[Senate Hearing 110-1064]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 110-1064

                 S. 294, THE PASSENGER RAIL INVESTMENT 
                      AND IMPROVEMENT ACT OF 2007

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

                                HEARING

                               before the

      SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE 
                            INFRASTRUCTURE,
                          SAFETY, AND SECURITY

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 27, 2007

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation






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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington           JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey      JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas                 JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware           DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
              Margaret Spring, Democratic General Counsel
             Lisa J. Sutherland, Republican Staff Director
          Christine D. Kurth, Republican Deputy Staff Director
             Kenneth R. Nahigian, Republican Chief Counsel
                                 ------                                

      SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE 
                  INFRASTRUCTURE, SAFETY, AND SECURITY

FRANK R. LAUTENBERG, New Jersey,     GORDON H. SMITH, Oregon, Ranking
    Chairman                         JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         TRENT LOTT, Mississippi
    Virginia                         KAY BAILEY HUTCHISON, Texas
JOHN F. KERRY, Massachusetts         OLYMPIA J. SNOWE, Maine
BYRON L. DORGAN, North Dakota        JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           DAVID VITTER, Louisiana
MARK PRYOR, Arkansas                 JOHN THUNE, South Dakota
THOMAS R. CARPER, Delaware
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota














                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 27, 2007................................     1
Statement of Senator Carper......................................     5
Statement of Senator Klobuchar...................................    11
Statement of Senator Lautenberg..................................     1
Statement of Senator Smith.......................................     9
    Prepared statement...........................................     3
Statement of Senator Stevens.....................................     2
    Prepared statement...........................................     3

                               Witnesses

Boardman, Hon. Joseph H., Administrator, Federal Railroad 
  Administration.................................................    12
    Prepared statement...........................................    14
Busalacchi, Hon. Frank J., Secretary, Wisconsin Department of 
  Transportation; Chair, States for Passenger Rail Coalition.....    26
    Prepared statement...........................................    28
Casey, Jr., Hon. Robert P., U.S. Senator from Pennsylvania.......     4
Kummant, Alex, President/Chief Executive Officer, Amtrak.........    22
    Prepared statement...........................................    24
Rendell, Hon. Edward G., Governor, Commonwealth of Pennsylvania..     5
    Prepared statement...........................................     7
Taylor, Kelly, Administrator, Oregon Department of Transportation 
  Rail Division..................................................    18
    Prepared statement...........................................    19

                                Appendix

Response to written questions submitted by Hon. Frank R. 
  Lautenberg to:
    Hon. Joseph H. Boardman......................................    41
    Hon. Frank J. Busalacchi.....................................    42
    Alex Kummant.................................................    43

 
   S. 294, THE PASSENGER RAIL INVESTMENT AND IMPROVEMENT ACT OF 2007

                              ----------                              


                       TUESDAY, FEBRUARY 27, 2007

                               U.S. Senate,
         Subcommittee on Surface Transportation and
            Merchant Marine Infrastructure, Safety, and Security,  
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:05 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Frank R. 
Lautenberg, Chairman of the Subcommittee, presiding.

        OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Welcome, please take your seats. I 
would like to make a brief statement.
    First, I'm pleased that the long-time Chairman of this 
Committee, and many others, are with us, Senator Stevens. 
Senator Lott, unfortunately, was unable to break an appointment 
that he had in Mississippi, but he fully supports our request 
for urgent attention to this critical situation.
    Governor Rendell is here, and he's part of the National 
Governors Conference that's taking place. I will make my 
remarks and then, Senator Stevens, yours, and then if we can 
hear Governor Rendell and see if we have a question or two, and 
I ask the patience of the others of you who are at the witness 
table.
    I want to welcome everyone to today's hearing as we begin 
to fundamentally change the way that America travels. I want to 
thank all of our witnesses, some of whom come from States that 
are already embracing this change. And we welcome the input and 
the ideas that each one of you brings.
    Today's hearing is about Senator Lott's and my vision for 
our Nation's transportation system, a system with more options 
and convenience for travelers, and less damage to our 
environment, less dependence on foreign oil. Along with air and 
vehicle travel, passenger rail should be one of the three legs 
on which our transportation network rests, and Amtrak should be 
among the greatest passenger rail systems in the world. The 
Passenger Rail Investment and Improvement Act of 2007 can help 
turn that vision into a reality.
    And, as any traveler will tell you, we need to implement 
that vision, because strengthening this intercity travel option 
is way overdue. Our highways are jammed, the average New 
Jerseyan spends 300 hours commuting by car every year, and 15 
percent of that time is wasted sitting in traffic. We know that 
our skies are becoming more crowded as more planes take to the 
air. Last year was the worst year for flight delays since 2000. 
One in four airplanes was late, and we expect nearly 5,000 new 
very light jets to add to this traffic over the next 10 years. 
We've come to the realization that the skies are not infinite 
in their capacity to take more airplanes. Between lines of cars 
and the maddening, indeterminate lines at airports, time is 
wasted, American travelers need and deserve another choice, and 
a reliable first-class passenger rail system is it.
    Disasters like September 11th, Hurricanes Katrina or Rita, 
also showed that America needs passenger rail. When air travel 
was canceled on 9/11, people rode the rails. And when the roads 
became lakes during Katrina, and Rita--people could have turned 
to trains to evacuate some of our most vulnerable people, and 
to move supplies, but it didn't take place. The recognition 
that those facilities were available did not strike those in 
charge.
    Amtrak's record ridership, nearly 25 million passengers 
last year, proved that Americans want rail. Our bill will lay 
the tracks for a strong passenger rail network, one that will 
bring more balance and efficiency to our national 
transportation system.
    Our bill will invest $19 billion in America's passenger 
rail system over the next 6 years. That's combined with a bond 
proposal that Senator Lott and I hope the Finance Committee 
will act upon as quickly as they can. It will fully fund 
Amtrak, allow it to upgrade its equipment, improve its 
security, and return the Northeast Corridor to a state of good 
repair. And it will create a new intercity rail grant program 
to build passenger lines between more of our country's towns 
and cities.
    Just this year, the government will spend more than $39 
billion on roads, more than $15 billion on airports, and yet, 
slightly over $1 billion on rail. And it's time for America to 
get onboard with the passenger rail system.
    And the timing, unfortunately, couldn't be better, nor more 
obvious, than these last few days of travel in our country. 
Throughout the country, the weather just took care of 
opportunities to get places and to carry on needed functions 
for people. And I personally took the train down from New 
Jersey yesterday, and, I'll tell you, after checking with the 
airports and finding out there were delays all over, canceled 
flights, et cetera, I don't know how we can continue to ignore 
this crucial need. So, we're going to work hard to make it 
happen.
    And, Senator Stevens, if you have any comments, please.

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. Well, Mr. Chairman, I commend you and 
Senator Lott for putting the time and effort into this bill. 
It's quite similar to the bill that was reported out of the 
Senate last year. It has some improvements. And I do think it's 
a bill that should become law. I hope that we can listen to 
these witnesses. I expect some of my colleagues to join us 
soon.
    And I ask that Senator Smith's statement appear in the 
record before mine.
    Senator Lautenberg. So ordered.
    [The prepared statements of Senators Smith and Stevens 
follow:]

  Prepared Statement of Hon. Gordon H. Smith, U.S. Senator from Oregon
    Thank you Mr. Chairman. I want to thank our witnesses for being 
here. I anticipate that this hearing will be informative, and I 
appreciate the participation of the panel.
    In particular, I would like to welcome Kelly Taylor who is the 
Administrator of the Oregon Department of Transportation's Rail 
Division. Ms. Taylor has worked for ODOT since 1978, serving Oregon in 
many capacities. I appreciate her making the trek to be here with us 
today.
    Amtrak has long been a source of debate as policymakers have 
struggled between the need for intercity passenger rail service and the 
financial viability of operating and maintaining that service.
    In recent years, Amtrak has experienced record ridership, carrying 
more than 24 million passengers each year.
    At the same time, the financial and operational state of Amtrak 
continues to be abysmal, running deficits in the neighborhood of $1 
billion per year.
    Mr. Chairman, I think we all agree that changes must be made.
    I applaud the inclusion of a number of reform measures in the 
reauthorization bill that will improve Amtrak's efficiency and 
performance.
    I have long advocated for the establishment of an equitable system 
for states to pay their fair share toward the operating costs related 
to Amtrak corridor routes.
    In the Northwest, Amtrak operates one such route, the Amtrak 
Cascades, which provides daily service between Eugene, Oregon and 
Vancouver, British Columbia. This service is supported through 
operating funds provided by the States of Oregon and Washington.
    With more than 600,000 riders last year, the Amtrak Cascades is the 
seventh most heavily traveled corridor in the country and represents a 
model for partnership among states, Amtrak, freight railroads and local 
communities.
    Currently, Oregon is one of 14 states that provide operating funds 
to support and maintain Amtrak's service. I am pleased to see that this 
bill moves in a direction that will ensure a more equitable allocation 
of costs among states, with each state chipping in its fair share.
    I believe that the state-Amtrak partnerships outlined in this 
bill--with respect to both the cost allocation and capital match--will 
be key to ensuring the long-term viability and growth in ridership of 
intercity passenger rail.
    The bill that Senators Lautenberg and Lott have put forth is a step 
in the right direction, and I am proud to cosponsor this reform 
legislation.
    Thank you Mr. Chairman.
                                 ______
                                 
    Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska
    I commend Senators Lautenberg and Lott for all of the time and 
effort they have put into crafting S. 294, the Passenger Rail 
Investment and Improvement Act of 2007. This bill provides true, 
substantive reform of our national passenger rail system.
    Last Congress, the Senate included an amendment in the budget bill 
that contained language similar to S. 294. However, it failed to 
survive in conference.
    I am hopeful that this bill will be signed into law this year. And, 
I look forward to hearing from our witnesses their thoughts on the 
bill.

    Senator Lautenberg. Governor Rendell, we welcome you----
    Senator Stevens. Turn on your light for your thing.
    Senator Lautenberg. Light's on. As a matter of fact, a 
quick aside, last night there were no lights on in my--the 
building I live, nor for blocks around, and I had to stay at a 
hotel near the Capitol here. It was hard finding my socks in 
the dark.
    So, Governor Rendell, the Governor of the State of 
Pennsylvania, and where we share lots of problems in common, be 
they rail problems, transportation problems generally, 
including highways, including commuters, and you name it. And 
so--and we're pleased also to have a colleague of Governor 
Rendell's here, a new member of the Senate, a very welcome 
member of the Senate, someone we look to for help and guidance 
in the projects that we take on that affect the country and, of 
course, our neighboring States.
    So, Senator Casey, if you would say--like to make a few 
remarks about Governor Rendell.

            STATEMENT OF HON. ROBERT P. CASEY, JR., 
                 U.S. SENATOR FROM PENNSYLVANIA

    Senator Casey. Mr. Chairman, I want to thank you for this 
opportunity--and Senator Stevens.
    I have a great honor today to introduce a friend of mine 
and a great leader for our State, known across the country as 
the great leader of the city of Philadelphia; before that, as 
the district attorney of Philadelphia; and now, for almost 5 
years, as Governor.
    And I have the honor to introduce Governor Rendell. And I 
won't make a long introduction, but I do want to thank him for 
the work that he's done as the Governor of the State and in his 
work as the mayor of Philadelphia to support not just 
transportation generally, but, in particular, to be a strong 
advocate for rail, transportation, and especially Amtrak.
    The Passenger Rail Investment and Improvement Act of 2007, 
as we all know, will authorize almost $20 billion in Federal 
funds for Amtrak by authorizing 3.2 billion per year over 6 
years. And I know you, Mr. Chairman, and so many others, are 
concerned about getting this legislation passed. I'm a 
cosponsor of this legislation. Just to give you some sense of 
what Pennsylvania has as--in terms of a stake in this, we have 
120 daily trains--Amtrak operates 120 daily trains in 
Pennsylvania. Our hub of Philadelphia is the third busiest 
Amtrak station in the Nation. Pennsylvania had a total of 4.9 
million riders in Fiscal Year 1906. We have over--almost 3,000 
Pennsylvanians employed by Amtrak. For so many reasons, funding 
for Amtrak is central to economic development efforts, central 
to the daily life of so many Pennsylvanians. And, as a United 
States Senator from Pennsylvania, I'm very concerned about the 
funding for Amtrak. That's why I'm a cosponsor. And I 
appreciate the work that this committee has done to highlight 
that.
    And no better person could speak for Pennsylvania, in terms 
of future, in terms of our economic development potential, and 
in terms of the importance and the primacy of Amtrak to the 
development of southeastern Pennsylvania and, indeed, our whole 
State, other than Governor Rendell.
    We're honored to be here with him today. He was just 
resoundingly reelected as the Governor of our State, and it's 
my honor to introduce to you the Governor of Pennsylvania, 
Edward G. Rendell.
    Senator Lautenberg. If I may take a minute, we've had 
another person from the neighborhood come in.
    [Laughter.]
    Senator Lautenberg. And Senator Carper, if you would like 
to make a statement.
    Senator Carper. Just a real quick----

              STATEMENT OF HON. THOMAS R. CARPER, 
                   U.S. SENATOR FROM DELAWARE

    Senator Carper. I think there's a certain irony here. 
Senator Casey, did you ever run for Governor?
    Senator Casey. I don't remember.
    [Laughter.]
    Senator Carper. It's interesting how things work out in 
politics, because 4 years or so ago, I think you both contended 
for the same spot. I think we're just very lucky that you both 
ended up where you are, and it's a real joy to serve with 
Senator Casey. He sits right beside me on my right hand on the 
Senate floor.
    Governor Rendell, it's a delight to have you here. You've 
been a terrific champion of passenger rail for as long as I can 
remember. And we appreciate that and are very much looking 
forward to what you have to say.
    To our other witnesses today, including the new president 
for Amtrak, we're delighted that you're all here. Welcome. 
Thank you.
    This is an important hearing, and we're excited to get 
started on this reauthorization once again.
    Senator Lautenberg. Thanks.
    Governor, if you could limit your testimony to 5 minutes.
    Senator Carper. Mr. Chairman, could I just say one more 
quick thing, please?
    Judge Rendell, Midge Rendell, was in Wilmington, Delaware, 
yesterday for the swearing in of a new judge on the Third 
Circuit Court of Appeals. And they were delighted so this is an 
important and exciting week for your family, I suppose.
    Governor Rendell. That's right.
    Senator Carper. It's great to see you both.
    Governor Rendell. Well----
    Senator Lautenberg. Welcome, and----
    Governor Rendell.--good morning----
    Senator Lautenberg. Please.

