[Senate Hearing 111-]
[From the U.S. Government Publishing Office]
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2011
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THURSDAY, APRIL 29, 2010
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:30 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Patty Murray (chairman) presiding.
Present: Senators Murray, Dorgan, Lautenberg, and Bond.
DEPARTMENT OF TRANSPORTATION
Federal Railroad Administration
STATEMENT OF HON. JOSEPH C. SZABO, ADMINISTRATOR
OPENING STATEMENT OF SENATOR PATTY MURRAY
Senator Murray. Good morning. The subcommittee will come to
order.
This morning, we are going to be holding a hearing on the
President's budget request for the Federal Railroad
Administration (FRA) and the budget request of the National
Passenger Railroad Corporation, Amtrak.
We're going to be hearing testimony from two panels this
morning. The first panel will include the Administrator of the
Federal Railroad Administration, Mr. Joseph Szabo. The second
panel will consist of three witnesses: Amtrak's President and
CEO, Mr. Joe Boardman; Amtrak's inspector general (IG), Ted
Alves; and the deputy inspector general for the Department of
Transportation, Ms. Ann Calvaresi-Barr.
I want to welcome all of our witnesses at this time and
thank you for being here this morning. I look forward to
hearing all of your testimony.
Efficient rail transportation in America ties our community
together. It creates jobs and boosts the economy and reduces
the prices of goods being shipped. And it helps commuters
around the country get to work. That's why I'm so glad this
administration has expressed a level of interest in rail
transportation we haven't seen in a long time. They understand
the important role railroads play in our transportation system.
This subcommittee has seen too many budget requests from
previous administrations that would have guaranteed the
bankruptcy of Amtrak, which would have been devastating to
commuters and communities across the country.
I know families in my home State of Washington deeply value
our Amtrak service. The Cascade line has set a new record for
ridership this year. And I've personally heard from a lot of
people who depend on it.
I know that communities around the country value their rail
service, as well. That's why I'm so glad that this year the
administration's request for grants to Amtrak would support the
railroad, although it does not meet all the needs identified by
Amtrak itself.
In addition, the administration is again requesting $1
billion for grants to support intercity and high-speed rail.
This funding builds on the $10.5 billion provided for these
purposes through the fiscal year 2010 appropriations act and
the American Recovery and Reinvestment Act, including $590
million to improve high-speed rail in Washington State.
And finally, rail transportation is being included with
roads and mass transit in discussions about the Nation's larger
network of surface transportation.
In the Recovery Act, we were able to provide States with
the flexibility to invest their formula grants in freight and
passenger rail. Rail transportation has also played an
important part in the Department's Transportation Investment
Generating Economic Recovery [TIGER] grant program that I
fought to include.
But, we still need to recognize that all of this work, as
well as recent proposals for additional funding, are happening
at a time when financial constraints are increasing and likely
to become even greater. As families across the country look for
ways to tighten their belts, leaders here in Washington, DC
need to redouble our efforts to get Federal spending under
control and reduce our debts and deficit. That's why the budget
President Obama sent to Congress freezes domestic discretionary
spending, and the budget resolution recently passed in the
Senate Budget Committee goes a step further by reducing the
spending by an additional $4 billion.
We owe it to future generations to not burden them with
debt. But, we also owe it to them to continue making the
investments we know will strengthen our economy and make our
country more competitive in the long term. That's why I'm
looking carefully for areas to cut spending. But, I also know
that lower spending levels will make it more difficult for
Congress, and for this subcommittee, in particular, to find
ways to pay for important infrastructure programs.
I know many people think the answer to this problem lies in
funding--finding a source of funding outside of the annual
appropriations process. The Highway Program and the Highway
Trust Fund offer an easy example of a dedicated, and what has
historically been a stable source of funding for transportation
infrastructure. But, we should all understand that the
financial constraints are just as real outside of the
appropriations process. The Highway Trust Fund has been
threatened with insolvency for more than 2 years, and we still
have not seen any realistic proposals to stabilize the Trust
Fund throughout the next authorization period.
This subcommittee has turned to appropriating funds
directly from the general fund in order to provide additional
investments in our Nation's roads and transportation
infrastructure during the current fiscal year.
So, there is no silver bullet and there's no way to avoid
making difficult decisions in setting priorities. And while I
believe that the administration's budget request would make
important investments in rail transportation, there are still
significant concerns that this subcommittee will have to
consider for fiscal year 2011.
The administration has failed to request any funding for
positive train control, an important new technology for
preventing rail collisions and derailments. And the
administration's budget request for grants to Amtrak does not
address the railroad's need to modernize its aging fleet.
During this hearing, we will have the opportunity to look
at those important issues. In addition, we'll be able to get
additional details on the administration's effort to improve
rail safety, and specifically its progress in implementing a
risk-based safety program.
However, one of the biggest questions is how well the new
leadership at the Federal Railroad Administration and at Amtrak
can manage our investments in rail transportation over the long
term. In the very beginning of the Obama administration, the
FRA was tasked with awarding $8 billion in grants for intercity
and high-speed rail. The program was brand new and, as part of
the Recovery Act, it needed to be set up immediately.
Adding to these challenges, the FRA had never before
administered such a significant grant program. Recent rail
legislation has also added significantly to the agency's
workload. FRA needs to manage its new responsibilities and
build a workforce that has the skills necessary to successfully
complete all of that work.
Amtrak also has new leadership, and there's a new level of
cooperation between its board and management team. They've
worked aggressively to complete a new strategic plan, build the
system for prioritizing capital needs, and develop a plan for
modernizing its fleet. But, the real test of Amtrak's new
leadership team will be as the railroad implements its new
plans.
This subcommittee needs to see that the leadership at the
FRA and at Amtrak administer their programs and manage their
funding effectively and responsibly. Both organizations face
significant challenges in the years ahead, but we cannot afford
to waste taxpayer dollars or squander this unique opportunity
to make our railroads work better for commuters, businesses,
and communities across the country.
With that, I will turn it over to my ranking member,
Senator Bond.
OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND
Senator Bond. Thank you very much, Madam Chair.
And I join you in welcoming all of our witnesses today.
And I thank you for outlining the tremendous budget squeeze
we're going to be facing this year. And it is going to take a
great deal of work to deal with the challenges we have and the
limits on--which are placed on us.
And as the Chair said, making an already bad situation
worse, the Congressional Budget Office projects that the
national debt will balloon to 90 percent of the economy by
2020. If interest payments on the debt remain at this same
interest-rate level, we'll have to pay $800 billion. Nobody who
knows anything about finance thinks we won't have a significant
increase in interest rates when our debt gets that high.
In other words, we're drowning in debt. And the situation
is going to get worse. The decisions we make on the budget and
appropriations will be critical to the future economic health
of our Nation. And we have to find the right balance, spending
to fund critical national priorities.
And, Madam Chair, as you've--as you have already described,
our general revenue programs compete against one another. It's
transportation versus housing. Both programs have strong
proponents, as well as very compelling needs. And they seek to
maximize funding for their priorities. High-speed rail, Amtrak
capital assistance, and fleet are all in direct competition for
funding with other transportation priorities, as well as
critical housing and community development programs for the
poor.
HUD is also in this same pool--is seeking significant
funding for the coming year: $250 million for Choice
Neighborhoods, $350 million for transforming rental assistance.
In addition, these programs, in total, are likely to cost
several billion dollars more in each subsequent fiscal year.
At the same time, HUD is proposing the elimination of
dedicated funding for housing programs that help the elderly
and disabled. These are very important programs. There is great
need, and obviously there's great support in Congress for them.
How we balance those funding needs, both old and new programs
in HUD, are difficult, under whatever allocation we receive for
the year, let alone in competition with substantial old and new
transportation funding requests, and especially rail, which are
likely to require not just significant, but huge increases in
the subsequent fiscal years.
Personally, I grew up as a railroad fan. I always loved
trains. First time I got a chance to ride on a train, I loved
it. I rode on a train. When I got to be Governor, I started
State funding for Amtrak. And there was nothing greater than
taking my very young son from Jefferson City to Kansas City, or
to the State fair at Sedalia. So, I come here as a rail fan.
But, at the same time, if we increase funds for
transportation projects like Amtrak, when we have these other
needs, we are, in a very real way, in danger of railroading the
poor, using limited general revenues to pay for rail, rather
than housing programs. And housing programs are not optional.
We have people who depend on housing. And we can't walk away
from them.
I think it's important, first, to take a look at the
unprecedented amount of money rail projects have already
received. No one can deny that there's a lot of money going to
fund the rail these days, following the passage of the American
Recovery and Reinvestment Act of 2009 [ARRA]. In fact, the
biggest winner within the Department of Transportation,
government-wide, has been the FRA. They are trying to manage
grants, beyond their wildest dreams, when the Passenger Rail
and Investment Improvement Act of 2008 was signed into law. Who
would have anticipated the rail would be the beneficiary of so
much general revenue paid for by the American taxpayer? These
are not dedicated funds, as the chair has pointed out, paid for
by users of passenger rail or freight. These are general funds
paid by all our taxpayers.
Amtrak received a record $1.3 billion in 2009 for capital
grants, while high-speed rail received $8 billion, with an
additional $2.5 billion in 2010. FRA had some experience in
managing Amtrak grants, but a whole new $10.5 billion program
on top of Amtrak and all of the safety programs they are
responsible for overseeing has to be a work in progress for any
modal administration.
With this sudden new influx of billions of taxpayers'
dollars, I want to ensure American taxpayers that not only are
they getting what they are paying for, but also know what
they're paying for. With billions more taxpayer dollars poured
into Amtrak, which has--let's be honest--has had management
problems in the past, I want to ensure that these dollars are
not victims of waste, fraud, and abuse.
To ensure that taxpayers get the oversight and transparency
they deserve, I've asked the Government Accountability Office
to review the first $8 billion awarded for high-speed rail
grants. I believe the American taxpayers need to know how the
administration chooses the projects to fund with their money.
That includes how projects are reviewed, ranked, and scored
within the Department.
Taxpayers also deserve to know how the Department applied
its criteria for selection and the process used in evaluating
awardees. They need to know how the score is given to each of
these projects selected, and those which were rejected for
funding in the first round. It's critical for our subcommittee
to understand the nature of the projects funded and to what
extent they represent a departure from, or a continuation of,
existing rail service and networks, and how they will fit in to
the National Rail Plan due to the subcommittee on September 15
of this year.
What's the future of rail in America? What does the
unprecedented amount of new funding mean? This, to me, is a
very important question. The American public and the private
sector are unclear on if the recent funding for rail in America
is just a blip or if rail is here to stay. Are we looking to
fund beyond the $1 billion proposed, per year, by the
administration, for high-speed rail? Are we supportive of
Amtrak's new fleet proposal, which, over the period of 2040,
will cost approximately $23 billion, in 2009 dollars? When
taxpayer dollars are already scarce, where's the money coming
from? Will it come at the expense of critical programs under
HUD or the fund--the funding needs of traditional
transportation programs, like highways, roads, and bridges?
Last year, $1 billion in the budget for high-speed rail
turned into $2.5 billion when we went to conference with the
House. This was due, in part, to artificially inflated budgets
for transportation without any details or plans for a National
Infrastructure Bank. When the National Infrastructure Bank
failed to get--garner needed congressional support, we had
general fund money on the table that, in my view, should have
gone to critical programs to help struggling families or
deficit reductions, rather than the rail industry.
If Congress goes even further to fund high-speed rail this
year, we're definitely railroading the poor to pay for
passenger rail. Especially true this year, when there's not a
unified National Rail Plan that includes passenger rail, high-
speed rail, Amtrak, State rail plans, freight rail, and a cost-
to-complete estimate.
Right now, when it comes to rail, no one has a complete
picture--we're looking--of what we're looking to build; a map
of the plan; how we're going to pay for it, or how much it will
cost us.
Under last year's appropriations bill, we're supposed to
get the plan on September 15. That plan should contain a map--
which corridors have been identified as high-speed rail
investment priorities for the administration. We need cost
estimates for these corridors, and we should have benchmarks,
an idea of how incremental improvements along existing rail
networks will benefit the traveling public. And they have to be
fully integrated with State rail plans and Amtrak existing
lines.
We should know the full cost of the equipment necessary to
run the system. Today, to be quite honest, despite our
inquiries, we don't know what we're building, how much it will
cost, and whether or not rail investment in America is here to
stay, without dedicated funds, because the cost seems to be
going out the roof.
The proposals, so far, have been just a handout of general
revenue, with no funding source attributed to it, when our
country, as I have indicated earlier, is going further and
further into debt.
The worst part is, under the Recovery Act and grants in
2010, we don't even know what they're building and whether the
use of taxpayer dollars for this purpose is an appropriate use
of funds, because, as I said, we don't have the plan.
In March, Secretary LaHood testified before us on the
budget, and claimed that, quote, ``When President Eisenhower
signed the Interstate Highway bill nobody knew how we were
going to pay for all of it. So, I'm not going to sit here and
tell you that I know where all the money's going to come from
for high-speed rail''.
Well, I was impressed with that statement. It turned out--
but, it turns out that statement is simply false. According to
research done by Transportation Weekly, the national interstate
map predated the Interstate Act--the map predated the act by 10
years. The 1944 Highway Act directed 48 States to designate,
jointly, a map for a national system of interstates, up to
40,000 miles. The State--the States designated 37,700 miles.
And a map was approved by Congress in August 1947. The map
remained pretty much unchanged, although added miles have been
designated and constructed, throughout the years.
On the cost of the map, Congress did have an idea of the
cost, because Congress asked the Department of Commerce to
conduct a comprehensive highway study--a cost study--and submit
it by February 1995. And Congress required an updated State-by-
State cost estimate of the interstate system every 4 years.
Will your National Rail Plan due to us September 15 include
a detailed map, a cost-to-complete estimate? I'm afraid I must
assume the answer to those questions is ``no.''
For that reason, in this year's appropriations bill, I
asked that you provide us with a description of the funds
necessary for you to complete a true cost--add a true cost-to-
complete study map. We have to have that.
In addition, I'd like your input, Mr. Administrator, on how
much you believe a study would cost, and how this could be
worked into you current plans for completion of the National
Rail Plan. Until we have this information, in my view, it would
be irresponsible for the subcommittee to give the high-speed
rail program any additional funds.
Along with the high-speed rail plan, we have Amtrak, which
should be included in the National Rail Plan. And I think you
would agree. I think the Department would include Amtrak's
capital needs and fleet requirements in the plan.
I'm pleased that, for the first time, Amtrak submitted a 5-
year capital budget plan along with its annual appropriations
request. However, as soon as we get a comprehensive plan, we
find an addendum to the plan, which is a sizable investment of
$446 million in the Amtrak fleet. Is Amtrak going to amend this
year's capital budget request to include fleet where we can see
what priority new fleet plays, versus Amtrak traditional
capital requirements and Americans with Disability Act
requirements? When we're dealing with general fund
appropriations, I think we need the answer to these questions
before we provide the resources.
Amtrak sent our subcommittee its addendum to their budget
submission on March 22 of this year. It's not been cleared by
OMB, and is not part of Amtrak's regular 5-year capital plan.
These are additional capital funds Amtrak's seeking for its
aging fleet. It's not included in all of the planning and
included in the budget on which--with which we have to work.
I'm thankful that--don't get me wrong--they've finally
submitted a fleet plan. At least there's a plan and a cost-to-
complete estimate, unlike our National Rail Plan and high-speed
rail plan. But, once again, there are no funding sources
identified other than general funds and loans paid with paid
interest by the general fund. In other words, these loans are
going to be a burden on future general revenue.
Once again, Amtrak is competing with HUD and, potentially,
other forms of transportation and, potentially, railroading the
poor, if this subcommittee agrees to pay $446 million in
additional capital for a fleet or agrees to incur additional
debt service using general funds for loans they may take out on
fleet in 2011 and beyond.
All of these resources should be contained in one
comprehensive National Rail Plan. If you agree with Amtrak's
fleet plan, Congress will agree, over the next 30 years, to pay
$23 billion, in 2009 dollars--$46 billion in escalated
dollars--or more, to provide replacement fleet to Amtrak's
system by 2040. Whichever approach is taken, it will be a very
costly endeavor to acquire the fleet replacement at the same
time that we're attempting to build high-speed rail and, in the
mind of the administration, enhance State service of passenger
rail.
What's the priority? We've got to establish some
priorities. Rail supporters have to know that there are limits,
even in the best of times, to these pie-in-the-sky requests and
to those of us who are rail fans, or who used to be, I'd have
to say. Given our current deficit, you have to admit, the
initial request of $446 million outside of the budget and
capital plan is inappropriate. Why is Amtrak asking for
replacement of locomotives on the Northeast corridor and
single-level long-distance cars?
Now, replacing aging locomotives along the Northeast
corridor might be acceptable, because at least they're
operating on a much lower cost per mile and per passenger
subsidy than other routes for Amtrak. But, long-distance
service last year only had 1.7 million riders, with a cost-per-
passenger subsidy of $153. Replacement of long-distance cars in
Amtrak's fleet, in 2009 dollars, is $4 billion. These are the
most costly routes on the current Amtrak system. And Amtrak is
proposing to ask for some of these cars first.
Where's the proposed money supposed to come from? Who's
going to pay? Will it be the taxpayer paying for rail once
again, at the expense of the poor? If Amtrak chooses to go the
loan route for the fleet, this subcommittee would have to pay
for debt service far into the future. We're really bilking the
poor in the future to pay for rail. Long after I have stepped
aside, general funds would be needed to pay for out-year
budgets for funding decisions that would be made now.
My closing note is that all this doesn't even touch the
safety side and unmet funding needs for positive train control
by 2015. Last year, our subcommittee provided $50 million in
grants for positive train control. The new regulation is
estimated to cost upwards of $13 billion to $15 billion for the
rail industry alone, and $2 billion for the transit industry,
and there's nothing in the budget for the safety program. With
a $12-trillion-and-growing Federal budget, we just can't throw
Federal funds at projects willy-nilly. We need to answer these
tough questions. We need a roadmap for the future. And we need
to balance scarce taxpayer dollars.
I apologize, Madam Chair, for the time, but I think the
magnitude of the problems--of the prioritizing problems we face
deserve some answers.
With that, I look forward to the testimony of the
Administrator.
Senator Murray. Thank you very much, Senator Bond. I
appreciate it.
And, Mr. Szabo, we will turn to you for your opening
statement.
STATEMENT OF HON. JOSEPH C. SZABO
Mr. Szabo. Very good. Thank you, Madam Chair, Ranking
Member Bond, and members of the subcommittee.
Appreciate the opportunity to appear before you today to
discuss FRA's fiscal year 2011 budget request.
