[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



         FREIGHT AND PASSENGER RAIL: PRESENT AND FUTURE ROLES,
                    PERFORMANCE, BENEFITS, AND NEEDS

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

                                (111-4)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON

             RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 28, 2009

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi             Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
ELLEN O. TAUSCHER, California        TODD RUSSELL PLATTS, Pennsylvania
LEONARD L. BOSWELL, Iowa             SAM GRAVES, Missouri
TIM HOLDEN, Pennsylvania             BILL SHUSTER, Pennsylvania
BRIAN BAIRD, Washington              JOHN BOOZMAN, Arkansas
RICK LARSEN, Washington              SHELLEY MOORE CAPITO, West 
MICHAEL E. CAPUANO, Massachusetts    Virginia
TIMOTHY H. BISHOP, New York          JIM GERLACH, Pennsylvania
MICHAEL H. MICHAUD, Maine            MARIO DIAZ-BALART, Florida
RUSS CARNAHAN, Missouri              CHARLES W. DENT, Pennsylvania
GRACE F. NAPOLITANO, California      CONNIE MACK, Florida
DANIEL LIPINSKI, Illinois            LYNN A WESTMORELAND, Georgia
MAZIE K. HIRONO, Hawaii              JEAN SCHMIDT, Ohio
JASON ALTMIRE, Pennsylvania          CANDICE S. MILLER, Michigan
TIMOTHY J. WALZ, Minnesota           MARY FALLIN, Oklahoma
HEATH SHULER, North Carolina         VERN BUCHANAN, Florida
MICHAEL A. ARCURI, New York          ROBERT E. LATTA, Ohio
HARRY E. MITCHELL, Arizona           BRETT GUTHRIE, Kentucky
CHRISTOPHER P. CARNEY, Pennsylvania  ANH ``JOSEPH'' CAO, Louisiana
JOHN J. HALL, New York               AARON SCHOCK, Illinois
STEVE KAGEN, Wisconsin               PETE OLSON, Texas
STEVE COHEN, Tennessee
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
PARKER GRIFFITH, Alabama
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico

                                  (ii)



     SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

                   CORRINE BROWN, Florida Chairwoman

DINA TITUS, Nevada                   BILL SHUSTER, Pennylvania
HARRY TEAGUE, New Mexico             THOMAS E. PETRI, Wisconsin
NICK J. RAHALL II, West Virginia     JERRY MORAN, Kansas
JERROLD NADLER, New York             GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         HENRY E. BROWN, Jr., South 
GRACE F. NAPOLITANO, California      Carolina
JASON ALTMIRE, Pennsylvania          TIMOTHY V. JOHNSON, Illinois
TIMOTHY J. WALZ, Minnesota           SAM GRAVES, Missouri
MICHAEL A. ARCURI, New York          JIM GERLACH, Pennsylvania
CHRISTOPHER P. CARNEY, Pennsylvania  CHARLES W. DENT, Pennsylvania
ALBIO SIRES, New Jersey              LYNN A. WESTMORELND, Georgia
MARK H. SCHAUER, Michigan            JEAN SCHMIDT, Ohio
BETSY MARKEY, Colorado               CANDICE S. MILLER, Michigan
MICHAEL E. McMAHON, New York         VERN BUCHANAN, Florida
THOMAS S. P. PERRIELLO, Virginia     ROBERT E. LATTA, Ohio
PETER A. DeFAZIO, Oregon             BRETT GUTHRIE, Kentucky
JERRY F. COSTELLO, Illinois          AARON SCHOCK, Illinois
BOB FILNER, California               ANH ``JOSEPH'' CAO, Louisiana
EDDIE BERNICE JOHNSON, Texas         PETE OLSON, Texas
LEONARD L. BOSWELL, Iowa
RICK LARSEN, Washington
MICHAEL H. MICHAUD, Maine
DANIEL LIPINSKI, Illinois
STEVE COHEN, Tennessee
LAURA A. RICHARDSON, California
JAMES L. OBERSTAR, Minnesota
  (ex officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Baker, Chuck, President, National Railroad Construction & 
  Maintenance Association........................................    47
Boardman, Joseph, President and CEO, National Railroad Passenger 
  Corporation (Amtrak)...........................................     7
Buffa, Peter, Chairman, Orange County Transportation Authority 
  (CA)...........................................................     7
Canby, Anne, President, Surface Transportation Policy Project, 
  and Member, OneRail Coalition..................................    47
Fenhaus, Leon, Director of Government Affairs, Brotherhood of 
  Maintenance of Way Employees Division, International 
  Brotherhood of Teamsters.......................................    47
Grenzeback, Lance R., Principal, Cambridge Systematics, Inc......    47
Kempton, Will, Chief Executive Officer of CalTrans, on behalf of 
  the States for Passenger Rail Coalition........................     7
Longman, Phillip, Schwartz Senior Fellow, Research Director, Next 
  Social Contract Initiative, New America Foundation.............    47
Simpson, Thomas, Executive Director, Railway Supply Institute....     7
Stem, James, National Legislative Director, United Transportation 
  Union..........................................................     7
Webb, Rick, Chief Executive Officer of Watco Companies, Inc., on 
  behalf of the American Short Line and Regional Railroad 
  Association....................................................     7
Wolfe, Ed, Wolfe Research........................................    47
Young, James, Chairman, President, and CEO, Union Pacific 
  Corporation, and Chairman, Association Of American Railroads...     7

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Cohen, Hon. Steve, of Tennessee..................................    65
Costello, Hon. Jerry F., of Illinois.............................    66
Cummings, Hon. Elijah E., of Maryland............................    67
Richardson, Hon. Laura A, of California..........................    72

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Baker, Chuck.....................................................    76
Boardman, Joseph.................................................    84
Buffa, Peter.....................................................    89
Canby, Anne......................................................    97
Fenhaus, Leon....................................................   105
Grenzeback, Lance R..............................................   120
Kempton, Will....................................................   127
Longman, Phillip.................................................   147
Simpson, Thomas..................................................   173
Stem, James......................................................   177
Webb, Rick.......................................................   186
Wolfe, Ed........................................................   200
Young, James.....................................................   218

                       SUBMISSIONS FOR THE RECORD

National Association of Railroad Passengers, Ross B. Capon, 
  President, written statement...................................   228

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

 
  FREIGHT AND PASSENGER RAIL: PRESENT AND FUTURE ROLES, PERFORMANCE, 
                          BENEFITS, AND NEEDS

                              ----------                              


                      Wednesday, January 28, 2009

                  House of Representatives,
    Committee on Transportation and Infrastructure,
       Subcommittee on Railroads, Pipelines, and Hazardous 
                                                 Materials,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2167, Rayburn House Office Building, Hon. Corrine Brown 
[Chairwoman of the Subcommittee] presiding.
    Ms. Brown of Florida. Will the Subcommittee on Railroads, 
Pipelines, and Hazardous Materials come to order.
    I want to welcome everyone to our first hearing of the 
111th Congress. I am proud to say that we are now the second 
largest Subcommittee on the Committee on Transportation and 
Infrastructure. I think that is due, in large part, to the 
increased interest in freight and passenger rail as a solution 
to increased gridlock on our national roads and the 
environmental and economic problems that our Nation is facing. 
I think it is also a reflection of the big achievement that 
this Subcommittee made last session.
    We have a number of new Members on the Subcommittee joining 
us this Congress, and I want to welcome them. Mr. Shuster and I 
are hosting a "meet to greet" with the new Members and 
representatives of the Railroads, Pipelines, and Hazardous 
Materials community on February 3 right here in this room, and 
we are asking all of our stakeholders to come out and join us 
for this "meet and greet" with the new Members.
    However, I am saddened that the new Members will not have 
the honor to meet one of our brothers, "Brokenrail," who passed 
away on December 19. "Brokenrail" served as the national 
legislative director of the United Transportation Union. We 
will have a memorial service right here in this room today at 
3:00. I hope that you all will join us for that.
    The Subcommittee is meeting today to receive testimony on 
the role of freight and passenger railroads in the U.S. 
economy, the impact of the current economic crisis on the rail 
industry, its suppliers and employees, and the benefits of 
freight and passenger rail and freight and passenger rail 
investment needs.
    Congestion has been a major problem across most of our 
surface transportation, including railroads. The U.S. 
Department of Transportation predicts that the demand for 
freight rail transportation will increase 88 percent by 2035. 
At the request of the National Surface Transportation Policy 
and Review Study Commission, the Railroad Association 
Commission has accessed the capacity of the national rail 
system to accommodate the estimated increase in freight 
traffic. The study found that the cost of improvement needs to 
accommodate rail freight demand to 2035 is estimated at $148 
billion in 2007 dollars.
    Prior to the economic crisis, the Class I railroad 
anticipated that they would be able to generate about $96 
billion of that $135 billion share through increased earnings 
from revenue growth, higher volume and productive improvement, 
while continuing to review existing infrastructure and 
equipment, leaving a balance in Class I freight rail of $39 
billion, or about $1.4 billion per year.
    Without this investment, the study estimates that 30 
percent of the rail miles and rail corridor will be operating 
above capacity by 2035 and that another 25 percent will be 
operating near capacity. Yet the economic crisis has hit the 
rail industry, and their investment needs may be greater than 
previously anticipated.
    Funding must also be provided for intercity passenger and 
high-speed rail. With concern still high about the dependence 
on foreign oil and on greenhouse gas emissions, Amtrak and the 
States are looking for opportunities to expand service. H.R. 
2095, which was enacted at the end of the last Congress, 
authorized about $13 billion for Amtrak and the States to help 
bring the Northeast Corridor to a state of good repair and for 
capital expenditures of the national rail passenger 
transportation system. We need to make sure that these programs 
are fully funded, and as we begin to develop and to reauthorize 
the next SAFETEA bill, it is critical that the needs for 
additional rail capacity for freight and passenger rail be 
addressed.
    The future of ground transportation is on our rail, whether 
it takes freight off congested highways or moves people on 
high-speed rail corridors. There is no one solution that will 
solve rail congestion or the environmental and engine problems 
plaguing our Nation. New and creative ideas from the government 
and the private sector must be utilized to increase and to 
improve both freight and passenger rail capacity.
    With this, I welcome today's panelists, and I thank you for 
joining us. I am looking forward to hearing your testimony.
    Before I yield to Mr. Shuster, I ask unanimous consent that 
Members be given 14 days to revise and extend their remarks and 
to admit the submission of additional statements and materials 
for Members and witnesses. Without objection, so ordered.
    I now yield to Mr. Shuster for his opening statement.
    Mr. Shuster. I thank the Chairwoman.
    I also would like to welcome everybody to the first hearing 
of the Railroads, Pipelines, and Hazardous Materials 
Subcommittee. Again, it is an honor for me to be the Ranking 
Member on this Subcommittee, and I look forward to working with 
Chairwoman Brown as we move through the 111th Congress.
    Our government has had a history of supporting the 
development of a strong rail network in this country, and we 
have reaped the benefits of it over the past 180-200 years, 
starting in 1862 with the land grants that made the first 
transcontinental railroad possible. The United States has 
supported the development of privately owned railroads. Our 
national investment in railroads has been repaid many times 
over, and I believe the continued investment will provide 
future generations with the building blocks for economic 
growth.
    There is a lot that Congress can do and is doing to help 
the railroads. Last year, as the Chairwoman mentioned, we did 
pass probably the most important piece of rail legislation in 
over a decade, the Rail Safety and Amtrak reauthorization. The 
rail safety provisions of that bill will bolster railroads' 
already outstanding safety records by the development of new 
technologies such as positive train control.
    The passenger rail provisions of the bill are also 
exciting. We are in the process of soliciting bids for the 
development of high-speed rail service on 11 corridors 
throughout the country . We also included provisions in the 
bill that allow private companies to bid and to operate certain 
routes that Amtrak now operates, whether by themselves or in 
conjunction with Amtrak. Private companies have a well-
documented ability to lower costs in transit operations, 
including commuter railroads, and I expect that we will reap 
the same benefits for the U.S. taxpayer with regard to 
intercity rail travel.
    Unfortunately, the freight rail industry has not avoided 
the economic downturn as we are all experiencing. At least one 
Class I railroad has been forced to furlough workers. Total 
rail volume is off by more than 18 percent this year as demand 
for rail service drops. Auto shipments are down 64 percent. 
Metals are down 41 percent. The chemical shipments are down 20 
percent. This is a critical time for the railroad industry.
    We can do more during this Congress to create an 
environment where railroads can succeed. We can enact a freight 
rail infrastructure tax credit. We can make railroads a bigger 
part of the next highway reauthorization bill, and we can fully 
fund programs that were authorized in rail safety and in Amtrak 
legislation that we passed last Congress.
    What we should not do is to interfere with the railroads' 
ability to raise capital, which is critical. Railroad 
reregulation, I believe, is dangerous policy, and I believe 
that we will return the railroads to the dark days of the pre-
Staggers, where dozens of railroads were bankrupted and where 
the government was forced to step in and prop up the industry.
    Experimenting with policies that inject government further 
into pricing negotiations between private parties is a bad 
idea, I believe. Furthermore, the STB has taken dramatic steps 
to ensure that shippers have recourse in rate disagreements by 
reforming the rate case process. We should also oppose the 
railroad antitrust legislation. Railroads are already subject 
to most antitrust laws, and the limited exemptions are in areas 
already regulated by the STB. By allowing Federal courts to 
insert themselves into rate disputes, we risk undermining the 
STB in creating an unworkable patchwork of core decisions that 
would interfere with the national rail network.
    Again, I am honored to be serving as Ranking Member. I look 
forward to working with Chairwoman Brown as we move into this 
Congress and make sure that we are doing the right things to 
strengthen the railroads, which I believe in turn will help to 
strengthen the economy.
    So thank you and I yield back.
    Ms. Brown of Florida. Thank you.
    I understand that Members would like to make opening 
statements. If we could, let's try to hold those statements to 
a minute so we can get to the great panel that we have here. We 
will start with Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Madam Chair. Congratulations to 
you and to Chairman Oberstar for the work in the 110th 
Congress, as well as to Ranking Member Shuster.
    Passing the Amtrak authorization, the railroad bill, made 
significant steps, although not as much as needed for our 
Nation's safety and passenger rail network.
    Welcome, our distinguished guests, especially those from 
California.
    Mr. Will Kempton, the director of Caltrans, welcome, sir. 
Peter Buffa, chairman of the Orange County Transportation 
Authority, just south of me. Chairman Young, who I have had the 
pleasure of meeting several times in my office, thank you, sir, 
for being here and for visiting with my elected officials last 
year in August.
    Freight and passenger rail provide great service and 
benefits, but it also creates a lot of problems for my area. 
Some of those burdens really need to be addressed, especially 
with the Alameda Corridor going through my whole district. We 
look forward to working on being able to continue to invest in 
the grade separations in areas all over the United States, to 
doing more research in the quiet zones to be able to ensure we 
provide sufficient safety, to working on properly training our 
employees and on ensuring their safety, and to working 
collaboratively to address the needs of our Nation and of our 
community to ensure the Nation's economy continues to improve.
    With that, I thank you, Chairwoman Brown, as we continue to 
work on those issues--track repair, maintenance--and all of the 
other stuff that we love dearly on this Subcommittee.
    I thank our distinguished panel, and look forward to your 
testimony.
    Ms. Brown of Florida. Mr. Moran.
    Mr. Moran. Madam Chairman, thank you very much. I will 
forgo an opening statement at your request so we can proceed 
with hearing our witnesses. Thank you.
    Ms. Brown of Florida. Mr. Miller.
    Mr. Miller of California. Thank you, Chairwoman Brown and 
Ranking Member Shuster, for holding this hearing today. I think 
it is very important to deal with this issue that tremendously 
has impact on our region.
    When imports come through the Ports of Los Angeles and Long 
Beach, most of these products are transported by rail to other 
parts of the Nation.
    On that note, I am happy to introduce Peter Buffa. He is 
chairman of the Orange County Transportation Authority. He is 
one of our witnesses today. It is good to have you here today. 
OCT is a multimodal transportation agency serving Orange 
County. Mr. Buffa also served as a Costa Mesa city councilman, 
and you were the previous mayor over there, I believe. It is 
really good to have you here today.
    The Committee welcomes the testimony of all of the experts 
we have today. It is going to be interesting to hear what you 
have to say.
    While the use of passenger and freight rail corridors is 
critical to facilitating economic growth in southern 
California, the increased rail traffic has also imperiled the 
safety and quality of life of the surrounding communities. Not 
only does the increase in freight traffic cause tremendous 
traffic delays at local grade crossings, but it affects the 
quality of life for residents surrounding those communities.
    A tremendous amount of goods come to the Nation through the 
Ports of Long Beach and Los Angeles. We have about 135 grade 
crossings in that region that are tremendously impacted by the 
ports that do ship goods over the rail. Now, a certain amount 
of it goes over our freeways also with truck traffic, but the 
bulk of it is on rail. And we have quite a challenge ahead of 
us in trying to deal with the emergency vehicles that have to 
cross those, the impact on the economy as individuals and 
trucks sit there, watching mile-long trains travel on our rails 
each day they go by. It is an issue that has to be dealt with. 
Billions of dollars of goods come into this Nation through our 
ports, and we need to take and to mitigate the impact caused by 
those goods.
    I look forward to the testimony today.
    I yield back. Thank you.
    Ms. Brown of Florida. Mr. Miller, would you like to 
introduce Mr. Buffa right now, your constituent?
    Mr. Miller of California. I just did.
    Ms. Brown of Florida. Mr. Walz.
    Mr. Carney.
    Mr. Carney. Thank you, Madam Chairwoman.
    Just briefly, I wanted to congratulate you and my good 
friend, the Ranking Member, Mr. Shuster, from Pennsylvania. I 
anticipate a great year for this 111th Congress in terms of 
what we are going to do for rail and what rail will do for the 
Nation. As we work together, we have an enormous opportunity 
here to rebuild the rail, to put more freight on the rail and 
more passengers on the rail. When we do that, this Nation will 
be stronger, healthier and safer, and we look forward to 
working with all of you in that regard.
    I want to welcome all of the folks here who are testifying 
today. I look forward to hearing your testimony and to tossing 
around a few questions.
    Thank you, Madam Chair.
    Ms. Brown of Florida. Mr. Latta.
    Mr. Latta. Thank you, Madam Chair. I will waive my opening 
statement, and will yield back my time.
    Ms. Brown of Florida. Ms. Markey.
    Ms. Markey. Thank you, Madam Chairman.
    I look forward to working on this Committee. As a new 
Member from Colorado, I know that railroads have been the 
backbone of our transportation system and have opened the West 
to economic development, so I look forward to working with you 
on this Committee and on the future role and needs of railroads 
in this country. Thank you very much.
    Ms. Brown of Florida. Thank you.
    Mr. Cao.
    Mr. Cao. Thank you, Chairwoman Brown and Ranking Member 
Shuster.
    At least the southern part of Louisiana has been very much 
impacted by Katrina. For the last 3-1/2 years, the railway 
system has been one of the instrumental instruments in economic 
development in the area. I would hope to work with all of you 
in order to provide greater services and also to help the 
Second Congressional District redevelop many of its 
infrastructure and also the rail systems there in order to 
generate more economic development systems.
    So thank you very much for being here.
    Ms. Brown of Florida. Mr. Boswell.
    Mr. Boswell. Thank you, Madam Chair. Thank you for the 
intense attention you are giving to this subject.
    Just two short things. You have heard me say it before: 
Many, many years ago when I returned as a soldier from an 
assignment in Europe, I thought somebody has got it wrong. They 
are expanding their ability, and we are taking up track. Well, 
I thought I knew then who was wrong, and I was right.
    Madam Chairwoman, I hope we get into a real solutions 
discussion on how we are going to deal with these bottlenecks 
we have in Chicago. It is one of our great cities. There is no 
question about that, but we have got a problem. I know you know 
about it. We have got to deal with that, it seems to me, to 
move our economy and to move freight back and forth across our 
country. So I commend you for taking all of this on, and I am 
looking forward to participating.
    Ms. Brown of Florida. Mr. Guthrie, you pass.
    Mr. Michaud.
    Mr. Michaud. I want to thank you, Madam Chair, and the 
Ranking Member, for having this hearing. I also want to thank 
the panelists for testifying today, and I look forward to 
hearing your testimony. Since we will have votes this morning, 
I will yield back the remainder of my time.
    Ms. Brown of Florida. Mr. Teague.
    Mr. Teague. Yes, Madam Chairwoman. Thank you for allowing 
me to be on this Committee.
    I am a newly elected Democratic candidate from New Mexico's 
Second Congressional District. I am proud to be on this 
Committee, and I am anxious to listen to the input of people 
who are intimately involved in this industry.
    Thank you.
    Ms. Brown of Florida. Thank you.
    I am pleased to introduce and to welcome our first panel--
our witnesses here this morning.
    Our first witness is Mr. Jim Young, who is chair, president 
and CEO of Union Pacific Corporation and who is chairman of the 
Association of American Railroads. Welcome.
    The next is Mr. Rick Webb, CEO of Watco Companies. Mr. Webb 
is testifying on behalf of the American Short Line and Regional 
Railroad Association.
    Of course, Mr. Joseph Boardman, president and CEO of 
Amtrak. Welcome in your new capacity.
    Also, we have Mr. Will Kempton, CEO of Caltrans. Mr. 
Kempton is testifying on behalf of the States for Passenger 
Rail Coalition.
    We have Mr. Thomas Simpson, executive director of the 
Railway Supply Institute.
    We have Mr. James Stem, national legislative director of 
the United Transportation Union.
    I remember that Congressman Miller has already introduced 
his person.
    Let me remind the witnesses that, under Committee rules, 
all statements must be limited to 5 minutes, but your entire 
statements will appear in the record. We will also allow the 
entire panel to testify before the questioning of the witnesses 
begins.