STATEMENT OF HON. EDWARD G. RENDELL, GOVERNOR, COMMONWEALTH OF 
                          PENNSYLVANIA

    Governor Rendell. Good morning, Mr. Chairman.
    And I'd like to thank Senator Casey for being here, and for 
his kind introduction, and, most of all, for his strong support 
of this very important piece of legislation.
    And I'd like to thank Senator Lott, who I know couldn't be 
here, with Senator Smith, Senator Stevens, Senator Carper, and 
our own Senator Specter, for your steadfast support of Amtrak.
    In my career as mayor and Governor, this is the fifth time 
I've testified before a Senate committee on behalf of Amtrak. 
And not much has changed, although Senate bill 294 will bring 
about definitive improvements and significant change.
    I have just two points that I want to make. If we improve 
it, people will come. There is absolutely no doubt in my mind. 
If there has ever been a context, if there has ever been a time 
to invest in mass transit--and understand that intercity 
passenger rail is mass transit--if there has ever been a time 
to invest in mass transit, with rising gasoline prices, with 
the congestions on the highways that you mentioned in your 
opening remarks, Senator Lautenberg, this is the time. It can 
work, and it does work. The states are willing to be partners 
with the Federal Government and Amtrak.
    And I want to draw the panel's attention to something that 
happened, actually, before I became Governor. Governor Tom 
Ridge, my predecessor, a leading Republican, lest we all 
forget, Governor Ridge entered into an agreement with Amtrak 
about something called the ``Keystone Corridor.'' It's a train 
that stops--makes five stops between Philadelphia and 
Harrisburg, our capital city. Both Amtrak and the State of 
Pennsylvania agreed to put $74 million each into capital funds 
to improve every facet of the line. The improvements were 
underway. I became Governor and continued those improvements, 
even though our capital budget was stretched very thin. And the 
results were startling. In 2004, the ridership on the Keystone 
Corridor was 898,000 people. During that year, the improvements 
set in--actually, they set in by the beginning of 2004--2005, 
excuse me--in 2005, ridership jumped to 1,009,000 riders, a 
12\1/2\ percent increase. We continued to put additional money 
in, both Amtrak and the State of Pennsylvania, and we managed 
to take the Keystone Corridor trip from 2 hours, 120 minutes, 
to 90 minutes. That has only been in operation, the 90-minute 
time span, for about 4\1/2\ months. During those 4\1/2\ months, 
ridership has increased another 12 percent. Another 12 percent. 
And, best of all, we're all paying for it. The state's paying 
for it, Amtrak, and, thereby, the Federal Government, is paying 
for it, and the riders are paying for it, because, with the 
improvements, we raised the prices. And notwithstanding an 
increase in price, we had a 12\1/2\ percent jump in ridership, 
over 100,000 new riders in one year, and, in less than 6 
months, we've had another 12\1/2\ percent increase. I ride--
when I was Mayor, and now as Governor--I ride the Northeast 
Corridor a lot.
    Think, for a minute--and I'm told that this is eminently 
possible--think, for a minute, if you could get from Washington 
to New York in an hour and 40 minutes, or an hour and 30 
minutes, and New York to Boston in an hour and 30 minutes, do 
you know what would happen? We would end shuttle plane service. 
There would be no need. If you could get to Boston to 
Washington in 3 hours without going through airport security 
lines, without the travel time out to airports, you would end 
that shuttle. Ending that shuttle would improve airport 
congestion in Boston, in LaGuardia, in BWI, in Newark, and in 
Philadelphia Airport. It would have a significant impact in 
ending congestion. The way to end airport congestion is, 500 
miles and under, to have a first-class high-speed passenger 
rail system.
    The only other point I want to make is that this bill is 
approaching it correctly. You are making these improvements 
through capital fundings and through bonding. Look, would any 
of us here buy a house, paying cash? Of course not. And yet, 
the Federal Government, dealing with the Nation's 
infrastructure problems, has been trying to deal with those 
problems out of the operating budget. No business does that. No 
governmental subdivision in the United States of America does 
that. It doesn't work. You can't pay for major capital 
infrastructure repairs out of the operating budget. No one does 
it. It doesn't work.
    The other six G-7 nations have all, in the last 5 years, 
either gone through or started major trillion-dollar 
infrastructure repair programs. We are never going to eat into 
the backlog on our highways, bridges, and roads, on our rail 
systems or airports or our ports, on infrastructure, water and 
sewer--combined sewer overflows, clean water systems--we are 
never going to do that until the Federal Government follows the 
lead here, in Senate bill 294, and adopts a Federal capital 
budget. Until that day happens, we will never, ever have a 
first-class infrastructure again, whether that's Amtrak, our 
roads, our water, and sewer.
    I testified--President Clinton convened a commission on the 
capital budget. It was chaired by, then--Goldman Sachs CEO John 
Corzine, and Kathleen Brown, who was then the treasurer of the 
State of California. I testified strongly in favor of it. There 
were some OMB types who were against it. They would not have 
financed Columbus's boats over to America. We'd all be on the 
other side of the ocean. And the commission actually issued a 
report that said nothing. They didn't endorse anything. They 
just handed on to the President the different--the varying 
opinions.
    But this bill will work, because you are not doing it 
alone, from operating, you are doing bonds, you are doing a 
semi-capital budget here. It's never going to change--Amtrak or 
anything else--until we have a legitimate Federal capital 
budget to fix the infrastructure of this country. How can the 
greatest, richest, most powerful country in the world have a 
crumbling infrastructure, have an infrastructure that doesn't 
support air travel, that doesn't cruise first-class ports, that 
has no passenger rail system, that has a challenged freight 
rail system--in Pennsylvania, despite the fact that I have 
spent over a billion dollars more on roads and bridges, we 
still have one-third--over one-third of our budget--of our 
bridges structurally obsolete or deficient--structurally 
deficient. No matter how much we spend, we cannot catch up. I 
know it's the same in Delaware, in Oregon, in Alaska. There are 
capital needs--of all sorts, not just transportation--facing 
this country, and they won't be changed until we have a Federal 
capital budget.
    But, with that, let me strongly endorse Senate bill 294. It 
is the best piece of legislation for Amtrak that I have seen in 
my 30-year public career.
    [The prepared statement of Governor Rendell follows:]

        Prepared Statement of Hon. Edward G. Rendell, Governor, 
                      Commonwealth of Pennsylvania
    Good morning. First I would like to thank you Senator Lautenberg 
for your longstanding commitment to transportation policy and 
transportation funding. We need more voices like yours in Washington. 
And I applaud the leadership provided by many others on this issue as 
well; in particular the dedication Senator Lott has shown to Amtrak 
over the years. And many others have contributed as well--Senator 
Smith, Senator Carper, of course my friend Senator Specter. And we will 
all get a lot of help from Pennsylvania's newest Senator, Bob Casey. 
All of your dedication to supporting Amtrak across party lines has 
helped this issue remain bipartisan and the country is the better for 
it.
    Our particular focus today of course is Amtrak. The Northeast 
Corridor (NEC) is a vital link for the economy of Philadelphia and all 
of southeastern Pennsylvania, and it is crucial that Federal support 
for this service and the people who provide it continues. I am not 
telling you anything you don't already know but I will say it 
nonetheless: it is vital that Amtrak funding be reauthorized without 
any interruption. Too many people's lives and livelihoods depend on it.
    One illustration of the importance of the Northeast Corridor to our 
regional economy comes from the our own local CEO Council, which is 
made up of over 60 CEOs of major corporations in the Philadelphia 
region. These CEOs have made preserving and improving intercity and 
commuter service on the NEC one of their top priorities and they hope 
to work with business groups throughout the Northeast to ensure that 
Congress takes action to address the infrastructure needs on the NEC. I 
hope that they can help educate critics within the Bush Administration 
about the importance business leaders place in fast and reliable rail 
service.
    While bringing the NEC back to a state of good repair is critical, 
I hope that we can also seek to move to the next level and address trip 
time and capacity issues as well.
    The NEC is the most advanced corridor in the Nation, but there are 
many other corridors that hold great potential to be a relevant 
transportation alternative if only Congress would provide the same 
Federal capital matching funds for intercity passenger rail that it 
does for other modes of transportation.
    The Keystone Corridor between Philadelphia and Harrisburg is a 
great example of what a Federal-state partnership can accomplish. Under 
the administration of my predecessor Governor Ridge--a Republican, I 
might add, in case anyone has forgotten--the Commonwealth of 
Pennsylvania and Amtrak entered into a partnership to invest in a major 
upgrade to this line to make it more reliable, faster and more 
attractive. During my administration there was some question as to 
whether Amtrak would keep its end of the bargain due to its dire 
financial condition, but we worked with David Gunn to renew the 
partnership and finish the job.
    Altogether we each put in $74 million. The result is substantially 
quicker trip times and big increases in ridership; the new service has 
been fully implemented in just the last few months and already we have 
seen a jump in ridership of 12 percent. And I might add that the users 
of the service are paying a share as well--fares went up as the new 
service was implemented but this has had no effect that we can see on 
usage.
    The moral of the story here is simple--people want better servive 
and within reason they're willing to pay for it. This is true for state 
government and it is true for riders. But by themselves neither of 
these groups can bring about the improvements in service they so badly 
want. Amtrak and the Federal Government have to take the lead or it 
will not happen.
    There are other similar corridors with great potential in many 
other states: California, Washington, Oregon, Illinois, Wisconsin, 
Virginia and Maine and many more. Many of these states have been 
putting money into these corridors on their own, but the progress they 
can make is limited without a reliable Federal partner.
    Unfortunately, Amtrak's current policy threatens to take corridors 
in exactly the wrong direction. Rather than promote and encourage these 
corridors, Amtrak is asking states to pay a higher share of current 
operating expenses. I and many of my fellow Governors are willing to 
have a conversation about paying more to get better service, but asking 
the states to pay more just so the Federal Government can avoid its 
responsibility to support a first-class transportation system is just 
wrong.
    This is what our former Secretary of Transportation Norm Mineta 
famously labeled ``the shift and the shaft.'' Originally the states 
were told that we would be asked to pay higher operating expenses only 
in conjunction with a Federal capital matching program, and in 
Pennsylvania we agreed to do so. Investments were made in some 
corridors, but overall the much anticipated Federal capital matching 
program was never created. And yet Amtrak has continued to ask states 
with emerging corridors to increase their share of the costs.
    For my part, I see this debate over Amtrak as just one piece of the 
larger challenge that faces us on transportation and infrastructure 
overall. In all of the areas that matter so much to our future--
intercity rail, public transit, roads and bridges, clean water, 
aviation, you name it--the Federal Government pays for long term 
capital investments in infrastructure out of annual operating funds. In 
some cases--for example, the Highway Trust Fund--we have managed to 
create a dedicated fund, but even here our level of spending in any 
given year is dependent on how much comes in. For Amtrak and other 
areas needing investment we don't even have that, and investment levels 
are completely unpredictable from 1 year to the next. This is no way to 
run a railroad.
    More to the point, it's not how the private sector actually runs 
railroads, and for good reason. Outside the Federal Government, most 
big companies and governments that have large capital investment 
programs finance capital and operations differently. Operating costs 
are paid from operating revenues as they come in, and capital costs are 
paid for through borrowing, with the term of the borrowing matched to 
the likely useful life of the asset being built or purchased. You 
wouldn't buy a house with cash and we shouldn't buy our bridges that 
way either. This is a basic principle of finance called capital 
budgeting that everyone seems to have figured out but us.
    Adoption of a capital budget allows those who manage the system to 
make long-term capital plans and invest in their facilities at the time 
when the investment makes the most sense. In practical terms this means 
we repair or replace an asset when it makes sense to do so from a life-
cycle cost point of view, rather than when the cash-flow looks good. 
This is exactly how we financed our share of the Philadelphia-to-
Harrisburg improvements I mentioned a moment ago, and as a result the 
investment happened on the front end even though the easiest way for us 
to pay for it is a little bit every year over time. Which is just how 
we are experiencing the benefits of the project. At its core, capital 
budgeting aligns costs with benefits over time, and it is a basic 
practice of good business.
    I believe it will be very hard for us to really fix Amtrak's 
financial mess or make the investments we need to into roads and 
bridges, wastewater and other infrastructure systems until the Federal 
Government adopts a capital budget.
    Getting back to our rail system, we have been at this for too long 
with too little progress. Intercity rail corridors hold so much 
potential to improve mobility and get people off the roads into more 
energy efficient and environment-friendly trains. With your leadership, 
I have renewed hope that we can end the tiresome yearly debates about 
whether Amtrak should exist and actually make progress on the Northeast 
Corridor, on the Cascades Corridor, on the Hiawatha Line, on the 
Capital Corridor, and elsewhere. I urge you to pass S. 294 and give 
this Nation a rail policy that moves beyond ideological debates and 
gives us a new transportation alternative. Thank you for your 
leadership and I stand ready to assist you in any way possible.

    Senator Lautenberg. Governor, thanks very much.
    The story about the Philadelphia-to-Harrisburg line is not 
untypical. If you build railroads--what we see now in New 
Jersey, there's a line that goes from Camden to Trenton, and it 
looked a little bleak, in terms of passenger ridership in its 
opening days, but we've seen economic development crowding over 
to get near that rail spur, and we see it throughout New 
Jersey. New Jersey has the most-used mass transit system, on a 
relative basis, of any state in the country. And wherever we've 
brought in a new line or refurbished a line, the building that 
centers around that--people are sick and tired of waiting in 
traffic on our turnpike and our other principal highways. So, 
it makes a huge difference, Governor. And your endorsement is 
critical. And I know that your colleagues in the Senate, I'm 
sure, in the House, as well, will join in to help us form a 
cadre of people who will make sure that this job gets done.
    Senator Smith wanted to make a short statement. Please do.

              STATEMENT OF HON. GORDON H. SMITH, 
                    U.S. SENATOR FROM OREGON

    Senator Smith. Thank you, Mr. Chairman. I appreciate your 
holding this important hearing on reauthorization, but I 
specifically would like to welcome Kelly Taylor, who is the 
Administrator of the Oregon Department of Transportation's Rail 
Division. I appreciate very much, Kelly, your traveling this 
long way to participate in this hearing. It's very important, I 
know, in Oregon, that the Cascade Line continues to exist. Its 
ridership is up. And I know people appreciate it and depend 
upon its continuance. So, thank you for participating.
    Senator Lautenberg. Thanks, Senator Smith.
    If anyone has a question for Governor Rendell--and Senator 
Klobuchar, I made a commitment to the Governor that he'd be 
able to get over to that other group that we work so closely 
with. They're one of the few groups that are smaller than the 
Senate. And so----
    [Laughter.]
    Senator Lautenberg.--with the dimunitive size, they gather 
power.
    And, Senator Carper, do you have a question that you'd 
like----
    Senator Carper. Yes.
    Governor Rendell, thank you for your enthusiastic support 
of our legislation that Senator Lautenberg and Senator Lott 
have really reintroduced from the last Congress. In the days 
when I was privileged to serve as Governor of my state, we were 
faced, at times, with making capital investments. In some 
cases, we were faced with a decision as to whether or not to 
make an investment to move passengers on roads or by rail. And 
if we decided to move them by roads, the Federal Government was 
willing to pay as much as--I think about 80 percent. If we 
decided to move them by rail, it was basically on our dime. And 
I often wondered if we sometimes we made the wrong decisions, 
given the fact that the--where the Federal dollars would reward 
us for highway, for road, but not for decisions to move 
passengers by rail. Your thoughts on that?
    Governor Rendell. Well, I couldn't agree more. Senator 
Casey and I were just discussing--we would love to have a rail 
line that goes from the--Wyoming Valley, Scranton, down to the 
Lehigh Valley and over to the Tube to get into New York City. 
It would do wonders for us economically. In the Lehigh Valley, 
the popular will is to expand a road called ``22'' to--a four-
lane highway--They want to expand it to eight lanes. It would 
cost infinitely more, in building this stretch of road. But 
unless we get Federal participation in the rail line, which 
would be much more cost-effective, much better for the 
environment, and much better for the Pennsylvania economy--
unless we can get the equivalent Federal share, we can't go 
forward. And it makes no sense at all. We're doing so much in 
the--and the President spoke to us yesterday, and he finally 
seems to be onboard on renewables and alternative fuels. He was 
talking about cellulosic ethanol, which is something we're very 
interested, in Pennsylvania, because of the proliferation of 
wood chips and fiber and agricultural waste that we have, all 
these alternative fuels--the best alternative fuel is 
conservation, and the best way to conserve is mass transit.
    Senator Carper. There was a time, in the last decade--and, 
actually, sometime before that--when the Amtrak board's 
membership included a Governor nominated by the President and 
confirmed by the----
    Governor Rendell. Governor Thompson, right?
    Senator Carper. Thompson--Tommy served. I served for 4 
years. Tommy was my predecessor and my successor, as it turns 
out. I think, if truth be known, Governor Thompson would have 
preferred to be Secretary of--or President of Amtrak, or 
actually Secretary of Transportation, as opposed to being 
Secretary of Health and Human Services.
    One of the ideas that both Tommy and I endorsed was a--the 
idea of providing a dedicated source of capital funding for 
passenger rail service. And the idea that we nurtured and 
supported was to add a half cent to the Federal gas tax, to use 
that half cent just to provide for capital investments, not to 
be used on the operating side, but just on the capital side. 
I'm not going to ask you, on the record, in terms of endorsing 
a half-cent increase in the gas tax to support passenger rail. 
I've done it, and survived quite nicely politically. But your 
thoughts for a dedicated source of capital funding for--we're 
talking about selling bonds, issuing bonds, which is really 
issuance of debt, and we pay the interest, and, you know, as is 
explained in the bill. But your thoughts for a dedicated source 
of capital funding?
    Governor Rendell. Well, I certainly endorse the way s. 294 
does it, for the short run. And having the dedicated tax set 
aside on part of the gas tax, we cannot do that in 
Pennsylvania, with our gas tax. Our State constitution says it 
has to go to highways and bridges and roads. But I would think 
that that would be a good idea.
    Interestingly, we had a discussion at the NGA about--with 
some financiers from Wall Street, about their reluctance to 
finance large-ticket items--$200, $300, $400 million items--for 
renewable energy. And they said one of the reluctance--forms of 
reluctance is because the oil cartel could always--seeing some 
of these projects getting off the board, drop their prices 
again and just price them out. One, I don't think that's 
possible anymore, because they have to drill so deep to get the 
oil supply; they don't have the luxury of dropping prices just 
at whim. But, two, we all agreed, at least at that meeting, 
there should be some floor on what gasoline sells for in the 
United States of America. I know some of the consumers wouldn't 
want to necessarily hear that, but that's the best thing for us 
to achieve all of our goals. And having a floor on the price of 
gasoline is very much similar to what you said.
    Using that asset to help us build other assets to avoid 
congestion, to avoid pollution to our environment, I think 
that's a terrific idea.
    Senator Carper. Thank you very, very much. Good to see you.
    Senator Lautenberg. Thanks very much, Governor. And I--
before you go, I don't know whether, Senator Klobuchar, you had 
any remarks.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. I wanted to say hello to Governor 
Rendell. We are both former prosecutors, and I've met him a 
number of times. And thank you for being here. And then, go off 
to your very important----
    Governor Rendell. Well, I was--for me, that was a long time 
ago.
    [Laughter.]
    Governor Rendell. It--almost along--I'm--it's longer than 
the time that I used to drive a car. So----
    [Laughter.]
    Senator Klobuchar. Very good.
    Governor Rendell. Good to see you.
    Senator Lautenberg. For me, everything was a long time ago.
    [Laughter.]
    Governor Rendell. That's right.
    Senator Lautenberg. But I--as you leave, Governor Rendell, 
I remind the panel that if you want to go from Brussels, where 
we had NATO headquarters, to Paris, distance about the same as 
from New York City to here, an hour and 20 minutes, and I rode 
in the cab of the train so they could show me TGV and how it 
operates--so rapid that the signage is on the dashboard, 
because you couldn't catch it on the--if it was stationary on--
but you can't find an airplane that will take you from Paris to 
Brussels, or vice versa. The trip is too easy by train. And we 
ought to replicate that in some----
    Governor Rendell. Anything under 500 miles ought to be 
rail.
    Senator Lautenberg. Thank you very much.
    Senator Klobuchar. Right. Thank you.
    Senator Lautenberg. And now for the other members----
    Do you want to make----
    Senator Klobuchar. Yes.
    Senator Lautenberg.--a statement?
    Senator Klobuchar. I just had a few questions of the other 
members.
    Senator Lautenberg. I would like to give them a chance to 
testify first.
    Senator Klobuchar. OK. All right. I didn't know they hadn't 
testified. So----
    Senator Lautenberg. Yes.
    Senator Klobuchar. Very good.
    Senator Lautenberg. It just felt like it.
    But the other witnesses here bring a thoughtful view on 
this, and we're pleased to hear them--hear from them.
    And, Mr. Boardman, thank you for being here, and we invite 
you now--we try to stick to a 5-minute summary statement. We 
don't slam the gavel, but--if you can, please.