Our $2.9 billion request reflects the administration's
commitment to keeping the national rail transportation system
safe and supports the administration's pledge to provide the
traveling public with sound transportation alternatives to
flying or driving.
Without question, this is a transformational time at FRA.
The impact of the Rail Safety Improvement Act, which requires
more than 40 rulemaking studies and reports, the passenger--the
passage of the Passenger Rail Improvement and Investment Act
and its new initiatives in bringing the States in as partners
if the development of passenger rail, and then, of course the
American Recovery and Reinvestment Act has just set about an
unprecedented time at our agency.
Over the past year, FRA has executed its rail safety
regulatory mission while simultaneously implementing an
entirely new line of business, the design and management of a
multibillion-dollar high-speed rail grant program. And
transformation does not come without obstacles, challenges, and
lessons learned.
Considering FRA's fiscal year 2011 budget request, I hope
the subcommittee recognizes the care that was taken to present
a request that supports our key mission--rail safety--while
also enhancing our capacity to manage high-speed rail programs.
And I want to emphasize that when we put this budget
together, we didn't just take last year's budget and start
making adjustments to it; we sat down with a blank sheet of
paper and started from scratch, taking a look at all of our new
requirements, all of our priorities, and from there, developing
a fresh budget.
For fiscal year 2011, we're proposing a strong blend of
safety program enhancements and technical budget changes.
Currently, all of FRA's administrative and operational
expenditures and several safety-related programs are funded
under a single account entitled ``safety and operations.''
In fiscal year 2011, we propose to eliminate this account
and break it into two new accounts: Railroad Safety and Federal
Railroad Operations. The proposed new account structure is more
transparent and will provide greater insight into the cost of
FRA's safety-specific program activities and internal
administrative operations.
Programmatically, under the new Rail Safety account, a
total of $49.5 million is requested to carry out FRA's mission-
critical railroad safety functions and activities. A total of
$153.8 million and 948 full-time equivalents [FTEs] are
requested under the new Federal Railroad Operations account to
fund FRA's administrative activities, such as payroll,
information technology infrastructure, and other shared costs,
and provide the necessary human resources to ensure sound
stewardship of our FRA safety programs. This includes 62 new
positions that will enable FRA to make measured progress on the
responsibilities mandated by the Rail Safety Improvement Act,
PRIIA, and the administration's high-speed rail initiative.
Finally, FRA's 2011 budget activities include a rail safety
user fee, which is modeled after the FRA-administered fee
between 1991 and 1995. FRA estimates that $50 million could be
generated for defraying the salaries and benefit costs of up to
330 of our rail safety inspectors across the country.
A total of $40 million is requested to support FRA's
Railroad Research and Development Program. Specifically, in
fiscal year 2011, FRA will focus added resources on railroad
system safety, train control testing and evaluations, and the
newly authorized Rail Cooperative Research Program.
Although the foundation for a Federal-State partnership
began with the passage of the Passenger Rail Investment and
Improvement Act [PRIIA], it was the $8 billion provided in ARRA
that has truly advanced the high-speed rail initiative. This
year's $1 billion request continues funding to advance
passenger rail infrastructure and includes up to $50 million
for program administration and oversight activities, $50
million for planning grants, and $30 million for high-speed
rail research and development.
FRA and Amtrak have shared a strong partnership for
decades. The fiscal year 2011 budget request for Amtrak, which
totals $1.637 billion, is a reflection of this administration's
continuing support of this relationship. Within the overall
request, $563 million is requested for Amtrak operations and to
support their ongoing efforts to reshape the company by
undertaking meaningful reforms.
A total of $1.052 billion is requested for Amtrak's capital
needs and debt service. And this includes $281 million to
finance Amtrak's ADA requirements.
Finally, $22 million is requested for a direct grant to the
Amtrak Office of Inspector General.
PREPARED STATEMENT
The past 18 months have just been filled with exciting but
challenges at FRA. But, it's been a great challenge. And it's--
even though it's been a challenge, it's been fun. And we're
continuing to enhance the safety of our Nation's freight and
passenger rail systems, while also driving forward this vision
of investment in high-speed passenger rail.
So, with that, I look forward to the subcommittee's
questions.
[The statement follows:]
Prepared Statement of Hon. Joseph C. Szabo
Chairwoman Murray, Ranking Member Bond, and members of the
subcommittee: Thank you for the opportunity to appear before you today
to discuss the Federal Railroad Administration's (FRA) fiscal year 2011
budget request.
This request, which totals $2.9 billion, reflects the
administration's commitment toward keeping the Nation's rail
transportation systems safe, secure, and efficient. In addition, this
request supports the administration's pledge to provide the traveling
public with a practical, energy efficient, and environmentally sound
alternative to flying or driving, particularly where there is
congestion in the air or on the roads, through strategic investments in
high-speed rail.
As you know, in April 2009, I was appointed as the FRA
Administrator. I arrived to find FRA in the midst of a grand
realignment. The entire organization was focused not only on the
effective implementation of the Rail Safety Improvement Act (RSIA) and
the Passenger Rail Improvement and Investment Act (PRIIA) that were
enacted in October 2008, but on the requirements of the American
Reinvestment and Recovery Act (ARRA), which was passed in February
2009. The impact of these mandates on FRA has been significant. RSIA
and PRIIA mandated new and expanded safety mission responsibilities and
programs, while ARRA appropriated an unprecedented $9.3 billion in
resources for intercity passenger rail programs.
Over the past year, FRA has executed its rail safety regulatory
mission, while simultaneously implementing an entirely new line of
business--the design and management of a multibillion-dollar,
discretionary high-speed rail grant program. As expected, this
transformation has not come without obstacles, challenges, and lessons
learned. However, the support this subcommittee has given to FRA has
enabled our agency to acquire the staff and resources to fortify our
continued success. In fact, we are making good progress in building our
workforce. We have hired and/or made offers to nearly one-half of the
20 new positions that were funded in fiscal year 2010 and have active
recruitments for the remaining positions. I expect within a few months,
FRA will have the majority of the new staff in place.
In considering FRA's fiscal year 2011 budget request, I hope the
subcommittee recognizes the great care that was taken to present a
request that fully supports the heart of our mission--rail safety--
while continuing to enhance our capacity to manage the comprehensive
management and oversight requirements of the high-speed rail grant
program.
RAILROAD SAFETY
For fiscal year 2011, we are proposing a strong blend of safety
program enhancements and technical budget changes.
Currently, all of FRA's administrative and operational expenditures
(i.e., salaries, benefits, GSA rent, Working Capital Fund
contributions, etc.) and several safety-related programs (Automated
Track Inspection Program (ATIP) and Railroad Safety Information System
(RSIS)) are funded under a single account titled ``Safety and
Operations.'' In fiscal year 2011, the major technical change proposed
is the elimination of the overarching Safety and Operations account and
the establishment of two new, more targeted accounts: (1) Railroad
Safety; and (2) Federal Railroad Operations. The proposed new account
structure is more transparent and provides insight into the cost of
FRA's safety-specific program activities, as well as FRA's internal
administrative operations. The new structure will allow FRA to be more
precise in its reporting and accountability and directly supports the
administration's transparency initiatives.
Programmatically, under the new Railroad Safety account, a total of
$49.5 million is requested to carry out FRA's mission-critical railroad
safety functions and activities. This new account captures the costs
associated with FRA's major rail safety program activities, which were
previously funded under Safety and Operations. Activities proposed to
be funded under the new Railroad Safety account include: Automated
Track Inspection Program (ATIP), the Risk Reduction Program (RRP), and
FRA's safety inspector-related travel.
FRA MANAGEMENT AND ADMINISTRATION
A total of $153.8 million and 948 full-time equivalents (FTE)/979
positions are requested under the new Federal Railroad Operations
account to fund: (1) FRA's administrative activities such as, payroll,
information technology infrastructure, and other shared costs; and (2)
provide the necessary human resources needed to accomplish a myriad of
priorities and to ensure the sound stewardship of FRA rail safety
compliance, research and development, and financial assistance
programs.
Included in this request are 62 new positions that will enable FRA
to continue to make measured progress on accomplishing the
responsibilities mandated by RSIA, PRIIA, and the administration's
high-speed rail initiative. These new positions minimize FRA's
operational risk and will allow the agency to hire additional staff
with the specialized skills and experience (e.g., civil and mechanical
engineers, environmental specialists, and financial analysts) necessary
to fully support FRA expanding programs and mission-essential
activities.
Finally, FRA's fiscal year 2011 budget includes a rail safety user
fee. The rationale for this fee is consistent with that of other DOT
Modal Administrations that have a fee structure to help finance, in
whole or in part, costs associated with safety mission programs and
activities. This user fee is modeled after a rail safety user fee FRA
administered between 1991 and 1995. As proposed, in fiscal year 2011,
FRA estimates $50 million in collections could be generated for use in
defraying the salary and benefit costs of up to 330 rail safety
inspectors across the country.
RAIL RESEARCH AND DEVELOPMENT
A total of $40 million is requested to support FRA's railroad
research and development program and agenda. Specifically in fiscal
year 2011, FRA will focus added resources in the areas of railroad
systems safety, train control testing and evaluations, and the newly
authorized ``Rail Cooperative Research Program.'' This new initiative
will enable FRA to efficiently gather input from stakeholders to
identify and validate rail research priorities and accelerate the real-
world impact of FRA's research and development program by strengthening
the academic and industrial railroad technical communities.
HIGH-SPEED RAIL
In less than 2 years, we have witnessed the notion of intercity
transportation change across the county. Although the foundation for a
Federal-State partnership to focus on the development of high-speed
rail began with the passage of PRIIA, it was the $8 billion provided in
the ARRA that has truly advanced this initiative. Delivering on the
administration's vision and realizing the benefits of high-speed rail
requires a long-term commitment at both the Federal and State levels.
For this reason, last year, the administration proposed a multiyear
initiative to invest $5 billion over the next 5 years to leverage
resources at the State and local levels, as well as in the private
sector. This initiative will fund strategic investments that yield
tangible benefits to intercity rail infrastructure, equipment,
performance, and intermodal connections over the next several years,
while building capacity for future corridor development. This
particular program is also expected to have a positive impact on the
Nation's rail-related manufacturing sector, which has declined over the
past two to three decades. As the major corridor projects are awarded,
the steel and rolling stock necessary to build and operate the
infrastructure can be supported by our country's factories and a
talented workforce.
The $1 billion requested in the 2011 budget is the second year of
the administration's 5-year high-speed rail initiative. These resources
will continue support of the administration's vision to provide a
sustainable 21st-century rail transportation solution that is energy-
efficient, environmentally sound, and leverages State, local, and
private sector resources and partnerships. This request continues
funding to advance the high-speed rail infrastructure capacity across
the Nation and includes up to $50 million for program administration
and oversight activities, $50 million for planning grants and
activities, and $30 million for high-speed rail research and
development activities.
NATIONAL PASSENGER RAIL CORPORATION (AMTRAK)
FRA and Amtrak have shared a strong partnership for decades, and we
continue to successfully collaborate on critical issues such as: (1)
ensuring rail safety; (2) promoting environmental quality; and (3)
addressing national passenger rail transportation priorities and
policies. The fiscal year 2011 budget request for Amtrak, which totals
$1.637 billion, is a reflection of this administration's continuing
support of this partnership.
Within the overall request, $563 million is requested for Amtrak
operations and to support Amtrak's ongoing efforts to advance its
mandate to reshape the company by undertaking meaningful reforms and
controlling spending. This Federal assistance will supplement Amtrak's
traditional corporate revenues, which are generated through passenger
revenue (ticket, food and beverage sales), State-supported revenues
(State contracts related to route performance), and its ancillary
business revenue.
A total of $1.052 billion is requested for Amtrak's capital needs
and debt service. Included in this funding level is $281 million to
finance Amtrak's fiscal year 2011 Americans with Disabilities Act (ADA)
requirements. Finally, $22 million is requested for a direct grant to
the Amtrak Office of Inspector General.
CONCLUSION
The past 18 months have been filled with exciting challenges for
FRA. We have continued to enhance the safety of our citizens and
communities that live and use the Nation's freight and passenger rail
systems, while designing the policies, programs, and infrastructure
necessary to advance the vision and investment of high-speed passenger
rail across our country. With this, I am happy to respond to your
questions and concerns.
AMTRAK FLEET
Senator Murray. Well, thank you very much, Mr. Szabo, for
your testimony.
Let me start by mentioning that, last February, Amtrak
published its plan for replacing its aging fleet of locomotives
and rail cars. And as part of that plan, they requested $446
million to fund the fleet plan in fiscal year 2011. Can you
explain to the subcommittee why the Department's request had no
additional funding for replacing Amtrak's fleet?
Mr. Szabo. Well, I think, as you know, that anytime you're
putting a budget together, there are a lot of very, very hard
and very difficult choices that have to be made. But, clearly,
we think that that fleet plan is a--you know, it's an excellent
plan. And it's a good vision. It has the opportunity to
invigorate domestic manufacturing. And we're sitting down with
Amtrak and trying to discuss some financing alternatives.
Senator Murray. Well, they have structured their fleet plan
so that it could support a domestic industry for manufacturing
rail equipment by spreading the orders over a 30-year period.
Their demand for rail equipment may be large enough and
reliable enough to actually support a domestic industry. Right
now, we don't have any domestic manufacturers of rail
equipment, but that could help revitalize a very important
sector of American manufacturing, and support the kinds of jobs
we all want to see to get our economy back on track.
But, for this plan to work, manufacturers have to believe
that Amtrak really is going to be a reliable source of funding
for its rail orders. I know they're looking at a variety of
ways to pay for the fleet plan, and have requested funding from
this subcommittee, and understand that it may apply for a loan
through the FRA's Railroad Rehabilitation and Improvement
Financing (RRIF) program.
Can you share with us what kind of financing you think
would help give our domestic manufacturers the kind of
assurance they need to be confident that Amtrak will actually
be able to purchase rail equipment well into the future?
Mr. Szabo. Yes. Let me say, first, Madam Chair, that I
think you're absolutely on the mark, that, in order to
reinvigorate domestic manufacturing, there needs to be the
belief that this is going to be sustainable.
You know, the Secretary pulled in all of the foreign
manufacturers, domestic manufacturers, all rail manufacturers
into a summit over at the DOT, back in December. And if we
heard one thing, it was, they, you know, clearly articulated
the need to ensure that these orders can be smoothed out over a
period of time. And so, you're not constantly going through
these peaks and valleys, and that, if the orders were truly
smoothed out over a period of time, and they believed it was
sustainable, that this would be what it would take to truly
make the investment, as a businessman, that they would need to
make in the plant and equipment, you know, and sink these costs
into establishing these types of facilities here in the United
States.
As far as the financing solutions--again, we're at the
table with Amtrak, and I think it's going to have to take a
blend. I'm not sure that there's this one single silver bullet
that's going to just solve all the problems for financing the
other plan. But, you know, certainly there's the potential for
possibly a RRIF loan, commercial lending, direct
appropriations. I mean, I think we need to take a look at all
of the alternatives and make sure that we come up with a sound
financing plan.
Senator Murray. Well, this is really important. This
subcommittee is a strong supporter of infrastructure spending.
That's what we do, and we believe in it. But, we have to have
consistent priorities and know that that funding is going to be
consistently there, if we want domestic manufacturers to begin
to develop that. And if we get a request this year, and we fund
it, but we don't know what's going to happen next year, I don't
think that is going to be enough for a domestic manufacturer to
make a decision to make that kind of investment. Wouldn't you
agree?
Mr. Szabo. Yes. I would agree. I mean, again, your remarks
directly align with what we heard from the manufacturers back
in December. They need to know that there is stability.
Senator Murray. So, what I'm saying to you is, we all need
to have a concrete plan, not just for an appropriation here or
there, but for how we're going to do this, long into the
future, if we want to really achieve the goal I think some of
us want to achieve.
Mr. Szabo. Yes, I would agree that there needs--again,
there needs to be the appropriate mix. We need to find what
that appropriate mix is.
POSITIVE TRAIN CONTROL
Senator Murray. Okay.
Well, let me turn to another issue, because, under the Rail
Safety Improvement Act, railroads are supposed to deploy the
positive train controls (PTC) by 2015. Senator Bond mentioned
it in his opening statement. We know that's an important safety
technology designed to prevent train collisions and
derailments. But, this is going to cost billions of dollars.
Now, you announced, I think, $50 million in the 2010
appropriations request for Rail Safety Technology grants. I
want to know what you hope to accomplish with that funding, and
what are some of the additional challenges that need to be
resolved so we can deploy the PTC?
Mr. Szabo. Well, what we intend to do with this initial $50
million is, instead of giving grants out to a single railroad
or a small combination of railroads, using it for those kind of
things that can be broadly shared; those initial costs that, in
essence, would benefit the industry as a whole.
And so, I--frankly, that was part of the reason why we
didn't make an additional request for 2011. We wanted the
opportunity to roll out the initial $50 million in 2010, kind
of test the waters with that. And then the opportunity exists
for these broader-based funding programs that the DOT--whether
it's the TIGER grants, whether it's through the high-speed rail
program, or whether it's through the proposed Infrastructure
Bank for the--you know, for the funding of positive train
control.
Senator Murray. Well, as Senator Bond mentioned, we're
talking about billions of dollars. Do you have a plan for how
to get there?
Mr. Szabo. Well, at this point, those funding requirements
belong to the railroads. And, you know, certainly we're looking
at those alternatives that might offer some help. But, again,
the responsibility, at this point, belongs to those rail
carriers that the regulation applies to.
Senator Murray. Well, according to FRA's regulations,
railroads have to deploy positive train control on any line
that carried passengers or certain hazardous materials in 2008.
But, for a lot of reasons, these routes shift before the 2015
deadline that's coming at us. In that case, the original
rationale for deploying positive train control on those lines
may no longer exist. Now, railroads will be given the
opportunity, I understand, to apply for an exemption to the PTC
requirement along those rail lines. But, can you share with the
subcommittee what criteria you will use to determine whether or
not to grant an exception?
Mr. Szabo. The key is that it's all about safety. And there
has to be a baseline from where you start. And so, we believe
that the regulation that we've drafted has a sufficient level
of flexibility that we start with where we're at today. But, as
those routes change, there's the ability to come in and
verify--you know, they--the carriers would need to verify to us
the fact that the routes have changed. And it allows for the
appropriate level of checks and balances that--as modifications
are made, for us to ensure that they're the appropriate
modifications and that public safety is maintained.
Senator Murray. Okay. Thank you very much.
Senator Bond.
ALTERNATIVE FUNDING SOURCES/GRANTS
Senator Bond. Thank you very much, Mr. Administrator.
