[Senate Hearing 112-395]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 112-395

                    MOVING INTERCITY PASSENGER RAIL 
                            INTO THE FUTURE

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON SURFACE TRANSPORTATION
                  AND MERCHANT MARINE INFRASTRUCTURE,
                          SAFETY, AND SECURITY

                                 of the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 14, 2011

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation









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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas, 
JOHN F. KERRY, Massachusetts             Ranking
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas                 JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri           ROY BLUNT, Missouri
AMY KLOBUCHAR, Minnesota             JOHN BOOZMAN, Arkansas
TOM UDALL, New Mexico                PATRICK J. TOOMEY, Pennsylvania
MARK WARNER, Virginia                MARCO RUBIO, Florida
MARK BEGICH, Alaska                  KELLY AYOTTE, New Hampshire
                                     DEAN HELLER, Nevada
                    Ellen L. Doneski, Staff Director
                   James Reid, Deputy Staff Director
                   Bruce H. Andrews, General Counsel
                Todd Bertoson, Republican Staff Director
           Jarrod Thompson, Republican Deputy Staff Director
   Rebecca Seidel, Republican General Counsel and Chief Investigator
                                 ------                                

      SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE 
                  INFRASTRUCTURE, SAFETY, AND SECURITY

FRANK R. LAUTENBERG, New Jersey,     ROGER F. WICKER, Mississippi, 
    Chairman                             Ranking Member
DANIEL K. INOUYE, Hawaii             JIM DeMINT, South Carolina
JOHN F. KERRY, Massachusetts         JOHN THUNE, South Dakota
BARBARA BOXER, California            JOHNNY ISAKSON, Georgia
MARIA CANTWELL, Washington           ROY BLUNT, Missouri
MARK PRYOR, Arkansas                 JOHN BOOZMAN, Arkansas
CLAIRE McCASKILL, Missouri           PATRICK J. TOOMEY, Pennsylvania
AMY KLOBUCHAR, Minnesota             MARCO RUBIO, Florida
TOM UDALL, New Mexico                KELLY AYOTTE, New Hampshire
MARK WARNER, Virginia                DEAN HELLER, Nevada
MARK BEGICH, Alaska











                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 14, 2011...............................     1
Statement of Senator Lautenberg..................................     1
Statement of Senator Udall.......................................     3
Statement of Senator Toomey......................................     4

                               Witnesses

Hon. Joseph C. Szabo, Administrator, Federal Railroad 
  Administration, U.S. Department of Transportation..............     5
    Prepared statement...........................................     7
Joseph H. Boardman, President and Chief Executive Officer, Amtrak    15
    Prepared statement...........................................    16
Theodore Alves, Inspector General, National Railroad Passenger 
  Corporation....................................................    17
    Prepared statement...........................................    18
Mitchell Behm, Assistant Inspector General for Rail, Maritime and 
  Economic Analysis, U.S. Department of Transportation...........    28
    Prepared statement...........................................    30

                                Appendix

Response to written question submitted to Hon. Joseph C. Szabo 
  by:
    Hon. Maria Cantwell..........................................    43
    Hon. Frank R. Lautenberg.....................................    43
    Hon. Claire McCaskill........................................    45
Response to written questions submitted by Hon. Maria Cantwell 
  to:
    Joseph H. Boardman...........................................    47
Response to written questions submitted by Hon. Kay Bailey 
  Hutchison to:
    Hon. Joseph C. Szabo.........................................    48
    Joseph H. Boardman...........................................    50
    Theodore Alves...............................................    52
    Mitchell Behm................................................    55

 
                    MOVING INTERCITY PASSENGER RAIL 
                            INTO THE FUTURE

                              ----------                              


                     WEDNESDAY, SEPTEMBER 14, 2011

                               U.S. Senate,
         Subcommittee on Surface Transportation and
            Merchant Marine Infrastructure, Safety, and Security,  
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Frank R. 
Lautenberg [Chairman] presiding.

        OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Despite the paucity of members, we're 
going to start this hearing. The subject is one that has such a 
giant part to play in the existence, in my view, of our country 
and our society. So we'll start the record, we'll record any 
discussions that we have, so everyone will be able to, who's 
interested, catch up.
    Thank you for being here and joining in what I hope will 
give us some acceleration of motion here to try and get a 
critically important part of our transportation services, an 
opportunity to play a reasonable part in the way we do things 
here.
    I don't think that the detractors, those who don't want to 
give Amtrak any money, understand what the implications might 
be. The thought that we could have in the millions, tens of 
millions, of people looking for a way to get to work, get off 
crowded highways, and have some reliability established in 
their lives.
    Trains have helped move America forward since the 19th 
century, when we built the Transcontinental Railroad. It was an 
engineering marvel that captured imaginations throughout the 
world. As President Obama pointed out in his address to 
Congress last week, building a world-class transportation 
system helped make America an economic superpower. That's why I 
support his call for more investment in America's railways.
    Those of you who know me at all know very well that I've 
been sounding an alarm and working hard to try and furnish 
Amtrak and our rail system the kind of support that we must 
have.
    We have an opportunity to bring our rail network into the 
21st century and once again make the United States the envy of 
the world. It's going to take a lot of work. Our competition 
for attention goes across countries in the world that are--some 
of which border on Third World existence, and you can get 
places in much more rapid time than we can present.
    To achieve the goals that we'd like, we've got to be bold, 
make a stronger investment in Amtrak, which has been the heart 
and soul of our national rail network for 40 years. Amtrak 
offers a solid record to build upon. Last year Amtrak's 
nationwide ridership hit historic highs, carrying nearly 29 
million passengers, and it's on track to beat that number this 
year.
    Amtrak is eager to give more Americans access to faster 
trains and that's particularly true in the Northeast Corridor, 
but it's throughout the country. Northeast Corridor rail 
service continues to skyrocket in popularity. Amtrak also wants 
to upgrade its infrastructure, including track, track, signals, 
and electrical system.
    In my State of New Jersey, I'm working with Amtrak to build 
the Gateway Tunnel, an innovative project that will expand 
high-speed rail in the Northeast Corridor. Now, I think you all 
know that we had begun a project to build a tunnel. Hundreds of 
millions of dollars were already spent in design and even in 
some construction. But that was called off--not a good idea, a 
terrible idea--and we're left with costs, money thrown away, 
because the program was pulled even as it had a pretty 
significant start.
    Giving Amtrak the resources it needs to better serve the 
public will be good for the economy, spark job creation.
    Businesses will flock to communities with premier rail 
service. We see that all the time. We've seen it in my state. 
It's a small state, but there's a lot of transportation that 
moves through and within New Jersey. We saw rail lines that 
were opened apart from Amtrak rail service where there was 
virtually no business activity; businesses invested, area 
projects began there. We have a couple of transit villages, 
buildings, houses, apartments, that were built particularly 
close to the rail system, and people liked it, and it continues 
to be a popular goal, putting houses near good transportation 
facilities, and Amtrak is that.
    Stronger national rail service will also be good for our 
national security, and it's good for the environment because it 
will help our country kick its dangerous oil addiction. 
Additionally, faster and better train service gives Americans a 
much needed alternative to spending their time stuck in traffic 
on congested highways and waiting in endless lines at the 
airport.
    We started this process in 2008 when both parties came 
together and passed my Passenger Rail Investment and 
Improvement Act, which reauthorized and strengthened Amtrak. 
This was a bipartisan bill, signed into law by President George 
W. Bush. Our Amtrak law also created the high-speed rail grants 
that are moving forward today in New Jersey and other States 
across the country. Additionally, the 2008 law made critical 
investments in the Northeast Corridor and required Amtrak to 
work with the States and the Federal Government to bring the 
corridor into a state of good repair.
    Make no mistake, if the United States wants to remain 
competitive globally we need to move beyond the status quo on 
transportation, and that job begins by making a stronger 
investment in Amtrak.
    Last year we spent more than $40 billion on highways, and 
lord knows we need that. But that's more than we spent on 
Amtrak in its entire 40-year history. And I repeat that: Amtrak 
received less Federal money in its history, its 40-year 
history, than highways get in a single year. Unfortunately, 
some say that we can't afford vital public investments like 
this right now, and I say we can't afford not to make these 
investments.
    When I was building a business, I learned firsthand if you 
want to be successful in the future you have to be laying down 
the foundation now. The same principle applies here. If we want 
to leave a country, a society, where our children and 
grandchildren live a better life than living in congestion 
wherever they go, we've got to make smart investments on their 
behalf. It means investing in Amtrak, and investing in Amtrak 
doesn't just make transportation or make travel faster; it 
saves. As I mentioned, it saves in buying foreign oil. It saves 
the quality of the air. It's such a valuable part of our 
existence, and I don't know why that picture can't be seen by 
everybody.
    It's not enough just to say we're going to cut service.
    It's like cutting throats, that's how serious this is. As 
you see, it bothers me.
    Anyway, Senator Udall, you're next, please, for your 
statement.

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you, Senator Lautenberg.
    I'm not going to give a long opening statement, but I just 
wanted to kind of set the stage for one of the questions I'm 
going to ask the panel. You know, Congress--and this is the 
issue of having no high-speed rail corridor in the Southwest. 
Congress authorized 11 high-speed rail corridors and the 
Department of Transportation designated the eleventh and final 
corridor earlier this year, and I'm disappointed there's no 
inter-mountain rail corridor serving the Southwest and major 
population centers like El Paso, Albuquerque, Phoenix, and 
Denver.
    The Mountain West is probably one of the fastest growing 
regions in the country and it's now a key time to invest by 
providing travelers throughout the region with efficient 
transportation and a green alternative to driving or flying. 
Today, you cannot travel from Albuquerque to Denver by rail 
without changing trains in Los Angeles or Chicago. Our regional 
railways run from East to West, with no North-South 
connections. A high-speed passenger rail would bring valuable 
new opportunities for tourism and business growth to New Mexico 
and throughout the Mountain West.
    You all know the map well, but you can see with the red 
high-speed corridors there are--this is called ``Vision for 
High-Speed Rail in America.'' The inter-mountain and Southwest 
is really lacking. So one of the questions I'm going to be 
asking the panel is: is there a possibility in the future to do 
that and where are we headed on that front?
    So with that, Chairman Lautenberg, I'm happy to hear from 
the witnesses and then go into the questioning after, of 
course, our colleague Senator Toomey reads his statement.
    Senator Lautenberg. Thank you.
    Senator Udall. Thank you.
    Senator Lautenberg. Thank you, Senator Udall.
    Senator Toomey comes from a neighboring state, a much 
larger state than mine, which is not more crowded but 
nevertheless makes good use of rail service within the State. A 
corridor opened just a couple years ago, has been a smashing 
success from Philadelphia--is that to Harrisburg or Pittsburgh?

