum. Also, 
Amtrak's board could have rescinded a number of self-imposed 
restrictions requiring board action for all kinds of 
transactions including labor contracts. None of that was done. 
As a result, the damage and chaos were maximized and the 
company is now in a catch-22 posture, where it can't even 
reduce the damage from losing a quorum without first 
reacquiring a quorum. The situation now is such a mess that I 
have heard it said that you couldn't think up a hypothetical 
case with this loony if you tried.
    Besides Amtrak's dereliction in following normal corporate 
procedures, we still have a denial psychology, in my opinion, 
by the administration. Right now, there are no nominations 
pending in the Senate, other than those of the two individuals 
now serving under claimed recess appointments. That is it. To 
put it another way, if all the administration's pending 
nominees were confirmed this afternoon, almost none of the 
legal issues about the quorum head count at Amtrak would be 
resolved. This late in the session, the administration has left 
itself virtually no options other than more legally suspect 
recess appointments.
    The saddest part of this picture is that its potential 
victims are people who do have control over the situation--the 
employees and unions who have signed labor contracts since mid 
2003, the companies that do business with Amtrak, even the 
parties who sue Amtrak cannot be assured that when Amtrak, the 
corporation, signs on the dotted line, it really means anything 
legally.
    I hope that by exploring these issues today, we will spur 
Amtrak and the administration first to take prompt corrective 
action as soon as possible, and equally important, send the 
message that this should never be allowed to happen again.
    It is now my pleasure to yield to our distinguished ranking 
member, Corrine Brown of Florida.
    Ms. Brown. Thank you, Mr. Chairman. And I want to thank you 
for holding this important hearing. And I also want to commend 
you for your leadership and fairness in dealing with Amtrak. It 
was through your leadership, Mr. Chairman, and the leadership 
of Ranking Member Oberstar and other members of this 
subcommittee that we have been able to save Amtrak time and 
time again from an administration that seeks to destroy our 
Nation's only, intercity passenger rail system.
    Now it seems that here today, we are exploring the issues 
surrounding Amtrak's governing board. Only this time, we are 
examining the Board that the administration has put in place--
another group of Bush cronies, the Amtrak Board Of Directors, 
or as I like to call them, the Bush board. What I would like to 
focus on however, is not just the legal relationship between 
the Board and Amtrak's chief executive officer, but the board's 
firing of David Gunn. When it comes to the Bush administration, 
it seems that if you don't do a good job, you stay on the 
payroll. But if you do a good job and you are successful and 
you stand up for what is right for the American people, you get 
fired.
    Someone needs to explain that rationale to me. Obviously, 
it is not going to be the two Bush board members who refused to 
show up at this time, or Secretary Mineta, who parades around 
the country blasting Amtrak, but doesn't have enough respect 
for the committee or the Board to have ever gone to a board 
meeting.
    Mr. Gunn was fired because frankly, he was succeeding. And 
if I was going to give a grade, as a former college professor, 
I would give Mr. Gunn an A. And if I was going to give an F, 
just like the American people, I would give an F to the Board 
and to the Bush administration. You get an F. I reserve the 
balance of my time.
    Mr. LaTourette. The gentlelady yields back. The gentleman 
from Florida, Mr. Mica.
    Mr. Mica. Well, thank you, Mr Chairman. Thank you for 
holding this hearing. It does seek to clarify some questions 
relating to governance that we do need to resolve. I have been 
involved in this process for some 13 years, worked on Amtrak 
reform legislation, ARC legislation, that we passed.
    I do believe to address the first question at hand that the 
Board is legally constituted. There have, in fact, been 
problems with the appointments, quite frankly, political games 
being played, people who don't want to see reform and who don't 
want to see people appointed to the Board who seek or would 
initiate reform. So we have had sort of a standoff in the Board 
governance.
    I think people are now tying to raise questions once that 
we have had a board that has taken some long overdue reform 
measures. And I want to commend David Laney and those who have 
served on the Board for making some decisions that are long 
overdue so that we can move both high-speed rail, long distance 
service forward. It is stuck in a rut. Anyone who looks at the 
figures is kidding themselves, if they believe otherwise.
    The country needs a national rail system. Amtrak has never, 
under its current configuration or management, been able to 
take us to the next step. I believe it was in September--
September 22, the Board voted to break off the Northeast 
Corridor, which is a monumental advance in seeking 
transparency. The finances of Enron, a great model compared to 
what we have had as Members of Congress to get any information 
relating to the previous finances.
    Mr. Laney has helped to bring some transparency, some 
rationality to the organization. And if we do break out high-
speed rail, we allow the private sector to develop that 
corridor and operate that corridor, it will serve as a model 
for the country, we can enhance dramatically service in that 
corridor and across the Nation. We can conduct long distance 
service as the administration has envisioned with public 
private partnerships and States, and expand it to States like 
Florida and other parts of the country where it is needed and 
not a Soviet-style configuration or operational mode.
    So I am pleased that you are holding this hearing. I am 
anxious to hear from Secretary Manetta and others from the 
administration, I do believe the Board has taken some 
courageous stance. I commend David Gunn. He did a good job as 
far as an operational person. He took it as far as he could, 
but he refused to take it to the next step, which the Board has 
done and now people are continuing to play games and stopping 
the true advance of advance of high speed service, long 
distance service and other essential rail services to this 
country.
    So again, I hope this hearing will shed light on where we 
go from today, and thank you, and yield back the balance of my 
time.
    Mr. LaTourette. I thank the gentleman very much. I have 
been advised that the Senator Lautenberg is here, Senator 
Schumer should be here shortly, and with the concurrence of the 
ranking member, they indicated that they may have another vote 
over in the other body at about 10:45. So with everybody's 
concurrence, Senator Lautenberg, we would like to hear from 
you. And then we will pick it back up with Mr. Nadler after we 
hear from you and Senator Schumer. Welcome. And we look forward 
to hearing from you.

STATEMENT OF FRANK LAUTENBERG, A UNITED STATES SENATOR FROM THE 
                      STATE OF NEW JERSEY

    Senator Lautenberg. Thank you very much, Mr. Chairman and, 
thank you, Representative Brown, and all of you for inviting me 
here to hear a view that comes from the other side of the 
Capitol. And I found it shocking that Mr. Gunn was fired by the 
Amtrak board. And it was a shock to my Senate colleagues on 
both sides of the aisle. Less than 2 weeks ago, the Senate 
voted in favor of bipartisan legislation, crafted by Senator 
Lott and myself, to revitalize Amtrak and move it forward.
    That legislation passed the Senate by a vote of 93 to 6. 
And it was intimated that the payback to this Senate from the 
chairman of the Board of Amtrak, that that was kind of 
retribution for our misbehavior.
    This vote was in favor of our Amtrak amendment that was in 
favor, was also a strong vote of confidence in the leadership 
of David Gunn. And that is why we were shocked to see Amtrak's 
hasty firing of Mr. Gunn one week later. And I hope, Mr. 
Chairman, that you will search for specific reasons that the 
Board felt it necessary to so inappropriately make this 
decision in terms of time and in terms of reason.
    There is a hostility to Amtrak demonstrated by the 
administration that, frankly, I do not see shared by my 
Republican colleagues in the Senate. On both sides of the 
aisle, we want to see Amtrak succeed and continue to serve the 
needs of the growing number of Americans who use passenger 
rail.
    One of the lessons that we learned on 9/11 was that our 
country cannot afford to rely entirely on one mode of 
transportation. When our aviation systems shut down that day, 
Amtrak was able to reunite thousands of travelers with their 
families. And we also saw chaotic evacuations during the recent 
hurricanes, motorists stuck in traffic for hours and those 
without cars left behind. We need more rail service to help 
move our citizens to safety during emergencies. And of course, 
congestion isn't just limited to our roads. We all have 
experienced flight delays, cancellations at the airport, this 
has impact throughout the aviation system.
    The DOT has had to cap the number of flights at Chicago's 
O'Hare airport because of congestion. Safety is always an 
issue. And the number of operational errors is up some 30 
percent this year over last.
    People want an alternative. And Amtrak is that alternative.
    Amtrak enjoyed record ridership last year with more than 25 
million passengers, and about as many travelers ride the train 
between here and New York City as do fly. In the 35 years since 
Congress created Amtrak, we spent only $28 billion on passenger 
rail, less than a billion dollars a year. And this year alone, 
we have spent $36 billion on highways, 14 billion on our 
aviation system. And it is not a balance that we should strive 
to maintain.
    Other nations understand the importance of rails. 
Unfortunately, we lag behind. A few years ago at a NATO 
meeting, I took a train from Paris to Brussels. 18 trains a day 
between the two cities. The 210-mile trip took about 85 
minutes. And that is where we ought to be. The Europeans aren't 
smarter than we are. They simply have made a smarter investment 
in passenger rail. Germany, with its modern high-speed rail 
system, invested $9 billion in 2003 alone,and the benefits of 
their world class system are obvious to anyone who travels 
there.
    And so, Mr. Chairman, what we are seeing from the Amtrak 
board seems to be ideology over the needs of the American 
people. And we need to do better. This latest decision to fire 
David Gunn, an executive with remarkable credentials as a 
manager, and I think his record will speak for itself, it is an 
impudent decision.
    And to respond to a statement made from one of our 
colleagues about the fact that David Gunn didn't do everything 
he was supposed to. He has got a leaky house, the roof is 
coming apart and everything else, and we don't want to put the 
money in to rehab it properly. And that is what is happening 
with Amtrak. They are always fixing something that is broken. 
The rail cars, the track systems, et cetera. And we haven't put 
the money in, and it is our fault. It is not Mr. Gunn's fault.
    So apparently, it is not good enough to be an effective 
public servant anymore. This administration requires that you 
also have to pass a loyalty oath to the president and we see 
that in the current board.
    Mr. Chairman, Ranking Member Brown, I hope that this 
hearing will help reveal to you just how badly this country 
needs guidance on passenger rail service. I thank you very much 
for the opportunity to speak and to intervene with the schedule 
that you have planned with your fellow colleagues.
    Mr. LaTourette. Senator Lautenberg, we thank you very much 
for coming and sharing your thoughts with us and we still don't 
have Senator Schumer. So I will go to Mr. Nadler for his 
opening remarks and we will go to the Senator and proceed in 
regular order after that. Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman, Mr. LaTourette and 
Ranking Member Brown, for holding this hearing on current 
governance issues at Amtrak, and thank you, Senator, for coming 
to this side of the Capitol and sharing your thoughts.
    Although, I think the title, "Current Governance Issues at 
Amtrak" is a little misleading. Now that David Gunn has been 
fired from Amtrak, there currently is no governance at Amtrak. 
I mean no disrespect to Mr. Hughes, who has been appointed 
active president following David Gunn's firing, but I think it 
is obvious what is going on here.
    The Amtrak Board Of Directors has become a front for the 
Bush administration and other people who want to destroy 
Amtrak. Their goal is to dismantle the railroad. And I have 
never seen a situation in which the obvious goal of the Board 
of Directors of a corporation was to destroy the corporation.
    When Mr. Gunn refused to go along with the Bush board on 
actions that would cripple the railroad, most notably, the 
spinoff of the Northeast Corridor, he was fired. The Bush board 
had to resort to these tactics because the administration 
cannot get Congress to do its bidding and break up Amtrak.
    Earlier this year, the Bush Administration requested that 
Amtrak's funding be eliminated completely, be zeroed out and 
try to force it into bankruptcy. In response, the House and 
Senate both voted overwhelmingly to increase funding to Amtrak 
just showing the contempt with which the House and Senate 
viewed the administration's attitude toward Amtrak.
    In fact, the transportation appropriations conference 
report, that is expected to be filed this week, contains about 
$1.3 billion for Amtrak, which is higher than any funding level 
in Amtrak's history. In September, the Board suddenly approved 
a resolution to spin off the Northeast Corridor and create a 
new subsidiary. Suddenly out of the clear blue sky, the Senate 
responded last week by passing Senator Lott's Amtrak 
reauthorization as an amendment to the deficit reduction bill 
by a vote that Senator Lautenberg noted of 93 to 6.
    This reauthorization bill would maintain Amtrak as is, 
while taking measures to enhance the railroad not to dismantle 
it, and again shows the attitude of Congress toward the 
attempts to dismantle Amtrak by this Bush board. The Bush board 
is trying to subvert the will of congress and the American 
people by destroying Amtrak through actions behind closed 
doors. I am sure we will hear a lot of talk today about 
management, about how the Board wants to move Amtrak in a new 
direction. We may even hear about this GAO report, which looks 
at the minutiae of management practices without looking at the 
broader context of how a railroad is run and without 
acknowledging Amtrak's performance results in the face of 
starvation funding for the last 30 years.
    The record will show that 2005 was a good year for Amtrak. 
David Gunn saw Amtrak through some very tough times financially 
as well as through various Acela problems, Hurricane Katrina 
natural disasters on the west coast and rising diesel fuel 
prices.
    Despite all of these challenges, ridership has increased, 
Amtrak is not in bankruptcy as the administration wanted it to 
be and, in fact, Amtrak expects its year-end available 
operating cash to be more than $120 million. That is a 
remarkable record for a chief executive officer sabotaged by 
his own board. David Gunn is a straight shooter who has made a 
number of common sense management reforms to help the railroad 
run more efficiently. He has almost 40 years of experience in 
this business. He came out of retirement 3 years ago to help 
Amtrak run a successful passenger service. And yet Amtrak is 
now being run by a board made up of persons who have virtually 
no experience--no experience in passenger rail.
    When David voiced his concerns about some of the bad 
decisions the Board was making, he was fired.
    In short, Mr. Gunn was fired because he would not agree 
with the process of FEMA-tizing Amtrak. His firing is a sign of 
the lengths Amtrak opponents will go in order to eliminate 
passenger rail service in this country. They must be called on 
it. This must be stopped.
    I want to know what gives the Board the right to thumb its 
nose at Congress and to take drastic actions such as spinning 
off the Northeast Corridor. I want to know on what grounds 
David Gunn was fired. The Board issued a press release claiming 
that Amtrak "needed to intensify the pace and broaden the scope 
of its reforms." exactly what reforms is the Board referring 
to? Is it referring to taking the railroad from a situation 
facing bankruptcy at the beginning of the year to $120 million 
surplus? Is it referring to record ridership levels? That same 
release mentions the strategic reform plan that the Board 
approved in April and says that Amtrak needs "a leader with 
vision and experience to get the job done."
    Well, that strategic reform initiative that the Board 
approved in April does not call for spinning off the Northeast 
Corridor. That is why I called that initiative sudden. In fact, 
it states that "such an action would be inadvisable," the 
Board's own resolution. It would seem that David Gunn is more 
committed to the strategic reform plan adopted by the Board 
than is the Board. It seems to me that it is the Board that 
should be replaced, not Mr. Gunn.
    I find this whole situation very disturbing. Amtrak is a 
vital part of our national transportation system. The American 
people recognize that and so does Congress.
    The Board apparently does not.
    The Board is taking sudden drastic actions that threaten 
our intercity passenger service. The only entity that seems to 
support the Board is the Bush administration and the very small 
number of the Members in Congress who do not have a majority or 
anything close to it. The American people and the millions of 
people who ride Amtrak every year deserve to know the Board's 
motivation.
    They deserve to know what will happen to Amtrak in the 
future. And they deserve the right to try to stop the Board's 
open conspiracy to support the law--I am sorry. They deserve 
the right to try to stop the Board's open conspiracy to subvert 
the law and to dismantle Amtrak.
    I hope this hearing will produce some answers and 
ultimately shed some light on this situation so Congress can 
figure out how to undo the subversive work of this board and 
save Amtrak in the future. Thank you, Mr. Chairman. I yield 
back.
    Mr. LaTourette. I thank the gentleman from New York for not 
only his statement, but for teaching us a new verb. FEMA-
tizing. I appreciate that. Gentleman from Alabama.
    Mr. Nadler. The English language must evolve.
    Mr. Bachus. I thank the chairman. This hearing today, I 
think, which focuses not only on Amtrak, but whether we are 
going to have a national passenger system, and I think anybody 
that travels our interstates or goes through our airports, 
realizes that we have to have a rail as an alternative, and as 
a viable alternative.
    You go to Europe, I mean those of us who have been in 
Europe, Japan, you see what they have, and you immediately 
realize that we are missing that in the United States, except 
for the Northeast Corridor, which really is underfunded itself.
    And since 1970, when the government took over the operation 
of our passenger rail, when it took it over, it formed, I 
think, the first mistake in 1970, it formed a for-profit 
corporation which is somewhat laughable that anybody that ever 
thought that passenger rail would turn a profit, when what the 
government took over was the rail, the freight railroads 
operations which were losing tens of millions of dollars a 
year, had dilapidated equipment and rundown infrastructure, and 
was competing against highways that the Federal Government, and 
the State governments and local governments subsidized to the 
tune of when you take all the governments, it is all, actually, 
hundreds of billions of dollars.
    Senator Lautenberg mentioned that just last year, we put 
$14 billion into our airports, yet when the administration 
proposed their financial support for national rail passenger 
service this year, it was zero. Which, how is rail passenger--
how is a system supposed to compete with no subsidies? There is 
not a rail passenger system in the world that I have been able 
to determine that doesn't have public subsidies. None exist.
    There are no other forms of transportation in the United 
States that aren't supported by literally billions of dollars 
worth of funding every year, including our waterways. We spend 
more money on our waterways. And they do have freight but they 
do have some passenger.
    So we have got--I think the first thing when we start 
discussing this--and I know I am a supporter of this 
administration.
    But when they talk about that Amtrak--and I just quote what 
they always say, that they have a poor financial picture, 
obviously they do because of a lack of funding for years and 
years. And really these funding problems are to me a safety 
concern.
    Because we are just, you know, we could be weeks or month 
away from a major accident costing lives because of the lack of 
funding we put in an infrastructure.
    The system has never turned a profit. It is never going to 
turn a profit. Unless, the only way it could possibly turn a 
profit is if tomorrow we backed away and quit funding our 
highways and our airports, and we simply started charging 
passengers for all those costs.
    As for David Gunn, I think since the early 1990s, people 
have realized that he was probably the best man for the job. I 
know that in the 1990s, he was offered the job to head up 
Amtrak, and he refused to take it. And when he did take it in 
2002, he faced a company that was on the verge of bankruptcy. 
And I--at least, from all apparent from what I could determine, 
he made great progress in the 3 years that he was there. And 
this April, there was a strategic reform initiative, which was 
announced with a lot of fanfare and lot of agreement, not only 
by David Gunn, but by the Board, and I thought everyone had 
come up with sort of a game plan in April. And then in 
September, we did hear about the Northeast Corridor subsidiary, 
which a lot of people, including myself, looked to me as if 
what that was is an attempt to keep the Northeast Corridor, 
which is by far the most important part of Amtrak, and the only 
part that could, that is the big revenue producer, to take that 
and break it off from the other parts of the system, which I 
think there is no one that knows anything about rail passenger 
service that doesn't realize that that is an attempt to kill 
the rest of the system, or to kill the rest of Amtrak.
    And maybe that is what, maybe that is what we need to start 
all over, just throw out Amtrak and start all over. But 
whatever we have to do, we are going to have to pay for. And it 
is unrealistic to think that we are, that we are going to have 
to have rail passenger service. That ought to be apparent to 
all of us. The American people want it. And it is going to cost 
money, and it is going to cost a lot of money. It is going to 
cost more money have we have been putting in every day. And to 
continue to have a board or a chairman of Amtrak and to starve 
it financially, is both irresponsible and irrational.
    Mr. LaTourette. I thank the gentleman. We are been joined 
by Senator Schumer, and he has the same constraints as Senator 
Lautenberg had, and so my intention is Senator Schumer, thank 
you for coming to see us today. We will receive your testimony 
and then we will go back to the regular order and hear from Mr. 
Menendez. Thanks for coming.

STATEMENT OF CHARLES SCHUMER, A UNITED STATES SENATOR FROM THE 
                      STATE OF NEW JERSEY

    Senator Schumer. Thank you, and Mr. Chairman, first let me 
thank you and Ranking Member Brown, for your courtesy and the 
committee's leadership on this issue, which I think is 
appreciated by millions of people in my State and tens of 
millions around the country.
    I am also grateful that we are joined by David Gunn, who I 
admire for his intelligence, experience and dedication to rail 
transportation in general. He did a great job as head of head 
of the MTA in New York City. He helped straighten that up. And 
now, we all hoped that he would be given the chance to do the 
same for Amtrak.
    Mr. Chairman, it is no secret. We sit here today as a 
crossroads for Amtrak and the future of passenger rail service 
in this country. We all know that the Amtrak Board of Directors 
unilaterally decided to fire Mr. Gunn, claiming he was not 
committed to reform, which I find to be an unbelievable 
statement. No one has pushed reform more than David Gunn. I 
know it. I have called him for things in New York that he said 
I just can't do because he wanted to save money and he is such 
an on-the-merits guy. He is a brilliant manager and experienced 
railroad administrator who, during his tenure, worked 
tirelessly to defend and expand Amtrak.
    Frankly, Mr. Chairman, in the railroad industry, there is 
no equal. He is truly the best we have. And that may be the 
reason the Board was so quick to get rid of him.
    Now, the real reason, in my judgment, that Mr. Gunn was 
dismissed is the Board wants to kill Amtrak as we know it. He 
wants it to survive and prosper. It is that simple. David Gunn 
was an invaluable ally in the fight to preserve, reform and 
expand Amtrak. And his unjust dismissal is a crushing blow for 
Amtrak's hope for success and reform, the action executed in 
the dead of night with zero warning or consultation. I spoke to 
Mr. Gunn that morning. He was still unsure of what the Board 
would do, is a striking example of the lengths that this 
administration is going to go to kill Amtrak. But, Mr. 
Chairman, there is some little glimmer of hope on the horizon.
    There are serious legal and procedural questions, 
surrounding the composition of the current board and its most 
recent actions. One of my concerns is that the Board, as it is 
currently comprised of only four active members, two of whom 
were recess appointments, may not satisfy the requirements for 
a quorum set forth in the Amtrak articles of incorporation, and 
the D.C. Business Corporation Act. Amtrak's articles of 
incorporation clearly state there needs to be five active and 
voting members on the Board to constitute a quorum.
    As we all know, right now there are only four. After 
consulting with many legal experts, the legal questions are in 
need of thorough examination by Congress, the Department of 
Transportation, and other outside legal authorities.
    It is my belief that Mr. Gunn, after talking--it is my 
belief, Mr. Chairman, that Mr. Gunn, that the Board did not 
have the legal power to remove David Gunn, or, at the very 
least, that is called into such question that he should not be 
removed.
    I am also concerned about a broader question, and that is 
whether the administration has lived up to its obligation to 
fill the Board with qualified and experienced leaders to guide 
Amtrak in the 21st century. In my estimation, it clearly has 
not. For more than 2 years, the Board has operated with only 
three or four members, and it is safe to say many of them lack 
the qualifications and dedication to Amtrak's future that we in 
Congress expected when we passed the Amtrak Reform and 
Accountability Act, creating the current board. Instead, we got 
people whose lone goal seems to be to undermine Amtrak.
    In addition, I believe had the President appointed serious 
administrators with sufficient railroad experience, we wouldn't 
be confronting these legal questions and confusions. We have 
corporate bylaws for a reason. There are meant to be followed, 
not dodged, and serious people know that. I personally do not 
believe that a board only half filled can oversee Amtrak's 
operations and future effectively and fairly.
    At the end of this year, the President's two 
recessappointments to the Board, Floyd Hall and Enrique Sosa 
will expire. We are calling on the President to not simply 
grant recess appointments to them or anyone else. So I am 
sending a letter, which I would ask unanimous consent being 
placed into the record, Mr. Chairman--
    Mr. LaTourette. Without objection.
    Senator Schumer. --to the President. I'm asking him to send 
to Congress a full list of five new nominees who will be 
subject to Senate advice and consent. In addition, he needs to 
follow the letter of the law and consult with Senator Reid on 
these nominations, the President cannot continue to skirt its 
legislative obligations when it comes to Amtrak. Year after 
year, the administration plays games with Amtrak's funding and 
management not realizing that its actions affect the daily 
lives of Amtrak's more than 25 million riders.
    In the face of near weekly attacks, this year, both Houses 
of Congress, on a bipartisan basis, reaffirmed our commitment 
to Amtrak by reversing the President's budget request voting 
for 11.4 billion again. I salute this committee and you, Mr. 
Chairman, and Ranking Member Brown, for your leadership on that 
issue.
    The problem is not Congress. It is not Mr. Gunn. It is not 
Amtrak's workers. The problem is an ideological administration 
and its unwillingness to fund Amtrak sufficiently, an 
administration that is willing to fund roads and airports but 
somehow is not willing to fund rail.
    The bottom line is that the Board and the President's 
actions have put the future of Amtrak in grave danger, the 
firing of David Gunn was the dagger in the heart. Again, I hope 
the Board will reinstate Mr. Gunn as quickly as possible until 
the legal issues are fully resolved. They are now, at best, 
cloudy. There is no clear legal consensus that the Board had 
the power to fire Mr. Gunn.
    It is no way to run a country. It is no way to run a 
transportation system. No business man or woman who knows how 
to get things done would operate in this way. Thank you, Mr. 
Chairman.
