[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                     FINDING WAYS TO ENCOURAGE AND 
                 INCREASE PRIVATE SECTOR PARTICIPATION 
                       IN PASSENGER RAIL SERVICE 

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

                                (112-15)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                       RAILROADS, PIPELINES, AND
                          HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 11, 2011

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman

DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey        Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
TOM REED, New York                   MICHAEL E. CAPUANO, Massachusetts
ANDY HARRIS, Maryland                TIMOTHY H. BISHOP, New York
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHAEL H. MICHAUD, Maine
JAIME HERRERA BEUTLER, Washington    RUSS CARNAHAN, Missouri
FRANK C. GUINTA, New Hampshire       GRACE F. NAPOLITANO, California
RANDY HULTGREN, Illinois             DANIEL LIPINSKI, Illinois
LOU BARLETTA, Pennsylvania           MAZIE K. HIRONO, Hawaii
CHIP CRAVAACK, Minnesota             JASON ALTMIRE, Pennsylvania
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               HEATH SHULER, North Carolina
BILLY LONG, Missouri                 STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      LAURA RICHARDSON, California
PATRICK MEEHAN, Pennsylvania         ALBIO SIRES, New Jersey
RICHARD L. HANNA, New York           DONNA F. EDWARDS, Maryland
STEPHEN LEE FINCHER, Tennessee
JEFFREY M. LANDRY, Louisiana
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma

                                  (ii)

  


     Subcommittee on Railroads, Pipelines, and Hazardous Materials

                  BILL SHUSTER, Pennsylvania, Chairman

GARY G. MILLER, California           CORRINE BROWN, Florida
SAM GRAVES, Missouri                 JERROLD NADLER, New York
SHELLEY MOORE CAPITO, West Virginia  RICK LARSEN, Washington
JEAN SCHMIDT, Ohio                   TIMOTHY H. BISHOP, New York
CANDICE S. MILLER, Michigan          MICHAEL H. MICHAUD, Maine
TOM REED, New York, Vice Chair       GRACE F. NAPOLITANO, California
JAIME HERRERA BEUTLER, Washington    DANIEL LIPINSKI, Illinois
RANDY HULTGREN, Illinois             JASON ALTMIRE, Pennsylvania
LOU BARLETTA, Pennsylvania           TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               LAURA RICHARDSON, California
BILLY LONG, Missouri                 ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         PETER A. DeFAZIO, Oregon
RICHARD L. HANNA, New York           JERRY F. COSTELLO, Illinois
STEPHEN LEE FINCHER, Tennessee       NICK J. RAHALL II, West Virginia
JEFFREY M. LANDRY, Louisiana           (Ex Officio)
JEFF DENHAM, California
JOHN L. MICA, Florida (Ex Officio)

                                 (iii)
























                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................   vii

                               TESTIMONY

Broadley, John H., John H. Broadley & Associates, P.C............    11
Feinsod, Stan, Secretary and Treasurer, Association of 
  Independent Passenger Rail Operators...........................    11
Gardner, Stephen J., Vice President of Policy and Development, 
  Amtrak.........................................................    11
Simmons, Patrick B., Rail Division Director, North Carolina 
  Department of Transportation...................................    11
Szabo, Hon. Joseph C., Administrator, Federal Railroad 
  Administration.................................................    11
Wytkind, Edward, President, Transportation Trades Department, 
  AFL-CIO........................................................    11

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Mica, Hon. John L., of Florida...................................    37
Reed, Hon. Tom, of New York......................................    39
Shuster, Hon. Bill, of Pennsylvania..............................    40

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Broadley, John H.................................................    44
Feinsod, Stan....................................................    55
Gardner, Stephen J...............................................    70
Simmons, Patrick B...............................................    89
Szabo, Hon. Joseph C.............................................    95
Wytkind, Edward..................................................   106

                       SUBMISSIONS FOR THE RECORD

Bracy, Steven F., Director of Structured Finance, Ross, Sinclaire 
  & Associates, LLC, statement...................................     2
Broadley, John H., John H. Broadley & Associates, P.C., responses 
  to questions from Hon. Bill Shuster, a Representative in 
  Congress from the State of Pennsylvania........................    51
Feinsod, Stan, Secretary and Treasurer, Association of 
  Independent Passenger Rail Operators:

  Responses to questions from Hon. Corrine Brown, a 
    Representative in Congress from the State of Florida.........    63
  Responses to questions from Hon. Bill Shuster, a Representative 
    in Congress from the State of Pennsylvania...................    68
Gardner, Stephen J., Vice President of Policy and Development, 
  Amtrak:

  Responses to questions from Hon. Corrine Brown, a 
    Representative in Congress from the State of Florida.........    80
  Responses to questions from Hon. Bill Shuster, a Representative 
    in Congress from the State of Pennsylvania...................    85
Szabo, Hon. Joseph C., Administrator, Federal Railroad 
  Administration:

  Responses to questions from Hon. Corrine Brown, a 
    Representative in Congress from the State of Florida.........   101
  Responses to questions from Hon. Bill Shuster, a Representative 
    in Congress from the State of Pennsylvania...................   104
Wytkind, Edward, President, Transportation Trades Department, 
  AFL-CIO:

  Responses to questions from Hon. Corrine Brown, a 
    Representative in Congress from the State of Florida.........   113
  Responses to questions from Hon. Bill Shuster, a Representative 
    in Congress from the State of Pennsylvania...................   115

                        ADDITIONS TO THE RECORD

Capon, Ross B., President & CEO, National Association of Railroad 
  Passengers, statement..........................................   116
Hannig, Gary, Secretary, Illinois Department of Transportation, 
  letter to Hon. Daniel Lipinski, a Representative in Congress 
  from the State of Illinois.....................................   119

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                       FINDING WAYS TO ENCOURAGE
                      AND INCREASE PRIVATE SECTOR
                       PARTICIPATION IN PASSENGER
                              RAIL SERVICE