 STATEMENT OF HON. JOSEPH H. BOARDMAN, ADMINISTRATOR, FEDERAL 
                    RAILROAD ADMINISTRATION

    Mr. Boardman. Mr. Chairman, Ranking Member Smith, I 
appreciate the opportunity to appear before you today on behalf 
of Secretary of Transportation Mary Peters and the Bush 
Administration to discuss the reauthorization of Amtrak and the 
future of intercity passenger rail here in the United States.
    The Administration believes that intercity passenger rail 
must be a cost-effective provider of transportation services 
for it to achieve its potential of playing an increasingly more 
important role in our national transportation system. The 
Administration believes that Federal operating subsidies should 
be eliminated within the next few years. S. 294 does not align 
with this position; instead, ramping up Amtrak's Federal 
subsidy in excess of Amtrak's own estimate of needs.
    A strong, unified board of directors is critical for making 
the changes at Amtrak will achieve sound economics. S. 294 
proposes changes that could result in political deadlock and an 
inability to provide decisive leadership.
    The Administration recognizes and supports your proposal to 
require accurate accounting of revenue and expenses, and is 
aligned with S. 294 in that regard. I believe developing 
metrics and minimum standards for measuring performance and 
service quality, in consultation with the STB, is an important 
step toward accountability. The steps you have taken to ensure 
that it's meaningful, such as withholding funds based on 
substandard performance, will help ensure accountability, as 
well. But we would like S. 294 to also spell out the goals to 
be achieved, including that the Federal operating subsidy is to 
be eliminated.
    The Administration is open to acceptable approaches that 
achieve the goal of preventing tradeoffs and distractions that 
negatively impact focus on maintaining owned or controlled 
infrastructure--operating trains on time, cost-effectively, and 
with the highest standards of safety--and the development of 
management and technical resources needed to carry this out. 
It's the basis of the transition to a pure operating company.
    S. 294 aligns with this provision of improving accounting 
and providing that funds cannot be moved among accounts without 
approval of the Secretary, but it does not provide enough 
structure or incentive for the focus needed on the core 
functions.
    The Administration envisions a system where states can 
contract with a train-operating company based on cost and 
performance criteria. S. 294 moves in that direction, but not 
with enough state flexibility for true managed competition to 
occur. States need a level playing field where they can have a 
range of available options. For example, section 218 would 
establish a mechanism for States to acquire access to Amtrak-
controlled equipment if the state selects an entity other than 
Amtrak to provide intercity passenger rail service. And we 
think it's important language. But that may also need 
appropriate Federal oversight to ensure that it is meaningful. 
We are open to discussing more flexible language.
    The Administration believes that we have a great 
opportunity to forge long-term partnerships between states and 
the Federal Government with S. 294. Rail planning needs to 
become part of the annual transportation improvement program 
that each state is required to do. The language of this bill 
could make major improvements in state corridor planning and 
future rail investment if you're willing to incorporate capital 
planning requirements on State DOTs into their annual STIP.
    The Administration believes that a new partnership is 
needed to manage the capital assets on the Northeast Corridor. 
Section 213 of S. 294 requires Amtrak, in consultation with the 
USDOT and the States, to develop a capital spending plan to 
return the Northeast Corridor to a state of good repair. That's 
a great reinforcement to the FY 2006 grant agreement. Section 
214 would establish advisory committees to promote cooperation 
in the planning and investment on the Northeast Corridor and 
reinforces the STB's authority over new usage agreements 
between Amtrak and the commuter rail operators.
    But I believe we need a decisionmaking body to control the 
Northeast Corridor, with representatives of the Federal 
Government, the eight States, and the District of Columbia. But 
I also believe that you must have skin in the game to make it 
work. Everybody must put their money on the table if they want 
a chair at that table. That does not exist in any proposals, 
and it will be a daunting task, but, without it, progress will 
suffer.
    S. 294 is a complex bill that reflects dedicated and 
thoughtful authors. Secretary Peters and I look forward to 
working with you to develop consensus legislation that will 
become the foundation for a robust and successful intercity 
passenger rail system.
    Thank you.
    [The prepared statement of Mr. Boardman follows:]

     Prepared Statement of Hon. Joseph H. Boardman, Administrator, 
                    Federal Railroad Administration
    Mr. Chairman, Ranking Member Smith, I appreciate the opportunity to 
appear before you today on behalf of Secretary of Transportation Mary 
Peters and the Bush Administration to discuss the reauthorization of 
Amtrak and the future of intercity passenger rail service in the United 
States.
    This hearing is particularly timely. If the Congress and the 
Administration cannot agree on legislation authorizing Amtrak and the 
Federal role in intercity passenger rail service, October 1 will mark 
the beginning of the sixth year since the end of the authorization of 
appropriations contained in the Amtrak Reform and Accountability Act of 
1997. Unfortunately, operating without authorization, other than that 
conferred by annual appropriations acts, is not the exception for 
Amtrak but is increasingly becoming the rule. Over the last 25 years, 
Amtrak has had to rely on appropriators rather than authorizers for 
intercity passenger rail service authorization about 40 percent of the 
time. Thus, Secretary Peters and I both hope that the Congress and the 
Administration can reach a consensus on intercity passenger rail 
policy, if not in this session, then certainly during the 110th 
Congress.
    However, our overall assessment of S. 294 is that it does not 
include enough meaningful reforms. Amtrak is an outdated monopoly that 
is based on a flawed business model. It does not provide an acceptable 
level of service, nor has it been able to control its finances. Our 
goal is improve the Nation's intercity passenger system to make it 
responsive to the needs of the traveling public, state and local 
governments, and ultimately to the taxpayers. To accomplish this, we 
urge the Congress to pass legislation that reflects the core reform 
principles originally presented by Secretary Mineta. Passing an 
authorization that does not fundamentally reform Amtrak--but provides a 
higher level of Federal subsidy for it--is not an acceptable outcome.
The Administration's View On Intercity Passenger Rail Reform
    It's been nearly 5 years since then-Secretary of Transportation 
Norman Y. Mineta presented the Bush Administration's five principles 
for intercity passenger rail service reform. These principles are:

        1. Create a system driven by sound economics.

        2. Require that Amtrak transition to a pure operating company.

        3. Introduce carefully managed competition to provide higher 
        quality service at reasonable prices.

        4. Establish a long-term partnership between states and the 
        Federal Government to support intercity passenger rail service.

        5. Create an effective partnership, after a reasonable 
        transition, to manage the capital assets of the Northeast 
        Corridor.

    The Administration proposed legislation in 2003 and 2005, the 
Passenger Rail Investment Reform Act (PRIRA), to implement these 
principles. While PRIRA is one way to implement the principles, 
Secretary Mineta maintained that PRIRA was not the only way to achieve 
these goals. He consistently expressed his willingness to work with the 
Congress to develop meaningful intercity passenger rail reform 
legislation acceptable to both the Congress and the Administration. 
Secretary Peters shares this view. However, she believes, as do I, that 
the principles articulated by Secretary Mineta in 2002 must still be 
addressed by any Amtrak reauthorization legislation that we could 
recommend that the President sign. It is from that perspective that I 
offer some general comments on S. 294, the Rail Investment and 
Improvement Act.
Observations on S. 294
    To provide structure, these comments are organized by the 
Administration's five principles of reform.
Create a System Driven by Sound Economics
    The Administration believes that intercity passenger rail must be a 
cost-effective provider of transportation services for it to achieve 
its potential of playing an increasingly more important role in our 
national transportation system. Regular reports by the Government 
Accountability Office, the Department of Transportation's Inspector 
General and Amtrak's own Inspector General have identified how Amtrak 
has lost the focus of its statutory mandate to ``. . . be operated and 
managed as a for-profit corporation . . .'' (49 U.S.C. 24301(a)(2)). 
Instead, we have been faced with circumstances where 10 percent or more 
of the Federal subsidy for Amtrak has gone to underwrite its food and 
beverage service while much needed long-term capital improvements to 
nationally-important infrastructure have been deferred.
    It is for this reason, the Administration believes that intercity 
passenger rail service must be operated like a business, with priority 
placed upon the financial bottom line. Nothing in this testimony should 
be taken as criticism of Amtrak's current Board of Directors and 
management who are addressing the Corporation's financial performance 
on both the revenue and expense sides of the ledger. There has been 
progress but this can only be viewed as a beginning effort that must be 
sustained. It is thus as both a goal and an incentive that the 
Administration continues to believe that Federal operating subsidies 
should be eliminated within the next few years.
    S. 294 does not align with the Administration's vision on this 
issue. Overall, the bill authorizes approximately $2 billion annually 
for Amtrak, which represents a significant increase over its current 
subsidy. The bill offers no programmatic justification for why this 
amount is needed or how Amtrak should or could spend these sums. Beyond 
the fact that the bill authorizes funding in excess of even Amtrak's 
own estimate of needs (by several hundred million dollars), authorizing 
such levels undermines the incentive for the railroad to become more 
efficient and business like. Amtrak needs to be held accountable for 
its well-documented inability to control costs and manage its 
operations. If the goal is to make Amtrak more fiscally responsible and 
self sufficient, ramping up its Federal subsidy would send the wrong 
message.
    A key need of any private successful business is to make decisions 
on when to enter or leave markets based upon economics and not 
government policy. The reestablishment of a ``National Rail Passenger 
System'' in section 201, would work against this end. Specifically, the 
Administration finds it unacceptable to continue to subsidize poor 
performing, under-utilized long-distance routes that lose hundreds of 
millions of dollars annually. The maintenance of a static nationwide 
network has been routinely cited as a major flaw of Amtrak's business 
model. As the GAO recently reported, long-distance trains ``show 
limited public benefits for dollars expended,'' and that ``these routes 
account for 15 percent of riders but 80 percent of financial losses.'' 
Rationalizing the route structure must be a key element of any 
reauthorization legislation.
    Furthermore, the chances of creating a system driven by sound 
economics will be undermined by altering the structure of Amtrak's 
board of directors. The bill proposes comprising the board with equal 
numbers of members from each political party, all of whom must be 
vetted through the Congress. Introducing overt partisanship into the 
selection process would increase the chances the board would become 
deadlocked on issues and unable to provide decisive leadership for the 
company. A strong unified board is critical for making changes at 
Amtrak.
    On the other hand, the establishment of an improved financial 
accounting system (section 203), recognizes that all businesses need to 
have accurate accounting of revenue and expenses, not just for the 
benefit of the independent auditors and shareholders, but for 
management to make critical business decisions. Work is underway in 
developing such systems at Amtrak and FRA and this section is welcomed 
reinforcement.
    Perhaps the greatest opportunity to align S. 294 with the 
Administration's vision of intercity passenger rail can be found in 
section 208 where FRA and Amtrak, in consultation with the Surface 
Transportation Board and others, would be directed to develop metrics 
and minimum standards for measuring performance and service quality. 
Elsewhere (section 210) S. 294 would provide that FRA could withhold 
funds from routes based upon substandard performance against these 
standards. The issue that needs to be addressed to make section 208 
meaningful is for the Act to spell out the goals to be achieved. The 
Administration believes that such goals should include elimination of 
Federal operating subsidy and in the interim, maximizing transportation 
benefit per dollar of Federal subsidy. Performance measures alone will 
not address these issues, however. Legislation must ensure that the 
railroad's purpose and design allow it to make decisions based on sound 
economics.
Require That Amtrak Transition to a Pure Operating Company
    The management of Amtrak has three significant challenges--
operating trains in a safe and cost effective manner; maintaining 
infrastructure essential for intercity, commuter, and freight rail 
transportation; and developing both internal and external resources to 
get this done. History has shown that these are three difficult 
challenges to juggle regardless of the skill and good intentions of 
those in Amtrak's management. The most frequent results are priorities 
and tradeoffs that push both service and infrastructure in the 
direction of marginally ``good enough.''
    The Administration believes that the infrastructure owned by 
Amtrak, particularly the Northeast Corridor and Chicago Union Station, 
is too important to be subjected to such tradeoffs. It appears that S. 
294 recognizes this concern. The improved accounting system required in 
section 203 is intended to be able to ``. . . aggregate expenses and 
revenues to infrastructure and distinguish them from expenses and 
revenues related to rail operations.'' In describing the grant process 
in section 205, the bill provides that funds cannot be moved among 
accounts--effectively preventing the use of capital funds for operating 
expenses--without the approval of the Secretary.
    The Administration believes that to improve operating performance, 
Amtrak needs to shed its responsibilities for maintaining capital 
infrastructure. This way Amtrak could focus on its core functions with 
dedicated funds. We have previously presented a plan for accomplishing 
this goal, though as you know we would be open to other approaches that 
achieve the same ends.
Introduce Carefully Managed Competition To Provide Higher Quality 
        Service at 
        Reasonable Prices
    A fundamental underpinning of the Administration's vision for the 
future of intercity passenger rail service is to create opportunities 
for competition by allowing new operating companies to compete for 
service contracts with States, groups of States, and regional 
authorities to operate the trains they believe important. Competition 
will help control costs and improve service quality. I recognize that 
some have said that such competition would not work in the passenger 
rail industry. This is belied, however, by the relatively robust 
competitive environment that has developed for the operation of 
commuter trains in recent years. Having states, groups of states, or 
regional authorities award contracts for passenger service would bring 
decisions about how much of which services to buy much closer to the 
customers for those services. That, too, should result in better 
service.
    S. 294 provides some opportunities for competition. For example, 
section 211 would permit FRA to select rail carriers that own 
infrastructure over which Amtrak operates to be considered as a 
passenger rail service provider, excluding many other potentially 
qualified operators including states themselves. Section 218 would 
establish a mechanism for States to acquire access to Amtrak-controlled 
equipment if the State selects an entity other than Amtrak to provide 
intercity passenger rail service. In section 301 (which proposes a new 
section 24402(b)(3) in Title 49), an applicant for a Federal/State 
passenger rail capital grant would have to provide a written 
justification to the Secretary if a proposed operator of the service 
was not selected competitively. While these sections move in the right 
direction, overall, the competitive balance is still in Amtrak's favor. 
Except for the infrastructure owner, State selected competitors would 
not have the same right of access to the rail infrastructure as Amtrak 
and would not have access to the Federal subsidies made available for 
intercity passenger rail service except that limited amount available 
through the proposed State grant program. S. 294 needs to establish a 
more comprehensive and level competitive environment. The 
Administration envisions a system where states can contract with a 
company, potentially including Amtrak itself, based on cost and 
performance criteria. Having a range of available competitors available 
is key to making managed competition produce improved system 
performance.
Establish a Long-Term Partnership Between States and the Federal 
        Government To Support Intercity Passenger Rail Service
    Most publicly supported transportation in the U.S. is undertaken 
through a partnership between the Federal Government and the States. 
This model, which has worked well for generations for highways and 
transit and airports, places the States, and in certain cases their 
subdivisions, at the forefront of planning and decision-making. States 
are uniquely qualified to understand their mobility needs and 
connectivity requirements through statewide and metropolitan area 
intermodal and multimodal transportation planning funded, in part, by 
the U.S. Department of Transportation.
    While intercity passenger rail has historically been an exception 
to the application of this successful model, in recent years some 
states have taken an active role in their rail transportation services. 
Several states have chosen to invest in intercity passenger rail 
service provided by Amtrak as part of strategies to meet their 
passenger mobility needs. Over the past 10 years, ridership on 
intercity passenger rail routes that benefit from state support has 
grown by 73 percent. Over that same time period, ridership on Amtrak 
routes not supported by states has increased by only 7 percent. In 
discussions with interested states, the U.S. Department of 
Transportation has found that the greatest single impediment to 
implementing this initiative is the lack of a Federal/State 
partnership, similar to that which exists for highways and transit, for 
investing in the capital needs of intercity passenger rail.
    S. 294 recognizes an important role for the states in section 302 
by requiring development of State rail plans and in section 301 by 
establishing a program matching Federal/State grants for intercity 
passenger rail capital investment. While a start in the right 
direction, the Administration believes that a larger and stronger role 
needs to be established for the states. Like the Federal Transit 
grants, we strongly urge that the state matching requirement be 
increased to 50 percent. This would ensure a state's full commitment to 
a project and would make states more accountable for selecting a well-
justified project. The state planning provision in section 203 is 
established as a stand alone rail planning effort. Planning for rail 
transportation needs to be fully integrated in the multimodal state-
wide planning that states already undertake under 23 U.S.C. 135. It is 
essential, in my opinion, that states consider all modes when 
undertaking mobility planning and select the investments that best meet 
their mobility needs regardless of the mode.
    Decisions on where intercity passenger rail service should be 
operated, and the schedules and attributes of this service should flow 
from this state planning and informed decision-making and not the 
corporate offices of Amtrak. While establishing a Federal/State capital 
program, section 101(c) relegates this program to a secondary 
importance by continuing to provide the lion's share of available 
Federal capital to Amtrak directly instead of to the states. The 
Administration believes that most if not all of the capital designed 
for intercity passenger rail improvements should flow through the 
states who are in the best position to know about mobility needs.
    We fully support creating a Federal-State partnership for investing 
in capital infrastructure. However, the framework presented in this 
bill gives too little responsibility to the States, while continuing to 
funnel most capital funding through Amtrak. Instead, states should be 
empowered to decide how best to invest in intercity passenger rail 
facilities.
Create an Effective Partnership, After a Reasonable Transition, To 
        Manage the 
        Capital Assets of the Northeast Corridor
    As discussed earlier, the Northeast Corridor infrastructure places 
significant burdens on Amtrak's management. Moreover, this is an 
essential transportation asset needed by commuters and freight carriers 
as well as Amtrak. It should be managed for the benefit of the region's 
transportation needs and not corporate priorities and the short-term 
financial fortunes of one should not affect the operations of all. 
Decisions on essential infrastructure replacements and improvements 
should not have to compete, as they do today, with decisions on what 
will be served on Amtrak's dining cars.
    S. 294 makes some modest movement in this direction. Section 213 
requires Amtrak, in consultation with the USDOT and the States, to 
develop a capital spending plan to return the Northeast Corridor to a 
state of good repair. This is similar to a condition I required in 
Amtrak's FY 2006 grant agreement and I appreciate the reinforcement 
that comes from inclusion of this provision in the bill. Section 214 
would establish advisory committees to promote cooperation in the 
planning and investment on the NEC and reinforces the STB's authority 
over new usage agreements between Amtrak and the commuter rail 
operators. I believe, however, based upon my past career in State 
transportation, that more is needed to keep the States from being 
reluctant partners in making the investments needed to preserve and 
improve the Corridor. I recognize that creating a decision-making body 
to control the Northeast Corridor with representatives of the Federal 
Government, eight States and the District of Columbia will be a 
daunting task, but this is what is needed.
Amtrak Debt
    The Administration believes that Amtrak's debt is a private 
corporate matter and should remain so. A quarter of a century ago, 
Congress relieved Amtrak of more than a billion dollars of debt without 
improving matters noticeably. Amtrak simply incurred even more debt. 
The Administration strongly opposes any attempts to transfer Amtrak's 
debt onto the U.S. Treasury. Amtrak, which incurred its debt 
independently and beyond the oversight of the government, must be 
responsible for retiring any debt using all the resources it has 
available. Amtrak has over $3 billion in revenue annually and therefore 
has the wherewithal to address its debt without special assistance from 
the U.S. Government. Amtrak's debt should not be misunderstood to be a 
de facto obligation of the Federal Government. Furthermore, the 
Administration does not believe that the bill should include a 
mechanism that would allow Amtrak to incur new government-backed debt.
Other Provisions
    At two locations, section 101(d) and in section 301 (where it would 
create a new section 24403 in Title 49), S. 294 recognizes that the 
Department and FRA require fiscal resources to oversee implementation 
of intercity passenger rail capital projects and gives FRA the 
authority to retain a portion of the funds authorized to help fund such 
oversight. This authority is much needed and is in accord with the 
Administration's views.
    Title IV would include in this legislation the ``Surface 
Transportation and Rail Security Act of 2007.'' On February 2, 2007, 
the Acting General Counsel of the Department of Transportation provided 
the Department's views on this legislation to Chairman and Ranking 
Member of the full Committee. I wish to incorporate her letter into 
this testimony by reference.
    The foregoing comments reflect a high level view of major 
provisions of S. 294. By all means these comments should not be 
considered comprehensive or the absence of a comment on a particular 
section be interpreted as Administration support. Staff from the 
Department and FRA will be available to provide more detailed comments 
to the staff of this Committee at their convenience.
    S. 294 is a complex bill that reflects much work and thoughtful 
consideration by the bill's authors. However, it falls short of making 
necessary reforms identified by the Administration and other 
independent experts. Without the changes we have identified, we have 
serious reservations with the bill.
    Secretary Peters and I look forward to a continuing dialogue with 
this Committee to develop a much needed consensus that can be embraced 
by the Congress and the Administration.
    I appreciate your attention and would be happy to answer questions 
that you might have.