 TESTIMONY OF JAMES YOUNG, CHAIRMAN, PRESIDENT, AND CEO, UNION 
   PACIFIC CORPORATION AND CHAIRMAN, ASSOCIATION OF AMERICAN 
    RAILROADS; RICK WEBB, CHIEF EXECUTIVE OFFICER OF WATCO 
   COMPANIES, INC., ON BEHALF OF THE AMERICAN SHORT LINE AND 
 REGIONAL RAILROAD ASSOCIATION; JOSEPH BOARDMAN, PRESIDENT AND 
  CEO, NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK); WILL 
KEMPTON, CHIEF EXECUTIVE OFFICER OF CALTRANS, ON BEHALF OF THE 
STATES FOR PASSENGER RAIL COALITION; THOMAS SIMPSON, EXECUTIVE 
  DIRECTOR, RAILWAY SUPPLY INSTITUTE; PETER BUFFA, CHAIRMAN, 
 ORANGE COUNTY TRANSPORTATION AUTHORITY (CA); AND JAMES STEM, 
   NATIONAL LEGISLATIVE DIRECTOR, UNITED TRANSPORTATION UNION

    Ms. Brown of Florida. I am pleased to have you here. We 
will recognize Mr. Young to start.
    Mr. Young. Good morning, everyone. I will be using a few 
slides today, so watch the screens, please.
    Chairwoman Brown, Ranking Member Shuster and Members of the 
Subcommittee, my name is Jim Young. I am chairman of the Union 
Pacific Corporation. I appreciate the opportunity to testify 
today, and I want to commend this Committee for holding this 
hearing.
    The United States freight rail system is the envy of the 
world. It is efficient and cost-effective. One train hauls the 
equivalent of 300 trucks at about half the cost. It is vital to 
our economy. Over 40 percent of our Nation's freight moves by 
train on a private system that costs taxpayers virtually 
nothing. It is friendly to the environment. Trains emit about a 
third of the emissions per ton compared to that of a truck. In 
fact, if your family vehicle were as fuel-efficient as a train, 
you would get about 400 miles per gallon. In short, freight 
rail is a vital resource for our economy that stands ready to 
accelerate the economic recovery that our entire country is 
hoping for.
    Like many companies, Union Pacific is facing extraordinary 
economic challenges. As our company started the fourth quarter 
of 2008, what had been a gradual decline in loadings became a 
sharp drop-off that surprised, even astounded, us all. In 
virtually every segment of our business, from automobiles to 
frozen chickens to X-boxes, our customers curtailed their 
shipping as credit evaporated, and consumer spending took the 
holiday season off.
    Today, approximately 1 month into the new year, we are 
still searching for a firm base from which we can start to 
recover. At today's business levels, Union Pacific has in 
storage 1,200 locomotives at $2 million each and over 48,000 
railcars. Even more discouraging is that over 3,100 of our 
employees are furloughed across our company. About half of 
these employees are covered by a new program that allows them 
to work 8 days a month and that maintains their full health 
care coverage. We have, essentially, stopped hiring until our 
furloughed employees can return to work and until the economy 
begins to recover.
    We are taking prudent steps to protect the financial health 
of our economy while being certain that we retain a fast 
recovery capability. For example, we have frozen the salaries 
of our executives, have canceled meetings, have curtailed 
travel, and have sought the help of all of our 47,000 employees 
in identifying and in implementing ways to reduce costs.
    We need to preserve our investment in the safety and 
maintenance of our railroad. That alone is well over $2 billion 
per year. We must also continue to invest in future growth that 
will make our service even more valuable to our customers. 
Financial returns drive growth investment. We are only able to 
make infrastructure investments for growth if our investors--
pension funds, mutual funds, ordinary people--have some 
confidence that they will earn a satisfactory return on their 
investments. If the economy does not begin to rebound, or if we 
are somehow prevented from earning enough to pay for growth, 
they will take their money elsewhere and we will have to reduce 
our investment in new railroad.
    There is much more to be done. Even with our record capital 
spending, our industry is only investing about half the level 
DOT studies say is needed to meet the demands on freight rail 
in the future. Clearly, our Nation is facing a monumental 
challenge. Railroads, particularly freight railroads, can be an 
integral part of meeting that challenge.
    We have three suggestions for your consideration:
    First, government must nurture policies that enhance the 
ability of the freight railroads to attract private investment 
and remain competitive. The less we utilize privately funded 
rail in this country, the more the taxpayer must subsidize 
other modes of transportation.
    Second, Congress should enact an Investment Tax Credit for 
new rail construction. We have endorsed a proposal that has 
been introduced in this Congress that would provide a 25 
percent Investment Tax Credit for new rail construction. This 
credit will allow us to accelerate our investments in rail, 
investments that are critical if we are going to meet the 
future demand for rail transportation.
    Third, Congress should enact and fund programs that allow 
States to partner with freight railroads to move forward with 
projects that benefit both the freight railroad and the public. 
The best example of this type of project is the CREATE project 
in Chicago. This multibillion-dollar project will improve the 
fluidity of the freight railroads, will enhance passenger rail 
in the city and will reduce congestion on the highways. The 
freight railroads are willing to put up the money consistent 
with the benefits that we would receive while local, State and 
Federal governments put up the resources commensurate with the 
public benefits.
    These are but three ideas for how our freight rail system 
can do even more to strengthen our economy. We stand ready to 
work with you to make them a reality. Thank you.
    Mr. Webb. Good morning, Madam Chair and Members of the 
Committee. My name is Rick Webb. I am chief executive officer 
of Watco Companies. We own 19 short lines, operating nearly 
4,000 miles of track in 16 States. I am testifying today on 
behalf of the American Short Line and Regional Railroad 
Association.
    The returning Members of this Committee know the short line 
story, and I will not repeat it here. For the new Members, let 
me just say the importance of the short line industry is in who 
and where we serve. America's 500 short lines operate nearly 
50,000 miles of track, or almost one-third of the national 
railroad network. For large areas of the country and 
particularly for small-town America, short lines are the only 
connection to the national railroad network. For small 
businesses and farmers in those areas, our ability to take a 
25-car train 75 miles to the nearest Class I interchange is 
just as important as the Class I's ability to attach that block 
of traffic to a 100-car train moving across the country. My 
Kansas grain customers cannot make the journey to export 
markets in the gulf without Class I railroad service, but they 
cannot start the journey by rail without short line service.
    The talk in Washington today is all about economic 
stimulus, and in the time I have this morning, let me make four 
points.
    First, short line railroads have enormous rehabilitation 
needs because they operate the most vulnerable track in the 
system. Today, short lines are yesterday's abandonment 
candidates. We have been very successful in turning these into 
profitable lines on a P&L basis, but we serve small customers 
who do not ship in volumes large enough to let us fund the 
enormous cost of eliminating deferred maintenance. Every time 
the Federal Government has given us a helping hand, either 
through the tax credit or through the low-interest, long-term 
RRIF loan program, which we appreciate very much, that help has 
leveraged significant additional private investment.
    On Watco's Kansas and Oklahoma Railroad, for instance, the 
tax credit allowed us to undertake a $10 million track 
rehabilitation project on a 40-mile segment over which 75 
percent of the railroad's traffic moved. We completed that 
project in 2006, and it increased speeds, improved safety and 
allowed us to increase traffic on the line for our customers. 
Without the tax credit, we would have done only 1 to 2 miles 
per year for the next 20 years.
    Second, short line projects are truly shovel-ready 
projects. Short lines are constantly installing new rail ties 
and ballasts, the amount limited only by funding availability. 
If extra funds became available tomorrow, the work gang that is 
currently installing ties and rail between milepost A and B 
would be hired to keep going to milepost C. Because virtually 
all short line capital investment is made on existing company-
owned rights-of-way, there is no regulatory, engineering, or 
environmental delay. The Short Line Association has identified 
$781 million in shovel-ready projects.
    Third, most short lines do not have the in-house manpower 
to undertake rehabilitation projects and must hire contractors 
and laborers to do the work. We estimate that the $781 million 
in shovel-ready spending would result in the creation of 30,000 
jobs during the course of the projects. These are direct jobs 
only, and they do not account for any of the economic activity 
generated by our purchases of rail ties and rock.
    Fourth, at the risk of sounding boastful, short line 
railroads are managed by entrepreneurs who have taken 
considerable personal financial risk to build new small 
businesses, and that is a process our government should be 
encouraging.
    My father was a unionized car repairman at the Kansas City 
Southern before he started our company. In 1983, he took out a 
$25,000 bank loan to begin our rail switching operations in 
DeRidder, Louisiana. That began Watco Companies. Today, Watco 
operates nearly 4,000 miles of short line track. We have a team 
of people 2,220 strong, and we move over 500,000 carloads 
annually. Hundreds of short lines across the country can repeat 
some version of the same story.
    I do not begrudge the stimulus dollars the Federal 
Government wants to devote to public infrastructure, but I can 
tell you that every dollar you devote to short line railroad 
infrastructure will leverage significant additional private 
investment, and it will allow us to create strong small 
businesses that will be an engine for continuing job creation.
    I appreciate very much the opportunity to be here, Madam 
Chair and Ranking Member Shuster, and I look forward to 
answering any questions you may have.
    Ms. Brown of Florida. Thank you.
    Mr. Webb, I hope you know that Mr. Oberstar had included 
$100 million for the short line that, thus far, has not made it 
into the stimulus. But we will continue to work toward making 
sure that rail is included in the final product that leaves 
this Congress and goes to the President.
    Mr. Boardman, I know that you cannot comment on Members and 
amendments, but there is an amendment on the floor today that 
takes out the $800 million--billion--million--million? Yes, it 
gets confusing around here with "million" and "billion." The 
amendment on the floor takes this out of the bill.
    So would you tell us how that would affect Amtrak? I have 
an amendment, you know, of $5 billion for the rail industry 
that included a substantial amount of more money for Amtrak. So 
we are waiting to hear from you. Thank you.
    Mr. Boardman. I will do my regular opening? Okay.
    Thank you, Madam Chair and Members. I am happy to be here 
today and to be given this opportunity.
    I have been in front of this Committee in two previous 
roles--first, as the commissioner of transportation for New 
York State and then, more recently, as the Federal Railroad 
Administrator, but on the day before Thanksgiving, I was given 
the opportunity to lead the finest group of men and women in 
passenger railroading in Amtrak.
    Amtrak just finished in the Federal fiscal year that ended 
in September of 2008 with a record-setting performance. The 
company had an annual ridership record of 28.7 million 
passengers, which was an increase of over 11 percent from 2007. 
Each of the three rail business lines--the Northeast Corridor, 
short-distance corridors, and long-distance trains--grew 
markedly.
    Both May and July were record months for ridership. Load 
factors were rising in the system. In time slots and services, 
the existing fleet was very nearly at capacity at the end of 
2008. This record gave everyone a great sense of the strong 
demand that existed for intercity passenger rail and the 
importance of the rail mode in delivering safer, green and 
healthier transportation for all Americans. However, in the 
first quarter of fiscal year 2009, beginning this past October, 
overall ridership has fallen below our expectations by nearly 5 
percent and revenue by nearly 7 percent below what we expected.
    Our Northeast Corridor business line generally, and 
particularly Acela Express, led our decline in both ridership 
and in revenue. Acela ridership was down 12 percent below 
expectations while revenues were off by 15 percent below the 
expectation. We are seeing a mixed result on our short-distance 
corridors. Some of those that connect with the Northeast 
Corridor, like New York City to Albany, are seeing drops in 
ridership.
    These circumstances demonstrate a strong need for funding, 
especially operations funding, at levels in our currently 
authorized bill. The critical need for Amtrak to be ready to 
meet the mobility needs of Americans in the United States faces 
a future marked by higher energy costs--everyone predicts that 
today--and a need to improve our environment.
    Congress must help Amtrak with the funding to rebuild, to 
replace and to renew its human capital, its passenger and 
locomotive fleet, and the critical infrastructure owned by both 
Amtrak and the freight railroads that carry 71 percent of 
Amtrak's train miles, or they are going to face potential 
failure of one or of many of the components of an efficient and 
critical rail network. This remarkable network provides surface 
connectivity for passengers and freight from coast to coast and 
border to border. Congressional interest must make this 
investment a national priority for the next decade or beyond if 
we are to remain a competitive and healthy economic engine in 
the world.
    One of the core competencies of our company is the 
specialized knowledge of our workforce in operating a 
nationwide passenger railroad. The men and women of our 
workforce keep this railroad glued together and operating. 
Amtrak's workforce looks like many other industries right now--
gray.
    More than 60 percent of our managers have been blessed with 
more than 50 years of life, and more than half of our total 
workforce is of the same vintage. Rail workers are generally 
eligible to retire when they reach age 60 and accumulate 30 
years of railroad employment. We face the prospect of a major 
change in our workforce in just a few years, and we must both 
invest in and change our approach to human capital planning to 
maintain our core competence.
    Our industry, both passenger and freight, is greener than 
our competitors'. We have got a smaller carbon footprint, but 
we could make a major leap forward by extending 
electrification. We should connect our rail network to the 
electric grid all over the Nation where it makes sense. That 
would go a very long way toward securing our energy future and 
in improving our environment. Railroads do not need to depend 
on liquid energy when the electric option exists and is 
available. This cannot be done, however, without a major policy 
decision by Congress.
    Programs on this scale are being undertaken elsewhere--in 
China, for instance, where they are regarded as the vital 
component of a future economic development and as a major 
element of funding in their stimulus program. I think it is $88 
billion for rail.
    I think it is time for us to look for the investment 
opportunity that will do for us in this century what the canals 
and transcontinental railroads did for the 19th century and 
what the highways did for the 20th. This is the kind of 
project, the kind of moment, which demands, as the noted 
Chicago architect Daniel Burnham once said, that we make no 
little plans.
    Thank you.
    Ms. Brown of Florida. Thank you.
    We have a vote, and we have about 10 minutes left on that 
vote. So we are going to take an informal recess. It is just 
one vote, and then we will come right back.
    Thank you very much.
    [Recess.]
    Ms. Brown of Florida. Will the Committee please come to 
order.
    Joining us now is the Chairman of the full Transportation 
Committee and, as I say, the transportation guru, Mr. Oberstar.
    Would you like to give a few words before we get started 
back into the hearing?
    Mr. Oberstar. Thank you, Madam Chair and Mr. Shuster. I 
thank you for the good work that you have done consistently on 
the rail issues, and I thank our panel for participating this 
morning.
    The issue of Freight and Passenger Rail: Present and Future 
Roles, Performance, Benefits, and Needs. It is a big subject, 
but it is a good one on which to start this first session of 
the 111th Congress.
    There are so many distinguished members of the panel. I 
want to welcome Mr. Boardman, and I want to thank him for 
continuing his service in rail and on Amtrak.
    Mr. Kempton, if I may. Will, you have been of enormous 
service as we move ahead with the stimulus initiative, or the 
recovery bill, as it is called. In the teleconference session 
we had a couple of weeks ago, your testimony that the State of 
California, Caltrans, has been receiving eight bids for every 
contract offered and that they are coming in 25 percent below 
final design and engineering estimates has been a compelling 
argument in favor of our initiative and in favor of retaining 
the $30 billion--although, I personally think it should be $60 
billion--for the surface transportation portion. It is the 
anchor element in our argument with the Congressional Budget 
Office that they are talking out of their hats in saying that 
the States cannot spend this money and cannot commit the first 
half in 90 days, $15 billion in 90 days. It is with this that I 
cite your specific experience, the biggest Transportation 
Department in the whole country. I thank you very much for your 
service and for your contribution.
    In that vein, if we are going to make progress on unlocking 
the congestion in America--in our major metropolitan areas, in 
our extended areas, and into the suburbs and exurbs--we have to 
develop far more passenger rail service than we have in America 
today. It is the fastest growing segment of transportation. We 
ought to be able to do in the United States what is done in 
France with the TGV, and in Spain with the Talgo, and in 
Germany, with the ICE, and in Italy with the MTV, and move 
people at speeds of 184 miles an hour plus. But to do that in 
this country, we are going to have to have the participation 
and the cooperation of the freight rail sector.
    In Europe, there is comparatively very little movement of 
freight by rail, which is why the European Council of Ministers 
launched a $1.3 trillion infrastructure initiative 5 years ago, 
a large portion of which is to develop freight rail service and 
to extend their existing high-speed passenger rail to build a 
2,000 mile canal across Europe to link the North Atlantic with 
the Black Sea--they are about halfway through with that 
initiative--to shift freight from highways to water service, 
but also to extend their freight rail.
    Unlocking that complexity of freight and passenger rail 
service on our side of the Atlantic is a challenge that this 
Committee has already faced and will continue to do. We passed 
the first major upgrade of rail safety in 100 years in the last 
Congress. With the participation of our ranking Full Committee 
Member, Mr. Mica, and the leadership of Ms. Brown and in 
partnership with Mr. Shuster, we passed the first authorization 
of Amtrak in 12 years. Now we have to invest in Amtrak.
    I have already leaned on the incoming Secretary of 
Transportation, that among its top three priorities the first 
is to deal with the impasse over the air traffic controller 
contract. The second is to get serious about moving Amtrak 
ahead. The third is to partner with us in the new authorization 
bill.
    So I think this hearing lays the groundwork for a great 
deal of what lies ahead of us in this country. I want to 
express my appreciation to the freight rail witness at this 
table and to the freight rail sector for getting serious about 
passenger rail and partnership. We have got a long way to go, 
but together we will do it. And I mean we will do it in this 
Congress, in this Committee.
    Ms. Brown of Florida. Thank you, Mr. Chairman.
    Now Mr. Kempton.
    Mr. Kempton. Thank you, Chairwoman Brown and Ranking Member 
Shuster and the distinguished Members of the Committee.
    I would like to begin my comments by thanking our 
California delegation for their work in transportation--Mrs. 
Napolitano, Ms. Richardson, Mr. Filner, and Mr. Miller. Their 
Membership on this Committee is testimony to their commitment 
to transportation.
    Speaking of commitment to transportation, Chairman 
Oberstar, no one in this country has the commitment to 
transportation that you do. And we appreciate very much the 
opportunity to work with you, and we were very impressed that 
you reached out to the States to ask our opinion on these 
issues, and we stand ready to assist you whenever possible.
    I am Will Kempton. I am the director of the California 
Department of Transportation. It is also known as Caltrans. I 
want to thank you for the opportunity to testify before you 
today on the benefits of intercity passenger and freight rail. 
Today, in addition to representing Caltrans, I am also 
representing the States for Passenger Rail Coalition on behalf 
of Secretary Frank Busalacchi from Wisconsin.
    I wanted to talk a little bit about the success that this 
Committee has had, the Subcommittee and the Full Committee, in 
terms of the Amtrak authorization and some of the other actions 
that you have recently taken relative to the stimulus.
    First of all, the capital matching program that you have 
included in H.R. 2095 is a huge benefit to the States that are 
spending dollars on their own to try to make sure that they 
have a viable intercity passenger rail service. In California, 
we have spent over $2 billion of our own money to upgrade our 
intercity passenger rail system to make sure we have a viable 
service. Moreover, the bill stabilizes financing for Amtrak. We 
are hopeful, as we move through the appropriations process, 
that those dollars get put out very, very quickly.
    I want to congratulate the Subcommittee and the Full 
Committee on their work on the stimulus package. As the 
Chairman indicated, we have I think crafted a very, very good 
package.
    In California, on rail alone, we think we can get $342 
million of intercity passenger rail work out the door very, 
very quickly. Our coalition of 31 States has a total of $1.6 
billion of work that is ready to go. California has seen a 
resurgence of interest in the use of intercity passenger rail. 
For the State fiscal year ending last July, more than 5.3 
million passengers rode California's three intercity passenger 
rail corridors. That is the San Joaquin service, which runs 
from Bakersfield to the Bay Area; that is the Capital Corridor 
service that runs from the city of Auburn through Sacramento to 
San Jose; and that is the Pacific Surfliner service which runs 
from San Diego through Los Angeles up to San Luis Obispo. That 
is a jump of 13 percent over the prior year.
    California is second only to New York in total Amtrak 
ridership with 20 percent of all Amtrak riders, and we have the 
second, third and sixth busiest passenger rail routes in the 
country. In fact, just a tidbit of information. Last summer, 
when the price of gasoline had topped out, our Pacific 
Surfliner service was serving more passengers than the 
Northeast Corridor, and I am very proud of that fact.
    New York, watch out.
    The benefits of passenger rail are very, very significant. 
Obviously, there are congestion reduction benefits. One example 
would be, for the service that goes between Orange County and 
Los Angeles, we are taking away the need for an additional lane 
of freeway on the Interstate 5 corridor. That is very, very 
significant in terms of the congestion reduction benefits of 
rail. Passenger rail uses 15 percent less energy per passenger 
mile than the airlines, and 21 percent less per passenger mile 
than the automobiles. It produces 60 percent fewer greenhouse 
gas emissions than automobiles, and that is a significant 
environmental savings.
    We also want to recognize the importance of freight rail. 
As a couple of Members of our delegation have indicated, the 
movement of goods through the State of California has a 
significant impact not only in our transportation system but 
also on the environment in the neighborhood of the ports.