             STATEMENT OF HON. PATRICK J. TOOMEY, 
                 U.S. SENATOR FROM PENNSYLVANIA

    Senator Toomey. Both. There's a successful Harrisburg 
corridor, yes.
    Senator Lautenberg. Very, very successful.
    Senator Toomey. Thank you, Mr. Chairman, and I appreciate 
your raising a number of important and thoughtful issues here, 
and I thank you for holding this hearing today.
    I wanted to touch briefly on a specific issue. It's really 
an important issue that Amtrak and Southeast Pennsylvania's 
commuter rail service, SEPTA, are dealing with, and that's the 
implementation of positive train control.
    PTC, as you know, was first mandated in 2008, and SEPTA, 
along with Amtrak, other commuter rail systems, and some 
freight line operators, have until 2015 to complete the 
implementation. In the conversations I've had with a number of 
my constituents, it's not clear to me that that deadline is 
realistic.
    Let me be very clear. We want the safest possible passenger 
rail systems. My concern, which GAO has raised as well, is 
that--and I'm going to quote GAO right now--``Other critical 
safety needs may go unmet if funding is diverted to pay for 
PTC.'' End quote, from a GAO 2010 report on positive train 
control.
    This is exactly what I'm concerned may be happening in my 
State already. For context, for instance, SEPTA owns over 300 
bridges, many of which it shares with Amtrak, with an average 
age that exceeds 80 years. Now, due to the amount of capital 
that's being diverted in anticipation of implementing PTC, not 
a single one of those bridges moved into construction in Fiscal 
Year 2011 and none are planned to go in in 2012.
    I think there may be a sensible solution to this problem. A 
3-year extension to 2018, the implementation date the FRA 
originally requested, could free up $40 to $50 million for 
SEPTA alone over the next 4 years, allowing them to make the 
additional infrastructure and safety upgrades that they would 
like to make.
    I also want to mention the technical concerns about whether 
PTC can be implemented in time. This is a very sophisticated 
technology that requires a significant amount of spectrum to 
operate real-time data transfers that indicate track movements 
and set speeds for individual trains. The FCC has issued a 
notice of public comment regarding the availability and 
affordability of that spectrum, calling the technical 
implementation ``a daunting challenge.'' GAO has also noted 
that it's uncertain if many of the PTC components will even be 
available in time to meet this mandate, including the software, 
sensors, and radios that are still under development.
    Last, GAO questions whether the rollout of a largely 
untested technology by 2015 is the most cost-efficient approach 
to implementing this mandate. The FRA itself has concluded that 
the cost-benefit ratio of this mandate at this time is about 20 
to 1. At this time of cash-strapped Federal and local budgets, 
commuter rail systems estimate the cost of implementation to be 
at least $2 billion, and SEPTA estimates that its overall cost 
could be in the ballpark of $175 million.
    The FRA is mandated by law to report back on the status of 
the PTC implementation by 2012. The problem with that is that 
many rail systems, including SEPTA, need to enter into binding 
agreements with supplies by the end of this year in order to 
meet the current deadline. Therefore, despite whatever the 
report might say or recommend, these PTC expenditures may very 
well already have to be allocated.
    So, Mr. Chairman, I think the PTC mandate in some ways may 
have painted the system with a slightly too broad a brush and 
not fully take into account some of the existing safety 
infrastructure and other items like spectrum availability or 
the existence of the needed technology. It's my hope that we 
can find some common ground in resolving this issue. I plan to 
introduce legislation that will address this and there is a 
sensitivity based on time.
    I thank you for having this hearing, Mr. Chairman. I look 
forward to working with you. I'm afraid I will not be able to 
stay because of another obligation that I have, but I 
appreciate your input.
    Senator Lautenberg. We welcome you here. Your State is an 
important suburb of ours.
    [Laughter.]
    Senator Toomey. That's not exactly how we view it.
    Senator Lautenberg. My bad jokes include New York usually.
    Thanks for being here.
    Now we bring the witnesses to the table, each with a 
significant amount of expertise on the importance of passenger 
rail. We have: Mr. Joseph Szabo, Administrator of the FRA, who 
will discuss FRA's efforts to move passenger rail into the 
future; and Mr. Joseph Boardman, President and CEO of Amtrak. 
Having worked with Mr. Boardman since he's been President of 
Amtrak, I can tell you there's a lot of very good effort that's 
put in there, good leadership, and we congratulate him; and 
we're going to hear about Amtrak's plans to build on the 
successes we have seen in serving the American people.
    Ted Alves is Amtrak's Inspector General and you'll, I 
understand, update us on the progress that Amtrak is making in 
meeting the challenges of the 21st century. And Mr. Mitch Behm, 
Assistant Inspector General for the Department of 
Transportation, who will discuss with us the Department's 
oversight of rail service in our country.
    I thank all of you for coming here today. We ask you to 
give your testimony within 5 minutes. Mr. Szabo, if you would 
begin, please.

   STATEMENT OF HON. JOSEPH C. SZABO, ADMINISTRATOR, FEDERAL 
   RAILROAD ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION

    Mr. Szabo. Chairman Lautenberg, also to Ranking Member 
Wicker, and of course the members of the Subcommittee: Let me 
just say it's an honor to come before you today on behalf of 
President Obama and his administration.
    As we continue to plan for the future of passenger rail in 
the United States, there's been much attention paid to and 
questions raised about passenger rail in America. Is the 
program too big? Who will pay for the program? Is such a public 
works program an anti-recession measure? Will it further extend 
the power of the Federal Government? How much of a stimulus 
will the program be to industry?
    In fact, these same questions were posed more than 50 years 
ago in a 1958 Fortune Magazine article on America's interstate 
highway program. We look back to the records from the House and 
Senate hearings in the 1950s and your predecessors spent years 
debating how the interstate highway system would be built, what 
it would look like, what role states should play, whether 
borrowing would be needed, and how much land would need to be 
acquired.
    Business and labor, the agricultural community, States and 
cities, all weighed in on the discussion. And after all the 
debate, they found a way to move forward and, thanks to their 
leadership, the interstate highway system was built, giving 
America's economy the competitive advantage of better mobility.
    The capacity to move people, goods, and information 
efficiently is the basis for all economic and social activity 
in any society. Just as job creators would no sooner invest in 
a nation that promised a future of slower Internet, or less 
bandwidth, business owners will not invest in America without 
transportation access to an expanded labor force and limitless 
customer markets.
    Investing in passenger rail today is a necessity, not a 
luxury. Over the next 40 years, America will become home to an 
additional 100 million people, largely concentrated in regions 
that make up only 25 percent of the land mass in the United 
States and where congestion is already costing families and 
businesses nearly $130 billion each year.
    While congestion is mostly limited to those regions, the 
economic cost of that congestion is not. Delays at hub airports 
are the largest cause of flight delays nationwide. Short-hop 
flights crowd out international flights that allow American 
businesses to reach the global marketplace, and congestion on 
highways increases the cost businesses face in getting their 
products in the customer's hands.
    Space to expand airports and highways in those regions is 
extremely limited and the cost to do so is very high. Investing 
in passenger rail and connecting it to the other modes of 
transportation offers the most cost-effective way to 
drastically expand capacity and improve the performance of the 
entire transportation network.
    By offering competitive or superior door to door trip times 
on intercity trips less than 600 miles, passenger rail can 
absorb many of the trips that have become detrimental to the 
performance of other modes in these congested regions, allowing 
America to move more people and goods throughout metropolitan 
areas and across State lines and around the world.
    When the history books are open on the year 2011, my hope 
is that future generations will look back and see today's 
leaders with the wisdom from previous generations who foresaw 
the mobility challenges of the 21st century and made the right 
decision by investing in passenger rail to provide Americans 
with mobility options that make the United States the best 
place to locate a business and hire new employees.
    With that, I'd be happy to answer any questions.
    [The prepared statement of Hon. Szabo follows:]

      Prepared Statement of Hon. Joseph C. Szabo, Administrator, 
                    Federal Railroad Administration
    Chairman Lautenberg, Ranking Member Wicker and members of the 
Subcommittee: It is my honor to represent Secretary of Transportation 
Ray LaHood before you today to discuss the Passenger Rail Investment 
and Improvement Act of 2008 (PRIIA). PRIIA has contributed to forming a 
strong, robust and vital rail component to our national transportation 
system and specifically to furthering high-speed and intercity 
passenger rail service for generations of travelers.
Introduction
    Throughout history, high-quality transportation infrastructure has 
been a key driver of economic growth and competitiveness. The canals 
and waterway systems in the 18th century, the transcontinental railroad 
in the 19th century, and the interstate highway and aviation systems in 
the 20th century all transformed the American economy and way of life, 
helping the United States to become the global leader that it is today.
    As the United States pursues infrastructure investments to prepare 
for the future, the Nation faces significant transportation challenges 
that require new approaches and bold, innovative solutions:

   The nation's population continues to grow rapidly, and is 
        concentrated in expansive urban areas called ``mega-regions''

   Rising levels of highway and air traffic congestion are 
        restricting accessibility and mobility

    High levels of energy consumption, particularly from 
        foreign sources, are draining both financial and natural 
        resources

   Large amounts of greenhouse gases and harmful pollutants are 
        being emitted into the environment

   American households are spending substantial portions of 
        their budgets on transportation, and society as a whole bears a 
        large cost for safety-related impacts of the current system