                              ----------                              


                         FRIDAY, MARCH 11, 2011

                  House of Representatives,
               Subcommittee on Railroads, Pipelines
                           and Hazardous Materials,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:00 a.m. in 
room 2167, Rayburn House Office Building, Hon. Bill Shuster 
(Chairman of the subcommittee) presiding.
    Mr. Shuster. The hearing will come to order. I would like 
to welcome everybody here this morning. Unfortunately, at some 
point I am going to have to step out. I am going to turn it 
over to the vice chair, Mr. Reed. And since I'm going to do 
that before I do my opening statement, I would like to 
introduce my distinguished panel here this morning, and again 
welcome you all. Thank you very much for coming and spending 
the morning with us.
    First, the Honorable Joseph Szabo, the administrator of the 
FRA. I am sure he will be here shortly. Stephen Gardner, vice 
president of policy and development for Amtrak, welcome. Pat 
Simmons, rail division director for the North Carolina 
Department of Transportation. John Broadley, John H. Broadley 
and Associates, P.C., thank you for being here. Stan Feinsod, 
who is the secretary/treasurer of the Association of 
Independent Passenger Rail Operators, and Ed Wytkind, who is 
president of the Transportation Trades Department of the AFL-
CIO. Again, welcome, all of you, for being here.
    Also, I would like to ask unanimous consent to put a 
statement into the record from Steven F. Bracy, who is the 
director of structured finance of Ross, Sinclaire and 
Associates. It's entitled, ``Finding Ways to Encourage and 
Increase Private Sector Participation in Passenger Rail 
Service.''
    So those are the types of things we like to enter into the 
record.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Shuster. And welcome to the administrator, Mr. Szabo. 
You have already been introduced, and thanks for coming this 
morning, we appreciate it.
    Two and a half years ago, President Bush signed the 
Passenger Rail Investment and Improvement Act, which was the 
first rail reauthorization bill in 11 years. And that bill, 
which I helped author, included important reforms in the 
operation of Amtrak, America's intercity passenger railroad.
    The act also opened the door for the private sector to 
participate in providing passenger rail service in a number of 
important new ways. For the first time, rail capital investment 
programs were established that gave States primary control to 
improve and expand intercity passenger rail service, and I am 
proud to say that the State of Pennsylvania has been doing that 
on the Keystone line, and it has been very successful.
    A pilot program was authorized to allow private-sector 
entities to operate current Amtrak intercity routes in much the 
same way that private-sector companies now compete with Amtrak 
to provide commuter rail service.
    The so-called Section 502 Program that I wrote, established 
a public-private partnership opportunity for high-speed rail 
development. Under this program, FRA solicited proposals to 
finance, design, construct, operate, and maintain high-speed 
intercity passenger rail systems within one of the 11 specific 
corridors, including the Northeast Corridor.
    Over 100 expressions of interest were submitted. And from 
these, FRA received eight credible proposals for development of 
high-speed rail corridor projects. The FRA process was kept 
completely separate from the Department of Transportation's 
high-speed and intercity rail passenger grants, funds that came 
through the 2009 stimulus bill. In my view, that was a mistake. 
Private sector participation can leverage Federal funds and 
make projects less expensive, get them built faster, and help 
keep operating costs down.
    I look forward to ways to encourage the private sector to 
participate in rail projects--design, build, operate, and 
maintaining this through financing.
    I would like to quote the chairman, who has, as we have, 
traveled the country talking about the next transportation 
bill, which will include a robust rail title, and it's that we 
need to do more with less. And as we traveled the country to 
several States and many cities talking about this, I think that 
departments of transportation around the country understand 
this, and we need to look at innovative ways to get capital 
leverage for public funds and get those public funds into the 
transportation field. And of course rail, passenger rail, is 
certainly critical to that.
    So, I look forward today to hearing our panelists discuss 
this, and of course, questions from our Members. And with that, 
I would like to yield to the distinguished ranking member for 
her opening remarks.
    Ms. Brown. Good morning, and thank you for this hearing. I 
am pleased to be here with this subcommittee meeting today to 
receive testimony on finding ways to encourage and increase 
private sector participation in passenger rail service.
    This hearing is very timely. Just last week, we saw an 
example of a great passenger rail project with massive private 
sector participation die in Florida. In fact, private companies 
from all over the world was interested in Florida's high-speed 
rail project. Yet, because our governor put politics before 
Floridians, we will no longer be the pioneers in high-speed 
rail in America.
    But we are not going to let him stop us. We will have high-
speed rail for the people of Florida. This is truly a set-back. 
Florida was awarded $2.4 billion in Federal funds to develop 
high-speed rail, including 84 new miles of track and 240 
planned miles. The first phase of this project would have 
connected two major tourist destinations, Orlando and Tampa. 
Florida's plan was going to give the United States high-speed 
rail that will finally compare with our European and Asian 
neighbors. Trains were going to reach up to 160 miles per hour 
on new tracks dedicated solely to high-speed rail. Trains will 
have reduced trip time from Tampa and Orlando from 90 miles by 
car to less than 1 hour.
    And I want to extend the remarks, because it's not just the 
time, but it's the number of people that we would have taken 
out of cars, and the pollution, and on and on and on.
    Unfortunately, despite the fact that just last year the 
Florida legislature and the governor approved appropriation 
money for this project, Florida's new governor, who won by 48 
percent of the vote, rejected the money, claiming it is a waste 
of Federal taxpayers' dollars, even though it is gasoline tax 
and not foreign sources.
    On the contrary, this is an example of Florida taxpayers' 
money coming home to them. Florida's governor is much more 
interested in politics than in creating jobs or improving the 
transportation system for Florida residents. This decision 
would do nothing to help reduce Florida's 12 percent 
unemployment rate. The high-speed rail plan for Florida serves 
as a perfect example of a successful public-private partnership 
that would have created tens of thousands of jobs--by Florida 
DOT estimate, 48,000. The high-speed rail line between Tampa 
and Orlando was going to produce public-private partnerships. 
And, in fact we had 55 creditable countries and companies 
competing for that transportation public-private partnership.
    Today's hearing will also focus on section 214 of the 
Passenger Rail Investment Improvement Act of 2008, which 
requires the Federal Railroad Administration to develop a 
program to contract out or privatize two Amtrak routes to 
freight or commuter railroads that own infrastructure over 
which Amtrak operates. I did not support this program, I did 
not vote for it. But I am looking forward to the FRA discussing 
it.
    However, I want to make it clear that North Carolina and 
Florida don't have to use Amtrak. They choose to use Amtrak. So 
I am interested in the input. And I want to be clear that the 
freight rail, if they wanted to, could offer a passenger rail 
as we speak, but the reason why they decided not to participate 
in the program was why we started Amtrak in the first place, 
because we do have the number one freight rail in the world. 
But passenger rail is something that we have to work to make 
sure that we have the support of the public and high-speed rail 
is what--where we're headed for. We have got to be able to move 
people, goods, and services.
    And so, with that, I am looking forward to the hearing.
    Mr Shuster. I thank the gentlelady for her statement. And I 
certainly understand your disappointment on what happened in 
Florida. I happened to be with Chairman Mica that day, and he 
is equally disappointed.
    But that being said, if Florida isn't able to use that 
money, I certainly would encourage the Administration to look 
to the Northeast Corridor. My friends, I don't actually live in 
that rail corridor, I live 90 miles west of Harrisburg, so it's 
not going to directly benefit me, but I believe it will benefit 
the entire country if we turn the Northeast Corridor into high-
speed rail. But----
    Ms. Brown. Would the chairman yield?
    Mr. Shuster. Yes.
    Ms. Brown. I am not disagreeing that the Northeast Corridor 
shouldn't get a part of it, but we just had a hearing in 
California, and the mayor of California, LA, was there. And the 
senator from there. So I don't know that we should be picking 
winners and losers, but there is a lot of States that would be 
interested in participating.
    And you mentioned the study. So what is the best way to do 
it is to put the money back out and let the States compete for 
it, in my opinion.
    Mr. Shuster. I----
    Ms. Brown. The one that come together with the best 
proposals and ready to hit the ground running, and put people 
to work.
    Mr. Shuster. I appreciate the gentlelady's comments, but we 
do pick winners and losers, that's what we have been doing with 
this money. And I believe that the money going to the Northeast 
Corridor, specifically to three projects that have to be done 
or there will never be high-speed rail in the Northeast, and 
that's the tunnel to Baltimore, the bridge--I believe it's the 
portal bridge from New Jersey to New York, and the catenaries. 
And $2.4 billion would go a long way to alleviate those choke 
points and those significant problems.
    So, again, Mr. Szabo, I guess I'm asking, when you go back 
to the Administration, that at least one Member of Congress 
here thinks that there can be a huge winner in this high-speed 
rail, which would grow to the rest of the country organically. 
High-speed rail, when we see it succeed in one place, people 
will clamor for it.
    So, anyway, sorry about that----
    Ms. Brown. Mr. Chairman, I do want you to know that I agree 
that we need to improve the Northeast Corridor. I am just not 
in the business of sitting up here and deciding that California 
should be left out.
    Mr. Shuster. I understand completely. And the record notes 
that, your position on that.
    We will proceed with our witnesses. I am going to--and I am 
going to encourage the vice chairman, when he is at the chair, 
to enforce the 5-minute rule with brutality. So at about 4 
minutes and 45 seconds, I will start to tap the gavel a little 
bit and ask you to summarize.
    But before we do that, I would like to yield for an opening 
statement, if he has one, the chairman of the committee, Mr. 
Mica.
    Mr. Mica. Well, thank you so much for yielding. And I will 
just take a minute to make a couple of comments.
    Two and a half years ago President Bush signed Passenger 
Rail Investment and Improvement Act, commonly referred to as 
PRIIA. And it was our first rail reauthorization in 11 years. 
Worked with Ms. Brown, Mr. Oberstar, at the time, and of 
course, Mr. Shuster to try to put some important reforms that 
were missing in Amtrak, and try to improve the terms and 
conditions and opportunities for passenger rail service across 
the United States.
    We currently--no offense to Amtrak, but basically we run 
what I term as Soviet-style passenger train system. Amtrak 
controls all of the franchises, all of the routing and service 
for passenger rail in the United States. It is done so at a 
high subsidization by the taxpayers. Last year, every single 
ticket on Amtrak was underwritten, $54.48. That's every single 
ticket. We only had about 28 million passengers. Half of those 
were in the Northeast Corridor.
    Mr. Shuster and I attempted in the legislation that was 
written to request Amtrak to look at some of the money-losing 
routes--and there are some routes that are documented, where we 
underwrite $200, $300 a ticket. Now, I know there is 
subsidization of some air service. I know there is 
subsidization of highways, et cetera.
    But there is no reason why some of the money-losing routes 
cannot be put up for private sector competition. We have seen 
models where that has been done, and there is no reason why the 
existing provisions of the law cannot be complied with. We are 
not talking about, for our labor friends, any difference in 
terms for labor. We are actually talking about, for labor, for 
employment, and for passenger service, an increase in all of 
the above. We would have more employees, we would have more 
service if we ran better routes.
    There are plenty of examples. There is German 
regionalization privatization. I met recently with one of the 
leading Japanese entrepreneurs in passenger rail service 
willing to put up huge amounts of investment, transfer 
technology to the United States, only to have an opportunity to 
provide some service.
    And our thoughts and prayers go with the Japanese people 
today, just an incredible natural disaster that they 
experienced in the last number of hours.
    But you can look to the East, to Asia, you can look to 
Europe. And you see rail passenger service, you see private 
sector innovation. I also use as an example--and don't tell me 
that you cannot make money moving passengers by rail--Richard 
Branson took two lines and when they privatized operations for 
rail service in England. He has paid a dividend the last 5 
years, and almost totally eliminated Federal subsidization of 
that activity.
    Not that I am unwilling to have the Federal Government 
underwrite some of the construction costs of the infrastructure 
and also maintain the infrastructure in the title of the 
American people, which we should do to protect their interests 
in all of this. But from an operational standpoint, I know that 
we can again attract private-sector capital if they have the 
opportunity not only to help develop, help finance, help 
construct, and also help to operate. Because they're not in it 
for the time of day, they're in it to return--to gain a return 
on their investment, which is a great motivator.
    So, I look forward to hearing ideas on how we can do a 
better job. I intend, if we don't do another rail 
reauthorization, to have one in the major transportation 
legislation, which we extended to September 30th last week with 
the help of Members on this panel and Members in the House, and 
we will have a robust provision. We will make certain some of 
the opportunities that were missed in the PRIIA legislation are 
addressed in a robust rail section. And if we can't get 
cooperation, in fact, we will very specifically direct actions 
to be taken, both to allow private competition and also to 
expand private sector investment opportunities in passenger 
rail service.
    We will drag the Congress and whoever else kicking and 
screaming into the 21st century of passenger rail service with 
private sector participation, one way or the other. With those 
remarks, Mr. Chairman, I am pleased to yield back.
    Mr. Shuster. Thank you, Mr. Chairman. And again, we will 
proceed with the testimony. And again, I am going to be brutal 
with the 5-minute clock. So I would ask you to sum up when you 
see the yellow, or when you start to hear this, all right?
    So, with that, Mr. Szabo, please proceed.

   TESTIMONY OF HON. JOSEPH C. SZABO, ADMINISTRATOR, FEDERAL 
RAILROAD ADMINISTRATION; STEPHEN J. GARDNER, VICE PRESIDENT OF 
   POLICY AND DEVELOPMENT, AMTRAK; PATRICK B. SIMMONS, RAIL 
DIVISION DIRECTOR, NORTH CAROLINA DOT; STAN FEINSOD, SECRETARY 
   AND TREASURER, ASSOCIATION OF INDEPENDENT PASSENGER RAIL 
  OPERATORS; JOHN H. BROADLEY, JOHN H. BROADLEY & ASSOCIATES, 
  P.C.; AND EDWARD WYTKIND, PRESIDENT, TRANSPORTATION TRADES 
                      DEPARTMENT, AFL-CIO

