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



 
                     OPENING THE NORTHEAST CORRIDOR
                       TO PRIVATE COMPETITION FOR
                   THE DEVELOPMENT OF HIGH-SPEED RAIL

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

                                (112-33)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 26, 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
ANDY HARRIS, Maryland                MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas  TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington    MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire       RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois             GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota             MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas              JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana               TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri                 HEATH SHULER, North Carolina
BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania         LAURA RICHARDSON, California
RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
JEFFREY M. LANDRY, Louisiana         DONNA F. EDWARDS, Maryland
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
VACANCY

                                  (ii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................     v

                               TESTIMONY

Bonilla, Carlos, Adjunct Fellow, Reason Foundation...............    98
Goetz, Michael, Executive Director, Railroad Cooperation and 
  Education Trust (RAILCET)......................................    98
Hart, Thomas A., Jr., Esq., Vice President for Governmental 
  Affairs and General Counsel, US High Speed Rail Association....    98
Jayanti, Ignacio, Former Member of the Working Group on Intercity 
  Passenger Rail, and President, Corsair Capital.................    98
Lautenberg, Senator Frank R., a U.S. Senator from the State of 
  New Jersey.....................................................     9
Richardson, James H., Senior Vice President, FC Asset Services 
  LLC, a subsidiary of Forest City Enterprises, Inc..............    98
Wytkind, Edward, President, Transportation Trades Department, 
  AFL-CIO........................................................    98

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Petri, Hon Thomas E., of Wisconsin...............................   152

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Bonilla, Carlos, and Poole, Robert W., Jr., \1\ Director of 
  Transportation Policy, Reason Foundation.......................   154
Goetz, Michael...................................................   163
Hart, Thomas A., Jr., Esq........................................   166
Jayanti, Ignacio.................................................   185
Lautenberg, Senator Frank R......................................   202
Richardson, James H..............................................   204
Wytkind, Edward..................................................   210

                       SUBMISSIONS FOR THE RECORD

Brown, Hon. Corrine, a Representative in Congress from the State 
  of Florida, request to submit the following into the record:

    Article entitled, ``Privatisation Fails to Cut Rail Costs,'' 
      Telegraph, May 26, 2011....................................   140
    Article entitled, ``U.S. Transportation Secretary LaHood 
      Announces $2 Billion for High-Speed Intercity Rail Projects 
      to Grow Jobs, Boost U.S. Manufacturing and Transform Travel 
      in America,'' May 9, 2011..................................   127
    Report entitled, ``Realising the Potential of GB Rail: Report 
      of the Rail Value for Money Study--Summary Report,'' May 
      2011.......................................................    19
Hart, Thomas A., Jr., Esq., Vice President for Governmental 
  Affairs and General Counsel, US High Speed Rail Association, 
  request to submit
  H.R. ___, The Private Investment in High Speed Rail Act........   106
Mica, Hon. John L., a Representative in Congress from the State 
  of Florida, request to submit into the record a chart entitled, 
  ``High-Speed Rail Comparisons--Private Sector Participation''..    97

                        ADDITIONS TO THE RECORD

Brown, Hon. Corrine, a Representative in Congress from the State 
  of Florida, letter to Hon. John L. Mica, a Representative in 
  Congress from the State of Florida and Hon. Bill Shuster, a 
  Representative in Congress from the State of Pennsylvania, June 
  2, 2011........................................................   215
Capon, Ross B., President and CEO, National Association of 
  Railroad Passengers, written statement.........................   219
Geddes, R. Richard, Adjunct Scholar, America Enterprise 
  Institute, written statement...................................   223

----------
\1\ Mr. Poole did not present spoken remarks during the hearing.
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                         OPENING THE NORTHEAST

