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


 
                       LEGISLATIVE HEARING ON THE
                   COMMITTEE PRINT ``COMPETITION FOR
                 INTERCITY PASSENGER RAIL IN AMERICA''

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

                                (112-42)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 22, 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
CHARLES J. ``CHUCK'' FLEISCHMANN, 
Tennessee

                                  (ii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi
Discussion draft, H.R. ____, a Bill to develop high-speed rail in 
  the Northeast Corridor through a public-private partnership, 
  and to encourage private sector competition on intercity 
  passenger rail corridors, 112th Cong., 2011....................   xiv
Section-by-Section Analysis of Competition for Intercity 
  Passenger Rail in America Act.................................. lviii

                               TESTIMONY

Boardman, Joseph H., President and Chief Executive Officer, 
  Amtrak.........................................................    38
Geddes, R. Richard, Adjunct Scholar, American Enterprise 
  Institute......................................................    38
Hart, Thomas A., Jr., Esq., Vice President for Government Affairs 
  and General Counsel, US High Speed Rail Association............    38
Millar, William, President, American Public Transportation 
  Association....................................................    38
Stubbs, Anne D., Executive Director, Coalition of Northeastern 
  Governors (CONEG)..............................................    38
Wytkind, Edward, President, Transportation Trades Department, 
  AFL-CIO........................................................    38

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Cohen, Hon. Steve, of Tennessee..................................    71
Cummings, Hon. Elijah E., of Maryland............................    72
Larsen, Hon. Rick, of Washington.................................    79

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Boardman, Joseph H...............................................    82
Geddes, R. Richard...............................................    86
Hart, Thomas A., Jr., Esq........................................    93
Millar, William..................................................   113
Stubbs, Anne D...................................................   117
Wytkind, Edward..................................................   123

                       SUBMISSIONS FOR THE RECORD

Mica, Hon. John L., a Representative in Congress from the State 
  of Florida, request to submit the following:

    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia, and 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, 
      requesting a legislative hearing on the draft bill, June 
      15, 2011; and the letter in reply from Hons. Mica and 
      Shuster, June 16, 2011.....................................    17
    2011 Hearings on Intercity Rail Competition..................    22
    Federal Rail Safety Improvements, Pub. L. No. 110-432, 122 
      Stat. 4959-4970, 2008......................................    24
    International Competition Success Stories....................    37

                        ADDITIONS TO THE RECORD

American Train Dispatchers Association; Brotherhood of Railroad 
  Signalmen; International Association of Machinists and 
  Aerospace Workers; International Brotherhood of Boilermakers, 
  Iron Ship Builders, Blacksmiths, Forgers and Helpers; 
  International Brotherhood of Electrical Workers; National 
  Conference of Firemen & Oilers, SEIU; Sheet Metal Workers 
  International Association; Transportation * Communications 
  International Union/IAM; Transport Workers Union of America; 
  United Transportation Union; letter to Hon. Bill Shuster, a 
  Representative in Congress from the State of Pennsylvania, June 
  21, 2011.......................................................   129
Association of American Railroads, Concerns and Questions on the 
  Discussion Draft...............................................   130
Boardman, Joseph H., President and Chief Executive Officer, 
  Amtrak, letter to Hon. John L. Mica, a Representative in 
  Congress from the State of Florida, June 21, 2011..............   131
Broadley, John, John H. Broadley & Associates, P.C.:

    Letter to Joyce Rose, Staff Director, Subcommittee on 
      Railroads, Pipelines, and Hazardous Materials, June 21, 
      2011.......................................................   135
    Comments on the Discussion Draft.............................   138
Capon, Ross B., President and CEO, National Association of 
  Railroad Passengers, written statement.........................   183
Chambers, Ray B., Senior Transportation Advisor to RAILCET, 
  submission of written testimony of Michael Goetz, Executive 
  Director, RAILCET, on behalf of Organized Rail Construction 
  Management and Labor, originally submitted for the May 26, 
  2011, hearing of the Committee on Transportation and 
  Infrastructure entitled, ``Opening the Northeast Corridor to 
  Private Competition for the Development of High-Speed Rail''...   191
CONEG Policy Research Center, Northeast Regional Issues--
  Competition for Intercity Passenger Rail in America Act 
  (Discussion Draft dated June 15, 2011).........................   195
Doulton, Romm, Chairman, Pullman Palace Car Company, letter to 
  Joyce Rose, Staff Director, Subcommittee on Railroads, 
  Pipelines, and Hazardous Materials, June 21, 2011..............   198
Drake, Thelma, Director, Virginia Department of Rail and Public 
  Transportation, Comments on the Discussion Draft...............   200
Hartman, Ronald J., CEO--Rail Division, Veolia Transportation, 
  letter to Hon. John L. Mica, a Representative in Congress from 
  the State of Florida, July 22, 2011............................   203
Hoffa, James P., General President, International Brotherhood of 
  Teamsters, letter to Hon. John L. Mica, a Representative in 
  Congress from the State of Florida and Hon. Nick J. Rahall II, 
  a Representative in Congress from the State of West Virginia, 
  June 21, 2011..................................................   207
Jayanti, Ignacio, Initial Comments on Mica-Shuster Discussion 
  Draft..........................................................   209
Kinstlinger, Jack, P.E., Chairman of the Board Emeritus, KCI 
  Technologies, Inc., letters to:

    Mica, Hon. John L., a Representative in Congress from the 
      State of Florida, June 16, 2011............................   212
    Rose, Joyce, Staff Director, Subcommittee on Railroads, 
      Pipelines, and Hazardous Materials, June 23, 2011..........   214
Little, James C., International President, Transport Workers 
  Union of America, letter to Hon. John L. Mica, a Representative 
  in Congress from the State of Florida and Hon. Nick J. Rahall 
  II, a Representative in Congress from the State of West 
  Virginia, June 21, 2011........................................   215
Mortensen, Stacey, Executive Director, San Joaquin Regional Rail 
  Commission, letter to Hon. John L. Mica, a Representative in 
  Congress from the State of Florida, June 9, 2011...............   217
News Release, Coalition of Northeastern Governors, ``CONEG 
  Governors: The Northeast Rail Corridor is Uniquely Positioned 
  as a National Model for High Speed Rail and Improved 
  Connectivity''.................................................   218
North Carolina Department of Transportation, Comments on the 
  Discussion Draft...............................................   220
Patterson, Dave, President and Chief Operating Officer, RWL 
  Leasing, letter to Hon. John L. Mica, a Representative in 
  Congress from the State of Florida, June 23, 2011..............   221
Pierce, Dennis R., National President, Brotherhood of Locomotive 
  Engineers and Trainmen, letter, June 20, 2011..................   222
Press Release, The Congressional Bicameral High-Speed & Intercity 
  Passenger Rail Caucus, ``Rail Caucus Chairs Say Northeast 
  Corridor Should Stop Being Used as a Political Pawn,'' June 15, 
  2011...........................................................   223
Press Release, United States Senator Jay Rockefeller for West 
  Virginia, ``Rockefeller Concerned About Threat to Amtrak 
  Service in West Virginia,'' June 20, 2011......................   225
Redeker, James P., Acting Commissioner, Connecticut Department of 
  Transportation, Comments on the Discussion Draft...............   226
Simpson, Freddie N., President, Brotherhood of Maintenance of Way 
  Employes Division of the International Brotherhood of 
  Teamsters, 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 
  21, 2011.......................................................   228
States for Passenger Rail Coalition, Statement from States for 
  Passenger Rail Coalition Chair Paula Hammond on House 
  Transportation and Infrastructure Committee Passenger Rail 
  Proposal--the Competition for Intercity Passenger Rail in 
  America Act of 2011............................................   230
Stem, James A., Jr., National Legislative Director, United 
  Transportation Union, letter to Hon. John L. Mica, a 
  Representative in Congress from the State of Florida and Hon. 
  Nick J. Rahall II, a Representative in Congress from the State 
  of West Virginia, June 21, 2011................................   231
Swaim-Staley, Beverley K., Secretary, Maryland Department of 
  Transportation, 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 
  17, 2011.......................................................   234
Transportation Trades Department, AFL-CIO, Labor Problems with 
  Mica-Shuster Competition for Intercity Passenger Rail in 
  America Act....................................................   237
Yaro, Robert, President, Regional Plan Association, Comments on 
  the Competition for Intercity Passenger Rail in America Act of 
  2011...........................................................   240

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                       LEGISLATIVE HEARING ON THE
                   COMMITTEE PRINT ``COMPETITION FOR
                 INTERCITY PASSENGER RAIL IN AMERICA''