    Mr. Szabo. Thank you, Chairman Mica, Chairman Shuster, 
Ranking Member Brown, and members of the committee. As always, 
it's an honor to have the chance to come and appear before you 
today to talk about the Passenger Rail Investment and 
Improvement Act, otherwise known as PRIIA.
    In 2008, Congress passed the most sweeping piece of 
legislation aimed at FRA since the Agency was created. For the 
first time, in one piece of legislation, both parts of FRA's 
mission, safety and infrastructure investment, were addressed 
in a comprehensive manner.
    PRIIA specifically addressed three issues critical to the 
future of intercity passenger rail service. First, it addressed 
the mission of Amtrak. Second, PRIIA created a new vision of 
the investment relationship needed to deliver intercity 
passenger rail service. And finally, PRIIA addressed high-speed 
intercity passenger rail service from both the public and 
private investment perspective.
    Before PRIIA, most States had no established passenger rail 
programs, and those that did were primarily focused on existing 
State-supported Amtrak service. States had a more limited 
vision of a more robust role for intercity passenger rail and, 
many States had limited rail staff expertise.
    The good news is, because of PRIIA, parties have been 
rapidly expanding their capabilities. The public sector and the 
private railroads have come to understand the roles, 
responsibilities, and obligations that flow from public 
investments in private assets. Indeed, the States and railroads 
have reached agreements on the development of most of all of 
the major intercity passenger rail corridors where high-speed 
rail passenger service will use freight rail infrastructure.
    We are also seeing States develop projects with private-
sector investment in mind. The California high-speed rail 
program anticipates that a third of the project's cost will 
come from the private sector. And in Florida, before rejecting 
high-speed rail funding, the State was prepared to seek an 
expression of interest from private-sector consortiums on a 
design, build, operate, maintain, and finance arrangement that 
would have the private sector bear the construction and 
operating risks of developing high-speed rail service in the 
State.
    And, of course, we continue to work with DesertXpress, a 
private sector-driven project for high-speed rail in Nevada. 
So, the Secretary and I look forward to working with Congress 
to better define these structures for private investment.
    One of the specific issues that you asked to be addressed 
at this hearing is the potential for competition in providing 
intercity passenger rail service, particularly under section 
214 of PRIIA. This section would allow for a pilot project 
involving competition on up to two Amtrak routes.
    Mr. Chairman, I want to assure you that we will 
expeditiously move forward on this rulemaking. And, assuming 
that we do have the adequate resources in this budget year, 
look forward to having a notice of proposed rulemaking underway 
this year.
    Key considerations in this rule will include a commitment 
to safety, efficient service, accountability for liability, and 
a level playing field, whereby all providers of intercity 
passenger rail service are railroads, as covered by the full 
spectrum of railroad laws. We want to work with you to ensure 
that the private sector is a partner in the success of our 
high-speed rail program.
    In the State of the Union address, President Obama added to 
his bold vision for intercity passenger rail transportation. To 
realize this vision, we will need to continue to build upon the 
success of PRIIA.
    The President's fiscal year 2012 budget proposes that 
funding be made available for intercity passenger rail, and 
should be done so with the same degree of predictability and 
multi-year commitment that helps define our successful highway 
and transit programs.
    Secretary LaHood and I look forward to working with 
Congress to ensure that America can fully realize the benefits 
of rail transportation. And I will be happy to address any 
questions the committee may have.
    Mr. Shuster. Thank you, Mr. Szabo. I appreciate that 
greatly. And I look forward to seeing a schedule on that 
schedule 14, the implementation of it, because it's a change in 
policy. And we appreciate that gratefully.
    Next, Mr. Gardner, before I turn it over to you, I am going 
to step away from the dais and the vice chair, Mr. Reed, is 
going to take over. But I will be back.
    So, Mr. Gardner, please proceed.
    Mr. Gardner. Thank you, Mr. Chairman and Ranking Member 
Brown and members of the subcommittee. I am Stephen Gardner, 
vice president for policy and development at Amtrak. And it is 
a pleasure to appear before the subcommittee today to talk 
about increasing private sector participation in intercity 
passenger rail.
    On a personal note, this is also a homecoming for me. I 
began my congressional staff career on the Hill as an intern 
for this subcommittee in 2001. So it's a real pleasure to be 
here, and thank you for your leadership on rail issues for all 
these years.
    The two and a half years since the enactment of PRIIA have 
been an extraordinary time for Amtrak and intercity passenger 
rail service. I would like to share with you what Amtrak has 
accomplished during this time.
    First, Amtrak's ridership and revenue have both increased 
to record levels. This year's ridership is running 6 percent 
above last year's record ridership, and has recently been 
trending higher still. Our $2.5 billion in revenue in fiscal 
year 2010 set another record, and ticket revenue in the first 5 
months of fiscal year 2011 are running 11.3 percent higher than 
last year. This continues a growth trend which has made 7 of 
our last 8 years record years for revenue and ridership, giving 
us the highest passenger rail cost recovery ratio in all of the 
United States.
    Meanwhile, Amtrak's on-time performance has increased from 
71 percent in fiscal year 2008 to 82 percent last year. And our 
Acela high-speed rail service, North America's only high-speed 
rail trains operating at 150 miles an hour, celebrated its 10th 
year of success this year. Together with our State partners and 
the FRA, we have improved nearly every aspect of our system, 
and we are very proud of the progress we have been making on 
behalf of the American people.
    We have worked diligently to also fulfill all of our PRIIA 
requirements, meeting or beating all of our deadlines. And more 
about that can be found in my written testimony.
    And focusing on the topic of this hearing, I believe it's 
helpful to consider the historical backdrop regarding the 
private sector's role in intercity passenger rail service 
before and since the creation of Amtrak. The reason Congress 
created Amtrak in 1970 was that the operation of intercity 
passenger trains was no longer viable by the private sector.
    Responding to requests from the private railroad, Congress, 
in the Nixon administration, considered a number of 
alternatives for preserving intercity passenger service, but 
ultimately decided to create predominantly a publicly owned 
company, Amtrak, to operate an inter-connected network of 
routes benefitting from nationwide marketing, support services, 
and equipment.
    Amtrak initially contracted with private railroads, 
actually, to operate these trains. But Congress quickly decided 
this approach was too costly, and did not provide sufficient 
control to ensure acceptable levels of service. So the law was 
changed to require that Amtrak operate and directly control its 
operations, but still allowed Amtrak to use the private sector 
when appropriate.
    Today, Amtrak purchases nearly $1.5 billion in goods and 
services from the private sector, from cleaning and mechanical 
services to commissary management and part supply. Further, 
with our State partner routes, States can and do contract with 
private companies to provide services other than train 
operations, as you will hear from Mr. Simmons today.
    Amtrak has also been pursuing partnerships with the private 
sector. We formed a consortium with SNCF, the French national 
railroad, and Bechtel, an international engineering company, to 
pursue the now-halted Florida high-speed rail project, in fact. 
We have also been reaching out to the leading high-speed 
railroads of the world to give us feedback on our vision for 
high-speed rail development in the Northeast Corridor.
    As the committee knows, PRIIA contains several provisions 
to facilitate increased private sector participation in 
passenger rail. Utilizing the private sector for intercity 
passenger rail is not a new idea. And while Amtrak is the 
country's national passenger railroad, Amtrak does not have an 
exclusive right to operate intercity passenger trains. Since 
Amtrak's inception, private companies have initiated operation 
of more than a dozen intercity passenger rail services. Most 
have ceased operations after a short period, due to financial 
problems. Most noteworthy is the original Auto Train 
Corporation, begun in 1973, but entering bankruptcy in 1981, 
after which Amtrak took over the operation in 1983.
    Amtrak generally supports these efforts to augment today's 
current network, and is presently working with several private 
companies that wish Amtrak to help them in operating additional 
services, including the proposed Greenbrier Express, serving 
West Virginia.
    One of the important issues to consider here is access 
rights, and Amtrak's access to the national system. These 
rights ensure Amtrak's ability to operate over freight rail 
lines and regional transportation authorities, and they were 
given in exchange for a relief of the private rail--to operate 
their own passenger trains.
    Those that would seek to transfer these rights now, 40 
years after that original deal, face, I think, steep opposition 
from the Association of American Railroads and other private 
railroads that agree that this deal was created to create 
access for the public, not for private sector access to their 
assets.
    Future efforts to encourage private sector involvement in 
investment in intercity passenger rail should take into 
consideration this point and two others. First, private-sector 
investment is not a silver bullet that ensures success. 
Competition can reduce costs, but it can also lead to 
fragmentation of service, and elimination of network 
efficiencies. Most of the world's passenger systems are 
operated by State-owned railways.
    In conclusion, renewed private-sector interest in passenger 
rail is a welcome development. We are not afraid to compete in 
this market. But competition requires a level playing field. 
And if other companies wish to operate in this service, they 
must be subject to the same laws and follow the same rules that 
Amtrak does. Thank you very much, Mr. Chairman.
    Mr. Shuster. Thank you, Mr. Gardner.
    Mr. Simmons, we will move on to you.
    Mr. Simmons. Thank you, Mr. Chairman, Ranking Member Brown, 
and members of the committee, for the opportunity testify 
today. My name is Patrick Simmons, I am director of the rail 
division with the North Carolina Department of Transportation. 
I also serve as a member of the PRIIA section 209 State working 
group, and the section 305 next generation equipment committee.
    Today I speak on behalf of other States through the 
American Association of Highway and Transportation Officials. 
AASHTO represents all 50 State departments of transportation, 
as well as the District of Columbia and Puerto Rico.
    My boss, Secretary Eugene Conti, serves as chairman of 
SCORT. State-supported services not only have the most robust 
growth in ridership and passenger revenues across the country, 
they are also the Nation's laboratory for innovation. And 
States take the lead in implementing the newly created high-
speed and intercity passenger rail program. It is through 
States that opportunities for public-private partnerships will 
grow. States strongly support the need to fund Amtrak and to 
provide for a national intercity passenger rail network.
    States also want to provide efficient, high-quality 
mobility for our citizens. And we recognize that to accomplish 
this goal will require many public and private partners.
    Section 209 of the PRIIA is the requirement that Amtrak 
work with States to develop a transparent cost-accounting 
model. It places Amtrak in an usual position of transparency 
similar to what a government agency would have, but in a 
private sector competitive arena, it also means that they 
reveal proprietary information. That's a point of opportunity.
    It also means that, of--the 36 trains that have 
historically been operated and paid for by Amtrak will now 
become State-supported. States do need a consistent budget 
planning process, so that we can provide for the appropriate 
cost of operation, no matter what the components are.
    Some examples of innovation in North Carolina are our 
municipalities own our stations. We contract with Amtrak for 
operation. On one of our trains we provide equipment. That 