    Senator Lautenberg. Thank you very much, Mr. Boardman.
    We'd like, now, to hear from Ms. Taylor. If you would, 
please.

STATEMENT OF KELLY TAYLOR, ADMINISTRATOR, OREGON DEPARTMENT OF 
                  TRANSPORTATION RAIL DIVISION

    Ms. Taylor. Chairman Lautenberg, Senator Smith, members of 
the Committee, I'm Kelly Taylor, with the Oregon Department of 
Transportation Rail Division, and I'm responsible for both 
passenger and freight rail programs, including the Amtrak 
Cascades program.
    The Amtrak Cascades is on the Northwest high-speed rail 
corridor that goes between Eugene, Oregon, and Vancouver, 
British Columbia, and it's a partnership that's been going on 
very favorably between Washington, Oregon, and Amtrak. We each 
pay a proportional share of that service.
    Now, Oregon only has two trains, at this moment, that run 
between Eugene and Portland that are State-sponsored. But both 
Oregon and Washington have long-range plans that would expand 
the service. But there are obstacles to getting there. For 
example, we invested about $30 million with Union Pacific's 
system, which our Amtrak runs on, in order to get those first 
two trains going. If I'm to add up to the five trains we'd like 
to do, I will need more money in order to make those 
investments on the Union Pacific railroad system, because they 
don't want the passenger trains--they need the passenger trains 
and the freight trains to run together, and not impact each 
other.
    Now, the Cascades has been a very popular travel choice. 
You're absolutely right, Senator, people will come when you 
build it. In the last decade, since we've had the two trains, 
ridership has quadrupled in Oregon. And our corridor, the 
Cascades Corridor, is the seventh heaviest traveled corridor in 
the country. So, you're right, if you build it, they will come. 
And they want it. But what people want is reduced travel time, 
they want increased frequency of train options to choose from 
for schedule, and they want it to be reliable. And, 
unfortunately, the on-time performance is one of the things 
that we've got a problem with. Our Cascades, in the last year, 
has been about 51 percent on time. And, frankly, I just heard 
from a gentlemen who wrote me and said, ``You know, I get so 
frustrated. I've ridden the train ten times, and each time it 
has been late.'' Well, you have to admire that man's tenacity. 
He wants to ride that train, and he's willing to get on it--
even when he knows the last ten times it's been late, he wants 
to ride it. So, we make these investments, people will ride it, 
and more people will come.
    In Oregon, we're projected to get a million people more in 
the Portland metropolitan area over the next 25 years, and, 
across the country, freight tonnage is supposed to double. 
Well, even with all the highway capacity projects we'll do, 
it's not going to be enough. No one mode can do it alone. It is 
a transportation system, and it takes all the components to 
make it work. It's like when I look at a map, and I see all the 
roads and the trains and the rivers, it's a circulatory system, 
and that circulatory system is what drives our economic 
vitality. And if you neglect a part or you let it wither, then 
that part of the body withers along with it. So, we have got to 
invest.
    And the one piece that I think--we love this bill, Senator 
Lautenberg. We just think it's a wonderful bill. We need 
passenger rail. Amtrak has been a great partner for us, and I 
think Amtrak needs to stay the national passenger rail service. 
Our State does not have the resources, nor the appetite to take 
that responsibility on. So, the part of this bill that keeps 
Amtrak going is fabulous. The part that has the Federal capital 
matching program is fabulous, because that's the piece we need. 
We need a strong Federal partnership to help us leverage the 
dollars we have, and we will have, in order to make those 
investments, in order for me to grow from two trains to the 
five trains. We've done the study. We could do five trains in 
the valley. They'll pay for themselves, they'll come close to 
cutting the cost--or paying for the cost.
    So, again, I think that the passenger rail system--there 
are issues. We share it with the freight trains. We need to 
make the investment so that they don't have to pull off into 
the sidings and wait for the long freight trains to go by, so 
they can keep up the reliability and the travel time.
    But, sir, this is a fabulous bill. We very much support it. 
I am honored to be here to represent my State. Senator Smith, 
thank you. And I'll conclude with that.
    [The prepared statement of Ms. Taylor follows:]

          Prepared Statement of Kelly Taylor, Administrator, 
           Oregon Department of Transportation Rail Division
    Chairman Lautenberg, Senator Smith, and Members of the 
Subcommittee, my name is Kelly Taylor, and I serve as Administrator of 
the Oregon Department of Transportation (ODOT) Rail Division. In this 
capacity I have responsibility for overseeing the State of Oregon's 
passenger and freight rail initiatives, including the Cascades Amtrak 
service along the Northwest's high-speed rail corridor. ODOT is very 
supportive of the Passenger Rail Investment and Improvement Act of 2007 
(S. 294), and I want to thank you for the opportunity to testify before 
you about the Northwest's successful model of providing passenger rail 
service and discuss how this legislation would benefit our efforts.
The Northwest Rail Corridor
    The Cascades Amtrak service runs 466 miles along the federally-
designated high-speed rail corridor from Eugene, Oregon through 
Portland and Seattle-Tacoma to Vancouver, British Columbia. While 
Oregon and Washington pay for the Cascades service, it is operated by 
Amtrak. This arrangement has proven to be a very successful partnership 
between two states, Amtrak, freight railroads, and local communities, 
and it is often held up as a national model for passenger rail service. 
Oregon pays for Amtrak to operate two round trips daily between the 
state's two largest urban areas, Eugene and Portland (and through its 
third largest urban area, Salem), while Washington pays for three daily 
trains between Portland and Seattle and two round trips between Seattle 
and Bellingham, with one extension to Vancouver, B.C. Amtrak pays for 
one daily roundtrip train between Portland and Seattle.
    Ridership on the Oregon segment between Portland and Eugene has 
nearly quadrupled since it was initiated in 1994, rising to over 
130,000 passengers in 2006. Total ridership on the Cascades trains 
reached 627,664 passengers in 2006, making the Amtrak Cascades the 
seventh most heavily traveled corridor in the country.
    Amtrak's Coast Starlight train also provides long-distance service 
along this corridor between Seattle and Los Angeles and serves an 
additional 330,000 passengers annually. Long-distance trains like the 
Coast Starlight provide an essential transportation service for many 
communities and to a significant percentage of the general public. Many 
long-distance trains serve small communities with limited or no 
significant air or bus service, especially in remote or isolated areas 
in the United States.
    Oregon helps sponsor passenger rail service because we believe it 
is an important part of the regional transportation system, and we 
believe that further investments can increase the role passenger rail 
plays in this corridor. The Cascades Amtrak service runs along a rail 
line that parallels Interstate 5, the most important route for the 
movement of people and goods among the West Coast states and with our 
trading partners in Canada and Mexico. Interstate 5 is particularly 
important in the Northwest and helps bind together the closely-knit 
economies of Oregon and Washington, providing a safe and efficient 
route for the movement of freight and people.
    Nearly 70 percent of the population of Oregon and Washington lives 
within a few miles of the Northwest high-speed rail corridor and 
Interstate 5, and much of the new population moving into the Northwest 
is settling along this corridor as well. As a result, traffic on 
Interstate 5, both within metropolitan areas as well as between them, 
is growing rapidly, and congestion has become a significant problem on 
the Interstate 5 corridor. Between Salem and Portland, the number of 
cars on Interstate 5 jumped by nearly 25 percent in just a decade, and 
we expect this trend to continue as the Portland metropolitan region 
gains another million people in the next 25 years.
    Unfortunately, Oregon has not been able to add lane miles to the 
Interstate fast enough to keep up with the growth in traffic. Federal 
and state highway funding have increased only modestly because neither 
Oregon nor the Federal Government has raised the gas tax since 1993, 
and an increasing share of highway funds is needed just to preserve 
aging infrastructure. As a result, Oregon has had to focus on a few 
strategic--and comparatively minor--expansions of capacity on 
Interstate 5 in recent years. While these investments do add capacity 
to the Interstate in key locations, they have not kept up with recent 
increases in traffic, much less addressed the rapidly growing demand we 
forecast for the future. The result has been, and will continue to be, 
increased congestion that slows the movement of people and freight.
    Even with the construction of highway projects that expand capacity 
on the Interstate and other routes, investing in highways alone won't 
fully address these problems because no single transportation mode can 
serve all the needs and handle all the demand. Addressing congestion 
and the costs it imposes on the economy and the quality of life for 
residents of the Northwest will require investing in transportation 
infrastructure across a variety of modes. We must look for alternative 
means of moving people and goods that take vehicles off our Interstate 
system. This helps ensure that when highway investments are made they 
function for many years. For example, we need to invest in expanding 
capacity on the freight rail system to reduce the growth rate of truck 
traffic on our highways, particularly given the explosive growth in 
freight predicted in the next few decades. And we should invest in 
passenger rail to move a portion of travel off the highway and onto 
trains.
Reaching the Corridor's Full Potential
    We believe that passenger rail serves an important role in meeting 
some of the demand for travel on the Interstate 5 corridor and thus 
could play an increasingly important role in the regional 
transportation system and our efforts to reduce congestion. As fast as 
ridership on the Northwest Corridor has grown, there is potential for 
much greater growth if we make the investments needed to improve 
service.
    The elements that make passenger train service desirable to 
citizens are increased reliability, reduction in travel time and 
enhanced frequency. The largest barrier to higher ridership in the 
Northwest is that taking the train is often not convenient to 
passengers because of infrequent service and poor on-time performance. 
The current Cascades service in Oregon offers just two daily trains 
between Eugene and Portland and thus provides few options for travel.
    What's more, calling this a high-speed rail corridor is something 
of a misnomer: the Amtrak trains frequently encounter conflicts with 
freight trains on the heavily-congested freight lines they use, which 
causes serious problems with on-time performance. For Fiscal Year 2007 
to date, the Cascades on-time performance is only 51.7 percent, 
compared to a target of 80 percent. These factors significantly limit 
the convenience of traveling by train: if there isn't a train to get 
you where you need to be at the time you need to be there, and you 
can't be sure it will get you there on schedule even if there is a 
train, you won't be very likely to ride. Despite these issues that 
reduce the convenience of train travel, ridership has continued to grow 
on the corridor.
    Oregon and Washington would like to address the problem of 
infrequent service by significantly increasing the number of trains 
operating on the corridor. The two states have established 20-year 
plans for the Cascades service that will accommodate the growth 
expected in the region. Oregon's plans call for six roundtrips between 
Eugene and Portland. Washington State's plans call for 13 roundtrips 
between Portland and Seattle, and four roundtrips between Seattle and 
Vancouver, British Columbia. This would offer travelers enough options 
that they would be much more likely to find a train that fits their 
travel schedule.
    Unfortunately, there are a number of significant barriers to be 
addressed before we could upgrade service to this level. Beyond the 
additional cost of operating the trains, Oregon would have to purchase 
additional trains to put into service because the current train sets 
that Oregon uses are owned by Washington and Amtrak and are at maximum 
capacity. This means that if either Washington or Oregon adds service, 
Oregon will need to acquire train equipment.
    In addition, passenger rail service is constrained by the capacity 
of the freight rail lines on which the trains run. The track on which 
Amtrak operates is owned by Union Pacific Railroad, and it is highly 
congested. The State of Oregon has already invested over $30 million to 
upgrade the freight rail infrastructure to accommodate the first two 
trains. Before Union Pacific would allow Oregon to run more trains, it 
would require significant investments in expanded capacity to ensure 
that passenger trains did not cause delays for its freight trains.
The Need for Federal Partnership
    Because Oregon has no dedicated source of funding for rail 
infrastructure upgrades, making these improvements would be very 
difficult without a strong Federal partnership. That's why ODOT is 
excited about the Passenger Rail Investment and Improvement Act. We 
believe this legislation is a very strong bill that will result in 
significant improvements to passenger rail service at the national 
level and help us make the investments the Northwest needs to reach our 
rail corridor's full potential.
    Of particular interest to us is the intercity passenger rail 
Federal capital matching grant program, which would provide states 
essential funding to invest in equipment, track, and facilities in 
order to improve intercity passenger rail service. Oregon is very 
supportive of the establishment of this program. ODOT and the 
Washington Department of Transportation could receive funds under this 
program to make the necessary rail infrastructure upgrades to 
facilitate more frequent passenger rail service with better on-time 
performance. We appreciate that the program is structured to reward 
states that have already made investments in passenger rail by 
providing a credit toward that matching share of the grants. Under this 
provision, Oregon would receive credit for millions of dollars we have 
invested in rail infrastructure, which would help us stretch our 
limited state resources further.
    In addition to the grant program for states to improve passenger 
rail service, there are a number of other aspects of the bill that ODOT 
supports, such as a process for host railroads and Amtrak to address 
poor on-time performance, which is sorely needed. With stable capital 
and operating funding, Amtrak can have a more robust operating 
partnership, for example keeping equipment in good repair and 
partnering with states to acquire additional equipment.
    While some have proposed dismantling Amtrak and having states pick 
up the responsibility for operating intercity passenger rail, ODOT 
believes that Amtrak should remain as a national passenger rail 
operating company. Oregon has neither the ability nor the desire to 
take up this responsibility. We have had a very successful partnership 
with Amtrak that builds on Amtrak's strengths, particularly its ability 
to successfully operate passenger rail service, as well as its 
statutory access to the freight railroad system, brand, reservation 
system, and other assets. If Amtrak were dismantled, creating a 
separate operating company for the Northwest Corridor would be 
extremely problematic and difficult, and I doubt the region would have 
the appetite or resources to do this. Consequently, ODOT appreciates 
that this legislation does not undermine Amtrak's status as the primary 
national operator of passenger rail service while encouraging states to 
partner with Amtrak.
    The legislation also follows the successful Northwest model by 
encouraging states to pay for Amtrak service. ODOT appreciates the 
cost-allocation methodology included in the legislation, which is 
intended to develop and implement a standardized method for allocating 
the costs of providing service between states and Amtrak to ensure 
equal treatment. We believe it is important that the contributions 
expected from states be equitable to ensure that all are paying their 
fair share.
Conclusion
    In conclusion, ODOT supports the Passenger Rail Investment and 
Improvement Act. We appreciate the legislation's recognition of the 
importance of passenger rail to the Nation's transportation system, and 
we support the creation of a Federal capital matching grant program 
that will make targeted investments in improving passenger rail 
service. As our Nation's highways become increasingly congested, 
passenger rail holds the potential for meeting an increasing share of 
the demand for travel.