    Intercity and High-speed rail (HSR) has many inherent advantages 
for addressing these challenges, and will play a critical role in the 
efficient, cost-effective, environmentally-sensitive, and multi-modal 
transportation network needed for America's future.
PRIIA--A Comprehensive Starting Point
    The fall of 2008 was a watershed for the Federal Railroad 
Administration (FRA). In response to the tragic Metrolink accident at 
Chatsworth, California, Congress enacted comprehensive rail 
legislation, fundamentally expanding the Agency's safety and passenger 
rail programs. For the first time, in one piece of legislation, both 
parts of FRA's mission were addressed in a comprehensive manner. 
Division A of that legislation, the Rail Safety Improvement Act of 2008 
(RSIA), was the first reauthorization of FRA's safety program in 14 
years and provided significant direction, responsibility and authorized 
resources for FRA's safety program. Division B of that legislation, the 
Passenger Rail Investment and Improvement Act of 2008 (PRIIA) began the 
transformation of FRA's investment programs. PRIIA was the first 
reauthorization of Amtrak in 11 years, but did this in the larger 
framework of intercity passenger rail service that went beyond the 
traditional view that Amtrak is synonymous with that mode of 
transportation.
    While much remains to be done, FRA has made significant progress in 
meeting the goals required in this legislation.
Implementing PRIIA--Progress To-Date
    I believe PRIIA, which was signed by President George W. Bush, 
began the transformation of the Federal role in intercity passenger 
railroad investment, laying the foundation for considering rail on par 
with the other surface transportation modes. In this regard, PRIIA can 
be viewed as addressing three issues critical to the future of 
intercity passenger rail service.
    First, PRIIA addressed the mission of Amtrak which had been the 
source of debate for a generation including: defining the national 
railroad passenger transportation system, improving and adding 
transparency to Amtrak's business processes, and setting expectations 
for intercity passenger rail performance and the role and 
responsibilities of Amtrak and the freight railroads that host Amtrak 
service to deliver on those expectations.
    Second, PRIIA addressed a new view of the investment relationships 
needed to deliver intercity passenger rail service. Since 1971, this 
had been a bilateral relationship between the U.S. Department of 
Transportation and Amtrak. PRIIA envisioned a trilateral relationship 
that involves relations between USDOT and Amtrak, between USDOT and the 
States, and between the States and Amtrak.
    Third, PRIIA also addressed high-speed intercity passenger rail 
service from both the public and private investment perspective. While 
much had been debated before the creation of FRA, a national approach 
to developing high-speed rail had been lacking.
    The roles and responsibilities for implementing PRIIA are as 
diverse as the issues that the legislation addresses. Amtrak, FRA, the 
U.S. Department of Transportation's Office of Inspector General, the 
Surface Transportation Board, the States and others each found that 
PRIIA had significant mission shifts and expansion for them. Attached 
as Appendix I, is an outline of the PRIIA provisions and the current 
implementation status.
Implementing PRIIA--The Challenges
    PRIIA envisioned roles, responsibilities and relationships that 
previously had not existed or were being significantly modified. In 
many ways, PRIIA begins the establishment of a new paradigm for 
intercity passenger rail transportation. Any major shift in policy or 
programs requires a period of transition while the various stakeholders 
adjust to those new policies and programs. This is true of PRIIA.
    None of the stakeholders, and I include FRA in that group, had the 
resources and capabilities for fully participating in the new intercity 
passenger rail environment created by PRIIA. FRA was sized for a 
financial assistance program that routinely provided annual operating 
and capital grants to Amtrak and evaluated applications for financial 
assistance under the Railroad Rehabilitation and Improvement Financing 
(RRIF) Program, together with a handful of other grants, the bulk of 
which had been earmarked by Congress.
    Compounding the rapidly expanding mission of FRA's financial 
assistance team were the significant new responsibilities placed upon 
our safety program. In balancing resources and priorities, I concur 
with the position of the previous Administration that because safety is 
FRA's top priority, the safety initiatives, including rulemakings, 
should have first claim on the FRA resources available to both program 
areas. I recognize that certain rulemakings required under PRIIA have 
been deferred due to the extraordinarily large regulatory workload 
imposed on FRA by RSIA. However, we are now catching up with the RSIA 
workload and are initiating some of the rulemakings required by PRIIA.
    When PRIIA was enacted, Amtrak was in a defensive posture. It had 
just survived yet another decade of inadequate funding, deteriorating 
assets, declining on-time-performance on its host railroads, threats to 
its very existence and was in the midst of a transition in management. 
While capable in many areas, Amtrak was focused on tactical day-to-day 
actions of preserving a national system of intercity passenger rail 
service in a resource constrained environment. Its ability to envision 
itself in a new model for intercity passenger rail service, with new 
relationships and stakeholders, was constrained by decades where 
planning and acting tactically had precedence over planning and acting 
strategically.
    Most States had no passenger rail investment programs, and those 
that did were primarily focused on continuation of existing State-
supported Amtrak service. Unlike highway and transit programs, most 
States had no or very limited long-term vision of a more robust role 
for rail in meeting their intercity passenger mobility needs, in part 
because the need for such a vision did not align with how the Federal 
Government funded transportation. Rail expertise in most States paled 
in comparison to the highway, transit and even aviation expertise in 
their departments of transportation. Thus, most States did not have the 
pipeline of intercity passenger rail projects that had been subjected 
to the rigorous planning, environmental review, design and engineering 
that would make them truly ``ready to go'' as PRIIA-authorized funding 
became available. Similarly, most States did not have the relationships 
with their private sector freight railroads which would be a critical 
stakeholder in implementing these projects.
    Freight railroads had become accustomed to the underfunded Amtrak 
model of intercity passenger rail service that had developed since the 
early 1970s. They were not prepared for public investments in their 
assets. In particular, they were not prepared for the obligations 
placed upon FRA and the States that required a tangible public sector 
benefit for the Federal investment. Nor were they prepared for the 
rapid expansion in the interest in passenger rail investment by 
multiple States.
    The good news is things are getting better. All of the parties have 
been rapidly expanding their capabilities. The public sector and the 
private sector railroads have begun to understand the roles, 
responsibilities and obligations that flow from public investment in 
private assets. Indeed, I am happy to report that States and railroads 
have reached agreement on the development of all of the major intercity 
passenger rail corridors where high-speed passenger service will use 
freight railroad infrastructure. By the end of the month, FRA will be 
essentially complete with the obligation of the funds provided to FRA 
under the Recovery Act, one year ahead of the deadline for obligations 
set by that Act.
    Amtrak, under the leadership of Joe Boardman and a new Board of 
Directors on which I serve as Secretary LaHood's representative, is now 
thinking strategically while not forgetting those essential tactical 
elements that are important for rail service today. That's why Amtrak 
can point to record ridership and improving customer quality reports 
while also producing a visionary plan for high-speed rail on the 
Northeast Corridor and innovative partnerships to participate in the 
development of high-speed rail elsewhere. No doubt a major contributor 
to Amtrak's success since PRIIA has been that Amtrak could devote its 
energies to getting better rather than an annually recurring fight for 
survival.
    The progress seen in intercity passenger rail over the last two 
years is due, in no small part, to President Obama's commitment to the 
rail mode of transportation as part of a high-performing national 
transportation system. The President's commitment to rail is also 
reflected in his strong commitment to making rail projects eligible for 
Federal funding under the TIGER Grant program and under the proposed 
National Infrastructure Bank. His commitment has taken PRIIA and 
intercity passenger rail from being just another in a series of 
underfunded statutory authorizations to something real. This has placed 
a sense of urgency on all of intercity passenger rail stakeholders that 
has not been there before. It also has us thinking about the next steps 
in the evolution in intercity passenger rail in the United States.
PRIIA Foundation for the Future
    PRIIA is a complex multi-faceted piece of legislation that 
attempted to comprehensively address issues facing intercity passenger 
rail service. Thus it has provisions that, while important, are 
mundane. Falling into this category would be section 206 which 
addresses Amtrak's requests for grants and how and when the Secretary 
will consider such requests.
    PRIIA also has far-reaching sections that redefine perceptions of 
intercity passenger rail service and the roles and responsibilities of 
the various stakeholders in providing this important transportation 
option. In many ways, these sections laid the foundation for the 
future. Among these sections are:

   Section 207 Metrics and Standards; this section recognizes 
        that safe, reliable and customer-focused high-quality service 
        is essential to the success of any form of transportation and 
        sets the expectations of performance by both Amtrak and the 
        host railroads in delivering that kind of service;

   Section 209 State-Supported Routes: this section will 
        standardize methodology for establishing and allocating 
        operating and capital costs between Amtrak and the States for 
        services that States deem an important component of their 
        transportation plans;

   Section 212 Northeast Corridor Infrastructure and Operations 
        Improvements: this section recognizes the collective 
        responsibility of the Federal Government, the States and Amtrak 
        in planning and developing the Northeast Corridor between 
        Boston and Washington, which is an essential component of the 
        transportation system of America's most populous region;

   Section 301, with Section's 302 and 501: these sections 
        establish a new paradigm for Federal investment in intercity, 
        including high-speed, passenger rail service moving from a bi-
        lateral relationship between the Federal Government and Amtrak 
        to a tri-lateral relationship in which the States are full 
        partners. As part of Section 301, PRIIA, recognizes the 
        importance of strong Buy America requirements as a means for 
        expanding domestic manufacturing and a strong commitment that 
        railroad work should be done by railroad workers, covered by 
        specifically-designed railroad statutes, as an important 
        component of a safe and efficient national rail system;

   Section 305 Next Generation Corridor Train Equipment Pool: 
        this section, through the development of specifications for 
        standardized next generation corridor equipment, will permit 
        the States and Amtrak to develop pooled orders for equipment to 
        achieve economies of scale in acquisition and operation of 
        equipment while helping foster development of our domestic rail 
        car manufacturing; and

   Section 307 Federal Rail Policy: this section directed 
        preparation of the first National Rail Plan and encouraged the 
        development of State rail plans in order to promote an 
        integrated, cohesive, efficient and optimized rail system for 
        the movement of goods and people.
PRIIA--Next Steps
    I believe that PRIIA was the right bill for its time; but times 
change. In his State of the Union address, President Obama laid out a 
bold vision for intercity passenger rail transportation. To realize 
this vision, we will need to move beyond PRIIA in many ways. The 
Administration believes that in moving beyond PRIIA, we should:

   Present a real, achievable vision for the role of rail in 
        meeting this Nation's mobility challenges.