equipment is maintained through a third-party operator. For 
stations that do not have the ridership to support full-time 
Amtrak staffing, we also contract for a third party operator to 
man those stations.
    In Maine, the northern New England passenger rail authority 
contracts out in food and beverage service and turn-around 
maintenancing. In California, through the Capital Corridors, 
they have opted out of the Amtrak call reservation system, and 
CalTran not only owns their own equipment, but they jointly own 
a mechanical facility, as well. There are other examples around 
the country of partnerships that include third-party 
operations.
    Stephen spoke earlier about one of the areas where Amtrak 
does have a birthright, an advantage, and that is, of course, 
the right of access. In addition to that is the pooled 
liability insurance. Those are issues that any operator that 
wants to get into the business will have challenges with.
    Mr. Chairman, I look forward to responding to any questions 
this committee may have.
    Mr. Reed. [presiding.] Thank you, Mr. Simmons. Move on.
    Mr. Broadley, please.
    Mr. Broadley. Mr. Chairman, Madam Ranking Member, I would 
like to thank you for inviting me to participate in this 
hearing. I am John Broadley, and I have been working in the 
vineyards of rail reorganization since 1975. My resume 
basically shows that I have worked through the Conrail, the 
Amtrak, I have litigated train cases for Amtrak back in the 
1980s.
    But I am here this morning to outline for the committee 
some of the approaches to the privatization of rail passenger 
service that have been adopted in Europe, specifically in 
Britain and Germany. I think international experience can shed 
some light on alternatives that are available to us in the 
United States.
    First, we need to establish comparability of conditions. 
U.S. passenger rail operations fall into two groups. The first 
is a group of low-frequency and relatively slow passenger 
trains that operate predominantly on freight-owned lines. Most 
of Amtrak's long-distance trains fall into this category. For 
example, the Washington-to-Chicago service. The second is a 
group of high-frequency train, and relatively fast trains that 
operate primarily on the Northeast Corridor. Operating economic 
characteristics for these two groups of trains are very 
different.
    And I want to focus on the Northeast Corridor passenger 
services, because they present economic and operating 
characteristics that are similar to those in several western 
European countries. The attachments to my written testimony 
summarize these similarities.
    First, the Northeast Corridor has a relatively high 
population density. They have major cities spread out along the 
corridor. Second, most of the population centers along the 
Northeast Corridor have good public transportation systems 
serving their city-center rail stations. Again, that is 
comparable to the European situation. Third, the Northeast 
Corridor is heavily used for both intercity and commuter 
operations. Many European lines are under the same 
circumstances.
    Again, attachments two and three to my written testimony 
show the passenger density on the Northeast Corridor, and 
compare it to passenger density on European lines. And you will 
see that the Northeast Corridor ranks very high. That's both in 
terms of passenger route kilometer and in terms of passenger 
kilometers per route kilometer.
    Fourth, the NEC is publicly owned or controlled, and is 
predominantly a passenger facility. This is another point of 
commonality with the European system. And finally, long-
distance passenger services on the Northeast Corridor, the 
Acela and the Northeast Regional Service, are within striking 
distance of financial viability on what we call an above-the-
rail basis. Again, this is comparable to the European 
situation.
    The--in--prior to 1974, British Rail was owned and operated 
and integrated--vertically integrated railroad. British Rail 
owned the infrastructure, operated the infrastructure, ran the 
trains. The same situation prevailed in Germany.
    In the early 1990s, the British Government undertook a 
root-and-branch restructuring of the rail system, in which they 
transferred the infrastructure to an outfit called Rail Track. 
They transferred the equipment to a group of leasing companies, 
which generally are referred to as ROSCOs, and they put out 
each of the major routes, passenger routes, to competitive 
bidding by passenger operating companies. The freight business 
was split into a number of separate companies.
    The basic structure established in 1994 continues to exist. 
There have been some changes in the players. The Rail Track, 
which received the infrastructure in 1994 morphed into what 
they call Network Rail now, which is a semi-private/semi-public 
entity that operates on a non-dividend-paying basis.
    The franchising responsibility is now lodged with the 
department for transport. And the franchising is done on a 
leased subsidy basis. All of the lines require subsidy. And the 
decision is made--other things being equal--on the basis of the 
required subsidy. Further details are included in my written 
testimony, and I would be very pleased to respond to questions.
    Mr. Reed. Thank you very much.
    Mr. Feinsod?
    Mr. Feinsod. Thank you, Mr. Chairman and Ranking Member 
Brown. I am here to represent the Association of Independent 
Passenger Rail Operators. This association represents 
companies, U.S. and international, rail operators in the 
private sector who have the qualifications, interest, 
experience, and commitment to operate and maintain passenger 
railroad operations in the United States. This group is already 
doing that for that segment of the railroad industry that we 
call commuter rail, which has been opened and is subject to 
competition.
    AIPRO supports the innovations introduced in the PRIIA, and 
was formed in recognition of the fact that PRIIA states that 
the States themselves should have the freedom to choose the 
passenger rail operators. This law created a first-ever program 
to support the States, to revitalize high-speed and intercity 
passenger rail, and to expand competition, giving States a 
greater role in passenger rail decisionmaking.
    In line with the President's ideas put forward in the State 
of the Union, we believe that America should seek a passenger 
railroad network that meets evolving world standards. Our 
member companies focus on service delivery, efficient use of 
resources, and sustainable business models. We are prepared to 
engage in a new era of passenger rail public-private 
partnerships, and to expand competition.
    We support the right of freight railroads for a fair return 
on their private investment under models similar to the public-
private partnership arrangement, to improve assets on the 
capital corridor. We believe the surface transportation act 
should contain a rail title, and it should maintain the robust 
investment in our freight network, and stimulate cost-effective 
passenger rail expansion.
    We emphasize the rights of labor, and those that are 
stipulated in PRIIA should be fully honored.
    The public benefits of adding improved rail capacity are 
many. We must establish a vibrant passenger rail system. We 
propose that in all elements of this reform, access to track 
and fees for that access should be on a negotiated basis. We 
believe the new rail title should be deficit-neutral and 
success-oriented, a program that cuts red tape, streamlines 
project delivery, and increases private investment, encouraging 
open and fair competition.
    As a direct outgrowth of PRIIA, we propose to reorganize 
the current approach to regional service with a new intercity 
State corridor program. This will lead to tangible improvements 
in services in the most productive corridors, and will prove 
that passengers will be attracted in large volumes to a high 
level of service that begins to meet international standards.
    Competition involving private-sector companies offers the 
advantages of bringing innovation, capital investment, 
efficiency, energy, and enthusiasm to the expansion of our 
passenger railroad services. We know that expansion will result 
from competition, and we will create new and expanded numbers 
of middle-class, private-sector railroad and related industry 
jobs, helping to reverse a decades-old reduction in railroad 
employment. We have seen this happen in markets overseas.
    So, we recommend the following reforms. Revise PRIIA to 
create an intercity State corridor program, which encourages 
competition and private sector involvement. The new program 
should be based on the German model, and provide the States 
with the option of managing their intercity corridor service. 
We would also recommend a special initiative for the NEC.
    The capital grants that are available from PRIIA follow the 
principle in highway and aviation programs that the Federal 
Government should provide infrastructure support and 
guidelines. This was a good first step. Now we should authorize 
an intercity State corridor program.
    We would propose a Federal commission on intercity rail 
public-private partnering, and then a transfer of corridor 
service to a budget-neutral program that permits the States to 
secure the funds that are now being used in those corridors 
that are going elsewhere. We would define a new method of 
establishing and allocating the costs, and invigorate the 
system with competition, as we have seen in Europe and Asia.
    Thank you. My written statement says more things.
    Mr. Reed. Well, thank you very much. I know the time gets 
you at times. We will move on.
    Mr. Wytkind, please?
    Mr. Wytkind. Thank you, Mr. Chairman and Ranking Member 
Brown, for inviting me and having the labor movement appear 
before the subcommittee.
    Our 32 member unions have a long history of supporting 
infrastructure investments in this country, and making our 
transportation system the best it can be in the world. Today, 
we believe--and we want to spend some time on this--there is a 
great story to tell about Amtrak and its employees, a story 
that can't be ignored as the committee considers ways to 
propose new advancements in passenger rail policy in this 
country.
    Amtrak and its employees are performing better than at any 
time in the history of the company. As we heard from Mr. 
Gardner, the company is growing monthly. It's operating in the 
black on the Northeast Corridor. It's expanding and 
modernizing, and is already the premier provider in this 
country, in fact, in North America, with the most qualified 
workforce to handle the growing demand for high-speed rail 
across the country.
    We believe those who seek to slash Amtrak's budget, as we 
have already seen in this Congress, or privatize services, are 
setting the company up to fail at the very time it is on course 
to finally find stability and increase ridership. It is up to 
Congress, together with the Obama administration, to foster and 
not derail the continued transformation of Amtrak.
    We now have a President who has made it a priority to build 
and expand passenger rail in this country. His recent budget 
calls for billions of new funding for Amtrak, as part of a 
broader vision for passenger rail.
    Regarding the private sector's role, its role in building, 
maintaining, and operating the Nation's passenger rail and 
freight transportation system has always been significant. Out 
of our 32 member unions, we represent many private-sector 
unions. We are not just a public-sector union organization. And 
we believe that private sector plays a crucial role, one that 
we are working to enhance in manufacturing, as well, the goods 
and equipment needed to operate and maintain the system. 
Without a strong well-capitalized private sector in our 
transportation industry, America will not remain the world's 
strongest economy.
    We are not opposed to private sector participation. In 
fact, there is plenty of it today. But we are opposed to 
breaking up Amtrak. It is not the answer, if we plan to 
maintain a national passenger rail network. Those who believe 
that privatization is a panacea are ignoring the fact that, 
under this model, service would only be provided where it is 
profitable to do so for private investors.
    None of the world's finest passenger rail systems operate 
with this model. In fact, no transportation system in any mode 
of transport anywhere in the world operates free of subsidy. 
The idea that rail systems around the world are profitable and 
operate independent of government assistance is pure fiction.
    Look at the UK. I was actually stunned to hear the UK model 
as a citation for progress in the future. It did not increase 
efficiency when that privatization experiment was tried in the 
early 1990s. In fact, it unleashed a torrent of problems: 
higher fares, massive layoffs, maintenance and safety problems 
that culminated in the Stafford Rail crash in 1996; 31 lives 
were lost. And only a decade later, British Rail privatization 