    So as Mrs. Napolitano and others have indicated, we need 
those grade separations. We need rail improvements so we can 
ship more of that freight traffic off of trucks, off of the 
roads, onto the rails, and with the grade separations, 
eliminate some of those bottlenecks that Mr. Miller talked 
about. We want to work with you on reauthorization because we 
think that is going to be a very, very significant step forward 
in terms of attention on intercity passenger rail.
    In addition to the Amtrak authorization legislation, we 
think that the upcoming transportation authorization is 
important. The Surface Transportation Policy and Revenue 
Commission recommended $5 billion to $6 billion a year for 
intercity passenger rail. AASHTO, the American Association of 
State Highway and Transportation Officials, has suggested $35 
billion over 5 years. These are levels we have never seen 
before, but these are levels that are needed to support 
intercity passenger rail in this country.
    In closing, I would like to compare our investments in 
intercity passenger rail with other global economic 
competitors. In a January 23 article, The New York Times cited 
a World Bank report that in 2008 the People's Republic of China 
invested $88 billion in its intercity rail program after 
spending $44 billion the previous year. This is on top of 
massive investments in highways and ports over the past several 
years. If you have been to China recently, you can see the 
evidence of that infrastructure investment.
    The European Union continues to invest heavily in 
alternative forms of transportation, notably passenger rail. 
Spain, which is similar in population and in gross domestic 
product to California, has spent nearly $30 billion over the 
last 4 years to upgrade its rail system. That nation intends to 
develop a 6,200-mile, high-speed rail network by 2020 at an 
estimated cost of approximately $150 billion. That does not 
include an additional $13 billion for conventional and commuter 
rail.
    If we are to truly be competitive in the global 
marketplace, we have to address our infrastructure needs. The 
improvement of mobility and the development of alternative 
systems of transportation are vital--make that essential to our 
national economy, to our quality of life and to our standing in 
the world community. Intercity passenger rail is an important 
part of that solution.
    That concludes my remarks, Madam Chairwoman. I am happy to 
answer any questions.
    Mrs. Napolitano. [Presiding] Thank you so much, Mr. 
Kempton, for your testimony.
    Now we move on to Mr. Tom Simpson, executive director of 
the Railway Supply Institute.
    Mr. Simpson. Thank you.
    The Railway Supply Institute is a trade association that 
represents the Railway Supply Industry. Our members provide 
goods and services to our Nation's freight and passenger 
railroads and rail rapid-transit systems. There are 
approximately 750 railway supply companies in the United 
States. In a good year, our sales volume totals somewhere 
between $20 billion and $25 billion. The vast majority of these 
companies are small, with less than $10 million in annual 
sales.
    Our members provide locomotives, new railroad freight cars 
and passenger cars. As well, they provide communication and 
signaling technology and modern maintenance-of-way techniques 
to our railroads. RSI member companies also own and provide for 
lease around 700,000 freight cars, or almost 50 percent of the 
freight cars operated in North America. We build virtually all 
of the railroad tank cars operating today, and we own 70 
percent of the approximately 300,000 railroad tank cars in 
service. There is no safer way to move the hazardous 
commodities that our Nation deserves than by railroad tank car.
    I had a boss who used to say, when railroads sneezed, we 
caught a cold. I think that when railroads sneeze now, we catch 
pneumonia.
    Our economic record is decidedly mixed. As long as 
railroads continue to reinvest in their rights-of-way, then 
maintenance-of-way and communication and signaling industries 
do well and have reported a relatively good year in 2008. They 
are worried about 2009. New locomotive manufacturers have 
enjoyed strong orders in recent years, but deliveries in 2009 
may be halved from those deliveries in 2008. Railcar leasing 
firms, those companies that own those 700,000 cars, have seen 
cars returned from lease and cars idled. One of my member 
companies has reported that miles of cars have been idled 
because of the economic downturn.
    There are six major freight car manufacturers in North 
America that belong to RSI, and we have compiled order and 
delivery statistics. I just have compiled the 2008 numbers 
today, so this is relatively new news. Orders last year were on 
the magnitude of 22,000 new freight cars. Deliveries were on 
the magnitude of 48,000. Backlog freight cars ordered but not 
yet delivered were at 32,000. We have not seen orders of that 
magnitude since the early 2000s. Analysts I have talked to 
recently are predicting perhaps a 50 percent reduction in 
orders for 2009. We have not seen orders of the magnitude of 
10,000 to 11,000 since the early 1980s. You may not be 
surprised to find out that not only are freight car 
manufacturers furloughing employees, but so are the leasing 
companies and so are the component suppliers.
    Congress can help. I ask you to pass the stimulus 
legislation, not only funding for Amtrak but also funding for 
infrastructure for the materials moved by freight car. I urge 
you to pass an infrastructure tax credit providing a 25 percent 
tax credit for certain freight-rail capital expenditures. You 
should extend a short line tax credit. You should fund Amtrak 
at the levels contained in the Amtrak reauthorization 
legislation you passed last year.
    Because of the uncertainty of the appropriations process, 
we must find an alternative funding source for intercity and 
high-speed passenger rail. Remember that these steps that you 
take are preserving and are creating jobs in my industry.
    I am an optimistic person. I wondered how I was going to 
end this today, but I am deeply concerned and am worried about 
the future of the railway supply industry. Thank you.
    Mrs. Napolitano. Thank you so very much for your testimony, 
Mr. Simpson.
    We will move on to Mr. Buffa, chairman of the Orange County 
Transportation Authority.
    Welcome, sir, my neighbor.
    Mr. Buffa. Thank you, Madam Chair, Ranking Member Shuster 
and Chairman Oberstar. Thank you very much for giving me the 
opportunity to testify before you today.
    My name is Peter Buffa. I am chair of the Orange County 
Transportation Authority, a multimodal transportation agency 
which was formed in 1991 with the consolidation of seven 
separate highway, bus and rail agencies.
    I will give you a little background on Orange County. It is 
like nothing you have seen in the OC or have heard on the 
Desperate Housewives of Orange County. Do not believe any of 
that. It is the fifth largest county in the Nation, with over 
3.2 million residents. More importantly, when combined with the 
other counties of southern California, we represent 25 million 
people, about 10 percent of the population of the United 
States.
    Keeping those 3.5 million people in Orange County moving 
requires a multimodal transportation system that includes the 
12th largest bus system in the Nation and the 91 express lanes, 
a highly successful 10-mile toll road that has become an 
international model for fully automated toll collection and 
congestion price management.
    What surprises some people who visit Orange County is that, 
even though southern California is the land of the freeway and 
the car is king, we also have a vibrant regional rail network, 
both passenger and freight. Our commuter service is called 
Metrolink. It carries over 4 million rail passengers annually. 
The peak-hour ridership on Metrolink is so successful that 
without it we would have to build two more lanes on Interstate 
5 from south Orange County to downtown Los Angeles to 
accommodate that peak-hour demand.
    Our rail service runs along two major corridors. The first 
is the BNSF, the Burlington Northern Santa Fe corridor, which 
runs from the ports of Los Angeles and Long Beach--which Mrs. 
Napolitano is very familiar with--through Orange County and 
east to the San Bernardino and Riverside Counties, ultimately 
to the remainder of the United States.
    The second major rail corridor is the passenger corridor 
called the LOSSAN corridor, LOSSAN being Los Angeles to San 
Diego. Ridership in the LOSSAN corridor has grown 500 percent 
since 1990, from 1.6 to 8.5 million trips today. Some 10 
percent of Amtrak's trips nationally take place in the LOSSAN 
corridor.
    A critical element in this system is the Anaheim Regional 
Transportation Intermodal Center, or ARTIC, which will be a 
multimodal gateway to Orange County and to southern California 
and a transfer station from the LOSSAN corridor to the planned 
California high-speed rail and to the planned California-to-
Nevada super-speed rail system. Although private participation 
will be sought for this project, public funding is needed now 
to build the foundational transportation elements of the 
project.
    I would like to focus the rest of my remarks on the rail 
capacity opportunities and challenges, because that is what 
they represent, presented by these two nationally significant 
rail corridors. OCTA hopes that we can join with the Federal 
Government as a funding partner in addressing these challenges. 
The BNSF corridor is one of the Nation's major goods movements 
corridors because it serves the Port of Los Angeles-Long Beach, 
which is the largest port complex in the United States and the 
fifth largest in the world.
    To give you some idea of how we define "largest," it 
carries 16 million cargo containers a year. That is more 
container traffic than the ports of Oakland, Ventura, San 
Diego, Portland, and Seattle combined. Just under half of the 
imports to the United States travel through the Port of LA-Long 
Beach.
    If you look at the graphic on your screen right now, it 
illustrates the goods movement flow in southern California to 
local, regional and national markets. Let me hasten to add that 
we have nothing against goods movement. We really like it 
because it means business, it means jobs. There are 700,000 
jobs in southern California related to goods movement, 107,000 
of them in Orange County. Those jobs generate a payroll of more 
than $6 billion. Regionally, those ports have delivered $256 
billion in international trade to the rest of the country, 
which we think is a wonderful thing. It also creates some 
challenges for us.
    So we are interested both in improving the capacity of rail 
but also in mitigating the impacts of rail. The present levels 
are challenging our system, particularly in terms of the 
interaction of rail with roads in major arterials. Grade 
separations are a major, major issue to us, particularly when 
you think that by 2010--just 1 year away--freight train traffic 
will increase substantially. Orange County alone will result in 
road traffic delays of up to 206 minutes.
    If you look at the second graphic, that will give you an 
idea of how many grade separation projects are underway in 
Orange County but are not fully funded for which we very much 
need assistance in funding.
    So, Madam Chair, if I were to make just one point today, it 
is that a dedicated funding source at the Federal level, both 
to improve goods movements capacity and to address congestion 
mitigation, is badly needed. We very much thank this Committee 
for their leadership on this issue. There have been a number of 
proposals for a container bill, one by Ms. Richardson. At the 
State level, there was a proposal last year for a $15 per 
container fee, which unfortunately the Governor vetoed. To give 
you an idea of how critical the issue is, the ports themselves 
have now volunteered to impose a fee which would be turned over 
to the MPOs, the local Metropolitan Planning Organizations, to 
apply to that issue of increasing capacity and goods movement.
    In summary, significant as the benefits of freight and 
passenger corridors are to OCTA in Orange County, the 
challenges they present cannot be fully addressed without the 
Federal Government as a strong and financially involved 
partner. And we hope that that will become a dedicated source 
of funding through the reauthorization process this year. And 
we very much appreciate this Subcommittee's leadership on that 
issue. Thank you very much, Madam Chair.
    Mrs. Napolitano. [Presiding] Thank you, Mr. Buffa, for your 
eloquent testimony. And I can attest that is a big issue, not 
only in the BNSF line, but the Union Pacific line, the rail 
crossings, the grade separations.
    Now we have Mr. James Stem, National Legislative Director 
for the UTU, United Transportation Union. Welcome, sir. And 
thank you for your continued effort to keep our employees safe.
    Mr. Stem. Thank you Madam Chairman. We appreciate the 
opportunity to speak. We are specially appreciative of the 
honor that Ms. Brown bestowed upon Mr. Bruckenhaver. We thank 
you for the opportunity to speak.
    Chairman Oberstar, Ranking Member Shuster, I first want to 
start my remarks by thanking this Committee for their 
leadership and their guidance in the creation of the Rail 
Safety Bill of 2008. That culminated a 10-year process for the 
United Transportation Union and most of rail labor. In trying 
to move those issues to the forefront, your leadership was much 
appreciate. The process of implementing the requirements of 
that new law have just begun. We will keep the Committee posted 
on the application of the provisions in the law, and we will 
work with you on further improvements in safety. The new law 
addressed many significant safety issues and there remain some 
areas that need attention.
    We would also like to take this opportunity to offer our 
encouragement and support for the full funding of the Federal 
Railroad Administration. The new safety bill contained many 
mandates that will require additional resources. Our message 
this morning is focused on safety of the operation for rail and 
passenger railroad.
    I also want to make sure that my remarks include our strong 
encouragement for inclusion of buy American provisions in all 
stimulus activity. The Federal Transit Administration currently 
has that. We encourage you to continue to support the buy 
American provisions.
    Freight and passenger rail service in the U.S. economy have 
played a central role in the development of our Nation. From 
providing the spine for westward population settlement and 
commercial and industrial development in the latter half of the 
19th century to transporting troops, arms, supplies during 
World War II, the Korean War, the Vietnam War, the Persian Gulf 
crisis, the rail industry formed the central core of the 
country's transportation system.
    As we look forward, a balanced transportation policy serves 
our Nation's needs best. A national policy that demands the 
best use of our fuel resources, while providing sustainable and 
environmentally friendly transportation must take priority over 
expediency. The environmental link to national transportation 
policies find that railroads provide the greatest option, both 
freight and passenger.
    Historically the rail industry has provided hundreds of 
thousands of middle class jobs. The passenger and freight rail 
industry, by its very definition, provided jobs in many rural 
areas all over our Nation. As we discuss ways to both stimulate 
our economy and also to provide middle class jobs, including 
rail at the core of the infrastructure piece of the recovery 
plan is a sound investment.
    The role of Amtrak and high speed rail services in the 
future of transportation needs is integrally woven into our 
balanced and environmentally sound transportation policy. 
Amtrak is an essential component of our national transportation 
system and must be properly funded to allow the system to grow 
with the demand for service. Our Nation needs redundancy and 
reliability in our transportation system.
    The impact of the current economic crisis has been 
significant for railroad employees. While the current economic 
crisis has already taken a severe toll on railroad workers, 
particularly operating employees, the overall health of the 
industry is sound, especially among Class I railroads. 
Financial reports for the fourth quarter of 2008 indicate that 
our Class I railroads and many other railroads enjoy 
significant growth, both in their net profits and in the 
reduction of their operating ratio.
    As of this writing, an average of 12 percent of our 
operating workforce is in furlough status. We have heard from 
Mr. Young this morning that that figure is expected to go up by 
the end of this month. The unfortunate reality of moving 
employees around during these furlough periods, of eliminating 
some employees and requiring new job functions of other 
employees, is an inevitable compromise in safety because of the 
lack of experience in existing work force and the unfamiliar 
surroundings. We are expecting and have already seen the first 
signs of an increase in personal injuries as a result of this 
economic crisis and the reduction of forces in our industry.
    Many of these furloughed employees will be needed by mid 
summer in order to meet the requirements from changes on the 
hours of service law, which were included in the new rail 
safety bill. Moreover, there will be strong demand for highly 
trained and highly skilled railroad workers when the economy 
begins to turn around and consumer demand is again on the rise.
    I now want to talk momentarily about a significant safety 
issue that also is involved in our economic recovery issue. 
Some railroads are demanding from their employees and the 
Federal Railroad Administration the authority to operate trains 
with only one person on the locomotive, thereby, elimination of 
thousands of middle class jobs that are there today, willing to 
compromise the safety of the public and the safety of the 
operation.
    When the demand was first made, during national 
negotiations the industry provided assurances and indicated 
that the safety of the operation could be authorized with only 
one person because of a pending development in positive train 
control. When research revealed that system wide implementation 
of any PTC system was many years and many billions of dollars 
away, the carriers continued with their demand.
    Single person operation of freight trains involves a 
completely different analysis of the rail safety equation and a 
complete reassessment of the overall safety of operations that 
extends far beyond consideration of this specific issue. 
Responsibilities of the railroad to operate safely over public 
crossings, to inspect the moving train at every opportunity, to 
open public crossings quickly when stopped, and to interact 
with emergency responders are issues that are not addressed by 
any positive train control system.
    Historically, each train has been considered as a self 
contained operating unit that had the capability of moving 
safely in and out of terminals and sidings and moving on main 
track, utilizes a variety of train control systems and 
methodologies. Each train was able to set out effective cars en 
route to provide self inspection and repair for dragging 
equipment, shifted lading, hot journals, broken coupling 
devices.
    Mrs. Napolitano. Mr. Stem, would you wrap it up, sir?
    Mr. Stem. Yes, ma'am.
    Mrs. Napolitano. Thank you.
    Mr. Stem. New computer and rail transactions have attempted 
to skirt the Railway Labor Act in some areas. We encourage the 
Committee to continue to insist on the application of current 
laws that exist today for railroads.
    And my summary comment is about rail accident 
investigations. The National Transportation Safety Board is 
charged with the responsibility of investigating transportation 
accidents. We encourage and know that this Committee has no 
authority over the internal operations of the National 
Transportation Safety Board. However, when bureaucratic 
decisions are made not to investigate fatal accidents, we 
cannot understand the cause of those accidents or make 
corrective safety actions.
    I thank you for the opportunity to speak.
    Mrs. Napolitano. Thank you so much for your testimony, sir.
    We will begin the questions, and I will start with the 
questions.
    Mr. Oberstar. Madam Chairman, if I might just intercede for 
a moment so I can run off to another Committee function. I want 
to observe for Mr. Buffa reference railroad grade crossings. I 
would like to read, "amounts allocated from the appropriation 
made herein for the elimination of existing hazards to life at 
railroad grade crossings, including the separation or 
protection of grades at crossing, reconstruction of existing 
railroad grade crossings and relocation of highways to 
eliminate grade crossings shall be apportioned." That is not in 
the current recovery bill. That was in the WPA order and the 
law signed by President Roosevelt in 1935. I tried to include 
that in the current language, but it was considered new 
authority.
    Mr. Buffa. Don't give up, Mr. Chairman.
    Mr. Oberstar. Don't worry. We are not giving up.
    Buy America is in every feature of our Committee's 
jurisdiction. It was reaffirmed in the stimulus initiative. I 
want you to understand that.
    The two-man crew issue, Mr. Stem, that you raised, the 
Federal Railroad Administration has assured us that they would 
have to approve a decrease and they have not done so, and they 
will not do so without an extensive review of the matter and 
consideration of the recommendations of the National 
Transportation Safety Board.
    Mr. Kempton, your comments about ridership in California 
are right on. America's memory, however, is very short. As soon 
as gas prices went down, people started shifting to those big 
ugly SUVs. They will be running back to the rails as soon as 
the OPEC folks figure out how to jack the price of oil back up 
to $140 a barrel. But I assure you that this Committee is going 
to stay on top of our Amtrak legislation. The 11 corridors, 
Secretary of Transportation is on full notice to continue the 
work begun already in the previous Congress by the previous 
administration, but more vigorously, to implement those 
provisions; and we look forward to working with you on 
imaginative, creative financial solutions. And Mr. Boardman, 
will welcome that, I am quite sure.
    There are many other comments. I just want to make those 
observations before I go off to other Committee business. Thank 
you.
    Mrs. Napolitano. Thank you, Mr. Chairman. And I certainly 
hope that we will also include a consideration of extension of 
the 90-day shovel ready project to 120 because that would give 
the locals the ability to be able to move on those projects. 
States could do it but I don't think cities would be in a 
position in 90. 120, yes.
    Mr. Oberstar. My amendment will be in order on the floor 
some time in the course of today and I expect it to pass.
    Mrs. Napolitano. Thank you, sir. Thank you very much for 
your leadership.
    Let's start off with Mr. Young. I have some questions that 
the Chairwoman left and I will infuse some of my own into the 
questions. To Mr. Young, when the economy was growing the 
railroads were having a difficult time making capital 
improvements to their infrastructure. You needed track time to 
do it. This was difficult given the increase in train traffic. 
Now that business has slowed, this is the time you should be 
making those investments because business is going to pick up 
again. It is not the time for cutting back.
    What would it take for Union Pacific and the industry, as a 
whole, to start aggressively investing in capital expansion 
now? That is question number one.
    Number two, and I will lead into it. A recent study found 
the cost of improvements needed to accommodate future freight 
and rail demand is estimated at $148 billion. Class I freight 
rail, which shares the cost is projected to be $135 billion, 
while the short line and regional freight railroads share is 
projected to be $13 billion. Prior to the economic crisis, 
Class I railroads anticipated they would be able to generate 
approximately $96 billion of their $135 billion share, leaving 
a balance of $39 billion or about $1.4 billion a year to be 
funded from other sources.
    Given the state of the economy, do you believe that Class I 
railroads will be able to generate the $96 billion? If not, how 
much of the $135 billion will the Class I railroads be able to 
generate?
    Mr. Webb, how much of the $13 billion will the short lines 
be able to generate?
    And I will leave it to you two gentleman.
    Mr. Young. Congresswoman Napolitano, let's start with the 
first question. They are both related. While you have heard 
from the industry that there is some cut back in capital this 
year, we still have a relatively healthy capital investment 