I am concerned that you talked about, ``We need to find
some alternatives. We don't know what they are. We have a
request for $446 billion--million out of the--outside of the
budget for--OMB's budget--for Amtrak. And yet, we don't know
how that's going to be paid for.'' We don't have our budget
allocation. And I can guarantee you that we're going to have to
start making some hard choices, because there are a whole lot
of wonderful things out there for railroad, but we need some
specifics to know what your priorities are.
No. 1, if you have plans for the alternative source of
funding, what are they? I mean, don't just tell us
``alternatives,'' because we're appropriating what we have. If
you're going to get us more money, how are you going to get us
more money?
Mr. Szabo. Well, I'd say we've just recently sat down and
started those discussions with Amtrak. So, you know, again, we
need to flesh out what those alternatives are and get you----
Senator Bond. Yes.
Mr. Szabo [continuing]. The answers.
Senator Bond. I can't approve any dollars that haven't been
flushed out--or fleshed out--whichever way you put it--sorry.
On, you know, ARA--ARRA gave Amtrak $1.3 billion, and
apparently the inspector general of Amtrak is going to tell us
that these programs are, perhaps, not meeting--going to meet
the February 17, 2011, timeline. Would you comment on the
oversight that FRA provided in making this grant--making these
grants to Amtrak?
Mr. Szabo. Well, let me say this. First off, I had a
sitdown with the Amtrak inspector general just this week, and
we discussed some of his findings in the report. And we welcome
that. You know, that's the purpose of the inspector general, is
to uncover potential areas of problems, whether the problems
exist today or whether it's the potential of developing. And
they did identify one that they have a concern with, you know,
regarding the extraordinary measures that FRA is requiring----
Senator Bond. Paying double overtime, I understand, on some
of----
Mr. Szabo. Yes.
Senator Bond [continuing]. Those projects?
Mr. Szabo. And I think the key is--what they said was, it
has the ``potential.'' We're comfortable that, through our
discussion with Amtrak and through the oversight that we're
providing, that we're going to achieve that appropriate balance
between the need to quickly create jobs--because that was the
intent of these projects--while also ensuring that there isn't
any waste. So----
Senator Bond. But, what did you do in advance? You're
talking about the IG looking at the--have you ever turned
down--denied a grant to Amtrak?
Mr. Szabo. I don't know, but I can get you that answer.
Senator Bond. What criteria----
Mr. Szabo. I mean, have I, in the past year? I have not.
But, we can get an answer of what FRA's history is on that.
Senator Bond. Maybe you can tell us what criteria you used,
what judgment you excised in making that money available. If
you'd provide that for the record, what criteria do you go
through before making those grants to Amtrak, to make sure they
were shovel-ready?
Mr. Szabo. Definitely.
5-YEAR CAPITAL PLAN
Senator Bond. And, in your view, should the 5-year capital
plan include fleet, other rail assets, and the ADA requirements
in one comprehensive fleet plan? Is that part of--is that going
to be part for the plan?
Mr. Szabo. Well, let me say this. One of the challenges,
historically, in preparing our budget request is that,
historically, there has been a mismatched cycle between FRA's
budget request and the budget that Amtrak has prepared. And the
good news is that, under Joe Boardman's leadership, and D.J.
Stadtler, their Chief Financial Officer, that's changing, which
means their budget cycle will be more in sync with ours. So, in
the future, when FRA makes its budget application to this
subcommittee, it'll be based on more sound facts, rather than
us trying to estimate what we believe Amtrak might need, and
then, their budget being developed a month or two later. And--
--
Senator Bond. Yes. Well, Mr. Administrator, I suggest
that's your problem, not ours. But, when you pass that----
Mr. Szabo. Well, and--like I say----
Senator Bond [continuing]. Off onto to us----
Mr. Szabo [continuing]. And the good news is----
Senator Bond [continuing]. We're up against----
Mr. Szabo [continuing]. It's being addressed.
Senator Bond [continuing]. We're up against the wall now.
Mr. Szabo. Right.
Senator Bond. And should we----
Mr. Szabo. But, it's being addressed.
Senator Bond. Are there things in your budget request that
you have submitted that you would like to reduce, to offset,
and to cover some of the $446 million fleet request for Amtrak?
Mr. Szabo. We believe that we have a very sound budget
request that appropriately----
Senator Bond. Okay.
Mr. Szabo [continuing]. Directs----
Senator Bond. So, we should absolutely ignore the $446
million request for Amtrak.
Mr. Szabo. I don't think you ever ignore any information
that----
Senator Bond. Well, unless the----
Mr. Szabo [continuing]. Somebody brings----
Senator Bond [continuing]. Unless----
Mr. Szabo [continuing]. To this subcommittee.
Senator Bond [continuing]. Unless----
Mr. Szabo. Well, sir? No, wait a minute, please, please.
Senator Bond. Yes.
Mr. Szabo. Please allow me to answer.
You know, as I said, when we develop our budget, there's
always difficult choices that we have to make. And so, we make
some decisions, and we present our vision to you. But, that
doesn't mean that you should ever ignore new information or
additional information or different information that somebody
else brings to you.
Senator Bond. I assure you, Mr. Administrator, we will have
to do that. But, what we want to have, going in, is your best
assessment. If you think the budget should be amended to take
account of the $446 million request from Amtrak, or some part
of it, we would ask you to provide that to us, because, at
least we would have some grounds to know. We need to look at
your budget request as a whole. And I--this coming in over the
transom gives us mixed signals on what the administration's
priorities are. And based on what you've said, and what we've
seen in the past, I would have to say that this subcommittee is
being asked by the administration to fund other things, but
not--at--to the exclusion of the Amtrak request. So, that's
something you're going to have to resolve, is whether you think
that some of the requests for locomotives on the Northeast
corridor should be included, and other projects that you've
requested should be eliminated to make room for them.
And finally, you're telling me that positive train control
and all that is totally the freight rail--the $13 billion to
$15 billion--is the freight rail's responsibility, and you're
not going to recommend money for it.
Mr. Szabo. No, that's not what I said. What I said was, we
do have other funding alternatives that are available through
these broadbased transportation programs, whether it's the
TIGER grant process for passenger rail, potentially through the
high-speed rail program, through the proposed Infrastructure
Bank, or even through RRIF loans. So, we do have some
alternatives. But, again, the responsibility--now, we can give
some help--we can give some help--but, the responsibility does
remain with those rail carriers.
Senator Bond. Well, I'd be--I hope we will see that in the
plan. And I'm sure the rail carriers will want to know how much
they're going to be expected to pick up.
Thank you, Madam Chair.
Senator Murray. Thank you, Senator Bond.
Senator Lautenberg.
EQUIPMENT REFRESH
Senator Lautenberg. Yes. Thanks, Madam Chairman.
One thing, I think, that's generally acknowledged, and that
is that Amtrak is critical for our society to function--
critical. And, you know, when you see a disaster, like
September 11 or Hurricane Katrina, it's Amtrak that is called
upon to move Americans out of harm's way.
And in the Northeast corridor, Amtrak operates the only
high-speed rail service in the country. And, as a matter of
fact, if we didn't have Amtrak running there, be in the
Northeast corridor, you'd have to run 243 more flights every
day, with the densely congested airspace in our country. You'd
also have to add, as an afterthought, 30,000 more cars on
highway I-95. Amtrak offers so many positive additions to our
well-being.
And included in that is the commitment that all of us have
made here, and that is to create jobs in this society. And
you're not going to build the rail cars overnight. You're going
to--how long does it take, do you think, Mr. Szabo, to--from
the time equipment's ordered until the time that it's
delivered?
Mr. Szabo. Well, actually, Mr. Boardman could probably give
you a more accurate line on that.
Senator Lautenberg. Do you----
Mr. Szabo. But, certainly----
Senator Lautenberg. You don't know----
Mr. Szabo. I'd say, roughly--Mark, what are we talking
about--a year--from order to delivery. Roughly 3 years.
Senator Lautenberg. Roughly 3 years. And the fact of the
matter is, that as we look at what Amtrak adds--reduces our
dependence on foreign oil, reduces the cost of--reduces
pollution. It adds so many things and also says, ``You can get
there on time.'' Surprise, you can get where you're going on
time, if--98 percent of the time--if you take Amtrak.
I took an airplane flight the other day, Madam Chairman. It
was a 45-minute flight up to LaGuardia Airport, but it took us
an hour and a half to take off. So, that made the 45-minute
flight a heck of a lot longer.
Amtrak's fleet of cars is rapidly deteriorating. The
average age of an Amtrak passenger car is over 24 years old.
And some are more than 60 years old. The fact that I regard
that as young has nothing to do with--what we've--with what
happens in a railcar. And I ask you, do we--how essential is
it, in your judgment, for us to get replacements for the cars
that we have on the railroad right now in order for Amtrak to
be the functioning railroad we'd like to see? Is it important?
Mr. Szabo. It's important, I would say, from both a safety
standpoint, as well as a reliability standpoint.
Senator Lautenberg. Is it critical, would you say?
Mr. Szabo. It's getting very close to critical.
Senator Lautenberg. You mean it's--we're not yet at
criticality?
Mr. Szabo. It's close.
Senator Lautenberg. Mr. Szabo, you're too well informed not
to be able to say yes to that.
Ride the railroad. I don't--do you ever take the railroad?
Mr. Szabo. Every chance I can get.
Senator Lautenberg. How often is that?
Mr. Szabo. I would say at least a couple of times a month.
You know, when I----
Senator Lautenberg. Well, I----
Mr. Szabo [continuing]. Lived in Chicago, several times a
month; now that I'm out here in the District of Columbia----
Senator Lautenberg. Yes.
Mr. Szabo [continuing]. A couple of times a month, whether
it's to go to----
Senator Lautenberg. I do it----
Mr. Szabo [continuing].--New York.
Senator Lautenberg. I do it every week. And I can tell
you--my handwriting was never my best skill, but when I get off
of the Amtrak train, and I try to write some things that I have
to take care of, it's barely readable, because it shakes,
rattles, and rolls. And it is ridiculous. If we want to make
this railroad the thing that America should be proud of, invest
like China or Spain or the countries that are far less able to
do these things than we. And we're like a third, or even a
fourth-rate country, in terms of railroading. It's shameful
what happens with us.
So, I agree with my colleagues here when we talk about
replacing equipment. We need that $400-plus million for new
equipment. And we've got to get those orders out there.
How much cash does it require on the barrelhead in order to
get these orders going?
Mr. Szabo. For----
Senator Lautenberg. For when you pay a deposit--you know,
like if you want to buy a car, you pay a deposit.
Mr. Szabo. It would be roughly $70 million.
Senator Lautenberg. Okay. So, that sounds like a start to
me, and we ought to work like the devil. And I--I've heard you
say that it was--that there's no silver bullets and it's--then
these are difficult decisions. All of that, those tales of woe,
Mr. Szabo, they're interesting, but they don't get the job
done.
And so, when we looked further--I wrote a rail safety law
that mandated that railroads install positive train control on
certain routes by the end of 2015. And it created a grant
program to help railroads meet this safety requirement.
However, the President's budget eliminates funding for this
critical grant program. What's the administration going to do--
I think, Senator Bond, that--to help public and private
railroads meet this deadline? Are they going to do anything
about it?
Mr. Szabo. Yes. Again, we would have funding available
through, potentially, the TIGER Program for the passenger
railroads, possibly the high-speed rail program, the proposed
Infrastructure Bank, and potentially through RRIF loans. So, we
do believe that there are some options out there.
Senator Lautenberg. Do you have any idea as to the amount
of resource or funding that might be available?
Mr. Szabo. Well, again, that would--it would depend on the
amount of TIGER money that is made available. You know, these
different pools--it would vary over time.
Senator Lautenberg. Everything depends on something else.
We know that.
In my State, New Jersey, we have a rail bridge known as the
``Portal Bridge.'' It's over 100 years old, in critical need of
being replaced. One of the biggest factors is--in delays on the
Northeast corridor--is the Portal Bridge. What's FRA's plan to
replace this bridge so that high-speed rail service on the
Northeast corridor can be seriously developed?
Mr. Szabo. Well, as I think you're aware, we, through our
high-speed rail program, have already allocated $38.5 million,
which is also being matched by $16.5 million from the State of
New Jersey to fund the final design of the replacement to the
bridge. And we'll continue to work with the State DOT to see
what alternatives are appropriate.
Senator Lautenberg. The--if I might, Madam Chairman, just
one last thing.
The last environmental impact statement for the Northeast
corridor was completed in 1978, in order for the corridor to
receive this kind of high-speed rail investment that it needs,
this assessment will need to be updated. Last year, Congress
provided $50 million to the Department of Transportation to
move forward on this assessment. Do you know what the status of
this review is and when it will be complete?
Mr. Szabo. Yes. The Secretary has asked for submissions
from the Governors to establish the Northeast Corridor
Commission, the study commission. That's been established and
we'll be putting together the appropriate plans to bring the
corridor to the--you know, to the next step, to the next level.
So, we're committed to that.
Senator Lautenberg. Madam Chairman, thank you very much.
I assume that we'll have the record open so that we can
submit questions for the record.
RAIL SAFETY
Senator Murray. Absolutely. Thank you.
Mr. Szabo, funding for high-speed rail has dramatically
changed the workload at the FRA. We can't forget that the FRA
is a safety organization. You are requesting 26 new positions
for rail inspectors and rail safety staff. Can you describe for
us your workforce strategy for those new positions?
Mr. Szabo. Roughly one-half of those will be field
inspectors, and then the remaining will be at headquarters,
being utilized to make this shift away--you know, we have to
always maintain a strong inspection program while we also shift
to the more creative approaches through our risk reduction
programs and the direction that the Congress sent us on, under
the Rail Safety Improvement Act. And so, the remaining half
would be the bench strength that we need to put together our
new rail safety initiatives.
Senator Murray. Okay. Well, you've proposed covering part
of that with the $50 million in user fees from the industry.
That's a lot of money, especially when we're asking them to
also do positive train control. Can you explain to us the
rational for charging user fees?
Mr. Szabo. Well, it's not unprecedented, when it comes to
safety inside the DOT. Not only is it utilized in a couple of
other modes at DOT, but there's some history of using it at
FRA. As I--as you might be aware, we had such a user fee
through the mid-1990s--roughly from, I think, 1990 to 1995. And
so, again, there's a basis for doing this. And we believe it's
appropriate to try and come up with revenue sources and that,
in some way, we try and supplement the cost of the railroad
safety program. Again, it's about public safety. It's about
ensuring that we have the resources and the inspectors that we
need to keep the Nation's railroads safe.
HIGH-SPEED RAIL
Senator Murray. Okay. In another arena--before the Recovery
Act, States didn't expect the Federal Government to provide a
significant amount of money for high-speed rail; and in less
than 2 years, the Federal Government has now committed $10.5
billion to intercity and high-speed rail. That is an important
long-term investment. We all know it's not realistic to expect
high-speed rail corridors to begin operations in the next year.
But, can you give us an idea of what timeframe you think will
be necessary to see the development of high-speed rail
corridors, and the beginning of service?
Mr. Szabo. Well, I think you need to keep in mind that
Congress developed this program as a State-driven process. And
so, it's the States and the regions that develop their vision
for their service, and then they apply to the Federal
Government for capital money to construct. And I would say each
of those States and regions are in a different maturity level,
as far as where they're at with their plans.
You know, in the case of those that got some of the early
awards, these are State DOTs that have been investing and
planning in rail, through their State programs, for many years.
In the case of California, the case of your State, Washington
State, in the Midwest, North Carolina--these States have been
at this for almost a decade.
You know, true 200-mile-an-hour service like California is
going to take a long time to build out. Now, there can be small
pieces that can be up and running and carrying passengers much
more quickly. But, frankly, it's going to be projects more like
the Midwest plan, the Midwest Regional Rail Initiative that can
have service at 110-mile-an-hour quickly in the next couple of
years, as it continues to build out and develop. And Washington
State, too.
Senator Murray. Well, you've requested a billion dollars.
Can you tell us how much you expect to use for intercity
projects and how much for high-speed rail corridors?
Mr. Szabo. Well, under the $2.5 billion that we rolled out
this year, we allocated, roughly, about 85 percent of that to
high-speed rail and, roughly, about 15 percent more toward the
intercity projects. And if you take a look at the percentages
on the $8 billion that we put out, you know, roughly--I want to
say, roughly, about 45 percent was in that category of true
high-speed rail of over 150 miles per hour. Roughly, another 40
percent went to what I would call ``emerging high-speed rail,''
you know, those in that 110- to 125-mile-an-hour category, and
then, roughly, about 15 percent into the smaller projects and
conventional service. So, that seems to be, you know, a good
balance, a good match.
Senator Murray. Okay. Well, in order to decide which
projects you're going to fund through this program, you're
going to have to rely on forecasts of ridership levels and
revenues and public benefits, projects costs. And, so far, we
haven't seen you develop these strong requirements. And I know
the Department's inspector general is starting to investigate
best practices. Can you tell us what you're doing to make sure
that the grant awards are based on sound forecasts of projects
based on costs and benefits?
Mr. Szabo. Yes. I mean, clearly, it has been, from day one,
a merit-driven process. And we do make these types of analyses.
But, again, there has to be an acknowledgment that this is a
brand new program. You know, it's in its infancy. In less than
a year's time, we've just----
Senator Murray. Well, are you----
Mr. Szabo [continuing]. Given birth to the program.
Senator Murray [continuing]. Developing those?
Mr. Szabo. Precisely.
Senator Murray. And when will we----
Mr. Szabo. Precisely. And that's kind of why I go back to
its--a lot of it is about the lessons learned. You know, when
it comes to ridership forecasts----
Senator Murray. Well, will we see this in writing?
Mr. Szabo. Well, I think ultimately, we will be developing
rules. But, again, we're just going through----
Senator Murray. Do you have a timeframe for that?
Mr. Szabo [continuing]. Utilizing the grant guidance. We
really need to get this first round under our belt, you know,
and experience the--you know, the--we have to execute the first
round before we can start taking a look at those tweaks that
need to be made in future rounds.
AMERICANS WITH DISABILITIES ACT
Senator Murray. Okay. Well, I have one more question. Under
the Americans with Disabilities Act (ADA), all Amtrak stations
are supposed to be accessible by July 26 this year. Amtrak has
already admitted that it will not be able to meet that
deadline, and started a 5-year effort to invest in station
improvements and come into compliance. Do you believe that,
over the years, Amtrak did everything it could have done to
comply with ADA?
Mr. Szabo. Well, I think, as this subcommittee is probably
aware, historically, no administration has ever made an ADA
request on behalf----
Senator Murray. Right.