    Mr. LaTourette. Senator Schumer, thank you for not only 
your thoughtful remarks, but coming back to where you used to 
work and we appreciate your participation.
    Senator Schumer. I miss it very much. Not that I don't love 
the Senate.
    Mr. LaTourette. Thank you, Senator. And in talking to 
Ranking Member Brown, I think that we are going to attempt to 
hear from our other colleagues to let them be on their way, 
too, and we appreciate your waiting. And Representative Castle, 
Mr. Castle. We thank you for coming and look forward to hearing 
from you.

 STATEMENT OF THE HON. MICHAEL N. CASTLE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF DELAWARE

    Mr. Castle. Well, thank you very much, Mr. Chairman and 
Ranking Member Brown, for holding this very important and 
timely hearing, and for allowing me to offer testimony. 
Although I am not a member of the Railroad Subcommittee, we 
have all worked closely on this issue over the last several 
years, and I appreciate this opportunity to express some of my 
concerns. I would also like to thank today's panel of 
distinguished witnesses for their presence at this hearing. As 
some of you may know, I co-chair the House's passenger rail 
caucus. Over the last several months, Mr. Rosen and Laney have 
been gracious enough to meet with caucus members on several 
occasions. Mr. Gunn and Hughes have also worked closely with 
our caucus. And I have been impressed by their extensive rail 
experience and leadership abilities.
    As the members of the Railroad Subcommittee know all too 
well, this administration has made no secret of its intent to 
restructure our passenger rail system and to discontinue 
Amtrak's Federal operating subsidy, the lion's share, that 
every person in this room agrees that Amtrak continues to be in 
need of reform. It is also our responsibility to provide safe 
and reliable transportation options for the rail systems 25 
million annual passengers. The Government Accountability 
Office's recent report highlighted the need for all of us to 
continue our efforts to improve Amtrak's management and 
oversight. Rather than constantly looking for ways to 
shortchange passenger rail, we should be working on a 
comprehensive strategy to make Amtrak the best high-speed rail 
system in the world.
    First and foremost, I strongly believe that improving 
passenger rail service in this country depends on strong and 
experienced leadership at Amtrak. Unfortunately, in recent 
months, the Amtrak board has made several important decisions 
despite the fact that close to half of its seats remain empty. 
In particular, the unexpected firing of Amtrak President CEO 
David Gunn, someone who is widely respected for his extensive 
rail and transit experience, raises several questions regarding 
the Board's commitment to Amtrak's stability. During my seven 
terms in Congress, I have written numerous letters to this 
administration and to the past administrations pleading for the 
appointment of experienced and dedicated railroad people to 
serve on the Amtrak board.
    Still, with two of the Board members' terms expiring when 
Congress adjourns next month, we are quickly approaching the 
prospect of a headless national passenger rail system and an 
ineffective board consisting of only two voting members. 
Frankly, I believe that failure to appoint a fully functioning 
Amtrak board is disgraceful. It stands as an enormous 
disadvantage for this rail system.
    Members of Congress can stress the need for accountability 
and reform until we turn blue in the face. But in the end, what 
Amtrak really needs is leaders with vision who attend and 
participate in board meetings, and who are genuinely committed 
to improving passenger rail.
    Currently, this board is not effectively carrying out its 
responsibilities. And as of today, I seriously question whether 
some of the individuals serving on the Amtrak board meet the 
standard of service that Amtrak customers deserve. Everything 
starts with this board. A fully functioning Amtrak Board of 
Directors could set the course for a new era of reliable high 
speed passenger rail in this country.
    For this reason, this week, I will introduce legislation to 
restructure the Amtrak board and ensure that vacancies on the 
Board are filled by dedicated railroad, transportation and 
business professionals. Like similar provisions introduced in 
the Senate, my bill would empower Amtrak's president with a 
vote on the Board and set a deadline for President Bush to set 
replacements for board vacancies.
    This legislation would ensure that the Board provides 
professional corporate leadership by expanding the number of 
board members from 7 to 9 and setting requirements for members 
with diverse regional backgrounds, bipartisan philosophies and 
real-life transportation expertise.
    I commend Chairman LaTourette for wasting no time in 
convening this very important discussion. The safety and 
effectiveness of our Nation's transportation system is at 
stake, and it is imperative that we act now to ensure Amtrak 
remains a viable option for traveler's.
    We have barely scratched the surface of passenger rail's 
potential. Expert leadership on the part of the Amtrak board 
and a strong commitment from Congress could lead to greatly 
expanded possibilities for our Nation's rail system.
    Again, I thank the committee for the opportunity to 
testify. And I look forward to working with all of you in this 
extremely important issue. And I yield back.
    Mr. LaTourette. I thank you, Mr. Castle, very much for not 
only your remarks, but for completing them in 4 minutes and 45 
seconds.
    The gentleman from California, Mr. Costa, we thank you for 
coming and look forward to hearing from you.

 STATEMENT OF THE HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Costa. Thank you very much, Mr. Chairman, and Ranking 
Member Brown, for allowing me this opportunity to testify 
before the subcommittee. I think it is fitting and appropriate 
that the subcommittee exercise its appropriate role in 
oversight in what are some very important issues involving not 
only the near term of intercity rail in America, but the long-
term important progress that we need to make if intercity rail 
is going to be part of a multi-modal transportation system that 
I believe most Americans think--and I think most 
representatives believe that we ought to have in this country, 
an intercity rail system that connects our air transportation 
system with our highway system and our rail system.
    After all, aren't the events of September 11 fresh enough 
in our minds to understand what happened when we found 
ourselves crippled under the attack of a terrorist front that 
left our transportation system lacking--badly lacking--and 
certainly emphasized the importance of a rail transportation 
system.
    Members of the subcommittee, while I don't have the 
pleasure to serve with you, over the 20 years that I have 
served in California State legislature, I carried, I was part 
of 4 multi billion dollar bond measures that, in which 2 passed 
that provided significant funding for intercity rail 
transportation in California. I am also the author of the high-
speed rail bond measure that is currently scheduled next year 
on California's ballot that will provide the first significant 
financing for high-speed rail in America, separate from what 
the Federal Government has done with the Acela line.
    So that we don't believe this issue is simply a Northeast 
Corridor issue, or limited to transcontinental trains. 
California, out of the five busiest corridors in the Nation, 
has three of the busiest corridors. Number 2, the San Diego/Los 
Angeles Corridor. Number 3 is the Capital Corridor between San 
Jose and Sacramento, and number 5 is the San Joaquin Corridor 
that serves part of my constituents from Bakersfield to the Bay 
area.
    As a matter of fact, for your information, Amtrak operates 
over 70 intercity trains in California today and 200 commuter 
trains. It operates a number of high frequency State-supported 
trains that annually provide 9.3 million passenger ridership.
    California has stepped up to the plate. We have provided 
literally hundreds of millions of dollars for financing of 
intercity service. And in the last 3 years, David Gunn has 
provided tremendous, tremendous partnership and his experience 
as an able administrator. He has not only helped increase 
ridership, but he has decreased costs of operation. He has been 
willing to invest in capital equipment. Most recently, a couple 
months ago, he and I completed efforts to open a brand new 
Amtrak intercity rail station in my district. He has been a 
hands-on administrator.
    And therefore, for all the reasons that have been 
articulated, he ought to be reinstated. I think that the 
efforts that this subcommittee will provide here in the ongoing 
days are critical. Your oversight is absolutely essential to 
finding out what has gone wrong.
    In reality, the administration wants, I believe, to 
emasculate and then kill Amtrak. What will that do? It will put 
another unfunded mandate back on States that decide to try to 
continue to provide intercity rail support. We need to 
critically evaluate the Board's actions.
    I think we must work in a bipartisan manner and return 
Congress to its position as an oversight body that all too 
often is lacking. We need to find out when the President will 
appoint a full Amtrak board, and will he go through the proper 
process rather than recesses appointments. We should require 
that the people have substantive experience, and be appointed 
to the positions of Amtrak. We need to also examine why the 
Board continues to make decisions in secret unannounced, with 
the minutes of the meetings are not provided. We need to 
examine what the States' problems are going to be with this new 
position of the Amtrak board. What will this transfer of Amtrak 
service mean in terms of pension funding, labor force, 
liability insurance, intellectual capital, et cetera?
    These are all the actions that I think this subcommittee 
needs to focus on, and the Congress need to focus on as we 
deliberate whether or not we want to have a true multi modal 
transportation system. Because that is what is at stake. We are 
not going to have high-speed rail in America if we are not able 
to, in fact, provide an opportunity for Amtrak to continue its 
progression as it has done under David Gunn's able tenure as 
the president of the Amtrak board.
    I thank you for the opportunity to testify before you, and 
I want you to know that this is simply not a Northeast Corridor 
issue, but it is an issue that affects the entire Nation as 
well.
    Thank you, Mr. Chairman.
    Mr. LaTourette. Mr. Costa, we appreciate your coming to 
share your thoughts with us today, and based upon the expertise 
you had in your prior life, I think you should be a member of 
this committee. And I think you would enjoy it.
    Mr. Costa. I would like to.
    Mr. LaTourette. We are going to go back to regular order 
now and pick it up with Mr. Menendez. By my count, we have 
seven more--six or seven more opening statements. And just as a 
courtesy to the members of our second panel, if you want to go 
up and use the facilities for the next 30 minutes or so, I 
think that is how long it is going to be before we get to 
these. So Mr. Menendez.

  STATEMENT OF THE HON. ROBERT MENENDEZ, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Menendez. Thank you, Mr. Chairman. I want to salute you 
and the ranking member for pursuing this hearing. I appreciate 
Mr. Laney and Mr. Rosen being here today. But I am not pleased 
at all that Mr. Sosa and Mr. Hall have defied the wishes of the 
chairman and this committee and refused to appear today.
    I think it is interesting that they can easily make it back 
to Washington in order to fire Mr. Gunn, but they can't answer 
a congressional request to explain themselves. I think that 
shows exactly how interested some of the President's board 
appointees are in the operation of a railroad.
    This merely highlights my concerns with the way the Board 
has been put together and the way it has been operating.
    Mr. Laney and Mr. Rosen, I want to be blunt here. I don't 
trust you. And I don't think this Congress can trust you. Your 
actions in the past few months, passing a resolution to try to 
spin off the Northeast Corridor, keeping that resolution secret 
for as long as possible, and firing Mr. Gunn, have not given me 
any confidence in your intentions for Amtrak or your ability to 
run it properly. I am particularly concerned about what your 
intentions might be for the Northeast Corridor.
    I cannot overemphasize the importance of the Corridor to 
the people of New Jersey. It is not just the millions of people 
who ride Amtrak each year. It is the nearly 100,000 commuters 
each day who rely on the Northeast Corridor to go back and 
forth to work. New Jersey Transit operates over 400 trains a 
day over the Northeast Corridor, nearly four times the number 
that Amtrak does. New Jersey puts out over $100,000,000 a year 
into the Northeast Corridor, and has put over $1.5 billion into 
it in the past 10 years, and yet they were not consulted. They 
were not even informed about your decision to create an 
infrastructure subsidiary.
    This is one of the most densely traveled, heavily congested 
corridors anywhere in North America. Trains cross from New 
Jersey to New York every 2-1/2 minutes. And this operation 
requires a tremendous amount of skill.
    I cannot allow anything to jeopardize the safety of the 
people on these trains. And yet you seem to want to play with 
fire.
    Despite your reassuring words to me when we last met, Mr. 
Laney, all of your actions appear to be aimed at one goal, 
selling off the Northeast Corridor.
    With a hand-picked board of administration loyalists and 
major Bush fundraisers, a secret resolution to create a 
Northeast Corridor subsidiary, a hasty decision to fire the 
company's president because he disagreed with your plan, your 
words are not reassuring at all.
    Congress and the American people have clearly demonstrated 
they want no part of the administration's privatization 
schemes. And yet, the Board moves forward intent on enacting 
these so called reforms that seek to emulate the British model 
of separating the infrastructure from the operations, a model 
that has resulted in worse performance, higher government 
subsidies, and failed fatal crashes. And my worst fear is that 
you are trying to sell off the Northeast Corridor to a group of 
investors who will use it to get huge tax breaks from the 
depreciation.
    This is not a toy railroad. It is a highly complex, vital 
national transportation asset. And unless you treat it as such, 
you are putting both the safety and the economic security of 
hundreds of thousands of people at serious risk.
    Finally, I think the Board has shown an utter lack of 
respect for Congress. And you have eliminated any confidence we 
had in your ability to be good stewards of the Northeast 
Corridor. It has become abundantly clear that this Board's lack 
of experience in running a railroad is matched only by its lack 
of commitment to preserving rail service for both the intercity 
and commuter riders who depend on it.
    Do changes need to be made in the way Amtrak operates? 
Perhaps. Do some reforms need to be enacted? Probably. But 
should these reforms be made by a hand-picked board of 
political appointees with no railroad experience who don't 
bother to consult the States' transit agencies, employees or 
passengers that depend on the corridor, who don't bother to 
consult with Congress about their actions? Absolutely not.
    We have no alternative but to explore actions that will 
protect our customers and your citizens. We need to restore 
confidence in the governance of Amtrak in the Northeast 
Corridor. We need to have a deliberative, consultative and very 
open public process that engages the stakeholders directly in 
deciding the future of rail service. We need to end the 
decision making in darkness. We need to find alternatives that 
put the Northeast Corridor firmly in accountable public hands, 
ensuring that the Federal Government meets its responsibility 
while balancing the governance between the interests of 
intercity and commuter services.
    And I look forward to working with my colleagues to find 
these alternatives and will fight side by side with them to 
prevent the Board from pulling a fast one and dismantling 
Amtrak.
    Mr. LaTourette. I thank the gentleman very much.
    Ms. Brown. Mr. Chairman, in accordance with clause 2(k)(6) 
of rule 11, I move that the committee receive my request to 
subpoena Mr. Hall and Mr. Sosa.
    Mr. LaTourette. Well, make this observation. My 
understanding--
    Mr. Mica. Point of order, Mr. Chairman, I would like to 
reserve a point of order.
    Mr. LaTourette. Point of order is reserved.
    The Chair would note that Mr. Sosa and Mr. Hall were 
invited to attend today's hearing. Our information is they are 
not going to be here. I would prefer that the gentlelady hold 
that in abeyance until we actually get the first panel in to 
see if they have arrived yet; and 2, it is my understanding of 
the rules of the committee and the subcommittee require for 
there to be a valid vote on the gentlelady's motion that we 
need to have a quorum of the subcommittee. There is 28 members 
of the subcommittee. We need to have 15 people here, which we 
do not, just at this moment in time.
    So if the gentlelady would hold that until we get through 
with opening statements, and I know she has another motion, 
perhaps we can discuss that.
    So if the gentlelady, with unanimous consent, would 
withdraw her motion at this moment in time, we will get back to 
you. Is that all right with you?
    Ms. Brown. Yes.
    Mr. LaTourette. Mr. Cummings is next.

  STATEMENT OF THE HON. ELIJAH CUMMINGS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MARYLAND

    Mr. Cummings. Thank you very much, Mr. Chairman. I want to 
thank you, and certainly our ranking member for holding this 
hearing. And I have got to tell you, as I sit here and I listen 
to my colleagues on both side of the aisle, I am very--makes me 
feel good that we have such strong statements in support of 
Amtrak. And we have such strong statements in support of 
probably the best administrator that Amtrak has ever had. But 
you know what I am afraid of? Is that after all the dust 
settles, and everything is over, we are going to still be in 
the same place. I can't get President Bush to return my calls. 
But my Republican colleagues can.
    The people that I am most concerned about are the people 
that I saw when I left Baltimore this morning standing on a 
platform at 6:00 o'clock in the morning, hard working 
Americans, doing the best they can with what they got, trying 
to get to work. And sometimes I think that we in Congress 
forget about the very people who send us here. They are not 
asking for any handouts. They are just trying to get to work.
    And like many of my colleagues, I was shocked and deeply 
troubled to hear about the sudden firing of David Gunn. The 
press release issued by Amtrak announcing this decision seemed 
to imply that this decision was taken in response to the recent 
release by the Government Accountability Office of a report 
strongly criticizing shortcomings in Amtrak's management. I 
have thoroughly read that report. And while it does point to 
the need for Amtrak to adopt new financial management, 
purchasing and strategic planning systems, the report also 
indicates that Amtrak has been moving to address many of the 
most serious challenges it has faced in the last few years.
    It also appears that Mr. Gunn was largely the driving force 
behind these efforts to clean up the problems left by previous 
Amtrak officials.
    And on that note, I say to you, Mr. Gunn, thank you for 
your service.
    There are so many who--I think it was Ms. Brown who said 
she don't understand when somebody in this day and age, with 
regard to this administration does a good job, they are the 
ones who get fired. People standing up for regular, everyday 
people, they are the ones who get fired.
    And importantly the GAO report that I talked about a moment 
ago cited critical shortcomings in the oversight role exercised 
by the Amtrak board, which currently lacks three voting members 
and includes two board members who were recess appointed and 
have not been confirmed by the Senate. In fact, many of the 
actions recently taken by the Amtrak board appeared to 
exemplify precisely the kind of questionable oversight cited by 
the GAO report.
    In April, for example, the Board put forward a plan to 
"save Amtrak." Give me a break. That would essentially split 
the service and shift cost to the States.
    Most supporters of Amtrak consider this to be an ill-
conceived and short-sighted plan.
    Just in case you didn't know it, States are suffering 
tremendously. My State has had all kinds of deficit problems. 
Later in the still unexplained decision made in September but 
released in October, the Board decided to separate the 
Northeast Corridor into a wholly owned subsidiary, despite 
having rejected that plan as recently as April, arguing that 
the complexities and costs of such a split outweigh its 
benefits.
    Now it's interesting my good friend Mr. Mica said that this 
Board has brought in a new era of transparency. Hello. It's 
interesting that we who sit on this rail committee, who have to 
answer to our constituents, had to find out about it through 
the press many days after the decision has been made. If that's 
transparency, ladies and gentlemen, give me a break. Coming on 
the heels of these decisions, the board's actions in firing 
David Gunn may indicate that the board's true intention is to 
implement, to the fullest extent possible, the Bush 
administration's plan to liquidate Amtrak as our national rail 
service and turn it over to the private sector.
    Amtrak, which currently serves some 25 million passengers--
many of whom are my constituents--in 46 States, on an annual 
basis, is under attack as never before by an administration 
intent on derailing this service, and it's controlled by this 
runaway train called the Board.
    I urge my colleagues, including all of my colleagues who 
supported the effort led by our subcommittee's Chairman and our 
Ranking Member, to increase funding for Amtrak in fiscal year 
2006 to $1.176 billion, to recommit--I'm almost finished, Mr. 
Chairman--to recommit to the value of preserving Amtrak as our 
national intercity rail service. That means that we must fully 
fund Amtrak. It also means that it is time, in fact past time, 
to bring to a close these annual discussions about the future 
of Amtrak by adopting legislation that can be the basis for 
real reform of Amtrak.
    And with that, Mr. Chairman, I yield back.
    Mr. LaTourette. I thank the gentleman. Ms. Carson. Ms. 
Carson.
    Ms. Carson. Thank you very much, Mr. Chairman. I'm going to 
be very quick, because a lot of what I was going to say has 
already been said and I won't be redundant. I have been in 
Congress almost 10 years and there has never, in my 10 years in 
Congress, that I have seen an individual as reverent as the 
honorable Mr. David Gunn. You have individuals from both sides 
of the aisle who extol the virtues, the talent, the experience 
of a person who's got a track record that is impeccable.
    My concern, Mr. Chairman and Ranking Member, is how can 
somebody who has no experience, no ability, come in and fire 
somebody who excels in what he's doing in terms of Amtrak? 
Amtrak, as all of you know, came to the defense of America when 
we were hit during 9/11. Prior to that time, Amtrak was at 
work. If we had not had Amtrak, this country would have 
continued to stand still. The person that is head of the Board, 
if there is such a Board, I don't know how you can take two 
people and fire a giant like Mr. Gunn. Two of them haven't even 
been confirmed. It's really a partisan Board; they are all 
Republicans. You have not bothered to name the Democrat members 
of the Board. I don't know how you can have some inexperienced, 
inept individuals come in and fire a person of Mr. Gunn's 
magnitude, who has a track record that's indisputable.
    I'm going to close by reminding that when we had a hearing 
back in September, I asked Mr. David Laney what he thought 
about Mr. Gunn. Mr. Laney's quote, verbatim, was he took 
Amtrak--this is Mr. Laney referring to Mr. Gunn: He took Amtrak 
from the day he landed on the platform and is riding a ship 
that was listing and about to spill over. As far as I am 
concerned, David Gunn is a terrific operator.
    That is a quote from Mr. David Laney himself when he fired 
Gunn because of his resistance to the strategic initiative.
    I would like for the two unconfirmed Board members to come 
before this committee, Mr. Chairman, and explain what a 
strategic initiative is. Even though I am not a betting person, 
I can assure you they don't have the slightest idea.
    So I want to thank again the Chairman and the Ranking 
Member for having this committee, and I personally want to give 
Mr. Gunn a standing ovation. I usually don't do that, 
especially with some Bush appointee, but you give credit where 
credit is due. Mr. Gunn has worked professionally with both 
members of the aisle in Congress, both the Democrats and 
Republicans. That is a rare breed for the Bush administration. 
And I would think that given all of the trouble that the Bush 
administration has, all the mess-ups of a Michael Brown, that 
they would want to keep the one bright and shining star that 
they have. And that is Mr. David Gunn, and I applaud him. I 
don't apologize for him, and I hope his life does not become 
even more difficult because somebody from the liberal side of 
the aisle has given him a standing ovation.
    I yield back, Mr. Chairman.
    Mr. LaTourette. I thank the gentlelady very much. Mr. 
DeFazio is next.
    Mr. DeFazio. Thank you, Mr. Chairman. Two lists of names: 
General Shinseki; Chairman O'Neill; economic adviser Larry 
Lindsay, Mike Parker, head of the Corps of Engineers; now David 
Gunn. Second list: Michael Brown; David Safavian; Mr. David 
Laney; Scooter Libby.
    Now, the first list is a group of people who told the 
administration the truth, the truth about a pending war, the 
truth about underfunding investment in infrastructure in this 
country, or the truth about the possibility of having a 
national interconnected rail future for America.
    The second group are all linked by one thing: They are all 
major campaign contributors or campaign functionaries who bring 
no expertise to their jobs. Mr. Brown has been outed. Mr. 
Safavian, the Chief Procurement Officer of the United States, 
who was an intern on a helicopter project at the Pentagon, 
highly qualified, is under indictment. Mr. Libby is under 
indictment. Mr. Laney has just famously participated in 
removing the very competent head of Amtrak for telling the 
truth and defying the Bush administration.
    Now, government is not a fantasy camp, although apparently 
if you give enough money, you get to play; and there is another 
way, and it's as a profit center. They have done well, as have 
their contributors; Halliburton, on down the list.
    Now I guess they're eyeing Amtrak and breaking it up as a 
potential profit center. To hell with the consequences. We're 
talking a lot about the East Coast. That's very, very 
important, given the population density here. But there is a 
West Coast, too. We have 50 million people between California, 
Oregon, Washington, and British Columbia. We have a vision of 
high-speed rail linking those areas. We have a critically 
oversubscribed Interstate 5 with tremendous infrastructure 
needs linking that area. We don't have the money, the President 
says, to upgrade the highway. Well, then, how about relieving 
some of the congestion and providing a cost-effective and fuel-
efficient alternative for passengers by delivering on that 
vision?
    Mr. Gunn had a vision to move America in that direction, to 
begin to catch up with Third World countries or developing 
countries, India and others with national rail systems. No one 
could ever match them. We'll never catch up with Europe there. 
We couldn't compete with them, I guess. But it's something that 
is hated by the Bush administration. I'm not certain why they 
hate the rail system. I know there's old business, the 
Governor, former Governor of Texas, now President; there was an 
airline based there that thought Amtrak might compete with them 
before it became bigger and it doesn't worry about those things 
anymore. I know the President's brother came in and killed off 
high-speed rail in Florida. So there's some old business, but I 
don't think that's really what is at play. The airlines are 
mostly bankrupt; they can't effectively lobby those issues 
anymore, talk about subsidies given, how much they have 
received.
    So I guess it's down to the fantasy camp, the political 
hacks, and running government as a profit center for private 
interest. But that does not serve the interest of the American 
people well. The Board should go, Mr. Gunn should be 
reinstated, Congress should assert its authority in this 
matter.
    Thank you, Mr. Chairman.
    Mr. LaTourette. I thank the gentleman from Oregon.
    Ms. Johnson is next.
    Ms. Johnson. Thank you very much, Mr. Chairman. I want to 
thank you and the Ranking Member for having this hearing. It 
appears that we were almost forced to do that. And I really do 
deeply regret the decision by the Amtrak Board of Directors to 
fire Mr. Gunn. Less than 2 months ago, this subcommittee 
received testimony from the Amtrak Board of Directors that 
spoke to the effectiveness of Mr. Gunn's leadership and 
managerial performance.
    This has been said, but I haven't said it yet: It appears 
that a proven track record slashing debt and increasing 
ridership to a record 25.4 million passengers for a struggling 
rail entity are simply not enough to preserve one's security.