    Senator Lautenberg. Thank you very much, Ms. Taylor. We 
like that endorsement, and that's why we are so pleased that 
Senator Smith has been working as one of the primary cosponsors 
of this legislation, and we look forward to continuing that.
    And when I hear the things that you talk about, it's the 
same things that we talk about in New Jersey. The freight mix 
is a very tough thing, because the--it takes a lot more 
maintenance to keep the trackage and the other facilities up to 
date. So, we thank you very much.
    And now, Mr. Kummant. Mr. Kummant is Amtrak's President and 
CEO, and we look forward to hearing your testimony, Mr. 
Kummant.

                  STATEMENT OF ALEX KUMMANT, 
           PRESIDENT/CHIEF EXECUTIVE OFFICER, AMTRAK

    Mr. Kummant. Thank you, Mr. Chairman. Thank you, Ranking 
Member Smith.
    Again, I'm Alex Kummant. I've been Amtrak's President since 
September of last year. I appreciate being here with you today 
as we consider S. 294. It is against the backdrop of this 
legislation that I believe we're truly at a crossroads, in 
terms of the future of passenger rail service in this country. 
I look forward to this discussion.
    Again, before I begin, though, I would like to offer my 
appreciation to the Committee, and particularly to Senators 
Lautenberg and Lott, for your sustained and persistent efforts. 
This is clearly important to drive home.
    Let me speak briefly to you about our vision for a national 
intercity passenger rail system for the 21st century, and why 
the passage of S. 294 is integral to its future.
    In short, our vision for Amtrak is one of growth, of 
product excellence, and of sound management. Some of the 
approaches we're taking to advance the key elements of this 
vision include the following:
    Positioning Amtrak to support the growing demand for State 
corridor passenger rail services. I've said it in other venues, 
but clearly the States are the future, State corridors are very 
much the future. And anything we look at, growth projections 
are driven by the States, and State demands, as we, here, have 
heard, really, from both State representatives here.
    Also, in that case, we need to align our organization--and 
we're in the process of doing that--with the needs of our State 
partners as they take a broader and broader role here in the 
future of Amtrak.
    We also need to ensure that our service quality continues 
to improve, with a strong customer focus.
    And the whole underlying piece of running this operation is 
driving continuous improvement, both by improving the state of 
good repair of our physical assets and by continuing to drive 
efficiency across the entire operation.
    These objectives--growth, product excellence, and sound 
management--are attainable. And let me tell you why I believe 
that.
    First, and most importantly, passenger rail service is 
becoming more and more relevant in more and more areas of the 
country every day. We've heard a lot on--all around this room, 
about highway and airport congestion, which continues to grow 
apace. Communities and regions are looking for transportation 
alternatives across all modes. And passenger rail often serves 
as a catalyst for economic development, frequently playing a 
significant role in the rejuvenation of the urban centers of 
small and mid-sized cities.
    Second, history clearly can be a guide to the future. 
Amtrak's existing corridor trains are carrying record numbers 
of passengers. In the last year, we've seen the expansion of 
corridor services in many parts of the country. There are many 
reasons for this, including higher fuel prices and other 
societal trends. Moreover, many of these services connect 
communities that, themselves, are growing rapidly.
    The growth of corridor service is one response to 
addressing society's changing transportation needs. Let me cite 
a few examples:
    In California, on the Capitol Corridor between Oakland and 
Sacramento, we now operate 16 daily roundtrip trains. That's 32 
train movements a day, or more than one passenger train every 
hour. I also believe that that volume has dramatically expanded 
over that period of time.
    Last October, in Illinois, in partnership with the State, 
we more than doubled our service on three different corridors 
out of Chicago.
    In Pennsylvania, as we heard, we added frequencies and 
dramatically reduced travel times on the Keystone Corridor 
between Harrisburg and Philadelphia.
    And we just heard a great discussion of the Cascades 
service, and we certainly hope to be expanding that in the 
future.
    In addition to what was done last year, we anticipate 
frequency additions on existing corridors in Maine, Wisconsin, 
perhaps even Michigan and North Carolina.
    The third reason why I'm optimistic is because of what is 
occurring here today. Congress is moving quickly on a 
reauthorization bill. You have taken a very comprehensive 
approach to this legislation. I thank you for that.
    Before I close, I'd like to leave you with a couple of 
other positive messages. Total systemwide ridership is up 
slightly, and revenue is up 10 percent, relative to last year. 
Because of improvements to the Acela product, and significant 
investment in the Northeast Corridor infrastructure, Acela on-
time performance is averaging 90 percent, and ridership was up 
by double digits in the first quarter. In fact, it was up 19 
percent, year over year, in December, to the point of, ``If you 
build it, they will come.''
    Long-distance travel continues to hold, and is actually up 
slightly. Ridership is up on corridor services systemwide about 
5 percent, and in some cases there is double-digit growth. Our 
safety numbers are very good, and injuries have been trending 
down, with reportable injuries down 42 percent, year over year. 
From Fiscal Year 2004 to 2007, a significant amount of 
investment in the Northeast Corridor--track, switches, signals, 
and catenary--has gone a long way toward rebuilding the 
Northeast Corridor, and we're now moving on to some larger 
projects, such as bridge replacement.
    We've reduced our outstanding debt by nearly $500 million 
over the last 4 years. In other words, most of the key 
indicators that the Amtrak board and I watch closely are headed 
in the right direction. So, you can see why I'm very hopeful 
about where Amtrak is headed.
    We look forward to working with you as we move forward on 
S. 294 in what I believe will be a very exciting period with 
passenger rail development in this country.
    Thank you.
    [The prepared statement of Mr. Kummant follows:]

                  Prepared Statement of Alex Kummant, 
               President/Chief Executive Officer, Amtrak
    Good morning, I am Alex Kummant, and I have been Amtrak's President 
and Chief Executive Officer since September 2006. I appreciate being 
here with you today as you consider S. 294, the Passenger Rail 
Investment and Improvement Act of 2007. It is against the backdrop of 
this legislation that I believe we are truly at a crossroads in terms 
of the future for passenger rail service in this country. I look 
forward to our discussion and thank you for the opportunity to testify.
    Before I begin, I would like to offer my appreciation to this 
Committee, but particularly Senator Lautenberg and Senator Lott for 
your tireless efforts to advance this legislation and for your 
leadership on Amtrak and passenger rail issues. Let me speak to you 
briefly about my vision for a national intercity passenger rail system 
for the 21st century and why the passage of S. 294 is so integral to 
its future.
    In short, my vision for Amtrak is one of growth, of product 
excellence, and sound management. Some of the approaches we are taking 
to advance the key elements of this vision include:

   Positioning Amtrak to support demand growth for state 
        corridor service.

   Aligning our organization to meet the needs of state 
        partners as their role continues to expand.

   Ensuring that our service quality continues to improve.

   Driving continuous improvement both by improving the state 
        of good repair of our physical assets and by continuing to 
        reduce our operating costs.

    These objectives--growth, product excellence, sound management--are 
attainable and let me tell you why I believe that.
    First and most important, passenger rail service is becoming more 
and more relevant in more and more parts of the country each day:

   Highway and airport congestion continues to grow apace.

   Communities and regions are looking for transportation 
        alternatives.

   Passenger rail serves as a catalyst for economic 
        development.

    Second, history can be a guide to the future--Amtrak's existing 
corridor trains are carrying record numbers of passengers. In the last 
year we have seen the expansion of corridor services in many parts of 
the country. There are many reasons for this including higher fuel 
prices and other societal trends. Moreover, many of these services 
connect communities that are growing rapidly. The growth of corridor 
service is one response to addressing society's changing transportation 
needs. Let me cite a few examples:

   In California, on the Capitol Corridor between Oakland and 
        Sacramento, we now operate 16 daily round trip trains; that's 
        32 train movements a day, or more than one passenger train 
        every hour.

   Last October in Illinois, in partnership with the state, we 
        more than doubled our service on three different corridors out 
        of Chicago.

   In Pennsylvania, we added frequencies and dramatically 
        reduced travel times on the Keystone Corridor between 
        Harrisburg and Philadelphia.

   There was also an additional frequency added on the very 
        successful Cascades service in the Pacific Northwest, and we 
        hope to add another frequency on that corridor shortly.

   In addition to what was done last year, we anticipate 
        frequency additions on existing corridors in Maine, Wisconsin 
        and perhaps even Michigan and North Carolina in the near 
        future.

    The third reason why I am optimistic is because of what is 
occurring today. Congress is moving quickly on a reauthorization bill. 
You have taken a very comprehensive approach through this legislation 
and I commend you for that.

   The creation of a Federal capital matching program for 
        states as envisioned in S. 294, the Lautenberg/Lott bill, is 
        absolutely essential for the future of corridor development. 
        The Administration in its FY08 budget request to Congress also 
        has indicated its support for the establishment of such a 
        matching program.

   In addition to the emphasis on corridor development, S. 294 
        includes numerous operational improvement requirements that 
        align with the progress already underway at Amtrak, first 
        started in our 2005 Strategic Reform Initiatives, and that will 
        encourage us to continue to make even more improvements 
        operationally.

   The bill authorizes full funding to bring the Northeast 
        Corridor to a state-of-good repair.

   S. 294 directs Amtrak to work with states to develop a 
        uniform cost allocation methodology for our state-supported 
        services. As more and more states look into starting corridor 
        service, it will be increasingly important for the states and 
        Amtrak to work cooperatively to ensure that all states are on 
        the same footing with regard to costs, both capital and 
        operating, for services.

   Similarly, the bill directs Amtrak and the Northeast 
        Corridor states to work together to forge agreement on the 
        costing methodology for access for commuters and ongoing 
        capital projects. In fact, Amtrak is already reaching out to 
        the NEC states and recently we invited the NEC Governors to 
        attend a March 23 meeting of a new NEC Infrastructure Advisory 
        Committee.

   Under the legislation, FRA and Amtrak are to develop new 
        system-wide performance metrics and standards on all of its 
        long-distance services.

   With regard to security, S. 294 authorizes additional funds 
        for both passenger and freight rail security. As Amtrak 
        coordinates and integrates security enhancements into capital 
        investments and the protection of critical assets, additional 
        Federal funding for these and other security measures will 
        assist us in our efforts to better protect our passengers and 
        secure our assets.

    The bill addresses a host of other issues that are important to 
Amtrak and its many stakeholders. It is also encouraging that there is 
such strong bipartisan support for this legislation and that so many of 
the states have taken such a strong interest in S. 294.
    Congressional passage of the reauthorization bill will provide the 
foundation for future growth in passenger rail in the country. To add 
service on new corridors is going to take capital funding--I cannot 
stress enough the importance of establishing a capital matching program 
for corridor development. We also need to continue to seek avenues to 
bring private capital into the mix of funding to solve these 
challenges.
    There's no doubt that our partners, America's freight railroads, 
need new capacity. We would be doing a disservice to our customers and 
all of you, if we tried to start new trains without building new 
capacity, particularly in our urban areas. No place is this more 
evident than in Chicago, where the city, the State of Illinois, and the 
Federal Government have partnered with the railroads to aggressively 
pursue funding for the CREATE project.
    Finally, we will also need an equipment strategy. Amtrak's fleet is 
both aging and stretched to the limit. The lack of additional available 
equipment is going to have to be dealt with in order to see Amtrak 
grow. Again, this will take capital.
    Obviously, the focus of today's hearing is S. 294. But because 
there are so many positive developments underway at Amtrak, what I've 
tried to do is provide you with a quick broad brush picture of the last 
12 months at Amtrak and how we see the next 12 to 18 months shaping up. 
I also hope I've laid out for you my vision of Amtrak's future. There 
are many other initiatives going on to improve the product which 
include a better way to provide food service on our long-distance 
trains and e-ticketing, and I would be happy to go into more detail of 
those initiatives during the Q & A period.
    In conclusion, let me leave you with a couple of positive messages:

   Total system-wide ridership is up slightly and revenue is up 
        10 percent relative to last year.

   Because of improvements to the Acela product and significant 
        investment in the NEC infrastructure, Acela on-time performance 
        is averaging 90 percent and ridership was up by double digits 
        in the first quarter.

   Long-distance travel is up slightly.

   Ridership is up on corridor services, system wide, about 5 
        percent and in some cases there is double digit growth.

   Our safety numbers are very good and injuries have been 
        trending down and we finished January of this year at 1.9.

   From FY 2004-2007, a significant amount of investment in NEC 
        track, switches, signals and catenary has gone a long way 
        toward rebuilding the Northeast Corridor and we are now moving 
        on to some of the larger projects such as bridge replacement.

   We've reduced our outstanding debt by nearly $500 million 
        over the last 4 years.

   In other words, most of the key indicators that the Amtrak 
        Board and I watch closely are headed in the right direction.

    You can see why I am very hopeful about where Amtrak is headed. We 
look forward to working with you as you move forward on S. 294 and what 
I believe will lead to a very exciting period of passenger rail 
development in this country.

    Senator Lautenberg. Thanks very much, Mr. Kummant.
    Now for Mr. Busalacchi, Secretary of the Wisconsin 
Department of Transportation, also serving as Chair of the 
States for Passenger Rail Coalition. We thank you, Mr. 
Busalacchi, for being here today.