                  CORRIDOR TO PRIVATE COMPETITION FOR


                   THE DEVELOPMENT OF HIGH-SPEED RAIL

                              ----------                              


                         THURSDAY, MAY 26, 2011

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                            Washington, DC.
    The committee met, pursuant to notice, at 10:04 a.m., in 
Room 2167, Rayburn House Office Building, Hon. John L. Mica 
(chairman of the committee) presiding.
    Mr. Mica. Good morning. I would like to call this hearing 
of the House Transportation and Infrastructure Committee to 
order. I am pleased to welcome everyone today.
    The topic of today's discussion and hearing is opening the 
Northeast Corridor to private competition for the development 
of high-speed rail. We have some distinguished witnesses today, 
and we are expecting Senator Lautenberg to join us shortly. 
There is a vote in the Senate.
    And then we will hear from some of the witnesses that we 
have called to hopefully provide us with some insight into 
achieving the objective of today's hearing, and that is to try 
to develop our most expansive, congested, and probably ready 
corridor in the United States that would be conducive to using 
true high-speed rail.
    The order of business will be as follows. We will have 
opening statements by Members, and then we will turn to our 
witness panels as they join us.
    Let me take a few minutes and begin today's hearing by kind 
of reviewing where we are and where we would like to go. Most 
people don't realize this, but the Northeast Corridor is one of 
the actual pieces of infrastructure that Amtrak and the 
Government own. It is a 437-mile corridor stretching from just 
a few blocks from Union Station all the way up to Boston, 
through the principal and most congested, heavily populated 
areas of the United States.
    The interesting thing about this corridor is that it has 
been available since 1971 for the development of passenger rail 
service. As most people don't understand, Amtrak has all of the 
franchise for passenger rail service in the United States.
    We are not talking about commuter or light rail or local 
transit, but intercity passenger services, a sole prerogative 
under existing statutes of Amtrak. But the only real corridor 
on which they own the infrastructure that also would be 
conducive to developing high-speed rail is the Northeast 
Corridor--again, some 437 miles.
    I think you hear a number of stories from Amtrak about how 
ridership has improved. And overall, they have gone up a small 
percentage in ridership; I think it is from 27 million 
passengers to 29 million passengers for the entire country. 
That is all of their service across the land.
    What is very interesting is the development of so-called 
high-speed service in the Northeast Corridor. And 
unfortunately, it is not truly high-speed; we are only 
operating about 83 miles an hour from Washington to New York, 
and a much slower speed, somewhere between 65 and 70 miles an 
hour, I am told--I get various figures--from New York to 
Boston.
    But this in fact is not high-speed rail. By Federal 
statute, under the PRIIA law, we define high-speed as 110 miles 
per hour average.
    I have got a copy of a picture of the Shinkansen. This 
travels 167 miles an hour, which is about twice the speed of 
the Acela. The Acela top speed--we will put a little Acela up 
here--which we refer to as high-speed, again, is running 83 
miles an hour, ironically, about half the speed.
    Amtrak has come forward with a couple of measures in a 
positive vein. First, they finally designated the Northeast 
Corridor as a high-speed rail corridor, and that was after 
decades of pleading that that corridor should have that 
designation and that, in fact, it has the greatest potential 
for high-speed service in the United States. That was several 
months ago.
    After, again, a lot of chiding by this committee, myself 
and others who are interested in true high-speed service, 
Amtrak has come forward with a proposal. That proposal is to 
develop high-speed rail in the corridor. However, it takes 30 
years, would cost $117 billion, and their initial proposal came 
that forward was that would be all Government money. And I know 
they are looking at some options.
    But that kind of sets the stage for today. Now, they will 
tell you that they have--again, going back to the ridership 
numbers--that they have increased ridership substantially. 
Let's put the chart up here. This is one of the most 
fascinating charts I have seen that actually shows what Amtrak 
has done and hasn't done.
    Yes, we have gone from 27 million to 29 million passengers 
in the last year. What is interesting, in the Northeast 
Corridor--and these figures are all from Amtrak's data provided 
to the committee--in 1977, the Northeast Corridor had 10.6 
million passengers. In 2010, again from Amtrak's report, then 
had 10.5 million passengers, actually down from 1977. To me, 
that is one of the most pitiful statements of achievement, 
after putting billions of dollars into the corridor, to see how 
underutilized that service is.
    Another interesting point: If you look at the highlighted 
area, we did go up to 12.9 million passengers in 2000 in the 
Northeast Corridor. So we have actually dropped from a peak, 
and that is even before 9/11.
    If you look at long-distance service, they went from 4 
million passengers in 1977--again, the first record we have 
from Amtrak--and we are at 4.5 million passengers, long-
distance service, another absolutely pitiful record of service.
    The only area in which we have had an increase in 
passengers is the 14.1 million passengers, which have grown 
from the 1977 data that you have here. And again, these are 
some partnership initiatives that actually show successes in 
providing intercity passenger rail service. But this is 
probably one of the most dismal records on earth for any rail 
service, particularly in the Northeast Corridor. And again, it 
is not high-speed service.
    The 30-year plan is not acceptable. I want to just point 
out and give one illustration of what we can do. We met for an 
update; every couple of years, we hear from people around the 
world who have undertaken various projects. Let's put up the 
Virgin Rail picture here.
    I met yesterday with executives of Virgin Rail, and we are 
going to ask them to come back and talk to us. This is an 
absolutely remarkable story. Let me have the statistics on 
Virgin Rail. And we will distribute them to all the Members 
here.
    In 2004 they took over two rail lines when England put all 
of their money-losing routes up for privatization. Various 
corporations bid on the service, and they had to come in with 
the lowest possible subsidization to the Federal Government 
there.
    They took two of the lines and put them up for bid, one 
from London to Manchester, the other one from London to 
Glasgow. In 2004, these lines had 14 million passengers. In 
2010, they had 28.6 million passengers. They went from 14 to 28 
million passengers, a 100-percent increase, a not-too-
dissimilar distance between London and Manchester as from 
Washington to New York. The travel time was dramatically 
improved. And they told me for every dollar in infrastructure 
that was improved, the private sector contributed 50 percent, 
or 50 cents on the dollar.
    This line in England went from a loss of about a quarter of 
a billion dollars when it was inherited--that was a 
subsidization by the Federal Government of the U.K.--to a net 
positive of nearly a quarter of a billion dollars this past 
year. And it is on its way to providing about a half a billion 
dollars a year in income. That means with no subsidization, so 
they have doubled the service.
    For the union representatives that are here, and labor that 
is interested in what took place here, they had 2,500 
approximate employees, all union, of course, when they started 
this. They now have 3,800 employees. They have less hassles, 
better wages, and again, over 1,300 more people employed with 
the private sector operation.
    So this can be done. It can be done in a congested 
corridor--if London isn't a congested corridor, I would like to 
know what is--and you can provide, again, outstanding service 
without being a burden to the taxpayers.
    In addition to money coming into the U.K. Treasury from 
this operation as opposed to money going out, they paid a 
dividend of $50 million to Virgin Rail holders, the private 
sector investors in this. That to me is a remarkable model, and 
we can take others from Japan and from Germany. We don't have a 
lot of time to go into that right now. But we will submit some 
of that for the record.
    So I believe that we have great potential in the Northeast 
Corridor. The only thing standing in the way right now is 
Amtrak or the Federal Government or Congress. And let me say 
what we plan to do in closing.
    First of all, we will be offering up in the next few weeks 
legislation. And right now, again, we are trying to mold the 
final version. But right now we are looking at taking the 
Northeast Corridor out of Amtrak's purview, probably 
transferring it to DOT, but what we would end up doing is 
putting the Northeast Corridor up for private sector bid.
    We would take offers from the private sector to control and 
operate its infrastructure and also operate the train sets. And 
we are looking at combinations, whatever would be the most 
beneficial to the taxpayer, in the structure that we will 
propose.
    We believe and we have heard, as you will hear today from 
some folks from the private sector, that you could probably do 
this with very little or no Federal Government taxpayer money. 
And if you are waiting for Congress to approve $117 billion 
over the next 30 years to bring service in 30 years to the 
high-speed corridor, you are going to turn blue because it is 
not going to happen.
    I think that we will have a plan that will attract private 
sector investment; that we will have a plan for development, 
financing, building, and operating the corridor with the 
private sector. We will retain the infrastructure assets for 
the taxpayer and we can also return money, we believe, to the 
Treasury because of the incredible opportunity to increase 
service.
    And finally, we look to speed up the approval process for 
developing the Northeast Corridor, so that will be another 
element of the legislation and proposal we are coming up with. 
And finally, as part of what we proposed in the PRIIA Act, we 
will insist on service of 2 hours or less from Washington, DC, 
to downtown Manhattan.
    We have assembled people today who we think can help us 
launch America into true high-speed rail service. I couldn't 
imagine, as a strong advocate of high-speed rail, a more 
disappointing start to high-speed rail in the country than we 
got off to.
    We have seen most of the proposals, which are not true 
high-speed rail. We have seen Amtrak hijack 76 of 78 projects, 
and then I believe 20 out of 21 additional awards, for 
basically slow-speed trains. But this is not high-speed rail, 
and it is a shame that we have squandered most of $10.5 billion 
and still will not have it, particularly in the corridor that 
we need it the most and in which the rest of the country can 
benefit by its example.
    As you may know, the Members that are here, more than 70 
percent of our chronically delayed flights in this Nation start 
in the Northeast Corridor. So no matter where you come from 
across the country, you will benefit by the improvement of 
service here for high-speed rail, not to mention how you will 
benefit the taxpayers by eliminating a huge subsidy, in fact 
having net positive revenue coming into the Treasury. That 
would be a very unique approach for Congress and for the 
Federal Government, but I think we can do it.
    So with those long opening remarks and taking the privilege 
of the chair, I wanted to lay out where we are and where we 
hope go to. Let me now yield to Mr. Rahall.
    Mr. Rahall. Thank you, Mr. Chairman, and I congratulate you 
for having these hearings this morning in regard to high-speed 
rail service in the Northeast Corridor.
    Despite wide recognition that high-speed rail creates jobs, 
reduces congestion on highways and airways, and decreases our 
dependence on foreign oil, the United States offers no high-
speed passenger rail service, unlike other major industrialized 
nations.
    In 2008, Congress chartered a new course for passenger rail 
in America. The bipartisan Passenger Rail Investment and 
Improvement Act created two national programs for the 
development of high-speed rail and intercity passenger rail in 
the U.S. That legislation laid the tracks for President Obama's 
vision for high-speed rail, which called for historic 
investment in the development of high-speed rail and the $9.3 
billion that was included for that purpose in the ARRA Act of 
2009, the most significant investment in passenger rail since 
the creation of Amtrak in the 1970s.
    I think it is worth noting with my colleagues and reminding 
them that we created Amtrak because the private sector--the 
private sector--did not want to operate unprofitable passenger 
rail service. Private companies did not want to run passenger 
rail service then, and I am not convinced that they want to do 
it now. But here we are again, and this time we are told that 
the private sector is beginning to take it over.
    Today we will learn about a proposal to privatize high-
speed rail in the Northeast Corridor. While we have not yet 
been provided the details of this proposal, I fear that it is 
just another veiled attempt to derailing Amtrak under the guise 
of better service and cost savings.
    Just 2 years ago the DOT issued a request for proposals for 
private companies to develop high-speed rail in the U.S. Guess 
how many companies were just chomping at the bit to get their 
hands on these projects? Not a one. Not one single proposal was 
submitted by the private sector for development of high-speed 
rail in the Northeast Corridor.
    We also heard at the committee roundtable in New York, Mr. 
Chairman, which you convened January, from several private 
investors who clearly stated that they would need to see 
substantial Federal funding in order to consider investing. The 
fact is, it is easy to criticize Amtrak, and it is easy to 
criticize its development in the Northeast Corridor, when for 
decades we have deprived Amtrak of the consistent and adequate 
funding that they need, and any business would need, to 
operate.
    Despite repeated efforts to derail Amtrak through 
starvation budgets, congressional efforts to eliminate routes, 
and a Bush administration budget proposal to destroy Amtrak 
through bankruptcy, Amtrak has survived. Ridership is up 200 
percent, and Amtrak is turning a profit in the Northeast 
Corridor.
    Amtrak is making great efforts toward building high-speed 
rail in the Northeast. The Acela, although it may only average 
83 miles per hour from Washington to New York, has made 
significant improvements over the past several years. It now 
boasts 3 million riders annually in the Northeast Corridor, and 
it has captured 69 percent of the air/rail market.
    In September 2010, Amtrak unveiled a plan for development 
of the true high-speed rail in the Northeast Corridor, to reach 
speeds of 220 miles per hour. Their bold vision would cost $117 
billion over 30 years, or $3.9 billion annually.
    Some on this side of the aisle have criticized these 
estimates, but that investment pales in comparison to what 
other countries are spending on high-speed rail and the $1.8 
trillion this country has spent on our world-class highway and 
aviation systems. Amtrak estimates construction of the system 
would support 44,000 jobs annually over the 20-year 
construction period, and approximately 120,000 permanent jobs.
    So in conclusion, Mr. Chairman, we ought to be looking at 
ways to help Amtrak achieve this goal, not looking at ways to 
dismantle it. We should be celebrating Amtrak's 40th birthday, 
not trying to kick it in the caboose by selling off its assets 
to private companies.
    Thank you, Mr. Chairman.
    Mr. Mica. Thank the ranking member.
    Let me recognize Mr. Shuster as the chair of the Rail 
Subcommittee.
    Mr. Shuster. I thank the chairman, and thank all of our 
witnesses that we are going to hear from later today.
    I appreciate us having this hearing before we roll out the 
transportation bill, and I think that what the chairman has 
done in working with us, I think it is absolutely the right way 
to go, to deregulate passenger rail in this country.
    You heard what the chairman had to say. Some of it I will 
repeat because I think it is important that we hear it. But 
internationally, there are private sector companies out there, 
as you heard the chairman say, that are running private rails; 
turning money back to the Government, not taking it from the 
Government; creating jobs, union jobs, I might add. And as we 
recently heard in New York, there are investors that are 
interested in operating and investing in the Northeast 
Corridor.
    The ranking member is correct. There were no bids for the 
Northeast Corridor. But there were many attempts to make bids, 
but they were blocked at every turn. And then, of course, the 
stimulus came out, and there are billions of dollars of free 
money. So who is going to invest their money until they see 
where this free money is going to flow? So, really, it is not 
fair to say there is no interest in it because there certainly 
is interest in the Northeast Corridor.
    As I said, the stimulus money that came out was also 
misguided. The President said he had a vision for high-speed 
rail. I believe his vision is blurred. It is not possible, in 
my view, to have high-speed rail in 80 percent of the country, 
nor do I think Americans need or want high-speed rail in 80 
percent of the country.
    Where we should have focused is where 20 percent of the 
country is: the Northeast Corridor, about 2 percent of our land 
mass. The congestion is there. We own the tracks. We should 
have focused that stimulus money on the Northeast Corridor. 
That is where the money should have gone.
    Let's get at least one place in America where we have high-
speed rail, or something approaching high-speed rail. Let's 
have a success story, then roll it out around the country, 
because there are corridors in this country that I believe 
would sustain high-speed rail.
    As I said, the President put out dribs and drabs, sprinkled 
that money around the country, and it is not going to have a 
significant impact. However, because of Florida rejecting their 
high-speed rail money, there is going to be a significant 
investment in the Northeast Corridor, or at least more 
significant than there was.
    But if you know the region like I know the Senator does, he 
knows that there are really three major choke points in the 
Northeast Corridor. There needs to be a new, expanded tunnel in 
Baltimore, an improved bridge from New Jersey into New York, 
and the catenaries need to be improved.
    When you do those three things, then you can start to talk 
about high-speed rail in the Northeast Corridor. You have to do 
some other things, but those are the three major investments 
that have to occur. And we haven't really done that and haven't 
been serious about it in the past couple of years, the past 40 
years.
    And when it comes to Amtrak, it has been 40 years. It has 
taken billions and billions of Government dollars, and has not 
even approached a break-even point. When you look at the 
concessions on the railroad, they lose money. There is no 
reason in the world for this. You have a monopoly on the train 
selling concessions--there is only one place to buy water--and 
you can't make a profit selling water on the Amtrak system, in 
the Northeast Corridor or anywhere, for that matter.
    The chairman did mention Virgin Rail. The numbers are 
staggering. They were receiving  300 million- 250 million in 
subsidy, now they are giving that much money back to the 
Government. They are returning money because the operations are 
turning a profit, going from 14 million riders to 28 million 
riders.
    In the Northeast Corridor, there are 10 million riders, and 
that hasn't changed significantly over the past decade. But 
here you have a corridor in England that is probably about a 
third to a half the size of the Northeast Corridor, and they 
get 28 million passengers. And they are not doing it with high-
speed rail, mind you. They are doing it at 92 miles an hour, 
and doing it very well at those lower speeds--again, but 
turning a profit.
    Also, for my friends in the union, the labor movement, that 
are here today, they added a third of the jobs. So let me 
forewarn you, I am going to ask the question when you testify 
today. You have gone from 29,000 workers in Amtrak to 19,000 
workers over the past decade. Now, in most corporations--I 
won't say all corporations--but in most corporations in 
America, if you lost a third of your business, you would 
probably be fired.
    We need the labor movement on board--excuse the pun--but we 
need you on board. These are going to be union jobs. We are 
going to create jobs in the Northeast Corridor. We are going to 
create jobs in the passenger rail system if we run it 
effectively so that everybody will benefit.
    As I said, the Northeast Corridor is the place to focus on. 
In our bill that we are going to put forward, we are going to 
move forward and move to deregulate. And, as I said, I think it 
is going to be good for all of Americans. Those that work in 
the system, those that use the system, and those that pay taxes 
are going to see that subsidy reduced and quite possibly start 
to see money flow back into the Government.
    So I am excited about this hearing. I am excited about our 
bill, and look forward to hearing from all of our witnesses. 
And I yield back.
    Mr. Mica. I would like to recognize one more Member on this 
side. Senator Lautenberg has joined us. I would like to extend 
the courtesy of having him, and then we will go back to 
Members. So one more Democrat Member, Mr. Rahall. Ms. Norton?
    Ms. Norton. Thank you, Mr. Chairman. I would just like to 
say to you and our ranking member on railroad that I share your 
enthusiasm for high-speed rail, and I share your enthusiasm for 
making it the Northeast Corridor. I do believe that while there 
was a call for this money from all over the country, that we 
need a project that works from which others can learn. So I 
really think that makes sense.
    I do think it is also important to understand how Europe 
developed high-speed rail as a 20th-century concept. I am 
embarrassed to be an American in the 21st century sounding 
forward-thinking talking about high-speed rail, which is really 
quite old-fashioned in Europe and Asia. The reason that it was 
developed in Europe and Asia, of course, is that the 
governments of those countries paid for the infrastructure, and 
then they are developed--and pay for most of it now.
    I would like to comment on what the chairman said about 
Virgin Rail because I was very interested in that, too, given 
the fact that Amtrak is pursuing private participation in its 
own proposals.
    The British Government has recently published a report on 
the privatization system that it has done, and it is true that 
there has been more than a 50-percent increase in ridership. 
But it is also true that Virgin Rail costs are 40 percent 
higher, and England's costs, therefore, are 40 percent higher 
than Europe. There are tradeoffs here, and we have got to 
understand there is no free ride to high-speed rail.
    How did we even get Amtrak? This is not a Government that 
wanted to run a railroad. The railroads didn't want to run a 
railroad. That is how we got it; they went bankrupt running 
passenger service. They begged the Government to take it, and 
the Government was the only place to go if you wanted to have 
passenger rail at all. This history has got to come into play 
to understand what we should do next.
    Now, Amtrak, which has shown it knows how to run a railroad 
because in the Northeast Corridor it is profit--and guess what? 
Those profits, it would be helping to pay for your districts 
because it is the only part of the system that is profitable. 
And you have got to ask yourself, what are you going to do 
about the rest of the country if Amtrak goes private and nobody 
cares except the investors? The Acela has helped make Amtrak 
profitable. But so have gas prices. So has collapsing airlines.
    Finally, I want to say, Mr. Chairman, I know you are trying 
to get a surface transportation bill done, and I commend you 
for trying finally to get a surface transportation bill out of 
here. But I hope you do not make it impossible to do so by 
putting a controversial proposal for privatization of Amtrak in 
your surface transportation bill. You are going to have a hard 
enough time getting it out.
    But unless there is bipartisan agreement about a surface 
transportation bill, it will kill the transportation bill and 
it will get nowhere when it comes to the Northeast Corridor 
that I think you and I agree should be started and should be 
started quickly.
    And I yield back the rest of my time, and thank you, Mr. 
Chairman.
    Mr. Mica. Well, thank you so much, and I appreciate the 
gentlelady's comments. And working with her, I think we can 
achieve a common goal.
    There are two things I'd like to mention before I recognize 
Senator Lautenberg. One, in the proposal that we put forward, 
we will--and I have talked to Ranking Member Rahall and 
Chairman Shuster and others--we will guarantee labor any 
current benefits and any current wage levels. In any proposal 
we submit, that will be part of our proposal.
    Also, our hope is to shave time. Right now, Amtrak has a 
30-year plan; and I didn't mention this, but we would like to 
do it in a third of the time and with very little Federal 
money, hopefully attracting private sector money.
    And just two quick points, again, on the amount of money. 
It is true that the Northeast Corridor currently breaks even. 
There might even be a slight return. And the gentlelady is 
correct that the money does go back in, but that is a very 
minuscule amount compared to the subsidization.
    The subsidization, if you look at it, was $1.5 billion, of 
which approximately half a billion went into operations. That 
means nearly all of a billion went into the Northeast Corridor 
because that is the only corridor that we actually own.
    If you could get a return similar to what they are doing 
with a quarter of a billion a year, escalating up to half a 
billion, giving it back to the Treasury or back into the system 
to improve the system, everyone will benefit--the taxpayers, 
along with others who want long-distance service or intercity 
passenger rail service. So we have the potential for less 
burden for the taxpayer, more money for----
    Mr. Shuster. Would the chairman yield? Would the chairman 
yield for just a comment? Just 30 seconds. We have talked 
about--just 30 seconds. Fifteen seconds.
    Mr. Mica. Thirty seconds. Fifteen seconds.
    Mr. Shuster. We have talked about history here. But 
everybody needs to remember the history of why the rails gave 
up the passenger service. They weren't profitable because the 
interstate highway system came on line and air travel became 
very popular. Now we have a different dynamic in America. 
People want to get back on the rails. So you have got to look 
at the whole history lesson, not just part of it. Thank you.
    Mr. Mica. Right. Well, we do have a very distinguished 
Senator waiting, and he has been very active in this issue. And 
we are pleased to recognize him and have him before our panel 
today. He was very courteous when I went over to his panel a 
few weeks ago. And I want to welcome, again, one of the Senate 
leaders and a very distinguished colleague from the other side 
of the aisle.
    Welcome, sir, and you are recognized.