    It appears to me that the primary reasons behind Mr. Gunn's 
firing lies less with his performance and more with his 
unwillingness to go along with the voices above, with the 
ultimate goal of starving Amtrak to death and getting rid of 
all the labor-protected employees, and carving its liquidation 
so that the rich can continue to get richer and the poor 
continue to get poorer. That has been the sign post of this 
administration.
    I want to thank the witnesses that have come before us and 
those to come, and I would hope that we could get some honest 
responses. I wouldn't like to have this hanging out and waiting 
for answers the next year or so. I would hope that the 
witnesses would tell us the truth. I don't think you're going 
to take an oath; but I hope if you don't tell the truth, you'll 
come back under oath.
    Thank you very much, Mr. Chairman.
    Mr. LaTourette. I thank the gentlelady very much.
    Ms. Holmes-Norton.
    Ms. Norton. Thank you very much, Mr. Chairman. I just want 
to make a couple of quick points. I want to thank you for your 
quick action, which I regard as a very important action of 
public responsibility.
    Points I want to make go to congressional intent and the 
crisis in governance that has now been exposed. Mr. Chairman, 
you may remember the process, and the best recent indication of 
just how strong the support is for Amtrak and the way it is 
operating must have been in the transportation appropriation 
process. I have never quite seen anything like it where 
subcommittees--I was one of them--gave up money, transferred 
money from their own accounts in order to make up for the 
shortfall in the appropriated amount we wanted to make for 
Amtrak. I mean, I got robbed blind. I'm Ranking Member of a 
committee, jurisdiction over GSA, except I can't really 
complain because I gave it up. I gave it up, as Members on both 
sides of the aisle kept giving it up, until we finally got 
enough to meet the mark.
    What was that, Mr. Chairman? It was a vote of confidence in 
Mr. Gunn and it was a vote of confidence in the sense that we 
know he has given new meaning to the impossible job. We know 
what he has been laboring under. What is this fight about? It 
is about privatization, it is about going back to the future. 
And I say going back to the future, because you have to 
remember how we got Amtrak in the first place. These are 
private railroads. They didn't come to Congress saying, give me 
a handout; they threw up their hands saying, we can't do this. 
They threw it at us. They said, you have no railroad unless you 
take it over. They said, look around the world. There is no 
railroad that is operated by the private sector. Railroads are 
sustained only with heavy subsidies from the public sector. 
Take us, take it over.
    That's how we got it. And our stewardship is a great part 
of the responsibility here.
    But it was a vote of confidence in Mr. Gunn, because we 
have seen palpable improvements in the railroad. We have seen a 
manager making long-awaited infrastructure improvements at the 
same time that he has been cutting costs. It's impossible to 
do, my friends. But we have seen upgrades in this period when 
we are concerned with terrorism going on, at the same time cost 
cutting is going on. It is like fixing a railroad while it is 
moving on the track, full of passengers. That's the kind of job 
we say, Mr. Gunn, that's what we want to you do. Don't tell us 
it's impossible, don't tell us you need more money; this is all 
we can give you.
    So Mr. Gunn was fired. He was fired for protesting 
destroying the corporation he had revived by spinning off its 
most profitable operations.
    I'll be through in a second.
    I just want to say that the Board may live to regret--we 
understand that you can fire a director who doesn't agree with 
the Board. The question is: What is the congressional intent? 
The congressional intent, through countless actions, was to 
keep the corporation as a public corporation and not spin it 
off. So who was in tune with the Congress, Mr. Gunn or the 
directors? What the Board has done is to open up not Mr. Gunn's 
tenure. You may have the power until you sue to fire him. It is 
the legal legitimacy of the Board itself, whether it has been 
operating for the last 2 years as a lawless Board. You have 
opened up a whole Pandora's box. The Pandora's box goes well 
beyond Mr. Gunn; it goes to whether or not anything this Board 
has done with its executive committee in the last 2 years, from 
settling claims, to disposing of property and developing 
property, whether or not all of that is up in the air. I mean, 
it's a lawsuit waiting to happen.
    Let me tell you what I think the Board needs to do. Not 
fire Mr. Gunn; fire whatever counsel advised you that you could 
operate with this makeshift Board in the way you have and get 
away with it without a lawsuit or without accountability from 
the Congress of the United States.
    Mr. Chairman, I looked at the GAO report that became the 
excuse for firing. The GAO report has only one sentence in it. 
It is a pregnant sentence about this Board, but it encapsulizes 
where we need to go and it is certainly not to all of the 
things that the corporation needs to do. For a very long time, 
unless there are massive subsidies, you are going to see this 
kind of GAO report come out.
    What we need to look at is the very last line, and I would 
like to quote it as I yield back my time:
    "accountability and oversight mechanisms that do apply, 
such as oversight by the Board of directors and the Federal 
Railroad Administration, are limited or have not been 
implemented effectively."
    Accountability stops at the top, starts at the top. And 
that's where the problem has been, beginning with the Board 
that may well have been illegitimate in and of itself.
    Thank you very much, Mr. Chairman.
    Mr. LaTourette. I thank the gentlelady very much.
    We are now ready to hear testimony from our second panel. 
Invited to participate this morning is David Laney, Chairman of 
the Board of Amtrak; Mr. Jeffery Rosen, General Counsel for the 
Department of Transportation and the designee of Secretary 
Mineta as a member of the Amtrak Board. We also invited Mr. 
Sosa and Mr. Hall, members of the Board of Directors of Amtrak; 
David Gunn, the former Chief Executive Officer of Amtrak; and 
Mr. David Hughes, the newly appointed acting CEO of Amtrak.
    Ms. Brown. Mr. Chairman.
    Mr. LaTourette. The gentlelady from Florida.
    Ms. Brown. In accordance with clause 2(k)(6) of rule 11, I 
move that the committee receive my request to subpoena Mr. Hall 
and Mr. Sosa.
    Mr. LaTourette. I appreciate that. As I now look at the 
table, it looks like Mr. Hall and Mr. Sosa are not here. I 
would tell the gentlelady that we continue to have the 
difficulty with an absence of a quorum.
    Mr. Mica. Mr. Chairman, I continue to raise--
    Mr. LaTourette. Gentlemen reserves a point of order. We 
continue to have the difficulty of not having 15 members to act 
on the gentlelady's request. I would tell you that counsel on 
our side is concerned about--because of the speed of this 
particular hearing, the invitations went out; I think that I 
would have appreciated it if Mr. Hall and Mr. Sosa, if they in 
fact received the invitations, would be here today. I am not 
averse to eventually getting to where I think the distinguished 
Ranking Member wants to go, but at the moment we don't have the 
authority under the rules to act on the gentlelady's request.
    Ms. Brown. One quick question. Can you inform me whether or 
not counsel sent out an invitation to those two members?
    Mr. LaTourette. It's my understanding that letters were 
sent to all of the witnesses. It's further my understanding 
relative to those two witnesses that letters were faxed to the 
Amtrak offices.
    Ms. Norton. I have a question.
    Mr. LaTourette. I'll yield in just a second. Again, going 
to--I'm sympathetic, let me tell the gentlelady, I'm 
sympathetic to her request. And I know the gentlelady has a 
request with regard to Secretary Mineta who is a member of the 
Board, we think, and the gentlelady's concern over Mr. Rosen 
being here as opposed to Secretary Mineta. I can indicate to 
the gentlelady I spoke to the Secretary; however, I am being 
informed--and I think that if we get down to the fact that we 
have to do this by the book, there aren't 15 people here, but I 
think that our side at this moment in time would feel more 
comfortable once we have a confirmation that we know, in fact, 
Mr. Hall and Mr. Sosa received the invitation and declined it. 
And too, relative to the gentlelady's second request, I would 
like to go over the scope, because it involves things back to 
2001.
    And I'd be happy to yield to the gentlelady from the 
District of Columbia.
    Ms. Norton. Mr. Chairman, I have a question. First of all, 
I want to say, inasmuch as one of the major issues here is 
whether or not this Board had a quorum, under D.C. Corporation 
laws, I'd hate to see us take any action without a quorum. That 
said, I'd like to know whether in issuing an invitation, you 
gave any notice to the two members that they would be subject 
to subpoena if they did not, in fact, come.
    Mr. LaTourette. No, it was not. And that is causing some of 
the consternation.
    Ms. Norton. In that case, as much as I would regret, I 
believe fairness begins here; and I think they have to be 
warned, or I think that a version of due process that we would 
all embrace would say they should be warned that if they do not 
come they will be subject to subpoena, because often we have 
people from the administration who don't come, who don't show 
up, and we just let it slide. Thank you.
    Mr. LaTourette. I appreciate the gentlelady's observations, 
and you have summed up the concerns of counsel on this side.
    Mr. DeFazio.
    Mr. DeFazio. I'd like to be specific about how the Chair 
intends to proceed. What I would suggest is that we would 
hopefully--what I think you're saying is confirm receipt and 
confirm that they declined to appear. And would it be at that 
point the Chairman's intention to subpoena the witnesses if 
they have received the invitations and they decline to appear 
at a future hearing, appropriately scheduled?
    Mr. LaTourette. Here is the deal. We didn't invite Mr. Hall 
and Mr. Sosa because we didn't want to hear from them; we 
wanted to hear from them. It would be the Chair's intention to 
follow the due process that the gentlelady from the District of 
Columbia has established; and that is, confirm that they have 
received the information and get them to say that if you don't 
come to see us, we are going to subpoena you. And if they still 
decline, I will again call a meeting of this subcommittee, 
we'll collect an appropriate quorum; and, if we have to go in 
that direction, will.
    Ms. Brown. I just have one question. How much time are we 
planning on giving them? This is a critical issue, critical to 
the American people and critical to the riding public. I think 
it is very important that we have the full testimony of the 
Board; in addition, in accordance with clause 2(k)(6) of rule 
11, that the committee receive my request to subpoena the 
Secretary of Transportation, Norm Mineta, and the Department of 
Transportation General Counsel, Jeff Rosen, to produce within 
30 days all books, records, correspondence, including 
electronic mail, memorandum, papers, and telephone records 
between the recipients and the Amtrak Board of Directors since 
June 28th 2001, the date that Mr. Mineta joined the Board.
    Mr. LaTourette. And we have the same infirmity with that 
request that we have with the other request. What I would say 
is that the gentlelady and all members of the minority have my 
commitment that we will move with deliberate speed to resolve 
this issue.
    Mr. Mica. Also, if this is a separate request, make a point 
of order that a quorum isn't present to consider that motion 
and reserve that point of order.
    Mr. LaTourette. Point of order reserved.
    Mr. Nadler, wish to be heard?
    Mr. Nadler. Mr. Chairman, I'm a little confused about this 
discussion. I certainly take a back seat to a known and 
appreciation to due process, but a subpoena is not a penalty, a 
subpoena is simply a request, a demand to appear. And I see no 
reason not to issue a subpoena if we want someone to appear and 
we are not sure they will. You don't have to go through the 
rigmarole of asking them, making sure they got the receipt, 
making sure they didn't do it, making sure they are in contempt 
of the committee to issue a subpoena to demand to appear. It is 
not a penalty. It's saying show up.
    Subpoena duces tecum, as suggested by the Ranking Member, 
to bring a lot of documents should take a little more care, 
because it takes time to assemble those documents and so forth. 
But just a subpoena to appear, if we have any doubt that they 
will appear, we ought to issue the subpoena.
    Mr. LaTourette. I thank the gentleman for his comments. I 
will inform the subcommittee that it's the Chair's intention to 
proceed in the manner that he has announced, and I am advised 
that House counsel has a process relative to these subpoenas, 
that it involves, as the gentlelady from the District has 
indicated, notifying the person the subpoena will issue, and 
they require a foundation that we have attempted to invite and 
a decline.
    There is not a quorum present. If we continue to have this 
discussion, we can move to consider Mr. Mica's point of order. 
I think everybody can count there are not 15 people here.
    Ms. Norton, another observation.
    Ms. Norton. I just want to observe that in case it appears 
punitive, that we want to speak to members of the Board. 
Normally the Board chair speaks for the Board. Here we are 
dealing with a governance crisis and whether or not a 
subcommittee of the Board is legitimate in how they are 
operating.
    Now, the two members are recess appointments who have 
delegated--whose votes have delegated the operations or 
decisions concerning governance of the operations to get an 
executive committee. So here, because these members' roles are 
specifically in doubt, I believe this committee does need to 
hear from these members and not simply from the Board.
    And on the question of subpoena, I agree with my friend 
from New York; a subpoena is a subpoena. The problem with the 
committee and with every committee of the House is that 
subpoenas are rarely given and members of the administration 
often don't come.
    So I would ask, I would particularly ask for regular order 
here, since we are demanding regular order from this 
corporation, and it is under a cloud for not having engaged in 
just the kind of discussion we are having before taking action.
    Mr. LaTourette. I thank you very much. Mr. Cummings.
    Mr. Cummings. Just one question. I just wanted to know so 
the record will be clear, did counsel get any response from 
these two gentlemen, Mr. Sosa and Mr. Hall? Did we get any 
response whatsoever?
    Mr. LaTourette. Hang on. I am checking. My information is 
that from Amtrak we received information that they would 
probably not be with us today, but we have not heard directly 
from them.
    Mr. Cummings. Thank you, Mr. Chairman.
    Mr. LaTourette. If that's resolved to everybody's 
satisfaction.
    Ms. Brown. It is, Mr. Chairman. Since I'm batting zero 
here, maybe we can do one thing that I request, is to have the 
panel sworn in.
    Mr. LaTourette. It's the Chair's intention to do that 
before we proceed. If you gentlemen would rise.
    [Witnesses sworn.]
    Mr. LaTourette. Again, I have introduced the folks that 
were here and just--
    Mr. Menendez. A point of order. Is that an affirmative 
answer by all the panelists? I only heard one.
    Mr. LaTourette. I heard people mouth "yes" or nods of the 
head.
    Mr. Menendez. So for the record, is that an affirmative 
answer?
    Mr. LaTourette. I believe all have acknowledged. Thank you. 
I think they are all set.
    Again, I want to thank those of you who did come today. For 
those that enjoy theater, you will notice there are nine chairs 
and there are some chairs missing, but we thank you for coming 
here today.
    I think you have heard during the opening remarks of the 
members what their relative concerns are, and again I'd remind 
the members, based upon your schedules, based upon the 
agreement between myself and Ms. Brown, at the conclusion of 
the testimony of this panel there will be extended a half hour 
of questioning. I will control the first half hour, the 
gentlelady from Florida, the second half hour.

  TESTIMONY OF DAVID M. LANEY, CHAIRMAN OF THE BOARD, AMTRAK; 
       JEFFREY A. ROSEN, GENERAL COUNSEL, DEPARTMENT OF 
 TRANSPORTATION; DAVID GUNN, FORMER PRESIDENT AND CEO, AMTRAK; 
       AND DAVID HUGHES, ACTING PRESIDENT AND CEO, AMTRAK

    Mr. LaTourette. Mr. Laney, thank you for coming to see us 
today. We look forward to hearing from you.
    Mr. Laney. Chairman LaTourette, members of the committee, 
my name is David Laney. I'm chairman of the Amtrak Board of 
Directors.
    Let me mention one item just to throw a little more either 
clarity or confusion into the issue we're talking about. The 
only invitation I received--and there may have been others--but 
the only one I received and read was one that invited me or my 
designee. There may have been another or others; I don't know 
what the other members received. So I assumed that I would be 
the designee but I have not spoken with them.
    Mr. LaTourette. I appreciate that. And we're not going to 
count this against your time, but I'm informed there was not 
only an invitation to you and/or your designee, but the others 
were forwarded. Again, based upon the discussion, in fairness 
we want to make sure everybody got one before we--not accuse 
them, but suggest that they didn't come to see us.
    Mr. Laney. Thank you, Chairman. I know we're here today to 
talk about the recent leadership change at Amtrak and I'll 
speak to that in a moment.
    I want to talk about Amtrak's recent performance and the 
need for more fundamental change to put the rail service on a 
stronger, more financially sustainable footing. At the outset, 
I want to make it clear that our Board is fully committed to 
leveraging the full potential of intercity rail service in our 
national transportation mix. We want to fix Amtrak's problems 
and make it better. It is not our goal to destroy, dismantle, 
or privatize Amtrak as some have falsely or disingenuously 
claimed. My hope is today in going forward, we can have a 
spirited and open and constructive debate about the best 
strategy for improving Amtrak, a goal that all of us share.
    Let's talk about where Amtrak stands today. As I said when 
I testified before this subcommittee in September on our 
Strategic Reform Initiative, David Gunn has helped Amtrak 
achieve much-needed financial and organizational stability. He 
has focused the railroad on repairing its core assets in the 
Northeastern Corridor. Today Amtrak is a better run company as 
a result of his leadership, and he and the employees of Amtrak 
deserve the credit for these very significant achievements. 
David leaves, as I'm sure I don't need to say for him, with 
much basis for him to hold his head high and be proud of what 
he achieved.
    At the same time, however, the Amtrak Board cannot just 
look in our rear-view mirror and be content at the distance we 
have come. Huge challenges still lie ahead that Amtrak will not 
and cannot overcome on its present course. These urgently need 
our attention, our creativity, and, most of all, our concerted 
action.
    For example, for the last 4 years, in spite of the 
improvements noted, Amtrak has had operating losses of nearly 
$500 million a year. It may very well be these losses would 
have been worse in recent years without some of the actions 
David Gunn and the Board took together. But the critical point 
is that Amtrak's financial performance has not improved in the 
last 3 years. We have lost the same amount of money every year, 
and over the last 4 years Amtrak has lost $2 billion in its 
operations, a bottom line that is not acceptable to the Board 
and cannot continue indefinitely.
    Second, a key indicator that Amtrak's business needs 
substantial reengineering is that labor costs--which is salary 
and related expenses including benefits--were 103 percent of 
passenger-related revenue in fiscal 2005. In other words, in 
our capital-intensive business where labor is only one element 
of our cost structure, the cost of Amtrak's labor force alone 
exceeds the revenues derived from passengers on our trains. 
Few, if any, businesses would survive long with such outside 
labor costs.
    It would be nice to fix this problem through a significant 
boost in passengers and ticket revenue, but to get our labor 
costs under control more quickly and certainly, Amtrak will 
need to outsource certain services, replace labor in some cases 
with technology, change labor agreements, and take other 
significant steps.
    Third, in three areas where Amtrak has had substantial 
difficulties that drive costs and losses up--food service, 
beverage service, long distance service and on-time 
performance--there is very little progress to report in any of 
these areas, and much remains to be done.
    Fourth, Amtrak has been unable to provide a consistent 
high-quality level of customer service aboard its trains. The 
passenger experience too often is degraded by an unappealing 
onboard environment, dirty or under-maintained rolling stock, 
or arbitrary treatment of passengers by crew members.
    While each Amtrak route can boast certain star trains and 
some stellar crew members, the overall level of Amtrak's 
interaction with its passengers is not where it needs to be if 
passengers are to assume a greater share of the Nation's 
transportation mix.
    Finally, Amtrak has been unable to provide clear, 
verifiable, transparent cost information for what it operates, 
what it owns, and what it offers for resale to governments. 
State departments of transportation seeking to purchase 
passenger rail services for use by their citizens and visitors 
are unable to obtain clear cost estimates, expense breakdowns, 
and invoices from Amtrak. While favorably disposed to passenger 
rail service in principle, these public authorities too often 
reject funding because they are unable to justify, understand, 
or control costs.
    With these challenges and others in mind--and there are 
others--the Board, with the support of management, developed a 
strategic plan to map out the future reforms for Amtrak that 
would build on progress already made. We completed this plan in 
April and gave testimony on it to this subcommittee in 
September.
    As I described then, the plan advances four essential 
objectives. Without working through them, they are in the plan 
and in my testimony. But let me move forward.
    This brings me to the issue of our management change. The 
Strategic Reform Initiative was developed with the knowledge 
that progress we had made to date was only a beginning and that 
Amtrak's present course was not sufficient to significantly 
improve the railroad's performance. David Gunn participated 
reluctantly, and often not constructively, in the development 
of this plan. When it came to its implementation he became, at 
best, an unwilling bystander.
    His resistance to the Strategic Initiative presented the 
Board with two problems. One, David's refusal to go in several 
new directions meant that Amtrak would continue on its present 
course: flat operating losses, unsustainable labor costs, 
money-losing long distance and food services, and more. 
Secondly, it meant that while the Amtrak Board was accountable 
to Congress, to the administration, and to the public for the 
organization's performance, our Chief Executive Officer was not 
accountable to anyone above him.
    In the end, the Board concluded that we had no choice but 
to release David because neither of these outcomes was 
acceptable.
    But let me say this was a decision of last resort, it was a 
decision we wish that we did not have to make, it was a 
decision that was not made casually or precipitously as some 
have suggested. On the contrary, the decision was made with 
care, deliberation, and objectivity and over an extended period 
of time. Most important, the action taken by the Board was the 
right decision based on David Gunn's overall performance during 
the past many months, and it is our final decision.
    I think I will hold my remarks with respect to the 
Northeast Corridor until later.
    Mr. LaTourette. I thank you, Mr. Laney.
    Mr. Rosen.
    Mr. Rosen. Thank you, Mr. Chairman. Mr. Chairman and 
Ranking Member Brown and members of the subcommittee--
    Mr. Mica. Can't hear him.
    Mr. Rosen. Can you hear me now? Okay. Thanks.
    First I'd like to thank the members of the subcommittee for 
inviting me to be here today. In the interest of time, I ask 
that my written testimony be submitted for the record and I 
would instead like to share three brief thoughts relevant to 
today's hearing.
    First, the 1997 Amtrak Reform Act explicitly renamed 
Amtrak's Board of Directors as the Reform Board of Directors. 
That's in the statute. Now, unfortunately, it took 
approximately 8 years, last April, finally, Amtrak's Board 
unveiled an ambitious plan to turn the company around by making 
a significant number of reforms. The Department of 
Transportation recognized this plan as a strong step in the 
right direction. Many Members of Congress, including some who 
are members of this committee, supported the plan when it was 
released.
    The Amtrak Board sought to move ahead with the many self-
reforms that are within Amtrak's own control. Now, as it turned 
out, the Board was unanimous in concluding that Amtrak needed a 
different president to fix the company. As Congress' own 
Government Accountability Office recently underscored, 3 more 
years of the same approach would have meant a $400 million 
increase in Amtrak's operating losses, further deterioration of 
infrastructure, and ridership below today's already extremely 
low one-half of 1 percent of the total intercity travel market. 
We have to go forward and not backward.
    Second, Amtrak's Board, in my observation, is genuinely 
committed to fixing its business and improving passenger rail. 
Unfortunately, now that Amtrak's Board has demonstrated its 
seriousness about reform and improvement, there are some who 
have raised questions about the legitimacy of Amtrak's Board. 
Let me say first, it would be nonsense to think that neither 
Amtrak's Board nor anyone else has the authority to terminate a 
corporate officer. The statute is explicit that all Amtrak 
officers serve at the pleasure of the Board. In addition, the 
questions that have been raised are old, and Amtrak itself, 
several weeks ago, previously provided a memorandum to this 
subcommittee refuting them. Legally, the questions about the 
validity of the Board are just flat wrong.
    Now, I don't have the time in my remarks today to go 
through all of it, although I will be happy to do that in Q and 
A if somebody would like me to and afford me the time.
    What I will say here, suffice it to say, is that the 
governing statute, the Amtrak Reform and Accountability Act of 
1997, explicitly provides that four of the seven members are 
sufficient for the Board to pursue its responsibilities; and it 
explicitly states that Board members are appointed, quote, "for 
a term of 5 years," close quote, not for part of someone else's 
term, not for a process of which the term is only 5 years and 
multiple people serve it, but for a term of 5 years.
    With regards to the recess appointments, it is telling that 
the validity of recess appointments to the Amtrak Board was 
unchallenged over the last 20 years, even though President 
Reagan made six such appointments to Amtrak's Board and 
notified the Senate of that. The U.S. Supreme Court killed the 
viability of any such legal challenge in a case called Labron 
vs. Amtrak in 1995.
    So, as I said, for anyone who's genuinely interested in the 
legal issues, I would welcome the opportunity to take as much 
time as it takes to go through that with any of you who would 
like me to.
    Now, moving on to my third and last observation, there are 
some who wrongly claim that Amtrak's president was let go 
because he refused to let the Board or DOT or somebody shut the 
company down. Now, this is ironic, because the only person to 
have repeatedly threatened to shut down Amtrak was Mr. Gunn 
himself. Neither the Board nor DOT has sought to do that.
    The fact is if someone really wanted to kill Amtrak, they 
would do nothing. Last year's approach of spending even more 
money than Congress had appropriated to Amtrak is 
unsustainable. So, instead, Amtrak's Board crafted an ambitious 
reform proposal and sought action on it. Instead, DOT has 
worked to encourage significant reforms to the way that we 
handle intercity passenger rail, with the eye to improving it 
so that it is both more available, more economically run, and 
better. And this administration has called far and wide for 
intercity passenger rail to be improved before taxpayer dollars 
are used in ways that are not efficient or useful.