  STATEMENT OF HON. FRANK J. BUSALACCHI, SECRETARY, WISCONSIN 
DEPARTMENT OF TRANSPORTATION; CHAIR, STATES FOR PASSENGER RAIL 
                           COALITION

    Mr. Busalacchi. Chairman Lautenberg, distinguished 
Senators, my name is Frank Busalacchi. I'm Secretary of the 
Wisconsin Department of Transportation, and Chair of the States 
for Passenger Rail Coalition.
    I am also a member of the National Surface Transportation 
Policy and Revenue Study Commission. The National Commission is 
working to construct the new 50-year vision for the Nation's 
transportation system. We're in the midst of our deliberations, 
and my comments do not represent the views of the National 
Commission. Every commissioner is working to keep an open mind 
on all issues.
    I appreciate this opportunity to share my comments on 
passenger rail issues and S. 294. This bill is an important 
first step in creating a passenger rail program to meet the 
mobility needs of the public.
    Let me begin by focusing on Wisconsin. As Secretary of 
Wisconsin DOT, I know firsthand that the American public is 
clamoring for expansion of passenger rail services. Our State 
provides financial support to Amtrak's Hiawatha service, which 
operates in the busy Milwaukee-to-Chicago corridor. Since 1989, 
we have committed almost $100 million in capital and operating 
support for existing and future Amtrak service in Wisconsin. 
This includes annual operating support, new or renovated 
stations, rail corridor acquisition, crossing improvements, and 
planning studies.
    The public has responded. Last year, Amtrak's Hiawatha 
service carried 588,000 passengers, a 48-percent increase in 
just 5 years. And the public wants more. With Amtrak providing 
excellent service from Chicago to Milwaukee, the demand is 
strong to expand service another 90 miles to Madison. Madison 
is ripe for passenger rail service. It's the state capital, 
home to the University of Wisconsin, and boasts a metro 
population of 450,000 that is highly supportive of energy-
efficient alternative transportation options.
    Wisconsin Governor Jim Doyle has proposed a total of $80 
million in state bonding authority as a 20-percent match to our 
future Federal funds for the Madison extension. Unfortunately, 
no program exists to provide Federal funding, and Wisconsin 
simply cannot undertake these projects on its own.
    Wisconsin is not alone in this predicament. The States for 
Passenger Rail Coalition represents 28 States that support 
intercity rail services around the country. Many States share 
Wisconsin's experience and frustration regarding passenger rail 
service. Virtually all of Amtrak's ridership gains over the 
past several years have come through state-sponsored services. 
From Washington to Florida, from New York to California, and 
everywhere in between, States have committed hundreds of 
millions of dollars for short-term incremental improvements 
that have fueled the growth of Amtrak ridership. States have 
completed environmental analyses, put plans on the shelf, and 
have passengers ready to get onboard the trains. What's missing 
is a strong Federal partner to make it happen. That's why I'm 
grateful to Senator Lautenberg for introducing S. 294, the 
Passenger Rail Investment and Improvement Act of 2007. The 
legislation will stabilize Amtrak with necessary operating 
funds for the next 6 years. The bill provides $6.3 billion for 
Amtrak to implement capital projects, including the Northeast 
Corridor. It also lays the basic framework for Amtrak to work 
in partnership with the states on an 80/20 Federal/state share 
program to implement regional capital projects. Both the 
Wisconsin DOT and the States for Passenger Rail Coalition 
endorse S. 294 as an initial step to bring passenger rail 
service to the public that is demanding mobility options.
    While S. 294 is a good start, it does not contain the 
funding necessary to meet states' needs around the country. Of 
the $6.3 billion in capital funds, the state-sponsored projects 
are eligible to receive only $1.4 billion. Under provisions of 
the bill, the most available to fund a single project in a 
given year is about $400 million. Wisconsin's Milwaukee-to-
Madison Project will require $400 million all by itself. A 
recent AASHTO report identified $17 billion in needs in the 
near term for passenger rail capital projects across the 
Nation, including $10.4 billion for state-sponsored projects. 
Therefore, as the Senate moves ahead on S. 294, I respectfully 
ask this committee to continue its efforts to provide a 
dedicated passenger rail capital program to fund the Nation's 
rail needs.
    The Federal Government provides the support for highways. 
It is needed for passenger rail, as well. S. 294 includes 
provisions that could make it happen: stabilization of Amtrak, 
support for the Northeast Corridor, and the beginnings of an 
80/20 capital investment program for State initiatives.
    The States for Passenger Rail Coalition is willing to work 
with the Senate and the House to help craft legislation that 
will fully support the needs of our Nation.
    In conclusion, I want to, again, thank Chairman Lautenberg, 
S. 294 cosponsors, for recognizing what we, in the States, have 
seen firsthand, the demand for fast, reliable train service. 
Working together, the states and the Federal Government can 
provide the mobility options that passenger rail can bring to 
our citizens.
    Thank you for the opportunity to speak to you today. I 
appreciate your attention and look forward to answering your 
questions.
    [The prepared statement of Mr. Busalacchi follows:]

 Prepared Statement of Hon. Frank J. Busalacchi, Secretary, Wisconsin 
    Department of Transportation; Chair, States for Passenger Rail 
                               Coalition
    Chairman Lautenberg, Ranking Member Smith and distinguished 
Senators, my name is Frank Busalacchi. I am Secretary of the Wisconsin 
Department of Transportation and Chair of the States for Passenger Rail 
Coalition.
    I am also a member of the National Surface Transportation Policy 
and Revenue Study Commission. The National Commission is working to 
construct a new 50-year vision for the Nation's transportation system. 
We are in the midst of our deliberations and my comments do not 
represent the views of the National Commission. Every Commissioner is 
working to keep an open mind on all issues.
    I appreciate this opportunity to share my comments on passenger 
rail issues and Senate Bill 294. This bill is an important first step 
in creating a passenger rail program to meet the mobility needs of the 
public.
Wisconsin Passenger Rail Initiatives
    Let me begin by focusing on Wisconsin. As Secretary of Wisconsin 
DOT, I know firsthand that the American public is clamoring for 
expansion of passenger rail services.
    Our state provides financial support to Amtrak's Hiawatha Service, 
which operates in the busy Milwaukee to Chicago corridor. Since 1989, 
we have committed almost $100 million in capital and operating support 
for existing and future Amtrak service in Wisconsin. This includes 
annual operating support, new or renovated stations, rail corridor 
acquisition, crossing improvements, and planning studies.

   Wisconsin has worked in partnership with the State of 
        Illinois to provide annual operating support for Amtrak's 
        Hiawatha Service. Our state provided approximately $6.5 million 
        last year. Wisconsin Governor Jim Doyle has proposed another 
        $500,000 in his 2007-09 biennial budget to add a car to each 
        train, since many of the trains are so popular they now have 
        standing-room only for a 90-minute trip.

   Our state has also undertaken three major station 
        development projects for Hiawatha Service customers. In 2005, 
        we opened a new passenger rail station at Milwaukee's General 
        Mitchell International Airport. In 2006, the village of 
        Sturtevant replaced a 100-year-old station with a brand new 
        facility. Later this year, we will finish a $16 million 
        renovation of the downtown Milwaukee station. This public-
        private partnership will provide a new multimodal facility for 
        Amtrak trains and Greyhound buses, along with commercial 
        development opportunities.

   Wisconsin has also invested funds to look to the future. Our 
        state has conducted an environmental assessment of a project to 
        expand service from Milwaukee to Madison and has received a 
        Federal Finding of No Significant Impact (FONSI). We have 
        invested funds to purchase and preserve a portion of the rail 
        corridor for this future extension.

    The public has responded to all of these investments. Last year, 
Amtrak's Hiawatha Service carried 588,000 passengers--a 48 percent 
increase in just 5 years.
    Now, the public wants more. With Amtrak providing excellent service 
from Chicago to Milwaukee and with engineering plans on the shelf and 
ready to go, the demand is strong to expand service another 90 miles to 
Madison.
    Madison is ripe for passenger rail service. It is the state 
capital, home to the University of Wisconsin, and it boasts a metro 
population of 450,000 that is highly supportive of alternative 
transportation options.
    Wisconsin is also looking to this service as a way to provide 
energy efficient transportation that can help reduce our Nation's 
dependency on foreign oil. Intercity passenger rail uses 17 to 18 
percent less energy per passenger mile than commercial air travel or 
personal auto travel, according to the Oak Ridge National Laboratory.
    Wisconsin has already committed $48 million in bonding authority 
toward this service. Governor Doyle has proposed increasing this to a 
total of $80 million in state bonding authority as a 20 percent match 
toward future Federal funds for the Madison extension. Unfortunately, 
no program exists to provide Federal funding, and Wisconsin simply 
cannot undertake these projects on its own.
National Passenger Rail Initiatives
    Wisconsin is not alone in this predicament. The States for 
Passenger Rail Coalition represents 28 states that support intercity 
rail service around the country. Many states share Wisconsin's 
experience and frustration regarding passenger rail service.
    Virtually all of Amtrak's ridership gains over the past several 
years have come through state-sponsored services.

   Fourteen states provide annual operating support for Amtrak 
        intercity corridor services.

   These state-supported services account for 35 percent of 
        Amtrak's daily ridership and about half of all passenger trains 
        in the system.

   State-supported services such as Pennsylvania's Keystone 
        Service, Illinois' Chicago to St. Louis trains, the Downeaster 
        in Maine, and Oklahoma's Heartland Flyer have joined 
        Wisconsin's Hiawatha Service in realizing double-digit 
        percentage increases in ridership.

   A GAO report \1\ from this past November notes that total 
        ridership on the state-supported corridor routes increased by 
        18 percent from 2002 through 2005, while ridership growth on 
        other parts of the system remained relatively flat.
---------------------------------------------------------------------------
    \1\ U.S. Government Accountability Office.

    From Washington to Florida, from New York to California and 
everywhere in between, states have committed hundreds of millions of 
dollars for short-term, incremental improvements that have fueled the 
growth in Amtrak ridership. States have completed environmental 
analyses, put plans on the shelf, and have passengers ready to board 
the trains. Around the Nation, 35 states have developed intercity 
passenger rail plans.
The Support for S. 294
    What's missing is a strong Federal partner to make it happen. 
That's why I am grateful to Senator Lautenberg for introducing S. 294, 
the Passenger Rail Investment and Improvement Act of 2007.
    This legislation will stabilize Amtrak with necessary operating 
funds for the next 6 years. The bill provides $6.3 billion for Amtrak 
to implement capital projects, including those on the Northeast 
Corridor. It also lays the basic framework for Amtrak to work in 
partnership with the states on an 80/20 Federal-state share to 
implement regional capital projects.
    Both the Wisconsin DOT and the States for Passenger Rail Coalition 
endorse S. 294 as an initial step to bring fast, reliable and energy-
efficient passenger rail service to a public that is demanding mobility 
options.
The Needs Beyond S. 294
    While S. 294 is a good start, it does not contain the funding 
necessary to meet states' needs around the country. Of the $6.3 billion 
in capital funds, state-sponsored projects are eligible to receive only 
$1.4 billion. Under provisions of the bill, the most available to fund 
a single project in a given year is about $400 million. Wisconsin's 
Milwaukee to Madison project will require $400 million alone.
    A recent AASHTO \2\ report identified $17 billion of needs in the 
near term for rail capital projects across the Nation, including $10.4 
billion of needs for state-based corridors.
---------------------------------------------------------------------------
    \2\ American Association of State Highway and Transportation 
Officials.

   In all, the AASHTO report identified nearly $60 billion in 
        needed passenger rail capital investment over the next 20 years 
---------------------------------------------------------------------------
        in the country, including for basic Amtrak system needs.

   The November GAO report reiterated that the state-supported 
        services are the most time and cost competitive for passengers, 
        but these corridors face capacity constraints and long-term 
        funding issues for capital needs.

    Therefore, as the Senate moves ahead on S. 294, I respectfully ask 
this committee to continue its efforts to provide a dedicated passenger 
rail capital program to fund the Nation's rail needs. The Federal 
Government provides this support for highways--it is needed for 
passenger rail as well. S. 294 includes provisions that could make it 
happen--stabilization of Amtrak, support for the Northeast Corridor, 
and the beginnings of an 80/20 capital investment program for state 
initiatives.
    The States for Passenger Rail Coalition (SPRC) is willing to work 
with the Senate and the House to help craft legislation that will fully 
support the needs of our Nation.

   SPRC supports H.R. 1631, the Railroad Infrastructure 
        Development and Expansion Act for the 21st Century (RIDE-21) 
        that provides $12 billion in tax credit bonding authority for 
        states to use on corridor projects.

   SPRC also supported past legislation, including S. 1516, the 
        Passenger Rail Investment and Improvement Act of 2005, the 
        predecessor to S. 294, though the $1.4 billion in this bill for 
        state corridor grants did not fully address the national needs.

   SPRC members call for balance in the Federal transportation 
        funding programs. Only 4 percent of Federal transportation 
        dollars are dedicated to rail programs, yet rail provides 
        incredible potential to carry millions of passengers on energy-
        efficient and time-competitive services in corridors of 
        national significance.

Conclusion
    In conclusion, I want to again thank Chairman Lautenberg and the S. 
294 co-sponsors for recognizing what we in the states have seen first-
hand--the demand for fast, efficient train service by our citizens. 
Working together, the states and the Federal Government can provide the 
mobility options that intercity rail can bring to our citizens.
    Thank you for the opportunity to speak with you today. I appreciate 
your attention and look forward to answering your questions.