Mr. Szabo [continuing]. Of Amtrak. And so, I mean, it
really put them behind the eight ball. You know, and that is
one of the reasons why we came forward this year and have, in
fact, made the $281 million request to start funding those
legitimate needs.
Senator Murray. Okay, all right. Thank you.
Senator Bond.
Senator Bond. Thank you, Madam Chair.
I would just note one thing. As a former Governor, I can
tell you that looking to the States to make massive investments
in high-speed rail is not going to happen anytime soon, until
the States get out of the holes they're in. And California,
you've mentioned, probably is in--somewhere up there between
Greece and Spain in having budget problems.
But, Madam Chair, I'm going to submit questions in writing
for the record, and I need to have a lot more specifics--firm
priorities, amounts--not just, ``We're going to work on a
plan,'' but a plan, criteria, priorities--before I can support
any of these requests. I need to know how they fit in our
overall budget.
So, thank you for your testimony, Mr. Administrator. And we
have other witnesses. And we'll be communicating with you.
Thank you.
Senator Murray. Thank you very much, Senator Bond.
Mr. Szabo, that would--will conclude our questions at this
time. There will be questions from the subcommittee that we
will need responses from you in writing.
Thank you very much for your testimony today.
And with that, I'd like the second panel to come forward.
Mr. Szabo. Thank you.
NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK)
STATEMENT OF HON. JOSEPH H. BOARDMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Senator Murray. All right. I'd like to welcome our second
panel today.
And, Mr. Boardman, we'll begin with you.
You want to turn your microphone on, please.
Mr. Boardman. Okay. Thank you, Madam Chair.
And I appreciate the opportunity to speak with you today.
Before I begin the discussion about Amtrak's funding needs,
I'd like to share with the subcommittee some good news that was
announced on April 8. Amtrak is on pace to break its annual
ridership record, carrying a best-ever 13.6 million passengers
during the first 6 months of fiscal year 2010. And with the
historically busier summer travel season ahead, comparing March
2010 to 2009, ridership increased by 13\1/2\ percent to a
record 2.4 million passengers for the month. In addition, every
single Amtrak route carried more passengers, with several
experiencing double-digit growth.
Furthermore, one of the, I think, important things to see
today is that we've had other wins. A win with Moody's--Moody's
has upgraded the rating for Amtrak from an A2 to an A1 just
this last month. There have been no material weaknesses found
in our audits. This is the first time since 2004 that that's
occurred. And ridership on long-distance trains increased by 16
percent in March, and is up 5.2 percent for the first two
quarters of 2010.
In every one of the services, whether the Missouri River
Runner, where Senator Bond is, it's up by 24.2 percent for
March, to--and 15.8 percent for the first half of Amtrak year.
Cascade's increased by 11.4 percent. And March saw a 16.7
percent increase for the first 6 months of the fiscal year.
These numbers reinforce what so many of us know about
passenger rail; if you provide a safe, reliable, user-friendly
system, the traveling public will use it.
What I'd like to do, though, is spend time talking about
what I think is the most important piece of what we're asking
for. And I know, in the last hearing, there were several
questions on it. And it's the ``Amtrak Equipment Plan and
Needs,'' which is by your table right now.
And just as an introduction, the fleet truly is the key for
customer perception and willingness to use our system. The
operating reliability is particularly important. And the cost
of maintaining a fleet is critical for us for the future.
The railroad belongs to you. It belongs to the United
States. It belongs to the administration and the Congress, and
it has for the last 40 years. We cover 80 percent of our
operating costs from revenue. We are the most efficient
railroad in the United States. We cover none of our capital
costs. Just like highways, capital support comes from the
Federal Government. And the payment on debt comes from the
Federal Government. And that will continue to be that way for
as long as you, the owners of this railroad, decide to operate
a railroad.
Amtrak has suffered insufficient Federal capital investment
over the full 40 years that it's been here. ADA has been around
for 20 years, and every administration has failed, and every
Congress has failed, to deliver what it passed as a law to fund
the ADA requirements for Amtrak. And that is not the case with
highway. It is not the case in the rest of the modes. These
modes are not pitted against the poor. These modes are pitted
against highways and aviation and rail. Nowhere is that more
evident in the railcar fleet and locomotive fleet.
AMTRAK'S AGING FLEET
The fleet needs to be recapitalized. The average age of the
fleet was already said to be 25 years old--or ``more than 24''
are, I think, the words that were used. Domestic production is
needed both for employment and to secure a Nation as we enter a
much higher cost of energy for the future. We need railroads
and passenger railroads.
In the first table, just to identify for you the planned
car locomotive procurement, you can see as red and yellow
lines. The yellow lines are the cars, and the red lines are the
locomotives. And the two high marks on the yellow lines are
when you replace train sets, like the Acela services, and
that's why they're higher.
In the second table, what you see is the average annual
miles, in thousands, that the cars operate for Amtrak. And on
the far right of this table, what you find is that all of the
Amtrak cars are operating, in some cases, 180,000 miles a year,
in comparison to all the transit operators, which are on this
side of the table, Tri-Rail being the most, at 66,000 miles a
year. And the utilization, then, for Amtrak--all of these
Amtrak cars--is much higher than any other operation in the
United States, period. And they're all older.
If you look at the third page, you find the same kind of
information for the average annual mile--locomotive mileage.
And what you see is, the closest competitor--and they aren't a
competitor, they're a host--is BNSF, which has an 83,000 mile
annual locomotive use, where Amtrak is 160,000 mile--almost
double what the mileage is by our private railroads.
But, I think perhaps the most compelling slide in the deck
that you have in front of you is the last one, because it's a
snapshot of the present. It is the locomotives that we're
talking about replacing, which is the electric locomotive on
the Northeast corridor. It's the AEM-7--from the 1980s category
in utilization you saw a couple of minutes ago. It's the
Heritage baggage car that was built in the 1950s. It is the
Viewliner sleeper cars, which are the newest ones on this
fleet. The Heritage diner, which is the same age I am. I was
born in 1948, and this diner was born in 1948.
PREPARED STATEMENT
And it's one of the things that keep our speed down on the
Northeast corridor. You can only operate 177 kilometers per
hour; that's 110 miles an hour. And when we replace these,
we'll be able to immediately go to 200 kilometers per hour, or
125 miles an hour, by replacing these older cars, which then
reduces the time it takes to travel on the Northeast corridor.
And then the Amfleet coaches and the lounge cars, from 1981 to
1983. This is the Florida-bound Silver Star, at Seabrook,
Maryland, and I think it really demonstrates what we need for
fleet for the future.
Thank you for the opportunity to speak.
[The statement follows:]
Statement of Hon. Joseph H. Boardman
Good morning, Madam Chair, Ranking Member Bond, and members of the
subcommittee. Today is my first time appearing before this subcommittee
as President of Amtrak, and I thank you for the opportunity to testify
on Amtrak's fiscal year 2011 operating and capital needs. I took this
position in November 2008; prior to that I was the Federal Railroad
Administrator.
Before I begin the discussion about Amtrak's fiscal year 2011
funding needs, I would like to share with the subcommittee some very
good news that was announced April 8. Amtrak has posted the best first
half in its history, carrying 13.6 million passengers during the first
6 months of fiscal year 2010. Comparing March 2010 to March 2009,
ridership increased by 13.5 percent to a record 2.47 million passengers
for the month. In addition, every single Amtrak route carried more
passengers, with several experiencing double-digit growth.
Ridership on long-distance trains increased by 16 percent in March
and is up 5.2 percent for the first two quarters of fiscal year 2010.
In the Chicago hub, ridership on the Lincoln Service (Chicago to St.
Louis) showed significant growth with an 18 percent jump in March and
11.6 percent for the 6 month period. The Hiawatha Service (Chicago--
Milwaukee) continues to grow with a 14.3 percent increase in March over
the previous year and a 4.8 percent increase for the fiscal year to
date. Elsewhere in the Midwest, the Missouri River Runner (Kansas
City--St. Louis) is up 24.2 percent for March and 15.8 percent for the
first half of the Amtrak fiscal year, while the Blue Water (Chicago--
Port Huron) increased by 21.7 percent in March and 5.2 percent for
fiscal year to date. In the West, Amtrak Cascades (Eugene, Oregon--
Vancouver, B.C.) increased by 11.4 percent in March and saw a 16.7
percent increase for the first 6 months of the fiscal year.
These numbers reinforce what so many of us know about passenger
rail. If you provide a safe, reliable, and user-friendly system, the
traveling public will use it. I want to personally thank Chairwoman
Murray and this subcommittee for the funding that has helped make this
growth possible and helped prove our belief in this system and mode to
be well founded. Between the funding provided by this subcommittee to
Amtrak and the Federal Railroad Administration's (FRA) High Speed and
Intercity Passenger Rail Grant Program through the fiscal year 2010
appropriations bill and the Recovery Act, you have truly ushered in a
new era of intercity passenger rail development in the United States.
With the funding you have provided Amtrak, we have rededicated
ourselves to our mission of developing the Nation's intercity passenger
and high speed passenger rail system, aiming to grow the quality,
utility, and breadth of our network. We are also working intensely on
this year's capital investment program, split-funded with $420 million
in General Capital Funds and $590 million in Recovery Act funds.
Equally important, we are also working with our State partners and the
FRA to implement the first round of grants awarded under the High Speed
and Intercity Passenger Rail grant program and are in the midst of
collaborating with State for second-round applications due this spring
and summer. Together with the Northeast Corridor States, we have also
just completed the first phase of our 3 year Northeast Corridor Master
Planning Process, and will be transmitting the final version of the
Master Plan document to Congress and the administration in mid-May.
Supplementing this effort, we have also just begun an initial phase of
our Northeast Corridor Next Generation High Speed Rail Study, led by
our new High Speed Rail department, to look at the feasibility of a new
dedicated high speed system in the NEC to serve as successor to the
Acela service, with greatly reduced trip times, increased frequencies,
and top speeds of 200 mph or more for our high speed express trains.
Central to all of these endeavors to strengthen or grow the Amtrak
system is our need to replace our aging and hard-run fleet with modern
equipment. Per Congress's instructions, we completed our first
comprehensive fleet strategy for the entire system and provided it to
the subcommittee on February 1. I testified before the House
Appropriations Committee last month to explain the urgency of our
financial needs, particularly our need to replace aging rolling stock,
and I want to repeat and, if possible, amplify this appeal. New
equipment is an urgent need. We must begin replacement of our aging
cars and locomotives next year, and the arrangement of financing for
these acquisitions is a priority. If we continue to delay, we risk a
significant worsening of the mechanical problems and failures that
degrade our service quality and increase the already considerable
maintenance expenses associated with the maintenance and repair of a
fleet far past its prime.
FISCAL YEAR 2011 REQUEST
For fiscal year 2011, Amtrak initially requested a total of $2.1
billion, consistent with the Passenger Rail Investment and Improvement
Act of 2008 (PRIIA) authorizations. About $592 million of that total is
requested for operating support, and $1.025 billion will cover capital
needs, while a total of $305 million would go for debt and debt
retirement opportunities. Another $231 million will be needed for ADA
compliance requirements. On March 22, Amtrak submitted a supplemental
request to Congress for an additional $446 million to address our most
urgent unfunded need, replacement of our aging fleet. This will raise
our total fiscal year 2011 request to about $2.5 billion.
FLEET PLAN
The $446 million requested for new equipment represents the first
and most urgent investments we need to make in replacing our aging
rolling stock. It will include the cost of purchasing 130 single level
long distance cars to replace our 1950s-era ``Heritage Fleet'' of
dining and baggage cars--the last rolling stock we inherited from the
freight railroads that's still in daily revenue service. The average
annual mileage of these cars is enormous, as you will see on this first
slide (see attachment). The typical Heritage car averages 451 miles per
day--that's like running it from Washington to Boston every single day
of the year. And we're putting these miles on cars whose automotive
equivalent would be a Studebaker or Packard. This is the fleet we are
going to replace. If you go to the next slide, you can see the
situation we face with our locomotive fleet. Our diesel electric
engines are comparatively new, but the electric fleet that powers our
Northeast Regional and Keystone trains is aging and requires
replacement.
The plan we have put together is shown on this third slide. Many
stakeholders have been anxious for the release of this plan, which was
required by Congress in the fiscal year 2010 THUD appropriations bill.
Amtrak has spent a year developing a comprehensive fleet plan that's
designed to replace all of our existing rolling stock as it reaches the
end of its useful life. It calls for the replacement of equipment in
manageable annual increments, which will allow us to identify and fix
issues with new designs before they become problems. This is not only a
procurement plan but a strategy designed to develop and support a
domestic rail manufacturing industry. It supports an administration
goal and an Amtrak goal, as a stable domestic manufacturing and supply
base should help spur innovation and reduce costs for us. Our fleet
strategy affords States an opportunity to join their orders to ours,
with unit cost savings for everyone--a goal set by Congress with
passage of PRIIA. To further this, we are working with the FRA and the
States through the PRIIA section 305 Next Generation Corridor Train
Equipment Pool Committee to ensure that our new fleet shares common
designs and specifications with the equipment needed by the States so
that this equipment is interoperable and easily maintained. All of
these are excellent goals, and Amtrak supports them wholeheartedly--but
we need to take the first step, which is funding the initial
procurement of a new single-level long distance fleet. We must give
potential suppliers reason to believe there is a long-term commitment
to retain Amtrak and to fund additional State procurements of intercity
passenger rail equipment in the United States. Otherwise, they will not
make the type of investments in facilities and workers necessary to
bring the United States back to the position it once occupied, in the
forefront of railcar manufacturing, and the 60-year old cars you see in
this fourth slide, which date from that era, will remain in service as
long as our maintenance and operating crews can keep them rolling.
Amazingly, Amtrak managed to increase its ridership by 32 percent
between 2002 and 2008 without buying new equipment and our ridership
continues to grow today. We are using ARRA funding to return stored and
wreck-damaged equipment to service, and I'm very pleased with the job
that our Beech Grove and Bear shop staffs have done. This extra
equipment now back in service is a contributing factor to our increased
ridership. But there are limits to what we can accomplish, and we can't
put cars that don't exist back into service. Right now the margins for
our equipment, particularly our single-level sleeper and diner fleets,
are razor-thin. A single major accident could potentially require us to
terminate or reduce certain services, particularly on the long-distance
trains.
ACCESSIBLE STATIONS DEVELOPMENT PLAN
This July 26 will mark the 20th anniversary of the enactment of the
Americans with Disabilities Act (ADA), and Amtrak is proud of its role
as an important mode of travel for people with disabilities and of our
special services to the disabled community. We look forward to
celebrating this ADA milestone, but there remains much work to be done.
Last year, 288,000 riders took advantage of the discounted pricing
Amtrak offers to passengers with disabilities, and that number is on
pace to increase by 6 percent this year. All of our front-line
employees are trained to provide special service to passengers with
disabilities, and we have resources and policies in place to
accommodate those with unique service requests, such as at-seat meals.
All of Amtrak's trains meet or exceed the requirements of the ADA,
while each and every one of our new rail cars is designed to be
accessible. Amtrak offers reserved spaces to park wheelchairs,
accessible seating into which passengers can transfer from a
wheelchair, accessible bedrooms on all long-distance trains, accessible
restrooms, and other accessibility features and services. We're also in
the process of modifying our train cars to allow for on-board storage
of Segway devices for those passengers who use them for mobility
assistance.
Currently, 94 percent of Amtrak passengers board at accessible
stations. While our stations must be fully compliant with the terms of
the act by July 26, 2010, unfortunately, as the subcommittee knows, we
will miss this deadline. But we are focused on making each of the 529
stations we serve fully accessible, a challenge that requires
significant funding. We are conducting a capital improvement program to
bring all covered stations we serve up to the necessary standards at a
cost of nearly $1.6 billion based on the comprehensive study we
completed in February 2009. In this fiscal year alone, Congress
allocated $144 million for station accessibility improvements.
Adding to this complication is the annual funding challenge. On
February 1, 2009, Amtrak advised in our report under section 219 of the
PRIIA that nearly $1.6 billion was needed to bring the entire system
into compliance with ADA, assuming that current ADA regulations on
platform boarding remain unchanged. (As the Congress may well be aware,
a proposed Federal Department of Transportation rulemaking is pending
that would call for level boarding at all stations covered by the ADA.
If that rule were to be promulgated and become law, the basic
assumptions and parameters of Amtrak's current stations compliance
program would be nullified and both the time and cost to achieve
compliance would be increased exponentially.) This investment amount
represents a year-old estimate for both Amtrak's responsibility and
third-party responsibilities.
In our fiscal year 2011 request, we asked for $281 million for our
fiscal year 2011 Accessible Stations Development Plan, to continue the
work to bring the stations we serve into compliance with the ADA.
However, today I am here to report to you that we are revising that
number downward to $231 million. Due to the challenges of reaching
agreements with all parties with ownership interests at the stations,
we have to take into consideration the 3 months of experience since our
fiscal year 2011 request was submitted, and we do not think it will be
feasible for us to spend $281 million in fiscal year 2011. If you or
your staff would like more details on this issue, we can certainly
follow up with you on that.
In closing, I am optimistic about our future and the future of
intercity and high-speed passenger rail. Our intercity passenger rail
system is one of the few readily available solutions to the
transportation challenges facing our country--and we are ready to turn
investments in rail into benefits for the environment, the economy, and
our mobility. What it needs is continued investment and leadership. We
look forward to working together in the coming months to ensure that
Amtrak obtains the public funding it needs to sustain its system and
fleet for generations to come and to realize the goals of a stronger
Amtrak and a stronger intercity passenger rail network.
Senator Murray. Thank you very much, Mr. Boardman.
Mr. Alves.
STATEMENT OF THEODORE ALVES, INSPECTOR GENERAL
Mr. Alves. Good morning, Madam Chair, ranking member, and
members of the subcommittee. And thank you for the opportunity
to discuss Amtrak's 2011 budget request.
I'd like to start by thanking Mr. Carper, Amtrak's
Chairman, its Board of Directors, President Boardman, and
members of this subcommittee for the support I've received
during the past 5 months as Amtrak's new inspector general.
I'm also pleased to report that Amtrak management and the
OIG have agreed to a new relationship policy, and that the
inspector general of the Farm Credit Administration found that
the new policy is consistent with the letter and spirit of the
IG Act. I want to thank the subcommittee for including this
very helpful requirement in last year's appropriations act.
Today, I will discuss the significant opportunities Amtrak
has to provide increased levels of high-quality passenger rail
service and four important challenges management must address
to take advantage of these opportunities.