   Commit to building a world-class high-speed and intercity 
        passenger rail network that continues to support the growth and 
        competitiveness of the Nation's freight rail system.
Vision for the Evolution of the Passenger Rail System
    The President's vision is for an integrated national system of 
high-speed and intercity passenger rail service. That service is best 
provided in three corridor tiers driven by market demand. Each tier has 
different policy and implementation frameworks based upon the unique 
characteristics inherent to the region. A ``one size fits all'' 
approach is inefficient and unresponsive to the different 
transportation needs and market conditions of specific regions and 
communities. The three tiers are described as follows:
    Core Express--Operates at sustained speeds in the 125--250 mph 
range, almost exclusively on dedicated electrified track. Core Express 
most closely resembles high-speed services such as the Japanese 
Shinkansen and the French TGV.
    Regional Corridors--Operates at sustained speeds in the 90--125 mph 
range on a combination of shared and dedicated track using either 
electric or diesel power. Regional High-Speed Rail most closely 
resembles Amtrak's successful Acela operations on the Boston--New York 
City--Washington, Northeast Corridor.
    Emerging Corridors--Operates at speeds up to 90 mph on shared 
infrastructure and diesel power. Examples of this service are the 
current San Luis Obispo--San Diego Pacific Surfliner and the Boston--
Portland, ME Downeaster.
    In addition, there are existing Amtrak short and long distance 
services where the State-sponsors are not yet ready for improvements to 
be categorized in the Emerging Corridor or other tier of service. These 
services would continue as part of the national intercity passenger 
rail program until development progresses.
Progressing the Vision
    Moving from the intercity passenger rail paradigm of the last 40 
years to one capable of delivering on the vision articulated above will 
be complex. We must address the legacy of the old system, the 
structures of the new system and strategies to effectively transition 
between them. To accomplish this, the National High-Performance Rail 
System would be managed through two coordinated programs--the System 
Preservation and Renewal Program and the Network Development Program as 
outlined in the Fiscal Year 2012 budget request.
    System Preservation and Renewal. This program ensures America's 
existing passenger rail system works well, by bringing it into, and 
maintaining it, in a state of good repair. In any transportation mode, 
one of the most cost-effective ways to add capacity, reduce delays, and 
improve travel times is to build upon the investments that past 
generations have made in the Nation's infrastructure. This proposal 
ensures that public assets maintained and renewed by assuming a share 
of the annual life-cycle costs of rail infrastructure and equipment, 
while also responsibly funding infrastructure backlogs and Amtrak's 
legacy debt. Specifically, this program would (1) replace aging 
national rail assets and equipment that have deteriorated due to 
historical underinvestment; (2) provide operating, capital, and debt 
resources to the National Railroad Passenger Corporation (Amtrak) for 
long-distance intercity passenger rail service and other nationally 
important assets; and (3) fund state of good repair and asset 
recapitalization of publicly-owned rail infrastructure and fleet.
    Network Development. The focus of Network Development Program will 
be development of the three tiers of high-speed intercity passenger 
rail service based on the market conditions and transportation needs of 
the affected communities. Further, this tiered approach reflects the 
international experience--every successful rail system in the world 
includes regional and feeder corridors that connect communities to a 
backbone of high-speed rail corridors.
    As with the development of the U.S. highway and aviation systems, 
achieving success will require thorough long-range planning, 
coordination among numerous public and private stakeholders, clear 
vision, and sustained institutional commitment. Moreover, like these 
other transportation modes, NHPRS will not be developed solely through 
Federal financing.
    While significant Federal investment is necessary in the early 
years to demonstrate a national commitment to passenger rail, build 
institutional capacity, and initiate complex, multi-state projects, 
NHPRS will succeed only if states, regional entities, and the private 
sector play a defining role in planning, developing, financing, and 
operating these services. NHPRS provides opportunities for this 
participation throughout the corridor development process, within a 
flexible framework that will adapt to new ideas and changing 
conditions.
    These initiatives focus on (1) planning and developing core 
express, regional, and emerging corridors; (2) developing intermodal 
stations to connect intercity passenger rail service to communities and 
other transportation options; (3) facilitating the design, procurement, 
manufacturing, and demand management of standardized passenger rail 
equipment; and (4) delivering training and technical assistance 
services to develop government and private expertise, promoting 
research and development in the rail industry, and providing temporary 
transitional operating support during the launch of new services and 
for existing state-supported corridors.
    The following table summarizes the program areas, funding proposal 
outlined in the FY 2012 President's Budget, and eligibility for the 
first six years of this effort.

                  National High Performance Rail System
                     FY 2012 through FY 2017 [$000]
------------------------------------------------------------------------
                       FY    FY    FY    FY    FY
       NHPSRS         2012  2013  2014  2015  2016   FY 2017     TOTAL
------------------------------------------------------------------------
  Network             4,00  4,83  5,85  7,10  7,38     7,714     36,896
   Development         0     3     3     7     9
  System              4,04  2,61  2,65  1,99  2,16     2,216     15,694
   Preservation and    6     3     3     9     7
   Renewal
------------------------------------------------------------------------
TOTAL--NHPSRS         8,04  7,44  8,50  9,10  9,55     9,930     52,590
                       6     6     6     6     6
------------------------------------------------------------------------

    This substantial investment is a national commitment to making rail 
a viable element of our future transportation system. The proposed 
investment is based on the current and future mobility needs of the 
American population; the costs of capacity enhancements for rail and 
other modes; and the public benefits that rail brings to communities. 
The six-year plan also reflects domestic and international experiences 
and applies the lessons learned from those experiences to America's 
unique transportation environment.
    Federal funding for intercity passenger rail service and programs 
authorized by various sections of PRIIA relies upon annual 
discretionary appropriations. By subjecting the timing and funding 
levels to annual appropriations, entities, both public and private, are 
hampered in planning, developing, partnering, and investing. The 
President's budget proposes that funding made available for intercity 
passenger rail should be done so with the same degree of predictability 
and multi-year commitment that helps define our successful highway and 
transit programs. These activities will be financed via mandatory 
contract authority in the expanded Transportation Trust Fund, using a 
dedicated Rail Account to ensure predictable and stable streams for 
long-range planning and development.
Conclusion
    In closing Mr. Chairman, I have spent my entire adult life in the 
rail industry. I have known and observed FRA for more than 30 years. 
And at no time has there been such a period of transformation in the 
Agency's mission and its ability to impact the safety and mobility of 
the American public and the freight on which the world's greatest 
economy depends. Secretary LaHood and I look forward to working with 
the Congress to craft the program structures necessary to permit 
America to fully realize the benefits of rail transportation.
    I would be happy to address any questions the Committee might have.
                                 ______
                                 