TESTIMONY OF FRANK R. LAUTENBERG, A UNITED STATES SENATOR FROM 
                    THE STATE OF NEW JERSEY

    Senator Lautenberg. Thank you very much, Mr. Chairman and 
members of the Committee on Transportation and Infrastructure. 
Thanks for the opportunity to come here to discuss my view 
before this committee, a view of what the national passenger 
rail system, and specifically the Northeast Corridor, requires.
    America, as everyone here knows, faces a transportation 
crisis. The highways are jammed, the skyways are jammed, and 
our future depends on the steps that we take to meet the 
economic, environmental, and congestion challenges that face 
our workers and families and businesses every single day.
    But first we have got to recognize some facts. The 
Northeast Corridor is the most densely populated area in the 
United States, and it is not just the density of population 
that we have got to discuss when we talk about the Northeast 
Corridor. Whether for moments of distress or otherwise, it does 
possess the largest financial center in the world, and it is of 
critical business as it does many other industries and 
businesses that are essential to the well-being of our country.
    More than 1,800 trains operate each day on the Northeast 
Corridor--1,800 trains. And on weekdays, more than 700,000 
passengers use these rails daily--700,000 people. The Northeast 
Corridor alone replaces 243 flights daily, and 30,000 cars are 
not on our highways each weekday.
    But put another way, if we shut down the Northeast Corridor 
rail service, you would have to build seven new lanes on 
Interstate 95 just to carry all the travelers that use these 
trains every day. Imagine what that would look like: cars piled 
up on the highways, pollution spitting into the air, pockets 
drained at the pump, businesses waiting hours or days for 
products they need to sell to make payroll and boost the 
economy. The fact is that Amtrak makes our region work, and we 
have got to invest in this critical asset.
    I believe that we ought to look at Amtrak and rail service 
in the same way we might view FAA and the controller services. 
It is essential for our country to have these facilities. We 
can't go backwards, and that means that we have got to 
therefore find ways to invest in the future.
    And we can talk about the private sector; I have had some 
experience there. Last year we spent more than $40 billion on 
highways. Over Amtrak's entire 40-year history, we have spent 
just under $38 billion. And that is worth repeating: Amtrak has 
received less Federal money in its history than highways get in 
a single year.
    Other countries, including China, Spain, France, Japan, and 
Germany, are prioritizing rail investments while we are stuck 
at the station. And this must change. We must be bold enough to 
make the investments that will make our economy and our country 
more prosperous, more efficient.
    We started this process in 2008 when both parties came 
together and passed a passenger rail investment piece of 
legislation that I initiated, and it reauthorized and 
strengthened Amtrak. It was a bipartisan bill, a bipartisan 
bill signed into law by President George W. Bush.
    Our Amtrak law created the high-speed rail grants that we 
are moving forward today in my State and many of your States. 
It also made critical investments in the Northeast Corridor, 
and required Amtrak to work with the States and the Federal 
Government to bring the corridor into a state of good repair.
    Amtrak has been making great strides to improve its service 
in the Northeast Corridor, and the proof is evident in the 
skyrocketing ridership numbers. And we have shortened the tim 
between New York and Boston and New York here, and the 
ridership has followed right behind that, and it has been 
terrific.
    Last year Amtrak's nationwide ridership hit historic 
heights, carrying nearly 29 million passengers, and it is on 
its way to beat that number this year. And I see it directly 
because I take the train at least twice a week, and I see how 
much more difficult it is to get seats and how much more 
crowded the train is.
    Amtrak also recently launched an ambitious and aggressive 
plan to enlist private sector investment, asking the private 
sector to submit a robust business and financial plan to 
develop higher speed rail in the Northeast Corridor. And so 
far, several investment firms have expressed interest in 
working with Amtrak.
    Now, the one thing that we all have to know, and that is 
that investors expect yields on their investment. They expect a 
return. And as a consequence, they are going to want to price 
the product at a sufficiently high price to get that return. So 
we have to be careful about that. Investors know that working 
with Amtrak to strengthen passenger rail will help our economy 
as businesses flock to communities served by faster trains.
    A stronger national rail service will also be good for our 
national security, and the environment that it will help, it 
will be significant in helping our country to kick its 
dangerous oil addiction. But I want to be clear. Privatizing 
the Northeast Corridor is not a smart or viable way to meet 
these challenges.
    You can't forget--it has been repeated here several times--
Congress created Amtrak in 1970 because the private railroads 
could no longer sustain intercity passenger service on their 
own. And to our colleague who said, yes, but we have to 
remember that airplanes came into service and that there were 
more investments in highways--but there hasn't been a similar 
thing happen to Amtrak as our population grew, 100 million 
people in the last 30 years. One hundred million people. So 
what was doesn't work any more.
    If we all do our part, we will be able to build great 
projects like the Gateway Tunnel, an innovative project that 
will expand high-speed rail in the Northeast Corridor. And I 
remind everybody that investments, private investments, in rail 
are going to be quite an accomplishment to complete. The Portal 
Bridge outside Newark would cost over a billion dollars alone 
to get done, but it is essential because you can't continue to 
go over a bridge that is 100 years old without something 
terrible happening.
    Building the Gateway Tunnel and achieving high-speed rail 
service in the Northeast Corridor are no small undertakings. 
Unfortunately, some way we can't afford vital public 
investments right now. But I would argue that we cannot afford 
not to make these investments.
    I built a business. I was chairman of a company that I 
started with two other friends. The company is called ADP; we 
have 45,000 employees today. We had nothing when we started the 
business over 50 years ago, nothing. And so I understand 
something about balance sheets and yield on investments and the 
opportunities you do have to amortize those investments.
    So if we want to be successful in the future, and America 
desperately needs that push, we have got to begin laying the 
foundation today. And the same principle applies here. If we 
want to leave our children and grandchildren a better, safer 
country, we have to make smart investments on their behalf, and 
that means investing in a system that will help us carry 
freight and passengers across this great country of ours on a 
reliable and better environmental situation for our people.
    So I thank you, Mr. Chairman, and I hope that we will have 
opportunities to continue to discuss this situation. And I 
invite you to come back to the Senate along the way, and though 
the participation will be less in numbers, nevertheless we 
respect what you do and we would like to air the views.
    Mr. Mica. Thank you, Senator Lautenberg, for joining us 
today, for your continued interest, for your ringing 
endorsement today of my proposal----
    [Laughter.]
    Mr. Mica. And we are going to rely a lot on your expertise 
in the private sector to bring them very effectively, and 
hopefully productively, into this process; and also for your 
leadership in the Senate, to get the damn thing passed over 
there. So we need you.
    Senator Lautenberg. I will rely on your humor, Mr. 
Chairman.
    Mr. Mica. We need you on board. And again, we are honored 
that you would come over and spend time, show your interest in 
this important subject that is not only important to the State 
you represent, New Jersey, and the Northeast Corridor, but the 
entire Nation. So thank you so much.
    And we will excuse the Senator. You came over from a vote, 
and I know you have to go.
    Senator Lautenberg. Thank you.
    Mr. Mica. And again, we appreciate it.
    May I now yield to--let me see who I have waiting--Mr. 
Petri.
    Mr. Petri. Thank you very much, Mr. Chairman, for holding 
this important hearing today. The Northeast Corridor between 
Washington and Boston, much of which is currently an 
embarrassing national environmental eyesore, holds the 
potential to become a true high-speed rail operation, with 
maximum private participation in a new generation of public/
private partnerships. And I commend you for the priority you 
are giving to this initiative.
    In this regard, I am particularly interested in the 
testimony we will be hearing from the Alliance for Passenger-
Oriented Development. They are proposing station area 
development across the Northeast Corridor as an integral part 
of an emerging high-speed rail system. The plan would capture 
some of the increased value of the development, which in turn 
would help finance high-speed corridor infrastructure and 
operational expenses.
    The organized commercial development plan would put an 
emphasis on intermodal connectors, state-of-the-art, mixed use, 
that can create vibrant communities along the corridor as has 
been done in a number of countries in Europe and other places 
in the world, and is underway in some of the communities here 
in our own country.
    A national reform initiative for rail passenger-oriented 
development has the potential to add a vital new element to 
leveraging private participation in the development of high-
speed service in the Northeast Corridor and the rehabilitation 
of intercity passenger corridors across the country.
    I look forward to working with the committee to craft a 
rail initiative that will encourage competition to transform 
the Northeast Corridor into a true high-speed rail system.
    Thank you, Mr. Chairman. I yield back.
    Mr. Mica. I thank the gentleman.
    Let me recognize the gentleman from New York, Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman. I want to begin by 
thanking you and Ranking Member Rahall for holding this hearing 
on the Northeast Corridor. And I want to thank you, Mr. 
Chairman, and agree with you that any high-speed rail ought to 
start with a major investment in the Northeast Corridor.
    This is where we have the density of population and the 
density of travel population to make high-speed rail viable. 
And I certainly agree that we ought to concentrate here 
initially, at least, rather than trying to spread it all across 
the country with the available funds.
    And I also agree that we ought to look at all different 
financing alternatives, including looking at private/public 
partnerships, looking at getting capital from private sources 
as well as what we have been doing.
    And I certainly hope that the Federal Government will see 
the wisdom of investing a lot of money in high-speed rail along 
the lines--not along the lines of, but certainly, at least, 
along the amounts of--what the President has proposed, which 
was $8 billion or $9 billion in the American Recovery Act. And 
in the bill that the committee developed 2 years ago, we had 
put $50 billion for high-speed rail, and I certainly think we 
ought to be doing at least those amounts of Federal investment.
    I have my doubts, to put it mildly, about allowing the 
Northeastern States--about the proposal that has been outlined 
here. As I understand the proposal, it would envision allowing 
the Northeastern States to take control of the corridor's 
infrastructure and operations and issue an RFP for bids from 
the private sector to finance the design, construction, and 
operation of service.
    But we have started down this road before. In PRIIA, we 
required DOT to issue a similar RFP, and last I heard, DOT had 
not heard any real expressions of--any real responses for the 
Northeast Corridor. At the field hearing in New York earlier 
this year, we had a roundtable with representatives from the 
private sector, and as I recall, any interest indicated there 
was predicated on some form of backing from the Federal 
Government as a backstop.
    Now, I have supported the chairman in his quest to research 
and review privatization proposals, but I certainly do not 
think the case has been made to justify moving ahead with any 
such scheme at this time. And we must absolutely not take any 
action that would disrupt current service or cost good-paying 
jobs, which I fear this proposal might very well do.
    I also question the idea of handing over the NEC, the 
Northeast Corridor, to the States. Aside from the fact that 
this would just shift the burden to local governments, it also 
risks any State being in the position of a Rhine River pirate, 
being able to block the entire corridor.
    Any State along the way could pull out of the program, 
could decide that it didn't want to or didn't want to invest as 
much money or wanted to charge a higher fare, perhaps. And as 
we have seen from some of the States that recently withdrew 
from high-speed rail proposals, in the Northeast Corridor, 
which goes from Washington through Maryland, Delaware, 
Pennsylvania, New Jersey, Connecticut, Rhode Island, 
Massachusetts--what is that, eight or nine States--any one 
State could interfere with all the others if we were to do 
this. So I don't think that is a--I think there are a lot of 
dangers with that.
    Ironically, Amtrak itself just issued an RFP to solicit 
proposals from private companies to partner with Amtrak to 
finance infrastructure and equipment upgrades. I am not clear--
it is not clear to me--why it is better for the States to 
partner with the private sector as opposed to Amtrak or the 
Federal Government partnering with the private sector.
    Amtrak provides a service that is much too valuable to risk 
by going out with a scheme that isn't fully prepared yet. I 
certainly urge questions as we move forward, and I certainly 
hope--I don't think that we are prepared to go ahead with any 
privatization scheme at this point.
    And I want to echo Ms. Norton in saying that I hope that 
any such provision is not in the reauthorization bill because 