was scrapped.
    Back home, Amtrak has been forced to limp along from one 
budget crisis to the next. The fact is that no public or 
private corporation can operate when it doesn't understand what 
its next year's budget is going to be.
    Let me also state that if entities other than Amtrak are 
going to provide passenger rail service, it must be ensured 
that the employee protections and statutes, such as Railroad 
Retirement or the Railway Labor Act, are applied to all the 
workers in the rail industry and their operators. It is wrong 
to allow private-sector competition, and then leave behind an 
unlevel playing field.
    In addition, we would argue that Davis-Bacon prevailing 
wage laws, as they have for decades, should continue to apply 
to all construction work that is funded with Federal 
assistance.
    And I have got a question of those who are talking about 
privatizing Amtrak. Have you asked the freight railroads what 
they think? We are aware of significant misgivings that the 
freight rails have that would allow other companies access to 
their private rail tracks, and they have publicly stated that 
they embrace their relationship with Amtrak as the main 
provider of passenger rail in this country on their private 
network.
    Lastly, investing in passenger rail can also boost our 
manufacturing industry. With strong Buy America requirements, 
Federal intercity passenger and high-speed rail funding can 
boost this important middle-class sector. These investments 
will create jobs here in the U.S. and not abroad. And this 
funding stream will provide the stability for private 
manufacturers to set up operations because they see a long-term 
market capability.
    I would just finish with the following proposition. Too 
often in Washington time is wasted creating new programs, 
rather than perfecting the ones we already have. This committee 
has a long history of making sure the transportation system has 
the capital and the operating support that it needs to succeed. 
And we believe, without a Federal vision, with long-term 
funding commitments that ensure a stable fully capitalized 
Amtrak operation, the goal of boosting private-sector 
participation will never be fully realized.
    We thank you for the opportunity to testify, and look 
forward to your questions.
    Mr. Reed. Thank you, Mr. Wytkind. I believe at this point 
in time we will move into some questioning of the witnesses. 
Ms. Brown, I will yield to you first.
    Ms. Brown. Thank you very much. And thank you, Mr. 
Administrator, for being here. And I want to thank you for your 
leadership, working with Florida and with the Secretary, Mr. 
Ray LaHood, which is really--he is a bright spot in the 
administration, and really has worked with Florida. And I know 
we have learned some lessons from that.
    And as we move forward, I guess I am concerned that as we 
develop high-speed rail, I mean, when you have communities like 
Orlando, Tampa, Miami, we need to have a model that they can 
come together and work with us in a way--I mean this is a 
lesson that we can take to the rest of the country, because 
let's say if the State doesn't want to participate, how can we 
have a program that the communities come together, and we can 
work with them in order to get commuter rail, or to get high-
speed rail?
    I know that you can't do it without some participation from 
the State. But the way the proposal is written, it requires a 
great participation from the State. So, as we go forward, we 
need to think about how we can work private-publicly, and 
move--because when you get 100 percent of the funding, and you 
got 90 percent Federal funding, gasoline tax, and you got 10 
percent guaranteed--and, in fact, I want to have submitted in 
the record the study that we paid for, as soon as we can get it 
from the State of Florida, indicating how, even in the first 
year it would have made a profit.
    Can you respond to that?
    And then I have some other questions about Amtrak. And I 
really get, you know, challenged constantly about the 
discussion about privatizing Amtrak when clearly we know that 
for 8 years we zeroed out the funding for Amtrak, and it was 
all we could do to just hold on while we got the opportunity 
now to move forward with passenger rail.
    And, in fact, I went to Salt Lake City, Utah 2 weeks ago. 
And, I mean, they are moving 40,000 people a day in commuter 
rail. And so we've got to figure out how to move people. You 
know, when people say, ``Well, we just need another lane on I-
4,'' we got 8. One more won't help us. So help me.
    Mr. Szabo. Well, thank you, Congresswoman. And, if you 
would, please make sure that everybody knows I was late getting 
in here because we were discussing some other business. So you 
were taking advantage of the opportunity.
    To your first point about trying to find a mechanism for 
local communities to come together, the biggest challenge here 
is that PRIIA, by law, actually states that it has to be a 
State or an entity established by the State. So that becomes a 
little bit of the challenge that we have to work with, in 
finding a legitimate legal means for communities to come 
together to actually make application or execute delivery of a 
project.
    Ms. Brown. Would Amtrak meet that criteria, in that they 
already have certain criteria that they can move within the 
State? Or could some of these private rail companies, you 
know--if they were interested in--let's say FEC says they're 
interested in doing passenger rail from Jacksonville to Miami, 
would they be eligible for----
    Mr. Szabo. Obviously, it always depends on the legal 
structure of the body. There certainly is a chance that an 
agency might be eligible, assuming that they were established 
under State statute. I mean, you know, counsel would have to 
review that. But it would sound like the door could be opened 
there. Clearly, there could be ways for Amtrak to be that body 
under PRIIA.
    But I would come back to a point that you also made in your 
comment, that it is close to impossible to do without a level 
of engagement by the State DOT. You know, while there is a way 
for the State DOT to hand it off, there is no way to entirely 
erase the involvement of the State DOT.
    Ms. Brown. My time is almost up, but there is a chart. Put 
the chart up, please. Can they put it up? There is a chart that 
shows, over the past 60 years, that the U.S. has invested $1.3 
trillion in highways and $84 billion in aviation, but only $37 
billion in passenger rail. Meanwhile, countries like Germany 
invested $104 billion in passenger rail.
    Over 10 years--and I have got to tell you I was recently 
talking to the Chinese, and I indicated that they were going to 
put about $300 billion in rail, and they said, ``No, 
Congresswoman, it's 3-5-0.'' And they plan on tripling the size 
of their system beyond the rest of the world by 2012. Now, I 
know we can't compete with the Chinese, but the point of the 
matter is we have started investment, and hopefully in the 
next, you know, 5 years, when we do the reauthorization, we 
will look at putting at least $50 billion, so that we can 
really have a system that will compete and move our people, 
goods, and services.
    And thank you again for your leadership. I yield back the 
balance of my time.
    Mr. Reed. Thank you very much. At this point, the chair 
will recognize the chairman of the full committee, Mr. Mica.
    Mr. Mica. Well, thank you. And thank you again for 
conducting this hearing, and for trying to look at how we can 
do a better job in getting private sector contributions and 
activity.
    You know, Mr. Szabo and Mr. Gardner, I don't think there is 
any way we could possibly mess up a launch of expanded high-
speed--well, creation of high-speed and expanded passenger rail 
service in the United States than we have done with the manner 
in which the 78--whatever the number--of grants that were 
given, and now have them coming back.
    I am so dismayed. I consider myself one of the stronger 
supporters of bringing true high-speed rail to the United 
States and also expanding passenger rail service where it makes 
sense for the taxpayers. But the launch has been an absolute 
disaster. And now, with Wisconsin, Ohio, Florida rejecting the 
money, it's made--we're going to have to almost restart our 
efforts to gain some credibility.
    And I hate to tell you this. I was out in California, in 
Fresno, and that one is not looking rosy, either. The ridership 
is very marginal. The farmers are up in arms, and the community 
of Fresno and Bakersfield doesn't have the population base to 
support this. So it's going to be a dramatically subsidized 
route.
    So, how do we recover? I pleaded and begged to look at the 
Northeast Corridor. They have come up with a--I'm trying to be 
polite. If I say ``half-baked,'' that's not a good term. 
They've come up with a plan that's not going to cut it. And 
$117 billion gets us to, what, 2030, 2040?
    Voice. 2040.
    Mr. Mica. 2040, with little, tiny, incremental 
improvements. So my question is, how do we recover credibility 
after so much damage has been done? And, two, how can we find a 
better opportunity in the Northeast Corridor, rather than 
what's being proposed?
    I think your proposal could be cut down, with a little help 
from Congress in getting the private sector, to 10, 12 years to 
put the service in, if we would allow, again, those to 
participate.
    So, credibility, restore credibility, and then having one 
success in the only corridor which we own that would fit the 
model. Mr. Szabo and then Mr. Gardner.
    Mr. Szabo. Thank you, Mr. Chairman. First off, I believe 
that we continue to have credibility. And the fact that three 
States haven't chose to continue to move forward doesn't change 
the fact that a majority of the States in this country do plan 
to continue to move forward.
    Mr. Mica. But none of those are really high-speed service.
    Mr. Szabo. California is, in fact, high-speed service.
    Mr. Mica. Well, I guess--and again, it does have the 
private sector component.
    Mr. Szabo. Right.
    Mr. Mica. But the problem is the route that was chosen. 
There are many bumpy ties in the track along the way on that 
one. I don't consider Chicago to St. Louis high-speed.
    Mr. Szabo. All right. If I can continue on then, sir, first 
off, let me say we agree with your vision that the Northeast 
Corridor needs to be a priority. We have existing 
infrastructure there that can be substantially upgraded and 
improved to actually continue the positive operating ratio that 
Amtrak is achieving there, continue to reduce the trip times, 
improve reliability, which are the crucial elements to success.
    And with California, it's really important that you put 
into perspective that what is being constructed there is a 
very, very first step that is no different from how the 
interstate highway system was constructed some 50 years ago. 
The very first segment was just a few miles in rural Missouri.
    Mr. Mica. Mr. Szabo, I am giving that same spiel. I mean 
your last sentence is in paragraphs of what I'm doing to 
respond to people.
    Mr. Szabo. Great.
    Mr. Mica. But----
    Mr. Szabo. Great.
    Mr. Mica. But again, I think we have to restore some 
credibility. We have got to find some successes. That is going 
to be a tough----
    Ms. Brown. Will the chairman yield? Will the chairman 
yield? Will the chairman yield?
    Mr. Mica. Only if it doesn't count against my time.
    Ms. Brown. Yes, well----
    Mr. Mica. The clock is rolling.
    Ms. Brown. I just want to say--30 seconds--because I hope 
you are not blaming the Administration for the ill-fated 
governor that we have that won 48 percent of the vote and has 
come in here, and the credibility of the studies showed that 
the ridership would have made money. You know, yourself, that 
all of the communities support it. So let's don't blame--it's 
not that it's a lack of credibility with the program. It's a 
lack of leadership in the State of Florida on one person.
    Mr. Mica. Yes. Now----
    Ms. Brown. One person. The legislature had voted for it. 
The House and Senate had voted for it. All of the communities 
had voted for it. So, clearly, we got a vote. But let's don't 
put it on the Administration. I know we try to put everything 
on the Administration. But the Administration has nothing to do 
with--the fact is that we have a governor that has killed this 
program. So let's don't say that it's a lack of credibility 
with the program. It's a lack of leadership in the State of 
Florida.
    Mr. Mica. Well, if it was just the State of Florida, that 
might be the case. But of course we have multiple States now 
who have rejected significant----
    Ms. Brown. We got multi-governors.
    Mr. Mica. I yield and reclaim my time back. But again, 
regardless, the money is coming back. The credibility moving 
forward has been damaged. I mean, again, the public views these 
now as failed attempts, whoever the parties are.
    So, I was concerned about the manner in which the projects 
were chosen, and that's a matter for our investigative 