                              ----------                              


                        WEDNESDAY, JUNE 22, 2011

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                            Washington, DC.
    The committee met, pursuant to notice, at 11:10 a.m. in 
Room 2167, Rayburn House Office Building, Hon. John Mica 
(Chairman of the committee) presiding.
    Mr. Mica. I would like to call this legislative hearing of 
the House Transportation and Infrastructure Committee to order. 
The purpose of this hearing today is to review the committee 
print, which is entitled, ``Competition for Intercity Passenger 
Rail in America.'' We have assembled a list of witnesses.
    The order of business will be, first, opening statements by 
Members. And then we will turn to our witnesses that we have. 
And I recognize myself, as we get started here.
    Ms. Brown. Mr. Chairman? The people have not been permitted 
to----
    Mr. Mica. Yes. And I, as the chair--the people will be 
seated. But in the effort of moving forward at the appointed 
time, which is 11:00, Members will have the opportunity to 
present their opening statements.
    And as the witnesses are recognized--as you know, some 
Members took extensive time during the last markup, biting into 
our time of this important hearing, this bipartisan hearing 
that I had agreed to at the request of Ms. Brown, the ranking 
member, at the request of the full committee chairman, Mr. 
Mica, and the ranking member, Mr. Rahall.
    We are going to proceed with a full hearing, and everyone 
will have an opportunity, as far as the Members, to give 
opening statements. And then we will hear from the witnesses 
who are being assembled, and will be seated as we proceed.
    Ms. Brown. Mr.----
    Mr. Mica. As I said, the order of business will be opening 
statements. I will proceed with my opening statements, then we 
will turn to the ranking member or the others who wish to be 
recognized.
    Let me again welcome everyone today, and say that I am 
pleased to comply with a request both in writing and verbally 
that I had from Mr. Rahall, from Ms. Brown, to convene a 
legislative hearing on the committee print of the proposal by 
myself and Mr. Shuster, which is entitled, ``Competition for 
Intercity Passenger Rail in America.'' We are very pleased to 
move forward and try to improve passenger rail service, not 
only in the Northeast Corridor, not only for high-speed rail, 
but also for passenger rail in America.
    As a very strong advocate of passenger rail, I believe it 
can not only benefit us as far as energy and as far as 
improvement in the environment, but in many other ways. I think 
it is a segment of the economy that has been stuck in neutral 
for many years. We are celebrating the 40th anniversary of 
Amtrak, which has a history of a Soviet-style train operation.
    While train operations and systems around the world have 
moved into the 21st and sometimes the 22nd century, achieving 
speeds of 150 miles an hour on average not uncommon in Europe 
and Asia, some of them going much faster than that on average.
    While we have our snail-speed trains that Amtrak promotes 
at great expense, underwriting every ticket last year by 
approximately $50.80, some of the routes in the hundreds of 
dollars--and I have no problem with subsidization of any forms 
of transportation, so long as they are reasonable and 
accomplish what we set out to do by moving people efficiently, 
economically, by the best possible infrastructure that we can 
work together to provide.
    Let me say that we have two reasons for this legislation 
that Mr. Shuster and I have introduced, as I continue with my 
opening statement as we get settled here and get everyone 
together.
    The first reason, of course, is my great disappointment in 
high-speed rail. I was excited when President Obama, even as 
President-elect, had stated one of his goals was to create 
high-speed rail systems like we have in Europe and Asia. He 
came to the floor of the House of Representatives during his 
State of the Union and said that that was his goal, and 
repeated it.
    And then the second reason we had, of course, was the 
money, which was thrown at several projects. And to go back for 
just a second, Mr. Shuster and I worked aggressively during the 
Bush administration, and prior to that I worked back as far as 
Susan Molinari, previous chairs of this committee, to try to 
bring good reforms and improve passenger rail service across 
the United States, including the PRIIA Act, which we worked on 
in a bipartisan manner with Mr. Oberstar.
    I helped author and promote the high-speed rail provisions, 
working in the House and Senate, with both Republicans and 
Democrats, and we actually got the President of the United 
States to sign that law that, again, set out a blueprint for 
creating high-speed rail, involving States and localities and 
others in the process, setting up, again, a participatory 
outline and framework.
    All that was sort of blown apart when some of the grants 
were announced. We threw $8 billion in stimulus money and 
another $2.5 billion through regular appropriations at high-
speed rail. And when those decisions were made behind closed 
doors without proper consultation of Members of Congress and 
others, you see exactly what you got: people rejected snail-
speed trains, they rejected 39-mile-an-hour systems that would 
be slightly improved, and you could still ride a bus and get 
there faster than you could by Amtrak-proposed service.
    So, money came back from Ohio. The 70-, 80-mile-an-hour 
snail-speed proposals for Wisconsin and Florida that were sold 
as high speed were also rightfully rejected. And I am not very 
pleased with the inglorious start that we have had in throwing 
money at projects that had no possibility of succeeding, either 
in providing high-speed service, or in moving this country into 
the 21st century of high-speed rail.
    Even by Federal definition that we put in the law, high 
speed is 110 miles an hour, which was watered down by Amtrak in 
negotiations. And, in fact, you will find the world's standard 
is 120 miles per hour.
    We have ended up with a horrible start. I couldn't think of 
a worse launch of high-speed rail in the United States, 
undermining the efforts that we worked so hard for to launch 
true high-speed service around the Nation.
    I am not even happy with the one project that retains the 
possibility of high-speed rail in California. We went out to 
Fresno, and we actually did a hearing out there, and the 
section that has been chosen between Fresno and Bakersfield has 
neither the population nor the intercity connections to make 
that route a success. And yet we are throwing billions of 
dollars at that marginal project, instead of a successful 
project.
    What we have tried to do is turn our focus to the Northeast 
Corridor. And people--any of the people who say that we are not 
going to succeed, I can tell you right now, Mr. Boardman, 
representatives of labor and others, that we are succeeding. 
Because the first thing we got done was the recognition by this 
administration and others to designate the Northeast Corridor 
after some time waiting as a high-speed rail corridor.
    And we do have some recognition by Amtrak, who is now 
considering--and we will hear the plans from Mr. Boardman--of 
bringing the private sector in, because he knows as well as I 
know and every Member knows, that you will be turning blue 
before Congress ever gives $117 billion or waits 30 years for 
high-speed rail in this Nation.
    So, yes, we will have a full hearing on this, and as we 
rolled this out, we tried to do it in a bipartisan manner, 
bringing in people from around the United States, not just the 
bigshots in Washington. We connected people, hundreds of people 
from around the country, who had an opportunity to participate 
both by teleconference and by webcast. We offered later--and 
everyone saw it when I saw it--a committee print which you see 
before you today.
    We will have a hearing every week, if we have to, until we 
get this done, or we get high-speed rail moving and intercity 
passenger service that meets an adequate world standard.
    And all along the way, Mr. Shuster and I have guaranteed, 
promised, committed to preserving labor's existing benefits, 
wages, and whatever else they have; I don't want that to be an 
issue. Anybody who thinks that the glorious future for Amtrak 
is to continue with the status quo, as some have said we should 
do, are sleeping at the switch, as far as labor is concerned.
    Labor, look at the future that labor has had with Amtrak 
and with what's going on. We have gone from 29,000 Amtrak 
employees when I came to Congress to 19,000. Do you want to 
continue to lose jobs in an industry where other parts of the 
world they are actually gaining and are moving people? Is that 
the history you want?
    I made part of the record today the outline of what Amtrak 
did to labor, and they argued for years over wages and 
salaries, minor benefits for their employees. I went to those 
meetings with Mr. Oberstar and tried to get off dead center, so 
that labor could--that's in Amtrak, and the great people who 
work in that, could get the benefits and some of the other 
terms of employment that they have in the private sector that 
they got from privatization of our freight rail, which we did 
years ago, and again, Amtrak left in neutral.
    No one is trying to harm labor in any way. And I will go 
out to the unions, if I have to go from shop to shop, and 
explain it to them again on train to train, and let them know 
that they will be protected by whatever we do here.
    Now, in an unprecedented fashion, too, we rolled out that 
measure last week, the committee print, and I saw it in the 
afternoon when everyone else did. We discussed the general 
outline of what Mr. Shuster and I proposed, both for high-speed 
rail in the Northeast Corridor and other corridors, and then 
long-distance and intercity passenger service. His intent is 
also a follow-up of what we put in PRIIA. He asked for just a 
couple of lines that are money-losers to be put up for bid to 
allow the private sector--and I ask you why can't you--why 
can't we ask the private sector to bid on some of these routes, 
if we are guaranteeing, again, labor all of their 
opportunities, their wages? Why can't we do that? Why are we so 
closed minded that people can't consider an offer that may be 
better?
    We did protect Amtrak in the case, again, that service will 
continue to be provided. And no one said that we want to 
dismantle Amtrak. In fact, if there wasn't an Amtrak already, 
there would have to be--you would have to create an Amtrak that 
would be the franchisee and oversee some of the passenger 
service.
    So, we put provisions into PRIIA, both for high-speed rail 
and for intercity passenger service, that we think we can build 
upon, and that we think that we can have an opportunity to 
provide more service, more employment, and true high-speed 
rail, while opening the door to competition and leaving Amtrak 
intact. But what we get, in fact, are just negative comments.
    And we will move this forward, one way or the other. We 
will move it forward in this Congress or in future Congresses. 
And I guarantee that Amtrak will tell us today and in the 
future that they will have to move in that direction, because 
they are not going to find $117 billion that Congress can give 
them, and we aren't going to wait 30 years to have that service 
in the Northeast Corridor or any place else in the United 
States.
    So, I think that gave everyone an opportunity to get 
settled.
    [Laughter.]
    Mr. Mica. And, Ms. Brown, you think that everyone got an 
opportunity to be settled?
    Ms. Brown. We appreciate that, Mr. Chairman.
    Mr. Mica. And I wanted to make certain that everyone 
understands with clarity my position. If there is anything I 
didn't amplify, I will be glad to do it as we proceed.
    So, with those brief opening comments, I am pleased to 
yield to Mr. Rahall.
    Mr. Rahall. Oh, thank you, Mr. Chairman. I was asleep at 
the switch. Not that your comments would ever put me to sleep, 
but I do want to thank you for holding today's hearings at the 
request of subcommittee ranking member, Corrine Brown, and 
myself, as the proposal you and Mr. Shuster have put forth 
raises a great many questions and concerns.
    Amtrak is a for-profit corporation. It is not an agency of 
the Federal Government. Yet your proposal would divest Amtrak 
of its assets in the Northeast Corridor and leave it 
responsible for its debts.
    The nonpartisan Congressional Research Service has 
determined that this proposal is unconstitutional because it 
violates the appointments clause of the Constitution. It is 
also likely that the proposal violates the takings clause, 
because it takes Amtrak's private property without just 
compensation.
    As a for-profit corporation, I believe Amtrak's standing is 
very little different than that of any other for-profit 
corporation in America. Yet I do not think anyone would dream 
of, say, legislatively stripping CSX or Norfolk Southern of its 
assets if one was unhappy with the freight service they were 
providing.
    There are many other peculiar aspects to this proposal. 
Under it the Secretary of Transportation would solicit 
expressions of interest from entities interested in replacing 
Amtrak as the operator in the Northeast Corridor. The Secretary 
would then select up to three entities to be awarded $2 million 
in Federal funds to develop more detailed proposals.
    Subsequently, the Northeast Corridor Executive Committee 
established by the measure would accept the detailed proposals 
and select the best one. There is no criteria contained in the 
measure as to what qualifications or restrictions might pertain 
to these entities. In fact, under a clear reading of the 
measure, China could qualify and operate the Northeast 
Corridor. Now, I don't believe that is something we really want 
to see happen.
    I also fail to see why we would hand over $2 million in 
taxpayer dollars to up to three entities in order for them to 
develop a detailed proposal. That is rather odd, paying 
somebody to develop a proposal to submit to yourself. I do not 
think that is how things of this nature are normally done.
    There is also no guidance or criteria governing which 
proposal the committee would select, other than it being the 
``best.'' What does that mean, ``the best''? The best what? 
Would we amend Federal aviation or highway statutes to say that 
the goal of those programs is to have the best aviation system, 
or the best highways?
    The answer is, of course, that while we all want to do the 
best, we would not use that term, as it is not a statutory term 
of art.
    In the case of your measure, Mr. Chairman--and I do commend 
you for your vigorous pursuit thereof--I think any overreaching 
goal as to what constitutes the best would include creating and 
retaining jobs, and provide the highest level of safety and 
security.
    As to other aspects of the measure, Amtrak relies on an 
operating profit from the Northeast Corridor to offset less 
profitable long-distance lines in other parts of the country, 
areas that rely heavily on passenger rail service. This 
includes--and accuse me of being parochial or whatever--but 
this includes the Cardinal that runs in my home State of West 
Virginia, a route connecting New York to Chicago.
    With the establishment of Amtrak in the Northeast Corridor, 
the Cardinal will suffer a fatal blow under this proposal, 
along with many other vital routes that connect rural areas of 
our country coast to coast, including the Auto Train, Capital 
Limited, California Zephyr, Coast Starlight, Empire Building, 
and Texas Eagle. Right now, Amtrak serves about 40 percent of 
America's rural population. All of this service will be lost 
under the draft legislation.
    I also have serious concerns about the implications of this 
proposal on rail labor. Under this measure, the existing 
contracts of some 19,000 Amtrak workers would be abrogated, and 
new workers would have no Davis-Bacon protections, and no 
protections under the Railroad Retirement Act, railroad 
unemployment compensation, and the Railway Labor Act. In other 
words, this proposal leaves rail labor sitting at the station.
    While proponents of this proposal claim this will save 
money, I fear it will have just the opposite result. Under 
existing contracts, Amtrak workers who get displaced receive up 
to 5 years of protection. As such, under this proposal, Amtrak 
would be responsible for up to $4.4 billion for displaced 
workers, an obligation that Amtrak would not be able to meet. 
This would undoubtedly fall on the U.S. Government. This is 
just one of the many ways that this proposal will cost, not 
save, the American taxpayers money.
    And then finally, as I conclude, Mr. Chairman, in its 
present form this proposal will have serious consequences for 
commuter rail agencies and freight railroads. And, frankly, I 
am not sure that the proposal can even be fixed. My fear is 
that if it is enacted, it will result in a transcontinental 
tragedy.
    I thank you for the time, and look forward to today's 
witnesses.
    Mr. Mica. Well, thank you. And, as I said, we offered this 
committee print online last Wednesday and asked any Members who 
had amendments to offer them by the close of business Friday. 
We extended that until Monday at noon. We did agree on this 
legislative hearing.
    And I do want to say--and I have taken notes of the issues 
that the ranking member has--that we are interested in crafting 
legislation that can have bipartisan support, and move this 
process forward. And when I saw the draft myself I had some 
concerns about some of the same issues that you raise.
    And we will be glad to take amendments from, again, 
committee members and others to make certain that our intent to 
provide good service, not to eliminate any, or interfere with 
any existing service, is achieved.
    So, again, just comments. We will, as we continue and move 
towards markup on the legislation, welcome everyone's 
participation.
    Mr. Shuster, chairman of the rail subcommittee, you are 
recognized.
    Mr. Shuster. Thank you, Mr. Chairman. I appreciate you 
holding this hearing today. I appreciate the ranking member for 
calling for it--Ms. Brown of the subcommittee.
    This is an important issue. The ranking member, Mr. Rahall, 
talked about Amtrak being a for-profit corporation. But if it 
were a bona fide for-profit corporation, it would be bankrupt 
by now. Amtrak would be gone. It would be sold off into pieces, 
or somebody would have come in and taken it over for $.10 on 
the dollar.
    It has never lived up to what it was established to be: a 
for-profit corporation. And those out there today and on this 
committee talking doomsday for Amtrak, I think it's doomsday 
for Amtrak if we do nothing.
    We have to look around the world at what is going on. 
Private sector capital, private sector operations, are coming 
in all over Europe and they are taking over the operations of 
these railways and making them profitable, or at least moving 
them towards break-even or profitability. And I think the same 
thing can happen with passenger rail in this country.
    I remember back 15, 16 years ago, 20 years ago, even 30 
years ago, when we deregulated--that is what we are doing here, 
I believe, we are deregulating passenger rail in this country, 
just like we deregulated freight rails, just like we 
deregulated the trucking industry in this country, just like we 
deregulated the airline industry. And two of the three have 
been great successes. The trucking industry and the freight 
rail systems have had great success. For the airline industry, 
the consumer has had success, I believe. We have got a lot of 
options for inexpensive flights around the country. The 
industry, though, has struggled; 9/11 didn't help at all.
    But still, we deregulated those modes of transportation. 
And, on all accounts, I think we would come down saying that it 
was a very successful deregulation. I think we can do that 
here, with passenger rail.
    I don't like to mention this to people, but I think it is 
important--they were Democratic Presidents that deregulated 
these industries. My friends on the other side of the aisle, I 
hope they look back at history. When we deregulated aviation 
and we deregulated freight rails in this country, Jimmy Carter 
was the President of the United States. Today you would think 
that was heresy, for a Democrat to do that, but in fact, that 
is what happened. Same with the trucking industry. Bill Clinton 
was the President of the United States.
    Deregulation works. And it can work in passenger rail. And 
I believe it can save passenger rail in this country. And, as 
the chairman said, if we didn't have Amtrak, we would probably 
would have to, in this bill, create Amtrak. It is not saying 
Amtrak is going away. Amtrak can participate, Amtrak will 
probably be here. I am quite sure it will be here in some shape 
or form. But it is going to be different, and it needs to be 
different if we want to have a vibrant passenger rail system in 
this country. And I believe we need to.
    I say in a lot of hearings about the population of the 
United States. It went from 200 million to 300 million people 
and we crossed that threshold about 4 or 5 years ago; it took 
us 65 years. We are now going to cross the 400 million 
threshold in about 30, or even 25 years from now. Passenger 
rail has to be a viable part of our transportation system, 
especially in the Northeast Corridor, where the population 
density is incredible. You look around the world, it is one of 
the most populous corridors in the world. We need to do better. 
And I believe this proposal does that.
    When I look around the world--and there is debate, but 
there are facts that have been shown to me--and when you talk 
about the West Coast rail that Virgin Rail took over in 
England, it was started out by the British Government by giving 
them $400 million in subsidies. Today, they pay the British 
Government $240 million, plus they make a profit of $80 
million. They have gone in there using marketing and best 
practices and over the last 6 years, they doubled the ridership 
from 14 million to 28 million people.
    I talked to a number of companies that are very interested 
in coming into the United States and investing in some shape or 
form in the Northeast Corridor. They believe that today's 
numbers of 10 million passengers could grow to 30 million or 40 
million passengers, which is incredible. And that is what we 
have to do.
    The proposal also affects State-supported routes. My State 
of Pennsylvania is very eager to have competition on the 
Keystone Corridor, which has been a great success between 
Amtrak, the State, building that line and increasing the 
ridership by 40 to 50 percent over the last 4 or 5 years.
    Both you and I look at examples on the negative side. And, 
of course, I am going to ask Mr. Boardman--I don't believe he 
was there at the time, but in Florida, the Florida Rail South, 
the Veolia bid that got the contract was $97 million; Amtrak 
was $162 million. I was in business. I couldn't stay in 
business if my prices were that much higher. And why is that?
    And then, to add insult to injury, Amtrak is suing Veolia 
because of four employees they say were stolen from Amtrak. As 
I said, I was in business, and I had people come to work for me 
and people who went to work for somebody else, and I also had 
other business owners say to me, ``Oh, you stole my employee.'' 
You can't steal something you don't own. So I don't know why 
Amtrak is pursuing, with Federal taxpayer dollars, a court case 
about four employees that changed where they wanted to work. I 
think it is ludicrous.
    And there are many examples. We had, the other day, the 
person that runs ACE Rail in southern California, where the 
bids came in. Amtrak bid double what the private sector company 
bid--I don't remember which private sector company it was.
    I believe bringing competition to passenger rail is the way 
to save it. I don't believe that we are going to kill it. We 
are going to save it and make it stronger, I believe, for the 
future, for the future generations of American passengers. And 
I look forward to working with Mr. Rahall and other 
colleagues--Ms. Brown, on the other side of the aisle. If there 
are provisions that we need to add to this, let's talk about 
it.
    Because I think, at the end of the day, as history marches 
forward, passenger rail is going to need to be deregulated. 
Competition in the transportation industry is what makes it 
stronger, as it has in the past. So, with that, Mr. Chairman, I 
went over my time. But thank you, and I yield back.
    Mr. Mica. I thank the chairman. Let me recognize the 
ranking member of the rail subcommittee, Ms. Brown.
    Ms. Brown. Thank you. My notes say that I am supposed to 
say, ``Thank you, Mr. Mica, for holding today's hearing.'' I 
don't think so, because I think legislation that affects the 