    For too long the Amtrak debate has been about how much 
Federal money the Amtrak company should receive, instead of how 
to use that money to deliver the best possible rail service for 
both the taxpayers and intercity travelers alike. Sometimes the 
issues are surrounded by too much heat and not enough light. I 
hope that we will be able to focus our time today on discussing 
the important work that needs to be done to save and improve 
intercity passenger rail. I hope we will discuss how to find 
ways to support Amtrak's own efforts to make meaningful and 
essential reforms. I hope we can examine new methods for 
ensuring that our investment in passenger rail goes further and 
is used more wisely than has been the case in the past. And 
ultimately I hope that the Congress will work with the 
administration to craft a plan to make passenger rail travel 
more relevant and useful for the 99.5 percent of intercity 
travelers that do not use Amtrak today. Thank you.
    Mr. LaTourette. I thank you, Mr. Rosen.
    Mr. Gunn, thank you for coming. We look forward to hearing 
from you.
    Mr. Gunn. Thank you, Mr. Chairman, members of the 
committee, you have a copy of my testimony. Anyway, Mr. 
Chairman and members of the committee, thank you for inviting 
me. My name is David Gunn, formerly, as we all know now, 
President and Chief Executive Officer of Amtrak. And I will 
make my remarks brief and I want to make 5 points.
    First, I am proud of Amtrak's accomplishments over the last 
3-1/2 years. The status of the company is detailed in the 
attached letter to Chairman Laney dated November 9, 2005, 
entitled "Year in Review."
    Amtrak has a competent, loyal workforce and has produced 
sound results. The financial reporting of results is timely, 
accurate, and public. Material weaknesses which existed in the 
system have been addressed, and, for example, audit adjustments 
have fallen from 200 million in fiscal 01 to 7 million in 
fiscal 04. The operating loss of funding requirement has 
stabilized or actually declined over the last 4 years. The net 
loss, including depreciation, which is what is driving the net 
loss, has stabilized.
    The capital program is a well-defined group of multiyear 
projects designed to bring the existing infrastructure and 
equipment to a state of repair. The capital program is 
producing the intended results. Productivity is detailed in the 
attached letter. Actual cash outlays in fiscal 05 were 92 
percent of budget, which means that we have invested virtually 
all of the money we were given for the plan purposes. Ridership 
has grown steadily and was at a record in fiscal 05, and 
currently continuing to grow. Head count has fallen from almost 
25,000 in fiscal 01 to 19,177 at the end of fiscal 05.
    Second, my second point, the Nation's transportation 
systems, air, highway, even waterways and rail are in trouble. 
Both freight and passenger mobility is deteriorating. Intercity 
rail service, passenger service in carefully selected urban 
corridors, offers potential relief at the lowest total cost. 
The current method of funding, regulating, and governing 
passenger rail service will not permit intercity rail service 
to reach its full potential.
    The reforms necessary to achieve change were detailed in 
Amtrak's Strategic Reform Initiative issued in April of 2005. 
Those reforms were supported by management, including myself, 
and by the Board. We were on track to implement the reforms 
that were within our control. No other reforms have been 
formally promulgated by the Board.
    Third, the Amtrak Board cannot unilaterally reform Amtrak. 
DOT cannot unilaterally reform intercity passenger rail 
service. Unlocking the potential of intercity rail requires a 
collaborative effort between management and employees, the 
Amtrak Board, DOT and Congress.
    Fourth, the Board structure has generally worked well, 
despite the lack of a full Board for quite some time. With 
regards to the operating and capital needs of the railroad, the 
Board and management have been in general agreement.
    On the issue of reform, a milestone was reached when we 
prepared our Strategic Reform Initiative in April 2005. I was 
surprised last August when our general counsel received the 
directive from the Board chairman to create an NEC subsidiary 
at the September Board meeting. I was told that it was a, 
quote, "fait accompli." this unilateral action ultimately 
resulted in my termination last Wednesday.
    The current Board stands in contrast to the previous Board 
where all seats were filled and there was a true sense of 
collegiality and trust among the management and the Board. With 
the exception of the DOT representative, the Board followed an 
independent course.
    Lastly, what is at stake today is the future of Amtrak and 
intercity passenger rail in the United States. What is required 
is some idea of what the end result we want is and a thoughtful 
plan to get there, and we don't know either of those. The 
destruction of Amtrak, which I think is possible, will 
ultimately devastate our most precious asset: the human capital 
or knowledge base required to operate high-speed passenger 
transportation and set back any plans for intercity passenger 
rail.
    I consider it to have been an honor to serve as Amtrak's 
President and Chief Executive Officer, and I am grateful for 
the support shown to me by our staff and our employees. I am 
grateful for the support of Congress and the friendships I have 
with many of you in the room and your staffs in the room. Thank 
you and I look forward to any questions.
    Mr. LaTourette. Thank you, Mr. Gunn.
    Mr. Hughes, thank you for coming and we look forward to 
hearing from you.
    Mr. Hughes. Good morning, Mr. Chairman, Ranking Member 
Brown, members of the committee. My name is David Hughes. Until 
a few days ago I served as Amtrak's chief engineer. On 
Wednesday of last week I was asked to serve as interim 
President and Chief Executive Officer of Amtrak.
    While I have been a member of Amtrak senior management for 
the past 3-1/2 years, I have been in the railroad industry for 
more than 30 years. Fundamentally, I believe passenger rail is 
an important aspect of our Nation's transportation network, and 
I will work to the best of my ability to continue to advance 
the goals and objectives of Amtrak and to provide safe and 
reliable passenger service for our customers.
    Many of you are familiar with the Strategic Reform 
Initiatives discussed here today. I was directly involved in 
the creation of these reform initiatives and I will see to it 
during my tenure as President and CEO--no matter how long--
Amtrak will continue to advance these policies and objectives 
set forth in that plan. Please rest assured that despite this 
time of transition, Amtrak employees will continue to strive to 
maintain the highest levels of service and the safety of our 
passengers, and, at the same time, will endeavor to look for 
creative ideas to foster more competition, improve operational 
efficiencies and to return the railroad to a state of good 
repair.
    The challenges are many, but given the adequate resources 
and continuing support of Congress, we can and will pursue to 
fulfill the objective of rail passenger service and remain an 
important transportation alternative for the American people 
now and in the future. Thank you.
    Mr. LaTourette. I thank you very much, Mr. Hughes.
    As I indicated before, pursuant to the agreement that the 
gentlelady and I have, we will now proceed to an hour of 
extended questioning. I'll control 30 minutes and will yield to 
some of my Republican colleagues, and then the gentlelady will 
have the same; then, at the conclusion, go back to the 5-minute 
rule.
    A couple of people have read observations. We last had a 
hearing in the subcommittee on September 21st, and different 
people have read different observations that you made at that 
hearing, Mr. Laney. And I have a different one. The quote that 
I have from that hearing is:
    "during this fiscal year, Amtrak continued to show strong 
results in a number of important areas. Despite everything that 
has happened this year Amtrak will finish FY 05 under budget 
and will set a new readership record. This is quite remarkable, 
when one keeps in mind the unforeseen Acela service 
interruption which caused the temporary cessation of all Acela 
trains earlier this spring. We responded efficiently and 
safely, while integrating other equipment quickly into the 
timetable so that no measurable impact on any ridership 
occurred. Now we are back to full Acela service operating this 
month 92 percent on time. Just recently we had to deal with the 
indefinite truncation of three of our long distance trains from 
the impacts of Hurricane Katrina."
    So I think I came away from that hearing thinking that 
while things weren't great, Amtrak was proceeding along in a 
pretty good path, and that's why I think last week's news was a 
little startling, I guess, to some of us.
    Mr. Gunn, I guess I'll let you start. I heard what you 
said, but prior to--and I read an interview you gave to Railway 
Age Magazine; and as I understand it, the Board came in and 
asked for your resignation and when you said no, you were 
released, according to the quote at least. What happened? I 
mean, did you have any conversations with Mr. Laney or the 
Board prior to this--these events of last week?
    Mr. Gunn. Well, we had had conversations, obviously, prior 
to this week. It came as a surprise to me that I was being 
terminated on Wednesday. It was no surprise to me that the 
Board was unhappy with my taking the position that I was 
against separating the Northeast Corridor, but I was surprised 
when I was terminated.
    Mr. LaTourette. I have an exchange of letters that went 
back and forth between you and Mr. Laney. Aside from what may 
be contained in those letters, were there ever any 
conversations with the chairman of the Board relative to 
expressing his unhappiness with the position you were taking?
    Mr. Gunn. We probably had two or three discussions where he 
had expressed--he had said that he couldn't defend me much 
longer, that sort of thing. But that would be over a specific 
issue where I was taking a position.
    Mr. LaTourette. The phrase "couldn't continue to defend 
you." he's the chairman of the Board, so who--did you have a 
sense as to who he was thinking he had to defend you from?
    Mr. Gunn. No, I can't tell you who. I did not ask.
    Mr. LaTourette. Let me turn to you, Mr. Laney, because 
you--do you recall having such a conversation, making that 
observation to Mr. Gunn?
    Mr. Laney. I don't recall that conversation or that 
specific comment, but I know we did have interaction and 
issues, some initiated by David. And I was concerned on a 
number of occasions about his unilateral departure and tried my 
best, I think, to make it work for David, for the Board, and I 
thought was aggressive and patient in trying to keep the thing 
laced together as best as we could. But I hate to say it, but I 
don't think either--no matter what you might hear from either 
me or David Gunn or anyone else, ultimately not too far beneath 
the surface, I don't think anybody was particularly surprised.
    Mr. LaTourette. Needs to be closer.
    Mr. Laney. I don't think anyone was particularly surprised 
at the action we took. They may have been surprised at the 
timing, but there is no timing that's particularly correct or 
right.
    Mr. LaTourette. When you are talking about no one being 
surprised, you're talking about no one that knew what was going 
on inside the company. You are not suggesting, based upon your 
observations in September to this subcommittee, that it didn't 
catch others outside the company off guard, right?
    Mr. Laney. That's correct.
    Mr. LaTourette. Mr. Rosen, I want to turn to you because I 
think that you have--you have sort of hit the issues that I am 
most interested in today. And I appreciate while you called 
some things ludicrous, you didn't call this issue about the 
quorum and the makeup of the Board ludicrous. I do recognize 
that they are old discussions, but I do have a little bit of 
time, and I'd like to go through it with you if I could.
    There are two things that cause me pause with the current 
constitution of the Board. One goes to the issue of whether or 
not, if you follow the 97 statute--and I heard what you said, 
where you had a situation where I assume it's the 
administration's position that the administration has appointed 
Mr. Laney and the Secretary to new 5-year terms.
    Mr. Rosen. Not only the administration's position, it's 
what the Congressional Record--
    Mr. LaTourette. Pull your microphone closer.
    Mr. Rosen. It's not only the administration's position but 
it's what the Senate in the Congressional Record reported at 
the time that Mr. Laney was confirmed. It's what's reflected on 
the appointment from the President. So I would say yes, 
consistent with the statute when these appointments were made, 
they were for 5-year terms as set out in the statute.
    Mr. LaTourette. I read the letter that you sent up here on, 
I think, the 26th. I'm familiar with that. I'm also familiar 
with the observations made by the Department of Justice. But 
maybe you can square--maybe it's a simple answer, but as I read 
the statute, section 24-303 49 USC, the 97 reform act indicates 
there is going to be this Reform Board established that you 
talked about, and then there was going to be a fork in the road 
that occurred in 2003. The fork in the road was going to be 
occasioned, and that the predicate question is whether or not 
the corporation was still receiving Federal assistance. If they 
were, you go one way; if they weren't, you go a different way.
    And my question is: Does that paragraph not cause you any 
pause? If you are right, this action was taken originally when 
the Reform Board was put into place, there wouldn't be a 
question in my mind.
    Mr. Rosen. Three observations, Mr. Chairman. First, there 
was a fork in the road, but not with regard to individual 
directors as such. There was a provision that said that if 
Amtrak achieved self-sufficiency by the year 2002, then the 
Board would cease to be the Reform Board and would revert to a 
more traditional corporate Board. Now, that eventuality was not 
realized, and the statute provides that therefore the Reform 
Board continues in effect as it does today.
    So I don't think there is any question that from the 
creation of the Reform Board through today, the same mechanisms 
are in place for the President to appoint the Reform Board 
members.
    Second, with regard to, then, the Reform Board, of 
directors, memberships and appointments, the statute did not 
require that they all be appointed at the same time. If it was 
just a magic 5-year window, you would have expected that people 
would have all been appointed at the same time and terminated 
at the same time. But that is not in the statute. It expressly 
contemplated appointments that would be made over time and 
provided--in fact, in section 24302(a)(1)-- that as soon as 
four of them, four of the seven, were appointed, then they 
could assume the responsibilities of the Board.
    So a second observation is that the terms of the Board 
members are not in the same 5-year window as the self-
sufficiency requirement.
    Third, then, and most importantly, I looked specifically at 
the text of section 24302(a)(2), which is the membership of the 
Reform Board, which is going to consist of seven voting 
members, and here is the key text, they are to be appointed by 
the President by and with the advice and consent of the Senate 
for a term of 5 years. A nominee is appointed by the President 
for a term of 5 years.
    It does not say appointed to fill out the remainder of a 5-
year window, shall serve out a term until the year 2002 
arrives. Congress could have said those things, but did not. It 
explicitly said the appointments were for a term of 5 years.
    Moreover, if you look at that against the backdrop of the 
prior statute, the prior statute, before 1997, had both a 
holdover provision such that Board terms were for individual 
membership, and a provision on how to replace members on an 
interim basis if their term was continuing, but they were 
departing. This statute eliminated that, simplified it, and 
said you'reappointed for a term of 5 years.
    So the Senate, which was half the equation in this bill, 
with obviously the House the other half, and then the President 
signing it, the Senate explicitly, with regard to Mr. Laney 
when he was appointed with the advice and consent of the 
Senate, and the Congressional Record reflected--reported that 
he was being appointed for a term of 5 years, those 5 years 
have not expired. Mr. Laney remains a correctly and 
appropriately appointed member of the Amtrak Reform Board of 
Directors.
    Secretary Mineta, similar story except that it does not 
require the advice and consent of the Senate, but he was 
appointed. And I have seen a--perhaps a mistake, in terms of 
reporting to us, did he replace Secretary Slater? He actually 
did not, because Secretary Thompson had already been on the 
Amtrak Board at the time he became the Secretary of HHS, and 
since the statute does not permit anyone beyond one DOT 
official, or executive branch official, to be on the Reform 
Board, there was a period where that was Secretary Thompson. 
And then it was changed over to Secretary Mineta I believe it 
was around the first of August of 2001. But the same basic 
story, appointment for a term of 5 years.
    There's an additional issue with the Secretary, which is 
one could read the statute as providing that the DOT Secretary, 
who, by the way, this statute explicitly authorizes to act 
through a designee, which in this instance is me--that the DOT 
Secretary upon appointment by the President can serve in excess 
of 5 years, but we don't need to resolve that question because 
5 years have not expired.
    So, in sum, I rely on the plain text of the statute. But it 
fits with the context of the prior statute, the context of what 
the Senate actually did, and with the overall structure of the 
'97 Reform Act.
    Mr. LaTourette. The second thing that concerns me--and 
again, I read your letter of October 26, and also the 
Department of Justice memo--has to do with recess appointments. 
And Mr. Sosa and Mr. Hall are recess appointments. Is it your 
judgment that members of the Board of Directors of Amtrak are 
officers of the United States for purposes of recess 
appointment?
    Mr. Rosen. For purposes of the recess appointments clause 
and the appointment clause of the Constitution, yes. And that 
has been established both through tradition and custom, as I 
have indicated, and that President Reagan appointed six members 
to the Amtrak Board by recess appointments. President Bush has 
done two. But also, most importantly, the argument to the 
contrary, which at one time I think might have been a 
legitimate inquiry, is that Amtrak was established by Congress 
as a private, for-profit corporation. And so there would be a 
legitimate question as to whether for constitutional purposes 
it should be deemed a Federal instrumentality in some way. And 
the U.S. Supreme Court, in Lebron v. Amtrak in 1995, 
specifically addressed and resolved that question.
    There had been some debate in the courts. The trial courts 
had said that it was subject to the constitutional provisions 
at issue there, and the Second Circuit, I think it was, Court 
of Appeals had said it was not. And then the U.S. Supreme Court 
ruled in 1995 that although Amtrak is a corporation established 
by Congress, and notwithstanding, the expressed statutory text 
saying that it is not a Federal agency, that for constitutional 
purposes--and in that case in particular whether the first 
amendment applied--that Amtrak is subject to constitutional 
provisions.
    And my assessment is that in light of that Supreme Court 
decision, the recess appointments and appointments clause of 
Article II of the Constitution would apply under the current 
structure in which the President is making the Board 
appointments, and Congress has been providing approximately 40 
percent of the funding, and DOT owns approximately 99 percent 
of the stock, is the largest debt holder and is also a mortgage 
holder on the Northeast Corridor.
    Mr. LaTourette. Again, I know that that is your view, and 
then I read the memorandum or the letter from the Department of 
Justice. I would assume that aside from those sources, Amtrak 
has requested other opinions on this matter, because I think I 
at least agree that some would argue that the Lebron decision 
skirted the issue that we are talking about relative to Federal 
officials, and there have been subsequent cases since.
    Are you aware of Amtrak or the Board of Directors ever 
receiving advice to the contrary from counsel that they 
retained?
    Mr. Rosen. I would have to defer that question to Amtrak's 
own general counsel, who would be responsible for that, and who 
is the one who did provide you with a legal memorandum separate 
from the one I sent the committee. I would have to reference 
that question to her.
    Mr. LaTourette. Mr. Laney, let me ask you that--this whole 
question about recess appointments and proper constitution of 
theAmtrak Board, are you--aside from the administration view 
and Department of Justice view, have you ever seen or been 
advised of legal opinions that call into question the two 
things Mr. Rosen and I are talking about?
    Mr. Laney. The only thing I really recall, Mr. Chairman, 
was the memo that was forwarded by the Amtrak general counsel 
to you in response to your request. I may have seen other 
things along the way, but mostly what I have categorized as 
interesting theories, but nothing that really challenges the 
legitimacy of the Board.
    Mr. LaTourette. I was urged by the Chairman of this 
committee to have a hearing on the legal fees that Amtrak pays. 
And I am aware of a letter by a firm of Wilmer Cutler and 
Pickering that addresses this issue and went to general 
counsel. And I think what I will ask--and I am going to yield 
to Mr. Mica and then to Mr. Bachus in a little bit for 
continuing use of our time--but in that advice that was 
addressed to someone named Said Bagam, who is a former general 
counsel, vice president of the corporation, the Lebron decision 
is discussed as well as the belief that, in fact, it agrees 
with this whole notion that you can't have holdovers that we 
have talked about. But it reaches different conclusions on this 
issue of whether or not Board of Directors are Federal 
officials within the meaning of the statute.
    And I still would say, Mr. Rosen, that I am troubled when 
just thinking about statutory construction, and in order for 
that, what you have put forward relative to this what I will 
call a fork in the road is not the most artful term in the 
world, I think that that interpretation completely reads 
subsection B of the statute out of existence. And I know you 
have a contrary view, but that is what is troubling me.
    But what I will ask is that to supplement this record, to 
provide to the committee whether or not the corporation has 
been advised with legal opinions or advice on this issue of 
recess appointments, and I will be happy to provide to you the 
letter that I already have in my possession.
    Mr. LaTourette. It is now my pleasure to yield 10 minutes 
of my time to the gentleman from Florida Mr. Mica.
    Mr. Mica. Thank you, Mr. Chairman.
    Some of what we have heard today from members of the 
committee and ladies and gentlemen and our witnesses is a bunch 
of fog that has been created to sort of cast aspersions on the 
Bush administration's intention and what has taken place. In 
the next 9-1/2 minutes let me debunk some of that, if I may, 
Mr. Chairman.
    First of all, Mr. Rosen--well, first of all, in 1997, I 
helped write the statute creating the provisions that said that 
if Amtrak received a Federal assistance in 2003, that the 
current procedures for appointment would stay in place. Mr. 
Gunn, to your knowledge, you're the old hand, did Amtrak 
receive Federal assistance in 2003? Yes or no?
    Mr. Gunn. Yes.
    Mr. Mica. Thank you.
    Mr. Rosen, you're the general counsel. The law is very 
clear that if they received that, in fact, that we would 
continue under the same appointment procedures as originally 
established; is that correct?
    Mr. Rosen. That's absolutely correct.
    Mr. Mica. I'm not an attorney. So it is very clear.
    Now, you have heard this rhetoric about the appointments 
and somehow the Bush administration was trying to subvert the 
process. You were around, Mr. Gunn, Robert Crandall was 
nominated by the President to the Board October 14th, 2003; Lou 
Thompson--I think these are both Democrat nominees--January 
26th, 2004; is that correct?
    Mr. Gunn. I don't know. I know nothing about the 
appointment process. I am not involved in it. I didn't pay any 
attention to it.
    Mr. Mica. I am sorry. I will go to the counsel.
    Counsel, did the administration do that on those dates or 
approximately on those dates?
    Mr. Rosen. Yes, it did.
    Mr. Mica. And what happened to those appointments?
    Mr. Rosen. Unfortunately the Senate failed to act on them.
    Mr. Mica. The Senate didn't do anything with 
thoseappointments. So the President didn't--did not fail to 
submit two Democrat appointments. Why then would you appoint 
recess appointees if the Senate doesn't act? Now, that is a 
horrible thing to do, isn't it? Why did you do that?
    Mr. Rosen. In the situation that existed a year ago, the--
    Mr. Mica. The Senate didn't act, so the President, in fact, 
made recess appointments of Mr. Floyd Hall and Mr. Enrique 
Sosa; is that correct?
    Mr. Rosen. That is correct, because that was important to 
be able to keep a quorum, among other things.
    Mr. Mica. And that's a legal quorum under the definition 
that you just--that we just concurred was part of the original 
law, and again the provisions that were put in place by 
Congress.
    Then we had the Senators--this was funny--to have the 
Senators up here, and everybody is questioning, oh, gee, now 
that they have made these decisions, finally acted, we have a 
Board in place, does this really constitute a quorum? But the 
Senate is going to run to the rescue and resolve this.
    Has anybody read what the Senate proposed? And we heard 
this; what did it pass, 93 to 6, some phenomenal amount? The 
Senate solution to the Amtrak Board appointment? Page 122. 
Quorum; a majority of the members serving shall constitute a 
quorum for doing business. Is that--are you--is anyone familiar 
with this? Mr. Rosen, is that the language that passed the 
Senate?
    Mr. Rosen. In the bill tendered by Senators Lott and 
Lautenberg?
    Mr. Mica. Yes.
    Mr. Rosen. I believe that is correct.
    Mr. Mica. Mr. Chairman, this exhibit for the provisions 
passed by the Senate. So what situation, sir, legal counsel, 
does that put us in? Basically the same situation we are in 
now?
    Mr. Rosen. Yes, it is my view that we have a quorum.
    Mr. Mica. Hey. So they have solved the problem.
    And let's go to the heart of the finance plans, the great 
Lautenberg plan, which is about $9 billion over 6 years. Is it 
a little more? Is anyone familiar with the Lautenberg plan?
    Mr. Rosen. It is a higher number.
    Mr. Mica. Twelve? We will go for 12-. Okay. Let's go for 
12-.
    Mr. Chairman, I would like to ask that the last GAO report 
to the Chairman of the Committee on Transportation and 
Infrastructure be included as part of the record.
    Mr. LaTourette. Without objection.
    Mr. Mica. On page ii it says, Amtrak's annual operating 
loss has grown to over a billion and projected to increase to 
over $1.4 billion.
    Mr. Gunn, what is the current backlog cost for maintenance 
on Amtrak, 5-, 6 billion?
    Mr. Gunn. We have an annual capital need of about 700 
million to keep the existing system in its--
    Mr. Mica. But we have several reports saying it is 5- to $6 
billion in backlog.
    Mr. Gunn. Look, I ran the railroad. I know what we have to 
spend, and we have to spend about 500-, $700 million a year.
    Mr. Mica. But the total that has been presented to 
Congress, presented in the report, you have seen some of these?
    Mr. Gunn. There has been a lot of numbers put forward that 
are much higher than you have to spend to keep it in--
    Mr. Mica. You said 700 million a year.
    Mr. Gunn. I think this in today's dollars--
    Mr. Mica. And the current losses are about 1 point--we are 
subsidizing about 1.2 billion. My point is here, even if we 
pass the Lautenberg, and you do the simple math on it, folks, 
you get absolutely nowhere. You're not going to build a high-
speed corridor. We have had at least two GAO reports; is that 
not correct, Mr. Rosen? Are you familiar with these? It says it 
is going to take 15- to $20 billion to make a high-speed 
corridor out of the Northeast Corridor. Is Congress going to 
get $15 billion? Never. Not based on the fact that they bungled 
the acquisition--the Northeast Corridor improvements.
    And I don't have enough time. Can't we go through--we could 
go through some of these. Mr. Hughes, you're an engineer. The 
catenary didn't work, bungled acquisition of the Acela, 
probably spent as much money on legal fees as we did on capital 
equipment in the project. Am I close to being correct on that?
    Mr. Hughes. Well, I have the good fortune to not have 
presided over those, Congressman.
    Mr. Mica. But again, just do the math. And the math does 
not work out. So you're advocating the status quo.