we all know we need to unify on a major reauthorization bill 
for a lot of reasons. And we may or may not be able--I doubt we 
will be able to unify under this kind of a proposal in time for 
a reauthorization bill, and that it probably ought to stand on 
its own as a separate proposal.
    In any event, I thank the chairman for calling this hearing 
where we can explore some of the perhaps advantages and some of 
the real pitfalls in these kinds of proposals.
    I thank you and I yield back.
    Mr. Mica. I thank the gentleman.
    I recognize Mr. Graves, the gentleman from Missouri.
    Mr. Graves. Thank you, Mr. Chairman. I want to thank you 
and Ranking Member Rahall for, obviously, holding this 
important hearing today. And I would also like to welcome our 
witnesses.
    The Northeast Corridor has a great potential for becoming 
the first true high-speed rail corridor. Unfortunately, the 
existing passenger rail service operator in this corridor will 
never meet the high rail standards that we see in other places.
    Currently, Amtrak has a de facto monopoly in passenger rail 
service on the Northeast Corridor and across the country, and 
is heavily subsidized by the American taxpayers. I believe 
there are private companies out there that can offer better, 
cheaper, and more efficient rail service. In fact, I know there 
are.
    Herzog, a company that is headquartered in my district, 
operates a few rail services in the U.S., and on each route, 
ridership has significantly increased over the last 5 years. If 
we open up the Northeast Corridor to competition using an open 
and transparent bid process, companies like Herzog can bring 
innovation to this corridor and perhaps one day offer true 
high-speed rail service. And this can be done with private 
investment.
    I keep hearing, and the gentleman from New York reminded 
us, about the 2008 PRIIA law. And I got to thinking and 
consulting with my friend here to the right. Mr. Shuster put a 
provision in there to require that we open up, at list for bid 
or for competition, at least two of Amtrak's money-losing 
routes. That was in the 2008 PRIIA law.
    Amtrak has failed yet to do that, to open up any of those 
two to competition. So we keep hearing over and over and over 
again today that there aren't any private companies out there 
that are interested in doing rail service any more, passenger 
rail service, but yet we can't even find out if anybody is 
interested or not. So how would we even know?
    Again, I mentioned in my opening statement or just a few 
minutes ago what I was reading, that we need an open and 
transparent bid process. Well, let's have it. Let's have an 
open and transparent bid process and see what interest is out 
there and if private investment can do a much better job.
    I believe they can, and I appreciate, Mr. Chairman, the 
opportunity to speak.
    Mr. Mica. Thank you. I will let Ms. Brown get settled. We 
will go to Mr. Denham. I know he had requested time. And then 
we will catch Ms. Brown as soon as she takes the chair.
    Mr. Denham, you are recognized.
    Mr. Denham. Thank you, Mr. Chairman, not only for 
recognizing me, but thank you for your leadership and oversight 
on this issue. I want to reiterate that I support the concept 
of high-speed rail. And even in my home State, as a State 
senator, I voted for the high-speed rail bond, a $33 billion 
project, $9.95 billion the taxpayers supported in California.
    Now that project has doubled, with no oversight. Private 
investors continue to talk about it, but there is no business 
plan. So my concern as we continue to look at public/private 
partnerships is making sure that you have not only got a 
transparent process, but can show how we can save taxpayer 
dollars.
    I agree with the chairman--we need an alternative to 
Amtrak's vision as well in the Northeast Corridor. There is a 
staggering cost of a $117 billion project in my State. While it 
will go from L.A. to San Francisco, again, a 400-mile project 
was proposed at $33 billion, and it is supposed to be done in 
just a few years. This proposal is a 30-year project.
    I agree this can be done in our country. It was done in 
Japan before I was born. Due to increasing debt, that rail 
system was also privatized in 1987. Now each private regional 
operator pays the Government a leasing fee for access to the 
line, which is then used to invest in new infrastructure. Since 
privatization, annual ridership on the original line from Tokyo 
to Osaka has risen from 102 million in 1988 to 138 million in 
2010, with a high mark of 151 million passengers in 2008.
    That line also has reduced travel times from 4 hours in 
1964 to its current 2 hours and 25 minutes. This is over a 320-
mile line. By comparison with the Northeast Corridor, which 
stretches 225 miles from DC to New York, it takes 2 hours and 
45 minutes.
    As this committee continues its oversight over high-speed 
rail in America, I encourage its focus on creating partnerships 
with the private sector. I would much rather see a private 
individual on the hook for making sure the business plan works 
and the ridership numbers pencil out than have something that 
is going to cost billions of dollars in subsidies from people 
in my district.
    I believe a purely publicly funded and publicly run system 
just will not meet the needs of taxpayers. We must see better 
planning and more creative financing in order to increase 
efficiencies and produce long-term transportation benefits for 
all of America.
    Thank you, Mr. Chairman. I yield back.
    Mr. Mica. Thank you. And I am pleased to yield at this time 
to the ranking member of the Rail Subcommittee, Ms. Brown, the 
gentlelady from Florida.
    Ms. Brown. Thank you, Mr. Mica, for holding this hearing, 
and Mr. Rahall, today on whether or not we should have more 
competition in the Northeast Corridor to private competition 
for the development of high-speed rail.
    I, too, support the private sector involvement in passenger 
rail and believe there is a lot we can learn from the 
experience of the private sector. But I don't support cherry-
picking the best routes on our national system and turning them 
over to private companies.
    We need to make sure that people that ride public 
transportation don't have to worry about the service, not some 
stockholder who is riding around in a limousine. That is the 
problem we are facing in healthcare; the insurance companies 
aren't concerned about all the care their customers get. They 
are concerned about how much money their stockholders make. And 
I can also add the oil industry to that.
    I want to take this time to express my strong support for 
Amtrak. Congress has micromanaged and financially stopped them 
for most of their existence. We created Amtrak because the 
freight rail couldn't make a profit and didn't want it on 
passenger rail, yet we continue to hammer Amtrak for making 
money.
    And let me be clear. There is no form of transportation 
that pays for itself, none. The Bush administration even went 
so far as to oppose in the fiscal 2006 budget to force Amtrak 
to go into bankruptcy. We demand that they operate in the 21st 
century a rail system and infrastructure built in the 1890s; it 
defies logic.
    Since we are discussing private sector involvement in rail 
today, I want to once again express my deep disappointment over 
Governor Rick Scott's decision to kill high-speed rail for the 
citizens of my home State of Florida. The high-speed rail plan 
for Florida served as a perfect example of a successful public/
private partnership that would have created tens of thousands 
of jobs. The Florida DOT said as much as 48,000, and the 
private sector said an additional 10,000 or 15,000 jobs.
    The high-speed rail between Tampa and Orlando was going to 
be one of the models for high-speed rail in the country, and we 
had eight different consortiums that wanted to participate. Now 
we have to wait a little longer for having high-speed rail in 
Florida, but we will get there.
    But that is why I am disappointed particularly that the 
committee invited the Reason Foundation to testify, knowing 
that Governor Rick Scott made his decision based on their 
recommendation. If anyone thinks that asking the private sector 
to invest significant money and manpower to apply to operate a 
high-speed rail system and then cancel it, cancel the project, 
we need to be clear that the private sector had invested 
millions getting ready for Florida. Millions.
    I met with someone yesterday. They talked about this is not 
the first time they have gone and invested dollars. They did it 
5 years ago, and now once again. So if we are going to be a 
serious partner, we have got to find a way that the whims of 
politics doesn't affect the public/private relationship.
    And with that, Mr. Chairman, I yield back the balance of my 
time, and I am waiting for the presentations.
    Mr. Mica. I thank the gentlelady for her spirited 
commentary.
    And we had another request for time. Mr. Southerland, the 
gentleman from Florida.
    Mr. Southerland. Thank you, Mr. Chairman. And I also 
represent the State of Florida, and I applaud our governor for 
the courage he took not to invest, not to take this loss 
leader, and take the taxpayers in the State of Florida down a 
boondoggle. This was clearly a bridge to nowhere.
    And so I am just as passionate for fiscal responsibility. 
Florida's 2nd Congressional District expects much, and when you 
are given much, they should expect much. We are broke. We are 
broke. We are broke here at the Federal Government, and in 
Florida, I saw our legislature have to find $4 billion because 
general treasury revenues were down for like the fourth 
consecutive year. I think the American people have had enough.
    I will tell you what bothers me is we had our Senator today 
came, and he spoke about privatization and the dangers of 
privatization because there is an expectation of a return on 
investment, as if that is a bad thing. And yet we take the 
taxpayers' money every single day and we think a return on the 
investment is a bad thing for them, that they shouldn't expect 
a return on the investment.
    That is why Washington, DC, is broken. It is broken. How 
pathetic that we will take money from the American citizens who 
are working hard to keep their nose above water. And we take 
their money and we are pathetic with it. We pass a DOT project, 
and it takes 13 years. Thirteen years.
    We don't run a competitive business in our Postal Service 
and in Amtrak. And so we need to ask this question. If this is 
something we had never started, would we start it today? And 
ask hard questions. In light of our past circumstances, our 
current situation, and our future hopes and dreams, what is the 
very wisest thing for us to do? The American people deserve us 
to ask that question.
    Mr. Chairman, I applaud you for having this hearing. I 
applaud you for examining other opportunities than the broken, 
failed systems that this city has applied to so many areas in 
our lives. I applaud you and I thank you, and applaud Governor 
Scott for not taking the bait.
    Ms. Brown. Mr. Chairman, I ask unanimous consent----
    Mr. Mica. The gentleman yields back. Did you have a quick 
comment?
    Ms. Brown. Yes, I did, sir. I ask unanimous consent to 
include in the hearing record a report just released by the 
British Government showing that the privatization has not 
worked and it has increased costs, and also submit for the 
record this morning's Financial Times article announcing that 
Virgin Rail is turning its line back over to the Government.
    And I also want to say that I want to submit for the record 
the report that indicates that the States that are benefitting 
from Florida's gasoline tax--the fact is, when I was elected, 
for every dollar we sent to Washington, we were getting 77 
cents back. Now we are getting close to 92 cents back. But we 
still are a donor State. The money that Rick Scott sent back is 
going to my colleagues, and they are very happy, and they are 
going to invite the governor to the ribbon-cutting.
    Mr. Mica. I thank the gentlelady. And without objection, we 
will include in the record the articles referred to.
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    Mr. Mica. I might say, just before we recognize our 
witnesses--I don't think there were any other Members who 
sought recognition, so we will go to our witnesses--but just 
two things for the record.
    One, the Florida project was not in fact high-speed rail. 
It was intercity passenger service that went from Tampa to the 
Orlando airport, a distance of 84 miles, in 1 hour. It did not 
connect into any fixed system. Tampa and Orlando currently do 
not have a fixed system. Orlando is planning, and we hope the 
Governor approves it, a fixed commuter rail system. And the 
part from the tourist area to Tampa did show very negative 
ridership figures as far as high subsidization costs.
    And prior to the gentlelady's arrival, the ranking member--
we did cite and included in the record accurate and up-to-date 
information on two of the lines that Virgin Rail operates that 
are returning about a quarter of a billion dollars now with no 
subsidization to the Federal Government, plus a $50 million 
return to the investors. So we also will make certain that 
information is in the record and has been referred to.
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    Mr. Mica. So now we will go to our witnesses. We were 
pleased to have earlier Senator Lautenberg.
    Now we have Carlos Bonilla, who is an Adjunct Fellow, who 
was welcomed very heartily by the ranking member. He is from 
the Reason Foundation. Ignacio Jayanti is president of Corsair 
Capital.
    We have James Richardson, senior vice president of Real 
Estate Asset Services, Forest City Enterprises; Thomas Hart, 
vice president of the governmental affairs at the US High Speed 
Rail Association; Michael Goetz, who is executive director of 
the Railroad Cooperation and Education Trust; and Mr. Ed 
Wytkind, who is president of the Transportation-Trades 
Department at AFL-CIO.
    Welcome, all of our witnesses. Thank you for your patience. 
As you can see, we will have some testimony from you. We have 
had great interest from our panel here today, and we are 
continuing the debate, hopefully in a constructive manner, to 
achieve, again, high-speed rail where it can be successful. And 
hopefully, as we address the Northeast Corridor and approaches 
to that, you will address that in your commentary today.
    So with those comments, let me first turn to Mr. Bonilla 
from the Reason Foundation. Welcome, sir, and you are 
recognized.