program. And I will talk about Union Pacific specifically. Last 
year we spent $3.1 billion on new capital or on capital. Of 
that 3.1, about a billion is new investment. What we are 
looking at this year is around $2.8 billion. We have slowed 
down some of the investment. And you hit it right. Track time, 
now is the time to do it. Price of goods. You think about 
steel, the raw materials. This is the time to do it.
    So we are going to continue our program. But there is a 
reality that we have to deal with in our business. This 
industry consumes a tremendous amount of cash. The credit 
agencies, Moody's, Standard and Poor's that rate our bonds, and 
that is our ability to go borrow in the markets, our industry 
is rated one notch above junk bonds. And the issue is that the 
huge capital investment that comes in is so substantial we have 
to look very carefully at our debt rating. So we are going to 
have a good, a healthy capital program, although I would also 
tell you that if things continue to deteriorate, we may have to 
hair cut it even more.
    In response to the second question, what would it take to 
incent more aggressive capital, you know, we have got a 
proposal for an investment tax credit out on the table and I 
think that has, can make a real difference in terms of the 
financial returns and cash flow. And as a consequence, we would 
expend our capital investment.
    Mr. Webb. Madam Chairman, thank you for the question. And 
from a short lines regional railroad standpoint, that 13 
billion is an absolutely impossible number, I believe, that is 
my opinion, without the type of assistance that the Federal 
Government has given to the short lines over the last 5, 4 
years. With the short line tax credit that was passed in 2005, 
we have seen hundreds of millions of dollars of investment into 
the short line industry that would not have been made without 
that.
    So I believe it is absolutely imperative that we continue 
programs like that. And we have several other ideas along with 
that. But the short line tax credit is a proven process that 
works.
    And if I may, I would love to thank Congressman Moran 
because he was the guy that actually wrote the first short line 
tax credit bill back in 2005. And so I believe, without a 
doubt, you go to anybody, railroad contractors, customers, 
Class I partners and customers, they would say that the short 
line tax credit has been a huge success. But that can only take 
us so far. That is why, in the testimony that I gave, we have 
found another $780 million worth of projects that could move 
quickly.
    And the last point I will make on that is the alternative 
to a lack of capital investment in the short line industry is 
abandonment. And from what I am hearing today, that is an 
alternative that would benefit no one. And so we ought to work 
together with you, with our customers, with our partners and 
make sure that we find the best solution possible to fund that 
$13 billion gap.
    Ms. Brown of Florida. [Presiding] Well, you know, Mr. 
Oberstar is still here and I wanted to mention that he included 
$100 billion for the short line in the bill.
    Mr. Oberstar. 100 million, not billion.
    Ms. Brown of Florida. I get confused by those numbers, Mr. 
Oberstar. But $100 million in the bill for the short line. And 
we will continue to work to try to get some inclusion for the 
short lines.
    I am going to let Mr. Shuster go on, but let me just say 
that what we need to start thinking about and one of the 
purpose that we had when we started this hearing was to think 
about the reauthorization bill and what we would like to see in 
that bill. And so that would be a question that I will follow 
up on. But now, Mr. Shuster.
    Mr. Shuster. Thank you very much. I have a number of 
questions so I am going to try to package them together and if 
you would be brief and to the point I would appreciate that.
    The first one, follow up with Mr. Webb on that. In the 100 
million that the chairman proposed that didn't make it in 
there, you said you could move quickly to get that out there. I 
want to know how quickly, what does quickly mean?
    And also, along the same lines, the investment tax credit, 
if we were to put that in the stimulus, how fast could Union 
Pacific move to put those projects in for creating jobs and 
getting things moving? So if you both could take a shot, Mr. 
Webb first, with the 100 million if you would.
    Mr. Webb. We believe, without a doubt, that we can do all 
projects; we can start all projects within 90 to 120 days, and 
most projects, because they are time projects that can be 
extended, we could actually start in less than 30 days.
    Mr. Young. Congressman, again in our industry I would see 
the same kind of relationship here. You have excess resources 
today in terms of people ready to go, equipment, engineering 
design is done. In many cases, these projects are an extension 
of programs that you have today that you had cut off and you 
would keep them going.
    Mr. Shuster. Quickly, Mr. Webb, how many jobs do you think 
that would create? 100 million? Do you have any idea?
    Mr. Webb. We estimated about 30,000 jobs is what we thought 
is what we, direct jobs that we estimated for that investment. 
And one other thing, to briefly touch on a point that was made 
earlier, all the materials that we would use would be made in 
America.
    Mr. Shuster. Mr. Kempton, the stimulus, we are debating the 
90 days, the 180. I guess the chairman's going to offer to 
squeeze that down to obligate the funds. I have heard from 
states, my own in particular, that said it is very difficult, 
it is going to be very difficult to do that. Pennsylvania, for 
instance, will let about a billion dollars in bids and obligate 
about a billion dollars in the first 6 months and they are up 
to receive about 1.2 billion; half of that has to be moved 
forward, and they have told me and a couple of States have said 
it is a manpower issue.
    At the Department of Transportation, we just don't have 
enough people to review and go through the process to do that. 
How does California view that and compressing the time frame 
are you going to be able to obligate those dollars?
    Mr. Kempton. Well, Mr. Shuster, we think we will be able to 
under the chairman's proposal. I will say it is more difficult, 
obviously the shorter the time frame, and I think Mrs. 
Napolitano made a very good point when she talked about local 
governments not being able to utilize those funds in those 
short time frames. That is problematic because there is 
federalization issues involved and work that was not planned to 
be federalized in the first place. There are staffing needs at 
the Federal agencies, the Federal Rail Administration, Federal 
Transit Administration, Federal Highway Administration in terms 
of processing those dollars through, and there are, as you have 
indicated, Mr. Shuster, staffing concerns at the state levels.
    We are in a unique position. Because of our bond program, 
we think we are going to be able to spend our share of those 
dollars in those shortened time frames, but I think it will be 
problematic for other States, as well as for some of our local 
partners.
    Mr. Shuster. And I even hear you saying you are going to 
try. I appreciate that to be a positive, but there is a----
    Mr. Kempton. Let me rephrase that. We will do it.
    Mr. Shuster. I hope so. And I will be pleasantly surprised 
if this all goes forward as quickly as we hope it does.
    Mr. Boardman, if I could ask you, on the high speed rail 
initiative that we put in the last Amtrak reauthorization, if 
you would talk a little bit about where that is and how that is 
moving forward.
    Mr. Boardman. Certainly. I know that it was about 60 days 
after the enactment there was a requirement for the DOT to come 
out and talk about it and that is exactly what happened. On 
December 15, I think they came out and began to talk about the 
concept of high speed rail. It has been a little over a month 
since then, and I don't think there is anything that is firmed 
up in terms of proposals at this point in time. But there are a 
lot of people right now, Congressman, that are looking at what 
does that really mean. And there is about a 9-month period from 
here on that it has been set in the law for people to really 
get together with a more serious proposal, so we expect that 
that may occur but we don't see anything real at this time.
    Mr. Shuster. You see some action, you feel it is moving 
forward, though, in general?
    Mr. Boardman. I think most of the action for the last 
months or so has been on our part has been trying to get ready 
for the stimulus and doing all the other things in the Recovery 
Act at this point in time necessary to do those kinds of 
things. So there hasn't been a great deal of discussion on the 
high speed rail, but there is a potential for that.
    Mr. Shuster. Okay. Thank you very much. Mr. Buffa, in your 
testimony you talked about the goods moved by rail from the 
ports of Long Beach and Los Angeles and the projections of 
increased loads. Is the situation improving there? Do we need 
to do more? What can the Committee do to support this?
    Mr. Buffa. Mr. Shuster, the situation certainly is not 
improving, and our concern is, you know, there has been 
something of a lessening because of the economic downturn. But 
this is going to come back. And no one responsible is going to 
predict when. But this will come back. And when we get back to 
some of projections that we have seen in the last year of what 
that freight traffic is going to become, it is a huge increase 
that is projected.
    And again, we don't, we are not opponents of that process. 
We are very supportive of it. But we desperately need Federal 
help and a dedicated funding source for the mitigation measures 
for that freight traffic and to increase rail capacity on those 
lines that we have some control over. So it is definitely not 
getting better, other than whatever you might consider as 
something as part of the economic downturn.
    But in the future, and we very much hope in the 
reauthorization bill, that we have your support in getting that 
funding source in place because we are going to need it.
    When I have to explain the impact of goods movement on 
Southern California to someone, I invite them to come ride with 
me on a freeway that Mrs. Napolitano is very familiar with 
called the 710, the Long Beach Freeway. It is a constant 24-
hour a day parade of trucks going from the ports to points east 
and back. And frankly, it is frightening to be on that freeway 
in a car because you are surrounded by tens of thousands of 
trucks at every turn and every time of day. So it very much 
needs your help.
    Mr. Shuster. Thank you very much. I seem to have endless 
time here on my clock. Is that because I have been good and you 
are giving me more time? I have one more question----
    Ms. Brown of Florida. Okay. One more question.
    Mr. Shuster. To Mr. Kempton on positive train control. Are 
you familiar with the mandate we placed?
    Mr. Kempton. Yes.
    Mr. Shuster. Can you tell us what is going on in 
California? Are you preparing to implement that? And can you 
give us a little update?
    Mr. Kempton. We are. As you know, we have had a couple of 
serious accidents in the recent past in the Southern California 
area, primarily, so we are working very closely with our local 
partners, with Amtrak, with the private railroads to meet the 
mandates contained in the safety bill. And we look to have 
implementation underway by 2012. I would have to say that there 
are obviously some issues, funding being one of them, and so we 
are working collaboratively with those partners that I 
outlined. It is going to have to be literally a public/private 
partnership, a contribution of private dollars, along with our 
local partners, Amtrak and the States in terms of coming up 
with that system, and we are gearing up for that and 
coordinating with those folks.
    There is also an issue of technology. Clearly, we do not 
want to get out ahead in California with a technology that 
doesn't match up well with what is being done in other parts of 
the country, and we are working with our private rail partners 
in that regard as well.
    I would say it is even going so far to the point where we 
are loaning some of our intercity passenger rail equipment to 
BNSF so that they can look at the braking characteristics of 
our equipment as we work together to implement the system. Very 
important to us. We are very aware of the mandates and we 
intend to meet them.
    Mr. Shuster. Thank you.
    Ms. Brown of Florida. I see Mr. Clement is with us, the 
former Member. Welcome. And Mr. Teague.
    Mr. Teague. Thank you, Madam Chairman. I am Harry Teague 
from New Mexico. And this is my first term and I am picking up 
on a lot of things here. But I had a few questions that I did 
want to ask. How many people can we put to work, and how many 
contracts can we get committed before the price starts going up 
and the value of the money we have appropriated starts coming 
down?
    And then also, for Mr. Webb, is the cost for building and 
replacing a line on a short line, a mile of track, the same as 
it is on a heavy traffic line like Union Pacific, or is more 
reasonable? Do they have different standards that they have to 
meet?
    And then also, all of the money that you receive in the 
short line rehabilitation tax credit, does that have to be 
private money, or can you go get State and local governments to 
help you with that match?
    Mr. Webb. Well, first of all, thank you, Congressman. From 
a short line standpoint, I will answer the last one first. We 
have to spend a dollar of private investment before we get 
anything back from the Federal Government. So it is really an 
accountability feature. We are not going to spend the money, we 
are not going to put our own dollar into it in order to get the 
50 cents back if we don't believe it is a good project.
    In terms of how quick we can put people to work, we can put 
people to work very quickly. And if we do the $780 million 
worth of projects that we talked about, we estimated that to be 
30,000 direct jobs, many more jobs associated with that.
    In terms of costs from a short line standpoint for 
rehabilitation, it generally costs less because our volumes are 
lower and we maintain our railroads to acceptable Federal 
Railroad Administration standards, but generally, they are much 
lower standards because we are not, number one, handling the 
same volume that our Class I partners and customers are; and 
number two, we are not traveling at the same speeds. And so, I 
hate to make any comparisons because you are really talking 
about two different maintenance standards. But the short line 
maintenance standards fits our rural America, small town 
America customers very well.
    Mr. Teague. And I understand that, and I wasn't trying to 
make an unfair comparison. But I mean, the speed limits and the 
weight limits and everything is different on the short line 
than they are on the cross country line, right?
    Mr. Webb. The speed limits for the most part are, for 
example, the majority of our 4,000 miles of track is at 25 
miles an hour. I think that is vastly different for Mr. Young's 
railroad and every Class I railroad. But the weight limits are 
a major issue because our weight limits have to be the same in 
order for our cars to fit into the national network.
    Mr. Teague. Okay. Yeah. I was just wanting an explanation. 
I wasn't trying to create a rift between the short lines and 
the cross country.
    Mr. Webb. Believe you me, neither am I. They are a good 
customer.
    Ms. Brown of Florida. Mr. Moran.
    Mr. Moran. Thank you, Madam Chairperson.
    Mr. Young, first of all, your testimony about government, 
embrace government policies, actually you are asking government 
to embrace policies that enhance the ability of freight 
railroads to attract private investment dollars. I also know 
that you are supportive, as am I, of the 25 percent tax credit. 
Is this a separate request? Is there something more that 
government policies can include that, beyond the tax credit?
    Mr. Young. Congressman, I think it covers the whole 
spectrum of areas. The investment tax credit is a piece of 
that, but I would also point out that there is not modal equity 
between highway and rail today when you look at paying a fair 
share, and that is a government policy that has been in place 
for a long time.
    Now, truckers are my partners here, so I am not picking on 
them because we work together on a lot of projects here. But I 
think we want to be careful, we don't incent more business to 
the highway. That would be a mistake.
    Environmental policies, permits. Today, it is interesting. 
We could build a bridge in Minnesota in, I think, about half 
the time. And yet, when you look at the time line today to 
permit a project, it has been elongated over the years. It is 
not unusual today that it is a minimum 2 years before you can 
get to construction on some of these projects.
    Preemption, I think, at least I use that word, you may call 
it uniformity. When you are in the rail business and you 
operate in all these States, we can't pick up our track and 
move to Mexico. We have been there for many years and we have 
to be careful about policies that force us to operate under 
different rules in different States. That would be a disaster 
for our industry.
    A simple example would be you think about emissions 
policies. If you have one State that has one criteria, another 
has a different, I mean, in the real world you would be 
changing locomotives at the borders. So those are the types.
    And then obviously, we need to be careful on new economic 
regulation in this industry.
    Mr. Moran. Thank you very much. Mr. Webb, you were very 
complimentary of me earlier, and I appreciate that. It is your 
company, its leadership is one reason that I am an advocate for 
short line railroads because you run a railroad that takes care 
of customers and that is something I would like for you to 
explore with the Subcommittee. I am not an advocate necessarily 
for railroads or for short lines or for Class I carriers. I am 
an advocate for the people they serve. And how would increased 
Federal support for short line rail improvements improve the 
lives, the economy, the benefits that your customers enjoy?
    Mr. Webb. Well, I think that is a great question. The short 
line industry serves roughly 13,000 customers. And when we came 
to you with the idea of Federal support, we have lined up over 
1,000 customers that believe railroad infrastructure investment 
can benefit them because it will allow the short lines, I think 
I have heard a lot of talk about safety, it will allow the 
short lines to operate more safely. It can increase transit 
times. Excuse me. It can increase cycle times. I will get it 
right. It can increase velocity, reduce transit times, reduce 
cycle times. And why that is important is because the short 
line side of the business really does feed the Class I network, 
and we are mainly competing against truck.
    And so our customers that are out there generally have at 
least two options, sometimes three if they have access to the 
waterway. And if one of those options gets weaker, for whatever 
reason, then it puts the other option or mode of transportation 
at a distinct advantage. And so even though I couldn't say it 
very well, it is definitely something that the customers can 
benefit from because they get safer, more efficient, more 
timely service.
    Mr. Moran. What percentage of today's short line railroads, 
the rail and the bed, are in the condition that they should be 
to run a railroad efficiently? You talked a moment ago in 
response to the gentleman from New Mexico's question about 
short line maintenance standards. How close, I don't know what 
the right standard is, but are most of our lines, most of our 
tracks at the standard they should be, or a significant portion 
are not?
    And then I hope that the short line tax credit as you 
indicated has been something that has been very helpful in 
meeting those kinds of standards. It expires again. It is an 
unending challenge, battle here to make certain that it has 
longevity. The fact that it will expire in 2009, what does that 
do to your investment decisions and your ability then to get 
the rest of the rail to the standards that they should be at?
    Mr. Webb. I can just tell you, from our example, that 
without the short line tax credit over the last 5 years, we 
would not have invested 50 percent of the capital that we 
invested, and right now we invest very similar to the rest of 
the industry. We will invest somewhere in the neighborhood of 
12 to 15 percent, maybe 18 to 20 percent in good years and when 
we have the short line tax credit of our revenue. If we had not 
had that, then a bigger part of our network would be at slower 
speeds because, unfortunately, the fact of the matter is the 
short line system has a lot of deferred maintenance in it. And 
one of the biggest issues we have got facing us that we haven't 
addressed was what we brought to you today, the bridge issues 
that are out there from a short line standpoint. So I, without 
a doubt, believe that the short line tax credit has been a huge 
success. It has allowed us to get our track speeds, I would 
say, a number off the top of our head, our track speeds up in 
the neighborhood of 20 to 40 percent of our network has 
improved because of the short line tax credit. But there is a 
huge amount still left.
    Mr. Moran. Thank you, Mr. Webb for being here for your 
testimony, and thank you for running a good railroad. I 
consider you a Kansas railroad, but I know that you operate in 
16 States, and I know from my constituents, grain elevators and 
others, that the services you provide are appreciated. Thank 
you, Madam Chairperson.
    Ms. Brown of Florida. Mr. Nadler.
    Mr. Nadler. Thank you, Madam Chairperson, and thank you for 
holding this very important hearing. I have a number of 
questions for several of our witnesses. First, Mr. Buffa, you 
said, you talk about that your movement action plan has 
identified $50 billion in needed projects to address capacity 
improvements and mitigation projects on freight just in your 
area. And you talk about either a container fee, and then say 
even if this local fee can be successfully implemented, more 
needs to be done and should be done at the Federal level to 
address this issue of national significance. And certainly, it 
is an issue of significance in terms of the ports on the West 
coast as well as the East Coast. You say more should be done on 
the Federal level. Could you suggest what?
    Mr. Buffa. Simply because up to this point there has been 
no dedicated funding source at the Federal level for these 
types of projects.
    Mr. Nadler. And you think there should be.
    Mr. Buffa. I think there should be.
    Mr. Nadler. Could you suggest one?
    Mr. Buffa. Well, it is not our job to get involved in the 
mechanics of it. The most common that has been suggested so far 
is a container fee and there has been some conflict between the 
State and the Federal Government about who actually should be 
imposing a container fee.
    Mr. Nadler. Not both?
    Mr. Buffa. It could be both. That is for you and the State 
to sort out. We think there is plenty of justification for the 
State because those impacts are localized. But while they are 
localized in our area, they are part of a national process, so 
certainly it could also be implemented by the Federal level, as 
was suggested in Ms. Richardson's bill. So it needs to be 
figured out. But again, as a sign of, I hate to use the word 
desperation, but it is a sign of the importance of when you get 
down to the point where the ports themselves are suggesting 
look, if nobody can figure this out, we will impose a fee, that 
is quite an indication.
    Mr. Nadler. Thank you. Mr. Young, you talk about Congress 
should enact and fund programs that allow States to partner 
with freight railroads to move forward with projects that 
benefit everybody. Obviously, I agree with you. But first of 
all, I don't know why we have to tell the States that they can 
do this. They should be able to do it without our permission.
    My real question is the following: Obviously the railroads, 
since the Staggers Act, and you have probably heard me say this 
on prior occasions, the railroads have invested an enormous 
amount of money in plant and equipment, and yet they have taken 
it out of their own internal capital and raised money on Wall 
Street, and yet the system is still shrinking. We have fewer 
miles of Class I railroad, although the need for railroad 
miles, for rail is greater than ever for rail freight 
especially, and yet we have fewer miles of Class I railroad 
every year and fewer miles of even Class III railroads. The 
system is shrinking. It is less than half the size it was after 
the war. We are clearly putting in far too little in capital 
investment in the railroads.
    Now, the railroads have historically opposed a Federal role 
in the sense of a Federal, major Federal funding for capital 
