[Senate Hearing 111-]
[From the U.S. Government Publishing Office]



 
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2011

                              ----------                              


                        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.
---------------------------------------------------------------------------
    \1\ ``Amtrak's Infrastructure Maintenance Program'', September 
2009, OIG Report Number E-09-05.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \3\ ``Human Capital Management'', May 2009, OIG Report Number E-09-
03.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
              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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \3\ Transportation, Treasury, Housing and Urban Development, the 
Judiciary, District of Columbia, and Independent Agencies 
Appropriations Act (TTHUD), 2006; Public Law 109-1 15.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \4\ March 31, 2010, semi-annual review.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \5\ OIG Report CE-1999-116, Report on the Assessment of Amtrak's 
Financial Needs Through fiscal year 2002. Issued July 21, 1999.
---------------------------------------------------------------------------
    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.]
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