entire passenger and freight rail system in the United States 
deserves a hearing, examination, and debate. There are numerous 
legal, financial, and operational questions that need to be 
answered before we auction off Amtrak to Wall Street investors.
    We have, as we sit here today, no surface transportation 
reauthorization bill, and no way to pay for it. This week we 
will be forced to delay the Federal Aviation Administration 
bill for the twentieth time, at the very moment that we should 
be working together to solve problems.
    We have this bill before us today that will be dead on 
arrival in the United States other body, the Senate. We 
absolutely need to find a way to get these transportation 
programs reauthorized so we can put people back to work. But 
this legislation will do the exact opposite. This legislation 
turns over one of our Nation's most valuable transportation 
asset to Wall Street investors with little or no regulation or 
service outcome. No safety or security mandates after being 
targeted by--given a private or possible foreign entity the 
right to take the land and property of the United States 
citizen and provide no protection for labor, all the while 
jeopardizing the railroad retirement system.
    This legislation also put the American taxpayers on the 
hook for billions of dollars in Amtrak debt, environmental 
clean-up, windfall profits for billionaires, and largely 
subsidies for--assuming that they would ever survive. In fact, 
this is unheard of. We are giving $6 million to encourage 
people to bid.
    We all agree that we need better service on the Northeast 
Corridor. But no one is going to operate trains at 200 miles 
per hour on infrastructure built in the 1800s. Amtrak has an 
operating profit on the corridor, and is steadily increasing 
passengers. And we can tear apart Amtrak and hope for the best, 
or we can give Amtrak the tools that it needs to run true high-
speed rail along with the numerous other services that they 
provide.
    The United States used to have the best passenger rail 
service in the world. Now we are being left behind because we 
refuse to invest necessary money for the true national 
passenger rail service. Japan and Great Britain--which is often 
talked about on this committee--Japan invested $30 billion--
30--I am sorry, $300 billion in infrastructure. That cost never 
passed on to the operators.
    Great Britain, which is often talked about, recently 
invested $15 billion to improve the West Coast Line, which 
Virgin Rail runs. Virgin pays only $160 million annually to 
Great Britain for the infrastructure improvement. Amtrak is 
expected to do less, yet they have a higher operating profit on 
the Northeast Corridor than Virgin on the West Coast Line. In 
fact, I think about $130 million.
    The American people deserve better. And privatizing Amtrak 
rail along the Northeast Corridor is definitely not the way to 
improve our Nation's passenger service. It will kill our 
Nation's passenger rail, and dismantle Amtrak, which I believe 
is the true goal of this legislation, and has always been the 
true goal from the Bush administration, when they zero out the 
funding for Amtrak.
    Mr. Chairman, I have received a number of letters and 
statements of concerns regarding this draft bill, including 
statements from Amtrak, the National Association of Railroad 
Passengers, and a number of labor unions, the Brotherhood of 
Locomotive Engineers and Trainmen, the International 
Brotherhood of Teamsters, just to name a few, and several other 
Members. I would ask unanimous consent that they be included in 
the hearing record, and given 30 days to get that information 
to the committee.
    I yield back the balance of my time.
    Mr. Mica. I thank the gentlelady. Other Members seek 
recognition? Mr. Southerland, gentleman from Florida.
    Mr. Southerland. Thank you, Mr. Chair. I commend you for 
having this hearing, and I appreciate bringing this incredibly 
important issue to the forefront of the full committee.
    You know, I will tell you. At least--you know, we have 
talked about this issue, and we talk about other countries that 
are doing well. I applaud us for often times, in referring to 
those countries, countries that are our allies, countries that 
do appreciate freedom and do appreciate free enterprise and 
free markets. Often times we hear on the Hill raising up 
countries that in no way exemplify the values that we hold true 
in this country.
    And so, I think sometimes you don't have to redesign or 
reinvent the wheel. There are some good ideas out there around 
the world that I think we need to be learning from, and using 
them as our R&D, and trying to implement on the issue that is 
before us today.
    You know, it blows my mind that Amtrak's long-distance 
routes operated a deficit of $527 million, requiring an average 
subsidy per ticket of $177.84. I, too, as Chairman Shuster made 
mention, stuck on to the ranking member's comments about how 
Amtrak is a for-profit organization. You know, I am new to this 
whole world, being here in Congress for 6 months. But I will 
tell you my family has been in business, a business my 
grandfather started. And I will tell you that if we were having 
to subsidize to the percentages that Amtrak is having to 
subsidize, it is just real clear we would have gone bankrupt 
and we would have ceased to exist, and we would not have 
perpetuated our business, our family business, to three 
generations now.
    There are just some brutal realities out there, just brutal 
realities. When you are in a hole, stop digging. Spoken like a 
true funeral director, because that is what I am. I know about 
digging holes. And what I see here just violates common sense.
    I understand how critically important this issue is 
regarding the transportation, and as far as the sector we are 
looking at. We want it to survive, we want it to thrive. And I 
think that, in looking at how we can best do that, to inject 
some private--public-private partnerships, makes sense. But the 
one thing that doesn't make sense is digging a deeper hole.
    And so, I am eager today to hear from our panel. I thank 
you all for being here. We are going to disagree, and that is 
OK. But I will tell you your ideas, they either fill the hole 
in, or dig it deeper, one of the two. We are broke. We are 
broke.
    And so, Mr. Chairman, I thank you. I look forward to 
hearing from our--from those that are going to testify here 
today, and I yield back.
    Mr. Mica. Thank the gentleman. Mr. Sires, the gentleman 
from New Jersey.
    Mr. Sires. Chairman Mica, Ranking Member Rahall, I thank 
you for holding this hearing today. As a Member whose district 
is in the Northeast Corridor, and as someone who travels home 
nearly every weekend on Amtrak, I have some concerns and 
reservations about this bill, which proposes to separate 
Northeast Corridor from Amtrak.
    The Northeast Corridor is important to Amtrak because it 
generates revenue which can be used to make up the--for losses 
in long-distance routes. However, more important than this, 
Amtrak provides an essential service to millions of passengers 
each and every day, and is a key component of our regional 
economy.
    The Northeast Corridor is not owned by Amtrak. And if the 
Northeast Corridor is to be split, it would split up into 
different private corporations. The ramification must be known.
    For example, the tunnel between New Jersey and New York are 
easements held by New York City. This legislation seems to 
assume that New York City would be willing to transfer these 
easements. Homeland Security concerns could be triggered. What 
would be the security requirements for private corporations to 
take over Amtrak routes? Where would labor jobs go?
    Additionally, under this plan, what would be the 
implications for the commuter railroads such as the New Jersey 
Transit?
    I am much--I am very much looking forward to the testimony 
of our witnesses, and thank the chairman and the ranking member 
for holding this hearing.
    Mr. Mica. Thank you. Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman. Thank you, Chairman 
Mica and Ranking Member Rahall, for holding this hearing on the 
chairman's bill to privatize the Northeast Corridor.
    I am glad we are holding a hearing, instead of a markup, as 
I think was originally intended. This is a pretty drastic 
proposal that makes sweeping changes to the intercity passenger 
rail system. It requires careful thought and deliberation, and 
I appreciate the chairman's willingness to slow the process 
down, so we can begin to address the many questions and 
concerns raised by the legislation.
    The bill requires Amtrak to redeem common stock and 
transfer its assets to DOT. At the same time, it directs the 
Secretary to solicit ``expressions of interest'' from private 
entities to build and operate high-speed rail service, and then 
it gives $2 million to the top contenders to prepare a more 
detailed proposal. It is not clear why an entity that 
supposedly has enough funding to build and operate a high-speed 
rail line needs taxpayer support just to write a proposal.
    Then the Executive Committee establishing the bill would 
evaluate these proposals, select the best one, and notify 
Congress of its decision. Congress would have no role in the 
decision. Congress would just be told what will happen, and the 
Secretary is directed to implement the Executive Committee's 
selected plan and grant a 99-year lease to the Executive 
Committee to carry it out.
    One of the biggest problems with the bill is that it sets 
in motion the elimination of Amtrak before any proposals are 
reviewed or recommended. We have no idea if there are any 
viable private financing schemes that adequately meet the 
desired criteria.
    We have already requested proposals in PRIIA, and none were 
submitted for the NEC. I understand the chairman has indicated 
that he thinks DOT didn't really act in good faith in search of 
proposals, but his bill setting up a new RFP is also in the 
hands of the DOT. Regardless, the logic doesn't follow that, 
therefore, we should first eliminate Amtrak and then hope that 
a solution will magically appear.
    As the chairman knows, I have supported his quest to 
research and review privatization proposals. But why should we 
take the drastic actions laid out in this bill until a detailed 
plan has been presented and properly evaluated? Why should we 
disrupt or eliminate current service and potentially lose good 
paying jobs until we know what will replace it? And why 
shouldn't we keep investing in Amtrak in the interim, and allow 
it to compete, as well?
    Another major problem is that this bill grants broad 
authority, including eminent domain authority and preemption of 
several State and local laws, to this Executive Committee which 
is eventually to be staffed by the private entity with a lot of 
unanswered questions. There might be legitimate reasons to have 
such authority. And, generally speaking, I support it. When 
furthering interstate transportation and commerce, that is 
clearly in the public interest.
    But under this bill we don't know exactly who we are giving 
this authority to, or when or how it will be used. This is a 
monumental states' rights issue, and a very broad grant of 
authority to an unknown, unaccountable entity over our 
districts.
    There are simply too many unanswered questions to allow 
such broad Federal preemption, and to place it in the hands of 
a private entity.
    I also question the provision of the bill requiring Amtrak 
to redeem all common stock at the book value. DOT performed the 
evaluation and determined the stock is worthless, which--an 
evaluation the courts have upheld. Under this bill, Congress is 
stepping in, providing a direct windfall to at least one of the 
shareholders. I have concerns about the takings issue in the 
bill. But beyond that, this could create a real problem of 
unjust enrichment.
    I am, frankly, surprised that, as my friends on the other 
side of the aisle are pushing drastic cuts across the Federal 
budget, that they would agree to just handing someone a 
windfall of hundreds of millions of dollars.
    These are just a couple of the big picture concerns. There 
are many other troubling aspects of the bill, such as 
inadequate labor protections, the potential impact of the 
railroad retirement system, and the increased cost for the 
freight railroads, the probable loss of State-supported and 
long-distance routes, and the shifting financial burden to 
States and local governments.
    If one of the main goals of privatization is presumably to 
reduce Federal funding, it seems odd to leave the Federal 
Government with such significant costs and liabilities. I would 
rather take that money and invest it directly in Amtrak's plan 
to eliminate the $9 billion backlog created by Federal under-
investment, and to implement Amtrak's plan to upgrade its high-
speed rail service.
    My biggest problem with this bill is that it throws the 
entire passenger rail system off a cliff, and hopes the safety 
net will suddenly appear. At least it hopes the NEC is saved. 
It doesn't deal effectively with other routes, except to remove 
the cross-subsidy from the Northeast Corridor that now supports 
them. These are risks I am not willing to take.
    As of now, I must oppose this bill. But I do commend the 
fact that we are holding a hearing, and hope we can explore 
many of the subjects raised by the bill. But we certainly 
shouldn't take the approach that the bill does of, in effect, 
abolishing Amtrak, and then hoping a proposal will emerge that 
can adequately replace it. I think that is, to put it mildly, 
putting the cart before the horse.
    I thank you, I yield back.
    Mr. Mica. Thank the gentleman. Mr. Cravaack?
    Mr. Cravaack. Thank you, Mr. Chairman, and I want to begin 
by commending you and Mr. Shuster for this bold, new direction. 
I think that Amtrak needs to go. And I thank all the panel for 
being here, as well, and I look forward to your testimony, and 
I hope to learn a lot along the way.
    Just some comments. I am a pilot from Northwest Airlines--
or now Delta--and living through deregulation, or not--but 
living as a result of deregulation, I can tell you that it is 
good for the consumer. Some of the arguments I am hearing here 
today were probably some of the same arguments that we heard 
about the airline deregulation, as well.
    Quite frankly, Amtrak is broken. And the other fact is we 
are broke. I hear about investment. Where is that investment 
money going to come from? Right now, 47 percent of our debt is 
foreign-owned. Do we plan to go to over 50 percent of that 
debt? Have foreign-owned entities own our debt, and begin to 
start telling us where we can and cannot invest our money? I am 
not willing to put my children and my grandchildren at that 
risk.
    When I see investment, or what I think the private sector 
should be doing, and what they can do, is start investing. The 
demand is there. And with the demand being there, you are going 
to see the private sector slip right in and start making 
profits, accordingly.
    When I see competition, what I see is increasing 
flexibility of schedules, affordability, and quality 
increasing, as we have seen all through the competition model. 
I have seen this with the airlines itself.
    Einstein had it right. Keeping--doing the same thing over 
and over again and expecting different results is the true 
definition of insanity. We cannot continue on with this model. 
I look forward to hearing what you have to say, and hopefully 
joining with you and partnering with you in a private 
enterprise that can create a significantly profitable model 
that will actually benefit the consumer and have long-term 
viability without increasing the debt on this country. I thank 
you very much, and I--Mr. Chairman, I yield back.
    Mr. Mica. Thank you. Ms. Norton?
    Ms. Norton. Mr. Chairman, I appreciate this hearing. I mean 
the last hearing Amtrak wasn't here to talk to--it is like I 
talk about you while you are not here. It is important to about 
them and to talk to them, with them here. And so this is an 
important hearing.
    I also think you have every right to be impatient with the 
backwardness of the United States on high-speed rail. May I 
remind the chairman that for decades, for almost 75 years, we 
have sat here and watched every advanced country--and some not 
so advanced--develop high-speed rail, and never lift a finger 
to do anything about it, until the administration, in fact, 
initiated a stimulus package in the middle of the great 
recession. It was aimed at finally, finally, starting up a 
nationwide high-speed rail system, while at the same time 
offering jobs to the many troubled areas of our country.
    That is why we didn't, for example, concentrate on the 
Northeast Corridor, which would have been more efficient, but 
that was not what those times called for. In fact, starting it 
up all across the country made a lot of sense. But we see some 
States even have decided to give back the money--including your 
own, Mr. Chairman, despite your best efforts to encourage the 
State of Florida, one of those most in need of high-speed rail, 
to proceed.
    The criticisms of Amtrak that I have heard here are no 
substitute for hard thinking about how to fix that system and 
get high-speed rail. That is the easy part. And I regret that 
this is an easy solution.
    The bill has an encyclopedia of flaws I will not--I will 
focus on only two of them. I am particularly troubled, by the 
way, by the cavalier treatment of American workers who have 
worked for Amtrak for decades. Because this bill surely wipes 
out their contracts, and undermines their retirement system.
    But let me focus on two fatal flaws. It is really 
surprising to see the Majority introduce a bill that has such 
Fifth Amendment-taking violations. This bill, if it were ever 
to get through the Senate--and I don't think anyone entertains 
the illusion that it would--would be in court if any President 
ever signed it. I don't want--the constitutional Fifth 
Amendment takings violations are replete throughout the bill. 
That, itself, is a fatal flaw.
    But there is another fatal flaw in the thinking behind this 
bill. The authors do not take into account that there is no 
passenger railroad service in the world today that is not 
heavily subsidized. The authors wipe out 1970, when the 
railroads came begging the Federal Government to ``Take this 
off our hands.'' Do you think the Federal Government wanted to 
take on a railroad and subsidize it the way we have done? Of 
course not. But both then and now, the private sector was not 
prepared to do what you would have them do now.
    Now, they do have a recourse. And, mind you, they will go 
to that recourse as quick as they were to--to get control of 
the Northeast Corridor. That recourse is available now. It is 
prohibited in the United States. It is prohibited is Asia. It 
is prohibited in Europe. And that is why passenger rail service 
is heavily subsidized throughout the globe. If you think we are 
the first country in the world to invent a privatized railroad 
system, I ask you to look at the history of the world.
    This is not deregulation. This is privatization, where the 
private sector would begin by depending on a Federal subsidy, 
``Give me the money to write the proposal,'' and then would 
either be begging us for money to keep the fares down or, God 
help us, would be raising the fares themselves.
    This is an interesting exercise, but we ought to understand 
it is no more than that at a time when we need to get serious 
about the business of Amtrak and the hard challenges and 
problems it poses for this committee. I thank you, Mr. 
Chairman.
    Mr. Mica. I thank the gentlelady. Ms. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair and Ranking Member 
Rahall.
    I would like to ensure that I agree totally with Ranking 
Member Brown's comments, am in strong opposition for this bill. 
It would end intercity passenger rail. And it goes beyond that, 
especially in my State of California. It gives those assets to 
the Northeast Corridor and et cetera, et cetera, as we have 
heard. It Would have a tragic impact on my State of California, 
most definitely.
    We have three of the top five busiest passenger rail 
corridors in the United States: the Surfliner, the Capital 
Corridor, the San Joaquin Corridor. And many long-distance 
Amtrak routes travel through California, including Sunset 
Limited, which does stop in my district. Metrolink, which is a 
commuter rail agency of southern California, is operated by 
Amtrak.
    The only way Amtrak would be able to continue operating in 
California is if the State itself incurred the enormous cost of 
operation of its equipment, of its maintenance, the station 
services and support services. And, as we well know, 
California, along with many other States, is in the doldrums. 
Their budgets--they are going bankrupt.
    So, there will not be any ability to have those States 
support, due to their major budget constraints. They would 
help--would actually hinder hundreds of thousands of people 
ability to travel, and would be able to further clog our 
California freeways, which are already called parking lots in 
the sky.
    We want, we should, we must assist Amtrak become a more 
profitable entity, instead of trying to encourage demise. 
Again, I strongly oppose the Competition for Intercity 
Passenger Rail in America Act, and I yield back.
    Mr. Mica. Mr. Larsen?
    Mr. Larsen. Thank you, Mr. Chairman. At a time when we 
ought to be improving our domestic infrastructure to remain 
competitive in the global economy, and to promote growth and 
efficiency and feed the American market, I think this is 
exactly the wrong bill at the wrong time. Instead of 
jeopardizing 20,000 jobs and shutting down an economic driver 
in many regions in this country, we ought to be investing in 
our transportation and infrastructure to create jobs in our 
local community.
    This proposal would seriously threaten the promising 
future--and the promising present, actually--of passenger rail 
in the Pacific northwest. Without revenues from the Northeast 
Corridor, Amtrak would shut down their long-distance routes. 
And certain portions of my State would end, as well. Washington 
State's passenger rail service is operated by Amtrak, and would 
face huge cost increases if Amtrak continued to operate.
    I also note Washington State, as a State government, is a 
major contributor to this service in Washington State. The 
commuter rail, which is operated by Amtrak, would also have to 
find a new operator.
    Washington State's passenger rail ridership has experienced 
strong growth over the past few years, and our State remains 
committed to its future. Our State has received over $700 
million in high-speed rail funds, and these dollars are going 
to work right now in our local communities, creating jobs and 
helping commerce to move more efficiently from point to point. 
And this proposal would be a serious set-back to these efforts.
    I am also concerned about this bill's effect on the men and 
women who work on our railroads. It would abrogate all existing 
contracts for workers on the Northeast Corridor and other 
privatized routes, and provides no protections for dismissed 
personnel. For rail workers in the new system, Davis-Bacon 
protections would not apply, and they would be exempt from the 
Railway Labor Act and the railroad retirement and unemployment 
systems. Without RLA protections, workers would lose their 
longstanding right to collectively bargain. It would also 
undermine their railroad retirement system that provides 
pensions for many people.
    This is a job-killing proposal, Mr. Chairman. If you are 
indeed open to making fixes to it, we look forward--I look 
forward--to hearing from our witnesses to see what kind of 
fixes we can make to it. So I look forward to the testimony 
today, and after a short meeting upstairs I will return to 
listen to the testimony. Thank you.
    Mr. Mica. Any other Members seek recognition?
    [No response.]
    Mr. Mica. No other Members seek recognition? We have had a 
request for submission to the record from Ms. Brown of letters, 
articles, and reports, and they will be made part of the 
record.
    I ask unanimous consent that also----
    Ms. Brown. Mr.--I asked for an extension of 30 days.
    Mr. Mica. Extension of 30 days. That is excellent. If Mr. 
Rahall agrees, we cannot wait to not comply with a 30-day 
request. Mr. Rahall agrees, so the record will be open for a 
period of 30 days. And we will hold as many additional hearings 
as we need to take testimony. Maybe by that time some Members 
will have had time to read the bill and find out that what they 
are talking about isn't even in the bill.
    But additional unanimous request consents, I have several 
here. A copy of the letter to myself and Mr. Shuster from Ms. 
Brown, Mr. Rahall.
    [No response.]
    Mr. Mica. Without objection, so ordered part of the record.
    [The information follows:]