    Mr. Laney, you had the audacity, and your Board, to step 
away from the status quo, and that was the breaking point. We 
just heard Mr. Gunn say the Board cannot reform Amtrak, that it 
has to take Congress.
    Interestingly enough, our legal counsel told us that is not 
the truth, because Amtrak has the ability to do what they did 
to separate out the Northeast Corridor; is that not correct? 
Mr. Gunn? I am sorry, Mr.--
    Mr. Gunn. We look alike.
    Mr. Mica. Do you have the authority to do what you did?
    Mr. Rosen, does he have the authority, the Board, under 
law, you are the general counsel, DOT--from your estimate, did 
they--first, they had a legally constituted board, correct?
    Mr. Rosen. Yes.
    Mr. Mica. Secondly, what they did, did they have the 
authority to break out the Northeast Corridor? And we will add 
to it. Did they have the authority to dismiss Mr. Gunn.
    Mr. Rosen. Well, as to the latter, without question.
    With regard to the Northeast Corridor, the only reason I am 
pausing is not one of legal authority, but I think there has 
been some misunderstanding about the step that the Board took, 
because it was--what I would characterize as a rather 
preliminary step to study both the practical impediments, the 
legal needs and so forth. And so since part of the study is 
what legal impediments exist, that is why I am pausing on 
giving you a conclusory answer.
    Mr. Mica. Again, they are starting that process.
    Mr. Rosen. That's correct.
    Mr. Mica. Even though there aren't a lot of folks here 
today, Mr. Laney, you will be receiving from me pages of 
Members of Congress whom I have gotten to sign a letter to you 
and your Board, dozens of Members who say--congratulate you on 
the action that you took in starting this process; also asking 
you to look at having the private sector both develop and 
operate that corridor. And, oh, the shudders. Labor and 
everyone, should they be concerned about what you're talking 
about, Mr. Laney, about breaking this down?
    Mr. Laney. No.
    Mr. Mica. He said no. Why shouldn't they be concerned? Mr. 
Gunn, didn't you testify and tell me how many people you have 
gotten rid of in Amtrak at one of the most recent hearings?
    Mr. Gunn. I gave you the head count this morning in my 
testimony--
    Mr. Mica. How many employees--
    Mr. Gunn. I will tell you. I said we went from--in '01 we 
had--the payroll was 24,800. And we are now down--or they are 
now down to about 19--
    Mr. Mica. Again, my point from the people from labor, why 
are you stuck in this mold? You're losing your laborers. If we 
had--we have a chance to open the Northeast Corridor, let the 
private sector--Congress is never going to give you 15 to $20 
billion. The private sector will do it. We might even make 
money in the operation of it.
    Why am I interested? Because I chair the Aviation 
Subcommittee. LaGuardia, Newark, JFK, they are all at capacity. 
I was just up in Philadelphia where they are extending another 
runway. It is at capacity. It will be at capacity. We can build 
a high-speed service with the cooperation for both the 
development and the operation by the private sector.
    Finally, we have a Board that is looking--God forbid, Mr. 
Laney--you're looking at it--look at the abuse you're taking 
for trying to get there. Imagine if you're a success, Mr. 
Laney, in the Northeast Corridor. How many people could be 
employed? Because we do this in the west coast, we do it in the 
central part of the United States. We need high-speed service 
all over.
    But do you think for 1 minute that Congress is going to 
vote the money to give Amtrak? Do you think Congress is going 
to vote to give money, to put that kind of investment in? Is 
there a plan? The current plan, the Lautenberg-Lott, whatever 
the name is, does not do that.
    Mr. LaTourette. Mr. Laney, I ask you to answer Mr. Mica's 
question, and then, Mr. Bachus, we have about 9-1/2 minutes 
left.
    Mr. Mica. I was just getting started, Mr. Chairman.
    Mr. LaTourette. Sadly, you're almost about done.
    Mr. Mica. Maybe we will have a few lights go on here. But 
we can expand labor, couldn't we? We could expand these 
corridors, if you get one success, instead of just following 
the pattern that we have followed, and some people can't see 
that; is that correct, Mr. Laney?
    Mr. Laney. We need to expand.
    Mr. LaTourette. Thank you very much.
    Mr. Bachus. We have 9 minutes left.
    Mr. Bachus. Thank you.
    Mr. Laney, you testified before this committee in 
September; is that correct?
    Mr. Laney. Yes, sir. Yes, sir.
    Mr. Bachus. And you talked about the Northeast Corridor. 
What you talked about at that time was the infrastructure was 
in need of repair and needed more operational reliability; is 
that correct?
    Mr. Laney. That is correct.
    Mr. Bachus. And that was the part of the strategic plan?
    Mr. Laney. Yes, sir.
    Mr. Bachus. About 2 weeks later, I think it was, you all 
announced that you were going to spin off the Northeast 
Corridor into a separate subsidy or operating unit; is that 
correct?
    Mr. Laney. No, that is not correct. We did announce that--
as Mr. Rosen has referred to, we did announce that we would 
begin the process of exploring the notion of segregating the 
assets mainly for accounting clarity and accounting and 
financial management purposes into a subsidiary.
    Mr. Bachus. So I am reminded about what Mr. Mica said in 
the paper about that one of the reasons Mr. Gunn was fired was 
his opposition to spinning off the Northeast Corridor. So he is 
mistaken about that.
    Mr. Laney. Well, with all deference to Mr. Mica, he doesn't 
know why Mr. Gunn was fired. I think only the Board members do.
    Mr. Bachus. Why was he fired?
    Mr. Laney. There was a number of issues mainly centered 
around the impasse between our wanting to move forward--left me 
finish, if I may--to move forward on our strategic initiatives 
which are in here, and they are very clearly laid out, and a 
very clear road map--
    Mr. Bachus. Let me stop you. In September you testified 
about 2 weeks before that he was in support of the strategic 
initiative.
    Mr. Laney. Yes, sir. He did--
    Mr. Bachus. And you testified that it was an agreement 
between the Board and the president.
    Mr. Laney. That's true.
    Mr. Bachus. But 2 weeks later it wasn't true?
    Mr. Laney. I think you're talking about a management move. 
In a way, I am the captain of a team, and I am trying to make 
it work. And I am not going to stand before you in the middle 
of trying to work things out and criticize our president. We 
are trying to making it work--
    Mr. Bachus. You testified before our committee that he was 
in support--
    Mr. Laney. And I will testify the same thing now, and I 
think you heard the same thing from him this morning. He is in 
support of a number of the concepts of the strategic reform 
initiatives.
    Mr. Bachus. What was he not in support of? What part was he 
specifically not in support of that caused you to, as you just 
said, fire him?
    Mr. Laney. I think it would be a long list, and it is 
scattered throughout the strategic reform initiatives. He was 
resistant to the Board's push forward on a number of different 
fronts--
    Mr. Bachus. Wasn't the Northeast Corridor--you are under 
testimony--wasn't that a major part of it?
    Mr. Laney. That was one factor. It wasn't a major--
    Mr. Bachus. Let's talk about it. You and the administration 
are opposed to Federal subsidies for the railroad; is that 
correct?
    Mr. Laney. No.
    Mr. Bachus. You are in support of--
    Mr. Rosen. Could I speak to that, Congressman?
    Mr. Bachus. Well, I will ask you a question. Well, let me 
ask you this. I will ask both of you all. Are you all in 
support of the administration's position for zero funding for 
Amtrak for this last year?
    Mr. Rosen. If you recall, Congressman, the administration's 
position was zero for the old model, but we would support 
funding for a changed, reformed Amtrak, and very specifically 
we favor funding for infrastructure similar to what is done in 
aviation and highways. We do not favor--
    Mr. Bachus. What you proposed was funding for 
infrastructure for the northern--Northeast Corridor; is that 
correct?
    Mr. Rosen. More than that, we were in support of--
    Mr. Bachus. What was the amount of money proposed for the 
infrastructure?
    Mr. Rosen. Well, we have to separate two separate things 
here. We submitted a bill that was introduced--
    Mr. Bachus. Wait a minute. The administration proposes a 
budget--
    Mr. Rosen. Submitted both a proposal--
    Mr. Bachus. How much was proposed for Amtrak? Can you give 
me an answer?
    Mr. Rosen. Yes, if you let me answer. The answer was that 
under the old model, we would not support funding. And under 
the new model, we submitted legislation as to what the new 
model would be--
    Mr. Bachus. New model was zero, right. What you actually 
did, let's talk about what you did.
    Is it--Mr. Laney and Mr. Rosen, was it zero? Was that the 
administration proposal? Either yes or no.
    Mr. Rosen. I think the question has been answered. Do you 
want me to repeat the entire answer?
    Mr. Bachus. No. Just was it yes or no funding?
    Mr. Rosen. The administration submitted a proposal that 
called for matching grants to the States--
    Mr. Bachus. All right--
    Mr. Rosen. --Northeast Corridor state of good repair and 
the amounts to be determined, but did not support funding for 
operating subsidies of the prior contract model--
    Mr. Bachus. There you go. Now, you proposed no operating 
subsidy; is that correct?
    Mr. Rosen. I think my answer is what I have said.
    Mr. Bachus. And that is what you said.
    Mr. Rosen. Congressman, I think you have my answer.
    Mr. Bachus. I am asking you again, is that what you said, 
no operating subsidies?
    Mr. Rosen. I think what I indicated to you was the 
administration submitted a proposal that would include matching 
grants to States for infrastructure, State--
    Mr. Bachus. Let me ask you this. All right. Now, I have 
heard Mr. Laney say, it is in his testimony, that one of the 
problems was the Federal subsidy; the administration has said 
they want to eliminate the Federal subsidies, and they proposed 
zero funding for Amtrak. I mean, am I in error here?
    Now, I know what you proposed in the Northeast Corridor. I 
am aware of what--this new plan you proposed, but I am talking 
about what you actually proposed. Let's go to the Northeast 
Corridor. But can't we be honest with each other? The 
administration proposed--here it is, AP story, the White House 
budget proposal for fiscal 2006 did not include any Amtrak 
funding.
    Now, was the Associated press wrong or right? Did they 
print--that is the truth? Or is that a lie?
    Mr. Rosen. It is both accurate and incomplete.
    Mr. Bachus. Let me ask you this: What was proposed for the 
Northeast Corridor was for the States to subsidize the 
operation; is that correct?
    Mr. Rosen. No.
    Mr. Bachus. You proposed no State subsidies?
    Mr. Rosen. For the Northeast Corridor and the 
administration's position?
    Mr. Bachus. No. What I am saying, this new proposal that 
was proposed September 22nd was to turn the--was to spin it off 
into a separate operating subsidiary; is that correct?
    Mr. Laney. That is not even close.
    Mr. Bachus. Let me ask you this: Am I even close in saying 
that you wanted to substitute State subsidies for national 
subsidies, as was reported in the several newspapers?
    Mr. Laney. No. Would you repeat the question? I don't know 
if I fully understood it. I couldn't hear that one.
    Mr. Bachus. Did you propose the States to start funding the 
operation of Amtrak in the Northeast Corridor--the new entity?
    Mr. Laney. In connection with our proposal with respect to 
the NEC infrastructure?
    Mr. Bachus. Yes.
    Mr. Laney. No.
    Mr. Bachus. So you're not asking or proposing--the 
administration doesn't want the States to pay any money?
    Mr. Laney. Our proposal in September, and our resolution to 
begin to explore the notion of segregating the assets for 
accounting purposes, has nothing to do with State funding in 
that instance. All we are trying to do is understand the costs, 
which we don't understand--
    Mr. Bachus. So there is no intent on the administration on 
your part to--
    Mr. Laney. There may be a little bit of a blur between what 
is in our strategic plan and what is in the administration's 
proposal. I can speak to the plan. I think Mr. Rosen can speak 
to the administration's legislative proposal. But the concept, 
and over time, almost from anybody you ask, is that the States 
will begin to assume a greater share of the overall costs of 
passenger rail in this country, as California and Washington 
have already done.
    Mr. Bachus. I have read some of your speeches on this, and 
I thought you said you wanted the States to start sharing some 
of the costs.
    Mr. Laney. Just what I said. It is in our plan.
    Mr. Bachus. So you did.
    Mr. Laney. Yes.
    Mr. LaTourette. Mr. Bachus, we have 10 seconds left. Ask 
your next question, and then we will yield to our friends on 
the other side.
    Mr. Bachus. Let me ask this final question. You have 
proposed under the new plan $900 million of infrastructure 
subsidy on the Northeast Corridor; have you not?
    Mr. Laney. You may be referring to the administration's 
plan, but I don't think so. But I don't know.
    Mr. Bachus. Did they propose that?
    Mr. Laney. I don't know.
    Mr. Rosen. I am not sure of the number that you are 
referencing to, where that is from.
    Mr. Bachus. Nine hundred million dollars. Are you aware 
that they have proposed an infrastructure--spending 900 million 
on infrastructure? So you're not aware of any proposal they 
have made for infrastructure improvement on the Northeast 
Corridor?
    Mr. Laney. No, sir. That doesn't ring a bell.
    Mr. Bachus. You both testified that the Northeast Corridor 
was in need of--in fact, Mr. Rosen, you said that there was a 
deterioration of infrastructure on the Northeast Corridor, and, 
Mr. Laney, your testimony says there is a need to bring the 
Northeast Corridor up to a state of good repair after years of 
underinvestment. But the administration has proposed zero 
funding for that; isn't that correct?
    Mr. LaTourette. Mr. Bachus, we will ask them to ponder that 
question and ask you to come back when we go to another 5-
minute round, if we could.
    Now, to 30 minutes, under the agreement it will be 
controlled by the gentlelady from Florida. Because we had a 
clock malfunction, and we want to be fair here, the gentlelady 
now controls 32 minutes.
    Ms. Brown. Thank you. And I still want to hear the first 2 
minutes from Mr. Gunn for any responses that you want to make 
before I yield 5 minutes to Mr. Nadler. But I want to give you 
a chance to respond.
    Mr. Gunn. Just to give you my opinion of the action they 
took on the 22nd, They keep talking about it being a study for 
clarity. If you read--first of all, in the strategic plan, 
which the Board approved, we would have come forward to the 
Board with a method of reporting our expenses by business line 
for clarity. That is going to happen at the Board meeting this 
week, because we were on line to do that.
    If you look at the resolution, on this separation, it says, 
resolved that management is authorized and directed to take all 
appropriate action to create the Northeast Corridor subsidiary. 
It is not the study.
    Ms. Brown. So are you saying that the Board action actually 
separated? Can you explain that?
    Mr. Gunn. It was to create a subsidiary within Amtrak's 
control. My main concern with all of the action over 
separating--of creating a subsidiary is that the administration 
and actually the Chairman last spring was--they were trying to 
separate operations from maintenance.
    My concern is that the corridor, whoever runs it, that it 
be a vertically integrated railway. And what I fear is we have 
reverted back to the original intent of the administration and 
the Chairman to separate operations from infrastructure. That 
is wrong. It is bad railroading. Whether it is private, whether 
it is public, whether it is Amtrak or a State-controlled 
railroad, you want a vertically integrated railway.
    Ms. Brown. I am going to yield 5 minutes to Mr. Nadler.
    Mr. Nadler. Thank you, Madam Chair. Thank you.
    Mr. Gunn, when you met with the Democratic staff yesterday, 
you mentioned something about the Amtrak Board hiring a public 
relations firm to head off turmoil as a result of their 
creating the Northeast Corridor subsidiary, and I presume it is 
a result of your dismissal. Is that accurate? Can you tell us 
about that?
    Mr. Gunn. What I said is there was a public relations firm 
hired. When I walked in on Wednesday morning, after I found out 
I was going to be terminated, I went down to the press office, 
and there was a public relations firm that had been hired. And 
they were sitting in the office and in control of public 
affairs.
    I can't--
    Mr. Nadler. Let me just ask you this: You were president up 
to that moment, so who hired them?
    Mr. Gunn. It wasn't me. It was the Board. It had to be. I 
don't know. But I assume it was the Board. But I don't know the 
intent, because I just found them there. But it was--it sort of 
indicated to me something was afoot.
    Mr. Nadler. Thank you.
    Mr. Laney, can you enlighten us about this? First of all, 
who hired them? Why were they hired? What is the purpose?
    Mr. Laney. Well, sir, I think if you put yourself in my 
shoes, it wouldn't be very comfortable sitting and talking with 
all David Gunn's public information, governmental affairs folks 
about how we approach the announcement if we, in fact, make a 
decision to terminate the president of the company. So we 
needed to go outside, and the Board--
    Mr. Nadler. In other words, you hired--the Board decided to 
hire this private public relations firm in order to handle 
publicity surrounding the dismissal of Mr. Gunn because you 
didn't trust your own staff to do that because they were 
appointed by Mr. Gunn? Is that what you're saying?
    Mr. Laney. Not exactly, but we didn't want to talk with 
them about it before we spoke with Mr. Gunn about it. I think 
that is a matter of courtesy. And we hadn't made a decision to 
terminate Mr. Gunn at the time we employed the outside public 
information firm.
    Mr. Nadler. Well, wait a minute. If you hadn't fired Mr. 
Gunn, what would their function have been?
    Mr. Laney. There wouldn't have been any function.
    Mr. Nadler. Well, you hired them for possibly no function?
    Mr. Laney. They didn't do anything for a while.
    Mr. Nadler. Would you have paid them during that time 
period of doing nothing?
    Mr. Laney. No.
    Mr. Nadler. So you hired them, in case you fired Mr. Gunn, 
to handle the resulting publicity?
    Mr. Laney. Yes.
    Mr. Nadler. Was it a no-bid contract?
    Mr. Laney. Yes, it was.
    Mr. Nadler. And how much is it costing Amtrak?
    Mr. Laney. Range of hourly fees depending on who is 
involved and how much work they do.
    Mr. Nadler. Do you have an estimate? Is it going to cost $1 
million, $100 thousand, 100 million? What are we talking about?
    Mr. Laney. Probably $25,000.
    Mr. Nadler. Probably $25,000. And out of what pot of money 
do you pay for this?
    Mr. Laney. Well, we won't take it out of the infrastructure 
fund for the Northeast Corridor.
    Mr. Nadler. That wasn't the question.
    Mr. Laney. We will take it out of general funds of Amtrak.
    Mr. Nadler. The operating budget.
    Mr. Laney. Yes, sir. 
    Mr. Nadler. Which is taxpayer money?
    Mr. Laney. Yes sir. No, not all. Some of it is fare.
    Mr. Rosen. About 40 percent.
    Mr. Nadler. Since this is accomplished already, how long do 
you think it necessary to keep an outside public relations firm 
hired?
    Mr. Laney. I haven't come to that conclusion yet, sir.
    Mr. Nadler. Are we talking a week? A month? A year?
    Mr. Laney. I have no idea. The Board will make that call.
    Mr. Nadler. Okay. I will yield back. Thank you.
    Ms. Brown. Mr. Rosen, I have a question for you. Did you, 
representatives of DOT, recommend to Members of the Senate 
during the negotiations on their Amtrak reauthorization 
proposal that the Amtrak Board of Directors be dismissed and 
that the Secretary should become the sole Board member making 
Amtrak its central award of DOT? Please describe that to the 
Board.
    Mr. Rosen. Not as you phrased it, but I do address that 
issue in my written testimony at the lengthy footnote on page 
6, where there have been discussions with the Senate Commerce 
Committee staff about during the period in which Amtrak 
receives Federal subsidies and has this odd accountability 
arrangement because it is a private, for-profit company, 
incorporated under D.C. Law, and yet there are people who think 
it is a public agency and want the Department and the 
administration to be responsible for its progress. There is 
this hybrid situation.
    So there have been extensive discussions with that staff, 
as well as others, actually, as to what is the best way to have 
governance in a situation where a private entity is receiving 
Federal subsidies, and that there needs to be accountability.
    Ms. Brown. That is enough. Let me just ask you another 
question. Do you think that there is a role for the Congress, 
you know, the House and the Senate, the people, and do you 
think that that is--there is a role? Because you all proposed a 
budget that the House and Senate, bipartisan, rejected. Do you 
think we have any role?
    Mr. Rosen. I think the Congress has a vital role in 
intercity passenger rail, and that is part of why the 
administration has sent proposed legislation for the period 
of--
    Ms. Brown. The proposed legislation that you all sent in. 
And I want a yes or no. You zero out the funding for Amtrak. 
That is a yes or no. And don't give me no lawyer's answer.
    Mr. Rosen. What is the question again?
    Ms. Brown. That is a lawyer's answer.
    Did you send a proposal to the United States Congress where 
you zeroed out the subsidy for Amtrak? That is a yes or no.
    Mr. Rosen. Well, I think as you saw--
    Ms. Brown. You are not capable of doing a yes or no.
    Mr. Rosen. It doesn't lend itself to a yes or no answer to 
be accurate.
    Ms. Brown. I want a yes or no. Did you send that proposal 
up?
    Mr. Rosen. If you want an answer that is both accurate and 
complete, I can't answer it yes or no.
    Ms. Brown. No, I don't. I just want a yes or a no.
    Mr. Rosen. Well, with that proviso that you don't want--
    Ms. Brown. Lawyers are not capable of doing yes or noes, I 
guess.
    Mr. Rosen. Not when the question is not one susceptible to 
it. But the President's budget--
    Ms. Brown. Let me ask you another question because you 
can't answer that one. You are the Secretary's designee, Mr. 
Mineta; is that correct.
    Mr. Rosen. That is correct.
    Ms. Brown. In the, I guess, 5 years that he has been 
Secretary, he is a Board member of Amtrak; is that correct?
    Mr. Rosen. He was appointed by the President to be a Board 
member, but the statute explicitly provides--the statute 
explicitly provides for him to act through a designee--
    Ms. Brown. That is not my question. Is he a Board member? 
Yes or no.
    Mr. Rosen. The answer is yes, as I have explained.
    Ms. Brown. I don't need any explanation.
    Mr. Rosen. Why don't you want an explanation?
    Ms. Brown. My next question is have he ever been to a board 
meeting? That is a yes or no.
    Mr. Rosen. Well, he has met with the entirety of the Board 
members.
    Ms. Brown. No. No. No. No. You're under oath, and I asked 
you a question. Has he ever been to a Board meeting?
    Mr. Rosen. You are asking me personally that. Keep in 
mind,I have been the designee for 1 year. Secretary has been 
the Secretary for 5 years.
    Ms. Brown. To your knowledge, Mr. Attorney, has Mr. Mineta 
ever been to a board meeting? Yes or no.
    Mr. Rosen. From my understanding, he has not, nor have 
several past Secretaries.
    Ms. Brown. Thank you.
    Mr. Gunn, what would be the effect of a zero budget that 
the administration sent up for Amtrak? What would be the 
effect, based on your 40 years of experience?
    Mr. Gunn. Insolvency and liquidation of the company.
    Ms. Brown. Is that the comments that they made, that they 
wanted Amtrak to--
    Mr. Gunn. They wanted--at the last Senate hearing that I 
was at, they were talking--well, Mr. Rosen talked about the 
benefits of--what potential benefits of bankruptcy and--which 
would be the result of a zero, a zero budget.
    Ms. Brown. Mr. Menendez, do you have questions? Yes, sir.
    Mr. Menendez. Thank you, Congresswoman Brown.
    Mr. Laney, in the Strategic Reform Initiative report issued 
in April of this year, on page 13 it says, infrastructure 
separation option. And I read from it. It says, it is important 
to highlight the fact that the Board and management have 
extensively explored a number of recommendations calling for 
the Northeast Corridor's infrastructure to be moved into a 
separate entity.
    We have reviewed models for such a structural split adopted 
and implemented in other countries with varying degrees of 
success. This step in the overall reform process remains an 
option for continued review. We have decided for now, however, 
that the cost complexities and risks of such a split within 
Amtrak outweigh the benefits. Consequently we have concluded 
that separation of the Northeast Corridor assets from its 
operations is not advisable at this time. At this time.
    And then I look at your testimony today, on page 3, and 
when you say on paragraph 4, amongst the strategic initiatives 
is the opening of intercity passenger rail to competition and 
private commercial participation. And then on page 4 where you 
go on to say that separating--what you did, which is have the 
Board pass a resolution that begins to move in that direction, 
separating the accounting and financial management of these 
distinct business operations, but you say it is not a prelude 
to an asset sale or the privatization of Amtrak; the Board 
supports neither at this time. At this time.
    My question to you, reminding you that you are under oath, 
is, one, have you or any other Board member spoken to any 
individual or group of investors seeking to purchase the 
capital assets and get huge tax breaks on operating losses? Yes 
or no.
    Mr. Laney. I am going to have to answer like Mr. Rosen did. 
I have spoken to people that are adamantly opposed to it and 
people that are adamantly in favor of it.
    Mr. Menendez. So you have spoken to individuals who are 
interested in buying the capital assets, the infrastructure 
assets for the purposes of being able to achieve depreciation 
losses, yes?
    Mr. Laney. Now, I don't have any idea what they are after, 
what they are going to achieve.
    Mr. Menendez. Clearly you have spoken to individuals, based 
upon your answer, who are interested in buying the capital 
assets of Amtrak along the Northeast Corridor. Is that a yes?
    Mr. Laney. Yes.
    Mr. Menendez. Thank you. Who are those individuals?
    Mr. Laney. I don't know the names of those individuals. I 
don't recall. I can get them to you and get back to you.