First, the opportunities. The Passenger Rail Investment and
Improvement Act fundamentally changed Amtrak's role within the
national passenger rail system. Rather than relying on Amtrak
to lead development of new intercity passenger rail services
alone, PRIIA calls on States, supported with Federal grants, to
share in developing new corridor and high-speed rail services.
As a result, Amtrak will become one of many choices States have
to provide rail services, rather than the only practical
option.
The first challenge is that Amtrak needs to organize
properly and operate more efficiently. Amtrak is making
organizational changes to help it successfully compete for new
contracts, and has taken steps to operate more efficiently.
To illustrate, the company has made significant progress
implementing reliability-centered maintenance practices in
response to a 2005 OIG report. Using reliability-centered
maintenance on the Acela fleet reduced costs and generated $16
million in new revenue in 2009. Amtrak should continue applying
this maintenance concept across its fleet.
However, Amtrak can do more. For example, we recently
identified opportunities to adopt European best practices,
including better asset management systems and more advanced
technologies.
Second, Amtrak needs to improve its human capital
management practices. In a May 2009 report, we made several
recommendations that management agreed to implement. As a
result, Amtrak is focusing on strategic workforce planning,
including identifying its critical skills and competencies,
implementing a total compensation philosophy, and improving
recruitment and retention practices. Fully implementing these
corrective actions will require a concerted effort over several
years.
Third, significant IT investments always involve risks.
Amtrak has four major technology initiatives underway, and has
taken a number of measures to address the risks, including:
establishing disciplined procedures to guide both project
management and technology development; forming an independent
team to enforce standards; and implementing reviews to ensure
that projects meet quality standards before proceeding to the
next development phase. To ensure that these projects stay on
track and achieve anticipated benefits, Amtrak should closely
watch progress, address emerging problems quickly.
The fourth challenge is managing risks associated with the
Recovery Act projects. Specifically, Amtrak may have to take
measures that could reduce productivity, adversely impact
project quality, or significantly diminish railroad operations
in order to finish some projects by February 2011.
Amtrak faces this issue, in part, because the terms of the
FRA grant are stricter than the terms in the act. The act
requires Amtrak to take measures to complete the projects by
February 2011. The FRA grant, on the other hand, requires
Amtrak to take continuing measures, and even extraordinary
measures, to complete projects by that date.
As projects face slippages, Amtrak is now considering
taking extraordinary measures to meet the completion date.
These measures include adding second or third shifts, which
studies indicate have a negative impact on productivity, and
reducing the scope of projects, which reduces the benefits
associated with the final product. Although the term
``extraordinary measures'' has not been defined, we do not
believe that Amtrak should take actions that would
significantly reduce productivity, adversely impact the quality
of the final products, or significantly diminish railroad
operations.
PREPARED STATEMENT
Madam Chair, this concludes my testimony, and I'll be happy
to answer any questions.
[The statement follows:]
Prepared Statement of Theodore Alves
Good morning Madam Chair, ranking member, and members of the
subcommittee and thank you for the opportunity to testify about
Amtrak's fiscal year 2011 operating and capital budget request. Amtrak
has made considerable progress positioning itself to meet the
challenges it faces to compete effectively in this new era of intercity
passenger rail. The intercity passenger rail system includes the long
distance routes, High Speed Rail corridors, State sponsored corridors,
and the Northeast Corridor (NEC). Accomplishments include completing a
new strategic guidance, a 5 year financial plan, and a long-range fleet
plan. Although fiscal year 2009 saw a decline in ridership and revenue
from fiscal year 2008 as the economy continued to struggle, both
ridership and ticket revenues came in at the second highest level in
company history. The last several months have also seen sustained
increases in passengers and revenue.
Before I discuss Amtrak's funding request, let me thank Mr. Carper,
Amtrak's Chairman, its Board of Directors, President Boardman, and
members of this subcommittee for the support I have received during the
past 5 months as Amtrak's new Inspector General (IG). Last year's
appropriations act directed Amtrak management and the OIG to agree upon
a set of policies and principles for working together that are
consistent with the letter and spirit of the IG Act. On March 17 of
this year, Carl Clinefelter, the IG of the Federal Credit
Administration and Vice Chairperson of the Council of the Inspectors
General on Integrity and Efficiency, reported that the new relationship
policy is consistent with the letter and spirit of the IG Act. I want
to thank the subcommittee for inserting this very helpful requirement.
Amtrak is requesting $2.6 billion for fiscal year 2011. A total of
$592 million is for operating support, $1.8 billion for capital needs--
including $446 million for replacing its aging fleet, and $281 million
to meet the Americans with Disabilities Act requirements--and the
remaining $277 million for debt retirement. This amount, along with
last year's American Recovery and Reinvestment Act (Recovery Act)
funding of $1.3 billion would be a significant infusion of funds and
would help Amtrak move toward its long-term goal of providing
efficient, high quality passenger rail service that is cost and trip
time competitive with other modes.
Today, I would like to discuss the significant opportunities that
Amtrak has to provide increased levels of high quality passenger rail
services, as well as important challenges it must address to take
advantage of these opportunities.
First, the Opportunities.--Congress passed the Passenger Rail
Investment and Improvement Act (PRIIA) in October 2008. PRIIA
recognized that passenger rail services, particularly connecting large
cities, can provide significant public benefits, including road and air
congestion reductions, environmental benefits, fuel usage reductions,
and increased mobility choices for the travelling public.
PRIIA not only reauthorized Amtrak; it fundamentally changed
Amtrak's role within the national passenger rail system. PRIIA also
contains many provisions aimed at spurring Amtrak to operate more
efficiently and to improve services on its existing routes. In
addition, the Recovery Act provided $8 billion through PRIIA grant
programs to States to assist in improving Amtrak's national network and
begin developing new High Speed Rail corridors. Amtrak also received
$1.3 billion through the Federal Railroad Administration (FRA) to
improve its infrastructure, facilities, and security.
Essentially, rather than relying on Amtrak to lead the development
of new intercity passenger rail services alone, PRIIA calls on States,
supported with Federal grants from FRA, to share in the development of
both new corridor services and High Speed Rail services. While Amtrak
is still presumed to be the national operator, PRIIA provides greater
flexibility to the States in determining who will plan, develop, and
operate these new services.
With States playing a larger role in planning for and funding
passenger rail service, Amtrak will become one of many choices States
have to provide services, rather than the only practical option. Amtrak
can still be the provider of choice in this new competitive
environment, but only if it is perceived as an efficient organization
that provides quality and cost-effective service.
In fact, Amtrak has many competitive advantages, including its
statutory access to host railroads, existing liability regime, and
experience in planning, engineering, maintenance, and operations. For
example, Amtrak already operates a number of commuter rail routes in
key markets and has a nationwide reservation system that can be
extended to support new services, allowing significant economies of
scale. Amtrak can leverage these advantages to help States plan for
these new services and to become the operator of choice for new
services.
Now, the Challenges.--As Amtrak moves into this new era of
passenger rail, it faces four interrelated management challenges. Those
challenges include:
--Competing successfully for new State supported corridor and high
speed rail services and then delivering high quality cost-
effective service.
--Improving human capital management practices, including strategic
workforce planning, and training and development.
--Managing risks associated with the modernization of Amtrak's
information technology systems and infrastructure.
--Managing risks associated with projects funded through the Recovery
Act.
CHALLENGE 1.--COMPETING SUCCESSFULLY FOR NEW STATE SUPPORTED SERVICES
AND THEN DELIVERING HIGH QUALITY COST-EFFECTIVE SERVICE
Growth in State supported services, including the development and
operation of new high-speed rail corridors, creates new challenges for
Amtrak. To retain its dominant position in the market, Amtrak must
elevate its customer focus, improve service quality, and become a more
nimble and dedicated partner. Competition for routes should also
challenge Amtrak to implement significant operating efficiencies that
will improve all lines of business.
The strategic direction and additional Federal funding that PRIIA
authorized, along with appropriations support, has given Amtrak a
unique opportunity to expand and enhance its rail passenger operations.
However, Amtrak will face challenges to compete successfully in a
market place that has increasing levels of both domestic and foreign
competition. The competition is evidenced by two recent examples:
--The Virginia Railway Express operating and maintenance service
contract was recently awarded to the U.S.-based subsidiary of a
French firm. Amtrak had been providing the services since the
commuter rail operations began in 1992.
--Caltrans selected a different French firm to renovate all 66 bi-
level intercity passenger vehicles from its California car
fleet. The renovations will take place in a newly-opened
maintenance facility in California. While Amtrak did not
compete for this work, it represents the growing marketplace
for equipment-related work.
To thrive in this newly competitive environment, Amtrak must
significantly improve its operating efficiency. In fact, we believe the
very existence of competition will provide the incentive Amtrak needs
to focus more attention on operating more efficiently.
Amtrak deserves to be commended for its recent decision to
establish a new High Speed Rail department reporting directly to Mr.
Boardman. This new department should help the company focus on the
planning and development activities required to successfully compete
for high speed rail contracts. As it implements this new organization,
Amtrak will need to also focus on ensuring that it is positioned to
deliver efficient and high quality services. A heightened emphasis on
operating more efficiently and controlling costs will be needed to
ensure that Amtrak remains the service provider of choice.
Amtrak has taken some commendable steps to improve operating
efficiencies in recent years, but more needs to be done. For example, a
recent OIG report \1\ concluded that, although Amtrak's Engineering
department has effectively reduced its operating expenses by 15 percent
between 2002 and 2007, the company still spends about $50 million more
per year than the average comparable European railroad, and $150
million more per year than the ``best'' European railroads to maintain
and renew its infrastructure assets. Although American and European
railroads are not entirely comparable and some of these opportunities
are outside Amtrak's direct control, Amtrak can implement many European
practices that would reduce costs. For example, we recommended that
Amtrak implement better asset management systems and procure more
advanced technology/equipment.
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\1\ ``Amtrak's Infrastructure Maintenance Program'', September
2009, OIG Report Number E-09-05.
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Amtrak is well along in implementing a new asset management system
but it will be several years before it is fully operational.
Additionally, Amtrak is exploring new technologies along the Northeast
Corridor. The key now is for Amtrak to follow through on these
recommendations to ensure that these changes are implemented
effectively.
In 2005, we issued a report on Amtrak's Mechanical Maintenance
Operations.\2\ We estimated that Amtrak had an opportunity to save $100
million per year by adopting a Reliability Centered Maintenance
strategy along with other efficiency improvements. Amtrak has made
significant progress in this area. For example, implementing
Reliability Centered Maintenance for the Acela fleet allowed Amtrak to
reduce maintenance costs and to increase available train sets from 14
to 16 per day, generating additional revenues of $16 million during
fiscal year 2009 alone. The experience with the Acela fleet is a strong
indicator that significant additional benefits can be realized as this
practice is expanded throughout Amtrak's conventional fleet. Amtrak
needs to ensure that momentum is maintained to apply this important
maintenance concept across all Amtrak fleet assets. We are currently
conducting a follow-up review on this important program.
---------------------------------------------------------------------------
\2\ ``Amtrak Mechanical Maintenance Operations'', October 2005, OIG
Report Number E-05-04.
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We also note that Amtrak's financial projections do not reflect
significant improvements in operating efficiency. One key indicator of
efficiency that Amtrak uses is loss per passenger mile. The chart below
shows the operating loss per passenger mile increasing by approximately
45 percent from fiscal year 2008 to fiscal year 2010, and then
remaining relatively constant from fiscal year 2010 to fiscal year
2014. During a period when ridership is expected to grow beyond the
levels experienced in fiscal year 2008, we would expect to see the loss
per passenger mile return to the levels experienced in fiscal year 2008
or even improve on those levels. Only through a renewed focus on
efficiency improvement will Amtrak be able to achieve this.
CHALLENGE 2.--IMPROVING HUMAN CAPITAL MANAGEMENT PRACTICES, INCLUDING
STRATEGIC WORKFORCE PLANNING, AND TRAINING AND DEVELOPMENT
Improved human capital management and strategic workforce planning
are critical to ensure that Amtrak has the right people with the right
operational and leadership skills to improve services and expand
operations efficiently and effectively.
Historically, Amtrak had been operating on budgets that allowed it
to maintain the railroad and deliver adequate passenger services, but
provided limited resources to invest in long-term planning, including
human capital initiatives. It maintains a relatively stable work force,
with long-term employees who operate the railroad with reasonable
efficiency, instituting improvements as time and resources allow.
Two significant factors will change this environment:
--Amtrak's workforce is aging. Over the next 5 years, 30 percent of
its work force, representing thousands of employees, will be
eligible to retire. Replacing them will be a daunting task
considering Amtrak employs about 20,000 people.
--Amtrak has received a large injection of capital funds to improve
its infrastructure, facilities, and security capabilities--this
has strained its ability to provide people with the right skill
sets to oversee these investments while continuing to run the
railroad.
Strengthening human capital practices remains a significant
challenge across Amtrak, a challenge which will intensify as workloads
increase at the same time that experienced employees in key positions
retire or migrate to other business opportunities.
In May 2009, we issued a report that compared Amtrak's human
capital management practices to other companies.\3\ In preparing the
report we interviewed over 125 Amtrak managers and employees, obtained
results from benchmarking studies, and visited two other Class I
railroads to see how they managed their human capital.
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\3\ ``Human Capital Management'', May 2009, OIG Report Number E-09-
03.
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Our report made specific recommendations that covered four critical
areas. Amtrak agreed with all major recommendations and has been taking
steps to implement them. However, fully implementing these
recommendations will require a concerted effort over several years.
Strategic Work Force Planning.--We found that Amtrak lacks a
strategic workforce planning process to ensure that it has a workforce
with the knowledge and skills to meet future needs. We recommended a
stronger focus in this area that includes identifying the critical
skills and competencies needed to achieve Amtrak's current and future
business requirements. The company has made progress by identifying
employees who are eligible to retire and preparing talent profiles for
non-agreement covered positions. While this is a good start, the
company has not yet identified its mission critical and other key
positions or developed a strategic workforce plan.
Total Compensation.--Amtrak also lacks a total compensation
approach to ensure that pay practices are applied consistently and are
aligned to support Amtrak's strategic goals. Total compensation is the
complete pay package an employee receives, including money, benefits,
and services. Our recommendations focused on the need to define and
implement an overall compensation philosophy and strategy. Since our
report, the Human Resources Department has conducted a compensation
review as part of an effort to develop a new pay structure that will
help attract, motivate, and retain highly skilled and talented
employees. Amtrak has not yet, however, revised its pay structures.
Recruitment.--Successful companies recognize the importance of
having a clearly defined recruiting strategy linked to the company's
identified workforce needs. Recruiting at Amtrak is decentralized and
manually driven. While the company has been successful in filling its
recruitment needs during the past 2 years, as the economy recovers
Amtrak risks losing skilled craftsman and technical expertise faster
than it can replace them. Our recommendations focused on how the
company could improve the recruitment process to reduce the cost and
time to hire while attracting highly qualified candidates. The company
is working to deploy an automated system that should help improve
recruitment.
Retention.--Each time a company loses an employee, it costs money.
Amtrak's overall turnover rate has averaged about 10 percent annually,
which is lower than most companies. Once employees reach 5 years of
service with Amtrak, the majority tend to stay for the entire career.
The problem is that in recent years a high proportion of Amtrak
employees leave before completing 5 years, resulting in an overall
workforce that tends to be skewed toward employees approaching
retirement age. Amtrak's challenge, therefore, is to retain employees
beyond the first 5 years of employment in order to smooth out this
imbalance. Our recommendations focused on the need for a corporate
retention strategy that aligns with and supports an overall strategic
human capital plan.
Amtrak is heavily engaged in implementing the Employee Information
Management (EIM) system, a sophisticated human resource management
system that provides a basis to more effectively track and guide the
career paths for its employees. Amtrak needs to ensure that it also
makes timely progress in addressing the strategic Human Capital issues
by continuing to implement our recommendations.
We also recently completed a separate and more detailed review
focusing specifically on training and employee development. Our October
2009 report,\4\ found that because Amtrak's training program is largely
decentralized, it cannot ensure that training efforts are aligned to
meet the company's strategic needs. We also found that Amtrak needs to
develop an effective corporate-wide strategy for developing management
employees to assume the future leadership roles in the company.
---------------------------------------------------------------------------
\4\ ``Training and Employee Development'', October 2009, OIG Report
Number E-09-06.
---------------------------------------------------------------------------
We made a series of recommendations to improve the effectiveness
and efficiency of training and employee development, focusing on
developing and implementing a corporate-wide training and employee
development strategy. This would ensure that training aligns with the
overall corporate strategy and provides employees with the skills
needed to assume leadership roles in the future.
Management recently agreed with all of our recommendations and
provided a plan to implement them. It is important, however, for
management to stay focused on making near-term improvements, because
effective training and development practices will be a key component of
Amtrak's ability to deliver high quality services.
CHALLENGE 3.--MANAGING THE RISKS ASSOCIATED WITH AMTRAK'S GOAL OF
MODERNIZING ITS INFORMATION TECHNOLOGY SYSTEMS AND INFRASTRUCTURE
Significant IT investments always involve risks, and achieving
anticipated benefits depends on managing the risks and implementing
business process improvements to streamline and improve internal
operations.
Amtrak recognizes that a number of its key information systems and
the underlying technological infrastructure are outdated and
increasingly prone to failure. Modernizing these information systems
also provides a major opportunity for Amtrak to better harness
information to make decisions and operate more efficiently. Amtrak is,
therefore, taking measures to mitigate the potential for system
problems while at the same time leveraging more up-to-date systems
technology to drive operational improvements and more effective
decisionmaking.
Amtrak currently has four major technology initiatives under way:
--Strategic Asset Management (SAM).--SAM is a multiyear program to
transform and integrate key operational, financial, supply
chain, and human resource processes. SAM is expected to help
Amtrak meet managerial accounting requirements mandated by
PRIIA and replace legacy financial, procurement, materials
management, and operational systems.
--eTicketing and Next Generation Reservation (RES-NG).--Amtrak's
current reservation and ticketing system is critical for sales
booking, ticketing, customer service, and train operations.
eTicketing is a major program that aims to replace current
paper-based ticketing processes with an airline-style
electronic ticketing system. This program will also automate
the onboard ticket processing and simplify and streamline the
revenue recognition and accounting functions.
--Amtrak Information Management (AIM).--The objective of this program
is to make critical business information reliable and easily
accessible to Amtrak's managers and executives. It will
integrate information from various internal and external
sources, and will include sophisticated capabilities such as
business intelligence, document management, and train
communications.