    Senator Lautenberg. Thanks very much.
    I want to point out something to you. The references 
typically made to the Northeast Corridor, and the Northeast 
Corridor will absorb so much of the funding. And it is the 
busiest part of the railroad. But when you look here, and you 
see that we have, actually, four lines that go cross-country 
from the South to the North, the center of the country has a 
significant participation by Amtrak in transportation needs. 
The West Coast has it. It's a universal thing.
    And, frankly, to raise questions about how we let it get 
this far into the hole is hard to understand. We complain about 
air pollution. Well, we find that, per passenger on railroad, 
compared to in airplanes or highways, it's far less consumption 
of BTUs. And so, we get something there. And having--becoming 
an expert on sitting in traffic has, frankly, helped encourage 
my support of passenger rail service, as a national railroad, 
as a national system, Mr. Boardman. And I think that unless we 
see it that way, we're making a mistake. I don't want to just 
do the Northeast Corridor. That's not enough.
    But, Mr. Busalacchi, what I see is that, while we're not 
offering enough here to take care of all the problems--we 
definitely are not--when you look at what's happened with 
Germany having spent something like $70 billion on their rail 
system, and how precious little we put into ours, when our 
country is so large, and the value so great, from having 
reasonably high-speed service for passengers--we see it. There 
are corridors begging for solutions. So, we're going to try.
    This bill, perfection is the enemy of the good. That's 
commonly said around here. And, while this bill isn't perfect, 
it is darn good, in my view, in terms of getting us out of the 
terrible position we're in, where we're reliant on a system 
that, in itself, is overloaded. The skies are finite. And 
they--you can't find more ways to get airplanes up there. Very 
often, the flight from here, that's a 36-minute flight up to 
either New York Airport, LaGuardia or Newark Airport in New 
Jersey, it's surrounded by a half-hour wait before you get up 
in the air, and a 15-minute wait when you get there, if you're 
lucky. And so, we can't continue to function that way. It 
reduces our standing to less than first rate, and we shouldn't 
be in that position.
    Mr. Boardman, it's good news to hear that President Bush 
agrees with one area of our proposal, and that is his Fiscal 
Year 2008 budget includes $100 million toward establishing new 
passenger rail service. How would that be paid for? Would it 
come from general funds or some other source?
    Mr. Boardman. That would be general funds, sir.
    Senator Lautenberg. General funds. Do you know how come it 
is a $100 million number? What does a $100 million package do?
    Mr. Boardman. Well, it's a start for us to begin to do what 
we think is particularly important. It is a common thread of 
agreement, I think, among all parties, and even what we heard 
today here, of the importance of working with the States. It is 
important, even from the standpoint of on-time performance, 
that investments that are made by the States, that are matched 
by the States, that are a part of a private relationship with 
freight railroads, would be expected to net on-time performance 
levels of as much as 80 percent. So, the package really begins 
to address some of the things that both Frank talked about and 
Kelly talked about here today.
    Senator Lautenberg. Is the Administration prepared to 
commit to a multiyear program that will increase that funding? 
Because we hear pleas for service, whether it's to Madison and 
we have them, also, despite our crowding, we heard Governor 
Rendell talk about what happened with the acceptance of that 
line from Philadelphia to Harrisburg. So, I hope this is not a 
1-year approach. Obviously, there's going to be a change in the 
chief engineer in the next year or so, but, for the remaining 
part of the Bush presidency, we'd like to know that our chief 
engineer there would support a continuation of, and an 
expansion of, this program.
    Mr. Kummant, I served as a CEO for a very large corporation 
for many years, and we learned one thing. You offer the good 
product, people buy it. And I often put the employees first in 
our company. And it's a company that, today, employs 46,000 
people, a company we started with nothing, more than 50 years 
ago, worked very hard. And what was the key to our success was 
the quality of the service. It was easier to get customers if 
the employees were content on their job, doing what they can. 
So, our mission was, ``Give good service.'' And I would say to 
you that the improvement we've seen on the Acela and the 
Northeast Corridor, that's improving customer satisfaction. It 
still has some ways to go. But I've been on some very crowded 
trains these days, and it tells you something. And so, do you 
think that a boost in performance can help grow ticket sales? 
Because a ride is often bumpy and late, and that's a terrible 
condition. I find--my handwriting gets much worse as I try to 
do it on the train. What about the improvements in service? 
What do you think that might do for us?
    Mr. Kummant. I agree with you. We have a number of 
different models. It's difficult to estimate, but I think if 
you just look at the Acela experience, and you look at the 
first quarter of this year, where we had--the difficulty we had 
with the brakes, some time back--we now have very clean year-
over-year comparisons. And, again, we see we're consistently up 
double-digit. We've worked very hard on that product. We're 
running it around 90 percent on-time performance, even while 
we've reduced the travel time. We also have worked very hard on 
the onboard culture. We have done that, as well, for example, 
on the Capitol Limited between Washington, D.C., and Chicago. 
And we do really see a response. But there's no doubt there's a 
very direct correlation between on-time performance, 
ridership--and certainly the experience that people have brings 
them back. Even if on-time performance is not as good, the 
experience is a very big deal. And clearly, our front-line 
employees are doing a great job on that product.
    So, we certainly believe there is considerable upside.
    Senator Lautenberg. Mr. Busalacchi, as a member of the 
National Surface Transportation Policy Commission that we 
created in the highway bill, can you say that the Commission is 
taking seriously the role of passenger rail in the Nation's 
future?
    Mr. Busalacchi. Yes, Mr. Chairman, we are. We've taken a 
lot of testimony around the country. We continue to do that. 
There are those of us--a few of us on the committee that take 
intercity passenger rail very, very seriously. And I can assure 
that this will be part of the final report that we give back to 
Congress.
    But I would like to say, Senator, that what's going to be 
critical here, and why Europe is just--and other nations--have 
moved so far ahead of us, is commitment. It's commitment on the 
part of the Federal Government. And it's become very clear, as 
we're getting around the country and that we're talking to the 
various areas and the various States, that the commitment is 
not there. And this is what we really need. If we get the 
commitment, the real commitment to dollars, we can make this 
system work. We've all said it here today, that people are 
riding the trains in record numbers. And that will continue to 
happen, but we're going to have to do it so we do make these 
trains on time.
    Senator Lautenberg. Well, we do have to complete our 
picture of serious intent, because that's the only way it's 
going to happen. That, unfortunately, has not been the case for 
the past several years. One year, there was so little money 
that it was obvious it was the intention of the Administration 
to bankrupt Amtrak. But we fought hard, and we kept it 
breathing. And now I think it's coming alive in a very 
significant way.
    Senator Carper?
    Senator Carper. Thanks, Mr. Chairman.
    And, to our witnesses, thanks again for being here, and 
thank you for your testimonies.
    I'm going to telegraph a pitch. I'm going to ask each of 
our witnesses--after I've directed a question to Mr. Kummant, 
I'm going to ask each of our witnesses just to give us some 
constructive criticism for our bill. Mention a couple of things 
that you think maybe we should change as we move it through the 
amendment process here in committee and on to the floor. If you 
could think about that, I would appreciate it.
    And, while you're thinking about that, I'm going to ask Mr. 
Kummant, if he will, just to share with us your vision for 
passenger rail service in this country in the first part of 
this century.
    Mr. Kummant. Again, as we go out and talk, as we've heard 
here today, it's very difficult to leave this city and find 
people that don't want passenger rail services. And I think, as 
Governor Rendell said, the most dramatic growth, if we look out 
10 or 20 years, we will see dramatic growth in the State in the 
intercity corridors, anywhere between, again, 100- to 500-mile 
types of stretches. And those numbers can, I think, easily 
double and triple. The challenge will be to come up with a 
capital funding structure and an approach to work with the 
freight railroads on the existing right-of-ways in order to 
make that happen. While I do think that, you know, true high-
speed, meaning TGV European-style rail, certainly would be 
wonderful to do. And in the future, there's no doubt we will 
have lanes that--someday that have trains of that nature. But 
we can do an awful lot with conventional equipment today that 
runs up to 80 to 100 miles an hour. And that becomes very 
meaningful service over those shorter stretches.
    So, again, I see State DOTs growing dramatically in their 
rail knowledge. I see, you know, capital programs in 
conjunction with freight railroads where there are very 
specific capacity slots available for both freight and 
passenger in order to minimize congestion problems. And another 
piece of this has to be significant expenditures on equipment. 
And I think there's a lot of room for everything we're looking 
at. For modern equipment, we desperately need to modernize our 
existing fleet. I think that alone will drive a lot of 
ridership, as well.
    So, again, we see the States taking a larger and larger 
role, States and regions, in defining specific corridor 
service. That's where the dramatic growth will be.
    Senator Carper. Do you serve--as the head of Amtrak, do you 
have a working relationship with the presidents of the freight 
railroads? Is there an association or a group that you meet 
with?
    Mr. Kummant. Well, there is an association, but I've 
actually taken it as somewhat of a personal mission to go out, 
and, in fact, I just finished a cycle of meeting with four CEOs 
of the U.S.-based Class I railroads, and I'm in the process of 
scheduling meetings with our two Canadian partners. One of my 
goals is really to bring the organizations closer together. 
There's no doubt there are moments when there have been--
perhaps not contentious, but not very close relationships. And 
I think we see that already moving. So, I have, personally, met 
with the CEOs. I intend to continue to do that and really, on a 
personal level, talk through issues. We see--we have very 
constructive conversations going with UP. And we look as though 
we'll be coming up with a new agreement there. And, again, it's 
about--it is about capacity and capital. Now, there are always 
issues to work on, in terms of dispatching and actual 
operations. We don't want to minimize that. And clearly, we 
need to be working those issues. But we, as an organization, 
need to get, and we're in the process of getting, closer to the 
freight railroads. That's part of the answer.
    Senator Carper. I remember visiting, once--I believe it was 
Burlington Northern Santa Fe's control operations down there--I 
believe, in Texas--and had these huge boards that 
electronically display all kinds of things, in terms of what's 
going on throughout their system at that point in time. 
Interesting, one part of one board--and the boards are probably 
as large as this--as tall as this room--it's a huge--it looks 
like a stadium in which they do this operation, or an arena--
but one of the things that they were following was how well the 
company is doing, in terms of helping Amtrak to realize on-time 
performance, and, by doing that, to increase the bottom line at 
Burlington Northern Santa Fe.
    Some of the freights have historically had a pretty good 
working relationship with Amtrak, some have not. Union Pacific 
was one that always has a history of not having a good 
relationship. And let me just say, I am encouraged by what you 
just reported, and I hope that that will be more the norm, 
rather than the exception.
    Before I turn to our other panelists, let me just ask you 
to comment--you and I have talked about the--how difficult it 
is to attract good talent to do some high-skill work for--on 
trains, and the difficulty that you face when you try to hire--
whether it's electricians or other skilled tradesmen and -
women. Would you talk about that and share with us what----
    Mr. Kummant. Sure.
    Senator Carper.--what you think we ought to do, and what 
you need to do----
    Mr. Kummant. Well, that's right. I----
    Senator Carper.--the Board needs to do?
    Mr. Kummant. Look, there's no question, we've had two-
thirds of our workforce without an agreement for 6 years. 
That's not good. I've worked very hard over the last 6 months, 
in terms of a personal outreach to the unions. And I think, you 
know, there's no doubt there's a--there's a fundamental piece, 
there are going to be issues relative to workplace flexibility 
that we have to continue to work through. I'm absolutely 
committed to getting a fair wage settlement, and I suspect, in 
the end, the freight railroads will most likely have a 
settlement that probably sets a pattern for us. So, I think the 
base salary issues could well likely be set in a pattern that 
way, and--which will leave us to work through, you know, some 
sort of signing-bonus issues and workplace flexibility issues. 
But there's no doubt in the skilled jobs, like electricians, 
our folks are underpaid, they are not at market. It's critical 
for us to be at market and really be able to manage to maintain 
equipment as sophisticated as the Acela. So, that's very 
important to us. And I'm committed to continue going down that 
path.
    Senator Carper. I think everybody sitting up here was very 
supportive of trying to provide $1.4 billion in the continuing 
resolution for the balance of this year in order to give Amtrak 
the ability to--and the Board the ability--to try to negotiate 
a settlement with its union workforce. And we came close. We 
got to $1.3 billion. And everybody here pushed very hard for 
that. And we'll certainly endeavor to do as well or better next 
year. Probably better. I hope.
    Let me turn to our other panelists, if I could, some 
constructive criticism. And, Ms. Taylor, you were effusive in 
your praise of the legislation that Senator Lautenberg, Lott, 
and the rest of us have cosponsored and introduced. How could 
we make it better? I'd like to say, ``Everything I do, I can do 
better,'' and that includes all the legislation I've ever 
introduced or written, and probably this bill, too. What could 
we do better?
    Ms. Taylor. Well, Mr. Chairman and Senator, I think if 
you--the part that we really appreciate is the cost-allocation 
methodology, looking at States proportionally paying a fair 
share, because that's what we are doing on the Amtrak Cascades 
Corridor. So, anything to do, strengthen that and make sure 
that that stays intact, it is important. But looking at the 
years of credit, perhaps some State cycles don't really match 
those years, as well, so maybe it could be expanded a little 
bit to add years as to what the credit window is. And making 
sure that credit is as flexible as possible. I know that 
different States made different kinds of investments. So, to 
make sure that that isn't somehow leaving something out that 
was important for that service to exist.
    Senator Carper. All right, thank you.
    Is it ``Secretary Busalacchi?'' How do you pronounce your 
name?
    Mr. Busalacchi. ``Busalacchi,'' you did a good job.
    Senator Carper. Oh, OK. All right, thank you.
    Mr. Busalacchi. Thank you.
    Senator Carper. I've been listening to Senator Lautenberg.
    [Laughter.]
    Mr. Busalacchi. Over the years, it has been hammered into 
the ground pretty good, so you did good.
    [Laughter.]
    Senator Carper. Constructive criticism. How could we make 
this a little bit----
    Mr. Busalacchi. Well----
    Senator Carper.--proposal better?
    Mr. Busalacchi.--you know, we're very upbeat about the 
bill, Senator. We think the bill is just an excellent piece of 
legislation. Obviously, we would like to see the piece for the 
State-sponsored amount a little bit larger than the 1.4 
billion, because there are so many projects that the States 
have in this country, the needs in this country are huge. And 
when you talk about passenger rail, they're huge. And when you 
add everything else that's going on in transportation, the 
dollars are daunting. But we like the--we like the bill a lot. 
I just want to stress, again, that we need a Federal partner. 
It's going to be very, very difficult for any of the States, 
whether it's the Governor or whether it's Ms. Taylor, any of 
us, to do anything here unless we have a real strong Federal 
partner.
    And I do understand--you know, Alex talked a little bit 
about the situation----
    Senator Carper. Mr. Secretary, my time is limited, so I'm 
going to ask you to----
    Mr. Busalacchi. Oh, all right. I'm sorry.
    Senator Carper. I'm going to--thank you for--thank you for 
that. And if you--if some constructive changes you can think of 
that should be made, we want to hear. OK? Please. And thank you 
very much for being here, and your comments.
    Mr. Kummant, constructive criticism on our bill, please?
    Mr. Kummant. Again, I think the most--I guess I'll just go 
to where I think the most important pieces are, and clearly the 
State/Federal matching piece, to us, really opens this whole 
thing up, because there it's both about, you know, capital and 
equipment. We'll probably have to, I think, continue through 
some of the--some of the oversight issues. Look, there's no 
doubt organizations need pressure to improve things. I think 
one of the--one of the thorniest issues is obviously the on-
time performance issues, how that's monitored, how that's 
looked at. I think it's a very thoughtful bill on those fronts. 
But I think a number of people may still go back and think 
about that, you know, how you drive that. And it may be linked, 
in some way, as well, with capital input. But, again, I just 
want to say that, fundamentally, the capital matching piece 
really opens this up, and a multiyear funding structure. In the 
end, staggering from 1 year to the next is something that hurts 
the organization a great deal. And so, any continuity in any of 
the provisions is a big plus.
    Senator Lautenberg. Thank you, Senator Carper.
    Senator Carper. Thank you very much.
    Senator Lautenberg. Senator Klobuchar?
    Senator Klobuchar. Thank you, to the panel. Thank you, Mr. 
Chairman. And I am new on this Subcommittee. And, just so you 
know, I'm from Minnesota. And I have always been a big fan of 
rail transportation. In fact, I grew up--for the first 8 years 
of my life, our only vacation was taking the Milwaukee Road, 
Mr. Busalacchi, to Milwaukee from Minneapolis, to visit my 
grandma. And then, I continued to take train, including the 
line from Seattle to Portland--I've taken that line before, Ms. 
Taylor--and I have--I appreciated all the--the chart that 
Senator Lautenberg put up there about the saving of energy and 
the issues with traffic jams that we're seeing in Minnesota. 
We're starting to see some commuter rail that we're going to be 
doing in our State. But I'd also like to add, I love going on 
rail, because then my husband and I don't have any arguments 
about directions.
    [Laughter.]
    Senator Klobuchar. So, you might want to include that in 
your future presentations.
    But I had some questions. Secretary Busalacchi, first of 
all, you talked about that line, the high-speed line, Chicago 
to Milwaukee, and then potentially expanding it to Madison. And 
I know that Minnesota is part of this States for Passenger--the 
Rail Coalition that you've talked about. Has there been talk 
about expanding beyond that?
    Mr. Busalacchi. Oh, absolutely. Minnesota's a big part of 
our plans. You know, once we extend to Madison, the next step 
will be to Minneapolis. That's--and we just think that this 
corridor has so much potential, Senator, you know, 
economically, providing a lot of transportation for the people 
in both of the States. So, most definitely, Minnesota will be 
part of this.
    Senator Klobuchar. Good.
    And then, Mr. Kummant, the Empire Builder, of course, goes 
through Minnesota, Red Wing, and Winona, and then up through 
Minneapolis/St. Paul and then beyond. Could you talk a little 
bit about that route and what's been happening with that, the 
ridership on that route, and where you see the future for that 
route?
    Mr. Kummant. Well, that continues to be one of our best 
routes, one of our best long-distance draws. And one of the 
things we often point out about long-distance, if you look at 
the Empire Builder together with the Coast Starlight, you're 
talking about almost a million riders a year. You're in the 
800,000 or 900,000 range. So, that will continue to be, really, 
one of our iconic routes. We'll continue to work on the quality 
of that service. So, basically, what I would say is, that will 
be there for a long time to come, and we just endeavor to make 
it--to make it better every year.
    Senator Klobuchar. And what's the ridership--and I 
remember, a few years ago, them closing down one of the routes 
or something----
    Mr. Kummant. I think it's about--it's about half a million 
people a year ride it. I'm--glance back and get a nod here. 
Yes, it's about half a million people a year. So, a lot of 
people see that stretch of the world. But I also know it 
provides some very real transportation to some of the smaller 
communities, particularly in some of the winter months.
    Senator Klobuchar. Right. And then, you talked about the 
ridership. And, since I'm new on this Committee, if you could 
give me some historical perspective on that. You said it went 
up slightly from last year.
    Mr. Kummant. Yes----
    Senator Klobuchar. What has been the status of Amtrak's 
ridership?
    Mr. Kummant. Last year, we had something approaching 24 
million riders, and it has been--over a multiyear period, it 
certainly has grown over the years. There was a peak right 
after 9/11, and a slight dip. And, as we've seen the 
performance improve over the last few years, we have, as a 
system, continued to creep up a couple percent a year. I'll 
have to glance over my shoulder here, as well. I'm----
    Senator Klobuchar. I know. He's there.
    Mr. Kummant.--quite new, also. So, in a 5-year trend, I 
probably can't give you a very specific number. But it's been--
it has been growing, as a total system, a percent or 2 a year 
since the--there was a bit of a dropoff after the 9/11 surge.
    That being said, if you think about the Northeast Corridor 
alone, you're talking, there, about 11 million in ridership. 
Acela, itself, is about 3 million. And there, you see Acela 
growing very dramatically.
    Senator Klobuchar. I'm glad that Ms. Taylor and Mr. 
Busalacchi--did I do that right, Frank?
    Mr. Busalacchi. You got it.
    Senator Klobuchar.--are on the panel, I know the Northeast 
Corridor is so well traveled, but, there has just been a new 
renaissance in our State, and I'm sure you've seen the same 
thing--with an interest in rail, where people that, before, 
thought that, ``That's nothing I'm interested in. I get in my 
car.'' We have a line that the Congress has helped to finance, 
going from the Twin Cities to--toward St. Cloud. It stops in a 
town called Big Lake. And then, we also have light rail going, 
for the first time. We were behind the eight ball in Minnesota 
on the rail. But there's just much, much interest in it. And I 
think it's important to keep this in mind. And I--when you 
said, ``We'll build it, and they'll come,'' I just wondered 
if--you know, if you could--we have this bill, which is very 
good, but, as you go forward, if you could have more, what you 
would see as a vision for the Midwest, and what you would like 
to see done there.
    Mr. Kummant. Sure. Well, in general, let me say, outside of 
the eastern seaboard, I would love to see a major corridor that 
really catches fire and attracts capital from all areas. I 
mean, I do think there is opportunity to look for private 
capital, as well. And those would take some very specific 
approaches and instruments. But if you can find routes where 
fluidity helps passenger rail and multiple freight railroads, I 
think you've got a formula for really being able to expand 
capacity with private capital, as well.
    Take, for example--now, this would be passenger, but I 
think you could get from downtown Detroit to downtown Chicago. 
Now, it would take some significant capital to get across some 
very congested areas. You know, we're talking about $500 to a 
billion dollars, something like that. But, nevertheless, you 
could have 80- to 100-mile-an-hour service between those city 
centers. You know, I love the service between St. Louis and 
Chicago, as well. And then, you can add things--I would love to 
add things across the Nation--and, again, it would have to be 
in conjunction with the freight railroads--dedicated WiFi, for 
example, along those lanes. You start thinking about time and 
place differently if you can work continuously on a train, for 
example, on your computer, with very high-speed transmission.
    California still, I think, is rich in opportunity. If you--
if you looked at a real passenger lane between the Bay Area and 
L.A., I mean, it's about population centers.
    But I think all the Chicago-centered lanes can be expanded, 
improved, and really driven in ridership. So, Illinois's done a 
great job, and, again, with the surrounding partnerships. The 
Hiawathas are a great story, where everything that's done 
there, I think, has, in the end, exceeded any forecasts. So, 
it's about capital and partnership with the freight railroads.
    Senator Klobuchar. Thank you very much.
    Senator Lautenberg. Thanks very much.
    We see, now, in New Jersey, that private capital is to 
our--one of our major resort areas, Atlantic City, is coming in 
to help buy cars and things of that nature, that--there is a 
demand for rail service that I think is unmatched since the 
earliest days of the railroad. But we do see that when lines 
are offered, that the response is quite extraordinary. And we 
are now creating something called the Transit Village 
Transportation Center, and building homes around there that 
people can get to the trains--because commuting between New 
York and New Jersey is quite extensive. And there's a lot of 
interest in being near public transportation, and especially if 
the--if it's a good rail system, where reliability, et cetera, 
is provided. When you see how much pollution we might save, and 
how much oil we might not need, or can reduce from having to 
buy, the advantages are so many.
    And, Mr. Boardman, I thank you for your statement and your 
interest. I think it's important that we have the full energy 
of the Administration employed here. It can make a huge 
difference. And I've heard some good comments. I read your 
testimony, and a little more concerned about the 
Administration's view--and what we have to do to get through 
this. We can't have a third-class leg in our transportation 
needs. If we spend $15 billion a year on aviation, it has made 
aviation, until most recently, an ideal way to travel. But our 
country needs efficient transportation in order for us to keep 
up with the growth of our population, with the competitive 
world that we live in. And I'd love to have the kind of support 
that we hear requested from our friends in the States. Yes, 
it's tough. It's tough in New Jersey. We have a State that's 
highly indebted, and we can't find a lot of money to put into 
systems. But we are scratching it and muscling anything that we 
can do to get that support, because we know that's the payoff. 
It may never pay off in precise dollars, but the ancillary 
benefits that come are fantastic.
    And so, I thank each of you for your parts, especially here 
this morning. It was a good hearing, and I'm pleased to see 
that there is enthusiasm out there for it. We're going to work 
very hard, and I want to be in the cab of the newer, the latest 
trains, wherever that corridor is. When--talk about a corridor 
you were going through, Mr. Kummant--railroad access from Los 
Angeles to Las Vegas--I mean, it would be--it would be 
fantastically attractive to people who make that trip. And the 
cities around the Great Lakes--I mean, this--I think this map 
is really impressive. It touches almost every State in the 
country. And places, like Montana, that are relatively remote, 
that rail service that goes through there, even though it comes 
through, I think, at very late hours--or very early hours in 
the morning, because it's a cross-country journey, is a very--
an essential factor. We have Essential Air Service. We need 
Essential Rail Service.
    Thank you all for coming.
    This hearing is concluded.
    [Whereupon, at 11:30 a.m., the hearing was adjourned.]
                            A P P E N D I X

Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                        Hon. Joseph H. Boardman
    Question 1. The President's Fiscal Year 2008 budget includes $100 
million toward establishing new passenger rail service. Would this be 
budgeted out of general funds, or from some other source?
    Answer. The President proposes that this be funded from the General 
Fund of the Treasury.

    Question 2. What is the $100 million figure based on? Does the 
President believe that $100 million could be spent on passenger rail 
projects in FY 2008?
    Answer. The number is admittedly a rough estimate of what could be 
obligated in the first year of this capital grant program and reflects 
the fact that a limited number of States such as California, Illinois, 
North Carolina, Virginia, Washington and Wisconsin have advanced plans, 
including environmental analyses, completed for projects and could 
compete for grants in the first year.

    Question 3. Is the Bush Administration prepared to commit to a 
multi-year program that will increase funding for passenger rail? Or is 
this just a one-year approach?
    Answer. The Administration proposes that an ongoing grant program 
be created as part of the reform of how this country provides intercity 
passenger rail service. A long-term Federal/State partnership to 
support intercity passenger rail was one of the five principles for 
reform articulated by former Secretary Norman Y. Mineta in 2002 and 
incorporated into the Administration's legislative proposal, the 
Passenger Rail Investment Reform Act, which was submitted to Congress 
in 2003 and 2005.

    Question 4. Your testimony states that: ``The Administration 
believes that Amtrak's debt is a private corporate matter and should 
remain so.'' Do you believe, as an Amtrak Board Member, that the 
corporation's debts should be paid at all? If so, and assuming no 
substantial increase in state payments to Amtrak, why does the 
Administration's proposal not provide sufficient funding for Amtrak to 
operate its system and pay its debts?
    Answer. As the Secretary's representative on Amtrak's Board of 
Directors, I believe that Amtrak should meet its debt service 
obligations and do so within the fiscal resources available to the 
corporation. Such obligations should take precedence over other uses of 
these resources such as subsidizing food and beverage service. It is 
important to point out that all of the debt obligations of the 
corporation were undertaken with the clear knowledge by the corporation 
and the lenders that this debt was not guaranteed by the Federal 
Government.

    Question 5. Assuming no substantial increase in state payments to 
Amtrak, does the Administration believe that its operation subsidy 
proposal of $300 million for FY 2008 is sufficient to operate the 
railroad without having to undergo major cuts in stations served or 
declare bankruptcy?
    Answer. The Administration believes that decisions by Amtrak's 
management on what routes and services Amtrak operates should be made 
based upon the availability of financial resources to support these 
routes and services. Management must focus its efforts to improve 
efficiency and cut costs and some tough decisions may be required in 
order to remain solvent. This is no different from what other private 
for-profit corporations must do.

    Question 6. You serve as the Secretary's designee on the Amtrak 
Board. Did you vote to approve Amtrak's legislative request for FY 
2008? Why or why not?
    Answer. I abstained from the vote on the management-proposed 
legislative report and grant request because it was inconsistent with 
the President's proposal.

    Question 7. Do you feel you are sufficiently aware of the Federal 
subsidy and revenue needs of the corporation in order for it to 
continue to provide current levels of service?
    Answer. Yes.

    Question 8. Your testimony states: ``Amtrak is an outdated monopoly 
that is based on a flawed business model. It does not provide an 
acceptable level of service, nor has it been able to control its 
finances.'' As an Amtrak board member, what actions have you taken 
specifically to encourage Amtrak's provision of an ``acceptable level 
of service'' and what actions have you taken specifically to strengthen 
Amtrak's ability to ``control its finances?''
    Answer. As Secretary's Peters' representative on Amtrak's Board, I 
am an advocate for efforts to improve the safety, quality and cost 
effectiveness of the services Amtrak provides, to improve Amtrak's 
financial management practices, and to permit the Corporation to live 
within the financial resources it has available. However, any 
discussion of the specifics of the pre-decisional positions taken by 
any of the Board members would have an adverse impact on the 
deliberative process.

    Question 9. Do you, and does the Administration, believe that, per 
passenger-mile traveled, passenger rail offers:

        a. The opportunity to reduce greenhouse gas emissions in the 
        U.S.?

        b. The opportunity to reduce oil consumption in the U.S.?

    Answer. Like so much related to Amtrak, there is not one answer 
that covers all of the services that Amtrak provides. In relatively 
well patronized intercity corridors such as between Washington and New 
York City, the answer is yes. On a longer corridor where an Amtrak 
consist of two locomotives and five cars with a seating capacity of 
several hundred carries less than 100 passengers on a trip, the answer 
is no.

    Question 10. Do you, and does the Administration, believe that 
investment in passenger rail infrastructure can provide benefits to 
commuter rail services?
    Answer. In appropriate corridors, investment in intercity passenger 
rail service could provide benefits to commuter services and vice 
versa. Each of the services should pay according to the benefits it 
receives.

    Question 11. Your testimony states: ``S. 294 is a complex bill that 
reflects much work and thoughtful consideration by the bill's authors. 
However, it falls short of making necessary reforms identified by the 
Administration and other independent experts.'' Which ``other 
independent experts'' reviewed the bill, and provided input for the 
Administration's assessment?
    Answer. The Government Accountability Office, the Department's 
Inspector General, and others have regularly outlined the shortcomings 
with how this country provides intercity passenger rail service. S. 294 
does not comprehensively address the issues they have independently 
raised. I am not aware that they have yet specifically been asked to 
comment on S. 294.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                        Hon. Frank J. Busalacchi
    Question 1. As a member of the National Surface Transportation 
Policy and Revenue Study Commission we created in the Highway bill, can 
you tell us whether the Commission is taking seriously the role of 
passenger rail in the Nation's future?
    Answer. Consistent with our mandate from Congress, the Commission 
is taking a comprehensive view of all transportation modes, including 
passenger rail. The Commission staff has compiled some issue papers 
related to passenger rail. However, one of the critical challenges we 
have with this mode is trying to understand how passenger, freight and, 
in some regions, commuter rail can run on freight rail lines that are 
already squeezed to capacity.
    On-time performance is key to passenger rail and rail line capacity 
is key to on-time performance. Working with fellow Commissioner Matt 
Rose, President and CEO of the Burlington Northern and Santa Fe 
Railroad, as well as other Class I railroads, I hope that the 
Commission will be able to acquire data to provide an accurate picture 
of capacity needs and the investment levels necessary to address those 
needs.
    Our commission meetings and field hearings have featured testimony 
on intercity passenger rail issues. At field hearings, in particular, 
witness after witness has advocated for more Federal support of 
passenger rail. The Commission needs the best analysis and 
documentation possible on intercity passenger rail, given its growing 
importance to our national transportation system.

    Question 2. Can you tell us what potential revenue streams might 
work to fund passenger rail development?
    Answer. State transportation department secretaries and members of 
the States for Passenger Rail Coalition have been careful to seek 
funding sources and revenue streams for passenger rail that will not 
adversely affect the already under-funded highway and transit programs. 
We need a dedicated intercity passenger rail funding mechanism that is 
independent of the Highway Trust Fund.
    We are seeking a Federal capital program that will provide funds to 
states for investments in both intercity passenger rail infrastructure 
and equipment. In the Federal highway and transit programs, this 
partnership generally entails an 80 percent Federal/20 percent state or 
local sharing of costs. We believe this is a sound approach for the 
delivery of an integrated national transportation system. The benefits 
of a passenger rail system will accrue to the Nation as a whole. States 
are willing to pay their share.
    Because of the magnitude of most state intercity passenger rail 
corridor projects, we are also committed to identifying a multi-year 
funding source. A multi-year funding source is needed to assure the 
completion of projects, which may take several years for infrastructure 
construction and equipment procurement.
    We have examined a variety of possible revenue sources and it 
appears that General Funds are most feasible in the short run, given 
the lack of maturity of passenger rail development in the United States 
and the magnitude of needs estimated by the American Association of 
State Highway and Transportation Officials (AASHTO) and others. User 
fees, such as ticket taxes or facility charges, could not provide the 
revenue stream needed in the short-term.
    Another potential short- to medium-term funding source to get a 
start on capital needs is bonding, specifically tax credit bonds. The 
key is to provide a federally-supported bonding structure that offers a 
true Federal-state partnership. Traditional tax-exempt bonds do not 
meet this test; while they provide a reduced interest rate to states, 
the interest and principle must still be paid by the states. Tax credit 
bonds would be structured so states pay back the principle while the 
Federal Government allows bondholders to claim tax credits, thus 
reducing Federal revenues.
    As the U.S. passenger rail system matures, and its associated 
ridership grows over time with Federal and state capital investments, 
it is likely that user fees could play a larger role in the mix of 
funding needed for capital improvements.

    Question 3. Are there other items our legislation should address 
per concerns you have heard during your participation on the 
Commission?
    Answer. I have not heard any specific concerns raised regarding S. 
294 in my activities with the Commission. However, consistent with my 
testimony before your Subcommittee, a number of those who have 
testified before the Commission have identified the need for a 
dedicated Federal intercity passenger rail funding program with 
sufficient funding available to address the needs identified by the 
states.
    As indicated earlier, a passenger rail solution will only be 
possible with the consensus and support of our freight rail partners. 
We may need to address choke points in our current rail infrastructure. 
I will work hard to assure that passenger rail is part of the modal mix 
proposed by the Commission.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Frank R. Lautenberg to 
                              Alex Kummant
    Question. How has on-time performance influenced ridership and 
revenue of the railroad across the various lines?
    Answer. Through market research, Amtrak customers consistently 
identify on-time performance (OTP) as one of the top 2 or 3 most 
important service attributes in the intercity travel market. Among 
Acela customers, OTP is the most important service attribute by a wide 
margin, due to the fact that approximately 85 percent of Acela's 
ridership is for business travel.
    In all three of Amtrak's business lines (Northeast Corridor, Long 
Distance, and State-supported/Other Short Distance Corridors), on-time 
performance delivery has significant impacts on demand--good on-time 
performance leads to increased ridership and ticket revenues, and poor 
on-time performance leads to demand losses. In general, the opportunity 
for incremental ridership and ticket revenues from OTP improvements is 
greatest when on-time performance is mediocre, say between 45 percent 
and 70 percent. Conversely, when on-time performance is already high--
say between 80 percent and 90 percent--then the opportunity for 
incremental demand from on-time performance improvements is less 
robust.
    Recent Acela performance provides an example of how OTP improvement 
can drive ridership and revenue growth. Acela OTP has improved 
dramatically from a mediocre level of 64 percent in FY05 to the 
currently high level of 88 percent in FY07, as a result of intense 
executive level focus on service delivery. Customer satisfaction with 
overall Acela service is up sharply (+14 percent), and customer 
satisfaction with on-time performance is up even more dramatically (+17 
percent) over that period. Triggered by the OTP improvements, and 
combined with travel time reductions, service frequency increases, 
service quality improvements, and more effective marketing 
communications, Acela ridership and ticket revenues so far in FY07 are 
the highest they have ever been, exceeding FY06 levels by 20 percent 
(260K riders) and 23 percent ($36.5 million), respectively.
    Because on-time performance in the Northeast Corridor, where Amtrak 
is the operator, is currently running above 80 percent, the greatest 
opportunities for incremental ridership and ticket revenues due to on-
time performance improvements now exist outside the NEC, where Host 
Railroads control the operation. Among Amtrak's Long Distance routes, 
with current on-time performance of only 43 percent, the incremental 
ticket revenues associated with a 20-point improvement in OTP is over 
$21 million year. Similarly, in Amtrak's Short Distance Corridors 
outside the NEC, where OTP is currently 67 percent, a 20-point 
improvement in on-time performance would translate into an additional 1 
million riders and nearly $28 million in additional revenue.
    In sum, the value of good on-time performance to the customer 
translates into significant favorable impacts at the fare box. It is 
the single most important improvement that we can make to substantially 
impact the financial performance of Amtrak's Long Distance trains and 
State-supported/Other Short Distance Corridor service outside of the 
NEC. With consistent OTP delivery, Amtrak is in a position to 
effectively market passenger rail service to the traveling public and 
to expand our customer base through repeat ridership and increased 
customer retention. With this dynamic in mind, Amtrak is bringing a 
stronger product management focus to its many services, and to our Host 
Railroad relationships, seeking to leverage service quality and OTP 
improvements to drive bottom line performance.

              Amtrak Service Attributes: Importance Ratings
------------------------------------------------------------------------
                                                 Amtrak         Acela
                                                Customers     Customers
------------------------------------------------------------------------
Providing a safe travel environment                   90%           86%
Providing information/annoucements about              89%           86%
 problems/delays
Leaving and arriving on time                          87%           93%
Providing good value for the money                    86%           77%
Providing consistent service from one trip            83%           84%
 to the next
Being a relaxing way to travel                        82%           75%
Treating me like a valuable customer                  81%           77%
Having helpful and pleasant personnel                 81%           69%
Having a smooth, comfortable ride                     80%           82%
Having staff who convey trust and confidence          77%           65%
Providing an enjoyable experience                     74%           63%
Being close to your home and/or destination           73%           80%
Allowing you to get up and move around                73%           68%
Having staff available to answer questions/           69%           55%
 handle complaints
Meets my individual needs as a traveler               68%           57%
Being willing to make extra effort to meet            67%           57%
 my needs
Being a fast way to travel                            65%           85%
Having convenient parking at the train                61%           56%
 station
Having visible security in the train station          57%           45%
Being leisure travel-oriented                         49%           26%
Being family travel-oriented                          41%           22%
Providing a unique travel experience                  34%           18%
Being business traveler-oriented                      33%           60%
------------------------------------------------------------------------
Scale: 100% very important-->0% not important at all.





                                                      Acela
----------------------------------------------------------------------------------------------------------------
                                                            Year-over-Year                          Customer
                                                   Actual      Ridership     Overall Customer  Satisfaction with
                                                    OTP         Change         Satisfaction           OTP
----------------------------------------------------------------------------------------------------------------
FY03                                                  57%             -9%                 na                 na
FY04                                                  59%             +1%                 na                 na
FY05                                                  64%           -17%*                71%                70%
FY06                                                  85%             +9%                77%                79%
FY07 (thru Feb)                                       88%            +20%                85%                87%
----------------------------------------------------------------------------------------------------------------
* Impacted also by April 2005 Acela equipment issues.


                                Acela Ridership & Ticket Revenues (October-March)
----------------------------------------------------------------------------------------------------------------
                                                                                                FY07% change vs
                                                FY07 (est.)        FY06           Budget     -------------------
                                                                                                FY06     Budget
----------------------------------------------------------------------------------------------------------------
Ridership                                          1,539,500       1,283,500       1,357,600     +19.9     +13.4
Ticket Revenues                                 $195,112,000    $158,588,000    $167,713,000     +23.0     +16.3
----------------------------------------------------------------------------------------------------------------

                                  
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