    Mr. Menendez. I certainly want the committee to have those 
names.
    Mr. Laney. My guess is they have spoken to a number of the 
members of the committee as well.
    Mr. Menendez. Have they provided names to you of 
individuals who are interested in purchasing the capital 
assets?
    Mr. Laney. Who?
    Mr. Menendez. You said individuals of the committee. Have 
individuals of the committee approached you about individuals?
    Mr. Laney. No.
    Mr. Menendez. When you said you spoke to members of the 
committee--
    Mr. Laney. I know a number of these groups that have 
concepts in mind have approached a number of Members in the 
House and in the Senate with their concept.
    Mr. Menendez. And they have also approached you and members 
of the Board?
    Mr. Laney. I don't know about members of the Board. They 
have certainly approached me.
    Mr. Menendez. And you have had conversations with them 
about selling the capital assets?
    Mr. Laney. I have had conversations listening to their 
concepts.
    Mr. Menendez. Has the administration spoken to you about 
any individual or group of individuals to purchase the capital 
assets of Amtrak?
    Mr. Laney. No.
    Mr. Menendez. Has anyone spoken to you or have you 
discussed the possibility with members of the Department of 
Transportation about selling capital assets of Amtrak?
    Mr. Laney. No.
    Mr. Menendez. Now, when you continuously have the caveat 
"not at this time," obviously those conversations have created 
the possibility of selling the capital asserts of Amtrak.
    Mr. Laney. Is that a question?
    Mr. Menendez. Yes.
    Mr. Laney. It doesn't remove it from the table.
    Mr. Menendez. Doesn't remove it from the table. And that is 
our concern.
    Mr. Laney. We don't have any plan to do that.
    Mr. Menendez. I know. We had no plans to separate the 
capital, the infrastructure, from the operating, and we moved 
in that direction by virtue of the Board's resolution, which no 
one knew about, including when you were testifying before this 
committee and made no mention of it.
    Mr. Gunn, have you had any knowledge of conversations as it 
relates to the selling? You mentioned before in response to 
another question that you were concerned about the original 
intent of the Chairman and the Board about selling the capital 
assets of the infrastructure.
    Mr. Gunn. My statement was in separating the operation from 
the infrastructure for operations.
    Mr. Menendez. Why would one do that if not to sell it?
    Mr. Gunn. That is a good question. But my concern has 
always been that the corridor should remain a vertically 
integrated railway. The administration proposal clearly calls 
for separating and disposing of the corridor to the States or 
whoever, and my position has been that whatever you do with the 
corridor, it should remain a vertically integrated rail way so 
that someone is in charge of train operation and maintenance.
    Mr. Menendez. That is because, as it says here in the 
Strategic Reform Initiative, the Northeast Corridor mixes high-
speed intercity services with freight rail services operated by 
several--by seven different railroads and some of the densest 
commuter operations. And it goes on to say that it is a highly 
complex rail corridor and is therefore, risky.
    Mr. Gunn. And Amtrak does a good job managing it and 
maintaining it and running it. And you need somebody like 
Amtrak--you can change the name, do whatever you want--but you 
need somebody like Amtrak in charge.
    Mr. Menendez. How many years have you been in the railroad 
business, Mr. Gunn?
    Mr. Gunn. I was on my 42nd year, if you include transit, in 
that mix.
    Mr. Menendez. And just going back to the point I asked you 
before, can you think of any good reason to separate the 
infrastructure from the operation other than to sell the 
infrastructure?
    Mr. Gunn. No. The issue of clarity, the argument of 
clarity, I think, is a bogus one. The Board is going to get an 
accounting system at the next Board meeting which will give 
them clarity in terms of how Amtrak spends its money. The real 
risk is the confusion--you have a very--a fragile accounting 
system at Amtrak. It is, as GAO has pointed out, and as we 
would point out, it is very manual, and it has some real 
systems problems. We have been able to work around those.
    What this will do is create not clarity, but confusion. And 
I think it is--there is no business reason for doing this to 
provide clarity. That is not--you cannot justify this other 
than on the basis of clarity.
    Mr. Menendez. Thank you, Mr. Gunn.
    Mr. Laney, in your statement you mentioned that current 
Amtrak partners will not invest in your infrastructure. They 
don't have confidence that they are getting what they paid for. 
Well, New Jersey Transit is one of your major partners, has 
invested over $1 billion in the last decade, and your actions 
aren't giving them any confidence.
    Don't you think that the Board should have consulted with 
your partners before you went forth on this resolution? Because 
I have talked to the executive director of New Jersey Transit, 
and he had no knowledge of what you intended to do.
    Mr. Laney. We haven't done anything. We have begun an 
exploration of a concept, and we have taken no action. And 
until we have understand all the facets and the consequences of 
that, we will take no action. But we have taken no action at 
this point.
    Mr. Menendez. Well, the resolution says that the management 
has authorized and directed to take all the appropriate actions 
to create the Northeast Corridor subsidiary. It seems to me a 
pretty definitive action. Are you seeking to be a Federal 
judge?
    Mr. Laney. No, sir.
    Mr. Menendez. You have no intentions of seeking to be a 
Federal judge?
    Mr. Laney. No, sir, I don't.
    Mr. Menendez. I just want to make sure that everybody's 
motives are out on the table.
    Let me ask Mr. Rosen. Mr. Rosen, can you name a passenger 
rail service, a passenger rail service, interested in your mass 
transit that is profitable?
    Mr. Rosen. Yes. If we are talking above the rail, it is my 
understanding that there are several including--
    Mr. Menendez. What do you mean by above the rail? I am 
asking about a passenger rail service.
    Mr. Rosen. I am talking about operationally, my 
understanding is Japan Central, Hong Kong Railroad, and I am 
told there are others--
    Mr. Menendez. I am talking about a passenger rail service.
    Mr. Rosen. That is what I am talking about, too.
    Mr. Menendez. Tell me how they are successful without 
subsidies.
    Mr. Rosen. Well, in the case of the Japan railroads, they, 
like Amtrak, were national, subsidized entities in the '70s, 
and then around 1986 or 1987, Japanese Government made the 
decision to split that up and create six--
    Mr. Menendez. I am not asking about the Japanese 
Government, Mr. Rosen. Mr. Rosen, I am asking the questions, 
and I don't really want to hear about the Japanese. I care 
about America.
    I want to know--I don't know of a system that is 
profitable. The Washington Metro is unprofitable. The New York 
City subway system, the busiest mass transit in the United 
States, is unprofitable. Yet, you know, you have this dogged 
determination to say that Amtrak has to be profitable, even 
though the reason Amtrak came into being in the first place is 
because the freight rail service said, please, take it away 
from us so that we could have passenger rail service.
    Mr. Gunn, do you know of a passenger rail service that is 
profitable?
    Ms. Brown. And that has to be the last question. And thank 
you so much.
    Mr. Gunn. No. I will say this. Mr. Rosen has mentioned the 
Japanese railway system. After the government invested 80-, 
$100 billion in new tracks and rights of way, they barely cover 
their operating expenses.
    Mr. Menendez. But we won't give you--I heard earlier about 
from one of my colleagues--we won't give you 15. I would, but 
others would not.
    Ms. Brown. We spend $6 billion a month in Iraq, just for 
your information. And you, Mr. Rosen, mentioned something about 
$400 million a year. We wasted $7.2 billion to Halliburton that 
we don't have any, any idea of where the money went.
    Mr. Cummings, 3 minutes.
    Mr. Rosen. I assume that is not an advocacy of waste.
    Ms. Brown. I called your name, and I didn't ask you any 
questions. I called on Mr. Cummings.
    Mr. Cummings. Mr. Gunn, tell us, do you think you were 
treated unfairly here in this firing?
    Mr. Gunn. The Board has a right to fire me. I don't 
question that. And if they have an agenda which is obviously 
different than the one I have, they have the right to fire me. 
So is it unfair? No. I think that--I am very concerned about 
the agenda that the administration and the Board has.
    Mr. Cummings. And what is your interpretation of that? I 
guess what I am trying to get to, we are not going to probably 
have too many chances like this to interview you again. They 
basically kicked you out of office. And I am not saying that to 
be smart. We have a limited amount of time. It is our watch. I 
want to make sure that the railroads stay intact. I don't want 
to see all these private folks come along and pick pieces of 
it, don't necessarily want to see the States like my State 
having to take--to put much more money into the railroad when 
they don't even have it.
    But yet still they are paying taxes big time, and they 
subsidized all kinds of other things, but they just want to 
subsidize the way it works. So I want you to tell us, you know, 
what you see and what you would like to see.
    Mr. Gunn. What happened, we had a strategic vision which 
we--the Board and management adopted in the spring. And 
contrary to what the Chairman said, that document, I had a big 
role in preparing that document, and I believe in that 
document. I did not believe in some of the other things they 
wanted to do.
    That document, we were following that document. And that 
document--and the Board will get the benefits of what we have 
been doing at the next Board meeting, I believe, unless they 
change that.
    What happened is that it is clear to me that I became an 
obstacle to a plan to, I think--basically to do away with the 
corporate structure in Amtrak and to implement the 
administration's plan for passenger rail service, which is 
really not a plan at all. It is a plan of just destroying the 
corporation and turning the Northeast Corridor over to a 
committee of governors and let them deal with it. I think that 
is what happened, and I was an obstacle. I think I was 
definitely an obstacle to the dismantling of Amtrak. And that 
is why I am sitting here as the former president. And I believe 
that.
    Mr. Cummings. And looking at this situation, I guess, in 
sort of hindsight, I guess there are certain things, Mr. Gunn, 
that all of us--we have certain principles, hopefully, that we 
really stand by. And I take it that you probably would have had 
a difficult time no matter what because the Board wanted you to 
go, just listening to what you just said, against some basic 
principles that you have about railroading, I guess. The 
public, I guess--
    Mr. Gunn. There are two things that--one is the way you 
manage a corporation or a railroad. I think the attempts early 
on to split operations from infrastructure were wrong from a 
managerial operating point of view, and I believe that very 
strongly.
    The other is I firmly believe that this Nation needs 
passenger rail service, and I think this dismantling Amtrak is 
not the right way to go. Amtrak needs reform. The reform is--I 
think we documented that reform in our package, which the Board 
approved. But obviously they have moved off that. And I think 
that the--I just became an obstacle to dismantling Amtrak. And 
I think what Amtrak right today, Amtrak is the gene pool for 
passenger rail--intercity passenger rail service in this 
country, and if isn't treated in a fairly thoughtful way, 
you're going to set back passenger rail service in this country 
decades.
    Mr. Cummings. Just one other question, because I know my 
time is limited.
    A lot of those employees that Mr. Laney pretty much 
described as doing a terrible job--yes, you did--I mean, for 
the main exec to sit here and say that about the employees--I 
mean, I ride Amtrak all the time. I mean, how do you feel about 
the employees and what is the morale there now? I know you're 
gone, but how was it?
    Mr. Gunn. I thought it was pretty good. There's no question 
that when you're dealing with 25 million riders, you're going 
to have problems, but I really think the bulk of our employees 
do a good job and they care about the railroad.
    I have issues on work rules and all that sort of thing, but 
the employees I think are a first-class bunch. There's a few 
rotten apples, there would be under 20,000 people, among 20,000 
people, but they're good.
    We have actually started--we had started a fairly 
systematic training program where--over the last 2 years, and 
we have actually seen passenger complaints drop by 20 percent. 
I think we have made real progress and I think we are working 
at that issue. But our employees, by and large, are 
professional and they're good people and they're good 
railroaders. Even though I disagree with some of the work rules 
and things like that, they're a good bunch.
    Mr. Cummings. Thank you for your service, and we really 
appreciate it. With that, I yield back.
    Ms. Brown. Thank you.
    Mr. Gunn, I have told you that I give you an "A" as far as 
your service to this country.
    Mr. Gunn. Every time.
    Ms. Brown. I want to yield 4 minutes to Mr. Nadler.
    Mr. Nadler. Thank you.
    Mr. Laney, to what extent was Mr. Rosen or Secretary Mineta 
involved with the decision to fire Mr. Gunn?
    Mr. Laney. Secretary Mineta was not involved at all. Mr. 
Rosen was involved as every other board member was involved.
    Mr. Nadler. Mr. Rosen, would you care to comment?
    Mr. Rosen. I think that's accurate, except that I did 
confer and consult with Secretary Mineta in order to make sure 
that the actions that were being contemplated were--
    Mr. Nadler. Fine.
    Let me ask you this, Mr. Rosen, first--well, Mr. Laney 
first. Who originated the idea to fire Mr. Gunn? Who first 
brought it up for consideration?
    Mr. Laney. First came up for consideration--
    Mr. Nadler. I didn't ask when. I said, who brought it up?
    Mr. Laney. I'll tell you the context.
    Mr. Nadler. Who first mentioned it?
    Mr. Laney. David Gunn.
    Mr. Nadler. Strike that.
    Who first recommended it? Who first recommended it, because 
I don't take that as a serious answer.
    Mr. Laney. That's a serious answer.
    Mr. Gunn nearly left on a couple of different occasions, 
and it concerned us and it--
    Mr. Nadler. Who first expressed that concern?
    Mr. Laney. About Mr. Gunn's departure?
    Mr. Nadler. About maybe he ought to go.
    Mr. Laney. I think it was--I don't know who first among the 
board members. I don't know who first raised it.
    Mr. Nadler. Was it among the board members?
    Mr. Laney. Oh, yes.
    Mr. Nadler. I understand, Mr. Laney, that there was a 
telephone conversation with DOT, or that involved DOT or 
Secretary Mineta, during the meeting up to Mr. Gunn's 
dismissal; is that correct?
    Mr. Laney. I was not involved in that phone conversation. I 
don't know anything about--
    Mr. Nadler. Mr. Rosen, do you know anything about it?
    Mr. Rosen. I don't think so, but if you could ask it again. 
I'm not sure if I got the question.
    Mr. Nadler. I understand that there was a telephone 
conversation with DOT, or that involved DOT or Secretary 
Mineta, during the time leading up to Mr. Gunn's dismissal; is 
that correct?
    Mr. Rosen. The reason I paused is, as a board member, I 
spoke with the other board members as a group. But otherwise I 
think the answer is no.
    Mr. Nadler. Did anyone outside the board speak on behalf of 
or against Mr. Gunn's firing before he was fired?
    Mr. Laney. Are you asking that of me?
    Mr. Nadler. Yes.
    Mr. Laney. It was a discussion.
    Mr. Nadler. I know, but did anyone express an opinion on 
that who wasn't on the board?
    Mr. Laney. No.
    Mr. Nadler. Mr. Rosen?
    Mr. Rosen. Not to my knowledge. As I say, with the caveat 
that Secretary Mineta and I conferred.
    Mr. Nadler. Mr. Gunn, did Mr. Laney allude to you that 
there were discussions with anyone outside the board regarding 
your position at Amtrak?
    Mr. Gunn. Not that I remember, except, as I said earlier, 
in several occasions he said he was having trouble defending 
me.
    Mr. Nadler. Mr. Laney, of whom were you speaking when you 
said--or when you said that you had tried to defend Mr. Gunn, 
to whom were you referring?
    Mr. Laney. Other board members.
    Mr. Nadler. Thank you.
    Mr. Laney, I want to follow up a little on some questions 
that were asked before. You testified that Mr. Gunn, that he 
was fired essentially because he refused or failed to do--
things he refused to do in going in several new directions that 
the board wanted to go, in implementing the strategic plan. Is 
that correct?
    Mr. Laney. Let me elaborate, if I may.
    Mr. Nadler. Before you elaborate, that is correct, that's 
what you said?
    Mr. Laney. I don't recall what I said, but it was an 
incomplete answer.
    Mr. Nadler. I'm going to make it more complete.
    Specifically what are the most important things that he 
didn't want to do or refused to do that you felt it necessary--
that were the cause of his firing?
    Mr. Laney. I'm very reticent to go into all the detail, but 
I will say in general terms there were elements of our 
strategic agenda--
    Mr. Nadler. You said that already. What were some of the 
elements, the most important, that he didn't want to go into, 
that he didn't want to do?
    Mr. Laney. We had been pushing reductions in costs from a 
food service, beverage service, food service, for a long period 
of time.
    Mr. Nadler. He didn't want to do reductions in cost?
    Mr. Laney. He was not as aggressive as we thought he should 
be.
    Do you want me to continue? I can catalog these long or 
short, however you would like to do it.
    There are a number of areas of expense and, potentially, 
expense reduction or at least significant expense control 
relating to maintenance of our equipment, overhauls of our 
equipment.
    Mr. Nadler. Basically, cost reductions in food service, 
beverage service and maintenance of equipment essentially is 
what you're saying?
    Mr. Laney. Cost reductions on the one hand, revenue 
generations on the other. There are a number of initiatives we 
didn't think he was being aggressive, as he should.
    Mr. Nadler. Mr. Gunn, were these subjects of major dispute?
    Mr. Gunn. They are now.
    Mr. LaTourette. If I can interrupt. I'll let you answer 
that question then this block of time has expired.
    Mr. Gunn. Basically there was never a normal boss-
subordinate sitting down saying, Look, I want you to move this 
fast on this issue. At the board meeting--when is it, tomorrow 
or Thursday--they'll get a renegotiated gate gourmet contract. 
They'll get a proposal; I think they'll get a proposal for 
someone to provide food service on our trains.
    We have in place already the design for the changes we have 
to make to the food service cars in order to provide a new type 
of food service at a lower cost. We have been moving very 
aggressively. I think it's a nonsense argument. It really is. 
Specious.
    Mr. LaTourette. I thank the gentlemen. We'll now return to 
the 5-minute rule. I'll recognize myself for 5 minutes and move 
through the list of remaining members.
    Mr. Laney, I want to get to something I think Mr. Nadler 
was talking to you about, this public relations firm. Has any 
part of their function, as retained, to communicate Amtrak's 
message to either Members of the House or the Senate?
    Mr. Laney. Yes, sir. We had public information releases 
going to the press, going to the Members of the House and 
Senate.
    Mr. LaTourette. I bring that to your attention just not as 
a "gotcha", but again referring to the Amtrak Reform and 
Accountability Act of 1997. Section 414 requires--and this is 
where I thought Mr. Nadler was going--that if you retain a 
consulting firm and one of the functions of that consulting 
firm is to bring information which, in my mind, is lobbying the 
United States Congress, there are requirements set out that you 
notify the committee, this committee, the name and purpose of 
the individual involved, the purpose of the contract and the 
amount and nature of their obligation.
    I'd ask if you'll review with your legal counsel whether or 
not that meets that requirement.
    Mr. Rosen, I want to get back to you. I'm concerned that 
the title of this hearing was "Amtrak governance." I am 
concerned about what happens going forward.
    We have the Senate about to adjourn, we have two recess 
appointments, Mr. Hall and Mr. Sosa, whose terms will expire if 
their nominations are not acted upon, and the first question I 
have is: Is it your view that, should that happen, the Senate 
take no actions on confirming Mr. Hall and Mr. Sosa, no other 
nominations go before the Senate, that it can just be you and 
Mr. Laney to constitute an executive board, you guys can govern 
Amtrak?
    Mr. Rosen. Well, I don't predict that that's the 
hypothetical that we'll wind up confronting, but if you're 
asking me the legal question of would we be able to function, 
that was the action that the board took to protect itself in 
2002 and 2003, to establish that in the absence of a quorum, an 
executive committee could continue to proceed so that the 
company would not be directionless or leadershipless.
    Mr. LaTourette. Let me say that I guess I read that 
differently. The way that I read the initial act, and then 
there was a change from three to two by board action, is that 
that executive committee was to be between meetings; it wasn't 
in the absence. I would think it would be strange.
    And, Mr. Laney, my understanding is, your background is as 
a corporate attorney. I would think that would be a very 
strange corporate structure that you could have the complete 
absence of a quorum if, in fact, these two recess appointments 
are not confirmed or people don't take their place, and two 
folks just--is that your belief too, Mr. Laney?
    Mr. Laney. My belief, that it's an odd corporate structure?
    Mr. LaTourette. One that is odd. And do you agree with Mr. 
Rosen that the two of you, absent anyone else getting 
confirmed, could continue to run the corporation?
    Mr. Laney. Mr. Chairman, we play the hand we're dealt; and 
we have to have a functioning board, and I think we would have 
the authority to act.
    Mr. LaTourette. Let me ask you this. This is the interplay 
of the D.C. Business Corporation Act, and my understanding is 
that the authorizing statute says that we're going to follow 
that as long as it's not inconsistent. And one of the 
provisions in the D.C. Business Corporation Act indicates that 
one way to solve this problem, because I really have to tell 
you I think that that would be not a good way to conduct 
business, but that you're going to have a shareholder election 
of interim directors until you can get duly qualified 
appointments confirmed by the Senate.
    Have either of you given any thought to--again, going back 
to corporate governance, my understanding is, if you look at 
the D.C. law, the shareholders are supposed to get together for 
a meeting once a year. I'm told there's not been a meeting of 
the Amtrak shareholders for 20 years. I'm not saying it's your 
fault, but I think that's unusual corporate governance, that 
the shareholders don't have an annual meeting and they don't 
have one for 20 years.
    Have you given any thought--and I know that it's a 
hypothetical because it hasn't happened yet, but have you given 
any thought to having your shareholders in and getting interim 
directors appointed in a way consistent with the D.C. 
Corporation law; or, Mr. Rosen, do you think that's 
inconsistent with Federal law?
    Mr. Rosen. I think there is a specific problem in that 
Congress specifically took away the ability of the common 
stockholders to vote for directors in the 1981 Act and has 
continued that.
    I think the other thing that would be difficult is, the 
Department of Transportation, as the holder of the preferred 
stock, holds in excess of 95 percent of the equity of the 
company and that, likewise, is nonvoting for directors after 
the Amtrak Reform Act of 1997.
    So if we were to depart from the Federal law--they took 
away those voting rights--and say, we're going to have a 
meeting and have them vote, I presume the Department of 
Transportation would have over 90 percent of the votes; and I'm 
not sure if that's really the concept that you're raising.
    Mr. LaTourette. Let me stop you there.
    Two things: One, I'm told by counsel that this '81 
provision has been repealed and the voting opportunity rights 
were restored, and further, that the statute indicates that the 
90 percent share, whatever the DOT owns, is nonvoting.
    Mr. Rosen. All the common stock is nonvoting for directors, 
and in addition, the statute required that the common 
stockholders' stock have been redeemed. That actually has not 
happened, but was supposed to happen under statute, in which 
case while there could be new common stockholders, the existing 
ones were supposed to have been bought out under the Reform 
Act; and for reasons that others would have to explain, that 
hasn't occurred.
    Mr. LaTourette. They're still stockholders, are they not?
    Mr. Rosen. There are, and it would seem anomalous that 
people who don't have a vote would now be asked to make 
decisions, unless perhaps they were going to become investors.
    Mr. LaTourette. All right. I'm a little more confused, but 
I will hash this out a little later.
    Ms. Brown. You want to--where do you want me to go first?
    Ms. Norton.
    Ms. Norton. Thank you very much, Mr. Chairman. Please 
correct me if, during the time I had to be out, this question 
was asked.
    We had a committee meeting here about 2 months ago, and--
this question is for Mr. Laney--according to the testimony at 
that time, you used the words "splendid" and "terrific" to 
describe the performance--this is 2 months ago now--to describe 
the performance of the man you have just dismissed.
    Mr. Gunn has done, as far as I am concerned, a splendid 
job. He took Amtrak from the day he landed on the platform, in 
effect--in 2002, I believe it was--and has righted a ship that 
was listing and about to spill over. As far as I'm concerned, 
Mr. Gunn is a terrific operator.
    How could anybody go downhill so fast in 2 months, and 
would you explain?
    Mr. Laney. I'll be glad do. The question has been asked and 
answered, but I'll be glad to.
    Ms. Brown. It hasn't been answered properly.
    Mr. Laney. Yes, ma'am. I'll be delighted to answer the 
question, and it's not inconsistent with my perceptions of 
David Gunn's performance from the day he arrived for the next 
12 to 18 months after his arrival.
    No one has worked as closely with David Gunn, at least 
among, between you all and--on the committee and the board, as 
the board has, and no one has seen as closely as we have David 
Gunn's performance. But I would add, no one among you is 
charged with the responsibility for overseeing Amtrak, as we 
all assume that responsibility.
    David did a terrific job and was the right man at the right 
time in 2002.
    Ms. Norton. And as of 2 months ago?
    Mr. Laney. As of 2 months ago he was not the right man.
    Ms. Norton. Why did you answer he had done a terrific and 
splendid job?
    Mr. Laney. I described the job he had done for the first 18 
months to 2 years.
    Ms. Norton. You did not leverage it, and you know it, as to 
the first 18 months.
    Mr. Laney. No, I didn't say the first 18 months, but read 
the remainder of my testimony, and I think you'll see I do 
raise concerns about his vision of the future. I was polite 
about it, he was still part of the team, trying to make it 
work.
    Ms. Norton. He is a terrific operator, not has been.
    Mr. Laney. He is a terrific operator. He is not the 
strategic strong planner and implementer that we need right 
now.
    Ms. Norton. Would you summarize in a sentence or two the 
reason, particularly in light of this glowing testimony, that 
the board decided that Mr. Gunn should be fired?