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    Mr. Mica. This is a list of the hearings on intercity rail 
competition that we did so far in the committee: January 27th 
in New York City; March 11, 2011, here in Washington; and then 
May 26th here in Washington. Also, a list of the witnesses who 
testified on bringing competition into the passenger rail 
service. That will be made part of the record.
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    Mr. Mica. And also made part of the record, I want to 
reference the cover page of the PRIIA Act--the gentlelady from 
the District said that nothing had been done relating to high-
speed passenger rail service--which is signed by President 
Bush. I helped author the high-speed rail provisions signed by 
the President October 2008.
    In the first passenger rail reauthorization in some 11 
years undertaken by Congress, and then the point also that 
there are not systems that make money, we will take a page from 
our introductory document that is entitled, ``International 
Competition Success Stories,'' and show exactly where some 
routes have been, in fact, turning a profit, increasing 
employment dramatically, and providing good economic 
opportunity. So we will put that in the record, too.
    [The information follows:]

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    Mr. Mica. Anyone else have anything they would like to add 
to the record?
    [No response.]
    Mr. Mica. OK. There being no additional unanimous request 
consents, we will now turn to our witnesses, who have been 
waiting patiently. We thank them for coming in today and having 
the opportunity to hear from them.
    We will start--I won't introduce all of them, they are 
likely suspects we have had before, and are pleased to see.
    Incidentally, I think what has been customary in the past 
is we were offered one witness in the past, and the last time I 
think there was a reference that we didn't have Mr. Boardman, 
because the one witness chosen by the Minority was a labor 
representative. But today I wanted to make certain that we had 
both Mr. Boardman and a labor representative. So they have been 
chosen by the Minority.
    And to lead, we will start with Mr. Boardman, who has been 
requested to testify.
    The other thing, too, I would like you to do is please 
don't rattle on about Amtrak going, you know, to Hades and all 
of that. What I would like to do is focus--this is a hearing on 
the committee draft. If you have suggestions for language, we 
would like to have them. For changes--I have already discussed 
some of the changes I would like to see with Mr. Rahall from 
the committee print. And that is what the purpose of this 
hearing is, how we can craft legislation that will allow us to 
increase passenger rail service and create high-speed rail 
service in the United States of America. That is the whole 
purpose, no other purpose that we are here for. And I will cut 
you off.
    So, if you got statements to read that just go on and on, 
you are going to get cut off. I want to hear specific--this is 
committee print, ``Competition for Intercity Passenger Rail 
Service in America,'' and a hearing on that draft, and I want 
to hear specifics on the language, positive recommendations or, 
if you have something critical of them that we can work 
together on, we would love to hear from you. But that is the 
way we are going to proceed.
    I am very pleased and--he takes a beating from time to 
time, sometimes from me unwarranted, and I apologize publicly 
for that--but he does as good a job with the cards he is dealt. 
I am just trying to rearrange the cards for Mr. Boardman. 
Welcome, Mr. Boardman.

TESTIMONY OF JOSEPH H. BOARDMAN, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, AMTRAK; R. RICHARD GEDDES, ADJUNCT SCHOLAR, AMERICAN 
   ENTERPRISE INSTITUTE; ANNE D. STUBBS, EXECUTIVE DIRECTOR, 
COALITION OF NORTHEASTERN GOVERNORS; WILLIAM MILLAR, PRESIDENT, 
  AMERICAN PUBLIC TRANSPORTATION ASSOCIATION; THOMAS A. HART, 
 JR., ESQ., VICE PRESIDENT FOR GOVERNMENT AFFAIRS AND GENERAL 
 COUNSEL, US HIGH SPEED RAIL ASSOCIATION; AND EDWARD WYTKIND, 
      PRESIDENT, TRANSPORTATION TRADES DEPARTMENT, AFL-CIO