activities to proceed, so that we can avoid this in the future. 
We have got to restore credibility, because we need to be 
having systems like they take for granted in other countries. 
We need to bring the private sector in. That's the purpose of 
this hearing. And we need to look at what failed in that 
process. If projects didn't make sense to the governors or to 
whoever, so be that. I have always wanted to have successes, 
not a series of failures, whoever's account, whoever's watch.
    But that being said, again--now, one question. Gardner, we 
didn't get a response from you, but I could probably give it. 
And I don't want to take away from anything you would add to 
the conversation, but that being said, now the money is coming 
back. Are you all being consulted by the Secretary on where 
that money goes, Mr. Szabo?
    Mr. Szabo. There continues to be a discussion, and making 
sure----
    Mr. Mica. And Mr. Gardner?
    Mr. Szabo [continuing]. That we again have a open and 
transparent process.
    Mr. Mica. Mr. Gardner?
    Mr. Gardner. Mr. Chairman, we await for the FRA to decide 
how they will allocate that--funds, whether they will be made 
re-available for competition----
    Mr. Mica. Have you provided any memo direction or anything 
to where the money should go, either to the FRA or the 
Secretary?
    Mr. Gardner. Not directly. We do, of course, have a wide 
knowledge of the projects.
    Mr. Mica. Is it a phone mark, or is there an email trail 
somewhere?
    Mr. Gardner. Yes, we have absolutely our eyes on the 
opportunity here.
    Mr. Mica. I'm not trying to be too smart, but the money is 
going to be spent, because the Secretary and the Administration 
have the authority to spend it.
    Congress is not in a position because of our CRs and all of 
that, probably, to take it back and put it in the treasury, 
because many people out there want to reduce the debt. I agree 
with them. But if it's going to be spent, I'm concerned about 
how we spend even the Florida $2.4 billion.
    And while I'm not a big fan of the Northeast Corridor plan 
that you have, there is certainly some improvements there. But 
there are some improvements that, for national security 
purposes, for transportation purposes, that we could best 
utilize going out, instead of having another half-baked attempt 
of a project that might again come back on us.
    So, I am just throwing that out there, as you make those 
decisions and have discussions. I am willing to sit down and 
work with you, to look at how we could attract private 
investment, and with your plan of 30 years, I would like to cut 
it down to 10 or 12. We have talked about this.
    If we need to speed up any of the approval process, we can 
set the framework for that. If there is something in PRIIA that 
needs to be adjusted--and I think we do need to go back and 
readjust this--the money sort of got ahead of the projects. But 
I am open to working with you. And I know you're just excited 
about working with me.
    [Laughter.]
    Mr. Mica. Is that right, Mr. Szabo and Mr. Gardner?
    Mr. Szabo. Mr. Chairman, we always like working with those 
who hold the rank of chair.
    Mr. Mica. Thank you.
    Mr. Szabo. Thank you.
    Mr. Mica. Yield back.
    Mr. Reed. Thank you, Mr. Chairman. At this point in time 
the chair will recognize the gentlelady from California, Ms. 
Richardson,
    Ms. Richardson. Thank you, Mr. Chairman and Mr. Chairman.
    With all due respect to our chairmen, Mr. Szabo, I would 
actually like to weigh in somewhat differently, in the fact 
that I do come from California, and I am the co-chair of the 
high-speed rail caucus. So, for the record, I think it's 
important to note that the chairman had a listening tour in 
Fresno. And although he might have had 20 farmers who were 
upset, there were over 150 people who were supportive of it.
    So I think, in all fairness--and what I would recommend is 
maybe what would be helpful is to have a staff briefing of all 
the status of the projects throughout the country, so we're not 
using kind of bits of information that--we might be reading one 
article that's in--up in arms that may not necessarily be 
reflective of the actual picture of what's happening on the 
ground.
    I can say, from being in California, that there is actually 
several routes that are being considered. And whoever happens 
to complete their permit process in a better fashion, I think, 
would get the lead. The reason why I think the Center Valley 
was being more highly considered was because it was less in the 
urban area, and some of the other issues.
    But I do not agree--and I will say for the record I don't 
agree--with what the chairman said, in terms of the current 
State of California. And what I don't want you to walk out of 
here, in terms of being in the Administration, of thinking 
that's the only way. I realize he is chair, but we actually 
have one vote for every seat here. And I hope that you would 
make sure that all of the information is collected before the 
Administration makes any final decisions. Is that fair, sir?
    Mr. Szabo. That is absolutely fair, Congresswoman, and the 
way that we plan to proceed.
    Ms. Richardson. OK. I appreciate it. Mr. Szabo, also I 
wanted to build upon--clearly, the President has made a 
commitment to high-speed rail. I would even say so much as he 
might see it as a part of his legacy. What, however, can you 
help us to do to make sure that also a part of the legacy of 
this administration is taking care of what we have already 
built?
    As Ms. Brown said, we all support high-speed rail. It's 
where we need to go. But we need to make sure that Amtrak is 
properly funded. And clearly, I don't think it has gotten its 
fair shake. So how can you help us with that?
    Mr. Szabo. Well, Congresswoman, there is no question that 
there has been a history of under-funding for Amtrak, which has 
always hindered its ability to achieve its best potential. But 
the President's fiscal year 2012 budget request really changes 
that.
    For the first time, there is a talk of taking a 
comprehensive look at the backlog of state of good repair that 
needs to be made, replacing the aged equipment, ensuring that 
there is appropriate transparency in the budgeting and a clear 
division in the business lines, and that there is the 
appropriate funding to see it excel.
    Amtrak has just now gone through 16 consecutive months of 
ridership growth. Last year they set an all-time record. In 
California, the ridership growth alone has been tremendous. 
Statewide in the past decade, it's up by 66 percent. On the 
capital corridors, it's up 100 percent. Just month after month, 
they are setting ridership growth records. And there is clearly 
this desire out there from the traveling public to see 
passenger rail as part of a balanced transportation network.
    Ms. Richardson. Yes, sir. And my last question, which will 
lead to a comment--and then I'm going to turn to Mr. Wytkind--
is I come from the private sector, I worked in the private 
sector. And what I will tell you is, when you have the 
resources needed to do the job you can often times do it more 
efficiently. But if Amtrak hasn't been given the resources it 
needed to make the improvements and the enhancements that it 
could have, it could very well perform just as well as any 
alternative other financing mechanism, which--I would like to 
turn to Mr. Wytkind in my remaining 1 minute.
    We--many of the gains that we have had, in terms of workers 
and standards and so on, translating those within the private 
sector is not always an assumption. All you have to do is look 
at Wisconsin and see that's the case. Mr. Wytkind, would you 
like an opportunity just to express further, other than your 
testimony, what guarantees or things you would be looking for 
if so--we went down this route?
    Mr. Wytkind. Well, thank you. I appreciate the question. 
And I appreciate your leadership on passenger rail issues in 
the caucus.
    I, by the way, spent 4 or 5 days in California. I share 
your view that there is a lot of enthusiasm in California for 
its initiative. I spent days meeting with the Members of the 
State legislature and other people out there.
    But we are very clear in our views. The private sector has 
always had a robust role in our transportation system. But to 
simply break up Amtrak, the only national passenger railroad 
that can operate high-speed service in North America, and 
subject it to open competition, is just a really bad idea. This 
country is filled with stories of broken privatization models 
that haven't worked very well. And who usually loses out in 
those equations is the employees and the people that rely on 
the service.
    And lastly, I think there--can't be lost here. There is a 
lot of blaming going on of the Obama administration's views and 
programs on passenger rail. The truth is that Governor Walker 
of Wisconsin, Governor Kasich of Ohio, and now Governor Scott 
in Florida have literally thrown tens of thousands of people 
out of work with decisions to throw passenger rail money back 
to Washington. And that was probably the very first decision 
that Governor Walker made, as the governor-elect, was to tell a 
bunch of Wisconsin people that they're not going to be 
gainfully employed--because of very, very vibrant investments 
in our passenger rail system.
    And so, I think that can't be lost in the debate. This is 
not whether the Obama administration's plan is perfect. But the 
plan can't work if you have elected governors who throw the 
money back and do not want to invest in passenger rail in their 
States for the benefit of the country. And I think that that's 
a huge loss for the country and for the people of those good 
States.
    Ms. Richardson. Thank you, sir. Thank you, Mr. Chairman.
    Mr. Reed. Thank you. Mr. Bucshon from Indiana.
    Dr. Bucshon. Thank you. I thank the panel for being here. I 
am a supporter of developing our high-speed rail system, and I 
have a question for Mr. Szabo. What do you see, in your view, 
is the biggest impediment to high-speed rail development in the 
United States?
    Mr. Szabo. I think, quickly, developing the intellectual 
capacity of all the players, the resources. Not intellectual 
capacity so much as the resources. You know, PRIIA, for the 
first time, put a significant responsibility on the States, 
gave them significant power, the right to choose their own 
operators, the requirement to do their own planning. It also 
put significant new challenges on my agency. And so there is a 
kind of a new paradigm created.
    State DOTs and the Federal Government are very, very good 
at constructing highways because they have been doing it now 
for 50 years. We need to develop the same kind of standardized 
procedures and the same ability to almost systematically crank 
the projects out.
    Dr. Bucshon. Thank you. We did a field hearing, as you 
probably know, in Grand Central Station on talking about high-
speed rail in the Northeast Corridor. And it was very 
fascinating. And a couple of things that I learned--and I am 
going to ask a couple of different panelists their view on 
that--is that, in my view, you know, most people believe that 
high-speed rail in the Northeast Corridor will be successful.
    However, the many, many years it takes to get environmental 
clearance because of the multiple environmental groups that 
have issues with any type of development that is new that--
becomes a significant impediment. And that includes getting 
permitting through the government and others.
    But--and the other thing is right of way issues, even--you 
know, for example, in the State of Indiana, Interstate 69, 
which we're now building from Evansville to Indianapolis, has 
literally taken about 30 years to develop, primarily based on 
those 2 issues.
    And I was glad to see Mr. Wytkind talk about public-private 
development. But the gentlemen from labor, at least in New York 
City's view, was that they would not accept any type of public 
involvement in this type of development in the Northeast 
Corridor, because of concerns about safety and workers 
conditions, which--my dad was a United Mine Worker, so I 
understand those things.
    So, I guess I would like to--I mean I think there is an 
800-pound gorilla in the room. There are many, many impediments 
to developing these things in our country. But I think also, on 
both sides of the aisle, we need to recognize that on both 
sides we have groups that are significantly slowing down 
progress in our country when it comes to these.
    And I would like someone to address the environmental 
issues, the civil liberty issues with right of way, and some of 
the labor--potential labor impediments to development of high-
speed rail. Mr. Szabo?
    Mr. Szabo. Well, I think I can touch on that real quickly. 
Certainly the environmental process is important. You do have 
to make sure that the citizens that are going to be potentially 
negatively affected by new service have a voice in the process. 
I mean that's just kind of fundamental to the principles our 
Nation stands upon.
    But having said that, it really does tie in directly to the 