                               Appendix I

    Summary of PRIIA Sections with Significant FRA Action or Interest
                          [as of Sep 14, 2011]
------------------------------------------------------------------------
 Provision Heading     Section         Synopsis             Status
------------------------------------------------------------------------
Restructuring        205         The Treasury         Ongoing: Treasury
 [Amtrak's] Long-                 Department           and DOT have a
 Term Debt and                    (consulting with     Memorandum of
 Capital Leases                   DOT and Amtrak)      Understanding
                                  may make             effecting this
                                  arrangements to      arrangement; the
                                  restructure          first Early Buy-
                                  Amtrak's             Out was exercised
                                  indebtedness . . .   on January 3,
                                                       2011, and the
                                                       second will
                                                       follow on
                                                       September 30,
                                                       2011.
------------------------------------------------------------------------
Grant Process        206         Establish            Completed:
                                  substantive and      Requirements were
                                  procedural           submitted to
                                  requirements for     Congress on
                                  Amtrak grants;       December 22,
                                  review and approve   2008; DOT and
                                  Amtrak grant         Amtrak have
                                  requests on a        collaborated to
                                  timely basis         assure timely
                                                       grant processing.
------------------------------------------------------------------------
Metrics and          207         . . . The Federal    Completed: Final
 Standards                        Railroad             standards were
                                  Administration and   published May 12,
                                  Amtrak shall         2010. The First
                                  jointly . . .        Quarterly Report
                                  develop . . .        was posted to
                                  minimum standards    FRA's Web Site on
                                  for measuring the    March 3, 2011,
                                  performance and      and two more have
                                  service quality of   been published
                                  intercity            since then.
                                  passenger train     Note: On August
                                  operations . . .     19, 2011, AAR
                                  [and] the            filed a complaint
                                  Administrator of     in the United
                                  the FRA shall . .    States District
                                  . publish a          Court for the
                                  quarterly report     District of
                                  [thereon] . . .      Columbia,
                                                       asserting that
                                                       Section 207 of
                                                       PRIIA is
                                                       unconstitutional
                                                       because it
                                                       improperly
                                                       delegates
                                                       rulemaking
                                                       authority to
                                                       Amtrak and
                                                       because it
                                                       violates the due
                                                       process rights of
                                                       the freight
                                                       railroads. A
                                                       response to this
                                                       complaint has not
                                                       yet been filed
                                                       with the court.
------------------------------------------------------------------------
Methodologies for    208         Section 208 of the   Pending: The Volpe
 Amtrak Route and                 PRIIA requires       Center has been
 Service Planning                 that FRA obtain      engaged to
 Decisions                        services of an       develop the
                                  entity to develop    methodology.
                                  objective
                                  methodologies for
                                  Amtrak route and
                                  service
                                  determinations,
                                  and submit
                                  recommendations to
                                  Amtrak and
                                  Congress.
------------------------------------------------------------------------
State-Supported      209         Develop a            Ongoing: State/
 Routes                           standardized and     Amtrak
                                  equitable method     negotiations have
                                  of allocating        led to a draft
                                  operating and        agreement on cost-
                                  capital costs to     sharing that will
                                  States, of all       have been
                                  short-distance       submitted for
                                  routes (not just     Amtrak Board
                                  those currently      approval on
                                  State-supported).    August 31st.
------------------------------------------------------------------------
Long-Distance        210         FRA to monitor       Ongoing: Amtrak
 Routes                           development,         has issued the
                                  implementation,      first third of
                                  and outcome of       its 15 plans. The
                                  Performance          remainder will
                                  Improvement Plans    appear in Fiscal
                                  (PIPs); if           Years 2011 and
                                  unsatisfactory,      2012. This year's
                                  notify Amtrak,       Plans will be
                                  OIG, and Congress;   submitted for
                                  allow Amtrak         Board approval at
                                  hearing; may         its September
                                  withhold             meeting. Under
                                  appropriated         the five extant
                                  subsidies if         Plans, Amtrak is
                                  progress is          generally on
                                  insufficient.        track in
                                                       implementing
                                                       cosmetic changes
                                                       but faces stiff
                                                       challenges in
                                                       obtaining host
                                                       railroad
                                                       agreements for
                                                       major changes
                                                       (e.g., increasing
                                                       train
                                                       frequencies).
------------------------------------------------------------------------
NEC State-of-Good-   211         FRA to review and    Completed: Amtrak
 Repair (SOGR) Plan               approve the SOGR     published its
                                  plan and updates,    plan on April 15,
                                  and assure that      2009. FRA
                                  capital grants are   approved it,
                                  congruent with       arranged for
                                  SOGR plan            updates, and
                                                       reviews Amtrak's
                                                       capital plans for
                                                       congruence with
                                                       the SOGR plan.
------------------------------------------------------------------------
NEC Infrastructure   212         Establish NEC        Completed. DOT/FRA
 and Operations:     ``Part 1''   Infrastructure and   established the
 Commission                       Operations           Commission.
                                  Advisory            Ongoing:
                                  Commission           Commission is now
                                                       operational and
                                                       has an Executive
                                                       Director in
                                                       place.
------------------------------------------------------------------------
NEC Infrastructure   212         Establish NEC        Ongoing: FACA
 and Operations:     ``Part 2''   Safety Committee     committee
 Safety Committee                 (with security       establishment
                                  responsibilities),   process is
                                  report               underway. The
                                  recommendations      revised charter
                                  along with           package, and a
                                  Secretary's          second package
                                  comments to          with formal
                                  Congress annually    Committee member
                                  during first         nominations, is
                                  session.             in final
                                                       coordination for
                                                       the Secretary's
                                                       signature.
------------------------------------------------------------------------
Alternate Passenger  214         Prepare a            Pending: FRA is
 Rail Service Pilot               rulemaking for,      well along in
                                  manage, and report   this rulemaking
                                  on a program for a   process: A Notice
                                  host railroad to     of Proposed
                                  take over Amtrak     Rulemaking (NPRM)
                                  service on no more   was published in
                                  than two routes      the Federal
                                                       Register on
                                                       September 7,
                                                       2011.
------------------------------------------------------------------------
Employee Transition  215         Develop a            Pending: Depends
 Assistance                       transition           on completion of
                                  assistance program   the Section 214
                                  for Amtrak           rulemaking which
                                  employees affected   FRA has
                                  by Section 214 of    initiated, and on
                                  the PRIIA or the     a bidding process
                                  deletion of a        that results in
                                  route                selection of a
                                                       competitive
                                                       proposal from a
                                                       non-Amtrak
                                                       carrier.
------------------------------------------------------------------------
Oversight of         220         FRA to monitor and   Ongoing: FRA's
 Amtrak's                         periodically         Office of Civil
 Compliance with                  review Amtrak's      Rights and Office
 ADA                              compliance with      of Railroad
                                  ADA                  Policy &
                                                       Development work
                                                       cooperatively in
                                                       the monitoring
                                                       and review of
                                                       Amtrak's
                                                       compliance with
                                                       applicable
                                                       accessibility
                                                       requirements.
------------------------------------------------------------------------
Passenger Rail       224(c) (1)  . . . The Secretary  Pending: Data from
 Service Studies                  shall conduct        the long-range
                                  [analyses of the     National Rail
                                  following            Plan, when
                                  corridors: (A) the   complete, will
                                  Southeast            inform future
                                  Corridor; (B) the    development of a
                                  South Central        designation
                                  Corridor's           process as called
                                  potential for        for in PRIIA
                                  extension to (i)     Section 224(c).
                                  Memphis,
                                  Tennessee; (ii)
                                  the Port of
                                  Houston, Texas;
                                  (iii) through
                                  Killeen, Texas;
                                  and (iv) to South
                                  Texas; and (C) the
                                  Keystone
                                  Corridor's
                                  potential for
                                  extension to
                                  Cleveland, Ohio] .
                                  . . and submit a
                                  report on these
                                  analyses to the
                                  [Authorizing
                                  Committees]. . . .
                                  The Secretary
                                  shall establish a
                                  process for a
                                  State or . . .
                                  States to petition
                                  the Secretary to
                                  redesignate or
                                  modify any
                                  designated high-
                                  speed rail
                                  corridors.
------------------------------------------------------------------------
Intercity Rail       301, 302,   Issue guidance/      Ongoing: The HSIPR
 Grant Programs       501         regulations and      Program--well
                                  implement the        underway--subsume
                                  Intercity            s these programs.
                                  Passenger Rail,
                                  Congestion Grant,
                                  and High-Speed
                                  Rail Programs.
------------------------------------------------------------------------
State Rail Plans     303         Section 303 of the   Ongoing: Draft
                                  PRIIA requires the   outline of
                                  Secretary to         prototype rail
                                  prescribe            plan created in
                                  procedures and       2010; ten State
                                  standard format      rail plans are
                                  and data             funded with FRA
                                  requirements for,    grants. FRA is
                                  and to review,       preparing
                                  State rail plans.    proposed state
                                  FRA is also to       rail plan
                                  assist States in     standards for
                                  developing their     public review.
                                  State rail plans
                                  (per Section 307).
------------------------------------------------------------------------
Baltimore Tunnel     304         Select, approve,     Ongoing: Two FRA-
                                  and complete         sponsored
                                  environmental        feasibility
                                  process on a new     studies are
                                  rail tunnel          complete; HSIPR
                                  alignment through    funds ($60
                                  Baltimore            million) were
                                                       obligated to the
                                                       State in April
                                                       2011 for
                                                       preliminary
                                                       engineering and
                                                       NEPA.
------------------------------------------------------------------------
Equipment Pool       305         . . . Amtrak shall   Completed:
                                  establish a Next     Committee is
                                  Generation           established, with
                                  Corridor Equipment   active FRA,
                                  Pool Committee       State, and
                                  [with FRA and        industry
                                  stakeholders] . .    participation.
                                  . to design,        Ongoing: Committee
                                  develop              has
                                  specifications       specifications
                                  for, and procure     for bi-level
                                  standardized next-   cars, single-
                                  generation           level cars, and
                                  corridor             locomotives. A
                                  equipment.           train set spec.
                                                       is expected in
                                                       September, to be
                                                       followed by a
                                                       Diesel multiple-
                                                       unit car spec.
------------------------------------------------------------------------
Rail Cooperative     306         Set up and carry     Completed: FRA
 Research Program                 out a rail           awarded $5
                                  cooperative          million grant to
                                  research program     Transportation
                                  in economic,         Research Board
                                  environmental, and   (TRB) in
                                  engineering          September, 2010.
                                  domains. An         Ongoing:
                                  advisory board and   Recommendations
                                  Transportation       from various
                                  Research Board       entities for
                                  participation are    Advisory Board
                                  integral to this     members are in
                                  provision.           review at FRA
                                                       prior to
                                                       submission to the
                                                       Secretary. TRB
                                                       will administer
                                                       once Advisory
                                                       Board is
                                                       established.
------------------------------------------------------------------------
National Rail Plan   307         Section 307 of the   Ongoing: FRA met
                     ``Part 1''   PRIIA requires       the PRIIA
                                  that FRA develop a   statutory time
                                  long-range           deadline by
                                  National Rail        publishing a
                                  Plan.                Preliminary
                                                       National Rail
                                                       Plan on October
                                                       15, 2009, and
                                                       provided Congress
                                                       with a progress
                                                       report on the
                                                       long-range Plan
                                                       on September 28,
                                                       2010. Additional
                                                       development is
                                                       ongoing.
------------------------------------------------------------------------
Federal Rail         307         FRA is to:           Ongoing: These
 Policy--General     ``Part 2''   Assist       activities are
 Provisions                       stakeholders and     intrinsic to the
                                  operators in         FRA's mission as
                                  research and         an agency, and
                                  planning for         are implemented
                                  shared-use rail      through multiple
                                  corridors.           initiatives such
                                  Develop      as HSIPR, RRIF,
                                  and enhance          and the National
                                  partnerships with    Rail Plan.
                                  the rail industry,
                                  States, and the
                                  public concerning
                                  rail development.
                                  Support
                                  rail intermodal
                                  development and
                                  high-speed rail
                                  development,
                                  including high-
                                  speed rail
                                  planning.
                                  Ensure
                                  that programs
                                  under this section
                                  benefit the public
                                  and support
                                  regional and
                                  national
                                  transportation
                                  goals.
------------------------------------------------------------------------
Locomotive Biofuel   404         Section 404 of the   Ongoing: An award
 Study                            PRIIA requires       was made to North
                                  that the             Carolina State
                                  Secretary, in        University to
                                  consultation with    conduct the
                                  DOE/EPA, conduct a   research
                                  study on the         activities
                                  potential use of     outlined in
                                  biofuels in          Section 404,
                                  locomotives and      which are in
                                  report the results   progress.
                                  of the study.        Extensive field
                                                       testing has also
                                                       occurred on
                                                       Amtrak's
                                                       Heartland Flyer
                                                       route.
------------------------------------------------------------------------
Study of the Use of  405         Section 405 of the   Ongoing: An award
 Biobased                         PRIIA requires       was be made to
 Technologies                     that the Secretary   National
                                  shall conduct a      Agriculture-Based
                                  study on the         Lubricants Center
                                  potential use of     at the University
                                  biodegradable        of Northern Iowa
                                  lubricants for       to conduct the
                                  railway equipment    research
                                  and report the       activities
                                  results of the       outlined in
                                  study.               Section 405.
                                                       Expected
                                                       completion date
                                                       is May 2013.
------------------------------------------------------------------------
Cross-Border         406         The Secretary shall  Completed:
 Passenger Rail                   seek to establish    Passengers
 Service                          facilities and       boarding Amtrak's
                                  procedures to        Cascades service
                                  conduct              in Vancouver,
                                  preclearance of      Canada pre-clear
                                  Amtrak passengers    immigration at
                                  traveling from       Vancouver's
                                  Canada to the        Pacific Central
                                  United States.       Station. The
                                                       Cascades trains
                                                       from Canada must,
                                                       however, still
                                                       stop at the
                                                       border (Blaine,
                                                       Washington) for
                                                       customs
                                                       inspection.
------------------------------------------------------------------------
Historic             407         Section 407 of the   Ongoing: The study
 Preservation of                  PRIIA requires       has been
 Railroads                        that FRA conduct a   initiated and is
                                  study in             expected to be
                                  consultation with    substantially
                                  historic             complete by the
                                  preservation         end of calendar
                                  groups; report the   year 2011.
                                  results of the       Consultations
                                  study and            with historic
                                  recommendations      preservation
                                  for future action.   stakeholders are
                                                       underway.
------------------------------------------------------------------------
Additional High-     502         Section 502(e)(1)    Completed: FRA
 Speed Rail                       of the PRIIA (Mica   issued the
 Projects                         provision, public    Request for
                                  private              Expressions of
                                  partnership)         Interest on
                                  requires that no     December 16,
                                  less than 60 days    2008. Of eight
                                  after receiving      proposals
                                  proposals that are   received, five
                                  judged to be         were judged to be
                                  complete,            responsive. None
                                  credible, likely     of the responsive
                                  to favorably         proposals
                                  affect               included private
                                  transportation,      funding,
                                  cost effective,      therefore, it was
                                  and in the public    determined that
                                  interest, the        none justified
                                  Secretary shall      the establishment
                                  establish            of a Commission.
                                  commissions to
                                  review and
                                  consider such
                                  proposals.
                                  Additional action
                                  is contingent on
                                  commission review.
                                  $5 million is
                                  authorized for
                                  Section 502 (but
                                  nothing was
                                  appropriated.). No
                                  actions beyond
                                  commission
                                  activities and
                                  reports, planning,
                                  and preliminary
                                  engineering are
                                  authorized without
                                  explicit
                                  additional
                                  authority.
------------------------------------------------------------------------


    Senator Lautenberg. Thank you, Mr. Szabo.
    The next person is Mr. Boardman, President and CEO of 
Amtrak.