investment the way we do for highways and so forth. Would you 
think that it might be time to consider a Federal role and not 
just in loans, but in grant programs in addition to what the 
railroads raise on their own?
    Mr. Young. Well, Congressman, I believe, and what I talked 
about in my testimony here was public/private partnerships 
where if the government is going to get involved it should help 
in the local communities in terms of maybe helping with some of 
the grade separations, the projects that we have in there. In 
terms of funding specific freight rail corridors, Union Pacific 
has not been in support of that over the years because of the, 
whatever you want to call it, strings that are attached.
    Mr. Nadler. Well, for example, the I-81 corridor which goes 
from northern New York down to Tennessee through Virginia, 
Pennsylvania, is way over capacity. I-81 is way over capacity 
on trucks. It is going to increase incredibly. And yet you have 
got two not very well used old Norfolk Southern rail lines 
paralleling it, which, if greatly improved, for that entire 
carrier could take a heck of a lot of traffic and mode shift 
from highway to rail. And yet it would cost a heck of a lot of 
money to do that, probably a lot more than Norfolk Southern can 
afford to put into that. What should our policy be with respect 
to getting a major mode shift from highway to rail over a long 
stretch, which is clearly in the national interest to do?
    Mr. Young. The policy needs to incent more freight 
business, moving trucks off the highway, and that is a great 
example. You look at a specific project. We have not had many 
when you look at this.
    Mr. Nadler. Have not had what?
    Mr. Young. We have not had many where it has been a 
specific government. I know that Norfolk Southern, I think, has 
had maybe one or two that look at it in the context of direct 
government investment in the railroad business. The benefits, 
as you have said, are tremendous. You can build a mile of 
railroad less than a mile of highway. It is probably five to 10 
times the cost to build a mile of new highway. We know the 
energy benefits, the safety benefits that are there. Most of 
the programs and discussions that we have had where we have 
looked at this at the government level, unfortunately, in some 
cases, bring different requirements that, for example, expanded 
commuter rail on some locations that you look at.
    Mr. Nadler. Well, that is a different problem and, frankly, 
one that if I had more time, I would go into because the last 
thing we want to do is burden freight railroads with commuter 
rail. Those are two separate problems. In fact, there are three 
problems. There is long haul passenger rail, Amtrak, there is 
commuter rail, there is freight rail, and we don't want them to 
get in the way of each other, frankly. And so I would never 
suggest that.
    But it seems to me that we ought to be taking a lot of 
money that we are now spending on the highways and be spending 
them on rail instead, not just, I mean, certainly we ought to 
do the tax credits and those things but we ought to be having a 
major modal shift from highways to rail, and I don't hear an 
interest from you on that.
    Mr. Young. Well, Congressman, I guess I was maybe trying to 
be realistic from my perspective on what might happen on new 
money flowing into the rail network. And I think when you look 
at the needs in these communities and public/private 
partnerships, like the Chicago Create program, that is a $2 
billion project alone. It has great benefits for the 
communities.
    Mr. Nadler. It is a great project.
    Mr. Young. That are out here. If we can even partially 
start funding some of those projects it is pretty significant. 
Now, if we have enough money left over, that we can move it to 
a direct rail investment, I would sure like to look at that.
    Mr. Nadler. Well, let me ask my last question, because my 
time is running over. One thing we clearly ought to be doing is 
what Congress was looking to do before Reagan was elected, 
which is major rail electrification, especially now where 
energy efficiency and getting off is so much more important, 
and how are we ever going to fund something like that if we 
don't have a major Federal component with major dollars in 
there?
    Mr. Young. Well, I think our first step, again, 
electrification is a significant investment, as you have said. 
We have a long ways to go with current technology. Latest 
generation locomotives that are being designed today will add 
another substantial reduction in emissions and increased fuel 
efficiency. So before we jump----
    Mr. Nadler. But nothing can match electrification. I don't 
care what you are doing with locomotive.
    Mr. Young. No, but if you think about trying to take a 
railroad and convert it to electrification, in fact, I will be 
honest with you, I don't think it can be done.
    Mr. Nadler. It can't be done?
    Mr. Young. I don't believe so.
    Mr. Nadler. Or it can't be done for what you consider a 
reasonable cost?
    Mr. Young. It can't be done for a reasonable cost.
    Mr. Nadler. Well, definitions differ on reasonable, 
obviously. My time is over. Thank you very much.
    Ms. Brown of Florida. Mr. Cao.
    Mr. Cao. Thank you, Madam Chairwoman. This is just a 
question to the panel. I want to know whether or not, does any 
one of you have any plans for expansion in the New Orleans 
metropolitan area? This is for any Members.
    Mr. Young. Well, Congressman, Union Pacific obviously 
operates through the whole Louisiana area. We have been 
expanding for several years in terms of our capacity. There are 
targeted projects really along that whole southern corridor. In 
fact, one of our very important routes is moving business from 
L.A., Long Beach, along our southern corridor through to New 
Orleans, where we interchange with the CSX. But there is, I 
don't have the specific numbers, but when you look at our 
railroad infrastructure, you have got to have balanced capacity 
throughout the infrastructure. It doesn't do any good to build 
capacity in Arizona without recognizing you have got to get it 
all the way through to another State. So I have no question in 
my mind that we are spending money in the State of Louisiana 
this year.
    Mr. Simpson. Sir, one of my member companies, Union Tank 
Car, through the generosity of the State of Louisiana has 
opened a tank car building facility in Louisiana and not in New 
Orleans, but nevertheless, in Louisiana.
    Mr. Cao. Thank you.
    Mr. Kempton. Congressman, we have partnered with the Kansas 
City Southern and ExxonMobil to build a storage facility near 
Baton Rouge, Louisiana, and again, it is to help improve 
throughput on the main lines and take the storage function into 
a storage function that you need into a more efficient, be 
handled in a more efficient manner in the Baton Rouge area.
    Mr. Boardman. Congressman, Amtrak, as a part of the 
requirement under PRIA will be doing a study on the Sunset 
Limited east of New Orleans into Florida at the request of the 
Chair.
    Mr. Cao. And for those of you who are looking at expanding 
your businesses in the State of Louisiana, what are some of the 
obstacles that the New Orleans metropolitan area presents to 
you all? Are there any obstacles down there?
    Mr. Young. Well, Congressman, in terms of the freight 
railroad, you are always going to have some obstacle in terms 
of just your ability to expand the right of way to build new 
railroad. Again, many of these areas are residential on both 
sides. You have some challenges with permitting in terms of 
accelerating permitting for new projects. And again, to me it 
is one of those, does it make economic sense? We have a very 
large, as you know, chemical industry that we serve down there 
that they are struggling right now. So I think one of the 
challenges you have when you look long term is what is the 
outlook for that industry in terms of future growth.
    Mr. Webb. With our investment, there is a time frame to get 
it done. It is a substantial investment. I think we have 270 
days to make the investment and the State and local 
governmental agencies have worked with us very well to meet 
that time frame.
    Mr. Cao. Mr. Boardman, I have a question directly to you. 
Do you have--what are the plans that you have for emergency 
evacuations during a situation of crisis like hurricanes, and 
what are your plans for the future?
    Mr. Boardman. Our plans are directly related to how we work 
with FEMA. For example, in the evacuation where we moved over 
2,000 people in the last cycle of hurricanes, we worked those 
plans out directly with FEMA. And each time that we have 
provided assistance, the plans have changed somewhat, depending 
on the host communities or how people needed to be moved. But 
again, we are available to work with FEMA and the emergency 
responders in both Louisiana and the entire gulf area to make 
those plans.
    Mr. Cao. Thank you. That is all the questions I have.
    Ms. Brown of Florida. Ms. Napolitano.
    Mrs. Napolitano. Thank you, Madam Chair. I would like to 
first address my first question to Mr. Young in regard to the 
stimulus. Many of the projects in my district, as you well 
know, are seeking stimulus for the grade separation 
specifically. Congress has directed States to spend the money 
quickly or else the projects will not be funded. My question is 
that grade separation projects may not get the funding because 
of delays caused by railroads or other rail issues that come up 
that allow for this to happen. What can the rail industry or 
specifically, Union Pacific, do to ensure that these projects 
are constructed quickly in order to meet the time requirements 
that are going to be set by Congress?
    Mr. Young. Congresswoman, if you get the money, I can 
assure you that----
    Mrs. Napolitano. Everybody heard it.
    Mr. Young. Union Pacific will not be a barrier. Now, where 
you can help is in the permitting process, particularly in 
California, that there is a lengthy permitting process that we 
need to accelerate. We need to approach it the same way the 
interstate bridge was approached in Minnesota. But we have 
resources. We will commit them in terms of making certain that 
the railroad industry is not the barrier.
    Mrs. Napolitano. Great. Great. That is great news. And Mr. 
Kempton you heard that.
    Mr. Kempton. I did Ms. Napolitano, and I agree with Mr. 
Young on that point, I think it is an issue at the Federal 
level as well as at the State level that we need to streamline 
these permits. We need to obviously provide for the appropriate 
environmental protections, but we need to make this process 
work faster. And we are doing our best in California to make 
that happen.
    Mrs. Napolitano. But we need to make it and making our best 
leads to what? What are we doing? What have you done to ensure 
that you begin once this goes through, that the moment that 
that bill is signed, that that is going to begin working the 
process, that the projects are being cleared, that the 
permitting is being done and not waiting until it goes down and 
then begin the process?
    Mr. Kempton. We have in California, Ms. Napolitano, already 
underway a discussion with the members of the legislature on 
streamlining our State permitting process. And that hopefully 
will be approved as part of the budget which we expect to be I 
am hopeful is adopted in the next several days. We have also, 
the governor has also talked to the Obama administration about 
the possibility of applying similar streamlining mechanisms to 
the Federal process. But Mr. Young is absolutely right. We, on 
an emergency basis, like on the I-35W bridge in Minnesota, what 
we did on the MacArthur maze and the tunnel down on I-5 in Los 
Angeles, in those emergency situations, that is, we have an 
economic emergency and we need to react accordingly.
    Mrs. Napolitano. Thank you. And Director Kempton, the State 
of California may be getting $2.8 billion in highway funds and 
one billion in transit and then of course some of it into 
intercity passenger rail. The bill gives the States the 
authority to disburse of these funds. How will you be 
prioritizing and I am asking the question of some others, is 
who is going to get to it? How fast are we going to get these 
people back to work, that money working, which is the intent of 
Congress?
    Mr. Kempton. Well, if you look at the total amount that is 
coming to California, we use a very conservative number for the 
amount of jobs created per billion dollars worth of capital 
investment. It is 18,000 jobs. The Federal Highway 
Administration uses $33,000. So if you do the calculations, 
that means the Federal stimulus money that is coming to 
California will create between 72,000 and 132,000 jobs. 27 
percent of those jobs will be created in the first year.
    Mrs. Napolitano. But where?
    Mr. Kempton. They will be created all over the State. And 
it will be, in large measure, driven by projects that are ready 
to go. So we have been gearing up in California working with 
the local partners, with the regions because a big share of 
these dollars, as you know, goes to the regions. We have been 
working with all these partners to get these projects ready to 
go. We have begun the federalization projects where those 
projects have not been federalized we are gearing up with our 
Federal Highway Administration and other Federal agencies to 
make sure that process flows smoothly; and we are talking about 
doing a new way of doing business in California so those 
dollars can go through much more quickly.
    Mrs. Napolitano. But are you targeting any of the areas 
that are economically depressed?
    Mr. Kempton. We absolutely do want to look at focusing and 
targeting these dollars to the extent possible. But again, for 
the first 90 days, depending on whether these provisions go 
into effect, and we have good reason to believe that they will, 
that those dollars will primarily be focused on delivery. The 
longer term, going beyond the 90-day time frame, et cetera, we 
will be looking to try to target that more with respect to 
where the jobs are needed.
    Mrs. Napolitano. Okay. Because we received a list from 
COGS, the Councils of Government, where they have outlined 
that. I don't know if you have received it, but I would be glad 
to put it in your hands.
    Mr. Kempton. I have seen it.
    Mrs. Napolitano. Okay. And also, States play an important 
role in assisting the FRA. And last year I tried to pass this 
particular amendment. I agree the current Federal law should 
continue to prohibit States from creating regulations that 
burden interstate commerce. But States should be allowed to 
regulate railroads in order to protect against local safety 
hazards. Do you agree with the California Public Utilities 
Commission that States should be allowed to regulate railroads 
in areas where the Federal Government has not acted?
    Mr. Kempton. I do. From a safety perspective, I think it is 
important.
    Mrs. Napolitano. Thank you, Madam Chair.
    Ms. Brown of Florida. Mr. Arcuri.
    Mr. Arcuri. Thank you, Madam Chair. Thank you, gentlemen, 
all for being here. Mr. Boardman, my constituent, thank you for 
being here again.
    Just really quickly, I think Mr. Nadler was spot on when he 
talked about the rail lines that run along the 81 corridor. 
That happens to be in my district and it is my colleague's 
district in Pennsylvania just south of that. Mr. Young, a 
question that I had, you said that it cost five times as much 
to produce a mile of rail line as it does a mile of road?
    Mr. Young. No, the other way around.
    Mr. Arcuri. Oh. Five times as much for road as rail.
    Mr. Young. Minimum.
    Mr. Arcuri. Thank you. Mr. Boardman, one question for you. 
And thank you for attending the meeting that we had on rail in 
New York not too long ago. You have seen it all. You have seen 
it from the small transit authority, State and now as Amtrak. 
Some of us have grand ideas about what we would like to see 
rail do. But as a practical matter, as you pointed out, some of 
the things are achievable. Some of them are great things to 
wish for but much more difficult to achieve. What steps should 
we take incrementally to try to get us to the point where we 
want to get to, and that is to eventually have maybe high speed 
rail if we can. But what steps should we be taking as 
Congressmen to try to get us to the point that we want to be in 
a practical way?
    Mr. Boardman. We actually had some discussion, Congressman, 
and after the meeting we had the other day, how do we relate to 
the caucus up in New York? What would be the best way to move 
forward? In fact, I had a discussion a few minutes ago with 
Will, telling him that some of the California model and the way 
that they have done things may be applicable in New York 
because they don't just use rail in California and ignore all 
other modes. They have a very strong component in what they do 
in California involving bus connections.
    So, for example, in upstate New York, if we were dealing 
with a bus connection, whether it be to Watertown or to 
Binghamton or wherever it would be, it would be coming out from 
the main spine of rail, through the center part of New York 
State. We also talked to staff that it probably would be useful 
for the caucus as well to get a tour of the line. In other 
words, ride one of our trains or CSX's trains to really 
understand what are the difficulties here, what are the 
crossings that we are dealing with, what is the characteristics 
of the line itself, which then gives you an ability to 
understand what it is that you could do to make real 
improvement. Because incrementally, if we can move from 79 
miles an hour to 90 miles an hour, maybe even as far as 110_one 
of things that I think Rick was really talking about needs to 
be understood by Congress and by those who want faster speeds 
is, if 79 works for the freight railroad and they deliver what 
they need to deliver in terms of freight, as they move up, as 
we move up speed, there is a higher cost below the rail to 
maintain that railroad.
    So there probably is a necessity at that point in time, if 
public policy decides that we are going to run at 110, to 
understand that difference and invest in that difference on a 
regular basis to ensure that we can keep that railroad at that 
speed, one of the difficulties we are having right now in 
Michigan, as Norfolk Southern is considering eliminating their 
use of that line in Michigan.
    Mr. Arcuri. So it is not just the initial cost but it is 
the maintenance cost if we choose to employ that?
    Mr. Boardman. Yes.
    Mr. Buffa. Madam Chair, could I add a brief remark to that? 
In Orange County, the Orange County Transportation Authority is 
providing seed money--there are 34 cities in Orange County--to 
begin planning local feeder systems that will get their 
citizens to our metro link stations. That is a major problem in 
Southern California. The rail lines are expanding but there 
aren't sufficient feeder systems to get people to the station 
from their homes or their businesses.
    So we have done a first round where we have spent a couple 
of million dollars, and the next round we will spend 6- to $8 
million to assist all the cities that want to participate in 
planning how are you going to get your people in your 
community, business and residents to the next metro link 
station.
    Mr. Arcuri. Mr. Buffa, are these primarily computer lines?
    Mr. Buffa. Yes.
    Mr. Arcuri. Thank you, gentlemen, very much. I appreciate 
it.
    Ms. Brown of Florida. Mr. Brown.
    Mr. Brown of South Carolina. Thank you, Madam Chair, and I 
know I will be brief with the bells ringing which means we have 
got votes before us.
    Mr. Young, as part of your statement you said that the 
railroad industry will need to invest over $135 billion in rail 
capacity by the year 2035. And I know Mr. Buffa mentioned that 
they are almost at capacity over in Los Angeles. But I know 
that y'all are aware that we are in the process, as we speak, 
to enlarge the Panama Canal. And I know that is going to make 
some freight differentials between the East Coast and the West 
coast. And I was just wondering if y'all are planning what the 
new capacity is going to be influenced by that change?
    Mr. Young. Congressman, I think we do look at the 
expansions at the canals, and it will be limited. Again, you 
could project out with not only what they are doing on their 
size, but on the size of ship that can move through the canals. 
It will take some of the growth off, but at the end of the day 
if you look particularly at the Ports of L.A. and Long Beach, 
they have grown at about an 8 percent rate in the last 10 
years. You may cut that in half, but it is still growth.
    I also believe, if you look at business moving on the 
highway where we want to incent more moving on freight 
railroads, that has nothing to do with, say, the canals; that 
has everything to do with what we are doing domestically here. 
So the challenges are very, very high here, and the costs are 
very significant.
    Ms. Brown of Florida. We have four more Members, and we 
need to finish with Mr. Brown. So we have got a vote on. I know 
you all have been very generous with your time.
    We have two votes. Then we will come right back so we can 
finish up with the other Members. Thank you very much. It is 
only 8 minutes.
    Mr. Brown of South Carolina. I would like to ask Mr. Webb a 
question.
    Mr. Webb, I noticed you stated in your presentation that 
you are actually losing ridership in the Northeast Corridor, so 
I guess those routes are not profitable at this time.
    I am sorry. I meant Mr. Boardman.
    Mr. Boardman. No, none of the routes have been profitable 
for Amtrak, and they never really have been. We have come 
closest in the Northeast Corridor to covering our operating 
costs.
    What is happening in the Northeast Corridor is a result of 
the business, especially the financial services industry, 
downturn and the reduction in the price of fuel. We are seeing 
much less use in the Northeast Corridor right now. There is 
also a flattening of the connections to the Northeast Corridor.
    Yet there are other areas, and I think Will Kempton said it 
well; in the San Joaquin, for example, we are still seeing 
growth in ridership. When you look at services out of Chicago, 
we are still seeing a growth in ridership, not as much as we 
sustained last year, but we are still seeing that growth.
    Mr. Brown of South Carolina. I thought you said, in the 
Northeast Corridor you are actually losing revenue and 
passenger load.
    Mr. Boardman. Yes. As our passengers go down--and about 
half of our ridership is in the Northeast Corridor--our 
revenues drop as well.
    Mr. Brown of South Carolina. Do you still have the connect 
route between the East Coast and the West Coast?
    Mr. Boardman. We have several connections between the East 
and the West, all emanating from Chicago. There is the northern 
route, which is our Empire Builder service. There is our Zephyr 
service. There is the Texas Eagle. Then there is the Southwest 
Chief.
    Mr. Brown of South Carolina. Thank you.
    Mr. Webb, just one quick question of you.
    On the short line railroads, are you all looking at 
expanding the passenger service in the short lines or are you 
just focusing primarily on freight?
    Mr. Webb. We are focusing primarily on freight, but on a 
couple of our lines, we have actually been asked to take over 
the freight portion of a commuter line. In Austin, Texas, for 
example, we do that. Then out in southern California, we do 
that as well.
    So there is a role for freight railroads and for commuter 
lines to play. From a short line standpoint, we think we can 
provide that freight service in conjunction with commuter lines 
where it makes sense.
    Mr. Brown of South Carolina. Thank you.
    Thank you, Madam Chair.
    Ms. Brown of Florida. We are in a temporary recess.
    [Recess.]
    Ms. Brown of Florida. This is such a high-powered panel, 
and the information is so important to where we want to move 
the industry, so I want to thank you again.
    Mr. Lipinski has a question.
    Mr. Lipinski. Thank you, Madam Chairwoman. I thank Mr. 
Carney for letting me butt ahead here, and I thank the panel 
for sticking around.
    I have to run to the floor to testify on an amendment that 
Mr. Nadler has, to give $3 billion more to transit in this 
bill. Unfortunately, Chairwoman Brown's amendment to have $5 
billion for rail infrastructure was not made in order by the 
Rules Committee. Her amendment is certainly something that I 
strongly support, and I hope that we can make some changes to 
the bill before we are finished with it.
    I wanted to very quickly respond to Mr. Stem.
    Mr. Stem, you talked about Buy America. We have good, 
strong Buy America provisions. We have had for iron and steel 
and for transportation projects.
    I had tried myself to get an amendment in the stimulus bill 
to have a strong Buy America provision for all materials and 
products in this bill. Unfortunately, as of now, that amendment 
was not accepted by the Rules Committee. We are still working 