TESTIMONY OF CARLOS BONILLA, ADJUNCT FELLOW, REASON FOUNDATION; 
    IGNACIO JAYANTI, FORMER MEMBER OF THE WORKING GROUP ON 
INTERCITY PASSENGER RAIL, AND PRESIDENT, CORSAIR CAPITAL; JAMES 
 H. RICHARDSON, SENIOR VICE PRESIDENT, FC ASSET SERVICES LLC; 
  THOMAS A. HART, JR., ESQ., VICE PRESIDENT FOR GOVERNMENTAL 
 AFFAIRS AND GENERAL COUNSEL, US HIGH SPEED RAIL ASSOCIATION; 
  MICHAEL GOETZ, EXECUTIVE DIRECTOR, RAILROAD COOPERATION AND 
   EDUCATION TRUST (RAILCET); AND EDWARD WYTKIND, PRESIDENT, 
           TRANSPORTATION TRADES DEPARTMENT, AFL-CIO

    Mr. Bonilla. Good morning, Mr. Chairman, members of the 
committee. It is a pleasure to be here. I am Carlos Bonilla, 
former Special Assistant to the President, George W. Bush, for 
Economic Policy. I am here today as an Adjunct Fellow of the 
Reason Foundation.
    My original work that forms part of the basis for this 
testimony was originally published by the American Action 
Forum. My coauthor is Robert Poole, director of transportation 
policy at the Reason Foundation. He has advised the U.S. DOT 
Office of the Secretary, numerous Federal and State agencies 
and State DOTs, and for 20 years he has specialized in 
transportation policy, including public/private partnerships.
    As you mentioned earlier, in 2010 Amtrak laid out its 
vision for high-speed rail at a cost of $117 billion. That 
system would have shown an operating profit of $928 million a 
year, but fully amortizing the construction costs adds an 
additional $7.2 billion, for a built-in loss of $6.25 billion 
per year. Envisioning 17.7 million passengers, each of those 
trips would have had a subsidy of $400.
    Clearly, not all benefits from high-speed rail are captured 
directly on the train. A study in 2010, however, offered 
cautionary lessons from the European and Japanese experience. 
Among them were:
    High-speed rail does not generate net new economic 
activity, nor does it attract new firms and investment to a 
country, but it does help to consolidate and promote ongoing 
economic activities in large cities.
    High-speed rail may put medium-sized cities at a 
disadvantage due to some shifting of economic activities, and 
political pressures for additional stops often lead to higher 
costs and reduce benefits.
    It is widely acknowledged that only two of the world's 
high-speed lines may be recovering their capital costs as well 
as their operating and maintenance costs from fare box 
revenues, the first Japanese line, from Tokyo to Osaka, and the 
first TGV from Paris to Lyon. All subsequent high-speed rail 
lines have involved significant Government subsidy of their 
capital costs.
    The overall global experience cautions against assuming 
high-speed rail in the Northeast Corridor will be a self-
supporting project. The challenge is to figure out how to 
harness the incentives provided by a public/private partnership 
to minimize the degree of taxpayer subsidy required.
    A notable model for a public/private partnership was found 
in two recent high-speed rails, the TGV from Tours to Bordeaux 
and the Spanish Rail from Perpignan to Figueres. In both cases, 
Government is providing approximately half the project costs. 
In both cases, the revenue will come from fees paid to the 
company by train operating companies.
    Thus, in those two projects, the infrastructure companies 
are taking on traffic risk rather than relying on guaranteed 
annual payments from the Government. Thus, all stakeholders 
have common interests in the economic success of the venture, 
from design and construction all the way to operation.
    Part of the reason for Amtrak's planned huge costs was its 
assumption of mostly new right-of-way, with curves no sharper 
than a 3-mile radius, much new station construction, and a 
somewhat arbitrary 220-mile-an-hour top speed. The central 
question is, how much is enough?
    Would, for example, adding high-speed rail in the Amtrak 
right-of-way be good enough to attract significant new 
ridership? And how much would rail passengers be willing to pay 
for various reductions in trip times?
    Assuming Congress decides to separate the NEC from Amtrak 
in order to revamp it via long-term private/public partnership, 
a useful first step would be to issue a request for information 
from potential developer operators to present the elements of a 
viable business plan. The RFI should make clear that Congress 
is willing to start with a clean sheet of paper.
    Among the factors that might make a considerable 
difference:
    No specified speed requirement, leaving that to be 
determined as part of the business plan;
    Freedom to define stations served and not served;
    Exemption from the Buy America provisions to permit 
acquisition of off-the-shelf rolling stock from abroad;
    Labor-management relationships based on the premise that 
compensation must be based on the profitability of the 
enterprise, which could, of course, include profit-sharing.
    And a comprehensive review of the Federal Government of how 
existing policies and regulations either foster or hinder the 
goal of successful high-speed rail.
    It would be wise for Congress to take the prior step of 
separating the NEC organizationally from Amtrak. Such a move 
would increase the transparency of Amtrak's financial reports, 
which currently blend the NEC with all other operations, making 
it difficult for parties to accurately gauge the risks and 
rewards of entering into a partnership.
    One key question that should be explored is whether the 
private sector would be interested in simply revamping, 
operating, and maintaining the infrastructure, or whether they 
would prefer to develop high-speed rail and other services as a 
vertically integrated infrastructure plus train operations 
business.
    As general guidelines for the RFP, we suggest:
    Offering a long-term concession for the NEC right-of-way, 
with or without train operations;
    Permitting multiple train-operating companies to provide 
service;
    Teams would compete on the least amount of Federal capital 
subsidy required for construction; no operating subsidies would 
be offered.
    And only companies or teams that had previously submitted 
their qualifications and made it onto an approved short list 
would be allowed to respond to the RFP.
    Finally, the costs and benefits of high-speed rail must be 
weighed against the costs and benefits of alternatives.
    Thank you very much.
    Mr. Mica. Thank the gentleman.
    And I will recognize Mr. Jayanti, who is president of 
Corsair Capital next. And we will withhold questions till we 
have heard from all the witnesses. Thank you.
    Mr. Jayanti. Mr. Chairman, distinguished committee members, 
I thank you for allowing me to testify today.
    I think the debate has been well-framed by the committee so 
far. And I would like to take a step back, before talking about 
the Northeast Corridor, to emphasize that this should be about 
creating jobs, improving service quality on the corridor, 
improving the frequency of service as well as reducing trip 
times, all within a goal of having a better financial model for 
the U.S. Federal Government.
    By way of background, I am an investor and a businessman. 
In 1997, I was invited by the then-chairman of this committee, 
Bud Shuster, to participate in the working group on intercity 
passenger rail. The key conclusion of the majority side of this 
working group was that a division between the infrastructure 
management and the operations afforded the best chance for 
preserving, and in fact renewing, passenger rail service in 
this country. I believe that this is still the case today.
    The goal of the committee is to open the Northeast Corridor 
to private competition for development of high-speed rail. I 
believe the solution is to separate the infrastructure 
management from the transportation service. This will open up 
opportunities for competition, competition to bring in new 
operators to operate alongside Amtrak in providing passenger 
rail service; competition for managing the infrastructure from 
leading engineering, construction, and logistics firms; and 
competition for all the new work contracts and new employees 
that will be required to revitalize the corridor.
    The vision of this proposal takes into account a very 
positive view of the Northeast Corridor passenger rail 
potential. It sees the tremendous untapped business 
opportunities. And most importantly, something that hasn't been 
said before, the private sector is willing and prepared to make 
a substantial investment in the corridor, along the order of 
$50 to $60 billion of private sector capital, over the lifetime 
of this concession.
    This, I emphasize, is $50 to $60 billion of private sector 
investment with no Federal subsidies to maintain the 
infrastructure, a very important point in the context of my 
earlier comment around managing this within a set of financial 
constraints that face the Federal Government today.
    As part of the vision, this plan envisions reduced trip 
times between New York City and Washington, DC, for example, of 
2 hours versus 3 hours currently. There are 14 new train 
stations planned, and we expect to develop effectively a super-
subway system along the Northeast Corridor with more passenger 
options, more reliable, faster, and less expensive service. We 
will help establish dedicated airport express train services.
    We do believe that there is great demand for passenger 
service that is not being met today. The Northeast Corridor 
ridership numbers, as stated earlier by the chairman of this 
committee, are static. They haven't moved in 30 years. That is 
not a success.
    This is the most densely populated and affluent corridor in 
the world. But the service over the past 30 years has not 
adapted to meet the needs of the traveling public. The problem 
is the current model, which doesn't allow for competition and 
fails to address long-term, significant need for investment in 
the infrastructure.
    The plan that we have devised can be implemented and does 
address these issues. The infrastructure management 
organization plan, the so-called IMO plan, sees Amtrak 
separated into two federally owned entities.
    First, Amtrak as a passenger rail service entity, continues 
to provide transportation services to its customers. The second 
Federal entity would own Amtrak's current infrastructure, 
mostly the Northeast Corridor, and conduct a competitive 
solicitation to select a private sector infrastructure manager 
to manage the infrastructure. This organization would be 
subject to strict oversight, reporting requirements, and 
regulations.
    The infrastructure manager would borrow up to $25 billion 
from the RRIF program. That loan would be fully secured so 
there is no risk on that principal to Federal Government or 
taxpayers. All NEC stakeholders are protected. Organized labor 
would have all of its existing contracts honored, pay increases 
expected for all the infrastructure workers, as well as 
thousands of new jobs created.
    The commuter carriers would be granted vested operating 
rights and avoidable cost access fees to be maintained. There 
is no additional financial burden on the States, and more 
resources freed up for Amtrak's nationwide system.
    The Federal Government and the taxpayer will continue to 
benefit from the ownership of the corridor and the significant 
upgrades that would be achieved through investments of over a 
billion dollars a year during the life of this concession. This 
will also make operations very much more available for the 
traveling public.
    The status quo has failed. Our plan is transformative. The 
model relies on proven principles of competition with Federal 
oversight and public sector partnership. This model is 
consistent with all other modes of transportation and the way 
the rest of the world is going in terms of how it structures 
passenger rail service.
    It is about creating jobs. It is about improving the 
service in the corridor, within the financial constraints and 
without further Federal funding and significant, $50 to $60 
billion private investment.
    Thank you very much.
    Mr. Mica. Thank you for your testimony.
    We will recognize Mr. Richardson, who is the senior vice 
president, Forest City Enterprises.
    Mr. Richardson. Mr. Chairman and distinguished members of 
the committee, I thank you for this opportunity to testify. 
This testimony is on behalf of Forest City Asset Services, 
which together with Woolpert has formed an Alliance for 
Passenger-Oriented Development, APOD.
    In previous testimony introduced into the record by 
Congressman Tom Petri on March 11, we recommended an organized 
approach to station area development that would make commercial 
improvement an integral element in the revitalization of 
passenger rail corridors across the country.
    The goal is to create a package that provides a stream of 
revenues from escalating land and commercial values in the 
station area. This revenue can then be plowed back into 
operating subsidies, maintenance, and capital projects across a 
high-performance intercity and urban passenger rail corridor.
    Currently, station-oriented development is undertaken on an 
ad hoc basis. There is frequently little coordination between 
economic development opportunities, passenger rail operation 
itself, and the intermodal connections to that operation. We 
submit that this new proposal can be part of a holistic 
solution to the most vexing problem of providing high-
performance passenger rail corridors, additional streams of 
revenues that will underpin the operations.
    A summary of our legislative proposal is attached to the 
end of this testimony. We believe this approach can apply to 
any urban rail or intercity passenger corridor, and is ideal 
for the Northeast Corridor. There are incredible commercial 
development opportunities along the Northeast Corridor.
    With this plan, we are proposing to capture some of the 
value of these developments, opportunities to help finance 
high-speed corridor infrastructure, investments, and 
operational expenses. Following are the principles that we 
recommend for the Northeast Corridor.
    A corridor-wide real estate plan should be developed under 
a master planner development administrator, MPDA. While 
certainly European and other international developers with 
experience maybe subcontractors, this should be an American-led 
planning effort.
    The MPDA would have specific responsibilities. Prior to any 
competition that would open the Northeast Corridor to public/
private partnership control, there should be a survey of all 
available real estate and an overlay of an estimate of 
development potential that should be made available to help 
support the infrastructure, operation expenses, and development 
opportunities that would be available to bid consortiums.
    Following the completion, the design, construction, 
management, operation, maintenance of the high-speed rail 
system, and commercial development for the corridor should be 
under the singular control of a corridor management group, 
which will work through the MPDA to:
    Create revenue capture assessment districts in each station 
area;
    Establish a Northeast Corridor rail corridor development 
fund that will plow back revenue into infrastructure and 
ongoing high-speed rail service requirements;
    Create continuity with common branding across all station 
areas in the corridor, with maximum revenue generation from 
advertising and related sources, as well as
    Coordinating all the stations to create destination centers 
that will drive ridership and revenues.
    Combine the above to establish a core development program 
that will be corridor-wide. The core program would generate 
income and be under the direct ownership and control of the 
corridor management group. This should not be less than 10 
percent of the total target commercial investment. These will 
be in central properties, particularly those tied to intermodal 
connections.
    The control of the core will provide leadership and 
leverage. This will, in turn, yield consistency and financial 
stability over the entire corridor commercial development 
program.
    Because these projects will combine public interest 
mobility and rail access with commercial development, pure 
commercial bank interest rates and terms will not work. 
Therefore, we propose to access innovative finance such as the 
Railroad Rehabilitation and Improvement Financing and the 
Transportation, Infrastructure, and Innovation Act that can 
leverage private investment in a true public/private P3 
arrangement.
    As America is lagging far behind most of the developed 
world in high-speed rail, we would suggest a special initiative 
for high-performance corridor development in the Northeast 
Corridor and other emerging corridors. Perhaps a national 
corridor bonding or a passenger corridor infrastructure bank 
could be established.
    Through this dedicated mechanism, this innovative finance 
could be made available to each corridor for both operation and 
qualified station area development. This program should be 
deficit-neutral. Revenues from the corridor development fund 
could be used to pay back the funds, the bonds, as well as to 
support operational cost.
    This proposal will provide a new source of revenue for the 
basic maintenance and upkeep of the high-speed rail operation. 
Just as importantly, it can be made a large contribution by 
creating vibrant urban communities with state-of-the-art 
intermodal station areas that will integrate access to 
passenger rail service with other transportation options.
    In conclusion, we propose Congress make station area 
development an integral part of emerging high-speed rail 
operation under the control of a common corridor management 
group in the Northeast Corridor. We believe the same concept 
can be applied to the designated State-supported corridors that 
have the potential to become the backbone of a high-performance 
American intercity passenger system.
    By engaging P3s and station-oriented development together 
with streamlining regulatory approval, we believe the objective 
can be achieved in the shortest possible timeframe.
    And I thank you for the opportunity.
    Mr. Mica. Again, we thank you for your testimony.
    We will now recognize Mr. Thomas Hart. He is the vice 
president of governmental affairs for the US High Speed Rail 
Association.
    Welcome back, Mr. Hart.
    Mr. Hart. Thank you, Chairman Mica. Thank you, Ranking 
Member Rahall, Subcommittee Chair Shuster, and Subcommittee 
Ranking Member Corrine Brown. On behalf of the United States 
High Speed Rail Association, its directors Andy Kunz, Joe 
Shelhorse, and its 250 members, I extend greetings to this 
prestigious Transportation and Infrastructure Committee.
    I am here representing the United States High Speed Rail 
Association as its vice president for government affairs and 
general counsel. I also serve as the director of the Washington 
office of the national law firm of Quarles & Brady.
    The United States High Speed Rail Association is a 
nonprofit association committed to advancing a state-of-the-
art, nationwide, true high-speed rail system in America. Our 
mission is to build widespread public, business, and political 
support for major investments in the Nation's high-speed rail 
network by the public the private sector.
    America has a history of investing in transportation 
infrastructure, with the Government funding the base 
infrastructure and private companies operating the 
transportation vehicles that work within that base 
infrastructure. This is how our highway system works. It is how 
our aviation system works.
    The infrastructure was built and is owned and maintained by 
the Government, while the vehicles are operated by private, 
for-profit companies. Given today's economic and political 
environment, we believe this is the best model for the new 
high-speed rail network in America. It is also the way many 
high-speed rail systems are developed and are being operated 
around the world.
    The key to unlocking the great value of the Northeast 
Corridor is twofold. First of all, we must upgrade the network 
in the Northeast Corridor to the international standards that 