    Mr. Boardman. Thank you, Chairman Mica, and Ranking Member 
Rahall, and all. Good afternoon.
    For 40 years, Amtrak has been America's only high-speed 
rail operator, and it has managed the Federal investment on the 
Northeast Corridor to transform infrastructure and operations. 
Today we are a world leader, in terms of cost recovery and 
operating efficiency, the most efficient passenger railroad in 
America, and one of the most efficient in the world.
    We share your advocacy for high-speed rail development in 
the Northeast Corridor, and support some of the broad 
objectives your bill seeks to advance, such as encouraging 
private sector investment, reducing Northeast Corridor trip 
times, and increasing Northeast Corridor high-speed rail 
service frequency.
    Amtrak is well along in its own initiatives on this front. 
Amtrak has created a ``Next Generation High-Speed Rail'' plan 
for the Northeast Corridor, which has received many positive 
international peer reviews, and we are now moving forward on 
implementation.
    A key to that progress will be for Amtrak to secure private 
funding, using more creative approaches than we have been open 
to in the past. The world's infrastructure needs have created 
new financial tools for major world-class projects, such as 
ours.
    Amtrak intends to use those tools to realize our plan with 
our experience with positive peer reviews, with recent 
agreements developed with respected partners, and with our 
improved financial performance on the Northeast Corridor, we 
can do it. We have a plan.
    We know how to gain partners. We have the knowledge and 
experience to make our vision a reality. This is a serious 
effort which offers practical solutions to the situations that 
exist on the Northeast Corridor, which are not easily 
understood, and no other entity can offer. In order for any 
public-private partnership to work, you need a partner that 
understands the key facts. And that partner is Amtrak. That 
ensures that Amtrak will have a key role under any structure. 
Perhaps you will rename Amtrak, but it will be the same women 
and men who understand the situation today, and understand the 
necessary solutions that will be required to carry out the 
plan.
    We believe the approach outlined in this legislation risks 
slowing, rather than advancing, the development of high-speed 
rail in the Northeast Corridor. It will introduce unrealistic 
time schedules and assumptions. It will fail to provide 
adequately for transportation safety and security. And it will 
be more expensive.
    It is important to look at the world leaders of high-speed 
rail in other nations to understand best practices, to study 
solutions. We should adopt and adapt where warranted. However, 
we must deal with the facts of the Northeast Corridor. There is 
no one that understands the facts of the Northeast Corridor 
better than the women and men of Amtrak. No one.
    The risk associated with applying foreign business models 
in a different context such as the Northeast Corridor is too 
high. The potential for service disruptions, safety failures, 
and the failure to understand the environmental protections is 
too great for us to run.
    Amtrak's Acela service has demonstrated that this mode can 
be competitive in the United States. Without it, this debate 
would not exist, and there would not be such a clear 
alternative.
    Many people travel around the world, and are impressed with 
the modern high-speed systems--rail systems--they experience in 
Europe, Japan, or China, and they wonder, ``Why not in the 
United States?''
    First of all, every one of those central governments wrote 
a huge check, and they continue to do so. We have not been 
willing to do that. And second, we prioritize matters 
differently. System safety is our number one concern. We will 
need to avoid the mistakes that were made in Britain and China 
on safety. We also require a longer environmental process to 
protect those that will receive an impact from the construction 
of high-speed rail.
    In closing, I will note that the theme of the bill's 
provisions would set back the development of high-speed rail by 
10 years or more, and will cost the economy of the northeast 
and the United States taxpayer a great deal more money. Thank 
you.
    Mr. Mica. I thank you, Mr. Boardman, and we will be back 
for questions when we have completed all of the witnesses.
    Mr. Richard Geddes, he is an adjunct scholar with the 
American Enterprise Institute.
    Welcome, sir, and you are recognized.
    Mr. Geddes. Thank you, Chairman Mica and Ranking Member 
Rahall and members of the committee, for the opportunity to 
participate today in this important hearing. And thank you for 
the introduction. I enthusiastically support the bill under 
discussion today. The bill would facilitate private 
participation in the provision of passenger rail service in the 
United States through the use of public-private partnerships, 
or P3s.
    P3s in transportation have been used successfully for 
decades in countries around the world, and in countries such as 
France for over 3\1/2\ centuries. A P3 also provides the best 
chance for the United States to achieve true high-speed rail in 
the foreseeable future.
    The bill contemplates using P3s in at least two distinct 
ways: through the introduction of competition in the Northeast 
Corridor, and through the introduction of competition on the 
country's longer distance, lower density routes.
    There is absolutely nothing mysterious about a P3. It 
simply refers to a contractual relationship between a public 
sector project sponsor and a private sector firm to provide a 
good or service. There are many salient benefits of the P3 
approach, and I will discuss just a few.
    First, the introduction of competition. A key social 
benefit of the P3 approach is that it allows competition. 
Competition may be--and I believe is--the single most powerful 
and socially beneficial force that can be introduced into the 
provision of a good or service. Competition is widely 
recognized by scholars to encourage competitors to provide 
quality service at low cost, to be responsive to customers' 
needs, and to encourage innovation.
    A second key benefit of this proposal is the transparent 
and least cost provision of any desired subsidies. Competition 
introduced by the P3 approach allows for any desired subsidies 
to be delivered transparently and at the lowest possible social 
cost. While the Northeast Corridor may have sufficient density 
to generate net private investment, non-Northeast Corridor 
routes may require subsidies to operate under a P3, as they do 
presently, although I firmly believe that the amount of those 
subsidies would certainly be significantly less.
    Open competitive bidding will ensure that the taxpayer is 
protected. Any socially desirable subsidies will be provided at 
least cost to the taxpayer, and will also be transparent, which 
is key. In other words, the taxpayers will know what they are 
paying for, and the transparency of subsidies will lead to 
better policy decisions.
    The third benefit I would like to articulate is the 
articulation and enforcement of key performance indicators. A 
critical social benefit of the P3 approach that is recognized 
internationally is simply that a contract exists. The contract 
will, of necessity, include clauses laying out what actions 
constitute desired performance on that contract.
    This, then, requires the public sponsor to articulate 
precisely how excellent or poor performance will be measured, 
and to consider what penalties and rewards will be used to 
incent that performance. This will certainly result in better 
service provision. The contract can include basic metrics, such 
as on-time performance and frequency of service, as it does in 
many other industries where P3s are used, but also other 
considerations, such as the cleanliness of cabins and 
restrooms.
    A fourth benefit is the provision--and that is absolutely 
key in this context--is the provision of fresh capital that 
would otherwise never be provided. One of the most obvious 
benefits of the P3 approach is that it taps into a vast pool of 
fresh capital that can be now injected into our passenger rail 
system. This allows for renovations, upgrades, and maintenance, 
including safety improvements, to be made much faster. This, of 
course, saves money. But it also results in more efficient 
service. This is capital that the public sector simply does not 
have, and will not be forthcoming.
    High-speed rail is a potentially viable service that could 
offer the public a valuable alternative to current 
transportation options in the Northeast Corridor. However, it 
will be costly to inject fresh capital, mitigate taxpayer 
costs, create competition--which we recognize is key, improve 
performance, and enhance innovation. The public sector should 
be engaged--the private sector should be engaged as a full 
partner with the public sector through public-private 
partnerships.
    Once again, thank you for this opportunity to appear, and I 
look forward to answering your questions.
    And in my remaining 13 seconds I will just note to Mr. 
Cravaack and Mr. Mica that there is a memorial service for 
Alfred Kahn this Saturday at Cornell University that was so 
over-subscribed that they moved it from the university chapel 
to the largest auditorium on campus, in reference to airlines.
    Mr. Mica. Thank you.
    And we will now hear from Anne Stubbs, executive director 
of the Council of Northeastern Governors.
    Welcome.
    Ms. Stubbs. Thank you, Chairman Mica, Ranking Member 
Rahall, Chairman Shuster, and Ranking Member Brown. Thank you 
for the opportunity to be here today. I am with the Coalition 
of Northeastern Governors, which is a nonpartisan association 
of the governors that works together for issues of mutual 
interest in the northeast.
    Before touching on comments for the bill, I would like to 
offer just a few comments, which are elaborated in the 
testimony, on why the corridor is so important to the 
northeast, and some of the principles that underlie the 
comments that I will offer today.
    The governors have long supported the Northeast Corridor 
and the larger regional transportation system, because it is 
both a transportation and an economic asset for our region. 
That includes the main stem linking Boston and Washington. It 
includes the branch services to Harrisburg; to Albany and 
points in upstate New York, Canada and Vermont; as well as the 
service up through Massachusetts, Connecticut, into Vermont; 
and to Portland, Maine. That asset is very important for our 
larger regional transportation system, for our economic 
vitality, and our community.
    The CONEG goals for this northeast network are really quite 
straightforward. We look for greatly expanded rail ridership in 
an integrated, multimodal regional transportation system that 
works for all of the users on the Northeast Corridor, be it the 
intercity traveler, a business person, a tourist, a retiree, a 
student, or military personnel; for the commuters; as well as 
the freight railroads that need access to the corridor in order 
to get to their markets.
    And the States believe that this will happen with quality 
service, that is safe, reliable, frequent trip time and price 
competitive. We are looking for ways to reduce the travel time, 
increase the frequency and the reliability for both the 
intercity and commuter traveler, and we are looking for higher 
speed, both premium and regional service, including express 
service.
    So the States, a number of years ago, adopted several 
principles that guide how we look at this network. Again, I 
want to touch just very briefly on some of the highlights 
before I get into my comments. First, the Northeast Corridor we 
do see as a critical regional and national joint use asset, 
that should be operated as a public transportation corridor. 
And public oversight and control of the infrastructure, we 
believe, is very important to achieving that goal.
    States are also co-owners, and they share in the financing 
and operations of intercity and commuter service on the 
corridor. They need to be very closely consulted with any 
changes in governance, funding, and management that does affect 
them directly.
    We believe that the Federal Government has a lead role in 
bringing the Northeast Corridor, particularly the main stem, 
back to a state of good repair. And change must occur--any 
change must occur--in a timely and orderly manner, (with States 
consulted) in a way that does not jeopardize the current 
intercity commuter and freight services.
    So, drawing upon those principles, I would like to offer a 
few initial remarks as the committee considers the appropriate 
balance of Federal, State, Amtrak, and private sector roles in 
the future of intercity rail, and particularly on the Northeast 
Corridor.
    First, we do see a continuing Federal role. The Federal 
Government, as we understand it, would retain the underlying 
ownership of the Northeast Corridor right of way. And so, 
greater clarity is needed on that ongoing Federal role, 
particularly as it may affect the future planning and oversight 
of the public interest in the corridor.
    As I said earlier, States need to be closely involved in 
any of the changes that are contemplated that affect their 
intercity and the commuter services on or off the corridor.
    Both current and future service is very much going to need 
the Northeast Corridor to be brought to a state of good repair. 
That is a significant financial investment that is needed. It 
is not clear, based upon our current reading of the bill, how 
that would be done for both existing and future high-speed 
services under the proposed new ownership and control of the 
corridor.
    Shifting control of the Northeast Corridor from a public 
entity could also impose a number of financial and liability 
risks to the States. The proposed bill is very clear that one 
of the evaluation criteria is to reduce the need for Federal 
subsidies. States are likely to have many other concerns 
associated with a shift in responsibility, such as the 
potential to transfer the subsidy costs from the Federal 
Government to State and local governments, which, as has been 
noted already, are suffering under severe financial strain.
    We would be looking at the implication of shifting greater 
liability and insurance exposure to the State, if the corridor 
was shifted to private control and ownership.
    We would be looking to see anything that might impinge upon 
the State's sovereignty. We particularly noted the broad 
condemnation authority that is proposed for the new Northeast 
Corridor Executive Committee. And the States will also be 
looking to see how there will be some consideration or 
protection of the investments they have already made in the 
Northeast Corridor infrastructure, as well as existing 
intercity passenger rail projects that are underway.
    Connectivity with other rail services, both on and off the 
corridor, is very, very important. Again, we see this as a 
regional network. The current bill does acknowledge that the 
current commuter and freight rail services would continue to 
have access to the Northeast Corridor infrastructure and 
facilities, but there is no similar assurance that is offered 
for the intercity service, such as the Keystone, the Empire, 
the Vermonter, that originate off the corridor but need access 
to it.
    Likewise, if you separate the main line from the critical 
branch lines, we are not sure what the details would be on any 
terms and provisions and conditions of such a separation, or 
the implications for a continued ownership and operation of 
that integrated service, if a State chose not to take--seek 
title.
    And then, finally, the Northeast States are already 
actively engaged with the Northeast Corridor Infrastructure and 
Operations Advisory Commission, which was created by this 
committee, and the States are very delighted that they are full 
and equal partners on that commission. We are not quite sure 
how this proposal, which does not repeal that commission, but 
creates a new Executive Committee and gives it future control 
over the Northeast Corridor and has some similar 
responsibilities, how the roles and responsibilities of the 
existing advisory commission and their proposed new Executive 
Committee would relate to each other.
    And so, thank you for the opportunity to share these 
comments. And I hope they will be helpful to the committee.
    Mr. Mica. Thank you.
    There has been a vote called.
    We will hear first from Mr. Millar.
    Mr. Millar. Thank you, Mr. Chairman, Mr. Rahall. Thank you 
for including APTA in today's hearing.
    As you know, APTA membership is very diverse. Many of the 
international rail operating and management companies, as well 
as the domestic companies, including Amtrak, are APTA members. 
Our members include the oldest commuter rail operators in 
America, and the brand new one in Denton, Texas, that opened 
just this past Monday. So we have a very diverse membership.
    Understandably, we haven't had a chance to really distill a 
comprehensive position, given the diversity of that membership. 
And I am sure you will hear from many of our members, and it is 
our intention to take you up on your offer, and supply you with 
additional information in the coming weeks ahead.
    That said, I have been asked to testify specifically on the 
experience of the U.S. commuter rail operators with competitive 
contracting. By way of background, there is some 27 different 
commuter rail operators in the U.S.; 8 of those 27 operate with 
their own--or what are known as directly operated systems, 
completely with their own employees, and own all their right of 
way, et cetera, et cetera, and 19 are purchase of service 
operators.
    Of those 19, 17 have been around long enough to report to 
the Federal Government in the national transit database, which 
is operated by the Federal Transit Administration. And it is 
from that database that I draw much of my information today.
    Also, I should point out that, while there are only eight 
directly operated systems, they have the lion's share of the 
business. Over 80 percent of the passenger miles, 80 percent of 
the passengers who use commuter rail are on those 8 systems.
    Now, there are many factors that affect the cost of 
operating a system. The 2009 national transit database shows an 
average per-passenger mile cost of directly operated or 
contracted to be remarkably similar: $.41 for directly 
operated, almost $.39 per-passenger mile for purchased service. 
But there is a great deal of variance.
    In the directly operated you can find it for as little as 
$.33, as much as $1.51. For the contract service, as little as 
$.30, as much as $2.55. So, clearly, it is not just competition 
that affects the cost.
    If you add in fare box recovery to these systems, the 
picture, unfortunately, gets murkier, with the direct operating 
having an average of 49 percent cost recovery and the purchased 
service 40 percent recovery and, again, with very wide ranges.
    I think, as this legislation proceeds, one of the things 
that will be very clear from our commuter rail operators, most 
commuter rail operators choose to compete their services. And 
whether Amtrak or others win the competition, they want to 
continue to have the right, because they believe the 
opportunity for competition is beneficial.
    Let me give you a couple of closing thoughts before my time 
expires. First, we need to be clear. All major rail systems in 
the world, including America's world-leading freight network, 
have required large capitalization from Government. It may have 
occurred many years ago, it may occur on a continuing basis, 
but we cannot escape the fact it requires large public 
investment.
    Second, public-private partnerships and competitive 
contracts, as I have hopefully demonstrated here, can be 
useful. But they are no substitute for major public investment. 
And, because of the necessity to integrate rail, passenger 
rail, with other forms of transportation, we certainly hope--
and know this committee has been working hard to try to develop 
a major piece of transportation funding legislation that would 
set a policy not only in this area, but across all other 
surface modes.
    Third, particularly as Mr. Boardman has said today, the 
Northeast Corridor is incredibly complex. It is one of the most 
complex rail corridors anywhere in the world, and we cannot 
lose sight of that. It is old, it must be updated, regardless 
of who owns it, regardless of who runs it. And we can't forget 
that every day about 700,000 Americans use the service on that 
corridor, and they expect to get to work, and they expect to do 
the other things in their life that are necessary. So we must 
be careful as we move forward.
    Fourth, as Mr. Boardman said, Amtrak does have extensive 
railroading, extensive Northeast Corridor experience. And--just 
as when Conrail was taken over and the private carriers on the 
freight side realized that some of it was just too complex to 
disentangle. So we--they kept the private companies, they kept 
a piece of Conrail, as well. So we need to be careful here. We 
think the expertise that Amtrak has, that our commuter rail 
operators have, is quite useful to you. And we pledge to work 
with the committee as you consider these important issues.
    Thank you.
    Mr. Mica. For 10 minutes the committee stands in recess. 
Until Mr. Shuster returns as stand-by, the committee is in 
recess.
    [Recess.]
    Mr. Shuster. [presiding.] We will bring the hearing back to 
order and continue. Chairman Mica should be back momentarily.
    With that, I believe, Mr. Hart, you are up.
    Thomas Hart, who is the Vice President for Government 
Affairs and General Counsel for the United States High Speed 
Rail Association. It is a good thing I remembered some of that, 
because I could not read it.
    With that, Mr. Hart, please proceed.
    Mr. Hart. Mr. Shuster, I would like to thank Chairman Mica 
for calling this hearing. I would like to also thank Ranking 
Member Rahall and the Subcommittee Ranking Member Corrine 
Brown, and acknowledge my Congresswoman, Eleanor Holmes Norton.
    Thank you for having me here. This is honestly my fourth 
time before this committee on this subject this year. I am glad 
to be back.
    I have put a lot of time and thought in this testimony over 
the last 6 months. I am really glad we have advanced the 
discussion and debate on the need for private investment and 
increased competition in our rail system nationwide, but 
particularly, the Northeast Corridor.
    As most of you know, the United States High Speed Rail 
Association is a non-profit trade association committed to 
advancing a state-of-the-art nationwide true high-speed rail 
system, to be completed in phases across the country.
    I am the Vice President for Government Affairs and General 
Counsel for the Association. I also am here as the Director of 
the Washington Office of the national law firm of Quarles & 
Brady.
    This is a real opportunity for progress to be made within 
this committee and within the body of Congress.
    The US High Speed Rail Association works with everybody, 
and that is truly committed to advancing high-speed rail.
    That is reflected in just my schedule this week, where 
Monday I spent a number of hours with Senator Mark Kirk in 
Chicago. He advanced on Monday and proposed private/public 
partnership legislation in the Senate called the Lincoln Legacy 
Infrastructure Development Act.
    Also, while I was in Chicago, I spoke before Reverend Jesse 
Jackson's Rainbow PUSH Coalition, and brought them up to speed 
on the initiatives for high-speed rail across the country.
    We speak to everyone. We engage with everyone. That 
includes the staff of this committee, both on the minority and 
majority side. I commend their work on this piece of 
legislation, and look forward to working with them and the 
Members going forward.
    This is a real key opportunity, and I hope that the members 
of this committee take advantage of it.
    This issue divides the committee pretty much down the line, 
as you mentioned at the last hearing, Chairman Shuster.
    Fifty percent of the group here wants to zero out Amtrak, 
wants to basically eliminate funding for them and possibly 
privatize the entire system.