    Mr. Laney. There's no precipitating single event.
    Ms. Norton. Let me suggest the following. In September 
there was a resolution passed that would have split the 
Northeast Corridor from the existing operations into a new 
subsidiary. Did Mr. Gunn agree with that resolution?
    Mr. Laney. No, he did not.
    Ms. Norton. So that, I take it, was the precipitating 
event.
    Mr. Laney. No, ma'am. He and I had extensive discussions 
and disagreements during the entire development of the 
strategic plan about that very issue. If that had been the 
issue, he would have been terminated then.
    That's not the issue, and you're making too much of that 
particular issue. That's not the reason.
    Ms. Norton. Let me make something of the board's issue. 
This resolution, this September resolution, these events that 
I'm describing are one on top of another. Here's the September 
resolution that I have just described: It said, split it off 
into a subsidiary.
    Now, that is September. Five months before that, in April, 
here's the board's position. Strategic and reform initiatives 
in FY '06 grant request which indicated--this is the board 
speaking--that the cost, complexities and risks of splitting 
the northeast operations from Amtrak's operations--and here I'm 
looking at your language, in particular--splitting it off into 
a subsidiary outweigh the benefits and are therefore 
inadvisable.
    Now, I want to know about your turnaround now between April 
2005 and September 2005. I'm trying to figure out where this 
board is and what is the basis for this board's decision. What 
was the basis for that reversal, if you will?
    Mr. LaTourette. If I could ask you, Mr. Laney, to answer 
the gentlelady's question, then move on to our next member.
    Mr. Laney. There's no change at all. They're absolutely 
consistent. The concern we raised then is the current concern I 
have now, and Mr. Gunn just elaborated or articulated a few 
minutes ago, and that is, we are not convinced that the 
benefits outweigh the risks of segregating the integrated 
management of the Northeast Corridor infrastructure and the 
management of the train operations on the Northeast Corridor.
    There is no change, there is absolute consistency.
    Ms. Norton. I'm sorry, I just read to you that you said 
that the risks--that the cost, complexities and risks of 
splitting the Northeast Corridor from Amtrak's operations as 
you now propose to do, quote, "outweigh the benefits and are 
therefore inadvisable."
    Mr. Laney. Yes, ma'am. You're reading absolutely correctly; 
and I agree with the way you phrased it, and there is no 
inconsistency between that position stated in the plan and my 
position now, or David Gunn's position, that is, you should not 
segregate the management, oversight, integration of the 
operation of the trains and the operation of the 
infrastructure.
    Mr. LaTourette. I thank you very much.
    Ms. Brown, 5 minutes.
    Ms. Brown. Thank you, Mr. Chairman.
    Mr. Laney, I understand that you have directed management, 
subject to the final board approval, to transfer to a new 
subsidiary the title of all Amtrak-owned infrastructure in the 
Northeast Corridor. While the NEC operation would remain with 
Amtrak control, there is no transfer of obligations to perform 
services or the employees' need to fulfill those obligations. 
In other words, you're busting up Amtrak and explain to me what 
you are doing, you--I guess you and one other person.
    Mr. Laney. We have a board of four at the moment, 
Congresswoman.
    Ms. Brown. Illegal.
    Mr. Laney. The action we took has not directed anybody to 
do anything other than to lay out for us all of the 
implications and any reasons why we might not go forward, as 
well as why we should go forward. But the action, if we do it 
on the basis of that analysis, would be, in effect, a transfer 
of the assets only into a wholly owned subsidiary of Amtrak. 
Short of that, the segregation into a separate division within 
the current corporate construct is another option.
    We don't know where we're going with this. We initiated the 
process for further focus, study and understanding; and I'll be 
the first to say that no one on the board and, quite honestly 
in my judgment, no one in Amtrak's management fully understands 
all the implications of this, and we're trying to get to the 
bottom of that.
    Ms. Brown. I want Mr. Gunn's response to that, but before I 
go to Mr. Gunn, I want to hear from the attorney because, you 
know--
    Mr. Rosen. Well, I guess the way I'd like to address--that 
is, the administration's proposal--
    Ms. Brown. Is this the Bush administration?
    Mr. Rosen. Yes.
    -- had provided for, in our legislative proposal--that's 
separate from what the board action is--but in our legislative 
proposal for separation of the infrastructure from the 
operating companies, just like airlines are separate from 
airports.
    And one of the concepts is that the infrastructure, because 
of Amtrak's operating needs, periodically is deferred, the 
maintenance is starved, and that we need to get the 
infrastructure brought up to a state of good repair. And so by 
having them in separate baskets, if you will, you don't take 
from one to support the other, and so the infrastructure has to 
get brought up to a state of good repair.
    Ms. Brown. Did you all propose any additional funding for 
that? Because the last time I checked, you all just zeroed the 
funding of Amtrak.
    Mr. Rosen. This separation has not occurred.
    Ms. Brown. Oh.
    Mr. Rosen. Now, the second rationale, in order to complete 
the answer--
    Ms. Brown. Does the Congress play any role? I mean, if you 
give us a proposed budget and if we don't accept it, then what?
    Mr. Rosen. By definition, Congress does play a role and 
determines what the appropriation is, as well as enacts 
legislation.
    Ms. Brown. Okay. I have never--I have been elected 25 years 
and I have been in this Congress for 13 years; I have never 
seen an administration that does not respect the Congress.
    Mr. Rosen. I'm sorry, I think we do.
    Ms. Brown. This is a blatant example of it. You all are 
moving forward to dismount Amtrak, two people or three people 
or four people, but none have been confirmed by the Senate 
except one person--yes, yes, you and Mr. Mineta, who is a 
member of this body, haven't been to one single board member 
meeting, but he issues statements about Amtrak.
    I would like Mr. Gunn to respond to the question that I 
initially asked.
    Mr. Laney. Do you want me to complete the earlier answer?
    Ms. Brown. No, I don't.
    Mr. Gunn. I'd just say two things about this discussion, 
and that is that, first of all, the idea that you have to 
separate the Corridor to prevent funding from bleeding from 
capital to operating is nonsense. Our budgets are set and the 
way our money is appropriated is operating money, debt service 
and capital. And we do not fund the operation out of deferrals 
of capital. We do not do that. We are very rigorous about 
segregating the funds into the proper buckets.
    The other thing is that this whole issue of creating a 
subsidiary, it is an enormously complicated effort which is 
probably going to result in lawsuits to the board from various 
parties; and it has no benefit, that they aren't going to get 
this board meeting when they, Amtrak, prepares its accounts 
according to business lines that are contained in the strategic 
plan.
    It is a specious argument to say, you need to create the 
subsidiary for clarity. That is absolute nonsense, in my 
opinion.
    Ms. Brown. Since the board was initially created--I mean, 
the Congress has not done the proper thing. I mean, we talk 
about "a billion-five," but I think Congress has moved forward, 
both the House and the Senate, bipartisan, have moved forward 
in addressing some of the infrastructure needs of Amtrak.
    What I find lacking is the board's response to the 
direction from the Congress and also, if you agree, Mr. Laney, 
with the GAO report that did some minor criticism of Mr. Gunn, 
it criticizes the board and said that you all have not done the 
kind of job that you are supposed to do as far as directing 
Amtrak.
    I will give you an "F", you and the board.
    Mr. Laney. I suspected that.
    Ms. Brown. Yes.
    Mr. LaTourette. If that is not a question, we are going to 
move on to somebody else.
    Mr. DeFazio.
    Mr. DeFazio. Mr. Chairman, I'll move quickly; five minutes 
isn't very long.
    As I look at the documents provided, as I understand it, 
Mr. Laney, your prior experience with the Texas Department of 
Transportation--I visited the Web site--had very little to do 
with rail.
    Do you have any other significant expertise in rail, other 
than your service on the board that I'm not aware of?
    Mr. Laney. No, sir.
    Mr. DeFazio. Mr. Sosa, another member of the board, in his 
confirmation hearing said, he had no experience on land 
transportation, never ridden an Amtrak train.
    Are you aware of anything else there that I might not know 
about?
    Mr. Laney. He was CEO of a major industrial company.
    Mr. DeFazio. We're talking about rail here. You may think 
it's transferable; we don't.
    Let's go to the next one. Mr. Laney or Mr. Rosen, Mr. Hall 
was Chairman, President, CEO--there you go, Mr. Rosen--of K-
Mart, which bankrupted shortly after his retirement, he went 
away with $62 million and a $2 million severance package. Are 
you aware of any significant rail experience he has, or 
transportation experience, other than what K-Mart might have 
used for transporting goods? Passenger, we're talking about 
here.
    Mr. Laney. I don't know his background.
    Mr. DeFazio. Mr. Rosen, you represented automobile 
interests--surface transportation, granted.
    Do you have any significant experience in management or 
knowledge of passenger rail that we're not aware of other than 
your service with--as general counsel for 2 years?
    Mr. Rosen. No.
    Mr. DeFazio. Thank you. That's good.
    Mr. Gunn, 40 years, is that what I heard?
    Mr. Gunn. Forty-one.
    Mr. DeFazio. Now you said that a zero budget by the 
President would have left an insolvency bankruptcy; is that 
correct?
    Mr. Gunn. Yes.
    Mr. DeFazio. Mr. Laney, with your vast experience, you 
disagree, is that correct, yes or no?
    Mr. Laney. No, I don't disagree.
    Mr. DeFazio. It would have led to bankruptcy, the 
President's budget?
    Mr. Laney. Zero operating budget leads to insolvency.
    Mr. DeFazio. Mr. Rosen, you apparently feel that even 
though it was proposed for zero, there were other aspects that 
would have allowed it to succeed.
    Mr. Rosen. Yes, because the zero was a call to action.
    Mr. DeFazio. Call to action, but if Congress would have 
passed it, it would have been pretty drastic action.
    Mr. Gunn, you said something I couldn't follow at the end 
of your testimony, or answer to that previously, something 
about researching, or Mr. Rosen talking about the benefits of 
bankruptcy, you said, at a meeting?
    Mr. Gunn. At the Senate testimony before an appropriations 
committee, he was questioned about the zero budget, and it was 
clear there was no money, no matter what happened in the 
budget, for passenger rail. And he discussed--made an analogy 
between rail and airlines in terms of the benefits.
    Mr. DeFazio. So we could break the unions, among other 
things, and perhaps question or break contracts?
    Mr. Gunn. I'll let him.
    Mr. DeFazio. Are those the kinds of benefits, Mr. Rosen?
    Mr. Rosen. I certainly didn't say that.
    Mr. DeFazio. It would be similar to the airline industry?
    Mr. Rosen. I think Mr. Gunn's recollection--
    Mr. DeFazio. We'll have to look that up. I only have 5 
minutes.
    Now, Mr. Laney, I'm just curious, did you have any 
conversations, communications or directives in any form with 
any political appointee of the Bush administration, Department 
of Transportation, White House or otherwise regarding the 
firing of Mr. Gunn before it happened? Yes or no?
    Mr. Laney. No.
    Mr. DeFazio. You did not. So then who first--what was 
your--what is your recollection of your first discussion 
regarding the firing of Mr. Gunn? Was it with another board 
member?
    Mr. Laney. Other board members.
    Mr. DeFazio. More than one? I don't know how you operate in 
terms of rules of procedure, whether you can reach a conclusion 
before a meeting. Is that illegal?
    Mr. Laney. No.
    Mr. DeFazio. Talk to three other board members and decide 
and go in and vote on it. I know how your boards work.
    Mr. Laney. What's the question?
    Mr. DeFazio. The question is, did you discuss it with other 
board members before the meeting?
    Mr. Laney. Before what meeting?
    Mr. DeFazio. When you fired him.
    Mr. Laney. Yes.
    Mr. DeFazio. With all three?
    Mr. Laney. Occasionally with one, two or three.
    Mr. DeFazio. You had reached a conclusion before the 
meeting?
    Mr. Laney. I think we had. I wasn't sure until we took a 
vote.
    Mr. DeFazio. Sounds like, if you had that many 
conversations, now there are no quorum procedures or anything 
like that; so you could discuss it with others before the 
meeting.
    Mr. Laney. We can discuss it with one, two or three.
    Mr. DeFazio. All right.
    Then, if we can go back to the previous issue, Mr. Gunn, 
about the Northeast Corridor, this report--I mean, again, I'm 
curious at some of the answers we're getting.
    The Strategic Reform Initiative seems definitive about the 
complexities, risks of a split, and that, regarding the 
Northeast Corridor, that it shouldn't go forward, but you had a 
major disagreement over that. Apparently, at some point the 
board decided to go forward despite the strategic initiatives 
of April; is that right?
    Mr. Laney. No, not "despite"; it's very consistent, in my 
judgment.
    Mr. DeFazio. So you overcame all the complexities, and the 
costs, risks, and split benefits, changed from April, and your 
position-controlled rail operations to remain unified for 
purposes of safety and efficiency despite, we heard, you wanted 
to split off rail and operations.
    So all those things changed from April to now, and then 
this is the report over which you are saying Mr. Gunn is not 
carrying out your direction?
    Mr. Laney. No, sir. The board decided not to segregate 
management of infrastructure from management of train 
operations.
    Mr. DeFazio. So that's Mr. Rosen's position, not yours?
    Mr. Laney. That's my position. I don't know what his is.
    It is Mr. Gunn's position as well. You shouldn't segregate 
the two.
    Mr. DeFazio. You're familiar with how well or how poorly it 
has worked out in Britain and other places?
    Mr. Laney. I'm very familiar with that.
    Mr. DeFazio. My time has expired. Thank you.
    Mr. LaTourette. Thank you very much.
    Ms. Johnson.
    Ms. Johnson. Mr. Laney could you tell me the origin of the 
privatization plan?
    Mr. Laney. What privatization plan are you talking about?
    Ms. Johnson. The one where you were going to separate the 
Northeast Corridor and sell off.
    Mr. Laney. There is no privatization plan.
    Ms. Johnson. There is not a plan?
    Mr. Laney. There is no privatization plan, no, ma'am.
    Ms. Johnson. Who were you going to sell it to, the public?
    Mr. Laney. There is no plan to sell it to anyone.
    Ms. Johnson. Okay. Who is the Corridor task force and what 
is that purpose?
    Mr. Laney. The Corridor task force is a concept in that 
plan, the strategic initiative plan that, in effect, involves 
the input of all the States or users along the Northeast 
Corridor--commuter rail, States, departments of 
transportation--so that we can have their input in developing 
our capital plan for the Northeast Corridor.
    It's a concept that we are moving forward on and it's--in 
my judgment, really takes something on a de facto basis, 
something already done in a more informal way and makes it 
formal.
    Ms. Johnson. Are these State DOT people?
    Mr. Laney. I don't know what we're actually going to use in 
terms of the actual composition of it, but representative users 
or interested stakeholders along the Northeast Corridor--
States, DOT's, and commuter operations.
    Ms. Johnson. Who is the Amtrak Reform Council?
    Mr. Laney. I can't give you the history, but the Amtrak 
Reform Council was a group that was he designated--I don't know 
the year, 1995, 1997, sorry--and it came together and worked 
fairly intensely for a period of time and came out with an 
Amtrak Reform Council proposal.
    Ms. Johnson. Is it close to what the proposal is now?
    Mr. Laney. I think there is some similarities and 
somedifferences. There's some similarities and some differences 
between our plan and virtually every other concept that's come 
out with respect to Amtrak.
    Ms. Johnson. Is that council still organized?
    Mr. Laney. I don't think so.
    Ms. Johnson. Have you had any conversation with anybody 
about the future of Amtrak as it relates to reorganizing?
    Mr. Laney. Reorganizing. Pardon me?
    Ms. Johnson. Other than the board members.
    Mr. Laney. I don't understand what you mean by 
reorganizing.
    Ms. Johnson. What are you reforming then?
    Mr. Laney. Reforming, absolutely. I speak to folks about 
the very concepts of reform--Members of the House, Senate, 
members of the administration and private sector members, as 
well as States and other interested stakeholders who have 
operations around the country. So, yes, I speak or, more than 
that, I listen to most of those folks who have their own ideas.
    Ms. Johnson. Who are the stakeholders? Do we have any role 
to play in that?
    Mr. Laney. Absolutely. We pay very close attention to what 
you say, what you think. You are our source of funding.
    Ms. Johnson. Thank you very much.
    Ms. Brown. Ms. Johnson, would you yield a minute of your 
time to me?
    Ms. Johnson. Yes, I yield a minute to Ms. Brown or whatever 
I have left.
    Mr. LaTourette. The gentlelady has a minute-33 remaining.
    Ms. Brown. I just have a follow-up question. We're trying 
to get to the meat of the coconut here.
    I want to know, how many proposals have you received, how 
many have you considered, and please describe the proposals 
that's being considered pertaining to the Northeast Corridor. 
Have you received proposals on how to operate?
    And remember, you are under oath, and at some point we are 
going to get these records. Now would you answer that question?
    Mr. Laney. I don't know the number that I have heard. Some 
have been oral presentations, some have been written, but every 
presentation I have received I have transmitted to Amtrak. 
They're now in the hands of our planning department for 
analysis, assessment and guidance to the board.
    So all I am--really, in some ways, I listen, some are very 
interesting, some are not. But it's a board decision, and we 
need the Amtrak--
    Ms. Brown. I'm not real certain about who is Amtrak 
management right now. Seems like the board is running Amtrak.
    Did Amtrak sign a confidentiality and nondisclosure 
agreement with any of these proposals, and what did the 
agreement commit Amtrak to do?
    Mr. Laney. Yes, we have signed nondisclosure agreements 
with respect to a couple--I don't know how many, whether one, 
two or three, because they don't want proprietary information 
shared with the rest of the world--and the proposals are across 
the board, from operating our trains to operating various--not 
trains generally, but a specific route, to operating various 
amenities of the trains.
    It's a wide variety of concepts, none of which may make 
sense, all of which may make sense. They're in the hands of our 
planning department right now. Let me talk about that for a 
second.
    This is a critical piece of the puzzle in terms of this 
Strategic Reform Initiative plan. It is in their hands, in our 
planning department's hands. And one of the biggest 
disappointments that I had was, following with Mr. Gunn's 
performances, following the development of this, we created a 
planning department, strategic planning department for lack of 
a better word, to do the analysis, to begin to think through 
not only what is in here, but what might come to us over the 
transom for lack of a better description. That department, 
unfortunately, was relegated to not directly reporting to Mr. 
Gunn, who is the key for this, to move forward or not.
    It was basically told to report to the head of our 
transportation department, not to Mr. Gunn, the operating 
department; and--
    Ms. Brown. I would like for Mr. Gunn to respond to this.
    Mr. Gunn. The strategic planning department was created 
after the adoption of this reform initiative by the board and--
    Ms. Brown. Can you speak to those proposals?
    Mr. Gunn. I don't see them. They go directly--I have seen 
some of them, but they don't send them to me; they send them 
around me to the planning department, so I don't know. I know a 
couple of them, because the head of the planning department has 
told me they came in.
    But if there have been others, I don't see them. They go--
the board sends them directly into the organization. But the 
planning department, the reason it's in the operating 
department is, the planning department is going to have the 
strategic control of the business lines that we have--long 
distance trains, corridors and so forth--and they control 
scheduling and equipment assignments. So there's a logic for it 
to be in the operating department, and that's where we put it.
    And it's worked fairly well, or it had worked fairly well. 
I don't see all the proposals.
    Mr. LaTourette. Thank you very much, Mr. Gunn. We're next 
going to move to Mr. Nadler for 5 minutes.
    Mr. Nadler. Thank you. Mr. Laney, I have a letter here 
signed by you, addressed to Mr. Paul Nissenbaum at Amtrak, 
saying:
    "Dear Paul, I'm sending the enclosed unsolicited proposals 
to you so that you can take a look at them and, at least on a 
cursory basis, begin to think through the approach to assess 
such proposals going forward.
    "I would suggest the first step is to invite them to the 
table in order for them to more fully work the analysis team 
through the proposal in more detail than might be apparent from 
the face of a written proposal.
    "these are confidential; in fact, I have signed a 
confidentiality nondisclosure agreement on behalf of Amtrak 
regarding one of them. So it is incumbent on the team that 
analyzes such proposals to keep them tightly under wraps during 
the process, start to finish.
    "also, a critical step in the process is to let the board 
know, when a proposal has arrived, the nature of the proposal 
and the progress and process of evaluating and responding to 
the proposal. Because there is such a built-in bias--I assume 
built-in because there is such a built-in bias against any such 
proposal ever seeing the light of day at Amtrak--it will also 
be an essential ingredient to the process that the final 
decision as to acceptance or rejection of the proposal be 
reserved to the board."
    My first question is, what does that mean, "the final 
decision as to acceptance or rejection be reserved to the 
board"? Who else would do it? Are you saying they should be 
secret from Mr. Gunn, from others in the corporation?
    Mr. Laney. No, I'm not at all.
    Mr. Nadler. What does that sentence mean?
    Mr. Laney. I mean, the board should have the final 
decision.
    Mr. Nadler. That's obvious. But what does it mean since 
it's such a built-in bias, the essential ingredient of the 
process, the final decision be reserved to the board. Is that 
tautology?
    Mr. Laney. No, it's not.
    No one, Congressman, likes change, and I don't think--
nothing dislikes or resists change more than entrenched 
bureaucracy.
    Mr. Nadler. We know lots of people won't like it, but we 
have a small amount of time.
    What do you mean by the final decision as to acceptance or 
rejection must be to the board? That's obvious.
    Do you mean no one else should know about it?
    Mr. Laney. A number of operating decisions are not made by 
the board; they're made by senior management.
    Mr. Nadler. Acceptance of these proposals?
    Mr. Laney. Senior management might well have concluded.
    Mr. Nadler. What were these proposals about? What kinds of 
proposals were these?
    Mr. Laney. I don't remember what went with that letter. Can 
be operating different routes, could be--Lord knows.
    Mr. Nadler. I have a memo, also dated September 19th, from 
Mr. Gunn to you, an e-mail that says, "I understand that you 
have signed a confidentiality and nondisclosure agreement with 
either Conex or Railway Service Corporation on behalf of 
Amtrak. Could we see a copy of same so we know what we are 
committed to?"
    Question mark.
    So, in other words, you were doing this behind the 
president's back?
    Mr. Laney. No, not exactly behind the president's back. I 
think he was very well aware of it, or he wouldn't have sent me 
that letter.
    Mr. Nadler. On the contrary. Obviously he hadn't seen a 
copy of it before you made the commitment or he wouldn't have 
sent that e-mail.
    Mr. Laney. I did it independent of the president.
    Mr. Nadler. Mr. Gunn, can you tell us what was going on 
here?
    Mr. Gunn. If my memory is right, those are two proposals 
that individuals had to operate some of our service in 
conjunction with Amtrak, not just take it over, but to have--
take over parts of our service in Chicago and California. It 
was fairly substantial and--
    Mr. Nadler. You hadn't been told about this?
    Mr. Gunn. I found out when a subordinate told me this 
happened.
    Mr. Nadler. So this analysis that was going on by the board 
is being done behind your back, so to speak?
    Mr. Gunn. We had a pretty tight chain of command, so as 
soon as this went to a subordinate, he told his boss, who told 
me, so I found out about it; but I didn't have any role in 
signing the confidentiality agreement.
    Mr. Nadler. Do you find it unusual in terms of how a 
corporation acts, that that would be the case?
    Mr. Gunn. Yes.
    Mr. Nadler. Why do you think that was going on?
    Mr. Gunn. I don't know.
    Mr. Nadler. In what way was it unusual?
    Mr. Gunn. If you're talking about--if you're going to have 
talk about contracting out Amtrak services and functions, the 
way you would have to do that is--because we are under Federal 
procurements regs is, you do an RFP; and you'd scope out what 
it is you want people to do and do an RFP. And you would 
certainly want it to go through--if you were going to do it, 
you would want to do it through the proper procurement process.
    Mr. Nadler. Normally, the president would know about this 
and it wouldn't be done behind his back?
    Mr. Gunn. Yes.
    Mr. Nadler. If I were to suspect that what was going on 
here was that Mr. Laney, or maybe some other members of the 
board, wanted to do something that they thought that you would 
oppose because you might--you were opposed to this kind of 
privatization; and therefore, they wanted to do it to hide it 
from you, would you have any reason to think that I was wrong 
in that?
    Mr. Gunn. Personally, I think it was more naivety than 
anything else. You're dealing with people who don't know the 
railroad business, and I think they actually thought that they 
could--that someone could walk in and radically change the 
economics. In other words, all the smart people work on the 
outside, the dumb ones all work for Amtrak; and I think there 
is a certain amount of that.
    Mr. Nadler. I can see that. I mean, I know that that 
happens sometimes, smart people walk in from the outside who 
don't know anything about what's going on, and I have seen that 
before. I have seen that, I must say, in some changes of 
administrations where a new guy comes in maybe from a new 
political party, brings a whole new group of people in the 
agency and make all the same mistakes the old guys made 10 
years ago because they don't know the institutional history. 
Because they figure they know and they don't know what already 
happened. So I can see that happening.
    But my question is, even assuming that, would it not be the 
normal course of events that if you were thinking of a major 
institutional change, the president wouldn't find out from some 
subordinate?
    Mr. LaTourette. We're going to ask you to answer that and 
move on.
    Mr. Gunn. That is not the normal way of doing business. I 
was surprised that that happened.