--IT Infrastructure Improvement (ITII).--This initiative focuses on
upgrading Amtrak's IT infrastructure to improve service levels
and lower current costs. Under new outsourcing contracts signed
during 2009, IBM is responsible for data center operations and
seat management, while AT&T is responsible for data and voice
networks. Amtrak is also moving its current data center to two
new locations over the next several months.
Because large IT acquisitions involve significant risk, they must
be carefully managed. The fact that these programs are taking place
concurrently and have a number of inter-dependencies heightens these
risks. For example, the AIM program will need to make use of
information that is being made available by other programs such as SAM
and eTicketing. Also, many changes to business processes and
operational procedures will occur in quick succession, challenging the
organizations ability to absorb the changes.
Amtrak is aware of these risks and has taken a number of measures
to manage them, including:
--Reorganizing the IT department to foster partnerships and improve
communications with business customers.
--Establishing a Project Management Office, separate and distinct
from the technology delivery team, to establish standardized,
disciplined procedures to guide both project management and
technology development.
--Forming an independent Enterprise Architecture team to develop,
monitor, and enforce architectural standards.
--Dividing each major project into phases and implementing
comprehensive peer reviews for each phase, to ensure that
projects meet quality standards before proceeding to the next
development phase.
--Instituting progress reports to keep management and the Board
informed about the status of each technology project.
To ensure that these projects stay on track, Amtrak will need to
closely watch progress and take steps to address emerging problems
quickly. We also recently initiated an audit of the largest and most
complex of the four programs--the SAM project--to evaluate how well
management and control measures are mitigating risks.
CHALLENGE 4.--MANAGING RISKS ASSOCIATED WITH PROJECTS FUNDED THROUGH
THE RECOVERY ACT
Recovery Act spending creates many opportunities to improve
infrastructure, facilities, and security, but the large amount of funds
combined with tight spending deadlines create a challenge to spend
money efficiently and effectively and to ensure that projects provide
long-term economic benefits.
The Recovery Act included $1.3 billion in capital grants to fund a
variety of projects to help Amtrak improve its infrastructure,
facilities, and security posture. The act also required the Secretary
of Transportation to take measures to ensure that projects would be
completed within 2 years of enactment (February 17, 2011).
In March 2009, the Federal Railroad Administration (FRA) provided a
$1.3 billion grant to Amtrak. The grant agreement requires Amtrak to
complete all projects funded through the Recovery Act no later than
February 17, 2011 and to continuously take actions to ensure projects
are completed by that date. Amtrak is allowed to request a waiver for
projects that cannot be completed by February 17, 2011, but must
demonstrate that it has taken ``extraordinary'' measures to complete
the project on time.
Amtrak currently has hundreds of individual projects under way that
are funded through the Recovery Act. Examples of important projects
include: replacement of the Niantic River Bridge, refurbishments of
several other bridges, improved communications, power upgrades,
modernization of stations, improvements for customer and workplace
safety, and the return to service of dozens of locomotives and
passenger cars.
This week we plan to issue a draft report to Amtrak that analyzes
project risks associated with key engineering projects funded by the
Recovery Act. Of the nine projects (totaling $293 million) that we
evaluated, five contained a significant number of high-risk areas that
need to be managed effectively to ensure the project's success. These
projects included the Niantic River Bridge project and Positive Train
Control projects. Of the 10 risk categories that we examined, risk
associated with acquisition, environment, schedule slippage, and
technology were identified by program managers as areas of the highest
concern. In general the program managers were quick to recognize the
high-risk items and to put forward tactics that they believed would
adequately manage the associated risk.
However, neither the program managers nor Amtrak's executives are
in a position to mitigate the most significant concern, which is that
the grant between the FRA and Amtrak requires Amtrak to take
extraordinary measures to ensure that all projects are completed by
February 17, 2011. Although the Recovery Act requires that Amtrak take
measures to complete the projects by February 2011, it does not require
``extraordinary'' measures. The March 19, 2009, FRA grant not only
requires that Amtrak take continuing measures to complete projects
within 2 years, but requires Amtrak to identify the extraordinary
measures taken to meet the February 17, 2011, completion date when
applying for a waiver.
This requirement to take extraordinary measures may have the
unintended consequence of encouraging Amtrak to take actions that
increase the risk of waste and inefficiency or even to take shortcuts
that could increase the risk that the project will not perform as well
as expected and will not provide the benefits expected. Although the
term has not been defined, we consider extraordinary measures as any
action that would significantly reduce productivity, increase the
potential for waste or inefficiency, negatively impact the quality of
the final products, or significantly impact the smooth operation of the
railroad.
Amtrak executives, including the President and the Chief Financial
Officer, are committed to ensuring that funds are utilized effectively
and represent an appropriate use of taxpayer funds. They are in the
process of making decisions about how to balance the need and desire to
implement these projects against the need to spend taxpayer funds
efficiently and effectively. In fact, when Amtrak awarded contracts, it
had taken measures to complete the projects on time--those measures
were reflected in a contract completion date that met the requirement.
However, as projects face slippages that threaten the completion
date, which is not unusual for large construction projects, Amtrak
executives are faced with either taking extraordinary actions to meet
the completion date, or cancelling the project and identifying a
substitute project that can be completed in time. Extraordinary actions
that have been proposed by Amtrak include the addition of second or
even third shifts on construction projects and reducing the scope of
projects to accomplish less than originally planned. Identifying
substitute projects at this point in time also involves risks and might
result in spending on lower priority projects that will bring fewer
benefits than the originally selected project.
Because the grant agreement is driving these ``extraordinary''
measures rather than the Law, we are recommending that Amtrak apply to
the FRA to amend the grant provisions that require Amtrak to continue
to take ``extraordinary'' measures to complete projects by February 17,
2011, if those measures would significantly increase the risk of waste,
inefficiency, reduced project benefits, or disrupt operations.
In closing, let me briefly discuss the OIG' s budget request.
We are requesting $22 million as a direct appropriation to the OIG
for fiscal year 2011, which is consistent with our authorized funding
level. Although it represents a $3 million increase over our 2010
appropriation, I would note that the OIG appropriation has not kept
pace with inflation for the prior 3 years.
The request will provide additional leadership positions to support
needed restructuring of our operations as well as positions to
strengthen our internal operations. For example, in the past, the
Amtrak OIG relied heavily on support from Amtrak management units for
Human Resource and procurement activities. While I plan to continue to
rely on Amtrak support, it is essential that we have adequate in-house
capabilities to ensure that we can operate independently and
effectively. Finally, our request funds required upgrades to our IT
systems.
We have developed a new strategic plan for the OIG that will help
us to focus on the major goals Amtrak is trying to achieve and we have
provided that plan to the subcommittee. This additional fiscal year
2011 funding will help us to implement our new strategy of focusing our
attention on the most significant issues Amtrak faces. We expect to
identify significant cost savings and program improvements in important
areas, including Amtrak's $250 million annual healthcare expenditures.
We are also working closely with Congress and this subcommittee to
provide timely information that will be helpful in the legislative and
oversight process. We hope you agree that your investment in the Amtrak
OIG serves to strengthen Amtrak's operations, improve efficiency,
prevent and deter fraud and abuse, and provide the transparency needed
in an organization that receives large Federal subsidies. To
illustrate, in February of this year, Amtrak released a Fleet Strategy
outlining a multibillion-dollar plan to replace its aging fleet and to
provide additional fleet to handle the growth in demand. At the request
of this subcommittee, we plan to review this important initiative.
Madam Chair, this concludes my testimony and I will be happy to
answer any questions.
DEPARTMENT OF TRANSPORTATION
Office of Inspector General
Senator Murray. Thank you very much.
Ms. Ann Calvaresi.
STATEMENT OF ANN CALVARESI-BARR, DEPUTY INSPECTOR
GENERAL
Ms. Barr. Chairman Murray, members of the subcommittee,
thank you for the invitation to discuss ongoing efforts to
strengthen the Nation's passenger rail network.
As you know, recent legislation calls for significant
investment in rail, an investment that demands rigorous
oversight to ensure passenger rail goals are achieved and
taxpayer dollars are used wisely.
My statement today focuses on FRA's expanded role and
responsibilities under PRIIA and the Rail Safety Improvement
Act, the challenges FRA faces in effectively carrying out its
new role, and the progress Amtrak has made in improving its
operating and capital financial management processes.
PRIIA and the Safety Act dramatically expanded FRA's role.
Together, these mandates call for FRA to develop, from the
ground up, a multibillion-dollar high-speed rail program and to
undertake several new safety and passenger rail service
enhancement initiatives.
Among the tasks set out for FRA are the development of
performance metrics for minimum passenger rail service
requirements, such as on-time performance levels, and the
establishment of a discretionary grant program to develop and
deploy positive train technologies. This expanded role presents
several challenges for FRA, especially as they relate to
implementing the high-speed rail program. To ensure program
success, FRA must develop a sound implementation strategy.
While FRA has developed project selection criteria, it has
yet to provide grant applicants with the detailed methodologies
needed to adequately complete their applications. For example,
FRA has not issued guidance on how to prepare forecasts of
project ridership and revenue, costs, and public benefits for
high-speed and intercity passenger rail. Without such guidance,
FRA is not positioned to effectively assess the merits of rail
grant applications and ensure sustainability of the service.
FRA must also enhance its internal policies and practices
in order to effectively oversee these larger project grants.
According to the Office of the Secretary of Transportation
[OST], plans for program monitoring and administration are in
development.
Finally, FRA must obtain adequate staff with the right
skill mix to oversee program implementation.
The Recovery Act greatly accelerated FRA's rollout of the
high-speed rail program, further exacerbating FRA's challenges.
Within 10 months after its enactment, FRA was required to issue
a strategic high-speed rail plan, establish interim guidance,
and process all applications for the $8 billion stimulus
investment.
Balancing other PRIIA responsibilities with its traditional
responsibilities create even more challenges for FRA. For
example, PRIIA requires FRA to coordinate with hundreds of
public and private stakeholders to establish a National Rail
Plan that addresses interconnectivity with other modes of
transportation, informs the development of State rail plans,
and recognizes the need for a sustainable funding mechanism. At
the same time, FRA must not lose sight of its traditional
responsibilities; chief among them, ensuring rail safety and
oversight of Amtrak.
Effectively managing these critical rail programs will
require sustained focus and oversight by FRA and the DOT OIG.
We have begun to shift resources accordingly. Specifically, we
have underway an evaluation of best practices for forecasting
high-speed rail ridership and revenue, costs, and public
benefits; an audit of infrastructure access agreements between
the States and freights to ensure access agreements adequately
address cost, schedule, and performance goals; and a
quantitative analysis of Amtrak's delays that will help FRA
ensure investments yield the highest return.
Given the important role Amtrak plays in intercity
passenger rail, our work on Amtrak's financial management is
relevant to FRA's efforts. Amtrak established key performance
indicators to measure both the efficiency and effectiveness of
its operational and financial performance. For example, Amtrak
developed a cost-recovery indicator to measure the proportion
of expenses covered by revenues and ridership growth. This
approach appears to be a more efficient way to monitor and
improve operating and financial performance than its previous
approach of tracking savings from specific reforms.
Our ongoing work also indicates that Amtrak has improved
its long-term capital planning. Specifically, Amtrak has
developed long-term plans for its fleet and infrastructure, a
transparent process for prioritizing its capital needs, and
guidance on conducting post reviews of its capital investments.
Clearly, Amtrak's success hinges on effective implementation.
PREPARED STATEMENT
In closing, while we are dedicating additional resources to
oversee FRA and its expanded role, we are encouraged that the
Amtrak's OIG, under its new leadership, will enhance its
oversight of Amtrak-related work.
Chairman Murray, this concludes my prepared statement. I
would be happy to answer any questions that you or other
members of the subcommittee may have.
Thank you.
[The statement follows:]
Prepared Statement of Ann Calvaresi-Barr
Madam Chairman and members of the subcommittee: Thank you for
inviting me here today to discuss ongoing efforts to strengthen the
Nation's passenger rail network. As you know, recent legislation has
called for significant investment in rail--an investment that demands
additional scrutiny and oversight to ensure legislative goals are
achieved and taxpayer dollars are used wisely.
My testimony today focuses on: (1) changes in the Federal Railroad
Administration's (FRA) role and responsibilities under the Passenger
Railroad Investment and Improvement Act of 2008 (PRIIA) and the Rail
Safety Improvement Act of 2008 (RSIA); (2) the challenges FRA faces in
effectively carrying out its new role; and (3) the progress Amtrak has
made in improving its operating and capital financial management. My
testimony is based on our recent and ongoing work related to FRA,
Amtrak, and rail issues in general.
IN SUMMARY
PRIIA and RSIA dramatically realigned FRA's role and expanded its
responsibilities. Together these two pieces of legislation have called
for the implementation of a high speed rail program, improvements in
intercity passenger rail services, and safety enhancement initiatives.
Each new mandate carries a unique set of challenges for FRA, especially
as they relate to implementing the high-speed rail program. Challenges
include developing written policies and practices to guide the
program's grant lifecycle process and oversight activities, and
obtaining adequate staff to oversee implementation. The American
Recovery and Reinvestment Act of 2009 (ARRA) exacerbated these
challenges by accelerating timelines and providing FRA an additional $8
billion. At the same time, FRA must continue to carry out its prior
responsibilities, including its oversight of Amtrak. While our work has
found that Amtrak has improved its financial management of operating
and capital planning activities, new PRIIA mandates and ARRA funding
could require Amtrak to heighten its improvement efforts. In light of
these issues, the Department of Transportation (DOT), Office of
Inspector General (OIG) has several audits--completed or under way--to
monitor FRA's efforts to carry out its traditional and new roles and
responsibilities.
BACKGROUND
Within the last 2 years, new legislation has been enacted with
major ramifications to intercity passenger rail in the United States.
On October 16, 2008, the President signed into law RSIA, or the Safety
Act, and PRIIA. The Safety Act is the most comprehensive new railroad
safety law in the past 30 years. In addition to reauthorizing FRA, the
Safety Act contains new mandates for freight railroads, commuter
railroads, and the National Railroad Passenger Corporation, better
known as Amtrak. PRIIA reauthorizes Amtrak and strengthens the U.S.
passenger rail network by tasking Amtrak, DOT, FRA, States, and other
stakeholders with improving service, operations, and facilities. PRIIA
focuses on intercity passenger rail, including Amtrak's long-distance
routes and the Northeast Corridor, State-sponsored corridors throughout
the Nation, and the development of high speed rail corridors.
ARRA was signed into law on February 17, 2009, to preserve and
create jobs and promote economic recovery through investments in
transportation, environmental protection, and other infrastructure.
ARRA provided $8 billion to FRA for discretionary grant programs to
jump start the development of high-speed rail corridors and enhance
intercity passenger rail service. ARRA also directed $1.3 billion to
Amtrak for capital investments. In addition, ARRA designated $20
million to DOT OIG through fiscal year 2013 to conduct audits and
investigations of DOT projects and activities funded by ARRA. In
response, OIG developed a work plan using a three-phase approach to
conduct audit and investigative work by emphasizing high-risk areas and
promptly reporting results. Between March and December 2009, OIG issued
two reports outlining the risks and challenges to DOT program offices
related to ARRA, including FRA.\1\
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\1\ OIG Report MH-2009-046, ``American Recovery and Reinvestment
Act of 2009: Oversight Challenges Facing the Department of
Transportation,'' issued March 31, 2009 and OIG Report MH-2010-024,
``DOT's Implementation of the American Recovery and Reinvestment Act:
Continued Management Attention is Needed to Address Oversight
Vulnerabilities,'' issued November 30, 2009. OIG reports and testimony
are available on our Web site: www.oig.dot.gov.
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LEGISLATION DRAMATICALLY EXPANDED FRA'S ROLE
Historically, FRA was a small agency, focused primarily on
promoting and overseeing railroad safety. FRA was responsible for: (1)
promulgating railroad safety regulations; (2) administering several
small grant and loan programs, such as the Rail Line Relocation grant
program and the Railroad Rehabilitation and Improvement Financing loan
program; and (3) overseeing Amtrak's operations and disbursing Amtrak's
annual grant funds. PRIIA and RSIA, however, dramatically realigned
FRA's role and expanded its responsibilities. Together, these mandates
call for FRA to undertake several new safety and passenger rail service
enhancement initiatives and to develop from the ground up a multi-
billion dollar high-speed rail discretionary grant program.
PRIIA Added Several New Initiatives to Enhance Intercity Passenger Rail
Service
PRIIA tasked FRA with numerous significant responsibilities--among
them the creation of a new High-Speed Intercity Passenger Rail (HSIPR)
grant program. Other new PRIIA mandates include initiatives to improve
existing intercity passenger rail service and to promote the expansion
of intercity passenger rail. PRIIA requires FRA to design a long-range
national rail plan that promotes an integrated, efficient, and
optimized national rail system for the movement of people and goods.
FRA issued its preliminary plan on October 15, 2009, and must submit
the final plan to Congress on September 15, 2010.
PRIIA also required FRA to develop performance metrics that
establish minimum passenger rail service requirements--such as minimal
on-time-performance levels and other service quality measures--and
provide a framework for improved passenger rail service. The metrics
were developed in conjunction with Amtrak and in consultation with the
Surface Transportation Board, Amtrak's host railroads, States, Amtrak's
labor organizations, and rail passenger associations. FRA is required
to publicly report performance results quarterly. Other Amtrak-related
responsibilities that PRIIA requires FRA to carry out include
monitoring and conducting periodic reviews of Amtrak's compliance with
applicable sections of the American's with Disabilities Act and
monitoring Amtrak's development and implementation of performance
improvement plans for its long-distance routes.
RSIA Highlighted and Expanded FRA's Traditional Safety Role
RSIA amended existing railroad legislation to make the safe and
secure movement of people and goods FRA's highest priority. Most
notably, RSIA requires FRA to establish a discretionary grant program,
with authorized funding of $50 million per year for fiscal years 2009
through 2013, to support the development and deployment of positive
train control technologies. FRA issued a Notice of Funds Availability,
Solicitation of Applications for this program on March 29, 2010; a
status report on positive train control implementation is due to
Congress by December 31, 2012.
RSIA also requires FRA to perform several safety-related studies.
One study will assess the risks posed to passengers with disabilities
boarding and alighting from trains where there is a significant gap
between the train and the platform. Another study addresses the risks
associated with the use of personal electronic devices by railroad
personnel while on duty. This body of work will position FRA to carry
out its role as the Nation's rail safety enforcement agency as it
undertakes increasing passenger rail responsibilities.
FRA FACES SIGNIFICANT CHALLENGES IN MEETING ITS MANDATE
The new legislative mandates present unique challenges for FRA.