    The other 50 percent, some of them feel that Amtrak is a 
sacred cow, should receive additional funding without oversight 
and real strict accountability.
    The United States High Speed Rail Association is somewhere 
in the middle, literally. We are a firm believer in competition 
and a firm believer of private capital investment in high-speed 
rail.
    We also recognize Amtrak as an unique service, and we do 
not support the pure privatization of Amtrak in its totality.
    With this divide in Congress and the divide in the Senate 
and the leadership at the Presidential level, it is important 
that we compromise to achieve our goal of bringing private 
capital into the Nation's rail system and move quickly to do so 
with the type of bill that has been presented by you, Chairman 
Shuster, and Chairman Mica.
    Unfortunately, the political reality is the bill will not 
pass the Senate in its current form.
    At the same time, the status quo is unacceptable. We do not 
accept Amtrak's monopoly position in the Northeast Corridor. We 
do not support the monopoly position, and we do not frankly 
accept many of the reasons why Amtrak has been delayed in 
advancing high-speed rail across the country.
    We take what we consider to be the best parts of the 
concept behind the bill that is presented, and offer our own 
suggestion.
    We have actually proposed legislation back in March called 
the Private Investment in High Speed Rail Act of 2011. At that 
time, we proposed private investment in Amtrak through 
increased offering of stock and bonds.
    Amtrak only has one shareholder, that is the United States 
Government.
    Specifically, Chairman Shuster, we have outlined a proposal 
that would split Amtrak into two entities, Amtrak Operations 
and Amtrak Infrastructure.
    Operations would run the trains. Infrastructure would 
maintain and manage the rail infrastructure in the Northeast 
Corridor, and it would increase the opportunity for investment 
up to 40 percent.
    I think that is a fair compromise. We can bring up to 40 
percent of private equity into Amtrak, sell off 40 percent of 
the infrastructure subsidiary or infrastructure company, that 
is currently totally owned by Amtrak.
    That is a significant investment that will get the 
attention of Wall Street, but it will maintain Government 
control over the infrastructure, and will provide for safety 
and security concerns as Mr. Boardman indicated.
    We need to bring in the private sector, and by offering up 
40 percent of the infrastructure facility, that would bring 
substantial money.
    After 5 years, we could re-evaluate that structure, and 
possibly increase, give the investor an opportunity to increase 
its investment by another 20 percent, and move them into a 
majority position.
    We also suggest that we add an infrastructure bank 
provision. That is supported in the Senate on a bipartisan 
basis now. We need to include that.
    Also, a small business provision. Amtrak has gotten $450 
million just recently for procurement. They want the money but 
they do not necessarily want the responsibility and 
accountability for increasing small business participation in 
this sector.
    A small business provision should also be added to this 
bill. That will go a far way in getting more bipartisan 
support.
    I look forward to your questions, Mr. Chairman, and other 
members of this committee, and working with you in the future.
    Thank you very much.
    Mr. Shuster. Thank you very much, Mr. Hart, for your 
testimony. I just want the record to show I have always been 
one in the middle on this issue, too.
    My colleagues on my side have for the last 20 years talked 
about killing Amtrak, selling it off, doing away with it, where 
my colleagues on the other side of the aisle say it can never 
succeed without the Government running it.
    I come down in the middle. It is somewhere in between 
there. I think we can do it, and our bill is a start in that 
direction, I believe.
    Next, Mr. Ed Wytkind. It is always good to have him here 
and hear his views. He is the President of the Transportation 
Trades Department, AFL-CIO.
    With that, Mr. Wytkind, proceed.
    Mr. Wytkind. Thank you, Mr. Shuster. I want to thank 
Chairman Mica for allowing me the chance to participate, and of 
course, Ranking Member Rahall, for his strong support for our 
members, and for his support in having the labor movement 
present its views.
    I have appeared twice before this committee in the last few 
months to express our strong opposition to the wholesale 
privatization and break up of Amtrak.
    You will be surprised to learn that my position has not 
changed today.
    While it may be interesting to discuss different operating 
models for passenger rail in America, we have always argued 
that if permitted to cherry pick lucrative routes, permitted to 
keep the cost of infrastructure replacement and upgrades off 
the books, a carrier might find a profit on some routes 
somewhere in the system.
    On the Northeast Corridor, Amtrak is operating in the 
black, above the rail. That may seem interesting but it has 
nothing to do with how you run a national passenger rail 
system.
    Amtrak's network, a victim of decades of chronic under 
funding, receives Federal subsidies, but so does our entire 
transportation system, and so does every rail transportation 
system in the world, whether it is privatized or not.
    Our transportation is not just about the wealth it creates 
for transportation providers. It is about the wealth it creates 
for the users of our economy, for the people, for the 
businesses that need transportation to be safe, reliable, and 
efficient.
    It is about the millions of good skilled jobs that are 
created in the system.
    Mass transit systems do not make money. The employers who 
rely on those systems to transport their employees do.
    Airports and air traffic control are not about profits. 
They are about the billions of dollars in wealth they create 
transporting people and cargo around the world.
    Highways and ports are not profit centers in and of 
themselves. They are profit centers for the people in the 
businesses that rely on them for commerce, for exporting, and 
for making sure we have a global economy that we are 
competitive in.
    None of this works without proper public oversight of the 
taxpayers' transportation assets, without significant public 
investment, as Mr. Millar pointed out, and without the cross 
subsidies that have always been the cornerstone of our national 
transportation network.
    That seems to be like a dirty secret that no one wants to 
talk about, our transportation system has always been based on 
having cross subsidies, and it works.
    Our passenger rail system is no different, which is why we 
need Amtrak as the national network provider for the Nation.
    Let me offer our preliminary analysis, we just got a hold 
of it a few days ago, of the Mica-Shuster legislation.
    First, despite comments made earlier, this is an Amtrak 
bankruptcy plan. I believe 20,000 jobs are placed at risk by 
this legislation.
    Removal of the Northeast Corridor from Amtrak is taking 
away its most prized asset, and with it goes the entire 
national system and up to 20,000 jobs.
    Second, it gives the green light to Wall Street to cherry 
pick the parts of the network that can make the most profit, 
and let the rest of the system wither.
    I am sure there are some panelists here who think that is a 
good idea. I do not.
    That approach will not unleash the private sector's 
capability to provide passenger rail service to a Nation that 
is starving for more train service. No. It will unleash Wall 
Street's ability to make money for Wall Street.
    Third, longstanding employee protections are eliminated in 
this legislation. I wish Mr. Mica was in the room to discuss 
it.
    Despite public claims that Amtrak workers would be held 
harmless, there is nothing in this legislation that holds these 
employees harmless.
    The bill would eliminate Railway Labor Act coverage, 
thereby stripping employees of current bargaining rights and 
union representation. Amtrak employees would lose all wage 
rates and benefits and protections in their union contracts.
    So, contrary to public claims, nothing in the bill 
guarantees anything to the employees of Amtrak.
    The Mica-Shuster proposal also eliminates coverage under 
the Railroad Retirement Act, the railroad pension, unemployment 
and disability benefits system that has been around for 
decades.
    Thousands would be siphoned from the system in the new 
entities, the long-term sovereignty of the rail retirement 
system would be jeopardized, and enormous tax increases, yes, 
tax increases, would be imposed on the current employers, 
including, by the way, the private freight railroads.
    We do not think 547,000 retirees, spouses and survivors 
should see their benefits threatened so that billionaires like 
Richard Branson can get richer and evade railroad pension 
obligations, which is exactly what is on the table.
    Assurances have been made that our members at Amtrak will 
also be able to follow their work. The problem is the 
legislation does not do that. All it does is give them some 
hiring preferences, which means they are guaranteed a chance to 
be considered for a job.
    I do not think anybody can pay a mortgage, child care or 
college tuition bill with that sort of promise.
    Lastly, let me talk about Virgin Trains. It has been 
discussed in this committee, and I thought it was important to 
inject some new facts about Virgin Trains' operation.
    First of all, the system is 35 percent more expensive than 
the State-owned European railways, according to a study done on 
the ground there.
    Between 1996 and 2009, revenues from the U.K.'s privatized 
system more than doubled. That is great. The problem is the 
public subsidy grew 500 percent.
    Virgin Trains received $1.75 billion in direct Government 
subsidies for its West Coast franchise, and $14 billion in 
indirect subsidies to upgrade the infrastructure on the West 
Coast line.
    As one labor leader described it in Great Britain, people 
are getting filthy rich on public subsidies.
    We have heard from the committee that Virgin Trains is 
repaying the Government. The fact is that Virgin Trains takes 
more money from British taxpayers than it gives back.
    Since 2002, it received $2.6 billion in direct public 
subsidies. It is true that in 2008 and 2009, it repaid back $81 
million. That is a single year. In 2009 and 2010, they were 
again receiving more money than they repaid.
    Repeatedly discussing this as if one single year sets out a 
context for the entire Virgin Trains' operation is not 
accurate.
    Lastly, service complaints at Virgin Trains are 600 percent 
higher than the average train operator in Great Britain.
    It is safe to say that the labor movement is not for this 
proposal. We have a long history in the Transportation Trades 
Department of working with both sides of the aisle.
    I have enjoyed developing a relationship with both Mr. Mica 
and Mr. Shuster on all sorts of important transportation 
issues, but this bill written as we see it today is too harmful 
to Amtrak.
    Our employees are placed at risk, and we think the 
Northeast Corridor is too vital an asset to put at risk with a 
privatization program that we think has many risks inherent in 
the ideas in there.
    Having said that, we are happy to be here. I am happy to 
take any questions you might have. Thank you.
    Mr. Shuster. Thank you very much, Mr. Wytkind. Mr. 
Chairman?
    Mr. Mica. [presiding.] Thank you for taking over the chair 
on this important oversight hearing.
    Let me say first that we did conduct three hearings on 
trying to improve passenger rail service. We focused first on 
high-speed rail, and met in New York City and had a great turn 
out.
    When we talked to folks on high-speed rail, most of the 
people that we talked to believed the best possibility for 
success in the country is the Northeast Corridor.
    Amtrak owns the Corridor basically. We do have some 
indebtedness. We have the connections. We have regional 
transportation systems that can link and distribute people. It 
is a real natural. We own that.
    The 21,000-22,000 miles of freight rail, we do not own. 
Amtrak has some other little pieces here and there, but that is 
the most conducive.
    I was disappointed with the money that was spent. We had a 
total of $10.5 billion, an $8 billion stimulus. A lot of that 
has been returned--projects that were just destined to fail. 
They just did not make sense. You could not get State support 
for them, whether it was Florida, Wisconsin, Ohio, or maybe 
even other States.
    I think as a benefit to the Nation, the high-speed rail 
corridor in the Northeast should be our focus. It was not 
eligible for some of that money in the beginning. I think an 
important step the Obama administration took a couple of months 
ago is designating it as high speed, and then also awarding it 
some money.
    But it was only three-quarters of a billion dollars that 
came back that was redirected to the Northeast Corridor.
    The problem is that is just of taking shears around the 
edges and trying to develop high-speed rail piece by piece, a 
little appropriation by appropriation, or throwing money at it 
on a fractional basis, which is not going to give us true high-
speed rail or what we hope to achieve.
    Mr. Boardman, you opened your testimony with saying that 
the key to Amtrak getting into that service is attracting 
capital. Was that not your comment?
    Mr. Boardman. Yes. We think that is one of the keys.
    Mr. Mica. I have looked at it, too. Again, I have told 
people you are going to turn blue waiting. We have challenged 
you. You came back with a plan. It was 30 years, $117 billion 
to do the whole thing.
    If I had my druthers and I could assist you with getting 
that kind of capital all at once, we would do it. That is not 
going to happen.
    What we want to do is take the funds that we can get from 
Congress, and then leverage them with the private sector 
capital.
    You have already had some of these proposals out, is that 
not correct, to attract some private capital?
    Mr. Boardman. We have a solicitation that came back on the 
20th, which was Monday, on looking at what we needed to do to 
finance what our plans were.
    Mr. Mica. One of the reasons I proceeded legislatively is 
we put together PRIIA. PRIIA was a good faith blueprint to 
establish sort of an outline of how we proceed with high-speed 
rail.
    The money came before actually we were able to move forward 
in an expedited fashion. That is why I think we have to 
approach this legislatively.
    In talking with folks to get the private sector to invest 
capital, they are going to want a return. To do that, they are 
going to have to either get a return from operating the 
infrastructure in the Northeast Corridor, the rail itself and 
be in charge of it, or the operational part of the high-speed 
rail or the passenger rail service.
    By increasing the ridership, it will increase revenues and 
pay the Government rather than having it subsidized. It still 
is subsidized. We can debate on the figures, not that we do not 
have to subsidize some rail service, but what you want to do is 
minimize that, and with a great route like we have in the 
Northeast Corridor, we can maximize, and I think actually bring 
capital into Amtrak.
    Part of the question we faced in crafting this legislation, 
Mr. Shuster and I, we were told we should consider two models. 
One, infrastructure separate, and operational separate, and 
then also a turnkey to offer to someone.
    Are you looking at it on that basis, too, Mr. Boardman, and 
do you have the authority to offer it on that basis?
    Mr. Boardman. The way we are really looking at this is that 
in order for profits to come to the Corridor, you have to have 
a Corridor that can actually increase the amount of service 
that is available. The trains have to be reliable. They have to 
be faster.
    The credibility first is being able to have a vision that 
an infrastructure will work. It was not just us looking at a 
vision for the future; the vision of 220 miles an hour. It was 
also having others look at that vision as well, and looking 
across the globe at some leaders, JR East from Japan.
    Mr. Mica. Was your proposal based on doing a turnkey or 
division of operation and the infrastructure? Is that what you 
discussed with these folks, or did you invite both?
    Mr. Boardman. I recognize the answer you want, and I will 
get there for you. I think what we needed to understand first 
was whether we had a competent plan, whether there was a plan 
that would really work, was it too expensive, was it realistic.
    That is why we had these peer reviews, SNCF, and looking at 
JRjst and Deutsche Bahn and all, coming and looking at what we 
were doing, asking, ``Is this the right thing or is it not?''
    What I said in my testimony is that we could adopt or we 
could adapt the things that made sense. As they looked at it, 
we began to learn some things.
    First, they thought it was a little too expensive. The 
Japanese said you can make your tunnels a little bit narrower. 
You could really think about this differently. We have taken 
that in. We understand it.
    We think that is probably a good thing in the way 
Government and business works today, if our plan was more now 
than what it is really going to cost. It is not an escalation 
of cost.
    They also said they thought we would have a lot more 
ridership, and that would improve the revenues. Again, in my 
own experiences, if you start proposing that it is going to do 
so much more than what you originally started with, and then 
you have to see it is not, then again, you lose credibility.
    The key was to get this vision to be looked at by folks 
that says is this credible, and it is.
    Amtrak is a transportation operating company. There is no 
doubt. That is the core of our business. We do have a very 
strong engineering department, and we are the only ones, and I 
think you know this, that really does electric rail in the 
United States.
    When you get to your question, are you going to split it up 
this way or are you going to do it another way, we do not know 
that.
    Mr. Mica. You are looking at all the options.
    Mr. Boardman. We need to do what is necessary for us to get 
the financing and the investments.
    Mr. Mica. For financing, someone is going to want a piece 
of the action. If they see there is a potential for revenue, 
they are going to want to pay their investors. That is the only 
way we are going to attract private capital.
    The private sector just does not come in and do things for 
the sake of charity. They are going to want a return.
    We are going to have to find some way to bring them in. 
They are either going to have to control--again, ownership, we 
have always said, would stay with the United States or Amtrak. 
They are going to have to control the management of that 
infrastructure.
    Mr. Boardman. The venture capitalists want their capital 
back. We understand that.
    Mr. Mica. They are going to also want to increase service 
for commuters because they are going to get revenue if there is 
increased commuter service for freight, for high-speed rail, 
maximizing the Corridor.
    The second thing is you get an operator. People do use the 
U.K. model and say it all went bad, but the U.K. was a totally 
different model.
    They took all that rail infrastructure in the whole country 
that deteriorated over years, and put it into Rail U.K., or 
whatever it was called. It did collapse. It was a huge thing. 
It took everything, even some of the local commuter routes, and 
it had very aging, decrepit infrastructure.
    That is not the case in the United States. Most of what you 
run, a service, 20,000 and some odd miles, is over freight 
rails.
    We are talking about specifically the Northeast Corridor 
and how to maximize its development.
    You do have some challenges in-house.
    When I saw the proposal that was brought out, I am not sure 
if that is really what I want to do, to create another entity.
    It was done for several purposes, one, because there was a 
model that was recommended by some people who might want to do 
this, and they said it would be attractive in that fashion, to 
have those options available.
    We did exactly the same thing you did. We said look at the 
Corridor and tell us how this could remain--I am not opposed--
first, I am not trying to do away with Amtrak. I am not trying 
to limit any service they provide or privatize all of Amtrak.
    The most important part of this is do you have the 
authority to move forward and create those entities I 
described, either to offer as a turnkey or to offer separate 
operations and rail infrastructure? Do you think you have that 
ability?
    Mr. Boardman. I think we are going to have some of the same 
problems everybody would have. We do not own the whole 
Corridor. The States own almost 100 miles of the Corridor. 
There are issues that need to be worked out.
    Mr. Mica. Can your attorneys look at it and see if you have 
that? I have had oh, we want to do that, Mica, but our charter 
is this, intercity passenger service and whatever we have now. 
They always come back and say we really do not have that 
charter or that ability.
    What I want from your counsel is--I do not mind giving 
authority to Amtrak to do what we are trying to achieve. I do 
not know that we need to create a second entity to do this.
    I have to make certain that you have the power to do this, 
then I am going to direct you to do it, to take those offers.
    I cannot believe for the life of me that people here would 
not welcome the private sector making an offer. I know there 
have been some bad examples around the world, people taking 
advantage, the private sector not writing the RFP right or the 
terms.
    I do not want to model it after that. I do not want to 
model anything on what the Virgin Rail did or they did wrong.
    Certainly, you are going to need significant amounts of 
Federal capital to subsidize some of the infrastructure 
improvements.
    Like you stated today, the key is to attract private 
capital. We have to have the ability for whatever entity, if it 
is Amtrak or another entity, to attract that private capital.
    Right, Mr. Boardman?
    Mr. Boardman. I think that is correct.
    Mr. Mica. Would you say the same thing? I know you have 
looked at this, Mr. Geddes.
    Mr. Geddes. Do you mean on the need to attract private 
capital?
    Mr. Mica. Yes. You represent the American Enterprise 
Institute. Can you attract private capital if it is structured 
the way we are talking? I think you did testify affirmatively.
    Mr. Geddes. Absolutely, yes.
    Mr. Mica. I want everybody to have a chance here, the 
gentlelady representing the Governors of Northeast.
    What we tried to do, in PRIIA, we created a blueprint for 
going forward. The money got ahead of us, as I said, and we 
have now had a history of some failures on high-speed rail.
    We created the different commissions to try to bring local 
governments into the process, whether it is the Northeast 
Corridor, or wherever they may pursue this, but what we were 
trying to do was empower and also have some transparency in the 
selection process of an operator.
    If you wanted to select Amtrak who partnered with--I told 
Mr. Rahall he could put in a Build America provision or 
whatever he wants, if we want to do that. Whoever they want to 
partner with.
    What we thought would be good is to empower you to go back 
and revise PRIIA provisions. We set up the commissions. I have 
been before them. They are working. We wanted to empower them 
in the process.
    If we kept it with Amtrak, we could still do this, too.
    Do you see what we are trying to do there? You have to be 
happy, because you have to be satisfied, like you said, your 
concern was on commuter rail, freight service, utilization of 
the Corridor, but we do not want you outside that loop.
    It is nice to be advisory and everyone ignored you. We were 
trying to empower the locals and States who have a stake in 
this, not only some ownership.
    Do you see what we are trying to achieve? If you can look 
at our language, and if you see that it needs to be better 
crafted, we welcome that.