first comments I made about having the structural capacity of 
the DOTs and the Federal Government to work through these 
processes in the most expeditious manner. Doing what they call 
the preliminary engineering/NEPA work for the high-speed rail 
projects is something that is new to many of the States, and 
also to my staff, where, again, for highways it's been well 
established for many years.
    Dr. Bucshon. Mr. Wytkind, can you comment on that?
    Mr. Wytkind. Yes, I would be happy to. A couple of points.
    First of all, I'm not really sure--maybe you can expand a 
little bit for me--what the labor impediments you're referring 
to are.
    Dr. Bucshon. Well, I'm not saying they are actual 
impediments, I'm just saying----
    Mr. Wytkind. No, I'm just curious what--if there is a 
specific issue I can address.
    Dr. Bucshon. The comment that was made, the person that 
testified, literally, his opening line was that, ``We will 
never accept private investment in the Northeast Corridor 
because we feel like it will lead to lower wages and less 
worker safety.'' I mean that was the opening comment on the----
    Mr. Wytkind. Well, I would----
    Dr. Bucshon [continuing]. Panel. So I'm not----
    Mr. Wytkind. Yes.
    Dr. Bucshon. I'm not agreeing or disagreeing.
    Mr. Wytkind. I understand.
    Dr. Bucshon. I just was curious. I think we all need to 
recognize there are many, many things slowing down this type of 
development, and it's not always money from Washington.
    Mr. Wytkind. Well, there are two points I would make. I 
would have to see the statement and understand the context in 
which it was provided. But I would say that the position we 
have expressed today is that we are for finding ways to ensure 
that the private sector has its role in participating in our 
transportation industry.
    The truth is that, whether we like it or not, the 
transportation industry has a robust private sector. Just in 
the construction industry, most of those building trade workers 
out there across America are working for contractors, private 
contractors, who are contractors under the Department of 
Transportation's infrastructure programs.
    But on the issue of streamlining, we supported and worked 
with the committee to find a way to have some of these 
processes be more concurrent. One of the problems that I 
understood in the debates in the last Congress, when you were 
writing the surface transportation bill in this committee, was 
that a lot of the processes were layered in order, as opposed 
to occurring simultaneously. And, as a result, you had some 
natural delays, because you had to wait for this approval to 
begin deliberation on the next approval.
    The last thing is if streamlining means evading employee 
protections and the important railroad statutes, we would very 
strongly oppose that.
    Dr. Bucshon. As I would.
    Mr. Wytkind. If it's simply trying to find a way to find 
efficiencies, I think there is a way to do that, and I think 
there is a way for the labor movement to work with the 
committee to accomplish that.
    Mr. Shuster. [presiding.] The gentleman's time has expired. 
I recognize Ms. Napolitano. Questions for 5 minutes.
    Mrs. Napolitano. Thank you, Mr. Chairman.
    Mr. Shuster. We have a vote that's going to come on here 
very shortly, so I would like to get through the questioning--
and I think we're going to be on the floor for a while, so if 
we could finish up here, that would be great.
    Mrs. Napolitano. Thank you, Mr. Chairman, and I will keep 
my comments as brief as possible.
    I would like to maybe make a--not comparison, but state 
that in my area Metrolink has four routes and five stations. 
It's operated by the private sector. But when the board found 
that the private operator continuously failed to comply with 
Federal and State regulations, they fired and then hired Amtrak 
to run them. So, you understand that there is issues.
    And then, there is issues with the high-speed rail 
authority in my area. And I was just talking to the 
Congresswoman Richardson, because the high-speed rail authority 
had not consulted with the cities in my district, because 
Amtrak does, if the route is proposed to go through my 
district. And it is high-speed rail that people in my community 
will not be able to afford to get on. I need passenger rail 
movement, I don't need high-speed rail movement in my area. And 
that's for the record.
    Mr. Feinsod, you recommend making the pilot program for 
contracting out Amtrak routes permanent. As part of your 
legislative recommendations, do you support or oppose requiring 
private operators to abide by all applicable labor laws?
    The Railway Labor Act, the railroad retirement and 
unemployment compensation, the hiring rights, the Davis-Bacon, 
would you support or oppose preventing operators from 
contracting out services to foreign entities and workers?
    How about liability insurance? Would you support or oppose 
having to purchase minimum liability insurance, like Amtrak is 
required to have, of $200 million?
    Now, I know you can't answer all of those at once. I would 
like to have it in writing, if you would, please. But as much 
as you can in a short time, I would like to have that in 
answer.
    Mr. Feinsod. Thank you, Congresswoman, for the opportunity 
to respond to you. I should point to the commuter rail industry 
in the United States, which has grown considerably in the last 
15 years. Many new commuter railroads have opened. Many of them 
were created through public agency investment, in part through 
the Federal Government. And many of them are----
    Mrs. Napolitano. Would you answer my questions, please, 
about supporting or opposing?
    Mr. Feinsod. Yes. The answer is that we would support the 
continued application of Federal railway law, because it is a 
requirement now, in the commuter railroad networks that are 
contracted out. It's not anything unusual.
    Mrs. Napolitano. How about the retirement and unemployment 
compensation, the hiring rights?
    Mr. Feinsod. Yes, ma'am.
    Mrs. Napolitano. Davis-Bacon?
    Mr. Feinsod. Yes, Congresswoman. These are framework 
requirements that would be part of any contractual basis and 
competition.
    Mrs. Napolitano. Would you support or oppose the 
prevention--preventing operators from contracting out to 
foreign entities?
    Mr. Feinsod. Well, I don' know what you mean by that, but--
--
    Mrs. Napolitano. Having a foreign company come in and take 
over running some of those areas.
    Mr. Feinsod. I think that in the United States we have open 
access to private companies that work within----
    Mrs. Napolitano. I realize that, and I understand that, 
except we are losing a lot of contracting services to foreign 
companies, because they underbid, because sometimes the 
governments do subsidize their contracting.
    And with that, Mr. Chairman, I would like to yield the 
remaining time to the Ranking Member Brown. Thank you, sir.
    Ms. Brown. Thank you. Mr. Gardner, Mr. Mica constantly 
talks about high-speed rail plans in the Northeast Corridor 
making small improvements. Can you talk about that? Because it 
seems as if he thinks the Northeast Corridor is just one State, 
or one county, and it's a whole group of entities working 
together.
    Mr. Gardner. Yes. Thank you very much, Ranking Member 
Brown. It is a very complex and amazing system of both 
intercity service, freight service, and commuter service 
spanning eight States and the District. And we do have a plan 
for vast improvements in the corridor that will take some time.
    And to answer the earlier questions, the main issue here 
for expanding high-speed rail in the Northeast Corridor is 
stable, dedicated funding. And that is also the main issue of 
bringing private investment into this network. Until there is a 
dedicated, consistent source of funding for rail investment at 
the Federal level, you're simply not going to attract the 
private-sector interest in this business. It's true in all of 
our other modes in the United States, and it's true 
internationally. The international experiments here all rely on 
very robust investments in this--in their rail networks. And 
off that base of public investment, you have been able to 
leverage private-sector involvement in certain portions of the 
network.
    And we, of course, see that opportunity in the Northeast 
Corridor. What it is going to take is that dedicated commitment 
of funding. Amtrak was not able to directly apply for funds in 
this initial round of funding for the Northeast Corridor. The 
States were needed to apply for those funds, and would have had 
to come up with the matching funds, in some cases, for those 
investments.
    So, we look forward to finding opportunities to invest more 
funds in the Northeast Corridor. We have immediate projects of 
more--something between $6 billion and $7 billion backlog of 
capital projects that need to be overcome. We have got 
opportunities to make real improvements.
    But I do want to say that the corridor has developed in 
amazing ways since Amtrak has taken over ownership in 1976 from 
a private-sector entity. And right now, above the rail, Amtrak 
is operating profitable services. Our regional services just 
covered 101 percent of their cost, and the sales service most 
recently, I think, were covering 186 percent of their cost.
    So, we are making money above the rail operations in the 
Northeast Corridor today, with the opportunity to expand that 
going forward with the right level support, and bringing in 
private-sector involvement, as appropriate.
    Mr. Shuster. The gentlelady's time has expired. Thank you. 
Mr. Barletta is recognized for 5 minutes.
    Mr. Barletta. Thank you, Mr. Chairman. Mr. Gardner, the 
Northeast Corridor is a critical area for our Nation's rail 
system. Obviously, the large cities are connected along the 
East Coast. However, what is Amtrak's vision for connecting 
those in smaller cities where trade service has been 
discontinued over the years, yet the demand remains?
    In my district, in northeastern Pennsylvania, over 30,000 
people commute from the Poconos in Monroe County to New York 
City every week. And there is much interest in rail service 
from Scranton through the Poconos into New York. What would 
Amtrak's vision be for that?
    Mr. Gardner. Well, thank you, Congressman. And I am aware 
of the desire for the service there, and certainly the New 
Jersey Transit's efforts to extend farther west in New Jersey, 
and conversations about bringing service to the Scranton area.
    Our vision for extending and expanding corridor service is 
to work in partnership with our States. We have 15 State 
partners today, including Mr. Simmons in North Carolina. And as 
he mentioned, we have a new process for being able to fairly 
and consistently allocate operating costs, and build services 
together.
    So, what we do is look for partnerships with States. We 
engage early with States to find opportunities for passenger 
rail, and then build with them a service model that will 
deliver service to their communities. So we remain open. We 
have been involved and had discussions with the commonwealth 
about this service. There is interest in service to Binghamton, 
a little bit to the north of you in New York. And we remain 
interested in looking at these options. What we need is a State 
partner. And together we look to expand the network every way 
we can that brings value to the service and to the taxpayer.
    Mr. Barletta. Thank you. Mr. Szabo, I'm concerned that 
we're not taking a greater look at the private sector 
participation in other countries. As Mr. Broadley points out in 
his testimony, there are several similarities to our rail 
system, specifically in the Northeast Corridor.
    What steps have we taken to look at those models and see 
how we can implement them into our country?
    Mr. Szabo. Well, I would say that, actually, we have. We 
have taken a considerable look at the international experience 
in both Europe and Asia. Quite a bit of this was used in the 
formation of PRIIA. And, of course, then we have taken the next 
step with the President's proposal in his fiscal year 2012 
budget request.
    Under PRIIA, the States have the right to select the 
operator of their choice, whomever it is that they choose. In 
fact, since 1997, under Amtrak law, the States have had the 
right to select whatever operator they chose. So, privatization 
has always been an opportunity that is there. But so far, 
States have just not found it in their best interest at this 
point to move in that direction.
    There was the section 502 provisions that asked us to take 
in these offers to look at privatization of the Northeast 
Corridor or some of the others, but surprisingly, there wasn't 
a single international applicant or private company that made a 
submission on the Northeast Corridor. There were a few others, 
but in every one of them, none of them did contain the private 
funding that would have gone with it.
    And so, at this point the States do have a high element of 
flexibility.