on that in the stimulus bill, but that is something that is 
very important in that if we are going to spend all of this 
money, we should be spending it here in America.
    Mr. Kempton and Mr. Buffa had mentioned grade separations. 
I was talking last week to the new Transportation Secretary, 
Ray LaHood from Illinois. We were talking about the problems, 
especially in Illinois, but also in other States across the 
country--certainly in California, in New York and in Ohio. 
There are other States that have major problems with trains 
that are blocking roadways and that are causing congestion. It 
is part of the CREATE program in Chicago, but while CREATE is 
under way, that part unfortunately we have not gotten moving. 
Well, there is one grade separation that was done, but there is 
more to be done.
    One of the problems is that Illinois right now only 
receives $10 million a year from the Federal Government for 
funding for grade separations, and this is something that I 
really think that we need to change. I am very hopeful in the 
upcoming highway bill that we will see that change. I know that 
certainly there is the support from some of our witnesses here 
today for that.
    Now, there is one thing I wanted to ask. I worked last year 
on that Amtrak bill with Chairwoman Brown and Ranking Member 
Shuster and Chairman Oberstar and Ranking Member Mica. I was 
very happy they were able to add language to help advance--to 
give grants--for Positive Train Control. Also, there is 
something very important in there from Amtrak in terms of 
putting money in there to help improve on-time performance and 
to get rid of some of the problem areas that Amtrak has with 
congestion.
    I took the train a few months ago from Chicago down to 
Springfield--to the State capital. Unfortunately, as everyone 
told me, we had problems. That is the Heritage Corridor there, 
and that is near the top of the list that Amtrak put out of 
congested areas that Amtrak wants to put money into fixing. It 
would make a great difference for Amtrak and also for metro 
commuter rail.
    I just want to ask Mr. Boardman if he has any information--
any ideas right now--about the time frame. I want to know 
whether you have any information right now--and you can get 
back to me--on a time frame for improving efficiency there 
along the Heritage Corridor.
    Mr. Boardman. I do not have it, Mr. Lipinski, right this 
minute, but we will get back to you with a plan for what we are 
going to do there. I do not know.
    Mr. Lipinski. Does anyone want to add anything else to the 
grade separation? Actually, there is money there for grade 
separations that the Federal Government sends to the States, 
but it is so small--$10 million in Illinois. $10 million is not 
going to get you one grade separation.
    Does anyone have any comments on this?
    Mr. Kempton. Mr. Lipinski, in California, we had the voters 
of our State approve a $20 billion bond issue for 
transportation back in November of 2006. This measure was 
sponsored by the governor, approved by the legislature and 
presented to our voters, who saw the wisdom in that measure and 
who approved it by a 60 percent-plus vote.
    I have to say that, as we divided a piece of that money, 
the Trade Quarter Infrastructure Fund piece of that, there was 
a significant amount of attention, in large measure from our 
partners in southern California, to focus some of those dollars 
on grade separations. There was also a separate component in 
the package for grade separations--something on the order of 
$250 million, as I recall--which is not as significant an 
amount of money given the grade crossing needs that we have in 
California. But for the piece of the Trade Quarter 
Infrastructure Fund that went to southern California, the 
members of the group that decided on how those dollars should 
be spent--including the Orange County Transportation Authority, 
which Mr. Buffa is representing--did, in fact, dedicate a 
significant portion of their dollars for those projects as 
well.
    So we have a good pot of money. We would welcome more. It 
is obviously critical from an air quality perspective, critical 
from a congestion reduction perspective and critical to getting 
that modal shift that Mr. Nadler talked about accomplished as 
well.
    Mr. Buffa. Mr. Lipinski, as you know, it is an enormously 
expensive undertaking. $11 million for the State of Illinois 
was not going to buy you one grade separation.
    As Mr. Kempton said, this is finally on the public's radar 
screen. It is such, kind of an arcane matter that the public 
has not been plugged in, but they have finally realized that it 
is like a three-legged stool.
    It certainly makes their lives better. It makes their lives 
safer because of the interaction of rail lines with major 
arterials. It is better for the rail system. It significantly 
increases through-put for them. So it is a hugely important 
issue. It just does not have a lot of sex appeal for the 
public.
    At least in California they have finally figured out "my 
daily life, my daily commute is really affected by this issue." 
As Mr. Kempton said, they supported a substantial bond issue 
which was called Proposition 1B to pay for it. So, yes, it is 
usually expensive, but it is also hugely important to 
metropolitan areas across the Nation.
    Mr. Boardman. Mr. Lipinski, if I could just add, one of the 
difficulties that we have with this is that the grade crossing 
money generally comes out of the highway side of the world. I 
cannot remember the particular section of that, but it is 
identified for grade crossings.
    Some of the difficulty that the highway folks have in 
regard to this is when they are losing 40,000 or 50,000 people 
on the highway itself in terms of their safety difficulties, 
when they look at the highway-rail grade crossing, it is a very 
low number in comparison to that. Less than 1,000 is where we 
are at this point in time. So that huge amount of loss on the 
regular highway overwhelms the grade crossing parts of this 
thing.
    I think one of the things that really could happen in the 
reauthorization is for Congress, for the policy to really be 
understood, to get 90-mile-an-hour or 110-mile-an-hour rail 
service, we need the funding necessary to seal a corridor, 
which is some of the things that are being looked at at this 
point in time; and that is just a rational high speed, not a 
super high speed where you are going to have to totally grade 
separate.
    So there is real need out there. Amtrak operates all over 
this country where we could make some improvements and could 
increase speeds even on existing freight track if those dollars 
were made available.
    Mr. Simpson. Mr. Lipinski, the program that Mr. Boardman is 
talking about is the Section 130 Grade Crossing Safety Program.
    In the decade of the 1990s, back in ISTEA days, $160 
million a year was set aside for the Section 130 Grade Crossing 
Program. That is allocated to each of the States. Hawaii gets 
money, Puerto Rico gets money, the District of Columbia gets 
money, and States like Illinois that really, really need the 
money are part of the allocation process. We argue that when 
you reauthorize SAFETEA-LU that you ought to take a look at 
that Section 130 Program and put some real money in that.
    Mr. Lipinski. Thank you very much. I could not agree more.
    I thank the Chairwoman, and I thank Mr. Carney.
    Ms. Brown of Florida. Mr. Carney.
    Mr. Carney. Thank you, Madam Chair.
    I think when we were leaving, Mr. Boardman and Mr. Webb, we 
were talking about the profitable or the close-to-profitable 
Amtrak lines. Where are those? It is not in the Northeast 
anymore, or it is still the Northeast? Is it getting worse in 
the Northeast?
    Mr. Boardman. No. There has been a decline in the Northeast 
since the end of the fiscal year last year. It is not a 
question of, I think, getting worse. What is really going to 
happen here is that we are going to be in the same situation 
again in just a few months. As the economy rebounds or as the 
price of energy increases, there is going to be a shifting 
again to the Northeast Corridor. So part of our difficulty is 
short term in some ways.
    Part of my point was that we need to make sure that we get 
the operating assistance, because we talk about capital; and we 
are very thankful for the $800 million, and we are very 
thankful for the $500 million in our normal appropriation for 
capital for stated good repair.
    But our difficulty at this point in time is, because our 
revenues are down and we are trying to demonstrate where that 
was happening and why that was happening, we are in a situation 
where, in order to maintain our services, we are going to need 
additional assistance.
    Mr. Carney. This is for everybody. How much thought has 
gone into the notion of intermodal transportation connected to 
rail?
    Mr. Boardman. Well, I think connected transportation today 
is being talked about more and more by many folks, whether it 
is Will here in California or whether it is perhaps Anne Canby 
later when she speaks on the next panel.
    Part of the need here today and part of the concept that I 
think even the freight railroads understand and that everybody 
understands is, we need to work together whether we are in the 
freight business or whether we are in the passenger business or 
whether we are in the bus business. If we are going to move 
people or if we are going to move freight onto the railroads, 
we have got to have trucking as partners on the freight side. 
We have got to have buses and light rail and commuters as 
partners.
    Mr. Carney. I could not agree more. I am asking, how far 
down the road are you in this discussion with bus folks and 
with truckers and things like that.
    Mr. Boardman. I will let Will answer that. There are 
tremendous improvements in California, and we are making them 
in other places as well.
    Mr. Kempton. We have a great partnership with the bus 
services in California, and I will use the San Joaquin service 
which, as you may recall, Mr. Carney, is the service from 
Bakersfield into the Bay Area.
    We have a number of connecting routes that provide for 
service over the Tehachapis to Los Angeles, as an example, and 
connections to other parts of California, too. It is absolutely 
integral to the success of our rail system.
    You also talked about intermodal activities. As Mr. Buffa 
spoke earlier on the ARTIC project in Anaheim, we are proposing 
to build and are working together to build a regional 
intermodal transportation center in Anaheim. That will bring 
high-speed rail, intercity rail, bus operations together, the 
Transbay Terminal in the San Francisco area, which is the 
granddaddy of them all perhaps, maybe next to Union Station in 
New York.
    We are really making an effort to tie our services together 
where you can come in on an intercity rail service and go 
cross-platform to a commuter rail service, and you can have a 
rail-to-rail pass, a ticket structure that will allow the 
passenger to step off one train and get onto another so that 
there is an ease of interface.
    These are all things to accomplish the intermodal goal that 
you are talking about.
    Mr. Boardman. If I could just add for a minute, one of the 
places in Pennsylvania, which you are familiar with, is with 
the 110-mile-an-hour service into Harrisburg. At this point in 
time, there is tremendous growth on that particular corridor. 
So many of the other corridors connected to the Northeast 
Corridor have had a flattening and a reduction in ridership. 
The Keystone Corridor has not. There are additional 
announcements today. I do not know exactly how the bus service 
out of Pittsburgh to Harrisburg is working, but it is one of 
the things that is attracting attention and activity by the 
private sector.
    Mr. Carney. From Pittsburgh to Harrisburg?
    Mr. Boardman. Yes.
    Mr. Carney. It is kind of a long bus ride.
    Mr. Boardman. It is, but it is a high-quality, Megabus-type 
service, just like is operating out of Washington, DC.
    Mr. Carney. We do it well in Pennsylvania.
    I submit you would probably increase your Northeast 
ridership if you would tap into the Northeast part of 
Pennsylvania, frankly. We have a lot of folks in my district 
along the Delaware River who work in New York City every day 
and who would love a train to get into work rather than to clog 
I-80.
    Mr. Boardman. There is a study right now going on in that 
area that involves Binghamton into Scranton, so we understand 
that.
    Mr. Carney. Yes. We want to see that come on line as 
quickly as possible.
    This is a larger question for all of us to ponder: How do 
we change the culture in this country so people want to get on 
a train again? I think that is the fundamental root of this 
whole discussion.
    Mr. Buffa. Mr. Carney, could I take a shot at that? Will 
and I were discussing that. Particularly in California but in 
the West, it is a huge problem.
    We are talking about a cultural issue. I happen to be a 
former New Yorker. I grew up with trains. I had no desire to 
drive a car until I was 18, and that is only because I was 
leaving to go to Arizona to go to college. I would not have 
done it then.
    Californians, in their heart of hearts, still kind of 
think, if you get on a train, you ain't coming back. They are 
scared of them. They are not sure how they work. That is a huge 
cultural issue for us to deal with. So, in addition to all of 
the infrastructure problems we have been talking about--I 
mentioned earlier this go-local problem where we, as an agency, 
are going to spend tens of millions of dollars to encourage 
communities to come up with these feeder lines.
    The big problem is a psychological one. Californians are 
married to their cars. They are very reluctant to get out of 
their cars. They have to be convinced that, yes, you will 
return home.
    More important are the people who are parents, who are 
worried during the day about getting that call about their kids 
at school or, you know, that your husband has had appendicitis 
and he is in the hospital. They are frantic about, how can I 
deal with that if I begin to use public transit?
    Easterners are very used to that. They know how to do that. 
Now, they have the infrastructure to support it.
    We need to greatly expand the infrastructure. That 
psychological element, that cultural element, is a huge barrier 
that we are not close to solving in the western United States.
    Mr. Carney. I am not sure we are close to solving it in 
most of the country, frankly, with the exception of New York 
and the Northeast. But it does, I think, get to the heart of 
this entire issue of passenger rail, which I think everyone in 
this room would agree we have to promote. We have to do more to 
ease congestion and to clean the environment and to be 
efficient in how we move folks around.
    I appreciate your time. I am late for another meeting, but 
I really appreciate all of your insights, and I look forward to 
working with you closely in the coming years. Thank you.
    Thank you, Madam Chair.
    Ms. Brown of Florida. Mr. Schauer.
    Mr. Schauer. Thank you, Madam Chair. It was certainly worth 
the wait.
    I represent the Michigan Seventh. To put it in Amtrak 
parlance, it includes the Wolverine line and the Blue Water 
line. I have worked with CN, with Norfolk Southern and with 
Watco to tackle a number of freight issues.
    I want to talk mostly about passenger here, and I 
understand there is a clear relationship with, I think, an 
entirety of leased lines within my district. There is a lot of 
interest in my district in expanding passenger rail. Maybe you 
can help me distinguish what I think of as a traditional 
intercity passenger Amtrak service, which we have now. The 
Detroit-Chicago corridor has been designated as a high-speed 
rail corridor. There are a number of other commuter rail 
projects kind of percolating up.
    I think one of the reasons that this is important to my 
district is that times are tough in Michigan. I have a number 
of smaller, urban core communities as well as smaller rural 
communities that I think would like to see the economic impact 
of being connected, for example, to Jackson, Michigan, which 
has a station that I think Amtrak owns and that we are trying 
to repair and turn into an intermodal hub.
    Jackson, for example, would very much like to hook up with 
Ann Arbor with some kind of high-speed commuter service. So how 
do we do this?
    I am certainly interested in the Chair's support and in 
Chairman Oberstar's support as to the resources that it would 
take to do this. I guess, to all of you: What do we need to do 
to make this happen in a way that helps create jobs in the 
short term, but helps create economic stimulus over the longer 
haul?
    Mr. Boardman. I will take a start at answering the question 
you have asked.
    I think it has been a question that has been asked in the 
past, not about Michigan so much, but about other places. How 
do we get these things done? There is usually a different way 
to get it done in every community that you operate in or in 
every State that you operate in.
    One of the things that the Federal Government and this 
Committee and the Senate did 2 years ago was to begin to 
establish a program of matching with State governments for 
improvements in rail. It was a small program to begin with, and 
we are on a continuing resolution right now, but we believe 
that we will have a program out of normal appropriation that 
will come forward again this year. It allows the States and the 
Federal Government to work together to make those kinds of 
improvements, the ones that you are really talking about.
    I think what you are talking about is, there is almost a 
no-man's land between the transit program of commuter rail and 
the need or the request. Part of what I think Mr. Webb was 
talking about in Austin was, it is related both to the transit 
side, and it is also a commuter-freight kind of a connection, 
so it takes a relationship with either a short line or with one 
of the Class I's.
    It a commitment from the State. The State puts forward the 
dollars necessary. It takes a Federal program, as you have 
already produced here, to make that happen. Then, if it is an 
Amtrak that operates this, it takes Amtrak's being involved 
from early on to figure out where the equipment is going to 
come from. How do we get the crews in place? What is the 
commitment to really provide that service?
    Mr. Carney, who is gone now, really talked earlier about 
the need for connectivity so there is enough ridership here 
that it is a success in the end.
    So it really does fit together. There is a program here. 
There is a way for Michigan and for the people who are involved 
to get the right parties at the table to make this happen.
    Mr. Schauer. Madam Chair, I would look forward to working 
with you and with the Committee and with all of you to make 
that corridor a priority. I mean, I just saw an estimate of the 
time. If we can make that line between Detroit and Chicago more 
efficient, I think the sort of door-to-door time would be 
something like 3 hours and 45 minutes. It is 5 hours-plus now. 
I think that would have an incredible economic stimulative 
impact for all of the communities there.
    So it is a high priority in the short run in terms of the 
jobs. And we can create, obviously, any new equipment; we have 
the capacity in Michigan in terms of plants and people. But for 
me, this is all about creating jobs and helping communities 
become more healthy economically.
    Mr. Boardman. I think Michigan is a member of the Midwest 
Rail Coalition as well.
    Mr. Schauer. Thank you, Madam Chair.
    Ms. Brown of Florida. Thank you.
    Mr. Young, Mr. Nadler asked about providing Federal funds 
for freight rail. The Senate stimulus bill provides $5.5 
billion to States to use on highways, bridges or freight and 
passenger rail.
    When we look at the SAFETEA-LU reauthorization, or whatever 
we are going to call it, don't you think that this type of 
funding is needed for freight rail?
    Mr. Young. I think it has the potential to be a great 
program, and we are going to take a hard look at it in terms of 
how it works and how quickly it can be used. But we will see; 
it still needs to get out there, and I am looking forward 
potentially to taking advantage of it.
    Ms. Brown of Florida. I guess, if freight is competing with 
highways and bridges, it is going to be very difficult.
    Mr. Young. It will. Although I think that is the program 
that is set for high-impact projects that I believe--when you 
look at high-impact projects that include the freight, I think 
they will clearly be at the top of that list in terms of 
priorities.
    Ms. Brown of Florida. Mr. Boardman, you don't have to 
answer this question. I just want you to think about it.
    What is it that we need to do to get passenger rail up and 
operating efficiently and effectively and competitively? Where 
do we need to be?
    Mr. Boardman. I will come back and meet with you on that.
    Ms. Brown of Florida. Yes, sir.
    Mr. Kempton, there is an amendment that I was just talking 
to Mr. Shuster about that is on the floor, which is about Mr. 
Oberstar's amendment pertaining to 90 days, that the money has 
to be spent in 90 days.
    Is that going to be a problem for the States to obligate 
this money? By its very nature, a "stimulus" means that you are 
going to be able to spend that money to kick-start the economy.
    Mr. Kempton. Madam Chair, as I responded earlier, I think, 
in an exchange with Mr. Shuster, California as a State will 
meet that requirement if that is deemed to be appropriate by 
the Congress.
    It will be difficult for some States, and it will be 
difficult for local governments. I think that was the point I 
made earlier, that some of them will have difficulty in terms 
of federalizing projects and in going through the steps that 
will be necessary to be able to spend those dollars.
    I believe we are going to be ahead of the game in 
California because we do have a bond program that has been 
stalled by our State's budget problems, and we will be able to 
move those dollars out very, very quickly.
    Again, I think there will be issues in other localities 
around the country.
    Ms. Brown of Florida. Mr. Stem, a question about the 
layoffs in the industry now:
    What do you think we need to do in the stimulus to get the 
industry to bounce back so that we can put people back to work?
    Mr. Stem. Find a way to generate freight. Find a way to 
generate projects on the railroads. As for those projects that 
were discussed here earlier and as Mr. Young and as Mr. 
Oberstar referred to, those people are in place. They are at 
home, wishing they had a job; and they are ready to go back to 
work tomorrow once they have funding for those projects and 
once they have a need for the employment.
    Ms. Brown of Florida. Now, there was one person there. I 
went out to see him in Orange County, and he actually had an 
earthquake arranged so that I could know the urgency of having 
that rail project out there.
    Mr. Buffa. Madam Chair, Mayor Pringle of Anaheim is quite 
proud of that. You have become a legend in Orange County 
politics because you were the Congresswoman who came to visit 
us and who had the bad misfortune of being on the seventh floor 
of the Anaheim City Hall when a 5.2 earthquake hit.
    Not only that, but you were apparently the coolest head in 
the room. Some of my Orange County compatriots were either 
under the table or in a doorjamb.
    Ms. Brown of Florida. Definitely under the table.
    Mr. Buffa. You stood your ground, so you are famous in 
Orange County.
    Ms. Brown of Florida. We will forever bond.
    I want to thank you all so very much. This has been so 
timely, particularly while we are dealing with this stimulus 
and are getting ready to start the TEA-LU process. I am hoping 
that everyone in this capital is listening to what you are 
saying, because I do think that you all are the engine that 
will really move this country forward.
    Thank you very much for the time that you have given us 
today.
    I want to welcome you all. Sorry that the first panel went 
so long, but I understand that we are on a real time frame 
because we are having the memorial here this afternoon, so we 
will get through this quickly. I would like to welcome and 
introduce our second panel.
    We have Mr. Ed Wolfe from Wolfe Research; Mr. Lance 
Grenzeback of Cambridge Systematics; Ms. Anne Canby, President 
of the Surface Transportation Policy Project and member of the 
OneRail Coalition--you are going to tell us about that; I 
understand you all had a major announcement recently.
    We have Mr. Phillip Longman, Research Director of the Next 
Social Contract Initiative at the New America Foundation. We 
have Mr. Chuck Baker, President of the National Railroad 
Construction and Maintenance Association. Finally, we have Mr. 
Leon Fenhaus, Director of Government Affairs for the 
Brotherhood of Maintenance of Way Employees Division of the 
International Brotherhood of Teamsters.