    Ms. Stubbs. We will look very closely at the language. One 
of the concerns is not just two or three members from the 
Northeast, but all of the States' interests, on and off the 
Corridor would need to be addressed.
    Mr. Mica. Mr. Wytkind, you worked with us when we did the 
PRIIA. Again, we are trying to find a way. We set a blueprint 
so we can move forward and protect labor.
    I know we have some language in here that probably is not 
the language you would like, but we had to write something 
initially. We want to make sure that labor is protected.
    I firmly believe that you can dramatically increase your 
membership. You can actually significantly improve the benefits 
with your folks. I saw how they got treated in the past versus 
their brothers and sisters in the private rail operation.
    I think there is hope. I welcome your suggestions in 
language. I may not be able to buy everything you give me, but 
I am trying to craft as much as I can to protect labor.
    The secret to this is attracting private capital. They are 
going to go. They are not going to be able to do this in-house. 
They are going to have to have somebody who has done it before 
take the project on and work with them.
    They may be a partner. They may be able to contribute. They 
may be able to help direct the project. Actually, to construct 
and then to operate, I do not think in the future----
    Mr. Wytkind. Do you want me to respond?
    Mr. Mica. Yes, go right ahead.
    Mr. Wytkind. First of all, I did not hear Mr. Boardman say 
anything other than he is looking for private capital partners. 
I did not hear him say he is going to be sending his operation 
to a private entity to run it for him.
    Second of all, the reason I made the comments I made 
regarding your draft legislation is because this legislation 
does not hold Amtrak employees harmless.
    None of the statutes that apply to railroad workers are 
applied in this legislation, including Railway Retirement.
    Mr. Mica. I welcome your language.
    Mr. Wytkind. I am not trying to sort of cook the books 
here. We read the bill. The bill does not apply railroad laws 
to railroad workers.
    This Florida example that keeps being raised----
    Mr. Mica. If I add your language, then you will be----
    Mr. Wytkind. No. There are a lot of concerns that we have.
    One last point. The Florida example that Mr. Shuster points 
out, that company does not pay railway retirement. If the model 
of the draft bill is applied in this case, the new entities 
will not pay railway retirement either.
    Mr. Mica. I have no problem moving the train along whatever 
track we get to. It is going to require private capital.
    Mr. Wytkind. We are not against that. We have not been one 
time against that.
    Mr. Mica. The private capital will require a piece of 
either operational pie, from an infrastructure standpoint, 
operations, or both. That is going to happen or you are not 
going to get the private capital. Then we will just chug along 
at our 83 miles an hour and 60 some miles an hour.
    I am taking an awful lot of time. I wanted to cover these 
things before I scoot.
    Again, I welcome your suggestions. We are keeping the 
record open. If I have to do more hearings and drag you back in 
and others back in--a lot of people did not obviously read the 
bill. We are going to try to educate Members slowly on this, if 
we have to cut it up, slice it, and feed it so people 
understand it.
    It is nothing outrageous. It is nothing to do away with 
passenger rail service or harm Amtrak.
    In fact, I think Amtrak could end up operating many more 
trains, hiring many more people, and being a very viable entity 
in the future if we work together in finding some means of 
attracting capital to this process, with private sector 
initiatives, efficiencies, and ingenuity, that always has made 
this country and the system great.
    I apologize, Mr. Shuster, for taking so long. I wanted to 
get a couple of questions in.
    Mr. Shuster. [presiding.] Thank you, Mr. Chairman.
    With that, I will recognize Ms. Norton for questions for 5 
minutes.
    Ms. Norton. I am informed that Mr. Nadler has to leave.
    Mr. Shuster. I will recognize him and then come back to you 
later. Mr. Nadler?
    Mr. Nadler. I thank the Chairman. I thank Ms. Norton.
    Mr. Boardman, first of all, given that Amtrak is a for 
profit corporation, owns the Northeast Corridor, I think the 
bill raises a serious Fifth Amendment problem with the taking.
    Under your reading of the bill, when Amtrak transfers the 
Northeast Corridor to the Department of Transportation, what 
compensation would Amtrak receive?
    When Amtrak transfers their only stock to the DOT, where 
private interest is required under the bill, what compensation 
would Amtrak receive for that?
    Mr. Boardman. The way we read it right now is we would 
receive no compensation for either. In fact, in the history of 
the taking, that is not what we do in this country, and that is 
not what happened when the Corridor was transferred to Amtrak 
back in 1976. The private owners were paid substantially, even 
though they were bankrupt for that.
    Mr. Nadler. You think this would be a taking of both the 
rolling stock and the infrastructure?
    Mr. Boardman. The rolling stock is a little different 
because we owe enough debt on that, that debt would have to be 
satisfied before they could take it at all. That is owned by 
the banks. It would not have that availability.
    Mr. Nadler. Do you have financing for most of that rolling 
stock now?
    Mr. Boardman. For most of our rolling stock, yes.
    Mr. Nadler. How do you transfer the rolling stock if you 
are still making payments on it?
    Mr. Boardman. As I said, we could not, because we would not 
have the money to pay off the debt. It would not happen. We 
would not have revenue any more.
    Mr. Nadler. Could you transfer it if it assumed the balance 
of the debt?
    Mr. Boardman. That is not what the legislation said.
    Mr. Nadler. No, but would that work?
    Mr. Boardman. If they took the debt with the equipment and 
all of that, it certainly makes it so it does not get lost.
    Mr. Nadler. Amtrak makes a considerable profit on the 
Northeast Corridor, and cross subsidizes all the other routes; 
is that correct?
    Mr. Boardman. For operating, yes.
    Mr. Nadler. If this bill or something like it were enacted, 
what would happen to the other corridors, other than the 
Northeast Corridor?
    Mr. Boardman. What would happen, especially with us being 
left with the debt, is we could not service it, and we could 
not operate without additional Federal subsidy.
    Mr. Nadler. The other corridors, you would have to shut 
unless you had additional Federal subsidy?
    Mr. Boardman. That is correct.
    Mr. Nadler. Do you know what the magnitude of that 
additional subsidy is that would be required?
    Mr. Boardman. One of the difficulties of that, and Rick and 
I were talking about transparency, is that the allocation 
formula across both the direct and indirect makes it difficult 
to figure out completely accurately what should be applied to 
those other corridors.
    In this particular case, it would be a lot easier, because 
all the indirect costs would then be applied to the other 
corridors.
    I have not added them up. It would be very expensive.
    Mr. Nadler. It would be very expensive. Let me ask you one 
other thing. The dialogue a moment ago with Mr. Wytkind, he 
made very clear that the labor protections that labor now has 
with Amtrak would not be carried through by this bill as 
currently drafted. Those people who are now under the Railway 
Labor Act, et cetera.
    Let's assume that were changed, and all the labor 
protections were in fact carried through. What would that do to 
the financing structure of this bill?
    Mr. Boardman. I am not sure I quite understand the 
question.
    Mr. Nadler. Let's assume that the bill were changed, and 
every labor guarantee that Amtrak employees have, whether 
Railway Labor Act or whatever, were in fact carried forward. 
They were held harmless.
    What would that do to the financing of the bill? How much 
cost would that impose on whom?
    Mr. Boardman. It is going to cost, if everything goes down, 
a little over $4 billion over a 5-year period of time. You have 
the rest of the labor protections that are existing out there 
that would be transferred to whoever would be the operator for 
the future on the Corridor.
    Again, I have not added up those numbers.
    Mr. Nadler. Presumably, they would have to put that in the 
bids as cost factors.
    Mr. Boardman. I see. That is correct.
    Mr. Nadler. That would be very expensive?
    Mr. Boardman. That would be as expensive as what it costs 
for us.
    Mr. Nadler. Thank you. Mr. Wytkind, last question. You said 
that even if all the workers are held harmless and every 
protection was carried through, you still have other problems 
with this. Could you just briefly outline what the other 
problems are?
    Mr. Wytkind. Sure. Thank you, Mr. Nadler. I do not think 
Balkanizing our passenger rail system and allowing private 
sector interests to chase profits is the way you run a national 
transportation system. That is exactly what this bill would do.
    Those with wealth would try to create more wealth with that 
wealth, and the rest of the system, which relies on cross 
subsidies, relies on services into communities that do not have 
the density of the Northeast Corridor, would all completely 
wither.
    As Mr. Mica said very appropriately, capitalists do not 
chase investments that lose money. They are going to chase 
investments that make them money.
    We think this is a flawed model. It has been tried in many 
industries around the world and around our country, and it 
always ends up giving the public sector the shaft, and the 
workers the shaft.
    Mr. Nadler. Thank you. My time has expired.
    Mr. Shuster. This is already a flawed model; what we are 
trying to do is save it. There are 28 million passengers on 
Amtrak every year. There are 750 to 800 million that ride 
airlines. I do not even know the number of people that drive 
their cars back and forth to work. Millions of people.
    Based on the will of this country, what we have now is not 
going to work, and we are going to end up with a situation 
where the American people at some point are going to say 
enough, we do not want to fund Amtrak any more.
    I think we have a golden opportunity right now in this time 
in our history to deregulate passenger rail in this country.
    For labor, you talk about the 20,000 jobs that are at risk. 
Well, 10,000 of them have been lost in the last 10 years. We 
can make an argument for whatever reason.
    This is about, I believe, saving passenger rail in this 
country, getting private sector involvement, injecting the 
Federal funds into it, and as Mr. Mica points out, nobody is 
going to put money into an operation that they do not have at 
least some control over.
    How will this all look at the end of the day? Maybe it is 
Amtrak as the operator, the entity that takes care of the 
infrastructure, and somebody else comes in to operate, which 
has been shown in other examples.
    You mentioned the Florida situation. That is going to be 
the next question, Mr. Boardman. How is it that you bid $265 to 
$97 million? Is that all railroad retirement?
    If that is the case, at least they are going to be there in 
the future paying a wage instead of not having a wage.
    We are dealing with Social Security and pensions in this 
country. We have to figure out how to make things pay for 
themselves or we are not going to have them for the future. 
That is what we are trying to do in this bill.
    Mr. Boardman, on that Florida Tri-Rail situation, $70 
million difference in the bid. Why so much?
    Mr. Boardman. First of all, let me tell you this, there are 
about 250 million riders of rail in this country. Amtrak is 
responsible for most of those riders because a large portion of 
that comes from the Northeast Corridor.
    The company that bid against us in Florida did not have 
liability costs to pay, like Amtrak does. It did not have the 
legally obligated Railway Labor Act. It did not have railroad 
retirement to protect the employees. There is always an 
additional amount of cost to the reality of what they were 
really trying to do.
    Furthermore, and I want to come back to something you said 
earlier, Mr. Shuster, and that is you are not supposed to go to 
work for the other company until you have left the company you 
are in. That is what the lawsuit is about.
    It is not about the fact that people cannot move from one 
company to the other. I have been lobbied by all the political 
people to tell me that we should drop this lawsuit and it will 
not be dropped.
    Mr. Shuster. Again, I think it is taxpayer dollars that 
should not be spent.
    As far as accounting, and you have been over there now for 
2 or 3 years, I think things have improved, especially when it 
comes to accounting.
    I understand you took somebody from FRA to come over to 
your shop, and it improved.
    In the past, accounting on all accounts has not been a 
strong suit. It has been miserable as far as I can tell at 
Amtrak.
    What are you doing to improve accounting? If we are to 
attract private capital, they want to do due diligence. They 
want to look at the books. Right now, I am not so sure they 
could figure out what is up at Amtrak.
    Mr. Boardman. One of the most important things for Amtrak 
was to be stable and continue to follow through and not be 
distracted by everything that comes down the pipe for Amtrak, 
and that has been one of my efforts at Amtrak for over 2 years, 
really to try to stabilize, not go in and change the entire 
management team like has been done in the past.
    There was a series of almost seven different presidents for 
this company, and they changed the CFO, and they changed the 
senior management, and they changed this and they changed that, 
and it is extremely difficult for a major company like this to 
be able to sustain that and continue to provide the 
improvements organizationally, financially, and otherwise that 
are necessary.
    There have been 8 years' worth of labor difficulty at 
Amtrak, and there has been a culture of blame as opposed to 
being a culture of accountability. That is beginning to change.
    I get somewhat depressed when I see all of this occurring 
because we can see so many things that are improving for Amtrak 
and for the customers of Amtrak and for the safety of Amtrak, 
and it is just another disruption that throws us again to the 
wind.
    Mr. Shuster. Ms. Stubbs, I have word from the 
administration in Pennsylvania they are very interested in what 
we are putting forward here. I would like to hear what the 
other Governors out there are saying.
    Former Governor Ed Rendell is very much on board, excuse 
the pun, with what we are trying to move forward here. He has 
been out traveling the country talking about these types of 
private/public partnerships.
    Could you let us know?
    Ms. Stubbs. The comments I made today are based upon a 
longstanding policy. What we want to do is look very closely at 
the bill, hold it up against the principles that we have, and 
look at how it would work, both for intercity and for commuter.
    I think I have indicated some of the areas that we feel 
would need to be addressed.
    Mr. Shuster. Any particular States that have been more 
aggressive or positive?
    Ms. Stubbs. It is still undergoing review in all of our 
States.
    Mr. Shuster. I think you will find Pennsylvania is going to 
be very, very interested.
    Ms. Stubbs. I know they are.
    Mr. Shuster. Mr. Geddes, could you talk a little bit about 
what you have studied, looking at Europe and Japan, and the 
findings of competition there and its impact? From what I see, 
it has been positive. Can you talk a little more about that, 
the competition aspect of it?
    Mr. Geddes. I can, Mr. Shuster. I was on sabbatical last 
year studying public/private partnerships in transportation in 
Australia, which began with the Sydney Harbor Tunnel in the 
mid-1980s.
    The Government simply did not have the money to build the 
tunnel under Sydney Harbor. The bridge that we are all familiar 
with in Sydney Harbor was completely and utterly congested, and 
that has been an extremely positive piece of infrastructure. 
They moved on to do competitive bidding.
    My main focus has been in highways, roads, bridges and 
tunnels.
    They did an extremely complicated P3 in Melbourne called 
CityLink, which has been very successful according to accounts 
of everybody I was able to talk to in Australia.
    It introduces competition. It is a competitive bidding 
process to win that. Financing on CityLink was provided by the 
private sector, which I think is the main focus here. Now, the 
State of New South Wales, Sydney is in the State of New South 
Wales, which is predominately a labor Government in Australia, 
is dedicated to doing all highway transportation projects going 
forward through P3s.
    They moved completely away from the traditional financing 
model and moved in the P3 direction because they are such firm 
believers in the P3 approach.
    It has been successful. One issue I did not have time to 
discuss in my testimony but I think is important is not only 
competition, which we all agree competition is socially 
beneficial, but the transfer of some risks to private 
investors.
    Private equity investors are getting a rate of return, of 
course, but they are being compensated for taking on real risks 
that are not illuminated through the traditional model. They 
are simply hidden and absorbed by taxpayers. Taxpayers are 
absorbing risks.
    I think a major benefit of the P3 is to do that.
    If I may, one thing I think I have learned from that 
experience, and this really addresses Mr. Mica's point of 
emphasis on what specifics we recommend as a panel in the 
legislation.
    If you want to attract private sector investment to sunk, 
long-lived assets of this nature, you need to provide in this 
bill the institutional stability that ensures those people that 
they will get that return in the future, and the Government 
will not do something to reduce the value of that asset.
    If I had one lesson from my sabbatical experience, it would 
be to design the legislation to provide a stable institutional 
structure, to which the investors from around the world, which 
is good, would look and say hey, I am going to put my dollars 
in there. These are long lived socially beneficial investments, 
and I know they will not be ex-appropriated by the Government 
down the road.
    The worse possible thing is what happened in Pennsylvania. 
I know Governor Rendell tried up and down to get it done with 
the lease of the Pennsylvania Turnpike, which would have been 
wonderful for that State, and the investors came up with their 
bids, which were multimillion-dollar costs to produce the bid, 
and then at the last minute, the State legislature changed its 
mind.
    That type of time in consistency is what I would hope in 
the bill you could try to avoid in the future.
    Mr. Shuster. That is a great point. With the Pennsylvania 
Turnpike situation, there was not as much money as was 
projected, number one, but second, the taxpayers need that same 
kind of guarantee. If you lease an asset, you are not going to 
squander the money and 20 or 30 years down the road look in the 
bank and say, ``Oh, we have spent it all.''
    The last thing I want to say is not a question, Mr. 
Wytkind, it is a request. You have a very clear stance, and I 
understand that, but you talked about discussing other models.
    Not today, but I would love for you to put together your 
ideas on how you do this, as long as it has a private element 
to it.
    I just do not believe we can go forward if your solution is 
the Federal Government ought to give $3 billion a year for the 
next 10 years to Amtrak--it is not going to happen.
    We are in a world where we have to be realistic about where 
we are going with this. I believe that what we are proposing is 
realistic. That is why we are having this hearing today, to 
talk about other ways to do this.
    I would welcome you to present me with something that is 
reasonable, and it does not have to be a 40-page paper, but it 
should include a private sector element talking about the 
various labor guarantees and things we can do to get you to 
consider moving in a different direction.
    Mr. Wytkind. I will not give you the 40-page answer now. I 
think you would throw me out for good.
    I am happy to come back to you with all of our thoughts. We 
have provided some of them today. As I have said publicly, and 
we are going to continue to say, Amtrak needs to be the 
centerpiece of this proposal.
    We are not against private sector participation. A 
significant portion of my membership that I am elected to 
represent works in the private sector.
    Mr. Shuster. And they make more money.
    Mr. Wytkind. That is debatable depending on the job. The 
point I am making is we are not all biased and saying the 
private sector's role is not important and therefore we should 
ignore it.
    As long as you understand the proposals I come back to you 
with are going to be with the centerpiece of the proposals 
being Amtrak as the primary high-speed rail provider for the 
country.
    Mr. Boardman. Can I add, Mr. Shuster?
    Mr. Shuster. Yes.
    Mr. Boardman. I thought Mr. Geddes brought up an excellent 
point on institutional stability. I did not have the term of 
art when I was trying to explain what we were trying to do.
    It is critical. I would not want to see this legislation 
damage our ability to move forward now. He may not have been 
applying it exactly how I am using it right this minute, but 
the fact is the stability of Amtrak and its future are critical 
to have any confidence in us as the centerpiece or anything 
else.
    This legislation and the way that we are characterized on a 
regular basis does not sustain that confidence in the investing 
public, and it is not accurate.
    Mr. Shuster. Mr. Hart?
    Mr. Hart. Yes, Chairman Shuster. I define it as a political 
sustainability, and it is a very key factor. That is why it is 
important to generate bipartisan support.
    I believe you can do that. There are 29 States in the 
country that have public/private partnerships in operation now. 
There are many countries, including the nine models that I 
referred to for public/private partnerships in rail in my long 
form testimony today.
    It is nothing to be afraid of. It is something to be 
encouraged. The private sector is ready, Congresswoman Norton, 
to invest in Amtrak and invest in the Northeast Corridor.
    In my preparation for today and in my preparation for 
earlier testimony, I met with major financial institutions in 
New York, in and around the world, that are willing to invest 
capital under the right circumstances, that do not necessarily 
exploit the opportunity. They do want a return on their 
investment. They do want to minimize their risks.
    There is a key factor regarding political sustainability 
that overrides everything.
    I think this is an opportunity for the committee, 
bipartisan committee, one of the most bipartisan committees in 
Congress, to show real leadership.
    The timing is now. As we approach the debt ceiling debate, 
which is going to really tear Congress apart and possibly the 
entire country apart, this opportunity here, the leadership of 
this committee, can impact even that debate.
    Public/private partnerships are the way of the future. To 
deny that fact is to deny the reality that we are not going to 
be able to fund public transportation to the levels that we 
have in the past. I wish we could. We just cannot.
    Public/private partnerships let the money players come to 
the table. That is one of the things that is absent on this 
panel. I am hoping there can be another hearing where we bring 
the real money players to the table and give them an 
opportunity to put their proposal and their money on the table.
    That was one of the big problems with the move to reject 
the Florida plan. It did not give the private sector the 
opportunity to show they were willing to put money up.
    Frankly, the folks that advocated for the rejection of that 