the chairman spoke about earlier. We need to reach speeds of 
220 miles an hour, or even faster. That can only be done with 
dedicated track.
    Number two, the train's operations need to be separated 
from the infrastructure operations, as it is in other forms of 
transportation in this country. This will allow private, for-
profit rail operators to compete for passengers in the 
Northeast Corridor, and the infrastructure would be owned and 
controlled by the U.S. Government. However, it could be 
maintained and managed by private companies for a profit.
    Mr. Chairman, as you know, this committee is well-known for 
its bipartisanship. But this particular issue sharply divides 
this committee. There are some on this side that would like to 
zero out Amtrak's budget. There are others on this side that 
might give Amtrak sacred cow status and continue to throw money 
at it.
    The United States High Speed Rail Association is somewhere 
in the middle. Over the past 40 years, Amtrak has provided a 
unique service, a valuable public service to the Nation as its 
primary carrier of the Nation's passenger rails. Amtrak has 
over 19,000 employees, many of whom come from 13 organized, 
hard-working, deserving employee unions.
    Amtrak has a very tough job. It coordinates eight corridors 
in rail and 2,000 trains per day over the Northeast Corridor 
track. Amtrak deserves credit for their recent commitment to 
high-speed rail by appointing Al Engel as their vice president 
for high-speed rail deployment. Al is a seasoned veteran and an 
expert in this field. Amtrak and the Nation are lucky to have 
him leading this important project.
    Although Amtrak has made a number of recent advancements, 
including making a privilege last year, it must do more to 
reach its full potential. The current slogan in Washington is 
that everything is on the table, and that must include Amtrak.
    Although the United States High Speed Rail Association does 
not support the privatization of Amtrak, the association does 
call for rapid improvement in rail service created by 
competition, innovation, and private investment.
    Over the past 40 years, Amtrak has become one of the 
Nation's major recipients of Government funds and subsidies, 
getting over $38 billion. Amtrak recently received $450 million 
for improvements in the Northeast Corridor. Although Amtrak has 
begun its procurement process, it has yet to develop a 
comprehensive plan for small business involvement that set 
goals, timetables, and procedures.
    Like the Federal Rail Administration, Amtrak lacks clear 
Government mandates for small and minority business 
development. As this committee examines ways to increase 
private investment and create jobs in the rail industry, this 
committee should also develop procedures and programs to ensure 
that small business has a role to play in the procurement by 
Amtrak.
    We need to continue our investment in high-speed rail, and 
under this current climate, that must depend on the private 
sector. The Obama administration did a great job over the last 
2 years, but now it is time for public/private partnerships to 
take the lead.
    The long version of my testimony analyzes nine public/
private partnerships that have been successfully initiated 
around the world. That 19-page report will be posted on our 
website today at ushsr.com, and it has been circulated to the 
members of this committee earlier.
    So we encourage public/private partnerships. We also have 
proposed legislation called the Private Investment in High 
Speed Rail Act of 2011, and we would like the chairman to keep 
the record open so that I could submit a copy of that proposed 
legislation in this testimony.
    [The information follows:]
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    Mr. Hart. Moving forward, we look forward to working with 
this committee in developing the right model for public/private 
partnerships. And we look forward to your questions and 
comments today. Thank you very much.
    Mr. Mica. Thank you, Mr. Hart.
    We will turn to our next witness, which is Michael Goetz, 
executive director of the Railroad Cooperation and Education 
Trust Fund. Welcome, and you are recognized, sir.
    Mr. Goetz. Thank you, Mr. Chairman, Ranking Member Rahall, 
distinguished committee members. My testimony today is on 
behalf of 30 railroad contractors and 3 international 
construction unions that build and maintain rail infrastructure 
across America.
    We ask that the rail title of the next Surface 
Transportation Act authorize a high-performance, intercity, 
urban passenger rail network. We suggest that the Northeast 
Corridor should be the crown jewel in that network. We agree 
with the President's goal that within 25 years, 80 percent of 
all Americans should have the option of a high-speed 
performance rail passenger alternative to highway and aviation.
    In these difficult budget times, we know that we cannot 
meet the goal of a revitalized passenger rail network by 
enacting a massive new grant program, and we did with the 
creating of the interstate highway network. Therefore, we 
support new approaches to leverage resources through the 
introduction of innovative financing, public/private 
partnerships, and competition in the design, construction, and 
maintenance of rail passenger systems.
    High-speed rail service in the Northeast Corridor and the 
West and the existing State-supported passenger corridors 
should be the foundation for a new national, intercity, and 
urban passenger network.
    To transform the Northeast Corridor and existing intercity 
and urban routes into a high-performance network will be a 
massive undertaking over a long period of time. To be 
successful, it must have major private sector involvement and 
cost control in the construction, maintenance, and 
rehabilitation of this rail network.
    To provide the maximum value for the taxpayers' dollars, we 
specifically call for fair and open competition for the 
construction of publicly funded or financed rail projects. We 
previous the following policy for rail construction.
    Number one, States and public authorities shall 
competitively bid out all publicly funded or financed rail 
construction, rehabilitation, and maintenance projects on 
publicly owned rights of way. Federal, State, regional, and 
local public authorities shall create no impediment to full, 
fair, and open competition on federally funded projects.
    Number two, to the maximum extent possible, States and 
public authorities shall competitively bid out all publicly 
funded or financed rail construction, rehabilitation, and 
maintenance projects on private rights of way. While the burden 
of proof should favor competition, we support limited 
exemptions to honor existing rail labor agreements in effect on 
the date of passage of the statute. Clear guidelines should be 
established to promote fair competition and enforcement by the 
Department of Transportation and the States. Suggested 
guidelines have been attached to my testimony.
    In recent months, there have been some unfortunate 
statements made before the Rail Subcommittee that our 
contractors and their employees have less than professional 
skills and qualifications because they do not operate under the 
railway labor laws. This is nonsense.
    The fact that our employees are organized under the 
National Labor Relations Act, along with other private sector 
employees in America, does not adversely impact the quality of 
the work we perform or the conditions of employment. We have 
superior benefits with solid health and pension plans. We 
jointly administer world-class training programs and utilize 
work standards that are second to none.
    We perform rail maintenance and construction efficiently 
and safely, as well as any in-house labor force. The skilled 
construction workers, from the carpenters, laborers, and 
operating engineers, perform complex construction projects in a 
wide range of industries, including rail projects.
    It is true that our companies operate in a highly 
competitive environment. Our unions and management work closely 
together through cooperative strategies that demand high 
quality at the best price. The bottom line is we must get our 
jobs done safely, on time, and on budget. We will happily 
compare our record of quality, safety, and productivity with 
any similarly situated in-house workforce in America.
    We also present a unified labor-management voice on 
legislative issues, as we are doing here today. We will work 
with Congress for a specific proposal on the Northeast 
Corridor. What we respectfully ask is that principles of 
competition for rail construction projects be applied here and 
on all other publicly funded rail projects. That way, as a 
high-performance American passenger rail network is developed, 
the taxpayer will receive the highest quality work at the best 
price.
    Thank you.
    Mr. Mica. Thank you, Mr. Goetz.
    And now, Mr. Wytkind, please proceed.
    Mr. Wytkind. Thank you, Mr. Shuster. Thank you, of course, 
to Mr. Mica, Ms. Brown, and Mr. Rahall, and other distinguished 
members of the committee. Thank you for inviting transportation 
labor to testify today on behalf of our 32 member unions, and 
specifically on behalf of the vast majority of Amtrak's 19,000 
employees.
    We believe that wishful thinking won't build and sustain a 
21st-century transportation system. A vision backed by policies 
and, yes, real dollars will. There is no high-speed rail system 
in the world that operates without robust Government support. 
So we need to stop all the tired privatization rhetoric and 
start having a conversation about how to get this done in the 
real world, in the way that transportation actually works, with 
both the public sector and the private sector involved.
    My message today is simple. Amtrak is doing a better job 
today than it ever has in a long time, and has well positioned 
itself to be the leader in delivering high-speed service both 
on the NEC and on other corridors across the country. Now is 
the time to boost investment in Amtrak and support its long-
term vision for growth, which includes private investment. And 
we strongly support that.
    It is not the time to allow private companies to provide 
rail services that are profitable only by exploiting past 
taxpayer investments, by relying on continued Government 
support and cherry-picking the most lucrative routes. And that 
is the inherent problem with the topic of today's hearing.
    Are there private companies that could offer NEC service 
that Amtrak provides today? Many claim there are. But as 
history has taught us, those entities will want to offer the 
services that are the most profitable and let the rest of the 
system wither.
    Even the parts of the system that may ``turn a profit'' 
will do so because the infrastructure is Government-supported. 
Besides skimming a profit for their shareholders and, yes, 
CEOs, I simply don't see what we are getting in return for 
bidding out the world's most prized and complicated 
transportation corridor.
    Many criticize Amtrak and liken it to an old-school Soviet 
passenger rail system. Those critics are not paying attention. 
And by the way, today Russia is planning for the future by 
developing a 250-mile-per-hour service between St. Petersburg 
and Moscow. They are investing three times what our Government 
invests in rail as a percentage of their economy.
    And more to the point, the Amtrak that the critics 
disparage simply does not exist today; and unlike some of its 
predecessors, the current management actually is bringing 
forward a vision for the future, and doing so in partnership 
with its employees.
    Despite years of shoestring budgets, including many 
attempts to force a shutdown, Amtrak and its workers continue 
to push forward. Amtrak set ridership records in 7 of the last 
8 years and is performing better than at any time in its 
history. The NEC service is booming. I won't let any of the 
privatizers, carrying their bias and incomplete analyses of 
what true costs are, pretend otherwise simply because they 
can't get their head around the idea that a Government-
sponsored entity can succeed.
    Intercity rail addresses today's transportation challenges. 
It provides convenience, reduces congestion on major corridors, 
and does so sustainably, helping to promote better local air 
quality and reduce greenhouse gas emissions. It is no 
coincidence that privatization advocates conveniently leave out 
these public benefits when they analyze the facts.
    We are not opposed to private sector participation on the 
NEC. In fact, we embrace it. Many of our members work for 
private industry. But we are opposed to privatizing Amtrak's 
NEC operations and breaking it up. When you strip Amtrak of its 
most lucrative system, you doom the national system. And be 
real clear: For some, that is exactly their plan.
    Let's not pretend that replacing Amtrak's corridor 
operations would be an easy undertaking. Seven commuter rails, 
seven freights, and Amtrak operate over a nine-State region. 
Amtrak does the dispatching for all 15 of those carriers. It is 
a risky business to fragment these operations by doling out 
complicated aspects of the system to private bidders.
    The NEC region represents 20 percent of U.S. GDP every 
year. Every day on the corridor, 700,000 people use commuter 
rail. Whatever Congress decides, it should not create chaos in 
a system that is central to our economy and serving the people 
well.
    Amtrak has unveiled its next-gen high-speed rail vision, 
and for part of that plan to work, Amtrak must operate the 
trains and maintain the system and equipment. That is our view. 
And it has proven its ability to provide safe, reliable service 
even in the leanest of times.
    The alternative is letting the system go the way British 
Rail went, and see how good that worked out. Fares jumped. 
Safety declined. People died. And of course, jobs were cut. And 
a decade later, British Rail looks a lot like Amtrak does 
today.
    Some have even criticized all passenger rail funding 
entirely. Clearly, they are unaware that trillions are spent in 
America and around the world building, expanding, and 
maintaining infrastructure. The purpose of the world's 
transportation system isn't simply about the profit of the 
system itself. It is about the goods and the people it moves 
and the jobs it creates and the productivity and the wealth 
that it creates across the economy.
    The private sector has a vital role to play, for sure. But 
an experimental free-for-all that puts jobs or the economy at 
risk we believe is a bad idea. We stand ready to work with this 
committee for a true public/private partnership on the NEC that 
recognizes our members' contributions, but also maintains 
Amtrak as the centerpiece of high-speed rail in the Northeast 
Corridor.
    Thank you.
    Mr. Shuster. Thank you very much, I think, Mr. Wytkind. 
Wishful thinking. In 1970, I wonder where you would have been 
when we deregulated the freight rail system in this country. If 
you had made that same argument, your brothers and sisters in 
the private sector would have been making the same amount of 
money as your brothers and sisters in Amtrak make today. That 
is less money.
    Mr. Wytkind. That is apples to oranges. Different point, 
wrong issue.
    Mr. Shuster. Second of all, I'm not cherry-picking. I put 
in PRIIA two losing lines, losing money. That is not cherry-
picking.
    Mr. Wytkind. You'll be surprised we just disagree on that.
    Mr. Shuster. And third, I want to put in for the record 
that the Government of Great Britain is not taking away, 
necessarily, the western line from Virgin Rail. They are going 
through a bid process. They are the most profitable. They are 
giving back the Government  100 million this year, $163 
million. So it is the most profitable system over there. And I 
certainly disagree with what you said on safety.
    But with that, I yield to the chairman for questions.
    Mr. Mica. Well, thank you. I will just ask a couple of 
questions, and Members, too. We were just notified there are 
going to be about an hour and a half or two hours of votes 
coming up, so I will try to be brief and ask a couple. Maybe we 
can get everyone in here, and then assemble a roundtable later 
on so we don't keep people too long today. Maybe we can 
accommodate folks.
    Let's see. Mr. Jayanti, you testified today that you think 
the private sector, without an outlay of cash but with a RRIF 
loan, could institute high-speed rail without significant 
Federal subsidization or any. I wasn't sure of the terms. But 
you believe that could be done.
    And how soon do you think you could get service? I am 
trying to do it in a third of the time, as opposed to the 30-
year outline, $117 billion initial proposal by Amtrak. Again, 
could you just summarize what you think you could do?
    Mr. Jayanti. Yes. Thank you, Mr. Chairman. I think that, as 
I mentioned earlier, there are significant private sector 
dollars that are available for investment in the corridor 
infrastructure. I believe, as chairman of the subcommittee Mr. 
Shuster said earlier, there are some critical infrastructure 
investments that need to be made that can be made within that 
10-year timeframe and will substantially reduce trip times.
    So to your vision of providing true high-speed rail on the 
corridor within a 10-year time period, I think that is 
achievable.
    Mr. Mica. We heard two representatives from labor. And the 
facts are, if this is a record of success, again, I think we 
pointed out from Amtrak's own reports, 1977, 10.6 million 
passengers; in 2010, in the Northeast Corridor, 10.5. When I 
came to Congress, Amtrak had 29,000 employees. They have 19,000 
now. To me, that is a record of failure. It is a record of 
labor leaving their employees behind and not really maximizing 
the asset that we have.
    Mr. Goetz, do you think we have the possibility? I gave one 
illustration, and of course, what we want to do is not adopt 
any failing efforts, whether it is in Europe or Asia, but there 
are models, don't you think, that we could adopt? You heard 
that one line that we brought forth the exact figures on; 
again, from London to Manchester, we went from 2,500 employees 
in 2004, I believe it was, to this year, and we have 3,800 
employees, all union-represented, all making better wages.
    Don't you think that that's possible, to increase 
employment, to model after successful models, and that people 
have done this before?
    Mr. Goetz. Well, yes. We certainly do. But my comments are 
mostly directed at the construction side of this, as opposed to 
the operational side. And I don't know if those----
    Mr. Mica. But it can be done?
    Mr. Goetz. Oh, yes. Yes. I just don't know if those job 
losses----
    Mr. Mica. And again, guaranteeing labor and protecting the 
public position.
    Mr. Goetz. Right.
    Mr. Richardson. Mr. Mica----
    Mr. Mica. Wait a second. Mr. Bonilla had his hand up.
    Mr. Bonilla. No. I was just----
    Mr. Mica. OK. I was just--all right. Well, again, I want 
everybody to have an opportunity----
    Mr. Wytkind. Could I try to answer that for the labor 
movement? Is that possible?
    Mr. Mica. Well, I didn't recognize you. And I want to give 
Ms. Brown and others the opportunity to----
    Mr. Shuster. I'm going to--when my question comes, I want 
to hear the answer. I am looking forward to that answer.
    What we are going to do is yield 5 minutes to the ranking 
member, and then from there on, 2 minutes to Members because we 
want to get as many questions as we can in.
    Ms. Brown. Let me just be clear. I want to put into the 
record the copy of Secretary LaHood's announcement of where the 
$2 billion from Florida--where it went. I want that for the 
record. And I also want to put in the record the comprehensive 
study that was done between Orlando and Tampa, and showing that 
it was a profitable route.
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    Ms. Brown. In addition to that, I am going to let Mr. 
Wytkind respond. But I have an additional question for you. The 
high-speed rail discussion by Mr. Bonilla said that Amtrak 
would cost a subsidy of $353 per passenger. Can you respond to 