  TESTIMONY OF ED WOLFE, WOLFE RESEARCH; LANCE R. GRENZEBACK, 
PRINCIPAL, CAMBRIDGE SYSTEMATICS, INC.; ANNE CANBY, PRESIDENT, 
  SURFACE TRANSPORTATION POLICY PROJECT, AND MEMBER, OneRAIL 
 COALITION; PHILLIP LONGMAN, SCHWARTZ SENIOR FELLOW; RESEARCH 
    DIRECTOR, NEXT SOCIAL CONTRACT INITIATIVE, NEW AMERICA 
     FOUNDATION; CHUCK BAKER, PRESIDENT, NATIONAL RAILROAD 
   CONSTRUCTION & MAINTENANCE ASSOCIATION; AND LEON FENHAUS, 
 DIRECTOR OF GOVERNMENT AFFAIRS, BROTHERHOOD OF MAINTENANCE OF 
 WAY EMPLOYEES DIVISION, INTERNATIONAL BROTHERHOOD OF TEAMSTERS

    Ms. Brown of Florida. Let me remind the witnesses that 
under our Committee rules, all statements must be limited to 5 
minutes, but your entire statements will appear in the record. 
We will also allow the entire panel to testify before the 
questioning begins.
    I will begin with Mr. Wolfe.
    Mr. Wolfe. Thank you, Madam Chairman and Ranking Member 
Shuster, as well as the other distinguished Members and your 
staffs, for the invitation to present today.
    My name is Ed Wolfe. I am the Managing Member of Wolfe 
Research, which is the leading boutique research firm on Wall 
Street focused on freight transportation and the macro economy.
    Our clients are the shareholders and debt holders of the 
public and some private railroads and other transport 
companies. My slides and testimony are available outside, and 
they also should be up on the screen.
    I see they are. That is good. They are also on our Web 
site.
    In my 13 years on Wall Street as well as my several years 
prior as an attorney, I have never before seen the U.S. or 
global financial markets and the economy deteriorate in such a 
broad-based manner or at such a rapid pace. These are truly 
unprecedented times.
    The following slides show how quickly freight 
transportation demand has fallen off by mode and, more 
specifically, for the railroad-by-end-user segment. I have also 
added some slides on rail and truck pricing, on rail capital 
spending, returns and recent stock performance, as well as your 
estimates for rail volumes, yields, revenue, and EPS for the 
rails in 2009 relative to 2008.
    Am I going to have to change these slides? Okay. Well, you 
are going to need good eyes.
    Slide 1 lists several of the key reasons why rail 
infrastructure is critical and is becoming more so for our 
Nation's transportation needs. Railroads comprise only about 7 
percent of total freight transportation spent in the U.S., but 
they have become an increasingly critical line-haul component 
of moving bulk commodities and consumer goods to businesses 
and, ultimately, to consumers throughout the U.S. and between 
Canada and Mexico.
    This has been accelerated over the past decade with the 
rise of global trade and offshore Asian imports into the U.S., 
which lend themselves to large, less expensive, non-time-
sensitive, long-haul moves on railroads rather than other modes 
of transportation. We estimate that rails are more than three 
times more fuel efficient than trucks.
    With increasing highway congestion, the rails are one of 
the few alternatives for truck freight with meaningful 
potential capacity to help decongest highways and make America 
more productive, safe and environmentally responsible.
    Slide 2 lists some of the major multiyear U.S. capacity 
expansion projects currently under way by each of the major 
railroads. These are some of the questions that have come up 
already. Someone mentioned I-81. Norfolk has a project, for 
instance, on the Crescent Corridor, but they are listed on 
slide 2.
    I will now turn to some thoughts on the freight macro 
economy generally and on Chairwoman Brown's request for an 
update on how railroads are faring in the current economic 
crisis.
    Our sense is that the recent further freight downturn since 
Thanksgiving reflects a material inventory drawdown and 
extended production shutdowns around and since the holiday as 
freight has seemingly ground to a halt. Based on our channel 
checks, we expect these very weak freight trends to continue 
well into the first quarter of 2009; hence, our expectation for 
minus 5 percent GDP during both the fourth quarter 2008 and the 
first quarter 2009.
    Beyond extended shutdowns from the Big Three auto makers, 
we have seen announced production curtailments from a broad 
array of companies and industries. We expect these shutdowns to 
further negatively impact already weakened freight volumes, as 
we have seen in December and January.
    Slide 3 summarizes 13 freight data series that we track 
each month. As shown in the column on the right, only one of 
those 13 series improves sequentially in the most recent month 
of available data from November or December versus the prior 
month. The one positive trend of truck bankruptcy showing 
relative improvement likely reflects the recent plunge in oil 
prices, keeping the small truckers in the game a bit longer 
than normal, given how weak demand is.
    Slide 4 shows the Cass Freight Index, which has plummeted 
recently, including a 23 percent year-over-year drop in 
December, the sharpest decline in the 18-year history of the 
index, which is now at its lowest absolute level since January 
2004. This shows how bad freight is currently in December and 
January.
    Slide 5 shows monthly year-over-year changes in freight 
volumes for the past 3 years for domestic truck, airfreight and 
rail volumes as well as West Coast ocean import and export 
volumes. Each of these modes of transportation fell materially 
in November and December from recent trends. Notably, export 
ocean volumes were up 20 percent on average in the first 8 
months of 2008, but were down almost 20 percent year over year 
in November and were down over 27 percent during December. That 
is quite a swing.
    Slide 6 breaks out the eight major rail product segments 
showing annual year-over-year growth for the past 6 years on 
the left side of the slide and data for the past eight quarters 
on the right side. Fourth quarter 2008 and full year 2008 total 
rail volumes were down 9 percent and down 4 percent 
respectively. This marks the worst quarter since at least 1990 
and the worst full year since 1985. Note that in the fourth 
quarter, as was the case for full year 2008, seven of eight 
segments were negative year over year with only coal volumes 
positive. In the fourth quarter, automotive, metals, paper, and 
lumber volumes were the worst-performing volume segments for 
the rail--down 30 percent, 25 percent and 16 percent--while 
coal volume, up three, remained the only positive segment 
during the fourth quarter, although it turned negative in 
December and remains weak thus far in January amidst the 
shutdown of several mines and a weaker demand generally.
    Slides 7 and 8 show the 62 percent correlation between U.S. 
GDP and rail carload volumes and the even higher, 68 percent, 
historical correlation between industrial production and rail 
volumes.
    Slide 9 tracks rail and truck pricing over the past 32 
years. Since rail deregulation in 1980, the spread between 
truck and rail pricing has widened, in part driven by trucks 
being less fuel-efficient and requiring higher fuel surcharges 
as oil prices have risen.
    Slide 10 highlights rail capital spending as a percentage 
of total rail revenue for each of the Class I railroads since 
1995, compared to the average capital expenditures as a 
percentage of revenue for the Dow Jones 30 industrials.
    On average, over the past 5 and 10 years, as reflected at 
the bottom of the table, railroads have spent 16.5 and 16.8 
percent of their total revenue on capital spending. This is 
almost three times higher than the spend by the average Dow 
Jones 30 company during these periods.
    Slide 11 looks at each rail's return on capital relative to 
the rail industry's cost of capital as published each year by 
the STB. While the rails' returns have, on average, improved 
from a low of about 6 percent in 2000 to 10.7 in 2007, they 
remained below the industry's cost of capital during 2007. 
Norfolk Southern was the only U.S. railroad to return its cost 
of capital in 2007. While rail returns were likely higher in 
2008, they will be materially lower in 2009.
    Slide 12 lists our current forecasted volume, yield, 
revenue, and EPS declines for the railroads in 2009. Our 
numbers have been coming down quickly over the past 6 months. 
While we think we are getting closer to a bottom, at least for 
2009, we are not yet confident our estimates have bottomed.
    In our current assumptions, we are assuming about a 6 
percent decline in volumes, on average, for the four major U.S. 
rails next year despite easy comparisons of minus 4 and minus 
3, on average, in the previous 2 years. In the prior 3 years 
from 2004 to 2006, the four U.S. railroads averaged volume 
growth of nearly 4 percent. These significant volume declines, 
along with slower real pricing gains and materially lower fuel 
surcharge revenue, should translate to about a 14 percent 
revenue decline on average in 2009. This is down from 10 
percent revenue growth on average in the previous 5 years 
through 2008.
    Combined with negative operating leverage for the high 
fixed-cost rail networks, we anticipate about a 16 percent drop 
in rail earnings per share next year down from a 27 percent 
earnings growth on average over the previous 5 years.
    Finally, slide 13 reflects recent annual and quarterly 
stock performances of the rails relative to truck and 
airfreight and logistics stocks, as well as the S&P 500. While 
the rails outperformed the other transports in the market over 
most of the past 8 years, in 2008 during the past fourth 
quarter and thus far in January, the rail stocks have 
underperformed as prospects have become less positive, 
reflected by our expectations on Slide 12.
    In conclusion, the rails are vital to the North American 
transportation network and will be increasingly important to 
infrastructure in order to alleviate highway congestion and to 
promote a more efficient and environmentally conscious 
transport grid. While the group has seen strong earnings and 
stock performance in recent years, this is the most capital-
intensive industry of which we are aware.
    2009 looks to be very challenging for volumes, yields and 
profitability, yet the group intends to minimally reduce their 
strong spending initiatives. Given low financial returns, if 
the downturn lasts beyond 2009, we would expect shareholders 
would demand more substantial capital plan reductions and 
shippers would demand some pricing rollbacks.
    I thank you for your time, and I look forward to answering 
your questions.
    Ms. Brown of Florida. No signal? Okay. We are ready.
    Mr. Grenzeback. Thank you.
    Madam Chairman and Mr. Petri, my name is Lance Grenzeback. 
I am Senior Vice President with Cambridge Systematics. We 
provide transportation, policy planning and management 
consulting services. We authored the Freight-Rail Bottom Line 
Report for AASHTO and, more recently, the National Rail Freight 
Infrastructure Capacity and Investment Study for the AAR and 
the National Transportation Policy Commission.
    Freight rail is a critical part of the freight 
transportation spectrum. Intermodal rail competes with trucking 
to move international and domestic containers. Rail carload 
service carries thousands of products from lumber in bulkhead 
flatcars to chemicals in tank cars, and unit trains haul 
enormous quantities of bulk commodities, including 30 percent 
of the Nation's grain harvest and some 65 percent of the coal 
used to generate electricity.
    Rail productivity and cost effectiveness have improved 
significantly. Rail rates are about half of what they were in 
1980. Freight tonnage has doubled; today, it accounts for about 
30 percent of all ton-miles of freight movement and over 40 
percent of the long-distance intercity ton-miles. Rail reduces 
the cost of maintaining public highways and bridges by keeping 
the equivalent of 100 million trucks and 1.5 trillion ton-miles 
of freight off the highways.
    Rail is more than twice as energy efficient as trucking on 
a ton-mile basis. In a world worried about climate change, rail 
accounts for less than 3 percent of all U.S. transportation 
petroleum use and greenhouse gas emissions.
    However, rail traffic has not grown significantly since 
2005, in part because of growing rail system congestion. Rail 
traffic is now dropping. As Mr. Wolfe noted, volumes in 2008 
were the fourth highest in history, but in December, rail 
carload traffic fell 14.2 percent, intermodal 13.7 percent. The 
decline continued in January, and all indications are that it 
will continue through the rest of the year.
    In the AASHTO and the AAR studies, we reported that the 
economy would grow at about 2.8 percent per year, resulting in 
a 70 percent increase in rail tonnage between 2005 and 2035. 
With the economy now estimated to grow at 2.5 percent or lower 
over that same period, we expect that forecast to be delayed at 
least 3 to 5 years.
    More importantly, the recession will reduce revenue for new 
capacity expansion. Investment in new capacity has been 
increasing from about $1.1 billion in 2005 to $1.9 billion in 
2007, but this performance will not be replicated in 2009 and 
in 2010.
    Maintenance and replacement will be cut back, and 
investment in new capacity expansion will largely cease. We 
will not see investment to untangle congestion at major rail 
hubs, such as Chicago, or to add track or to rebuild and expand 
rail terminals.
    As a result, when the recession eases and the demand for 
rail freight picks up, we will likely find ourselves with less 
capacity than we have today and well behind what we will need 
for tomorrow.
    What might that look like? In 2007, we estimated that about 
13 percent of the primary rail corridor miles were operating 
near or above capacity. This is shown in the slide in the red 
and yellow. We projected that without capacity expansion 
improvements totaling nearly $150 billion over the period, 30 
percent of mileage would be operating above capacity by 2035. 
If we delay improvements to the freight rail system, we may 
find ourselves closer to this hypothetical 2035 situation than 
we anticipated.
    Two events could and will likely accelerate the need for 
rail capacity. If oil prices increase again, as is likely with 
an economic recovery, we can expect to see freight shift from 
truck to rail, which will quickly absorb any available 
capacity. If we follow through on our promises to make much-
needed improvements to our intercity passenger rail services, 
we will need to add capacity to many, already congested, 
freight lines. Five to 8 years from now, we could find 
ourselves out of capacity and struggling to catch up.
    In closing, we have an opportunity now to prepare for the 
recovery and to position the freight rail industry to absorb 
future growth. To do this, we need to establish a national rail 
policy and outline the future of a national rail system. We do 
not need a detailed blueprint, but we do need a broad consensus 
on when and where we must make major improvements.
    We should increase the public and private investment, as 
has been much discussed today, in both freight and passenger 
rail, but we also need to agree on how we will share the 
benefits, costs and risks of doing so.
    We should create a mechanism, such as a national 
infrastructure investment bank, to finance freight and 
passenger rail improvements_those projects of national 
significance where the costs are too high for a single railroad 
or State to undertake, but where the improvements benefit many 
States and industries.
    Finally, we should look to expand State and local rail 
programs to coordinate freight and passenger services, to build 
grade separations_which are going to be critically important as 
the volumes and speeds increase_and to mitigate the community 
impacts of more train traffic.
    I thank you for the opportunity to appear before you today, 
and I would be happy to answer questions later.
    Ms. Canby. Thank you very much, Madam Chair and 
Representative Petri.
    My name is Anne Canby. I am head of the Surface 
Transportation Policy Partnership and am the founding member of 
OneRail, a new coalition dedicated to advancing rail as a 
critical element of our national transportation system.
    Earlier this month, 10 organizations came together to form 
the OneRail Coalition. Our goal is to promote the benefits of 
rail, both passenger and freight--which is the first time these 
interests have come together--as an essential element to the 
future of the economic growth and well-being of our Nation.
    In our principles, which are attached to my statement, my 
OneRail colleagues and I propose and recommend to you three 
major areas of activity:
    One, expanding and strengthening the Nation's passenger 
train network and ensuring capacity for both passenger and 
freight growth in the years ahead;
    Two, enacting policies and programs that expand public and 
private investment in rail freight mobility;
    Three, supporting a dedicated funding source for intercity 
passenger train expansion.
    We must maximize the transportation options that enhance 
our mobility, achieve energy efficiency, reduce greenhouse gas 
emissions while boosting economic growth and improving the 
quality of life for all Americans.
    Working separately on intercity passenger rail or freight 
makes no more sense than looking independently at highway 
corridors. As we identify critical corridors, we must create 
the institutional capability for all interests to work in 
concert to identify the optimal investment regardless of mode.
    With regard to the economic recovery proposals pending, 
OneRail has urged the Congress to recognize rail as a full 
partner in the economic recovery measure; and we greatly 
appreciate this Committee's effort, under the leadership of 
Chairman Oberstar, for the $5 billion, and we share your 
disappointment that the figure is considerably less than that. 
We are, however, pleased with the Senate appropriations actions 
yesterday, allocating substantial amounts to rail as well as 
expanding eligibility for rail projects.
    Our preference is that currently authorized programs for 
both passenger and freight, such as the rail-freight 
relocation, Positive Train Control, capital grants for Class II 
and III railroads be fully funded. In the case of Amtrak, our 
view is that their capital investments should be augmented with 
additional funding for major catch-up investments.
    Our second proposal is to permit funds allocated to States 
and localities to be used for investments in passenger and 
freight transportation. Because the source of these stimulus 
funds will be general funds, broad eligibility should apply. 
Even if the stimulus funds are allocated pursuant to Title 23 
provisions, the recipients should be able to invest in projects 
with the highest payback in terms of job creation and 
environmental benefit without regard to mode. We are encouraged 
so far by the progress in both the House and the Senate, and 
are ready to work with you to ensure that rail receives its 
full due in the final economic recovery program.
    The benefits of rail have been well stated today, and I 
have also highlighted them in my testimony. Let me speak for a 
moment to my experience when I ran the Transportation 
Department in Delaware.
    It was troubling to me that our Federal funds could be used 
for commuter rail, but not for intercity rail service on the 
Northeast Corridor, which is a critical link for my State of 
Delaware. Because we were funding commuter rail, we were able 
to use our Federal funds. However, many States do not have this 
option today. Federal funds, in our view--in my view--flowing 
to the State DOTs should be eligible for both intercity freight 
and passenger improvements.
    Also, while I was in Delaware, we recognized the growing 
truck volumes along I-95 between Washington and Delaware, and 
actually asked Mr. Grenzeback to help on a study to determine 
what rail improvements in that corridor would enable us to 
improve both the performance on the highway as well as on the 
rail network. This resulted in the Mid-Atlantic Rail Operations 
Study, which identified over $6 billion worth of improvements, 
including the Howard Street tunnel in Baltimore, supported by 
five State DOTs and three railroads. These projects remain 
basically unfunded.
    In terms of the authorization that your Committee will be 
dealing with later this year, since we have just gotten 
organized, OneRail is still considering the specific proposals 
that we will make, but let me make a few comments from my 
position at STPP:
    First, we need a clear national purpose and strong 
provisions for accountability and measurable outcomes that 
reflect the national interest. The new law must, in my view, 
incorporate all forms of surface transportation, and that means 
rail. We have one system that is made up of several modes. Each 
of them plays a very important role in the moving of both 
people and goods, but we have not really put this together into 
a systematic and integrated network.
    We must do so.
    Finally, the Federal policy and programmatic framework that 
emerges from this next authorization should reshape our 
transportation systems to meet the goals of energy independence 
and a dramatic reduction in the level of greenhouse gas 
emissions, while assuring that we are positioned to meet both 
passenger and freight travel in a safe, economically and 
efficient way. These are not separable goals. We must meet them 
all. And I thank you for this opportunity to testify.
    Ms. Brown of Florida. Mr. Longman.
    Mr. Longman. Madam Chairman, Members of the Committee, my 
name is Phil Longman. Good afternoon. I am a senior fellow at 
the New America Foundation, which is a public policy institute 
here in Washington. And I am also the author of a cover story 
in the current issue of the Washington Monthly that addresses 
what is for many folks a rather novel idea, and I am grateful 
to have the opportunity to sketch it out for you. It is a 
proposal that offers stunning improvements in highway safety, 
maintenance and congestion costs, energy use, greenhouse gas 
emissions, public health, shipping costs, and plenty of 
economic stimulus as well. If it was fully implemented, it 
would get 83 percent of all long-haul trucks off the road by 
2030. It would reduce carbon emissions by 39 percent and reduce 
energy consumption by 15 percent.
    The best way to explain this project is to use a concrete 
example that has been alluded to several times in this hearing; 
that is, I-81. This is a highway that starts in northern New 
York, Canadian border, goes down through the Shenandoah valley 
into Roanoke and on into Tennessee. It is a rather obscure 
interstate as they go, because it doesn't connect much of any 
big population center.
    Nonetheless, the road is being pounded to pieces by trucks. 
One out of every four vehicles on this road is a long-haul 
truck. And people in Virginia have been trying to figure out, 
what should we do? What can we do? Most of these trucks are not 
even stopping in Virginia. They are on their way to somewhere 
else. So the conventional idea would be, you know, add more 
lanes. That is what highway departments do. But it turns out 
that is incredibly expensive. So the next conventional wisdom 
thing to do is let us put tolls on their road. And that idea 
was floated early last year, created a political firestorm.
    Thankfully, there is a better way and some progressive-
minded folks in Virginia, particularly Virginia Rail Solutions 
advocacy group and Virginia DOT, have had the idea of, instead 
of taking the money--take the money that would have gone to 
adding lanes on I-81 and put it into rail infrastructure. There 
happens to be two parallel lines owned by Norfolk Southern 
going along the same route as 81. Norfolk Southern says they 
can divert 2 million trucks off the road with this 
infrastructure.
    Now, I don't aim to tell you all the advantages that come 
from that, the improvements and congestion. You know, trucks 
kill 5,000 people a year nationally. But I do want to add that 
there is the opportunity here for something much broader, using 
that I-81 example as a beginning point.
    There has been some allusions to railroad electrification. 
One hundred years ago there was a railroad called the Chicago, 
Milwaukee, St. Paul and Pacific that took 100-car freight 
trains over the Rockies and Cascade Mountains using electricity 
generated entirely by hydropower, which is abundant in the 
region. You think about what that is. That is zero-emissions 
freight transportation.
    The Millennial Institute, which is best known for its work 
on modeling environmental scenarios, has calculated that for an 
investment of about $250 billion, we could, by electrifying 
major Class 1 mainline railroads, bring all these tremendous 
reductions in carbon emissions and gas use that I alluded to 
before.
    It is work that can start right away. Importantly, too, it 
is work that doesn't beg any questions about what kind of 
energy you use. You can use wind. In fact, wind power, the most 
sensible use for it in many ways is for powering passenger 
trains, because you don't have any transmission laws; solar 
where it is appropriate; hydro where it is appropriate; coal; 
nuclear, if you want to go there. But this is an opportunity to 
do something truly dramatic about a whole host of problems. It 
is kind of like the Swiss Army knife of public policy proposals 
in that we just solve so many problems.
    My feeling is that some of the Class 1 railroads are a bit 
reluctant to take this on; it sounds like pie in the sky. But I 
think dramatic national interests are at stake here, and it may 
be even appropriate to think about compelling some 
electrification, because when you look into the details, there 
are just tremendous opportunities here.
    Thank you, ma'am.
    Ms. Brown of Florida. Mr. Baker.
    Mr. Baker. Madam Chairman, Congressman Petri, and Members 
of the Committee, good afternoon. I am Chuck Baker, the 
president of the National Railroad Construction and Maintenance 
Association, known as the NRC. Norm Jester, who is a vice 
president of Herzog Contracting Corporation and a member of the 
board of the NRC, was scheduled to testify, but the winter 
weather caused his flight into D.C. to be cancelled, so I will 
be your witness today.
    I am speaking on behalf of the NRC and RAILCET. The NRC is 
the trade association representing the independent railroad 
construction and supply industry. RAILCET is a group of 30 NRC 
member companies that have signed a national labor agreement 
with the Laborers International Union of North America and the 
International Union of Operating Engineers. LIUNA is supporting 
this testimony.
    We believe that freight and passenger railroads provide 
important benefits to the American economy and environment. Our 
freight-rail system is widely regarded as the world's most 
efficient, and it is a major contributor to the economic 
competitiveness of American industry.
    Railroads are three to four times more fuel efficient than 
trucks on a freight-ton mile basis. Passenger rail also 
benefits the environment, and investments into rail transit 
systems encourage more efficient and environmentally sound land 
use patterns.
    Freight and passenger rail play a crucial role in removing 
cars and trucks from the road. A typical freight train takes 
over 200 18-wheelers off the road. And last year alone there 
were over 4 billion trips taken on rail transit systems. 
Without these rail systems, highway congestion would become 
even more intolerable.
    Railroads also play a crucial role in the safety and 
security of our country by efficiently transporting military 