    Mr. LaTourette. I thank you.
    Mr. Menendez for 5 minutes.
    Mr. Menendez. Thank you, Mr. Chairman.
    Mr. Laney, I heard you say to Ms. Brown that you hear what 
we say. I'm concerned for your health because I don't think you 
quite hear what we say, and I want to give you, since you are 
under oath, the opportunity to reconsider some of your answers 
to me.
    Number one is you--when I asked you, did you have 
conversations about getting investors in the infrastructure of 
the Northeast Corridor, you said you didn't remember--you did, 
but you didn't remember any names, you're going to submit those 
to the committee, yet here we are signing confidentiality 
agreements.
    Did any of those agreements involve the purchase of the 
assets of the Northeast Corridor?
    Mr. Laney. No, sir.
    Mr. Menendez. None of them?
    Mr. Laney. Not that I recall anyway.
    Mr. Menendez. I'll ask you to review your recollection when 
you go back and make sure that if there are any, that that 
answer be given to the committee.
    Mr. Laney. Absolutely.
    Mr. Menendez. When I asked you, don't you think you should 
have talked to your stakeholders, like New Jersey Transit that 
pumped in a billion dollars a year, before you moved on the 
proposal of the separation of the physical assets, you said to 
me, we haven't done anything yet. That was your answer. And yet 
I read to you the resolution, and now I have a copy of an e-
mail that you sent to Mr. Gunn, dated September 9th, 2005, 
where you in part say:
    "let me know if you plan to protest my proposal to initiate 
the transfer of the physical assets of the Northeast Corridor 
into a separate, wholly owned Amtrak subsidiary. I don't want 
to be surprised and accept it to be a fait accompli in any 
case."
    Isn't that much more than saying we haven't done anything, 
you were definitely moving towards a separation of the assets?
    Mr. Laney. Would you like an answer?
    Mr. Menendez. Yes.
    Mr. Laney. Read the rest of the resolution. We haven't 
taken the final action, and we're not going to until we fully 
understand all the implications, and the implications may stop 
us from going forward.
    Mr. Menendez. Well, the resolution goes on and says, 
"everything necessary to move in that direction."
    Let me ask you this.
    Mr. Laney. Would you like me the read the remainder?
    Mr. Menendez. I wouldn't have enough time. I'm sure I'm 
capable of reading it myself.
    Let me ask you this, Mr. Laney. In response to one of the 
other colleagues' questions, you said, We believe that keeping 
the integration of management and operation is essential.
    Is it not possible, under the discussions that you have 
had, to sell the assets to a private investor and have it with 
an agreement that would allow for the management and operation 
to continue in the hands of Amtrak?
    Mr. Laney. Yes, that's possible.
    Mr. Menendez. It is possible. Now what guarantee would 
there be that an investment in the infrastructure, however, 
would take place under such an agreement?
    Mr. Laney. I don't know what agreement you're talking 
about.
    Mr. Menendez. The agreements, the conversations that you 
have been having with individuals about investors in the 
infrastructure of the Northeast Corridor.
    Mr. Laney. Congressman, I haven't had conversations; I have 
had proposals proposed to me, and I have listened and I have 
transferred whatever I have got into our planning department.
    Mr. Menendez. I'm sure you have asked questions, and you 
inquired in the process, so the conversation would be a fair 
framing of the response.
    Mr. Rosen. Congressman--
    Mr. Menendez. I didn't ask you a question. I would like my 
own time to be determined by me.
    Let me ask you, Mr. Rosen, however, when you vote on the 
board, you're there as Secretary Mineta's representative? Yes 
or no.
    Mr. Rosen. Yes.
    Mr. Menendez. And when you vote, does the Secretary tell 
you how to vote? Yes or no.
    Mr. Rosen. I can't answer it yes or no because there is not 
a single answer. But we regularly consult, and I tend to vote--
    Mr. Menendez. Do you vote independently of the way the 
Secretary wants you to vote? Yes or no.
    Mr. Rosen. No.
    Mr. Menendez. So you vote as the Secretary wants you to 
vote.
    Finally, Mr. Gunn, I'm going to give you the last word 
here, as I think is fitting and appropriate. You said in 
response to a question that the reason you believe you were 
fired as the president of Amtrak is because you were in the way 
of dismantling Amtrak.
    Could you, with specificity, speak to the committee about 
what you viewed as the board's plan to dismantle Amtrak?
    Mr. Gunn. I did say that we were making it work, and that I 
was--I really believe that I was an obstacle to dismantling 
Amtrak. There hasn't been a lot of dialogue between the board 
and myself after the adoption of the strategic initiative in 
the spring about strategic direction. My sense of what they're 
doing is that they're basically following the administration 
plan. That's what I think they're doing.
    Mr. Menendez. That plan being?
    Mr. Gunn. Breaking it up into separate corporations and 
trying to privatize the various services which won't occur in 
most cases because it's not a profitable business. I can't 
prove that, but all the indications are that that's where 
they're headed, particularly with this Corridor initiative.
    Time will tell. We'll see whether they proceed down that 
road to separate--to take the company and break it into the 
three pieces that are in their legislative proposal and try to 
privatize the long distance services or just take them off.
    Mr. Menendez. I hope they're hearing us, Mr. Chairman, 
because that's not what many of us support.
    Mr. LaTourette. Thank you very much.
    I would tell the members of the panel and then our 
witnesses, who have been very patient to be here, I just have 
one question, you always say one question, I'm going to ask a 
couple of questions about the stock issue and time myself and 
however much time I take, I'll make available to the other 
members in turn. If I take two minutes, I'll give you 2 minutes 
and we'll try and wrap this thing up.
    Mr. Rosen, I want to go back to you on this stock question. 
It's my understanding that the common stock, 38 percent was 
owned by BNSF, 50 percent by American Premier--53 percent, then 
12 percent roughly split between Canadian Pacific and Canadian 
National.
    Is it your view, or the administration's, those entities do 
not own any voting stock in the Amtrak Corporation today?
    Mr. Rosen. They don't have voting rights with regard to 
directors.
    Mr. LaTourette. With regard to directors?
    Mr. Rosen. Correct.
    Mr. LaTourette. So it's your view that they don't have--do 
you think that the D.C. corporation law would apply to them if 
one of them read about this hearing and someone owned more than 
20 percent of the stocks said we should have a meeting? Do you 
think that they have that right?
    Mr. Rosen. I haven't specifically looked at that, but I 
guess I'd say I'm skeptical.
    Mr. LaTourette. And are you skeptical because the stock was 
supposed to have been redeemed? How can you lose your rights if 
stock was supposed to be redeemed and nobody has redeemed the 
stocks? Don't they still have rights as shareholders.
    Mr. Rosen. I think they have a right to have their stock 
redeemed.
    Mr. LaTourette. But this is--and you're obviously a lot 
brighter than I am, but if the Congress has directed that stock 
be redeemed by Amtrak, and Amtrak has never purchased the 
stock, how can you take away somebody's rights when you haven't 
paid them for it?
    Mr. Rosen. Well the key is the phrase "take away their 
rights." it is what rights did they already have? Remember, 
this stock was created way back when, in the 1970s, and its 
rights have varied over time. And so it is a question of what 
rights it has or doesn't have, and whether they were altered by 
statute and whether that was appropriate.
    Mr. LaTourette. And I agree with you. And I heard you say 
about--what you said about 1981. But we believe that in 
conversations with the former Amtrak general counsel when the 
1981 action was repealed, the rights of the common stock 
shareholders was restored. And Amtrak has not purchased the 
stock--section 415 of the 1997 act goes on to say that whatever 
stock is allocated to the Department of Transportation has no 
voting rights. That is pretty clear.
    And I guess this quandary, because I guess I am not as 
competent as you. I believethat the Senate will leave town for 
the year--and nothing disrespectful to the Senate, it is the 
end of the session--and Mr. Hall and Mr. Sosa will not be 
confirmed as members of the Board. And there appears to be no 
vehicle, no way to have Amtrak run--and I know we disagreed 
about this whole quorum issue. But if I am right, and there are 
some difficulties with recess appointments and there are some 
difficulties with continuing Mr. Laney's term and the 
Secretary's term under the 1997 act because of this fork in the 
road that we talk about in 2003, you have to recognize that 
that improper quorum--improper in my mind--you don't agree, I 
got that--but that changed this executive committee from 3 to 
2, because originally there was supposed to be 3. This Board 
that I have suspicions about then changed it to 2.
    Your policy statement in 2002-2003 says that the 
directors--you assign all these duties. Well, you don't have 
any directors to fill the slots and nobody has rescinded that.
    So I am concerned and I would hope that perhaps we could 
have an additional dialogue outside the confines of this 
hearing where--because governance is the title of the hearing; 
governance is something that I am concerned about. And I would 
hope that the administration and you, Mr. Laney, would be 
concerned about the potential of this corporation with all the 
difficulties it is facing moving forward into the new year with 
just the two of you. And I don't consider that to be a good way 
to run a railroad or a corporation. And if there is something 
you want to say before I yield back, I would be happy to do 
that.
    Mr. Rosen. Only thing that I would say, Mr. Chairman, is I 
would be more than happy, as I said in my opening remarks, to 
talk further with you and any members of the committee about 
those issues further, because obviously our time, and 
everyone's time, is somewhat constrained in how much detail we 
can get into. And I have looked at a number of these questions 
before. I have looked at the stockholder one, but I am not as 
current on that. So I would like the opportunity to talk about 
that.
    Mr. LaTourette. Then let's talk about it some other time. 
And I look forward to the discussion.
    Mr. Rosen. The other thing I would say, really just 
thinking of the Ranking Member's comments, is we think the 
Board has the responsibility to oversee and manage the 
corporate affairs. We very much look to reach out to the 
stakeholders, and particularly the Members of Congress, and try 
to stay in touch. And I can tell you that Secretary Mineta has, 
and I have, and others in the department, sought to listen to 
and meet with a wide array of Members of Congress, and I think 
will continue to try to do that.
    Mr. LaTourette. I thank you very much. And I used 4 minutes 
and 50 seconds, and, Mrs. Brown, I yield to you.
    Ms. Brown. I won't use all that time. I just want to say 
one thing. I have been on this Transportation Board since I 
have been here. And Mr. Mineta has been Secretary, and he was 
for 4 years, 5 years, 6 years--not once, well, he certainly 
have not been to this committee to address us about Amtrak. I 
would stand to be corrected. But I am truly disappointed that 
he has not. He issues statements around the country about 
Amtrak. But he himself have never come and addressed this 
board, this Congress. And he hasn't been to a Board meeting. 
You have been there. And you are saying that you talked with 
him. And I am sure you all discussed how you want Amtrak to 
move forward. Is that correct?
    Mr. Rosen. Yes.
    Ms. Brown. And so we are going with his direction, I guess, 
from the Bush administration.
    Mr. Rosen. Well, he is the Secretary of Transportation, and 
I work for him.
    Ms. Brown. Under the Bush administration.
    Mr. Rosen. Yes, of course.
    Ms. Brown. I have a list of questions that I want to submit 
to the record. Keep it in mind you're under oath, and I want to 
submit my questions based on that. And I would like, as I told 
you before, Mr. Laney, I would like a response to my questions 
in a timely fashion.
    And, in closing, once again, I think that the Board is--you 
know, it is just like, I guess, that Mr. Brown with FEMA, 
missing in action. And I am just--I can't express the 
disappointment that I have after talking with you privately, 
and we discussed being bushwhacked about the proposal by, you 
know, the corridor; and then turn around and the firing of Mr. 
Gunn without any discussion with the members of the Congress on 
either side of the aisle. You know, this administration--and 
the American people are weighing in; he gets an F and this 
board get a zero.
    In closing my time, I just want you to know, Mr. Gunn, I 
have the greatest amount of respect for you. And no way does 
this Board action do anything to demean the work that you have 
done for this country and for Amtrak and their employees, and 
you get positive stars and checks. And, you know, I love you 
and thank you so much for everything you have done. And you 
will never see me saying anything like that about a 
Bushappointee, you can rest assured of that.
    And I yield back the balance of my time.
    Mr. LaTourette. We are going to go around in order, because 
after 4 minute and 50 seconds, Mr. Nadler.
    Mr. Nadler. I will yield to the gentlelady from Indiana.
    Ms. Carson. I don't want to be redundant about this, but I 
am still--you have a seven-member board. You have a seven-
member board, you had two people that fired Mr. Gunn; is that 
true?
    Mr. Rosen. No, four.
    Mr. Carson. How can you have four members and only two of 
them beenconfirmed?
    Mr. Rosen. Two were recess appointed, and one was confirmed 
in the position of the Secretary of Transportation. And one was 
confirmed by the Senate as Board member and chairman.
    Ms. Carson. Can you tell me what about the other three? 
When do we expect to see them three in place?
    Mr. Rosen. I don't know if I can say prospectively. I can 
say in the past that there have been some nominations sent up 
to the Senate and we will hope that at least the ones that are 
pending there now will get dealt with.
    Ms. Carson. They have been sent up there, though?
    Mr. Rosen. There are two that are pending, which are the 
two that were recess appointed.
    Ms. Carson. What about the other three?
    Mr. Rosen. Those are currently vacant.
    Ms. Carson. Are they going to be sent up to somebody, him 
or some--the other three? Four plus three equals 7?
    Mr. Rosen. Correct.
    Ms. Carson. So are three going to be sent up? Are they in 
the works?
    Mr. Rosen. Well, I don't know that I can really address 
what is going to happen next. I can tell you where we are.
    Ms. Carson. Who submits the names for confirmation?
    Mr. Rosen. The President.
    Ms. Carson. Is he in the country? We need to call him.
    Mr. Rosen. I think he is actually traveling.
    Ms. Carson. He has been traveling during these vacancies. 
Do you recommend anybody; say, here is the person that has the 
expertise, they know all about the rails and trains and stuff 
like that, happen to be a Democrat?
    Do you send up names like that?
    Mr. Rosen. I think, as Congressman Mica alluded to 
previously, the administration had sent up Mr. Thompson, who 
was a Democrat I believe, Mr. Crandall--
    Ms. Carson. He was with American Airlines, right? He was 
the CEO.
    Mr. Rosen. That is correct.
    Ms. Carson. Mr. Crandall.
    Mr. Rosen. Formerly; that's correct.
    Ms. Carson. So airlines and rail go together. Go ahead; who 
else?
    Mr. Rosen. Mr. Sosa and Mr. Hall, both of whom are retired 
CEOs, are the nominees who are currently pending.
    Ms. Carson. I am sure Mr. Gunn doesn't want his job back 
after all this rigmarole. But I was trying to understand the 
procedure for the next person. I am just speaking--I haven't 
even spoken to Mr. Gunn.
    They have a saying in my neighborhood: It ain't no fun when 
the Reverend got a gun. So I am sure Mr. Gunn will be glad to 
get up out of here with all this nonsense.
    I yield back Mr. Chairman.
    Mr. LaTourette. I thank you.
    Ms. Norton, we will go to you next; then Mr. Nadler, Mr. 
Menendez, and then we will be done.
    Ms. Norton. I just want to establish for the record, Mr. 
Rosen, you are the source of legal advice concerning the 
executive committee and quorums and legal technical questions 
we have been discussing here?
    Mr. Rosen. No.
    Ms. Norton. Who is?
    Mr. Rosen. I believe Amtrak's general counsel, Ms. 
Serfetti.
    Ms. Norton. So you don't give any of that advice and that 
person isn't here? The person that gave you the advice that 
resulted in the controversial way in which the Board has been 
operating was not you, who was the general counsel of 
Department of Transportation?
    Mr. Rosen. Right. Amtrak has its own legal department.
    Ms. Norton. You didn't pass off on that at all?
    Mr. Rosen. Let me clarify. The chairman of this committee 
did ask the Department of Transportation for an opinion, in 
addition to an opinion from Amtrak. And we both provided that. 
Including me.
    Ms. Norton. And so you were, in fact, a source of the legal 
advice with respect to the way the Board is operating executive 
subcommittees, quorum and all?
    Mr. Rosen. No. I am sorry. I don't mean to be difficult, 
but the actual advice occurred in the past, when I was not the 
Secretary's designee to the Board, and Ms. Serfetti was and is 
Amtrak's general counsel.
    Ms. Norton. You understand that the Chairman's questions, 
as technical as they sound, raise very serious matters for the 
corporation. That is to say, do you agree that the way in which 
the Board is organized today--sorry, operates today, with 
questions being raised by quorum, executive committee, could, 
in fact, put in legal jeopardy some of the actions of the 
Board? Do you understand that that question is now on the 
table?
    Mr. Rosen. Well, at one level, I mean, questions can always 
be put on the table; but I think that there are actually 
correct answers to them, and I think there are other legal 
doctrines that were not yet alluded to, such as doctrines of 
necessity or the fact that management cannot--
    Ms. Norton. I want to stick with the doctrine of necessity, 
because Mr. Laney talked about dealing with the hand he was 
dealt. And we should be looking at whether or not the hand you 
were dealt, the way in which interim Board members, if you 
will--whether or not we need to take some action with respect 
to that.
    Did you or Mr. Rosen, anybody on the board, seek the advice 
of the Senate, or of this committee, concerning this dilemma, 
this rather unusual corporate dilemma, or did you simply 
operate within the legal confines of the Department in deciding 
that it was okay to operate in this way, quorum--quorums and 
executive committees notwithstanding, that were unprecedented?
    Mr. Rosen. Well, on pure questions of law, I am the 
Department's chief legal officer, and it is my job actually to 
do this.
    Ms. Norton. But given the fact that you were dealt a hand 
that Mr. Laney himself testified was difficult because you had 
these interim appointments, you had to proceed--
    Mr. Rosen. Well, I have to evaluate one of the--
    Ms. Norton. I am asking whether or not you brought this 
matter to the attention--particularly to the Senate, but even 
to the House? 
    Mr. Rosen. Well, I had to evaluate whether the situation--
    Ms. Norton. My goodness, did you bring the matter to the 
attention of the Senate or of this committee or any 
subcommittee of the committee? I am simply asking an answer; 
did you bring the matter, the hand you were dealt, which you 
say forced you into this rather jury-built way of operating, 
did you bring the matter to the attention of any Member of the 
Senate or the House? And I haven't been among those asking for 
"yes" or "no" answers, but I will be darned if you can't answer 
whether or not you, or any officer in your knowledge, brought 
it to the attention of the Senate or the House. Then I don't 
know whether there could ever be a "yes" or "no" answer. So can 
you say whether you have or not, so I can go on to my next 
question?
    Mr. Rosen. Forgive me, but the hand we have been dealt--
    Ms. Norton. I'm just quoting Mr. Laney.
    Mr. Rosen. The issue of vacancies, that certainly has been 
discussed with the Senate. If the issue is some of--
    Ms. Norton. Your ability to operate with an executive 
committee, that may be operation--may raise legal questions, 
because there is a question about your quorum. I am asking if 
these legal matters were brought to the attention--not whether 
or not, you know, we have vacancies; Mr. Senator, please fill 
them--whether these legal matters were brought to the attention 
of a Senator.
    I wish you would answer that question. If you continue to 
evade it, then, you know, I can only draw my own conclusions.
    Mr. Rosen. They have been discussed, as indicated from the 
Chairman having asked for opinions, which he has received.
    Ms. Norton. Let me move on. Mr. Laney, just for the record, 
you wrote the Congress indicating, did you not, that you 
supported the President's proposal for zero funding?
    Mr. Laney. No. I don't think I did.
    Ms. Norton. The record will show that you wrote the 
Congress in support of President Bush's proposal to eliminate 
the funding for Amtrak.
    Mr. Laney. I don't think the record will show that. I have 
never written anything like that to you, that I recall.
    Ms. Norton. So you did not write a letter supporting the 
President's proposed operating budget which called for zero 
funding?
    Mr. Laney. You can prove me wrong by showing me that 
letter.
    Ms. Norton. I am going to prove you wrong and move on. And 
I am going to then release the letter that proves you wrong, 
because you have been under oath now. You say no.
    Mr. Laney. I say I don't recall the letter.
    Ms. Norton. So in other words, to do so, I think you would 
agree, would be a violation of your fiduciary responsibility.
    Mr. Laney. To do what?
    Ms. Norton. To write a letter supporting zero funding from 
the Congress of the Amtrak.
    Mr. Laney. I have never supported zero funding.
    Ms. Norton. So to do so would be a violation of your 
fiduciary responsibility; would it or would it not?
    Mr. Laney. Well, again, a lengthier answer than that, I 
think you could argue that you could support it in the context 
of a reform--
    Ms. Norton. You could if you are doing that, of course; a 
private corporation may seek to reorganize. But that is not 
what the President said he was doing. He said zero.
    I am asking you the question simply about zero budgeting. 
And I believe you wrote that, and I believe you said it was the 
right message, and I am going to therefore put that in the 
record and release that so I don't want to make it look like I 
am paying playing "gotcha." I am speaking for the record. I am 
going to show you the letter. I don't have it before me now. I 
have quotes from the letter.
    The Bush administration has supported stripping altogether 
the Northeast Corridor and turning it over to some kind of 
Federal-State consortium; you are aware of that?
    Mr. Laney. I am aware.
    Ms. Norton. That was the initial proposal.
    Mr. Laney. That was the administration's proposal.
    Ms. Norton. Is there any evidence of any State interest in 
such a consortium?
    Mr. Laney. Not to my knowledge, but I don't interact--this 
is not the proposal--
    Ms. Norton. It is for that reason, is it not, that you 
moved to the backup proposal of a virtual split by doing a--or 
proposing, as you now have, a subsidiary instead of the split 
which has no congressional--which has no congressional support, 
which has no support in the States, for some kind of consortium 
to then take the matter up?
    Mr. LaTourette. Mr. Laney, we're going to ask you to answer 
this question and then we will move on to Mr. Menendez for the 
last 4 minutes and 50 seconds of the hearing.
    Mr. Laney. Absolutely not.
    Ms. Norton. Your answeer is not to what? I am sorry.
    Mr. Laney. That is not a backup proposal. Absolutely not.
    Ms. Norton. Thank you, Mr. Chairman.
    Mr. LaTourette. I thank the gentlelady.
    Mr. Menendez, you have 4 minutes, 50 seconds.
    Ms. Norton. I ask just for the record--the letter which I 
referred to for Mr. Laney is February 17, 2005. I will get that 
for the record, and I will release that letter.
    Mr. LaTourette. Without objection.
    Mr. Menendez. I will not take the total time. First, I want 
to thank you and the Ranking Member for the manner in which you 
have conducted this hearing. I believe that it is fair in the 
process, and I appreciate the Chair's pursuing this process and 
being fair and equitable in the way in which it has conducted 
the hearing. And I just want to make a closing remark.
    I, as someone who has 100,000 New Jerseyans every day on 
Amtrak's lines, and thousands more who use it for intercity 
travel into other parts of the Northeast Corridor, I believe 
that the refusal to send appointments to the Senate for advise 
and consent, depending upon recess appointments of individuals 
who have no railroad experience whatsoever but who have a great 
loyalty to the administration, an administration that sets zero 
funding to the Congress and that has overtures by investors who 
care a lot about going ahead and getting great tax benefits by 
depreciation losses but very little interest in running a 
railroad, point towards a dismal future for Amtrak, unless this 
committee and the Congress exert their appropriate role to 
ensure intercity passenger service--important in the Nation's 
commerce, thousands of people use Amtrak to go sell their 
services and goods; important for individuals who seek health 
care in major institutions--for example, along the Northeast 
Corridor; important for those who travel; and important, I 
would say, after September 11, of having multiplicity of modes 
of transportation in the event of an attack upon the country.
    That is what is at stake here. And, Mr. Chairman, I 
appreciate you pursuing those questions at this hearing.
    Mr. LaTourette. I thank the gentleman. I want to thank all 
four of you. It has been a lengthy hearing.
    Ms. Norton. Could I do a point of correction, because I 
want to apologize to Mr. Laney?
    Mr. LaTourette. Sure.
    Ms. Norton. Because I have this quote. This was a letter 
from the Board to Speaker Hastert. And, again, I want to make 
sure that that letter is put into--that this letter or this 
Board message of February 17, 2005 is put into the record. It 
is not ascribed to you, but it is ascribed to the Board, and I 
apologize. If you didn't do it, then I will make sure that when 
I release it, whoever did it from the Board, or the entire 
Board, is noted.
    Thank you Mr. Chairman.
    Mr. Laney. Let me say, the Board correspondence comes 
through me. I still don't recall what you are referring to, so 
please share a copy with me when you get it.
    Mr. LaTourette. I was going to thank you all for coming, 
but now I have to throw my 2 cents in. My recollection of the 
letter, if I have the right letter, is that the President's 
budget submission sends the right message relative to reform 
and didn't advocate zero funding. But we will let the letter 
speak for itself.
    I want to thank you all for coming.
    Mr. Gunn, regardless of the opinion different Members may 
have about the activities of last week, I think all of us thank 
you for your service to this country.
    Mr. Hughes, I know you are upset we didn't ask you any 
questions and you had to sit there. We very much appreciate 
your coming before us. It has been a lengthy hearing. I want to 
thank all the members who participated.
    And there being no further business to come before this 
subcommittee, we are adjourned.
    [Whereupon, at 2:30 p.m., the subcommittee was adjourned.]

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