STATEMENT OF JOSEPH H. BOARDMAN, PRESIDENT AND CHIEF EXECUTIVE 
                        OFFICER, AMTRAK

    Mr. Boardman. Mr. Chairman, Mr. Udall, we've worked hard to 
comply with PRIIA and make progress toward complying with the 
legislation that you passed. We've met most deadlines, 
including implementing an improved financial accounting system, 
working with the Departments of Treasury and Transportation to 
restructure our debt, working with the States on new costing 
methodologies for State-supported routes--that's particularly 
important with the recent House mark that we received--and 
working with the FRA and States to develop specifications for 
the next generation corridor equipment.
    Several of the PRIIA provisions address the immediate needs 
and future vision for the Northeast Corridor. In May of 2010, 
there was a Northeast Corridor Infrastructure Master Plan 
approved. Initiated in 2007, it was approved under the idea of 
attaining a state of good repair. Shortly after President Obama 
came to office, there was a new vision. Now we're working on a 
concept plan for next generation high-speed rail service in the 
Northeast and a two-track corridor capable of supporting world-
class speeds, facilitating major reductions in travel time.
    For example, today from New York City to D.C. it's often 
favorable for people to say our average speed is 87 miles an 
hour, even if we hit 135. But with the new plan our average 
speed would be 135 miles an hour, with a top speed being 220 
miles an hour. So that 220 mile an hour service is in four 
operational segments that we see as a stairstep approach.
    Our vision already is moving forward thanks to a $450 
million authorized by PRIIA to upgrade 24 miles of the 
Northeast Corridor in New Jersey with electrical and track 
upgrades that allow for increases in operating speeds.
    It's often not understood that the critical piece of what 
needs to be done--and I think you laid it out succinctly, Mr. 
Chairman--is that you have to do a lot of foundational work to 
get where you really need to go. And that includes electrical 
and track work in the existing Northeast Corridor that was a 
tremendous vision 100 years ago, but it hasn't had a 100-year 
vision in that period of time.
    We can improve the reliability for current Amtrak and 
commuter service at the same time and it will support the 
proposed Amtrak Gateway Project that is intended to increase 
access and capacity at New York Penn Station, which is another 
foundational element. There's nowhere for commuter trains to go 
in Penn Station. You're handling 1,200 trains a day. We can 
build a new entrance, the proposed Moynihan Station Project, 
but if we don't fix underneath, the infrastructure, it will not 
work.
    We'll soon issue an update report which includes a new 
analysis on the project's ridership, revenue, and construction 
costs, and by mid-year 2012 we intend to complete a business 
and financial plan that will identify opportunities for private 
investment. As we know, that's required to make this really 
work for the future.
    PRIIA enabled these bold plans and real improvements by 
establishing a supportive policy environment. It provided a 
strong foundation for growth and in many ways changed the 
direction of intercity passenger rail service in this Nation. 
The task before us now is to build on that foundation. To do 
that effectively, a clear national policy direction backed by 
sustained and consistent public investment will be required.
    Amtrak looks forward to working with you, Mr. Chairman, and 
this committee and its staff on legislation that would achieve 
that objective. Thank you.
    [The prepared statement of Mr. Boardman follows:]

          Prepared Statement of Joseph H. Boardman, President 
                  and Chief Executive Officer, Amtrak
    Good afternoon, Chairman Lautenberg, Ranking Member Wicker, and 
members of the Subcommittee. On behalf of the Amtrak Board of Directors 
and the men and women of Amtrak, I am pleased to have the opportunity 
to come before the Committee to discuss Amtrak's role in implementing 
the Passenger Rail Investment and Improvement Act of 2008, or PRIIA.
    President Bush signed PRIIA into law in October 2008, shortly after 
Amtrak set a ridership record. Fiscal years 2010 and 2011 were again 
record years.
    PRIIA anticipated such a pattern of continued growth in demand for 
passenger rail service. Sections 301, 302, and 501 authorized, for the 
first time, a Federal grant program to support efforts to develop high-
speed and intercity passenger rail services. The program received over 
$10 billion in subsequent appropriations, and since that time, Amtrak 
has worked closely with the Federal Railroad Administration (FRA) and 
the states to advance numerous projects to expand and improve Amtrak 
service for which states sought, and in many cases received, grants 
under these sections. These grants are funding dozens of projects in 
more than 30 states.
    PRIIA also addressed passenger train performance. Prior to the 
passage of PRIIA, Amtrak had experienced acute problems with on-time 
performance, particularly on our long-distance trains. PRIIA included 
two provisions which directly address passenger train performance. 
Section 207 mandated the development of metrics and standards to 
monitor and improve service quality, including but not limited to on-
time performance. Additionally, Section 213 authorized investigations 
by the Surface Transportation Board if on-time performance averages 
less than 80 percent for two consecutive calendar quarters. It also 
enforces the existing requirement that Amtrak receive preference over 
freight trains in the joint use of a rail line. Amtrak's on-time 
performance on host railroads has improved significantly since PRIIA's 
enactment.
    We've also worked hard to comply with or make progress towards 
complying with all PRIIA requirements and deadlines, including by 
implementing an improved financial accounting system under Section 203; 
working with the Departments of Treasury and Transportation to 
restructure our debt under Section 205; working with the states on new 
costing methodologies for state-supported routes under Section 209; 
producing plans to improve our long-distance routes pursuant to Section 
210; and working with the FRA and states under Section 305 to develop 
specifications for next-generation corridor equipment.
    Several PRIIA provisions address the immediate needs and future 
vision for the Northeast Corridor. Under Section 211, we prepared a 
capital spending plan to return the Northeast Corridor to a state-of-
good repair, and updated that plan in May 2010 with the Northeast 
Corridor Infrastructure Master Plan. Amtrak is also represented on the 
Northeast Corridor Infrastructure and Operations Advisory Commission, 
which was established by Section 212 to promote mutual cooperation and 
planning.
    We will be working with the Commission on our concept plan for 
next-generation high-speed rail service in the Northeast on a new two-
track corridor capable of supporting world-class speeds and 
facilitating major reductions in travel time. We intend to pursue the 
plan using a ``stair-step'' approach that outlines a structured path to 
achieving 220 miles-per-hour service on each of four operational 
segments. Our vision is already moving forward thanks to a $450 million 
Federal grant, authorized by PRIIA, to upgrade a 24-mile section of the 
Northeast Corridor in New Jersey with electrical and track upgrades 
that will allow for an increase in operating speeds, improved 
reliability for current Amtrak and commuter service, and will support 
the proposed Amtrak Gateway Project, which is intended to increase 
access to, and expand capacity at, New York Penn Station.
    We will soon issue an updated report which will include new 
analysis on the project's ridership, revenue, and construction costs. 
By mid-year 2012 we intend to complete a business and financial plan 
that will identify opportunities for private investment.
    In conclusion, PRIIA enabled these bold plans and real improvements 
by establishing a supportive policy environment. It provided a strong 
foundation for growth and in many ways changed the direction of 
intercity passenger rail service in this Nation. The task before us now 
is to build on that foundation. To do that effectively, a clear 
national policy direction backed by sustained public investment will be 
required. Amtrak looks forward to working with the Committee and its 
staff on legislation that would achieve that objective.
    Thank you and I welcome the opportunity to answer your questions.

    Senator Lautenberg. Thanks very much, Mr. Boardman.
    Mr. Alves.

        STATEMENT OF THEODORE ALVES, INSPECTOR GENERAL, 
            NATIONAL RAILROAD PASSENGER CORPORATION

    Mr. Alves. Chairman Lautenberg and Senator Udall, thank you 
for inviting me to discuss Amtrak's actions to implement PRIIA. 
I'd like to start by thanking you, Mr. Chairman, and the 
Subcommittee for the support you have given my office since I 
became Inspector General in late 2009. I also want to 
acknowledge some of Amtrak's key recent achievements. Ridership 
and revenue have grown steadily and this year the company 
expects to exceed 30 million passengers for the first time. 
Amtrak is also focused on improving management practices and 
financial performance and is finalizing a new strategic plan.
    Today, I will discuss preliminary results from our audit of 
Amtrak's progress in implementing PRIIA. We found that Amtrak 
has embraced PRIIA and has made good progress addressing most 
provisions. It is in the process of addressing other 
provisions.
    We also identified five issues that offer opportunities to 
save money or improve PRIIA implementation. First, 
restructuring more Amtrak debt could generate savings. PRIIA 
authorized Treasury to restructure Amtrak debt to save money 
for Amtrak and the government. In response, Treasury agreed to 
restructure 13 capital leases, which will save $152 million 
over time. Amtrak has 39 other leases with buyout options that 
have the potential to eventually save over $400 million.
    However, the authorization to restructure debt has expired. 
We believe Amtrak should update its estimates and we suggest 
that the Congress consider reauthorizing the restructuring 
authority.
    Second, improving long distance routes faces challenges. 
Amtrak completed plans for the five worst performing routes in 
2010 and has begun making improvements, such as expanded 
seating and food service options. However, it has not been able 
to implement the major initiatives, such as providing daily 
service on some routes. Those initiatives require approval from 
host railroads, which have asked Amtrak for millions of dollars 
to make infrastructure improvements. We believe Amtrak should 
focus future plans on improvements that it can control.
    Third, Amtrak needs a process to support on-time 
performance remedies. Amtrak continues to experience untimely 
performance on many of its long distance routes. The Act 
authorized Amtrak to ask the Surface Transportation Board to 
investigate whether poor on-time performance is due to host 
railroads giving preference to freight trains. Amtrak has been 
collecting data to determine whether to request a Board 
investigation, but it lacks a structured process to make the 
determination.
    Fourth, Amtrak's new financial system is needed to complete 
other PRIIA provisions. PRIIA required Amtrak to implement a 
new accounting system to provide better financial information. 
This information is needed for Amtrak to fully meet other PRIIA 
reporting requirements. Although Amtrak deployed the new system 
in June, it has encountered problems and is not yet generating 
the needed data.
    Finally, Amtrak should analyze whether additional special 
trains could reduce subsidies. Amtrak has not responded to the 
PRIIA provision suggesting that it use more special trains. I 
would point out that that's the only provision that Amtrak 
hasn't responded to. They have made very good progress.
    Amtrak operates few special trains because it does not have 
the resources, such as numbers of rail cars and personnel 
dedicated to this service. While special trains currently 
provide little revenue for Amtrak, without an adequate 
analysis, Amtrak cannot know whether running more special 
trains could lower subsidies.
    In conclusion, Amtrak has made good progress implementing 
PRIIA and should address the five issues I discussed today.
    Mr. Chairman, this concludes my statement. I would be happy 
to answer any questions.
    [The prepared statement of Mr. Alves follows:]

       Prepared Statement of Theodore Alves, Inspector General, 
                National Railroad Passenger Corporation
    Good morning Chairman Lautenberg, Ranking Member Wicker, and 
members of the Subcommittee. Thank you for the opportunity to discuss 
Amtrak's efforts to provide higher quality, more cost-effective 
intercity rail transportation services. The Passenger Rail Investment 
and Improvement Act of 2008 (PRIIA) reauthorized Amtrak and 
strengthened the U.S. passenger rail network by tasking Amtrak, the 
Department of Transportation, the Federal Railroad Administration, 
states, and others to improve operations and services. PRIIA also 
assigned Amtrak a clear mission:

        ``To provide efficient and effective intercity passenger rail 
        mobility consisting of high-quality service that is trip-time 
        competitive with other intercity travel options.''