Effectively implementing the HSIPR program is key among these
challenges. Specifically, FRA must: (1) assess the net benefits of
high-speed rail; (2) develop written policies and procedures for grant
management; and (3) determine staffing needs. The $8 billion in ARRA
funding exacerbated these vulnerabilities as it accelerated
implementation. In addition to implementing the HSIPR program, FRA must
balance its increased workload under PRIIA with prior legislative
requirements, including its oversight of Amtrak. While FRA has made
several steps toward meeting these challenges, it has recognized that
more resources are needed to successfully carry out its mandate.
HSIPR Success Depends on an Effective Implementation Strategy
To ensure HSIPR project grantees follow sound management practices,
FRA must develop a sound implementation strategy. First, FRA must
develop guidance for forecasting project ridership, revenue, costs, and
public benefits for high-speed and intercity passenger rail. According
to DOT's Office of the Secretary (OST), FRA has developed detailed
evaluation criteria to determine a proposed project's merit and
feasibility. However, FRA has yet to issue formal guidance for grant
applicants to use in preparing forecasts.
Second, FRA must develop written policies and practices to guide
the program's grant lifecycle process and oversight activities. We
identified certain risks associated with awarding grants without a
fully documented program implementation strategy and grant lifecycle
process. As a result, FRA delayed the awards until early 2010. However,
according to OST, FRA is still in the process of reviewing its grants
management manual for final approval and developing monitoring plans
and grant administration standard operating procedures.
Finally, FRA must obtain a sufficient number of staff with the
skills needed to oversee program implementation. To address its initial
lack of capacity to start up and effectively manage the HSIPR program,
FRA has completed a workforce assessment, which we have yet to
validate. As a result of that assessment, FRA requested and received
funding for 27 additional staff resources in its fiscal year 2010
budget. However, FRA has been slow to fill these vacancies.
ARRA's tight deadlines for spending funds have greatly accelerated
FRA's rollout of HSIPR, exacerbating program challenges. Deadlines for
obligating funds under Track 1 (``ready to go projects'') and Track 2
(``corridor development programs'') are September 2010 and September
2011, respectively. Within 10 months after ARRA's enactment, FRA issued
a strategic plan, established interim guidance, and processed all Track
1 and 2 applications, as required.
Managing Other New and Traditional Legislative Responsibilities Further
Challenge FRA
Balancing new PRIIA responsibilities with its traditional
responsibilities create additional challenges for FRA. With regard to
PRIIA, FRA must coordinate with hundreds of public and private
stakeholders to establish a national rail plan that addresses
interconnectivity with other modes of transportation and recognizes the
need for a sustainable funding mechanism. As the market for intercity
passenger rail carriers grows, tracking and reporting their performance
results could become a challenge for FRA. For example, FRA will have to
establish a standardized mechanism for collecting performance data from
multiple carriers who may have different procedures than currently used
for reporting the proposed metrics and standards.
At the same time, FRA must continue to carry out its prior
administrative responsibilities for its existing grant and loan
programs. Specifically, FRA must effectively manage the Rail Line
Relocation discretionary grant program, the Railroad Rehabilitation and
Improvement Financing loan program, and the Amtrak grant program.
Together, these programs account for 37 percent of FRA's $4.374 billion
fiscal year 2010 budget.
Effectively managing these critical rail programs in the face of
the public scrutiny of the HSIPR program will require sustained focus
and oversight by FRA and OIG. OIG has begun to shift resources to
provide the appropriate level of oversight in order to inform FRA's
efforts and monitor its progress. For example, our evaluation of best
practices for forecasting high-speed ridership, revenue, and public
benefit should assist FRA in its efforts to assess the economic and
financial viability of proposed projects and ensure Federal investments
are allocated to the most worthy projects. Our audit of the risks
private freight railroads pose to the HSIPR program should help FRA
ensure that access agreements adequately address cost, schedule, and
performance goals, and that HSIPR benefits are achieved. Finally, our
quantitative analysis of the causes of Amtrak delays will inform
efforts by Amtrak and the freight railroads to improve Amtrak's on-time
performance and clarify the relative value of investing Federal funds
to expand freight rail capacity as a means to address delays.
AMTRAK HAS MADE IMPROVEMENTS IN FINANCIAL MANAGEMENT
Our work on Amtrak's financial management is extremely relevant to
the HSIPR program, given the important role Amtrak will play in FRA's
development of intercity passenger rail service. Since we began
reporting regularly to Congress \2\ on Amtrak's operating performance
and its progress in reducing Federal operating subsidies, Amtrak has
shifted its financial management approach from implementing various
strategic reform initiatives (SRI) to establishing key performance
indicators (KPI). The KPIs appear to be a more efficient way for
management to monitor operating performance. Results of our mandated
audit on Amtrak's 5-Year Capital Planning, which we are finalizing,
also indicate that Amtrak has made significant improvement to its long-
term capital planning including a more transparent prioritization
process.
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\2\ The Transportation/HUD Division of the Consolidated
Appropriations Act of 2010, Public Law 111-117 changed OIG's reporting
requirement on Amtrak's savings from quarterly to semi-annually.
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Management's New Approach to Measuring Reform Initiatives Through Key
Performance Indicators Appears Reasonable
Since fiscal year 2006, we have reported on Amtrak's savings
achieved as a result of operational SRIs at the corporate level, by
business line, and at the route level.\3\ The SRIs were intended to
improve Amtrak's operating efficiencies and lower its dependence on
Federal operating subsidies. For example, one SRI aimed to reduce
losses through enhanced service flexibility and the outsourcing of
certain services, such as food and beverage. The SRI approach was
established to provide a comprehensive analysis of potential and
realized operating savings for the longer term provision of a more
efficient and financially feasible intercity passenger rail service.
However, as we stated in our fiscal year 2009 fourth quarter report,
Amtrak did not include any new savings from operational reform
initiatives in its fiscal year 2009 budget.
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\3\ Transportation, Treasury, Housing and Urban Development, the
Judiciary, District of Columbia, and Independent Agencies
Appropriations Act (TTHUD), 2006; Public Law 109-1 15.
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Amtrak's 2009 Strategic Guidance provided further details on
possible savings from future operational reforms through KPIs--criteria
that will measure both the efficiency and effectiveness of Amtrak's
operational and financial performance. For example, Amtrak established
cost recovery ratio KPIs to measure the proportion of Amtrak expenses
covered by revenues and ridership growth. Recently, officials told us
that because the KPIs are derived from the annual budget and Amtrak
operates to its budget targets, the KPIs provide a more streamlined way
of evaluating performance to budget.\4\ Amtrak officials also noted
that because KPIs are linked to monthly financial statements, KPIs are
tracked and updated much more frequently, allowing management to react
quicker to changes in operating and financial conditions. The updates
should also allow management to drill down into KPI detail in real-time
to determine what is driving any changes, and consequently react
quicker, rather than waiting until the next month for the next round of
financial statements. The Strategic Guidance states that KPIs will be
used to evaluate management and to ensure that leadership's attention
and effort are properly focused.
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\4\ March 31, 2010, semi-annual review.
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While Amtrak's new approach appears to be a more efficient way to
monitor and improve operating and financial performance, Amtrak has
continued to pursue improvement initiatives tied to the original SRIs.
Further, Amtrak officials stated that management will not measure the
net impact of individual initiatives because it is too difficult to
determine the incremental impact of any given initiative or project on
one metric. For example, if Amtrak's marketing department invests
additional funds to promote Acela and revenues increase for that route,
there is no clear way to determine if or what portion of the increase
is due to higher gasoline prices, deteriorating airline service, or the
marketing campaign. Instead, executives will discuss the results of
improvement initiatives, and when intended outcomes are not achieved,
they will require the relevant departments to take action to address
the targeted KPIs. If the departments achieve the KPIs, then the
improvement initiatives will be deemed successful.
Because the KPIs have only been in place for 6 months, the ultimate
success of this new approach has yet to be determined. As we stated in
our fiscal year 2009 fourth quarter report, in addition to reporting on
a semi-annual basis Amtrak's financial performance, we will track and
evaluate Amtrak's efficiency KPIs. Our Amtrak semi-annual report, which
will be issued next month, will provide more detail on our evaluation
of Amtrak's operating performance through March 2010.
Progress Has Been Made in Long-Term Capital Planning, but the Measure
of Success Will Be Determined Through Implementation
Since 1999, we have also reported \5\ on Amtrak's progress in
determining its long-term capital needs. Previous reviews by our
office, GAO, and Amtrak's OIG have looked at various aspects of
Amtrak's capital budget and requirements and outlined concerns,
including a number of which focused on Amtrak's lack of a comprehensive
long-term planning strategy with clearly defined goals, as well as a
process for monitoring performance.
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\5\ OIG Report CE-1999-116, Report on the Assessment of Amtrak's
Financial Needs Through fiscal year 2002. Issued July 21, 1999.
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In our current review, we have found a number of operational
changes that have been implemented to improve Amtrak's long-term
capital planning process, which are primarily due to legislative
requirements dictated by PRIIA and leadership from its Board of
Directors and senior management. Specifically, Amtrak has developed
long-term plans for its fleet and infrastructure, a transparent process
for prioritizing its capital needs, and guidance on conducting post-
reviews of its capital projects. However, the success of these efforts
depends on Amtrak's ability to effectively implement and sustain many
of its new policies and procedures. We look forward to issuing our full
report within the next couple of months. Our office is also in various
stages for other PRIIA mandated reviews, which are planned for issue
over the next 12 months.
CONCLUSION
High-speed intercity passenger rail is expected to greatly enhance
the Nation's transportation system. Yet meeting the goals of PRIIA,
RSIA, and ARRA will be a significant challenge, especially given the
transformation required of FRA. While ARRA was enacted to jump start
the U.S. economy, FRA's decision to move forward deliberately is
prudent and should help it make the most of its ARRA funds. Further, it
has given OIG a unique opportunity to ensure proper oversight controls
are built into the program. We have begun to position ourselves to
oversee FRA developments while continuing our ongoing and newly
mandated work on Amtrak. However, we are hopeful that Amtrak's OIG,
under new leadership, will pick up appropriate work, allowing us to
dedicate additional resources to oversee FRA's implementation of the
HSIPR program.
Senator Murray. Thank you very much.
Mr. Boardman, under Amtrak's new leadership, we've seen
some important improvements in how the railroad has been
managed, and instead of limiting its focus to getting through
each day, the management team now has a strategic vision and
has started to look at long-term planning.
Amtrak's overall capital plan and the accompanying fleet
plan reflect that new priority on strategic decisionmaking, but
Amtrak is still making separate requests for its capital plan
and for its fleet plan. If you do not get all of the funding
you've requested for fiscal year 2011, how are you going to
decide on funding between these two separate plans?
CAPITAL PLAN AND FLEET PLAN FUNDING
Mr. Boardman. I think you're referring to--basically--we're
almost a billion dollars over where the request came in from
the administration. And it's accounted for, all in capital.
We're talking about fleet, and we're talking about all the
projects that are capital-related on the Northeast corridor and
on ADA and on all the other projects that are needed. So, as
Amtrak has done in the past, and as Amtrak needs to look,
today, to the future, we look at every opportunity for us to
gain those dollars, one of them being the appropriation
process, another being--and I think the Administrator talked
about it a little bit--we are in discussion with the
administration about--either a Federal loan or even going out
into the commercial market to borrow money.
But, in the end, it all comes back to Congress, because all
capital is subsidized by Congress, in one fashion, form, or
another, just like all capital for the highway or the aviation
side is subsidized through Congress. They have a different
methodology. They have a program that provides user funds for
highways, but those user funds also are distributed to transit,
which are not necessarily--and I think we talked about it a
little bit earlier--they're not paid for by the transit rider,
they're paid for under the same structure that the highway
receives those funds and the same way that aviation receives
those funds; it all comes back to the Congress in making a
decision.
The need for Amtrak is to put on the table to Congress what
our capital needs are, and we have not been bashful about doing
that, because we need to rebuild the railroad.
Senator Murray. Okay. Well, in addition to replacing your
aging locomotives and railcars, as I talked about earlier, this
could revitalize a domestic industry for manufacturing rail
equipment and really help us focus on manufacturing jobs here
in the country. But, realizing that goal, as I mentioned
earlier, is going to require companies to have the confidence
that Amtrak has a reliable, long-term source of funding for its
fleet plan. What will it take, do you believe, for U.S.
manufacturers to believe that passenger rail equipment is a
viable line of business?
Mr. Boardman. Like that commercial on television says,
``Buy my product.'' Fund my plan.
Senator Murray. So, you need to know that there's a--that
they will need to know that there is----
Mr. Boardman. Yes. And----
Senator Murray [continuing]. A consistent----
Mr. Boardman [continuing]. There's a new----
Senator Murray [continuing]. Source of funding.
Mr. Boardman. Chairwoman, there is a new understanding
across the world today, I think, that we are in a very
different competitive environment for--not only the economy,
but for energy for the future. And every country today is
looking at how they are going to solve this problem. And rail
becomes a key part of that. We've already seen that, as a key
part of it, in terms of what the investments are with transit.
But, transit needs to be connected to the rest of the country
and there are two key elements that Amtrak brings to the table.
One is its workforce, its key competitive advantage in the
people that operate this railroad and know what needs to be
done. And the other is the connectivity across this country, up
and down from border to border and from coast to coast. This
railroad will be a key reason why this Nation can live in a
more prosperous position in the future.
Senator Murray. So, what you're saying is, if we have that
goal, as a country, and it's very clear and consistent, it will
send a message to domestic manufacturers that we're in it.
Mr. Boardman. Yes. And I think that message is already
getting there.
Senator Murray. Okay.
In the past, Amtrak has purchased rail equipment from
Bombardier, a company based in Canada. Is Amtrak currently
purchasing rail equipment or overhaul service from Bombardier,
and will it do so in the near term?
UPGRADING THE AMTRAK FLEET
Mr. Boardman. Yes. We continue to enhance our relationship
with Bombardier, with GE, and with other manufacturers across
the United States.
Senator Murray. Okay. I understand that Amtrak is still
trying to decide on the best strategy for replacing the Acela
fleet, which was originally provided by Bombardier. One option
is to purchase additional cars for the Acela fleet in order to
expand capacity along the Northeast corridor, even though these
new cars would be replaced after just a couple of years, along
with that original Acela fleet. How likely is it that Amtrak
would purchase additional Acela cars from Bombardier, before
updating all of the equipment for the Northeast corridor?
Mr. Boardman. Well, what we really looked at was that the
Acela fleet on the Northeast corridor actually covers 121
percent of its costs. So, you're actually making money on
Acela, as compared to----
Senator Murray. Right.
Mr. Boardman [continuing]. Other modes and services on the
corridor. So, we looked at that. We can improve the amount of
revenue and enhance ridership if we could extend the number of
trains that we operated that were Acela-like train sets. So,
the opportunity is for us to increase our revenues, if we can
find about five train sets that we could add to the corridor
for high-speed service.
Certainly, the Bombardier products that exist are already a
proven design, and we don't have to spend the time to go
through to test an entirely new technology to provide that
service. So, there's a great--I'm trying to find the right
word--there's a great opportunity for us to be able to do that
with Bombardier. But, we haven't made that decision. We haven't
decided that that's----
Senator Murray. Not decided.
Mr. Boardman [continuing]. What we're going to do.
Senator Murray. Okay.
In my opening statement, I talked about the fact that I'm
glad the administration is not submitting budget requests that
would guarantee the bankruptcy of Amtrak anymore. But, their
request for capital grants is still lower than the railroad's
own request, by about $500 million. What impact would the
administration's budget have on your capital investment?
Mr. Boardman. It'll just make more shovel-ready projects
available for us to do for the future, if funding becomes
available. And I--what I mean is that we have, as every State
DOT, and at--every competent operation has a list of projects
that need to be done, especially when you have a $5 to $7
billion backlog, just on the Northeast corridor.
But, there are a lot of other projects that could be done.
I know Senator Dorgan may be here, talking to me about one in
particular, in Devils Lake. So, we have opportunities, should
the money become available, to get a----
Senator Murray. On the capital----
Mr. Boardman [continuing]. Job done.
Senator Murray. What about on the operating side? I think
their request is $40 million less than yours. Will that have an
impact?
Mr. Boardman. It will not cause, if the question really is,
us to cut back services.
Senator Murray. That's what I'm asking.
Mr. Boardman. We're looking for a way that we can make sure
that those services are continued to be provided.
But, some decisions--for example, I still get messages,
from those who ride from Albany to New York City, asking,
``When are we going to return the cafe car?'' which we don't
have on there any longer. We eliminated that in order to reduce
costs.
Senator Murray. Right.
Mr. Boardman. But, it--so, it impacts us, that it's not as
convenient for people to ride the service now as it was before.
Senator Murray. Okay. Thank you very much.
Senator Bond.
Senator Bond. Thank you, Madam Chair.
Mr. Boardman, we just heard Mr. Alves testify that second
and third shifts are reducing productivity and compromising the
work that's done. We thought that--I understood that the $1.3
billion in ARRA funds were for shovel-ready projects. Were they
not shovel-ready? Was Amtrak not shovel-ready? Why have you had
to take these extraordinary steps, which apparently are more
costly and less productive?
ARRA PROJECTS
Mr. Boardman. I think all the projects were shovel-ready.
And I think that the IG did an excellent job looking at the
risks for us along the way. But, of the nine projects that he
really looked at--one of them was the Niantic Bridge, there
were two positive train control projects, and there was a
frequency converter replacement project and the Los Angeles
maintenance facility--there were the top five that they were
worried about for risk.
When you looked at the number of points--and they looked at
acquisition, environment, schedule, objectives, technology,
size, complexity, financial, human capital, management, and
fraud--what you wound up with was 10 points for each of the
first 3 that they were worried about, 9 for 4, and 8 for 5. And
when you look at the 10, what you find is the risk is really
environmental and size and complexity. The things that Ted and
his staff found is it's costing us more, as it does in every
capital area, when you try to get it done as quickly as we were
really trying to get it done and you had to put on the second
or third shift.
Senator Bond. So, that was a mistake, trying to put the
time deadline on it. That had----
Mr. Boardman. Well, if----
Senator Bond. That was a mistake, in terms of cost,
productivity. So, that is a signal not to put timelines on it.
I would hope that the requests you have would have reasonable
timelines that are achievable. And I didn't have any----
Mr. Boardman. Absolutely. We agree with you.
Senator Bond. I didn't have anything to do with that bill,
so I can't speak to that.
You've mentioned you're taking a look at different types of
funding for Amtrak. And you mentioned, as it--high on the
priority list, borrowing in the private market. Correct me if
I'm wrong; if you borrow, that means this budget--this
subcommittee's budget will have to pay the interest costs and
the debt service every year. So, that will really be a charge
on this budget.