that in your response?
    Mr. Wytkind. Thank you, Ms. Brown. Yes, I would love to. I 
was fascinated by Mr. Bonilla's testimony, actually. A couple 
points.
    If you were to judge our transportation system based upon 
its profitability throughout the system, whether it is rail, 
transit, aviation, whatever the mode may be, and only ran in 
support of the system that ``made money,'' we would all have to 
have limousine service to get around town because there would 
be no transportation system anywhere in the country that runs.
    Two, Mr. Bonilla talked about pay for performance. I wonder 
whether he would support pay for performance for Wall Street 
execs who almost ruined our economy, and continue to make a lot 
of money today after doing so. So I wonder if those standards 
apply to both rank-and-file employees and to execs at Wall 
Street firms.
    Lastly, on the issue of how you define cost, the cost of 
our system is a cost that has to be borne with support from the 
Government. There is no transportation system in the world that 
doesn't get significant Government support. All these so-called 
private models that continue to be pointed out by some of our 
witnesses and by members of this committee, all of those 
private models have significant, in some cases billions of 
dollars, in Government support as the underlying and 
underpinning principle for making them work. So it is a 
complete fallacy to say that you can run this thing as a purely 
private sector-based initiative.
    Regarding the comment and question that Mr. Mica asked, I 
think the direction of this debate needs to be pointed at the 
inability of Congress, throughout Amtrak's entire history, to 
fund the enterprise. It is the classic starve-the-beast 
philosophy. You give the beast about half of what it needs, ask 
it to succeed, and then blame it for not succeeding 30 years 
later.
    The answer to the question is, when is Congress finally 
going to fund Amtrak at the level that it needs to run a real 
national system in the Northeast Corridor? Until that happens, 
there is no way you are ever going to have an oversight hearing 
where you are all happy about the performance because you 
continue to chronically underfund the company and then expect 
it to do wonderful things for the American people.
    Ms. Brown. Thank you. Thank you. Let me just say that--I 
need to say something about this committee because this 
committee has always worked together. And we realize that this 
committee is really the engine. Without infrastructure, you 
don't have jobs. Every billion dollars we invest, we generate 
44,000 jobs. And the way we have to grow the economy is through 
infrastructure investment.
    Now, Mr. Mica, I want to summary to say that I am for a 
roundtable discussion, but not just with the players that we 
have in the room and not with a narrow focus. You are just 
interested in the Northeast Corridor; I am interested in the 
Sunset Limited. I want to see what private groups want to take 
it from New Orleans to Orlando.
    There are many options out there, long distance. So when we 
have this discussion, it needs to be a comprehensive discussion 
on how we are going to move transportation in this country. We 
are not competing in Florida with Georgia and Alabama, my 
friends. We are competing with the Chinese that will put $350 
billion into the system.
    And so, basically, if we are going to be there in 
competition, we have got to invest in infrastructure. When we 
are talking about the reauthorization, are we going to put the 
money in rows? That is all I hear.
    But the point of the matter is that in Orlando, folks that 
don't understood Central Florida, we have got eight lanes. One 
more lane than the Governor come up here and discuss won't help 
us. One more lane won't help us in Florida. We have got to come 
up with a comprehensive way to move people, goods, and services 
so we can be competitive with the rest of the world.
    Mr. Hart. Ranking Member----
    Ms. Brown. Mr. Hart, but I think----
    Mr. Hart [continuing]. Can I be recognized?
    Ms. Brown [continuing]. Someone else raised his hand that 
wanted to respond.
    Mr. Hart. Could I be recognized? May I be recognized?
    Ms. Brown. All right, Mr. Hart.
    Mr. Mica. You have got about a minute.
    Mr. Hart. Yes. One minute.
    Ms. Brown. He get only 30 seconds of my time. Someone else 
wanted part of it.
    Mr. Shuster. [presiding.] You have 30 seconds.
    Mr. Hart. Thank you. I want to agree with the ranking 
member that the Reason Foundation does have blood on its hands 
for killing the Florida high-speed rail project. That was a 
model project that did have bipartisan support. Even the 
chairman tried to save that particular project. It would have 
established a model for public/private partnerships that we 
could have built on as we looked at the Northeast Corridor, the 
Chicago hub, and in California.
    But before the opportunity was given to the private sector 
to fill the gap for $300 million, the Governor took the deal 
off the table and wouldn't even give the private sector an 
opportunity to show that it was prepared to meet the burden of 
risk and financing for that program.
    Ms. Brown. On that point, let me tell you, I have met with 
the private sector, and they are reluctant to invest their 
money since you are dealing with a partner that is not stable. 
The patient is on life support constantly. You invest your 
money, your dollars, and then when it is time to go to the 
table to do the project, well, you get one person saying, we 
are not going to do it, even though the legislature and the 
Congress have voted for it.
    Mr. Shuster. The gentlelady's time is expired.
    Ms. Brown. I have one question for Mr. Bonilla.
    Mr. Shuster. Well, we can submit it for the record because 
your time is expired. We are going to move on to other Members 
because we have votes here soon.
    So anybody over on our side have a question? Mr. Meehan, go 
ahead.
    Mr. Meehan. Thank you, Mr. Chairman. And let me just begin 
my quick comment by recognizing a point Mr. Wytkind made, which 
is we are getting ready to invest in transportation on the 
highway system in which most of that money from the Federal, 
State, and local government is investments of government that 
underscore the transportation that everybody uses every day in 
their automobiles.
    But I have a question. I just need to have some 
understanding, Mr. Jayanti, because I don't understand the 
economics of the idea of separating the operation of a rail 
system from the infrastructure of a rail system, presuming that 
the proceeds that drive the system generally go to the 
operation and the ticket prices.
    So how do you finance and make profitable simple 
construction and maintenance of infrastructure?
    Mr. Jayanti. Thank you, Mr. Meehan. It is relatively 
straightforward. The infrastructure manager charges access fees 
for those companies that run trains over its infrastructure.
    Mr. Meehan. But that is going to increase the cost of 
tickets and other kinds of things. Right?
    Mr. Jayanti. No, it will not. In fact, it will do the 
opposite because what you will do is attract additional 
passenger rail service providers to use the corridor. Today, 
the corridor--there are sections of the corridor where Amtrak 
is running four passenger trains per hour, when you could, in 
fact, with some infrastructure investment, run up to 30 or 40 
trains per hour on the same infrastructure.
    So there are possibilities to both increase the revenue to 
the infrastructure manager as well as lower ticket prices for 
the citizens and traveling public who use it. This also will 
create jobs. It is not privatization because the Federal 
Government continues owning the infrastructure asset. It is a 
very different hybrid model of public/private partnership. 
Thank you.
    Mr. Meehan. Thank you. Mr. Chairman, in the interest of the 
questions, I yield back.
    Mr. Shuster. Thank you very much. We are going to get votes 
called here in about 5 minutes, so we will be here probably 
another 10 minutes, 15 at the most.
    Ms. Richardson, you are recognized for 2 minutes.
    Ms. Richardson. Yes. Thank you, Mr. Chairman.
    First of all I would like to refer to one of my colleagues 
who called Amtrak and the Postal Service a failure. I would 
like to suggest, take a look at Wall Street and car 
manufacturers. If we could give them a bailout, certainly we 
can support our own rail system and our postal system.
    Next, Mr. Jayanti, if you could briefly answer my question. 
You are proposing that the Federal Government would provide $25 
billion up front in the form of Federal subsidized loans, which 
the Federal Government would have to borrow, so that you could 
invest in other financial instruments? Is that what you are 
suggesting? Yes or no. Just yes or no. I think you said it in 
the testimony. Yes or no?
    Mr. Jayanti. Yes. My testimony stands.
    Ms. Richardson. OK. I would like to say, I am sure Amtrak 
and a whole lot of other people could use $25 billion up front 
to invest in the way that they should. I just find this witness 
is just really, in my opinion, not appropriate for this panel.
    My second thing: Mr. Bonilla, is your position to support 
Buy America? Should we develop high-speed rail in the Northeast 
Corridor?
    Mr. Bonilla. You have to----
    Ms. Richardson. Yes or no?
    Mr. Bonilla. Maybe.
    Ms. Richardson. Yes or no?
    Mr. Bonilla. Should we support high-speed rail? If it is 
profitable and if it is done properly.
    Ms. Richardson. No. My question, sir, was what is your 
position on whether we should use Buy America, and should it 
apply with the development of high-speed rail? Yes or no?
    Mr. Bonilla. Not necessarily.
    Ms. Richardson. Thank you.
    OK. My last question, and I need it to be brief, Mr. 
Bonilla. Do you believe that the work of high-speed rail should 
be covered under the Railway Labor Act and the Railway 
Retirement Act? Yes or no? Yes or no?
    Mr. Bonilla. I think that is a foregone conclusion.
    Ms. Richardson. Yes or no?
    Mr. Bonilla. Yes.
    Ms. Richardson. Thank you.
    I yield my remaining 16 seconds to the ranking member, Ms. 
Brown.
    Ms. Brown. Mr. Bonilla, I want to just ask you one 
question. Do you support intercity commuter rail, Sun Rail? Yes 
or no? You? It was your company----
    Mr. Bonilla. Do I support intercity commuter rail?
    Ms. Brown. Sun Rail in Central Florida. Do you support----
    Mr. Bonilla. Oh, no.
    Ms. Brown. OK. I want Mr. Mica to be here to know that 
because he certainly support it.
    Mr. Shuster. The gentlelady's time is expired.
    Ms. Brown. It is a project that we worked on for 7 years.
    Mr. Bonilla. We are aware of that.
    Mr. Shuster. The gentlelady's time is expired. Her Governor 
is making her very upset here today, and has been for a couple 
of months.
    Mr. Bonilla. I am glad I wore my Kevlar suit.
    Mr. Shuster. I now yield 2 minutes to the gentleman from 
New Hampshire, Mr. Guinta.
    Mr. Guinta. Thank you, Mr. Chairman. Thank you all for 
being here today, and I appreciate the different perspectives 
that we have from each and every Member who is testifying.
    I had a couple of questions for Mr. Wytkind. Thank you 
again for coming. I listened to your testimony, and it seemed 
pretty clear that you are advocating, and quite frankly 
suggesting, that without any additional dollars, we can have a 
real problem with long-term sustainability.
    I don't disagree with that. I guess where may be I disagree 
is why would it be your position that private sector money 
should be excluded from those investments that need to be made?
    Mr. Wytkind. Well, thank you for the question. There is not 
a single word in my testimony that would even imply that I 
don't see a role for the private sector. Understand, I 
represent 32 unions in the private and the public sector. Our 
members do everything you can possibly imagine to make our 
transportation system work.
    My testimony today is focused on not breaking up into 
pieces and privatizing Amtrak either on the Northeast Corridor 
or anywhere in the country because I believe Amtrak is the 
premier high-speed rail provider in this country. And if given 
the resources, which it never has had for 30-plus years, it can 
succeed because it has the best railroad workers in the world 
who perform the functions of operating and maintaining the 
system.
    That is the focus of my testimony. There is not a single 
word in here that suggests that the private sector shouldn't be 
brought to the table. In fact, quite the contrary. It needs to 
be brought to the table because that is the way we are going to 
develop passenger rail, and frankly, all transportation in this 
country, is with a very robust private sector role.
    Mr. Guinta. So you are in favor of some private sector 
dollars. On the public side, and I know my time is expired so 
if you can answer very quickly, where would those dollars come 
from, given the state of our economy?
    Mr. Wytkind. Well, I think there needs to be priorities 
finally made about the need to invest in transportation. It is 
why I work so hard up here in this committee to help the 
leadership pass a surface transportation bill. We are falling 
behind the rest of the world.
    We are running a transportation system in the year 2011 on 
a 1980s budget, and we wonder why it is failing. It is because 
the Congress needs to step up to the plate and invest more 
money into the entire system.
    Mr. Guinta. Thank you.
    Mr. Shuster. The gentleman's time is expired.
    The gentlelady from Florida, 2 minutes. I am going to 
enforce it strictly.
    Ms. Brown. Yes. I want to put in the record this news 
article that I just got, ``Privatization Fails to Cut Rail 
Costs.'' I want to be clear. This is another instance. I 
believe in the private/public partnership, and I believe that 
is the way we have got to go as far as investments. But I do 
not agree that we need to destroy Amtrak.
    Amtrak is the leader at the table. And let me just tell the 
people in this room: We, as Members of Congress, will not 
decide who are the partners. That is the role of the 
administration, to be clear. And so people put in bids. They 
make decisions through that mannerism.
    We don't pick the winners and the losers, who is going to 
do business with the Federal Government. We come up with the 
broad scope, and then privates make that decision. And we had 
90 percent of the funding in Florida, and we had eight 
companies that were ready to be that 10 percent. It was 100 
percent funding, for the information of the people in this 
room, 100 percent of our gasoline tax that we sent to 
Washington, that we were able to work in a bipartisan manner 
and send it back to Florida.
    And let's be clear. We have lost close to 60,000 jobs with 
a city and a community that has 11 to 15 percent unemployment. 
It is criminal what happened with the taxpayers' dollars in 
Florida. And in 3 years, we are going to change that.
    And let's be clear. All this talk about what we need to do 
about waste, the only waste is how we waste those taxpayers' 
dollars in Florida and sent the money to my colleagues in other 
places. And they are so very grateful for the contributions 
that Florida has made to increase their transportation system.
    So with that, I yield back the balance of my time.
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    Mr. Shuster. Thank you very much.
    The gentlelady from Washington.
    Ms. Beutler. Thank you, Mr. Chairman. And this for Mr. 
Wytkind. Am I saying that--Wytkind? OK.
    In your statement, you said, ``Private sector companies 
simply cannot make a profit without Federal support.'' Yet we 
have seen the example of Virgin Rail in the U.K., where Virgin 
makes a profit without Government subsidy, as well as other 
models. Can you maybe elaborate on your statement in light of 
that?
    Mr. Wytkind. Sure. Thank you. Thanks for the question.
    The premise of the question is not accurate. In all of 
these so-called private models, whether it is Virgin Rail or, 
frankly, any other one around the world, there is a massive 
underpinning of public support to build the infrastructure. As 
Ms. Brown said, China is spending billions----
    Ms. Beutler. Wait a minute. Let me add a clarification 
there. You said underpinning of public support, or public 
investment? You are talking about public investment?
    Mr. Wytkind. Well, that is what I mean by support, yes. 
Public money. Our infrastructure in this country, like it is 
around the world, governments are badly outspending us because 
they believe it is part of their economic future. And anybody 
can find a particular route or system in our transportation 
network that can ``make money.'' But most of that making money 
is above the rail, and everyone knows that.
    Ms. Beutler. So can you identify----
    Mr. Wytkind. And we conveniently ignore the infrastructure 
costs that the Government put money in.
    Ms. Beutler. Let me head in there because I am interested 
in this. Rails is something in Washington State we utilize, 
whether it is passenger rail, freight rail, or possibly a high-
speed rail. I have not seen an area where it makes money, or 
even pencils. Can you provide for me and for this committee 
some examples? Is that possible?
    Mr. Wytkind. Well, that is the point I made in my 
testimony. There really is very little in our transportation 
system when it comes to our infrastructure that ``makes 
money.'' I know that Amtrak, which should have been a witness 
here today since they run the Northeast Corridor, makes money 
on the Northeast Corridor above rail. It ranges from 40, 45 
cents to, I think, 75 to 80 cents on the dollar. That is pretty 
good metrics. But they weren't invited here to provide those 
metrics for you. The truth is that they have the ability----
    Ms. Beutler. I am sorry. I am out of time.
    Mr. Shuster. Finish your thought.
    Mr. Wytkind. No. What I was going to say is there is a way 
to ``make money'' and make some profit out of certain routes, 
certain systems within our transportation network. But the 
underpinning of the costs is the long-term infrastructure 
maintenance and other development costs that go into it. And 
without a robust Government role, it is an absolute losing 
proposition.
    Mr. Shuster. And the proposal that is coming forward is 
still going to include public sector money----
    Mr. Wytkind. Right.
    Mr. Shuster [continuing]. Making those investments. But we 
are talking about, where you can recoup those costs, we should 
do it. And then the British Rail model, Virgin Rail, is doing 
just that and actually turning it back, creating jobs, too, 
union jobs, I might add.
    Mr. Bucshon from Indiana, 2 minutes.
    Dr. Bucshon. Thank you. I have just a couple questions, 
basically for anyone on the panel. And I will just go down the 
line.
    Where do you think we should get the money to fund this 
stuff when the Federal Government is broke? Quickly.
    Mr. Bonilla. You have no options. You either look to the 
private sector or you look to Amtrak and $117 billion. If you 
don't look to the private sector, there is no funding 
opportunity.
    If I could--briefly, the comment was made earlier that we 
are falling behind the rest of the world in high-speed rail. 
That may be true, but we don't know if the rest of the world is 
racing off a cliff.
    Dr. Bucshon. OK. Just go down the line. Because this is a 
problem not only in infrastructure but in a lot of things we 
are dealing with right now in the Federal Government. Where are 
we going to get this money? I am interested in people's ideas.
    Mr. Jayanti. I think it is easy to ask the Government for 
more money and more money and more money. We have heard that 
Amtrak has received over $38 billion in the last 40 years and 
is still requiring a billion and a half a year.
    Dr. Bucshon. Well, let's make the presumption that the 
Federal Government is broke and that we don't have any money to 
hand out. So if that is the case, with that premise, where are 
we going to get the money for infrastructure?
    Mr. Jayanti. You need the private sector.
    Dr. Bucshon. Mr. Richardson?
    Mr. Richardson. In order to get the private sector 