personnel and equipment, lessening our dependence on foreign 
oil, providing disaster evacuations and safely transporting 
hazardous materials.
    Given the economic, environmental, safety and security 
benefits of rail, it should be a goal of public policy to shift 
more freight and passenger traffic to rail. To do that, 
additional capacity must be added to the system. The rail 
network is currently constrained by a lack of capacity, which 
causes higher prices for shippers and decreased efficiency for 
carriers.
    An investment of $148 billion for rail infrastructure 
expansion over the next 28 years is required just to keep pace 
with economic growth and meet the forecasted demand from 
shippers. Freight railroads will be able to supply much of this 
capital through internally generated cash flow, but a 
significant amount will need to be funded from outside sources. 
The economic stimulus package being debated right now is an 
excellent and timely opportunity to direct funding and 
improvements into the rail network.
    Investing in rail infrastructure is an efficient way to 
stimulate the domestic economy. These investments create well-
paying, local construction and permanent operating jobs that 
cannot be outsourced, and the effect is immediate. Shovel-ready 
rail projects are constructed on existing company-owned right 
of way and require no additional permitting or review.
    Beyond the stimulus, the NRC believes the Congress should 
use the opportunity of the next transportation reauthorization 
to revamp transportation law in this country. As many of the 
leaders of this Committee have stated, the next reauthorization 
should not be incremental in nature; it should be 
transformational. As a basis for this transformation, we 
endorse the Transportation for Tomorrow framework put forward 
by the National Surface Transportation Policy and Revenue Study 
Commission.
    Specifically, we recommend, in the stimulus bill, invest at 
least $12 billion into the rail transit system as proposed by 
Chairman Oberstar, and we do support the Nadler-DeFazio-
Lipinski amendment being offered on this topic today.
    Congress should adopt the proposed 25 percent freight-rail 
infrastructure capacity expansion tax credit with Davis-Bacon 
provisions.
    Congress should extend the Short line Railroad 
Rehabilitation Tax Credit through 2015 and raise the credit cap 
from $3,500 per mile to $10,000.
    Congress should appropriate at least $100 million for 
capital grants to Class 2 and 3 railroads, as proposed by 
Chairman Oberstar.
    Congress should provide $1.5 billion for capital grants to 
Amtrak, as proposed by Chairman Oberstar.
    We can also leverage additional private investment into 
rail by improving the RRIF loan program by setting an interest 
rate of 1 percent and deferring initial principal repayment by 
up to 6 years.
    We recommend strong Federal support of public/private 
partnerships, such as Chicago CREATE and CSX's National 
Gateway.
    And finally, Congress should invest $3.4 billion into high-
speed and intercity passenger rail capital grants, as proposed 
by Chairman Oberstar and Chairwoman Brown.
    In the reauthorization we do support increased investment 
into intercity passenger rail, with reform of the current 
Amtrak system.
    We believe that the Alternate Passenger Rail Service Pilot 
Program and the High-Speed Rail Corridors program provided in 
last year's Passenger Rail Investment and Improvement Act is a 
good start towards reform, and that efforts such as this to 
encourage greater private participation in the intercity 
passenger rail network should be expanded.
    Thank you.
    Ms. Brown of Florida. Mr. Fenhaus.
    Mr. Fenhaus. Madam Chairman, my name is Leon Fenhaus, and I 
am the Director of Government Affairs for the Brotherhood of 
Maintenance of Way Employes/International Brotherhood of 
Teamsters. BMWED represents over 35,000 men and women who 
perform the infrastructure work on the Nation's Class 1 
railroads and many regional and short line carriers as well. 
The BMWED is a member of the Teamsters Rail Conference, which 
includes the Brotherhood of Locomotive Engineers and Trainmen, 
representing the interests of over 40 percent of the Nation's 
railroad employees. Railroads have played a major role in the 
U.S. economy since the Baltimore & Ohio Railroad began 
operations in 1830.
    Railroad industry employee productivity increased by 42 
percent between 1997 and 2006, compared to 12 percent in 
trucking. Rail transportation is efficient due to a highly 
skilled and productive professional workforce that is vital to 
the U.S. economy.
    No nation's economy is strong if those who toil within its 
industries do not receive wages and benefits sufficient for 
them and their families to thrive. The railroad industry 
provides such solid middle-class jobs. As of 2007, collective 
bargaining resulted in an $11.6 billion payroll for the 167,000 
overwhelmingly unionized employees of the Nation's Class 1 
railroads, employees with disposable income. In 2008, the 
medical plan will pay out $1.7 billion in benefits. This 
collectively bargained benefit supports the U.S. economy 
because railroad employees do not forego medical care and do 
not rely on financially strapped local and State governments 
for health care.
    Additionally, all railroad employees in the United States 
participate in the Railroad Retirement System, which provides, 
in essence, a financially sound and solvent defined benefit 
retirement annuity. Given the great influx of employees to the 
industry during the 1970s, an entire generation of railroaders 
are nearing retirement age. The ability of those long-serving 
workers to retire with a secure pension will open up positions 
for younger workers, especially those workers who have become 
unemployed in other industries.
    Investment in passenger rail is a necessary part of any 
coherent national energy and transportation policy. Rail 
passenger operations are the only intercity transportation mode 
that delivers passengers directly to the heart of cities.
    The BMWED commends the hard work performed by this 
Subcommittee that resulted in the passage of the Passenger Rail 
Investment and Improvement Act of 2008. That commitment helps 
preserve existing jobs and should create new employment 
opportunities.
    The major Class 1 railroads performed well in 2008 and 
remain in strong financial shape. However, it must be noted 
that the slowing down of the U.S. economy is being felt by the 
railroads as reflected in lower car loadings. Historically, 
freight railroads have been responsible for the investment in 
their infrastructures, but today there appears to be a 
perceptible slowing of private investment in infrastructure by 
the major railroads.
    It is in our Nation's and the railroads' interests to 
continue to perform maintenance and capacity work, especially 
during the current economic downturn, for the inevitable 
rebound of the economy, but in order to accomplish this, the 
industry must keep all of its current workforce employed and 
immediately hire new employees to learn the skills and acquire 
the experience necessary to seamlessly transition through the 
imminent retirement of the baby boomers.
    BMWED supports further investment in the expansion of 
passenger rail and new investment in freight rail, but Congress 
should ensure that it is not done on the cheap with unqualified 
workers, with contractors who lack experience and do not have 
overall responsibility for all rail operations.
    Congress should act to ensure that owners of rail lines in 
the Interstate Rail System and that the persons who perform 
rail work, especially work involved with the movement of 
people, are the professional, qualified railroad workers 
already employed in the industry, and that they must be subject 
to the Federal laws created for railroads and railroad workers.
    BMWED continues to study the various proposals and 
suggestions for ways freight railroads can invest in improving 
and expanding their infrastructure. We can offer no specific 
proposal at this time, but we intend to continue to study the 
matter and hope the Subcommittee will hold additional hearings.
    I thank you for the opportunity to express BMWED's issues.
    Ms. Brown of Florida. Thank you.
    And thank all of the panelists.
    Question for the panelists. What specific actions should 
the Federal Government take in the short term and the long term 
to increase rail capacity, reduce congestion and improve 
service and reliability? Let us start with Mr. Wolfe, and 
anyone can respond.
    Mr. Wolfe. I think it is pretty clear, since deregulation 
in 1980, that the railroads respond best to the carrot relative 
to the stick. So I would say the 25 percent tax credit as a way 
to stimulate investment is probably the best measure that I 
have seen.
    At the same time, you have got the issue of captive 
shippers and pricing, so I think that is an area that needs to 
be addressed as well, but not by reregulation, by stimulating 
through incentive. And I think that is very clear. So I think a 
tax credit during this period of highway reauthorization and 
infrastructure is something that is tied in and comprehensive, 
involves rail, highway and port, and looking from a Federal 
Government standpoint of the needs of all those, I think the 
railroads look very good. And yet we don't see any dollars for 
other than the 100 million for the short line railroads right 
now in the stimulus bill. I would like to see the tax credit 
get in there. I think that would be very important and 
effective. I'll leave the specifics of how to spend the funding 
to the railroads and policymakers
    Mr. Grenzeback. Madam Chairman, I would suggest perhaps we 
focus on three areas. One would be projects of national and 
regional significance. The Chicago CREATE program was a good 
example. There are Mississippi River bridges and other projects 
out there which are simply too large for a single railroad or 
State to risk taking on at the time, whether you use grants or 
loans or loan credits for those. There are good examples in the 
TIFIA program of how that could be done.
    I think there is a second tier of work that needs to be 
done, which is on the corridors that are going to be sharing 
freight and rail, passenger rail, we are going to--in most of 
those areas, we are going to be looking at either adding track 
or adding right of way. And in many areas of the country, we 
have done the easy work now. When we go from one- to two-track 
and then existing right of way, it is not a problem. When you 
go to a third one, you have to sort of add bridges and improve 
the systems considerably. That is going to be a very expensive 
area.
    The third area is a very quiet, hidden one. The railroads 
do a very good job of investing in upgrading the lines, the 
long-haul lines between cities. But when we get into the 
cities, particularly in our very densely developed urban areas, 
we are going to have terrible problems and a lot of expense 
sorting out the rerationalization of rail lines, upgrading rail 
terminals, sorting out truck access. We are seeing in the rail 
industry a tendency to consolidate long haul, move it to the 
outskirts of the city, and then worry about the city--let the 
State and the city figure out how to manage the traffic 
inbound. I think that is a third-tier program where Federal 
action and State action combined will be very, very helpful.
    Ms. Canby. Madam Chair, I would just reiterate what I said. 
First, broadening eligibility so that States are able to make 
an intelligent decision as to the best investment on intercity 
transport versus the highway programs that they might normally 
do. As a former DOT director, we didn't have that flexibility.
    Secondly, ensuring that there are clear outcomes that are 
expected from the investment of these funds, and particularly 
focusing on the energy and the climate emissions issues; and as 
Lance suggested, using potentially the program that is in the 
Senate proposal now for major corridors, to take advantage of 
the discretion that is there. Longer term, clearly, at the 
State level, we have to find ways in the current safety law to 
have much better integration across modes and to rationalize a 
system that has just been piled one on top of the other without 
thinking about how they work together.
    Mr. Longman. In the short term, there are a few small 
projects that would make an enormous difference. CREATE is one 
example. Another example is just a few feet from us actually, 
literally. Why are there so many trucks on I-81? It is because 
I-95, going from Maine to Florida, is so overwhelmed with 
trucks that other trucks divert to get around it. The railroads 
only have 2 percent market share on that lane. And why is that? 
It is because the Virginia Avenue tunnel right over here is too 
narrow to let double-stack trains through, and it is because 
the Howard tunnel in downtown Baltimore, which is listed on the 
Register of Historic Places, is too old and too antiquated to 
let these trains through.
    So, just focusing on those little projects has an enormous 
bang for the buck. And this is very different than with the 
highway projects because typically you can't do anything to 
increase the capacity of a highway except add new lanes. With 
rail you can often do that.
    The other thing I would say in the slightly longer term is 
that many studies were done in the 1970s of rail 
electrification. People like Governor Milton Schapp of 
Pennsylvania got very involved. These studies are sitting on 
shelves. They are ready. We would have to update them somewhat, 
but it is not entirely pie-in-the-sky stuff. The business of 
putting up cantonary involves special skills, but it is not 
something that a laid-off auto worker couldn't learn in short 
order.
    Thank you.
    Mr. Baker. I think if you are looking at short term, you 
obviously have to focus on the stimulus, which is the only real 
opportunity, you know, today. I think there is three 
categories. First, you have got to make sure that on the House 
side you guys keep the good stuff that you have already 
achieved in the bill. That would be the intercity passenger 
rail program, although we wish it was more; the Amtrak grants; 
and then all the transit funding.
    I think then you have to look at--in the inevitable 
conference committee that is coming with the Senate, you have 
to try to take what was good about the Senate packages, 
especially that $5.5 billion Competitive Surface Transportation 
Grants program; and also the $2 billion High-Speed Rail 
Corridors program is excellent. And then I would love to see 
both the 25 percent capacity expansion tax credit and the 50 
percent short line tax credit added in. I think those would 
both provide an excellent carrot to the railroads.
    Mr. Fenhaus. As I stated earlier, we have no specific 
proposals at this time; however, any of the number of proposals 
that have been presented today, we would take a critical look 
at them from the standpoint of, first, what is the impact on 
rail labor; secondly, certainly the impact on the carriers; and 
finally, at a minimum, analysis of the impact to the Federal 
Treasury. But that would be our start point.
    Ms. Brown of Florida. The safety bill that we passed had 
language in there to ensure that we have qualified people to 
run the trains, to make sure that safety provisions are taken 
care of. Did you have any comments about that?
    Mr. Fenhaus. No, I do not.
    Ms. Brown of Florida. Mr. Petri.
    Mr. Petri. Thank you very much. Thank you all for the 
testimony that you have spent.
    I have lots of questions. I will only ask one or two. And I 
think the first was of Mr. Wolfe, and that has to do with 
investment in the rail industry from private sources. There, 
for years, there was disinvestment in the industry. More 
recently, I guess is it because mainly high energy prices, 
there has been--smart money has been moving into the rail 
industry, Warren Buffett and other long-term investors. Is that 
trend continuing? And how is anything that we do in terms of 
public/private partnerships or infrastructure investment at the 
Federal level likely to affect private support of the rail 
industry?
    Mr. Wolfe. Thank you for the question.
    We have seen what on Wall Street is referred to as a 
railroad renaissance, and I showed some levels where the stocks 
really since 2000 have outperformed the market and done very 
well. And there has been increased investing by some very high-
profile people; as you say, Mr. Buffett. Some well-known hedge 
funds as well have entered into railroads, something they have 
never invested in before. I think it is a combination of a 
sense long term that the need for infrastructure, and being 
fuel efficient, and generally a push towards commodities and 
everything that moves them or touches them.
    The most recent downturn has been particularly harsh for 
commodities and everything that moves them. And in the last 
quarter, as I noted, in fourth quarter and so far in January, 
the rail stocks have underperformed, and we have seen a lot of 
capital leave this space.
    At some point, while the rails have grown earnings, the 
valuations of the railroads have really not accelerated. They 
are still trading at the same valuations that they traded at, 
the same multiples of earnings and cash flow that they traded 
at all the way back in the 1980s and 1990s.
    What has grown has been the earnings. The railroads have 
done a better job through productivity, through mergers, and 
through some pricing recently that they haven't had. The reason 
investors haven't yet given them higher multiples is because 
the returns on capital and the asset intensity is so great. So 
I showed slides that show that CapEx is 17 percent of revenue, 
and for most industrials it is only 6 or 7.
    That is a real issue longer term, and I think the only 
thing that is going to increase investing ultimately long term 
in the railroads is if we can improve those returns. In 
trucking, there has always been the Federal Government, through 
taxes and tolls and gas taxes paying for the maintenance of the 
highways. The railroads pay all of the maintenance of their own 
track and facilities. So when Jim Young was testifying that he 
is going to spend $2.8 billion, down from $3 billion, you know, 
2 billion of that is maintenance of his way, and to spend more 
is going to require a carrot and some infrastructure, I think.
    Interestingly, last night Canadian Pacific filed for a $500 
million equity deal. What is interesting about that is after 
the railroads have pulled back so much, to offer equity to 
dilute shareholders and not offer debt is a sign that they 
don't feel comfortable they can find debt. So we did some math, 
and if they had--based on the amount of equity they issued, to 
be equally dilutive they would have been paying a coupon of 
about 14 percent on their debt, which is very high cost to do 
business. So I think that the credit markets and those issues 
are a further issue for railroads if this downturn continues as 
we go on.
    Mr. Petri. Thank you. I would like to explore that, but I 
only have a limited time. And I have a question I wonder if Ms. 
Canby and maybe Mr. Grenzeback would like to comment on, and 
that has to do with both what the Senate is working on in their 
economic package is a $5.5 million pot of money for 
infrastructure, and your testimony about possibly national 
infrastructure bank. You were talking about the CREATE project 
in Chicago and the need for--the difficulty of local people 
doing some of these projects.
    We did not cover ourself with glory in the last 
transportation bill where we had projects of national 
significance, and it all kind of got hijacked or earmarked. 
Could you comment on how we can do that? If we turn it over to 
the Secretary, there is this big risk going down the road that 
it tends to be a--the Secretary's discretionary funds 
historically end up getting earmarked somewhere in the process 
or allocated by Congress, congressional people or whatever, so 
there doesn't seem to be a pristine way of doing this in the 
real world. Could you just expand a little bit about what we 
can do in this area, or should be doing in this area, besides 
just sort of laying out a broad plan, but to actually make 
things happen?
    Ms. Canby. Mr. Petri, let me try and give you a few 
thoughts on this. I would say, first, hope springs eternal that 
we might get it right one of these days, you know? Our sense is 
that if we are able to establish a clear national purpose in 
this law, which in our view has been somewhat absent in the 
past, and have also very clear outcomes that we are seeking, 
then it might be possible to structure a discretionary program 
around meeting those particular objectives with clearly a 
feedback loop to see whether or not it is happening. I mean, 
the more light we can shed on potential projects and then the 
outcomes, I think, helps keep within more reasonable bounds the 
tendency to earmark without any concern about the outcomes.
    So I would say that this is the first instance where we 
have really had an across-all-modes opportunity to look at a 
range of potential investments and to pick the ones that make 
the most sense from a clear set of objectives, and that is what 
I would hope we could come out with.
    The points you raise are very well taken, and history does 
not necessarily bode overly well for it to work, but I think we 
need to keep trying because I think this will spur competitive 
and creative thinking that may be missing now, absent having 
this kind of a competitive process.
    Mr. Grenzeback. I have a colleague who keeps telling me 
that earmarks are really a symptom of a failed program; that 
earmarks are money looking for solutions that aren't coming out 
of a program. And I think that very broadly what in the next 
authorization you might attempt to achieve is to balance that 
by building up the programs.
    If we take a look at the national freight network, 
including rail, the kind of problems out there that are really 
very big, expensive problems pop up pretty quickly. There were 
a number of them cited here today. What we have now done to 
date is to collect that into a national vision of what we have 
to fix and where we have to go.
    We know something about the capacity of the railroads to 
invest. We know demand patterns, we know where the population 
growth is. We can pretty well estimate where our needs are and 
where the bottlenecks are. That needs to be elevated to the 
point where, when people say there is money in a program, but 
by the way, I would like to earmark it somewhere else, it 
becomes very visible and very difficult to earmark it to other 
needs.
    You want people to say: what happened to Chicago? What 
happened to the east coast problems? I don't know that there is 
a clear and obvious answer, but I think it is the failure on 
the program side and a failure of the national mandate for the 
last years that have been the problem. We haven't had to worry 
about investment in rail because we have had a mandate and a 
consensus to invest in highways as the practical engine for 
economic development.
    We basically filled up both the highway and the rail 
systems, and now we are going to have to make a series of very 
specific choices about where to invest to improve pieces of 
those systems. I think the demand will be there, the revenues 
will be there, but there are going to be some projects that are 
simply going to pop up and be very visible, and it would help 
to make them very visible, to target the money and set 
criteria_which Congress can do_and then to say we don't want to 
waste it. Why isn't it going to that project? It will take 
continual oversight by Congress to force us to behave 
logically.
    Mr. Petri. Thank you. Thank you all very much.
    Ms. Brown of Florida. Mr. Grenzeback, you were making great 
points until you started talking about earmarks. In this 
Committee, we call it Members' priority.
    Mr. Grenzeback. Well, when I get them, I call them 
wonderful.
    Ms. Brown of Florida. We will talk about that later.
    But I had a question for Ms. Canby. Given that the freight 
railroads are privately and profitable to some extent, Congress 
has been reluctant to provide funding for freight 
infrastructure improvement. We have always believed that they 
are able to help themselves and improve their infrastructure. I 
personally think it is a bit shortsighted, since the railroads 
have different priorities than the Federal Government does when 
it comes to rail expansion. They look at the bigger bang for 
the buck, and we are looking at opportunities for public 
benefits, reduced congestion, increased passenger rail service, 
et cetera.
    The Committee will reauthorize the surface transportation 
program in Congress. As president of the Surface Transportation 
Policy Project, what role shall rail play in reauthorization? 
Should we provide funds in the bill for rail? If so, why?
    And, Mr. Longman, you may want to respond to that also.
    Ms. Canby. Thank you, Madam Chair.
    We definitely believe that rail should be a part of the 
next authorization because it is such a critical part of 
addressing some clear national objectives that have come to the 
forefront. And so the challenge is going to be to figure out 
how do we integrate the public and private aspects of our rail 
network and the public benefits that it brings in ways that can 
enhance the overall performance of the transportation system, 
both on the road side as well as on the rail side, passenger 
and freight, intercity as well as metro area.
    And so there is a lot to sort out. And as Lance suggested, 
there are probably a need of some overhaul of the overall 
program structures as we think about this so that we can 
incorporate rail and have the kind of partnership that benefits 
both the private sectors needs and what they are able to 
provide as well as then having it augmented by the public 
sector.
    But I definitely think that as we move forward, we have got 
to find creative ways to incorporate the public and private 
interests into a collective strategy, which now doesn't 
particularly exist. We don't have the institutional structures 
which we need to give some thought to, and I am hoping that 
this is one of the areas where OneRail can contribute and 
advance the conversation and the thoughts in terms of how we 
would move forward.
    Ms. Brown of Florida. Okay. Mr. Petri, did you have 
another? You could have 1 minute if you want to have a closing 
statement before I close.
    Anyone?
    Mr. Longman. Well, I would just amplify, think big, big 
enough to capture the public's imagination. In my limited time 
in working this issue, I have found that what gets people's 
attention is trucks off the road; whether or not you believe in 
the global warming or all the rest, trucks off the road.
    Ms. Brown of Florida. Anyone else?
    Well, in closing I want to thank the witnesses for their 
testimony and the Members for their questions. Again, if the 
Members of this Subcommittee have additional questions for the 
witnesses and ask a response, the hearing record will be held 
open for 14 days, and Members wishing to make additional 
statements or to ask further questions will have the 
opportunity to do that.
    Ms. Brown of Florida. At 3 o'clock today we are going to 
have a memorial for "Mr. Brokenrail" here in this room. And on 
February 3rd, at 5 p.m., we are going to have a meet and greet 
for the new Members of the Committee to meet with our 
stakeholders.
    With that, if there are no additional questions or 
comments, thank you very much for your time, and we are looking 
forward to moving rail forward.
    [Whereupon, at 2:30 p.m., the Subcommittee was adjourned.]

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