money played right into Amtrak's hands. They could not create 
the competitive environment to bring in other international and 
domestic players that wanted to compete with Amtrak on a true 
high-speed system in Florida. That was wiped away, and 
everything fell back to Amtrak by default.
    We have to create an opportunity for the private sector to 
speak for itself, put in the terms and conditions that are 
acceptable, and then let the Congress, DOT, Amtrak and others 
evaluate it. The money will speak for itself at the time they 
are given the opportunity.
    Mr. Shuster. Thank you very much, Mr. Hart. With that, I 
yield to Ms. Holmes Norton.
    Ms. Norton. Thank you, Mr. Chairman. I did not say the 
private sector did not want to invest in Amtrak or anything 
else. I said there was no passenger rail system that was never 
subsidized, and that is the operative word here.
    I just want to say for the record, the chairman indicated 
that when I said there had been no high-speed rail bill before, 
he indicated he would correct me and cited a bill actually 
passed when the Democrats were in control of Congress, although 
in fact, President Bush signed this bill.
    It was a bill for good repair for Amtrak. It was not a 
high-speed bill. It had a small, small subsidy for private 
proposals for high-speed rail.
    Bush will not be remembered for high-speed rail or even for 
Amtrak. He will be remembered for year after year trying to 
zero out Amtrak.
    Actually, Mr. Shuster was on the Floor with me. There were 
scores of Members trying to save Amtrak from being zeroed out 
and put through bankruptcy. That is all you can give Mr. Bush 
credit for.
    I find it very interesting. The majority here has had 
conniptions about the affordable health care bill, too big to 
swallow.
    Can you imagine what would happen if in its present form we 
were to pass this bill. It would be a nuclear shock to States 
all around the country. This has no chance of passage.
    That is what annoys me about the bill. This is a serious 
matter. This is a committee that has always been very 
practical. How can we get something done. This is not the way 
to get something done.
    For example, Mr. Boardman, you indicated, I believe I read 
in your testimony, that this proposal would actually set back 
the development of high-speed rail. I think you said by a 
number of years, 10 years. I do not have it before me now.
    I do remember reading something that you wrote that said 
this proposal would mean the end of our national passenger rail 
system.
    I would like you to comment on both of those.
    Mr. Boardman. I think the end of the system, let me just 
say it simply, with the debt we would be left with, we would 
not be able to service that debt, and as a result of that, 
without an increase in additional Federal assistance, there 
would be no way for us to continue to operate any of the non-
profitable----
    Ms. Norton. That is what I want to focus on. This has been 
about biting off the only profitable part of the system.
    If in fact Amtrak operated today with only that part with 
no obligation to a national system, then Amtrak would indeed be 
profitable. That ought to be said and that ought to be 
understood. Amtrak in fact pays for itself, but it also pays 
for a lot else.
    I want Mr. Geddes, for example, to tell me what we do with 
the 23 States and 233 local communities all over the country 
who depend upon Amtrak with subsidies coming in part from 
Amtrak, of course, they come from the Federal Government, but 
they also come in part from Amtrak.
    What do you want to do with them, while you are out making 
money with one section of the railroad?
    Mr. Geddes. Thank you for the question. I have been waiting 
to address that question for a while. It is terrific.
    I am in no way, shape or form opposed to those subsidies, 
as long as subsidies are (a) transparent; (b) provided in the 
least possible cost.
    Ms. Norton. Which subsidies?
    Mr. Geddes. Subsidies to the routes you are referring to, 
to these small communities.
    Ms. Norton. Part of those subsidies come from Amtrak, the 
Northeast Corridor.
    Mr. Geddes. Some of the subsidies come from the Northeast 
Corridor.
    Ms. Norton. The other comes from the Federal Government. Do 
you want more from the Federal Government?
    Mr. Geddes. There is absolutely no policy reason why those 
subsidies need to come from riders in the Northeast Corridor. 
There is no solid social policy reason why a rider between 
Washington, D.C. and New York should be cross subsidizing a 
ride on Amtrak say from Des Moines to Seattle, wherever, pick 
your towns.
    Ms. Norton. That is a very interesting notion of 
transportation. Some States, Mr. Geddes, in our system 
regularly subsidize other States. This is a 70 percent 
federally funded corporation.
    Some States fund smaller States, and the other way around. 
This is a union. Maybe you do not think there should be cross 
subsidy, but I do not understand why.
    Mr. Geddes. No, madam. This comes from 20 years of teaching 
Economics 101 after I received my Ph.D. from the University of 
Chicago.
    A cross subsidy of the nature you are referring to 
generates social losses because it distorts the price system. 
We have recognized that in economics for over 40 years.
    There is a problem, a serious problem associated with 
building cross subsidies into a system like this.
    Ms. Norton. I get your point, Mr. Geddes. The people of the 
United States will subsidize these 23 States and 233 
communities rather than getting it from the private sector or 
the fare box of Amtrak.
    I would like to ask you another question. What do you think 
about the proposal to pay people $2 million to write a 
proposal, in light of your notion that the private sector 
should take responsibility? Should it not take responsibility 
for writing its own proposal?
    Mr. Geddes. Absolutely, and they would take responsibility.
    Ms. Norton. They should not give $2 million from the 
taxpayers for people to write a proposal?
    Mr. Geddes. We have a giant body of law called antitrust 
laws that is intended to promote competition. We as a society 
believe that competition is per se good and positive.
    One of the things that this proposal would do is encourage 
that competition.
    Ms. Norton. We pay corporations in order to encourage 
competition among corporations? Do I hear you right?
    Mr. Geddes. You want to get more bidders into the process.
    Ms. Norton. Should there not be an indication of whether or 
not a bidder, a serious bidder, was willing to put his own 
capital up to bid?
    Mr. Geddes. They are at risk of losing that if they do not 
win the bid.
    Ms. Norton. Mr. Geddes, I am chair of a subcommittee that 
has to do with construction and leasing for Federal buildings 
throughout the United States. Regularly, they engage in 
competition. We put out an RFP. They engage in a competition. 
They lose--of course, there is a way of taking care of that in 
the tax system or at least part of it--they lose millions of 
dollars every year competing for Federal contracts. Indeed, 
that is the way it has been throughout the Federal system.
    Why should this be an exception to how the Federal 
Government does business with the private sector if it wants to 
do business with us? Put up your own money. We will know you 
are serious. I am not going to pay you.
    Mr. Shuster. I would ask the gentlelady to wrap up. We want 
to make sure we get to Mr. Sires. They are going to call votes 
here shortly.
    Ms. Norton. I will wrap up very shortly. I just could not 
stand it.
    Mr. Geddes. It is used throughout the world, Congresswoman.
    Ms. Norton. It is not used in the United States of America. 
That is one part of this proposal that has to go or be laughed 
out of the proposal. I think the reason it is in the proposal 
is nobody was willing to put up his money in the first place 
when the word went out for private proposals.
    I just want to say Amtrak is itself a public/private 
corporation. The public part is us.
    Mr. Shuster. I am going to ask the gentlelady to wrap up. 
Mr. Sires has been here for most----
    Ms. Norton. I am going to defer then to the gentleman.
    Mr. Shuster. I thank the gentlelady very much. Mr. Sires?
    Mr. Sires. Thank you very much. Mr. Hart, I have to say you 
scared the hell out of me with your statement to bring money 
players to the table.
    It seems that every time we bring money players to the 
table, look at the housing industry when we brought the money 
people, the entities, to the housing industry, today, we have 
more foreclosures than ever, with some of the practices that 
were going on.
    I am very concerned because the outcome of privatizing this 
is the bottom line is profits and a lot of little people are 
going to get hurt in this process.
    If we do not find a way of protecting some of those little 
people, the pensions, the retirements, we are hurting a lot of 
Americans.
    I am very concerned about that. Briefly, because I want to 
ask a question to Mr. Boardman.
    Mr. Hart. The analogy of the financial industry is a little 
bit misplaced, but I do recognize your overall concern and 
sincerity in raising the issue.
    There are provisions and ways in which the financial sector 
can be beneficial. They can increase the quality of service for 
Amtrak. Put Amtrak to the test of a true business case.
    How much is the Northeast Corridor worth? How much is the 
infrastructure in the Northeast Corridor worth? I have not 
heard a number from anybody to actually tell me what is the 
value of the asset we are talking about.
    It seems to me Amtrak should have that answer. Certainly, 
if it was a true for profit operating company, we would have 
that answer, and also a number of other answers to how to 
improve the operations of Amtrak.
    It is a very tough question. The private sector does bring 
more than just money. They do bring money, which we absolutely 
need. They also bring a business discipline and a focus to 
detail and operations that would be helpful.
    I am not suggesting in our proposal that the private sector 
take over. I am suggesting that up to 40 percent of Amtrak's 
infrastructure be given the opportunity for private investment.
    Mr. Sires. They will need subsidies then.
    Mr. Hart. Public/private partnerships are not a replacement 
for public investment in rail. They are a supplement to that.
    Mr. Sires. I just want you to know that I came from the 
private sector. I had a business for 20 years. I had to meet 
payroll, health benefits and everything else.
    Mr. Boardman, what percentage of the business that Amtrak 
does now is privatized? Do you do any privatization of any of 
the functions of Amtrak now?
    Mr. Boardman. I think in terms of looking at contracts out 
there, we probably have about 60,000 contracts that are private 
contracts for the work we get done. Amtrak itself is a private 
business in so many ways.
    We have clearly a solid way to bring the private sector in 
and do work, and we have that all over our railroad.
    Mr. Sires. The concern that I have also is in my district, 
the New Jersey Transit brings people into New York. The New 
Jersey Transit moves a lot of people.
    I am also concerned about the freight lines. I have the 
ports in my district, and we have to move some of this freight 
away from the highways. I do not think the New Jersey Turnpike 
can take another truck, quite frankly.
    How is that going to impact it if we go through this 
privatization? We may not have the right-of-way on some of 
these lines.
    Mr. Boardman. I think there is a lot of complication to 
that. We really do not know that. We know we need to improve 
the weight capacity for a lot of the freight that is out there 
on the Northeast Corridor to 286,000 pounds per car.
    I think it is something we have to get into the detail of, 
of what the economic and industrial development opportunities 
there. There are additional people that can invest in the 
concept, but we have to have that institutional stability to 
really get people to understand that we are going to be around.
    The agreements that we have made now will continue to be 
held for the future. I think this bill has created a lot of 
concern about that happening.
    Mr. Sires. How about the commuter lines?
    Mr. Boardman. Same way. The New Jersey Transit in 
particular really has been the largest growth on the Corridor, 
and yet when they get into Penn Station, there is nowhere for 
them to go, so they have to come back through the tunnel, so 
they demand a large percentage of our capacity.
    We need to find another place to put them in Penn Station 
to really make the fluidity work on the Corridor.
    Mr. Sires. The other concern that I have is the security. 
In my district, I represent the two most dangerous miles in the 
country. We have the Lincoln Tunnel. We have the Harlem Tunnel. 
You name it. We have it in our district.
    How do you think the security is going to be impacted if 
you privatize a lot of this service, they may not go through a 
screening process for some of these people going through these 
tunnels.
    Mr. Boardman. I do not know how it will be impacted. Right 
now, it is not addressed at all.
    Mr. Sires. Mr. Geddes?
    Mr. Geddes. That is the very beauty in the core of the P3, 
that you write that detail into the contract. You say that the 
security procedures will be followed this way, and if they are 
not, there are penalties associated with that and they are 
articulated.
    Mr. Sires. I heard you talk about contracts before. I was 
an elected official. I put out things to bid. We put out that 
certain things have to be done in the contract. It is just 
another layer for the supervisor to make sure it happens.
    Really, most people out there, when you are going to make 
money, a lot of the stuff in the contract gets cut, including 
employment for some of the people that are there.
    Mr. Shuster. I thank the gentleman from New Jersey. A 
question to Mr. Boardman. How difficult would it be for Amtrak 
to provide an inventory of what they had and the value? Do you 
have a valuation of what the Northeast Corridor is worth?
    Mr. Boardman. I will look and see what we have, Mr. 
Shuster, and provide it.
    Mr. Shuster. I would appreciate that. Mr. Millar, you have 
been very quiet and very patient. I would like to ask you a 
question concerning the fact that there are 27 commuter rail 
systems in the country, 19 contracted out.
    Mr. Millar. Yes, sir.
    Mr. Shuster. Four of them actually are contracted to 
Amtrak. Can you talk a little bit about the difference in 
operations, the success or lack of success?
    Mr. Millar. Yes. Certainly, Amtrak as a management company, 
if I can speak of it in that way, has been a very successful 
provider. They have won competitive proposals, as was pointed 
out earlier. They have also lost some competitive proposals.
    I think the fundamental point I was trying to make is that 
our commuter rail members who choose to purchase service want 
to make sure that they continue to have that right, that it is 
in fact beneficial to them, and in terms of service quality, 
that is a judgment they and ultimately their customers have to 
make as to what is the best, what is the worse.
    We certainly know of examples with all kinds of different 
providers where one provider will do very well in one city. 
They will go to the next city and not do so well.
    It is very difficult to generalize beyond the basic point, 
which is competition tends to be something that works and makes 
things better.
    Mr. Shuster. That is one of the things in this draft bill. 
We want the States to have the ability to do exactly what you 
have done. It sounds like it has been overall positive.
    Mr. Millar. Yes, sir.
    Mr. Shuster. Thank you very much. With that, I will yield 5 
minutes to the gentlelady from Florida.
    Ms. Brown. Thank you, Mr. Chairman. First of all, Mr. 
Boardman, I want to thank you for your leadership and service, 
and for all of the Amtrak employees.
    The feeling of the chairman and others is not the feeling 
of all of the Members. It is not the feeling of the traveling 
public.
    Last Friday, just for your information, I was flying from 
Washington to Connecticut. I sat at the airport, after going 
through security for 3 hours, the flight was cancelled. The 
next morning, I took the flight to Connecticut.
    Saturday morning, I took the train from Connecticut to New 
York. It was on time. It was clean. There were a lot of 
students and traveling public. It was wonderful. I was able to 
do my work as I traveled. I know you do the same thing in the 
winter time when that plane would not have left even the next 
day in the snow.
    I want to thank you all. The Congresswoman mentioned 
something about providing money to Amtrak. For years, it was 
zeroed out funding.
    Only with this administration, I want to be clear, it was 
the Obama administration that put the money for Amtrak, not 
just for Amtrak, for high-speed rail, based on the bill that we 
passed. They did not make it up. We passed the bill and they 
implemented it based on that.
    My question to you, you wrote a letter yesterday to the 
Congress. Would you elaborate on that letter, saying what this 
bill would do as far as demolishing Amtrak?
    Mr. Boardman. Sure. I think this bill really does not go to 
the depth, the understanding, the subtleties, the complexities, 
the difficulties that it takes to operate a railroad.
    I think I am hearing today that a lot of people agree with 
that, there are other things that need to be done here that 
really would make this bill, if you had a bill, a practical 
one.
    You do not need to do this bill. Almost everything that is 
available in this bill and that you want to do with the 
railroad in the United States is available to be done with and 
through Amtrak.
    There has to be stability. There has to be a stable funding 
source. I think Mr. Geddes said the right things about the 
long-distance trains, quite frankly. It is a policy decision.
    If you are going to decide that you are going to provide 
the services across the country, you need to pay for those 
services. Those services should be rendered at as low a cost as 
we can get them to. It is not always easy to get to that low 
cost.
    Especially as we look today, and it gets more complicated 
for the future, you have to understand the capital that needs 
to be applied and given and paid for to the freight railroads. 
You have to understand you are going to need to make continuing 
investment in the capital of the Northeast Corridor.
    If questions did not get answered, I think Anne brought it 
up, are we going to bring the Northeast Corridor back to the 
state of good repair, and the master plan there today, even 
without high-speed rail, is $52 billion to bring that back, to 
bring it where it really needs to be to provide that 
reliability.
    The private sector is going to be interested in whether 
that is there or not, and if they are going to put part of 
their dollars forward, they need to know they have that public 
partner along with an operating partner like us.
    When high-speed rail comes to really be looked at and when 
this whole program comes to be looked at, it has to be looked 
at in its whole.
    If you take away the Corridor and you decide you are not 
going to have a policy of having a connected mobile rail system 
in the country, you have begun to destroy Amtrak.
    Ms. Brown. I attended every single hearing. I did not hear 
maybe what the chairman and others heard. He asked for 
recommendations on the bill. I would say strike everything and 
start somewhere else.
    I want to ask about the labor protection. The chairman 
constantly mentions the protection is there for labor, and 
maybe you all discussed it when I was out of the room.
    Mr. Shuster. He did.
    Mr. Wytkind. Let me explain it to you. I did discuss it 
with him. Nothing in this legislation guarantees anything to 
Amtrak's employees. The Railway Labor Act, Railroad Retirement 
Act, none of the statutes apply to railroad workers, despite 
public comments made that employees of the company will be held 
harmless.
    Secondarily, not even the hiring preference really has much 
value to Amtrak workers. All they are guaranteed is a chance to 
be considered for a job. That is it. That is really all I can 
find in this bill that gives Amtrak employees any confidence 
they will have at least a chance to be gainfully employed.
    As far as I am concerned, our public comments say close to 
20,000 jobs are at risk, and that is perfectly valid based upon 
the current draft legislation.
    Mr. Shuster. The gentlelady has 1 minute for a final 
question or remark.
    Ms. Brown. The chairman constantly talks about Virgin Air 
and how they make a profit. The point is the British put in 
over $50 billion; is that correct? $15 billion. This is the 
second round. I had been over there for the first round when 
they took all of the system back and bid it out again.
    They put $15 billion in recently, but they only receive 
$168 million profitability.
    Mr. Boardman. We talked about that a little bit earlier. I 
think one of the things that came to light is that we were 
really talking about 1 year where there was any profitability, 
and for the rest of the time, there has been additional 
subsidies applied, not just Virgin, but the other private train 
operating companies that are over there.
    The way they get that subsidy is to bid for the cheapest 
subsidy for that particular line.
    Britain is going through another soul searching again about 
taking this back to a more vertically integrated system. The 
public share of the operating cost is now about 50 percent of 
the total, as opposed to 40 percent, even though they have a 
great deal more ridership, their subsidy levels have increased, 
and the total cost to them is about six times where it was back 
in the late 1990s.
    Ms. Brown. I went to the hearing up in New York. One of the 
things is there were people from the Governor's Office. It was 
elected officials.
    The point is it is not just one system. It is working 
together. The point is Big Government is going to come in and 
take over.
    I cannot believe that is the mindset of the Republican 
leadership on this committee.
    Mr. Shuster. The gentlelady's time has expired. They have 
called a vote. I want to wrap this up so we can all get out of 
here.
    I appreciate the gentlelady's passion for rail in this 
country, and I appreciate her requesting to have this hearing 
today.
    Again, I want to thank all of you for being here today. I 
believe it is time to make a change in this country, to 
deregulate passenger rail.
    Mr. Wytkind, I am looking forward to seeing your proposals. 
Forty pages is fine, if it is that kind of detail, and I would 
like to see it.
    Again, I appreciate everybody being here. I thank you all 
for coming, and I am sure we will be talking again.
    Ms. Brown. Can I have an additional 30 seconds to close?
    Mr. Shuster. Sure. Thirty seconds and then I am going to 
gavel you down.
    Ms. Brown. That is fine.
    Mr. Shuster. I have been here for 4 hours. You have not.
    Ms. Brown. Let me just say one thing. This proposal, I 
promise you, is dead on arrival in the Senate. It is going 
nowhere. We should be dealing with the aviation bill, but what 
we are dealing with is a pipe dream that will end when it 
arrives at the Senate.
    Thank you very much.
    Mr. Shuster. I appreciate those closing remarks. I 
certainly disagree with them.
    I think this is going to be a talking point in the House, 
and I think for people across the country as well; as I 
mentioned earlier, there are 350 million passenger train rides 
in the country, but only 28 million of them occur on Amtrak. 
The American people are going to stand up. I have already heard 
them in circles, even liberal circles in this country, saying 
the one thing we should do is end Amtrak as it exists today.
    We are going to have a lot of conversations.
    I believe, as Chairman Mica believes, that eventually there 
are going to be significant changes to the way we provide 
passenger rail in this country.
    Again, thank you all for being here, and this hearing is 
over.
    [Whereupon, at 2:03 p.m., the committee was adjourned.]
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