Are there any dedicated sources of funding that you're
looking at, outside of putting Acela-type trains on, that
generate a profit, making things profitable that will give you
the money you need?
Mr. Boardman. No.
Senator Bond. Thank you----
Mr. Boardman. All capital comes from this--from the Federal
Government.
Senator Bond. Okay. Well, I would urge you to find out ways
to emphasize that--what is profitable, and de-emphasize that
which is not profitable, because we are up against the wall, as
you probably heard me say, earlier.
Mr. Boardman. None of it is profitable, Senator.
Senator Bond. Okay. Well--but, it has to be less costly.
Right now----
Mr. Boardman. And that is happening. But, it's not----
Senator Bond. Yes. Well, it's not----
Mr. Boardman. Even if it----
Senator Bond. But----
Mr. Boardman. Even if it's less costly, though, sir, it
doesn't mean we can pay the capital with it. It means we can
pay the operating. We----
Senator Bond. Well, it's--we----
Mr. Boardman. We----
Senator Bond. They come out of the same pot of funds. If
you're looking here--doesn't matter whether you call them
capital or operating, your capital is going to compete with
your operating, which is going to compete with housing.
Let me turn to Mr. Alves. This is sort of a two-part
question.
I know you're new to the office at--of inspector general.
We welcome you. The--in 2009, Amtrak outlined a strategic
guidance document, and I'd like to know how it is being
implemented. And to what extent are Amtrak managers or others
being held responsible for achieving the key performance
indicators that have been developed? And are they affecting pay
and promotion?
Mr. Alves. I'm not sure I can fully answer that question,
but I'll do my best.
The strategic guidance identifies the key things that
Amtrak is trying to achieve. And Amtrak has been taking steps,
under a new performance measurement system, to develop
performance measures and goals for its key executives, and to--
and then to flow those through the system to subordinates to be
able to----
Senator Bond. Are there--is there tie-in between pay, or--
is there any performance bonus for those who meet it or
penalties for those who don't?
Mr. Alves. I'm not sure about a bonus, but I do know that
the rating and the pay is going to be tied to those measures.
Senator Bond. All right.
Ms. Barr, welcome. You have spoken about the problems that
apparently came from putting too much money, too many
requirements on FRA. In other words, you were--I think I
understood you to say that a bunch of money was dumped on them
with a bunch of requirements that were impossible to meet. And
that's why there have been failures to achieve what is expected
from FRA. Is that a fair assessment?
ROLE OF FRA
Ms. Barr. Yes, I think the assessment, and the point that I
really want to make is, looking at FRA and what its traditional
role really was, was a small regulatory agency that's been
asked to transform into a large grant-making organization. So,
not only do they have to issue their own grants, develop their
own internal policies for good, solid project management and
oversight, but they have to oversee a larger grant operation on
behalf of Amtrak.
Overlay that with all of the new safety requirements that
came out of the Safety Act as it relates to positive train
control, as it relates to the Americans with Disabilities Act,
and a whole host of other things, that is a big challenge.
That's a hugely expanded role. And I think if I had to
characterize what it's like, it's like needing to design and
implement at the same time. That's very difficult.
Senator Bond. Are they able to handle the resources and the
demands that they are expecting now? Are they still have a--are
they able to handle it?
Ms. Barr. I think they're on their way.
Senator Bond. Okay.
Ms. Barr. They've requested the FTEs, but they're nowhere
close to where they need to be.
Senator Bond. Okay.
And finally, who's going to--with the DOT IG, Amtrak OIG,
how are you going to relate the roles of the two IGs?
Ms. Barr. Okay. I can start first. Ted and I had
discussions about this, as well. We're thrilled that he is in
place and can pick up, traditionally, what--where we've been
focused, on some of the Amtrak issues. The way--I guess I would
divide the responsibilities. I think it laid out pretty well
the challenges that FRA has before it. And I think you,
Senator, indicated this National Rail Plan is something that
needs to be looked at very, very closely.
Senator Bond. That will be your----
Ms. Barr. That would be something we would look at. We
would look at all of the other mandates, the requirements, how
well they're overseeing project oversight. And we would hope
that the Amtrak IG can continue doing what he's doing, looking
at some of those internal policies and practices and management
challenges, going forward, with their new requirements.
Senator Bond. Okay. You've got the FRA ball. Mr. Alves,
you've got the Amtrak ball.
Mr. Alves. I would like to say a couple words about this,
if I could. I agree with what Ann is saying. And the Amtrak
inspector general, I think, has some very capable people, and
has done some very good work. But, I think that our focus needs
to be on the major challenges that Amtrak faces and its
strategic goals that are outlined in that strategic guidance.
And we have put together a new strategic plan that builds on
that strategic guidance and, basically, directs us. Our goal is
going to be to spend much more of our resources addressing the
big, major issues. And so, I think that will fit with what
you're looking for.
Thank you----
Senator Bond. We look forward to your sharing with us. My
apologies, Madam Chair, to you and my colleagues.
Senator Murray. Senator Lautenberg.
Senator Lautenberg. One of the things that has been talked
about with a degree of frequency, and that is, searching for
new corridors, where we can bring rail--good quality rail
service to these places.
Where would we--how would we fund the equipment, the
tracks, the infrastructure, we--when we can't handle the
equipment needs for Amtrak, as it exists? We're talking about
other corridors. How is that going to be paid for?
Mr. Boardman. No, no. Directed to me, Senator?
Senator Lautenberg. Yes.
Mr. Boardman. It's good to see you.
Senator Lautenberg. Please.
FUNDING CORRIDORS
Mr. Boardman. First of all, I think there are a lot of
those corridors that we can extend the use of our existing
equipment. For example, Springfield, Mass., to New Haven, for
example--that's one of the things being funded. And, certainly,
there has been a lot of activity about how that'll get financed
for the future. When we extended the corridor to Lynchburg,
Virginia, we were able to use equipment that was available that
extended from the Northeast corridor to provide that service.
But, there are areas, as you say--for example, one of the
corridors that I think has great promise is the Milwaukee-to-
Madison corridor, for example, for the future. That will
require the rebuilding of the tracks, and it will require
additional equipment. And you have a State that's made a strong
commitment, in regard to that, being Wisconsin, and--both in
terms of equipment that they would buy and pay for--in some
cases, on their own--and also applying for and rebuilding the
line between Milwaukee and Madison, or at least part of that
line that they own.
And I think that's where the key for PRIIA came, was that
the States would take a leadership role in those corridors, for
the future, not only with adding tracks and facilities, but
also with the equipment. We're there to help them, but they're
going to have to take a role in that process and also use the
Federal money that's become available.
Senator Lautenberg. The question that arises here--you
know, I look at this, and one thing that we all know, here,
whether we like to look back and talk about all of the years of
neglect in investment that we made--I mean, if you compare what
Amtrak--what's happened with Amtrak on an annual basis, I think
it runs something over a billion dollars a year, over the--
since the 1970s, when it became Amtrak, as we know it.
And when you look in other places and commitments that are
made--$10 billion a year in Germany for--get--to get high-speed
rail to--going. And they did it. And it doesn't do us a lot of
good to beat our chests here about that. But, the fact of the
matter is, this has been a case of sheer neglect on our part,
to step up to the plate.
So, when you look at these amounts of money, this isn't
something that is coming in out of the blue. It's trying to
make up for some lost time.
Mr. Boardman. Well said, sir.
FLEET MAINTENANCE
Senator Lautenberg. And, you know, when we look at, for
instance--I want to ask a couple questions about the equipment.
You were--you pretty well gave an endorsement to the
continuation of a--buying Bombardier equipment.
And how about the maintenance costs for Bombardier, how
about the durability of the equipment, because I've heard,
chatting around, that the maintenance costs right now are
outrageously high. Is that not true? That's--is that because
the equipment was over--has been overworked? Or----
Mr. Boardman. Well, right now--and I don't mean to
interrupt you, if you're----
Senator Lautenberg. No.
Mr. Boardman. Right now, we're actually rebuilding them at
the midlife--it's 10 years. So, the cost, right now, is
somewhat higher. We expect these trains have to last 20 years.
One of the things we did with the fleet plan was we began
to recognize that there was a commercial life and there was a
useful life. There were no manufacturers, other than
Bombardier, in the United States that really built the heavy-
duty, long-lasting, intercity rail cars in the United States.
So, we really had to have a spec on regular--I'm kind of mixing
terms here--but, we're--we really had to have a spec that was
heavy-duty for the future that would drive domestic
manufacturing.
Part of the reason that we're committed to Bombardier is
because we're committed to Bombardier. We have 20 train sets
out there that are operating, and I want to get things done and
keep things moving. And I truly believe that--right to my core
that we're sitting on the precipice of huge increases again in
fuel cost, and our need to deliver for our Nation and for the
community is going to mean that we need to move faster.
Somebody said--asked the question earlier, how long does it
take to get these cars in here? Three years? Maybe, if we push
them, 2 years? We're at $80 a barrel. We're going to be headed
to 100, at least by some estimates, and maybe beyond that. It's
when that happens that you begin to see a total breakdown in
the aviation business model for short distance. And those are
the kinds of things that railroads can provide in the most
efficient manner.
So, I don't want to say that we have to buy Bombardier for
the high-speed rail sets. And I want a new generation of high-
speed rail that's open and competitive. But, right now, in
order for us to really move things the way we think we need to
move them, we need the relationships with Bombardier. And we
also need relationships--and we are improving our relationships
with General Electric, for example, that we have--over 200 of
our diesel locomotives are General Electric locomotives that--
we're improving our relationship with them so that they will
become longer-lasting, and we're looking at the potential for a
new-generation tier-3----
Senator Lautenberg. In the meanwhile, can we get any
acceleration of the speeds--you held out some hope there, and
made me glad for a minute; in this environment, that's pretty
hard. But, the fact is that, with new equipment, you projected
a real shortening of the trip from here to New York. The
example that----
Mr. Boardman. We believe the time savings can be improved.
Senator Lautenberg. If we--the midlife repairs that you
talked about. Does that give you the kind of equipment
advantage that in any way enhances the amount of time that we
have to go on the Northeast corridor to get to destination?
Mr. Boardman. Well, some, but it doesn't get us up to the
speed of the Acela. And it's not going to improve your
handwriting, because we need to have that infrastructure fixed,
as well.
Senator Lautenberg. We don't do old habits like that, huh?
Mr. Boardman. Yes, sir.
Senator Lautenberg. Thank you. Thank you, Mr. Boardman.
Thank you, all of you.
Senator Murray. Senator Dorgan.
Senator Dorgan. Thank you very much.
So, Mr. Boardman, thank you for being here. And Senator
Lautenberg and I were just talking about the fact that both of
us think you're doing a good job, and we were reminiscing, with
Mr. Gunn, who used to run Amtrak, who I thought was a superb
leader, as well. But, thanks for sinking your teeth into this.
This is a big challenge, because you've not gotten the
money from the Congress for capital to do what's necessary.
I was in Russia recently, and was on a fast train from
Moscow to Saint Petersburg, and I'm thinking, ``Wait a second.
Why is it there's a fast train, with faster and better
equipment in Russia than here?'' It makes no sense to me.
Well, I'm a big supporter of Amtrak. I think rail passenger
service is an important part of the transportation network. And
I think Congress just has to do better. And I know we have some
among us, here in Congress, who believe we shouldn't do this at
all, ``The private sector won't do it, it shouldn't be done.''
I'm not one of those. I think this is a very important adjunct
to America's transportation system.
Now, having said all that, and complimented you
sufficiently, let me----
Mr. Boardman. Is Devils Lake on your mind, Senator?
Senator Dorgan. Yes it is. Yes it is.
You know, you mentioned, I think that the Empire Builder is
probably one of the most successful long-distance trains in----
Mr. Boardman. Yes, sir.
DEVILS LAKE
Senator Dorgan [continuing]. On the Amtrak system. The
Senator from Washington knows that, because that's where the
Empire Builder ends up. Over a half a million people get on
that train, from Chicago to Seattle. It goes through North
Dakota. And we face a problem. As you know, we have a chronic
lake flooding that's been going on for a dozen years now in
what is called ``Devils Lake.'' It's dramatic flooding. I think
it's the only circumstance, other than that of the Great Salt
Lake, where you have a closed basin. We don't quite understand
where all this is going to go, but the Lake has increased in
height, I think, 25 feet now. And it just continues to rise.
This year, it's expected to rise again.
We have a bridge, near Churchs Ferry, on a track owned by
BNSF Railway where Amtrak, I believe, slows down to 25 miles an
hour in order to----
Mr. Boardman. Yes.
Senator Dorgan [continuing]. Go over that bridge. But, if
the water goes much higher, perhaps another foot and a half,
you won't be able to go over that bridge. And we met, in
January, about that. I'm hoping that quick action can be taken
to begin the work to resolve that issue.
I don't think you want to avoid stopping at Grand Forks,
Devils Lake, Rugby, along the route of the Empire Builder. You
get a lot of traffic in that area.
So, tell me where we are, in your minds, and what can we do
to fix this, and do it on an urgent basis?
Mr. Boardman. We've been regularly meeting, in regard to
this----
Senator Dorgan. I'm aware of that.
Mr. Boardman [continuing]. With the State and with BNSF and
so forth. And nobody has stood up and volunteered to pay for a
new bridge, for example, which is perhaps understandable. But,
it's time. It's time for all the parties to decide, what part
of this do they need to help pay for? And how do we move this
forward?
So, I would propose to you--with your blessing, I hope--
that we meet with the State, in a more structured way, with our
senior folks, to find a way to not only design and engineer,
but finance, the appropriate bridge that solves this problem
for the future.
Senator Dorgan. Now, the track and the bridge belong to
BNSF?
Mr. Boardman. They do.
Senator Dorgan. And what will the design and the
engineering cost be?
Mr. Boardman. You know what, I had it and----
Senator Dorgan. All right.
Mr. Boardman [continuing]. Was supposed to remember it, and
it's gone. But, I can provide that to you for the record.
I think the construction of the bridge was around $60
million, and usually it's about 10 percent of that, but I
think--I think it was, like, between $4 and $6 million to
design it; and then, the more--maybe more difficult part for
the future was, we had to replace some rails for the future,
and maintain it, which brought the whole thing up to, maybe, in
the $100,000-plus-or-minus category.
Senator Dorgan. You mean $100 million.
Mr. Boardman. Yes, $100 million. If it was 100,000, we'd
take care of it.
Senator Dorgan. Yes, we'd----
Mr. Boardman. Sorry. I was trying to convert, you know----
Senator Dorgan. Senator Murray----
Mr. Boardman [continuing]. Kilometers per hour to----
Senator Dorgan [continuing]. Would fund that out of
personal funds, $100,000.
Mr. Boardman. You got me.
Senator Dorgan. We seldom ever hear numbers like that.
Well, let me make a suggestion. I wonder if perhaps we
shouldn't do a conference call next. My staff has been involved
with all of these calls. I mean, we've had some weekly calls;
but, frankly, nothing is happening.
Mr. Boardman. Yes, sir.
Senator Dorgan. I mean, nothing constructive is happening,
and I wonder if we shouldn't do a conference call with the CEO
of BNSF, Mr. Rose, yourself, the Governor, the congressional
delegation; and, in that call, decide who's going to do what,
when, and how we're going to get this fixed. Because, I worry
very much that we could come up to a time here, in just a
matter of weeks, when something--structural issues or others--
could persuade you that you can't any longer run that Amtrak
train through Grand Forks, North Dakota--Devils Lake, North
Dakota--Rugby----
Mr. Boardman. You were persuasive to me, in the meeting we
had in January, that I would continue to operate----
Senator Dorgan. Well, I tried to be persuasive.
Mr. Boardman. Yes.
Senator Dorgan. But, let me suggest that we put together a
conference call of principals, first. Make some judgments there
about who's going to do what and when.
Mr. Boardman. Yes, sir.
Senator Dorgan. But, again, you want this railroad to run
well. You believe in passenger service, as I do. And I think
that the chairman of this subcommittee, I know, has very strong
feelings about it. You just heard Senator Lautenberg--nobody's
been stronger in the Senate than Senator Lautenberg. You
understand you've got a very strong supporter in the Vice
President's office.
Mr. Boardman. Yes.
Senator Dorgan. We watched him, as a Senator, spend a lot
of time on Amtrak, as well.
So, I really want you to succeed. We need to find a way to
get enough capital into this rail passenger system so that you
can make decisions in the intermediate and longer-term. It's
the only way we're going to get to where we want to be, and
need to be, to have a healthy rail passenger system that works
well.
So let me, Madam Chairman, thank you for the time.
And I'll look forward to talking to you either late today,
Mr. Boardman, or tomorrow.
Mr. Boardman. Yes, sir, Senator.
Senator Dorgan. And we'll set up that call.
Thank you very much.
Mr. Boardman. Thank you.
Senator Murray. Thank you very much.
I have one final area, and that is in fiscal year 2010,
Amtrak committed to spending $144 million on station
improvements to bring the rail system into compliance with the
ADA. The original budget request for 2011 included $281 million
for the second year of its 5-year plan for ADA compliance, but,
today Amtrak is lowering that estimate, I understand, by $50
million, because of difficulty getting the money out the door
this year. And I understand that part of that is due to the
fact that you don't own all the facilities.
But, I wanted to ask you today, Mr. Boardman, if you still
believe that Amtrak will be able to bring all of its stations
into compliance with the ADA within the next 5 years.
Mr. Boardman. I don't know that we can, Chairwoman. I'm not
happy with my organization that reduced the amount from the
$281 million down to the $231 million. And I don't yet have the
answers from them as to what we're going to do to make that 5
year deadline. If we have to drop it--$50 million right this
minute--for me to testify to you that we can deliver it in 5
years, I don't think would be the appropriate thing for me to
do.
Senator Murray. Well, I just want you to know, this is a
high priority for me.
Mr. Boardman. Yes.
Senator Murray. It's about people's civil rights. And it's
not going to get any easier in the next 5 years, so I'm going
to continue to press you on this.
Mr. Boardman. Yes, ma'am.
Senator Murray. With that, I don't believe we have any
other members that have questions. So, I want to thank all of
our witnesses for their testimony.
SUBCOMMITTEE RECESS
And I will recess this hearing until May 6, at 9:30. At
that time, we will be taking testimony from HUD Secretary
Donovan and DOT Secretary LaHood on the administration's fiscal
year 2011 budget request related to community livability and
sustainability.
Thank you very much.
[Whereupon, at 11:24 a.m., Thursday, April 29, the
subcommittee was recessed, to reconvene at 9:30 a.m. Thursday,
May 6.]