    The Act authorized nearly $10 billion for Fiscal Years (FY) 2009-
2013 for Amtrak's operating costs and capital investments, including 
actions to bring the Northeast Corridor to a ``state-of-good-repair'' 
\1\ and to pay down Amtrak's long-term debt and capital leases. While 
appropriation levels have increased since PRIIA was enacted, they have 
been less than the authorized amounts.
---------------------------------------------------------------------------
    \1\ In July 2008, the Secretary of Transportation defined a state 
of good repair as ``[a] condition in which the existing physical 
assets, both individually and as a system, (a) are functioning as 
designed within their useful lives, and (b) are sustained through 
regular maintenance and replacement programs; state of good repair 
represents just one element of a comprehensive capital investment 
program that also addresses system capacity and performance.''
---------------------------------------------------------------------------
    The Act also contains provisions to help Amtrak operate more 
efficiently and to improve services on existing routes. It assigned 29 
sections to Amtrak: 15 required Amtrak to act within a specified time 
frame, 10 suggested that Amtrak take or consider some action, and four 
required or suggested that Amtrak respond to actions taken by Federal 
or state agencies. For example, the Act directed Amtrak to implement a 
modern financial accounting and reporting system and develop a five-
year financial plan.
    As requested, my testimony today will address the preliminary 
results of our ongoing audit of Amtrak's progress and opportunities in 
completing provisions of PRIIA.\2\ Our audit is assessing the progress 
Amtrak has made in implementing PRIIA by comparing the Amtrak-assigned 
PRIIA provisions with the Company's deliverables and responses. We also 
evaluated the quality and effectiveness of Amtrak's actions to 
implement four selected sections: Restructuring Long-Term Debt and 
Capital Leases (Section 205); State Supported Routes (Section 209); 
Long-Distance Routes (Section 210); and Passenger Train Performance 
(Section 213). We judgmentally selected these provisions on the basis 
of their potential to improve performance and generate savings to 
Amtrak and the U.S. government.
---------------------------------------------------------------------------
    \2\ Next month we plan to issue our final report on the progress 
that Amtrak has made in implementing PRIIA.
---------------------------------------------------------------------------
    Before I address the preliminary results of that work, I want to 
thank you, Mr. Chairman, and the Subcommittee, for the support that you 
have given me and my office since I became Amtrak's Inspector General 
in 2009. We will continue to build our capacity to conduct effective, 
independent oversight of Amtrak's operations and offer recommendations 
for improvement.
    I also want to acknowledge some of Amtrak's key recent 
achievements. Amtrak is now projecting that--for the first time ever--
its annual ridership will exceed 30 million passengers for FY 2011. 
This past June was the best June on record, with more than 2.6 million 
passengers for the month. Amtrak is also focused on improving its 
management practices and financial performance, and is finalizing a new 
strategic plan to guide Company efforts to improve its performance.
    Good Progress Made In Addressing Most Provisions; Others In The 
Process Of Being Met
    Our preliminary audit results show that Amtrak has embraced PRIIA 
and has made good progress. As shown in figure 1, Amtrak has addressed 
18 of the 29 requirements and suggestions assigned to it. For example, 
Amtrak issued performance improvement plans for its five worst 
performing long-distance routes and, with the Departments of the 
Treasury and Transportation's assistance, restructured some of its 
capital leases, saving $152 million. Amtrak is working to respond to 
seven PRIIA sections. For example, it is negotiating with states to 
implement a standardized cost-sharing methodology for state-supported 
routes. Amtrak has not responded to one suggestion--that it expand the 
use of special trains to reduce Federal subsidies. As noted in the 
figure, Amtrak has not responded to three sections because the 
triggering events that are prerequisites to Amtrak's responding have 
not occurred.
     Figure 1. Amtrak's Progress in Implementing PRIIA Provisions 
                          (number of sections)


    Note: Amtrak did not have to respond to an additional three 
sections because the triggering events that are prerequisites to 
Amtrak's responding have not occurred.
    Source: OIG analysis of Amtrak's deliverables and responses and 
PRIIA's requirements and suggestions.

    The status of each PRIIA provision and our ongoing review of 
selected provisions are detailed in the attachment to this testimony. 
Based on that work, there are five issues I want to bring to the 
Subcommittee's attention that represent opportunities for savings or 
improving the implementation of PRIIA provisions:

   Restructuring More Amtrak Debt Could Generate Savings. 
        Section 205 authorized the Department of the Treasury, the 
        Secretary of Transportation, and Amtrak to restructure 
        outstanding Amtrak debt, if significant savings would accrue to 
        Amtrak and the Federal government. After working with the 
        Secretary of Transportation and Amtrak, Treasury restructured 
        13 capital leases, saving $152 million ($91 million in present-
        value dollars).

    Opportunities for substantial savings still exist, but the 
        authorization to restructure debt expired in October 2010. To 
        illustrate, when Amtrak submitted its proposal to Treasury in 
        May 2009, it identified another 39 leases with early buyout 
        options that had the potential to save an additional $426 
        million ($305 million in present-value dollars). New 
        legislative authority and updated savings estimates would be 
        needed to allow Amtrak and the Departments of the Treasury and 
        Transportation to pursue these savings.

   Implementing Long-Distance Improvement Plans Faces 
        Challenges. Section 210 required Amtrak to rank its 15 long-
        distance routes and develop performance improvement plans, 
        starting with the five worst-performing routes. Amtrak 
        completed the first five plans, which generally call for 
        changes that would significantly improve ridership and several 
        financial metrics, but at the cost of modestly increasing 
        operating losses.

    While Amtrak has begun implementing improvements that are under its 
        control, such as expanding seating, food-service options, and 
        vacation packages, it has been unable to implement the major 
        initiatives. One reason is that major initiatives, such as 
        providing daily service instead of three-day-a-week service, 
        require approval from the host railroad. The host railroads 
        informed Amtrak that their approval is contingent upon its 
        providing millions of dollars to improve their infrastructure. 
        Other impediments are the need for additional Federal subsidies 
        at a time of severe budget constraints, and limited 
        availability of passenger rail cars.

    Essentially, Amtrak is not in a position to control many of the key 
        improvement initiatives it proposed. At this point, we believe 
        Amtrak's future improvement plans should focus more on 
        initiatives it can control and implement without requiring 
        additional Federal subsidies or support from host railroads.

   Developing a Process and Criteria to Support Using On-Time-
        Performance Remedies. Section 213 authorizes Amtrak to request 
        that the Surface Transportation Board investigate substandard 
        on-time performance of intercity passenger trains, which the 
        Act defines as less than 80 percent on-time for two consecutive 
        quarters. The Board is then to determine the causes of not 
        meeting the on-time-performance standard and, if the cause is 
        the host railroad's failure to provide preference to Amtrak 
        over freight transportation, the Board is authorized to award 
        damages or prescribe other relief that it deems appropriate.

    Amtrak continues to experience on-time-performance rates for many 
        long-distance routes that fall below the PRIIA-defined 
        standard. Amtrak has been collecting the data necessary to 
        determine if and when to request an investigation by the Board. 
        However, our work shows that Amtrak has not developed a 
        structured process or criteria to make this determination. Such 
        a process is a prerequisite to determining if and when to 
        request an investigation, and would enhance the likelihood of 
        success if Amtrak pursues this option.

   Implementing Amtrak's New Financial System is Key to 
        Completing Several Remaining Provisions (Sections 203, 204, and 
        207). Section 203 required Amtrak to implement a modern 
        financial accounting and reporting system by next month. This 
        past June, Amtrak deployed its new system, but the system 
        encountered problems and is not yet fully stable or 
        operational.

    According to Amtrak officials, the previous financial reporting 
        system lacked detailed financial data. However, the new system, 
        being implemented under the Strategic Asset Management program, 
        will provide detailed financial data once fully operational and 
        stabilized. Consequently, we found that while Amtrak has 
        prepared annual five-year financial plans as required by 
        Section 204, the plans have not fully met the PRIIA financial 
        reporting requirements. Also, Amtrak has not been able to meet 
        Section 207 requirements that it maintain detailed data to 
        measure the performance and service quality of intercity 
        passenger trains, including cost recovery. According to a 
        senior Finance Department official, when fully operational, the 
        recently deployed system will help Amtrak meet these 
        requirements.

   Determining Whether Additional Special Trains Could Help 
        Reduce Federal Subsidies. Section 216 encouraged Amtrak to 
        increase the operation of special trains to minimize the need 
        for Federal subsidies. This is the only PRIIA provision that 
        Amtrak has not acted upon.

    Amtrak officials said that they did not consider this suggestion 
        and have not increased the number of special trains. They 
        stated that the Company does not have the resources, such as 
        the rolling stock and manpower, dedicated for this type of 
        service. Amtrak does, however, provide some special trains, 
        although it accounts for a very small portion of revenue. 
        Still, without adequate analysis to determine whether 
        additional special trains could generate profits to help reduce 
        Federal subsidies, Amtrak may be missing an opportunity to 
        generate additional profit by operating more special trains.
Preliminary Suggestions
    While we are still finalizing our audit report on Amtrak's 
implementation of PRIIA, we can provide our initial thoughts on how 
Amtrak and the Congress could take advantage of the opportunities 
available under PRIIA to increase revenues, minimize Federal subsidies, 
and improve performance. Our preliminary suggestions are that Amtrak 
should take action to

   update its information to support early buyouts of 
        additional capital leases that would generate savings and 
        provide those data to Congress for its consideration,

   focus future performance improvement plans on improvements 
        that are less dependent upon host railroad approval or 
        increased Federal subsidies,

   develop a specific process and criteria to help determine 
        how and when to request that the Surface Transportation Board 
        investigate substandard on-time performance, and

   determine whether additional special trains could yield 
        profits to help reduce Federal subsidies.
Potential Matter For Congressional Consideration
    Given that the authorization has expired, the Congress may wish to 
consider whether to reauthorize the early buyout of those remaining 
capital leases that will generate saving to the Federal government.
    Mr. Chairman, this concludes my statement, and I would be happy to 
answer any questions that you or other Members of the Subcommittee may 
have.
                               Attachment
Progress And Opportunities for Improving Amtrak's Implementation of 
        PRIIA
    While Amtrak has addressed most of PRIIA's requirements and 
suggestions assigned to it, our ongoing work shows that opportunities 
remain for improving Amtrak's implementation of three provisions. 
Amtrak is in the process of addressing the requirements in seven 
sections and has not responded to one suggestion. And there are three 
sections in which the triggering events that are prerequisites to 
Amtrak's responding have not occurred.
Amtrak Has Addressed Most Requirements, Including Developing 
        Performance Improvement Plans for its Long-Distance Routes and 
        a Plan to Improve Onboard Service
    The requirements specified in the nine PRIIA sections that Amtrak 
has addressed range from such diverse topics as requiring Amtrak to 
report travel expenses for Board of Directors members to producing 
technical specifications for the next generation of train equipment. 
The actions Amtrak took to address these nine requirements are 
summarized in table 1. We selected Section 210 from this group for 
detailed review and identified opportunities to improve its 
implementation. This section has requirements deadlines that are to be 
met over a series of years. The opportunities we identified relate to 
future-year requirements and implementation issues.