    Mr. Barletta. Thank you. Mr. Chairman, I yield back the 
balance of my time.
    Mr. Shuster. I thank the gentleman. And I am not going to 
have a follow-up question now, but what Mr. Szabo said, not one 
person applied, not one entity applied for the Northeast 
Corridor, and, I think a lot of people followed the money. And 
there wasn't much that went to the Northeast Corridor on those 
grants.
    With that, Mr. Sires, I recognize you for 5 minutes.
    Mr. Sires. Thank you, Mr. Chairman. You know, as one that 
rides the Acela every week, back and forth--I represent the 
northern part of New Jersey--and I am thrilled that we have 
Amtrak running, because it's really--going through the airport, 
going through the whole hassle, it's just impossible.
    But last year I took a trip--it was the year before--I took 
a trip to Spain, because Spain has the AVE. And I wanted to 
compare it with Amtrak. And I talked to a lot of people, you 
know. We even met with the port authority people in Barcelona, 
because we took the train from Madrid to Barcelona. There is a 
substantial amount of money coming in from the government to 
that train. So, when we say ``privatization,'' you know, when 
we talk about Europe, you know, there are huge investments by 
the government.
    And when I worry, Mr. Feinsod, about privatization, it's 
that, to me, it means as you get your expenses--your expenses 
go up--and you privatize, it's expensive--you go to the workers 
to give in, to get back. And as expenses go up, the workers 
suffer.
    I think there has to be a balance. I'm not saying that 
everything should be coming directly from the government, but 
there has got to be a balance where the worker is protected and 
there is some sort of subsidy, so these entities can run 
properly.
    You know, and it is difficult, I think, in the--on the 
east, to have anything similar to some of these European lines, 
because I know that the line from Madrid to Barcelona did not 
go through as many States as we do, or some of the tracks that 
I use for other things. So, you know, it's pretty much a 
dedicated line. And we just don't have the room in some of 
these places to do something similar to that. So when people 
say, you know, ``Let's do the European experiment,'' all well 
and good, but we have to see where, you know, where we're going 
to do this.
    And I hope that the service continues to improve in the 
Acela, because it really is a pleasant ride from Newark to 
Washington.
    And I just have time--you know, can you answer some of 
those concerns that you have--that I have, Mr. Feinsod, when 
you talk about labor? Because to me, now, everything privatized 
just means, well, we go off to the unions, we get it from the 
unions, and, in many cases, let's get rid of the union.
    Mr. Feinsod. Well, I think that the only answer I can give 
you is that this is not what we see as a competitive 
environment, that the competitive environment is a creation of 
a higher energy level to provide for improvements to the 
corridors that might be competitively created.
    I don't think we are talking about a Madrid Barcelona line 
which required significant government investment to create the 
line. It is being run by and operated by the Spanish State 
railroad, and has been extraordinarily successful, and is 
profitable, very profitable.
    But when we look at the regional, State-supported systems 
in the United States, we have an opportunity to open up the 
market to competition. And that competition would create the 
opportunity for innovation and improvement. And I don't believe 
it is a natural result to hurt labor. In fact, we believe that 
if we have a more robust----
    Mr. Sires. Well, where are you going to get the money to 
offset it?
    Mr. Feinsod. If we have a more robust market, we're going 
to have higher ridership, and we are going to have more jobs. 
And the whole idea is to----
    Mr. Sires. Would you answer that, Mr.----
    Mr. Feinsod [continuing]. Increase the number of jobs.
    Mr. Wytkind. Yes, I would. I don't have--thank you for that 
question.
    Look, I think there is a--there are--there is a litany of 
examples across the country in the transportation industry and 
elsewhere in the economy where private contracting does result 
exactly as you have described, whether it's to completely 
eliminate collective bargaining, which seems to be a popular 
theme these days with some Members in the political class, but 
more importantly, we have a lot of examples where private 
contracting resulted in people having to be the people that pay 
for the cost of either poorly managed contracts or, as you 
said, they run out of money and it's got to come out of 
somebody.
    And so, I could submit to the committee a number of 
examples. A lot of them are in the mass transportation 
industry, where a lot of this privatization has occurred, where 
the workers have been absolutely the victim of those 
privatizations.
    Mr. Sires. Thank you, Mr. Chairman. I yield back.
    Mr. Shuster. I thank the gentleman. We have got 10 minutes 
left in the vote. I am going to try to finish my questions, 
because then we're going to have to probably be over there for 
a while.
    I have a few questions, and then we're going to leave the 
record open for 2 weeks. We probably are going to submit some 
questions to most of you, if not all of you, to get them back 
in writing. But first question, Mr. Simmons, can you talk to me 
a little bit about the obstacles that you face for private rail 
operators coming in to running operations in your State?
    Mr. Simmons. Thank you, Mr. Chairman. In my testimony I 
outline several opportunities where we already work with 
private companies.
    In terms of private railroads operating our existing 
service, the issue of access, the issue of maintaining the 
freight capacity, those kinds of things, are challenges that 
are in front of us and the companies.
    We open the door to the opportunity as we look to absorb 
and manage the growth opportunity that is in front of our 
State, adjoining States, and America to provide jobs both in 
the traditional industry, but there are other places, 
particularly in design, construction, and components of our 
operation where the private sector can and do play a role.
    Mr. Shuster. And I think that level playing field--which I 
think Mr. Szabo, Mr. Wytkind, and Mr. Gardner all sort of 
touched on when it comes to labor--and that--labor level 
playing field is in the law now that we passed. But what you're 
talking about are some of the other issues: access, cheaper 
incremental costs that you have to--if you bring a private 
operator in, you have to negotiate with the freight rails. Is 
that----
    Mr. Simmons. Yes. Yes, we would. But I want to say--speak 
to the issue of the labor, the existing agreements. In the law 
that is protected. Any operator that was not Amtrak would have 
to look at lot like Amtrak. So we're not threatening that.
    We are--what we are faced with, and the largest challenge I 
have overall, is how to absorb and manage the growth. The 
tremendous opportunity that States have, that America has, to 
grow this business, not just from the business perspective, but 
to provide service and mobility for our communities and for our 
citizens, that's the challenge that we have, that we face every 
day.
    Mr. Shuster. I appreciate that. And also, I guess my final 
question is to Mr. Szabo concerning the DesertXpress. I know 
that that's come out before. It was supposed to be a $2 billion 
and now it's, I think, a $6 billion project. It was supposed to 
be all private money, now they're looking to the RRIF program.
    Can you talk a little bit about what your view is on that 
project? Is that something that you think is viable? I have 
concerns, you know, going from Las Vegas to Victorville--I 
didn't know where Victorville is, but I know it's not Los 
Angeles.
    Mr. Szabo. Well, ultimately, their plan is to connect with 
the California high-speed rail project. It's just a matter of 
that final step through the mountains. So, again, a little bit 
like the interstate analogy we're talking about, where legs get 
built in phases.
    You know, they continue to adjust their costs. That's not 
unusual for a project of this magnitude.
    Mr. Shuster. Triple the cost, though? I mean is that 
reasonable?
    Mr. Szabo. You know, it's a matter of refinement, and 
making sure they have accurate costs before they choose to move 
forward.
    Mr. Shuster. When you refine something, I thought it got 
better.
    Mr. Szabo. I'm sorry?
    Mr. Shuster. I said when you refined something, I thought 
it got better, not worse, in the cost.
    Mr. Szabo. The most important thing is to be accurate. 
Obviously, you have to know what the facts are, making sure 
it's accurate, before a decision is made to move forward, and 
so they can do their appropriate analysis to see if the right 
return on investment is there.
    But clearly, we do believe that it's a project that has 
some very good potential.
    Mr. Shuster. Well, again, we have a vote. I appreciate 
you----
    Ms. Brown. I do have a final----
    Mr. Shuster. Sure, I yield you 2 minutes.
    Ms. Brown. OK. Well, I appreciate that, Mr. Chairman.
    A couple of things. Mr. Simmons, in the current law, do the 
States have the right to choose their passenger rail operators, 
or do they have to choose Amtrak?
    Mr. Simmons. Under the current law, we have the right to 
choose operators. But the environment that we work in can 
constrain that.
    Ms. Brown. Absolutely. We have that same impairment in 
Florida, where we have one person making a decision. And I want 
to make sure that we put the study in the record that showed 
that the high-speed rail project would have made money the 
first year, based on the facts.
    Mr. Gardner, I have one other question for you. In doing my 
research, I found out that Amtrak subcontracts over 66,000 
business annually. And I would ask unanimous consent to insert 
a list of the 70 businesses into the hearing, but also make 
available those other 66,000, so people know that Amtrak has a 
lot of partners, private partners.
    Mr. Gardner. Absolutely, Madam Chair. We have, again, $1.5 
billion in services that we purchase, goods and services every 
year, from private entities that manage our part supply to 
cleaning and servicing and mechanical servicing and turnaround 
locations in some of our outlying points.
    Of course, through our procuring of equipment, we just 
place orders for 70 new electric locomotives with Siemens that 
will be built here in the United States, meeting Buy America 
requirements. So we are engaged in, every day, partnership with 
the private sector to deliver the services that we need to, to 
make this network work.
    So, it's--and as Mr. Wytkind said, most of the big capital 
projects we do, of course, use contractors who are private 
sector entities to build big bridges and tunnels and so forth. 
So we rely on this, and we aim to grow it. And we will need the 
private sector, undoubtedly, to take this network to the next 
step and grow.
    Ms. Brown. And, Mr. Szabo, you have my last minute.
    Mr. Shuster. The gentlelady doesn't have a last minute, so 
Mr. Szabo, we will give you 30 seconds to answer succinctly----
    Ms. Brown. Oh, no, you----
    Mr. Szabo. Very good, Mr. Chairman.
    Mr. Shuster. We've got 4 minutes left in the vote, and 
since I'm the chairman I do get the final word, fortunately.
    Ms. Brown. OK, all right.
    Mr. Shuster. Go ahead, Mr. Szabo, 30 seconds.
    Mr. Szabo. Well, I'm sorry. Did you have another question?
    Ms. Brown. I don't have a question, I just want you to have 
the last word.
    [Laughter.]
    Mr. Szabo. Well, the final word? Thank you for the hearing. 
This Administration is working very, very hard to make sure 
that high-speed passenger rail is a reality in this country. We 
believe we have a strong program. We are continuing to move 
forward. It is something that's in its infancy, so you have 
those challenges that go along with something that is brand 
new. But the village is solid, and the partnerships are being 
developed, and we are moving forward.
    Mr. Shuster. Thank you, Mr. Szabo. I thank all of you for 
being here today. I appreciate it.
    And passenger rail in this country, I believe, is needed. I 
think we ought to look at the places where that investment 
needs to be focused. There are places that we can, I think, 
have it.
    But I hope that the Administration comes together, along 
with labor, along with the freight rails, along with Congress, 
to focus on the Northeast Corridor, because I think that is our 
best chance for the first successful operation of high-speed 
rail in this country. And I believe it will create economic 
opportunity for those in labor, those in business, and those 
communities along that corridor. And it will help all 
Americans, if they see its being successful.
    So, again, thank all of you very much, and this hearing is 
adjourned.
    [Whereupon, at 11:45 a.m., the subcommittee was adjourned.]
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