involved, you need to look at the stations and the locations 
and the destinations that you are creating. If you create 
strong destinations and service, you are going to increase your 
ridership and your revenues, and you will get private 
investment to come in to build developments around those 
stations, which will increase the tax coffers of the local 
communities and the States.
    Dr. Bucshon. Mr. Hart?
    Mr. Hart. Yes. Transit-oriented development is important. 
It is a source of revenue. So is competition. Amtrak should not 
be the only one operating trains on the Northeast Corridor. The 
infrastructure can be maintained, and there can be access fees 
provided. We can get capital from the private sector if the 
political dynamic is balanced and there is some certainty and 
continuity in our plan. There is $500 billion available for 
that.
    Dr. Bucshon. I am going to move on to the last two. I am 
running out of time.
    Mr. Goetz. Public/private partnerships. I think we need to 
get the private sector involved.
    Dr. Bucshon. And Mr. Wytkind?
    Mr. Wytkind. Well, I guess you won't be surprised to hear I 
don't think the Federal Government is broke. It just needs to 
reprioritize how it spends its money, and transportation needs 
to be----
    Dr. Bucshon. Totally valid.
    Mr. Wytkind [continuing]. A higher priority than it has 
been in the past.
    Dr. Bucshon. OK. Thank you all.
    Mr. Shuster. Mr. Southerland is recognized for questions 
for 2 minutes.
    Mr. Southerland. I get pretty passionate about wasting 
taxpayer dollars. And we have made reference hr today about 
what is criminal. And I think what the American people are 
having to deal with right now is criminal.
    We often hear the raising China as the model. I have just 
got to tell you, we are financing their infrastructure. 
Pathetically negotiated trade agreements, where they have 
access to our markets and we don't have access to theirs. That 
is criminal.
    And so Government regulation pushing down upon the family 
farm, pushing down upon oystermen and those that make their 
living working 20-hour days in the Gulf, trying to fish and 
perpetuate on boats that are being held together by paperclips, 
that is criminal.
    And so I just want to make sure that when we talk about 
that word, that we look no farther than what the American 
people right now are having to bear. To throw that word 
around--what I have seen here in 5 months sickens me. And I go 
home and I hurt with my people. That is criminal, what they are 
being made to bear.
    And so that is not a question, but that is a deeply held 
statement. Mr. Chairman, I yield back.
    Mr. Shuster. I thank the gentleman.
    Mr. Richardson, can you talk about some specific examples 
on investing along the corridor? Because I know that--I think 
it is in Hong Kong where they have invested in a station that 
is--that is the way they are making the money, or the bulk of 
the money, on the system. So I wonder if you could maybe talk 
about the Northeast Corridor or other places where we might 
make those investments to recoup our cost.
    Mr. Richardson. Thank you. Our model pretty much--and let 
me give you an example. Let's say if you took a station and you 
develop $100 million worth of commercial residential parking 
around the station or within the station itself, retail, et 
cetera. And you create a $10 million NOI on at that time, and 
then in addition to that you create a special tax district that 
took advantage of all the incremental increases of the taxes.
    You could probably raise another $10 million. So you 
basically have about $20 million a year to pay off a $100 
million investment. Based on that, you would pay it off in less 
than 6 years. That $10 million can then go back into the 
operation costs of the stations, and go back into 
infrastructure; and also, the other $10 million of the tax 
district goes back into the State coffers.
    You take and you can do multiple stations along a corridor, 
and you create the continuity and you create the branding 
between all these stations, and naming rights, and you increase 
more revenues. And that is where we should take advantage of 
those opportunities.
    Mr. Shuster. For example, taking the 30th Street Station in 
Philadelphia and building an office tower above it, or is that 
kind of----
    Mr. Richardson. Absolutely. That is one thing we don't do 
right now, and a lot of Amtrak stations you go in and you see a 
big hall. You don't necessarily see the retail shoved back in a 
corner somewhere. It is not out in front. It is not taking 
advantage.
    So I understand the fact that you want to move people in 
and out of the stations. But it is the same thing as our 
airports; when they added the retail into the airports, it 
started creating revenues and started helping the operation 
costs of the airports themselves.
    So there is a tremendous advantage in the TODs and how to 
leverage them and get private investment in there.
    Mr. Shuster. Mr. Jayanti, can you comment on the British 
system, how they have gone about it, specifically Virgin Rail? 
And the East and the West Coast--the East Coast line is run by 
a Government entity, and I understand it is not profitable; and 
the West Coast line is Virgin Rail, and Virgin Rail actually 
have separated it three ways. There is an infrastructure 
company, there is a rolling stock company franchise, and then 
there is the operations side.
    In your plan, it doesn't separate it out that way. Is that 
correct? And can you comment on that British model?
    Mr. Jayanti. I can't comment specifically on the British 
model. I can submit some facts for the record separately. But 
under our plan, the infrastructure is separate from passenger 
train service provision, and the infrastructure has a long-term 
investment plan attached to it which results in the ability to 
provide better service for the train ridership and I think will 
actually result in lower costs.
    Mr. Shuster. Good. Thank you.
    And Mr. Wytkind, come back to you on 29,000 and 19,000. 
Have at it.
    Mr. Wytkind. We think that 19,000 should be 119,000. And if 
we actually invest----
    Mr. Shuster. So you would agree to a Government mandate 
that we made it 119,000?
    Mr. Wytkind. Yes. I could endorse that today.
    Mr. Shuster. I figured that.
    Mr. Wytkind. The issue of--it is all related. It is the 
point I was making 10 minutes ago. We have underinvested in the 
enterprise by a lot, and that has led directly to the job 
creation or job loss issue at the company. The company has 
never been even--rarely has it ever even been fully funded, as 
authorized by this committee. It is always scrambling to come 
close. And so it is an underfunded enterprise, and then it is 
told it is a failure at the end of the process.
    So I think if we fully fund at this and give it a chance to 
compete as a centerpiece of high-speed rail, that 19,000 figure 
will boom off the charts.
    Mr. Shuster. So it is all about funding. It has nothing to 
do with mismanagement or contracts, labor contracts that don't 
give us the flexibility to do things? Because when you look at 
Amtrak and you look at the concessions, they lose money. And it 
is a monopoly. I can't stop at the local--put my hand out the 
window and get a Coke while I am going by. I have got to go to 
the rail car, the beverage car, and get my food there.
    So how are they not able to do that? Isn't that a 
mismanagement problem?
    Mr. Wytkind. Well, my submitted testimony said--I have had 
a lot of differences with previous Amtrak management, and we 
have had a lot of problem with previous managers who didn't 
really treat their employees right, and frankly, the way they 
managed collective bargaining wasn't as good as it could have 
been.
    But the current leadership is attempting to transform the 
company, and it is now competing vigorously in the States to 
try to provide some of the higher speed rail that some of the 
States want. It has appointed a new person to oversee that 
area. And it has repaired the worst labor-management relations 
I saw in my career when Joe Boardman took over the company. The 
way it repaired it is that it became a collaborative process 
from the floor all the way up.
    And it is just a different kind of company. Perhaps we can 
give it a chance to succeed with the right level of funding.
    Mr. Shuster. He got a contract, too. That helps out a good 
deal, I am sure.
    Mr. Wytkind. Well, obviously, collective bargaining is 
about----
    Mr. Shuster. Now, I made the statement about the freight 
rails. I made the statement about the freight rails, and you 
said, ``That is apples to oranges.'' I get it. Freight is 
different than passengers. But it is still running an 
operation. The private sector in America versus everywhere else 
in the world, they make a profit. It doesn't require the 
Government to put forth huge subsidies for operations.
    Mr. Wytkind. But not in the public transportation of 
people. It is not----
    Mr. Shuster. But why is that? Why can't that be? Because we 
have never really tried it.
    Mr. Wytkind. Because it is a worldwide problem.
    Mr. Shuster. We have never tried--but no, no, no.
    Mr. Wytkind. You cannot----
    Mr. Shuster. That's right. The Governments control it. So 
why don't we try a different mode?
    Mr. Wytkind. No. The problem is the railroads got out of 
the business because they couldn't make money doing it.
    Mr. Shuster. Why is that?
    Mr. Wytkind. Bring the freight railroads up here to explain 
that.
    Mr. Shuster. I don't need them here. I know the history.
    Mr. Wytkind. Because in the 1960s they were going broke.
    Mr. Shuster. The issue is the interstate highway system and 
the airlines started to transport people. And people wanted to 
fly, and people wanted to drive cars on these new modern 
highways. That is what happened.
    Now things have changed in this country. We have recurring 
congestion. The Senator said earlier we went from 200 million 
to 300 million people over 60 years. We are going to go from 
300 million to 400 million people in 30 years.
    Mr. Wytkind. Right.
    Mr. Shuster. We have got to figure out better modes of 
transportation. But we are not going to be able to expand I-95, 
so we need passenger rail. So would you agree that we should 
focus on the Northeast Corridor? Would you at least agree with 
me on that? Focus on the Northeast Corridor, to make that a 
high-speed rail corridor.
    Mr. Wytkind. We also believed you should focus on the 
Northeast Corridor. But don't ignore all the other highly 
successful corridors that will even be more successful if you 
give them a chance to have higher speed service.
    Mr. Shuster. Do you support what the President did, just 
sprinkling money everywhere and having no real impact?
    Mr. Wytkind. I supported what the President did. The $8 
billion probably should have been $80 billion. But Congress 
wasn't going to give that kind of money to high-speed rail. My 
point is, you get what you pay for in this country. If you 
underinvest in transportation, then you get a lousy 
transportation system. That is to me what the problem is.
    Mr. Shuster. Unfortunately, it is not always ``you get what 
you pay for.'' Sometimes you pay for things and you get lousy 
service. You get lousy management. You get things that you paid 
for but don't get a return on. That is what I think we have 
got----
    Mr. Wytkind. Well, poll the Acela riders. They will tell 
you they are not getting lousy service. They are getting really 
good service.
    Mr. Shuster. Well, they could get better service.
    Mr. Wytkind. I couldn't agree with you more, and I would 
like to work with you to get that done.
    Mr. Shuster. And we have to focus. We just can't keep 
spending money and spending money or we will end up going down 
the tubes. The Chinese are----
    Mr. Wytkind. I think we are going to go down the tubes if 
we don't spend money. That is the problem.
    Mr. Shuster. We have got to spend it the right way. That is 
what we need to do.
    With that, we still haven't got votes called.
    Ms. Brown. Yes. And I would like----
    Mr. Shuster. You may have 2 minutes.
    Ms. Brown. Thank you. I know it is just 2 minutes.
    But let's be clear, Mr. Wytkind. One of the reasons why 
Amtrak could not pay the management is because Congress didn't 
fund it. Remember, we got a Democratic Congress, and we gave 
the money so that Amtrak could negotiate those prior 
agreements. It did not just happen.
    Amtrak did not have the money. Let's be clear. Over the 
years, as you said, we have not given Amtrak the money that 
they needed. Someone asked about the Northeast Corridor. Let's 
just be clear, Mr. Hart. There are 10 different services that 
run on Amtrak. And you have got all of those different 
communities. You have got all of those different mayors, 
different Governors. So they have to work together.
    Mr. Hart. Absolutely.
    Ms. Brown. And it is not anything we can just come in and 
take over the services. And let's be clear. What the President 
did, the Department of Transportation, was based on what we 
pass in Congress. Let's be clear. They didn't just come up with 
it. We gave them the law and they implemented the law.
    And I do know certain people want just the Northeast 
Corridor. Well, I just want Northeast Corridor/Florida/
Washington. We need a comprehensive transportation system. And 
when someone sits up here and says the rest of the world is 
going over the cliff, I need to know what kind of research you 
are doing. Where did you go to school? Because everybody else 
feels it is important to invest in infrastructure 
transportation.
    You have people coming up here and saying, well, we don't 
want the Government. But yet you are coming up here asking for 
$25 billion for the RRIF loan. That is a Government program, 
for your information. You need to know it is a partnership 
between the Federal and the State and local and private. And 
that is what we need to do to get infrastructure moving in this 
country. And keep in mind, one model is the airports. The 
airports, we invest in the major infrastructure, and then 
different operators run the airports.
    So there is no form of transportation in this country that 
just runs on its own. We are in the business in Congress of 
picking winners and losers, and we had better make sure it is 
fair, or what happened in Wall Street will happen throughout 
the system.
    Mr. Hart. We proposed models of nine countries that have 
successful public/private partnerships in operation right now. 
We did not highlight the Chinese system. So China is an 
example, but not the only example of profitable public/private 
partnerships in operation right now throughout the world.
    And we can do a similar type of public/private partnership 
that preserves Amtrak's integrity, that preserves the labor, 
but also increases competition and provides a better service 
than we have right now.
    Mr. Shuster. Thank you, Mr. Hart.
    Mr. Bonilla. Mr. Shuster, if I might for a second?
    Mr. Shuster. Yes, sir.
    Mr. Bonilla. Department of Transportation a couple of years 
back put out a study talking about subsidies in different modes 
of transportation, and reported that road transportation has 
essentially no subsidy because we charge users a fee to build 
and maintain those roads. Air transportation has some subsidy, 
not as much as it looks because we collect passenger facility 
charges, fuel tax on aviation gasoline, and the highest subsidy 
was on rail.
    We are here because we don't know how to pay for it and we 
don't believe that the users are willing to use it enough if 
they have to pay the full cost of it.
    Mr. Shuster. All right. Understand. Thank you. It is my 
time now, and we are getting ready to finish up. They called a 
vote.
    A couple things, though. First of all, I have heard Wall 
Street get beat up a little bit here. Wall Street deserves to 
get beat up for what happened. But we should also remember a 
big, big player in our collapse were quasi-government 
institutions, Fannie and Freddie, that were encouraged by 
Congress and Presidents from both parties to loan money to 
people that couldn't afford housing.
    And so beating up Wall Street is a thing we do in public a 
lot to folks. But we also have to remember, again, the history 
of it is that it is not just all Wall Street. We had a fair 
hand in it ourselves.
    And as we move forward, we need to look at different modes. 
There are Members on my side of the aisle that say, sell off 
all of Amtrak. Get rid of it. It has failed. There are those on 
this side of the aisle and those on the panel that say, oh, you 
can't. It is everywhere in the world. There is no possible way.
    Yet I believe it is possible. We have a freight rail system 
that works that way. We, I believe, could have a passenger rail 
system if we size it the right way, if we focus on the right 
areas of this country, that will use the system significantly.
    And I think we need to find a solution because of the 
increased population that we are going to experience and the 
increased competition we are going to experience in the world 
because we are seeing our transportation system begin to 
crumble and falter.
    We need to make significant investments. We have made 
investments in this country, spending taxpayers' dollars that 
weren't investments; they were poorly spent dollars on the 
stimulus spending. We should have spent most of that money on 
transportation and infrastructure. But we were not heard. Our 
voice was not heard on that.
    The other thing I want to point out is we keep getting 
reports from British newspapers, and if you know the British 
newspapers, most of them tell you right up front, they are 
liberal-leaning, conservative-leaning, because they basically 
editorialize; they don't report in Great Britain.
    In the British Rail system, the West Coast line is being 
rebid, and they are going through the normal bidding process. 
There have been some delays and push-backs. But the West Coast 
line is successful over there. It is giving the Government 
money back. And I think that is a testament to what the private 
sector can do.
    And I think we ought to take a chance with that. We don't 
have the money in this country to spend as Amtrak wants, $117 
billion. We also don't have the time to wait 30 years for that 
investment, their plan, to take hold. We can do it in a shorter 
period of time, and I think with robust involvement of the 
private sector--again, the public sector is going to be there; 
we are not going to stop contributing, I am certain of that. 
But having a new model to use, I think, is important.
    And we have to have a successful corridor, higher speed, 
high-speed corridor in this country or the American people are 
never going to buy it. We can all sit here and talk abut it and 
try to get labor to agree with me, and they won't, that let's 
get one thing right.
    We are not going to get it all right, all at the same time. 
Let's get one-quarter correct. Let's get high-speed rail in the 
Northeast Corridor. Then we can show the other corridors in 
this country, these are the problems we have faced, these are 
the ways we overcame them, these are the successes. Then we can 
roll it out through the country and let it spread organically 
into our rail system, compared to something that we try to 
impose on the American people.
    Again, I appreciate all the witnesses being here today. We 
do have votes. We have 9 minutes to get over there. Again, the 
chairman has said he will do a roundtable and we can continue 
this. And a roundtable, I have found, gets even more livelier 
than it has been here today.
    But we are going to have to say that the gentlelady from 
Florida can't talk about the Governor of Florida because she 
just gets too upset about it. I am concerned about her.
    Ms. Brown. Keep in mind, I must have more partners at the 
table.
    Mr. Shuster. Well, you need to talk to the chairman about 
that.
    But again, appreciate everybody being here, and sorry that 
we didn't have more time. Thank you very much.
    [Whereupon, at 12:32 p.m., the committee hearing was 
adjourned.]
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