                              Table 1.--Nine PRIIA Requirements Addressed by Amtrak
----------------------------------------------------------------------------------------------------------------
  PRIIA
 Section                     Title                                              Action
----------------------------------------------------------------------------------------------------------------
    202   Amtrak Board of Directors                   Amtrak reported all travel and reimbursable business
                                                       travel expenses for each Board member to specific
                                                       congressional committees.
----------------------------------------------------------------------------------------------------------------
  210 a   Long-Distance Routes                        Amtrak ranked and issued performance improvement plans for
                                                       its long-distance routes that addressed nine information
                                                       categories specified in the Act. Amtrak has also
                                                       implemented some of the plans' initiatives, such as
                                                       expanding seating and food-servicing capacities and
                                                       adding certain vacation packages. More plans are required
                                                       to be developed in the near future.
----------------------------------------------------------------------------------------------------------------
    222   Onboard Service Improvements                Amtrak developed and implemented a plan to improve its
                                                       onboard service pursuant to its performance metrics and
                                                       standards established under PRIIA.
----------------------------------------------------------------------------------------------------------------
    224   Passenger Rail Service Studies              Amtrak issued studies of six prior and current routes to
                                                       determine whether to reinstate passenger rail service or
                                                       a station stop, to expand service, or to reduce ticket
                                                       prices.
----------------------------------------------------------------------------------------------------------------
    226   Plan for Restoration of Service             Amtrak issued a plan for restoring passenger rail service
                                                       between New Orleans and Sanford, Florida.
----------------------------------------------------------------------------------------------------------------
    304   Tunnel Project                              Amtrak selected and obtained approval of a new rail tunnel
                                                       alignment in Baltimore.
----------------------------------------------------------------------------------------------------------------
    305   Next-Generation Corridor Equipment Pool     Amtrak established a Next-Generation Corridor Equipment
                                                       Pool Committee and produced the technical specifications
                                                       for the next-generation train equipment.
----------------------------------------------------------------------------------------------------------------
    306   Rail Cooperative Research Program           Amtrak nominated an executive to serve on the advisory
                                                       board, called the Rail Oversight Committee.
----------------------------------------------------------------------------------------------------------------
    406   Cross-Border Passenger Rail Service         Amtrak developed and implemented a strategic plan to
                                                       facilitate expanded passenger rail service across the
                                                       Canadian border during the 2010 Olympic Games.
----------------------------------------------------------------------------------------------------------------
a Selected by OIG for detailed review.
Source: OIG analysis of Amtrak data<.

Implementing Long-Distance Improvement Plans Faces Challenges (Section 
        210)
    While Amtrak has ranked its 15 long-distance routes and submitted 
performance improvement plans for the five worst-performing routes in 
FY 2010 as required, it has not yet implemented the plans' key 
initiatives. Amtrak has experienced difficulty because it does not 
control all the factors required to achieve the key initiatives. These 
factors include host railroad approval \3\ and the availability of 
additional Federal operating subsidies. The host railroads responded 
that their approval is contingent upon Amtrak's providing millions of 
dollars to improve their infrastructure. Also, the FY 2010 performance 
improvement plans are projected to improve many of the routes' 
operating and financial performance metrics. For example, the projected 
increase in ridership decreases the loss per passenger mile. However, 
the plans are projected to do so at the cost of increasing the routes' 
financial operating losses because the increase in revenues is less 
than the increase in operating expenses.
---------------------------------------------------------------------------
    \3\ A host railroad owns and controls the tracks that are used by 
Amtrak and other intercity passenger rail operators. When an Amtrak 
train operates on tracks owned or operated by host railroads, the host 
railroad's dispatching center generally has control over the Amtrak 
train's movement. An Amtrak engineer must comply with the host 
railroad's instructions, such as slowing down, stopping, or sitting on 
a side track for a passing train.
---------------------------------------------------------------------------
    Amtrak has put itself in a position in which it cannot control the 
factors needed to achieve the key improvement initiatives that it 
proposed. If Amtrak continues to maintain this approach in future 
improvement plans, versus focusing primarily on initiatives that are 
not dependent upon host railroad approval or increased Federal subsidy, 
it is unlikely that Amtrak will make significant progress in improving 
performance on these long-distance routes.
Amtrak Has Responded to Most Suggestions, Including Restructuring Some 
        Capital Leases and Obtaining Services from the General Services 

        Administration
    The suggestions contained in nine PRIIA sections, which Amtrak has 
also responded to, range from making agreements to restructure its 
capital leases to obtaining services from the General Services 
Administration. The actions Amtrak took to address these nine 
suggestions are summarized in table 2. As discussed after the table, we 
also selected Sections 205 and 213 for detailed review. For Section 
205, we identified opportunities for savings by the restructuring of 
additional capital leases. Since the restructuring authority has 
expired, it would need to be reauthorized. Further, Amtrak's capital 
lease data are outdated, and current savings estimates would be needed. 
For Section 213, we identified opportunities to improve its 
implementation.

                              Table 2.--Nine PRIIA Suggestions Addressed by Amtrak
----------------------------------------------------------------------------------------------------------------
  PRIIA
 Section                     Title                                              Action
----------------------------------------------------------------------------------------------------------------
  205 a   Restructuring Long-Term Debt and Capital    The Department of the Treasury, in consultation with
           Leases                                      Amtrak and the Department of Transportation, restructured
                                                       13 Amtrak capital leases. This authorization expired in
                                                       2010, 2 years after PRIIA's enactment.
----------------------------------------------------------------------------------------------------------------
    206   Establishment of Grant Process              Amtrak complied with the Department of Transportation's
                                                       newly-established grant application process.
----------------------------------------------------------------------------------------------------------------
   213a   Passenger Train Performance                 Amtrak is collecting and monitoring on-time-performance
                                                       data for analytical purposes that could be used if it
                                                       decides to request that the Surface Transportation Board
                                                       investigate delays by a host railroad for substandard on-
                                                       time performance due to ``freight interference.''
----------------------------------------------------------------------------------------------------------------
    218   General Amtrak Provisions                   Amtrak obtained services, such as purchasing and travel
                                                       card service, from the General Services Administration.
                                                       Through this service, it will avoid administrative
                                                       processing costs compared with previous, paper-based
                                                       procurement processes.
----------------------------------------------------------------------------------------------------------------
    223   Incentive Pay                               Amtrak approved merit pay, geographic pay, and spot award
                                                       programs for its employees, and proposed an incentive pay
                                                       program to the Board of Directors.
----------------------------------------------------------------------------------------------------------------
    301   Capital Assistance for Intercity Passenger  Amtrak provided advice and assistance to states in their
           Rail Service                                efforts to obtain capital assistance and grants for
                                                       intercity passenger rail service.
----------------------------------------------------------------------------------------------------------------
    302   Congestion Grants                           Amtrak provided advice and assistance to states in their
                                                       efforts to obtain congestion grants.
----------------------------------------------------------------------------------------------------------------
    402   Routing Efficiency Discussions with Amtrak  Amtrak met with host freight railroads and commuter rail
                                                       entities to develop feasible train schedules to satisfy
                                                       all users' requirements.
----------------------------------------------------------------------------------------------------------------
    501   High-Speed Rail Corridor Program            Amtrak applied for nearly $1.3 billion in infrastructure-
                                                       improvement grants to bring next-generation, high-speed
                                                       rail to the Northeast Corridor. The Department of
                                                       Transportation awarded Amtrak nearly $450 million to
                                                       upgrade support systems and tracks between stops in
                                                       Pennsylvania and New Jersey.
----------------------------------------------------------------------------------------------------------------
a Selected by OIG for detailed review.
Source: OIG analysis of Amtrak data.

Restructuring More Amtrak Debt Could Generate Savings (Section 205)
    While the Department of the Treasury, in consultation with Amtrak 
and the Department of Transportation, restructured 13 Amtrak capital 
leases, Amtrak still had another 39 at the time of submission with 
early buyout options.\4\ With an investment of $420 million, the 
estimated savings from the early buyout of the 13 leases was about $152 
million ($91 million in present-value dollars).\5\
---------------------------------------------------------------------------
    \4\ Amtrak provided the Department of the Treasury with data that 
showed its capital leases by their early buyout option dates. On April 
30, 2009, Amtrak had 25 and 27 capital leases with early buyout options 
during FYs 2010-2014 and FYs 2015-2019, respectively.
    \5\ The $152 million savings is about $10 million less than that 
reported by the Department of the Treasury.
---------------------------------------------------------------------------
    Opportunities for substantial savings still exist, but the 
authorization to restructure debt expired in October 2010. To 
illustrate, when Amtrak submitted its proposal to Treasury in May 2009, 
it identified another 39 leases with early buyout options that also had 
the potential to reduce Federal costs. At the time of its proposal, 
paying off the remaining 39 capital leases could have resulted in an 
additional $426 million ($305 million in present-value dollars) in net 
savings with a $638 million investment. New legislative authority and 
updated savings estimates would be needed to allow Amtrak and the 
Departments of the Treasury and Transportation to pursue these savings.
Developing a Process and Criteria to Support Using On-Time-Performance 
        Remedies (Section 213)
    Amtrak continues to experience on-time-performance rates for many 
of its routes that fall below PRIIA standards. While Section 213, 
Passenger Train Performance, authorizes Amtrak to request that the 
Surface Transportation Board investigate substandard on-time 
performance, Amtrak has not requested such an investigation. According 
to Amtrak officials, they are in the process of developing information 
and supporting documentation that could be used to make such a request. 
However, these officials do not have a well-defined process or criteria 
for developing a request of this type. Developing processes and 
criteria are a prerequisite to the Company's determining when to 
request an investigation. Further, sound processes and criteria enhance 
the likelihood of the Board's agreeing with Amtrak's position.
Amtrak Is Addressing Some Requirements, Such as Implementing an 
        Improved Financial Accounting System and a Standardized Cost-
        Sharing Methodology for State-Supported Routes
    Amtrak is also in the process of addressing seven PRIIA 
requirements, summarized in table 3. After the table, we discuss the 
implementation status and challenges to completion for the seven 
sections.

                            Table 3.--Seven PRIIA Sections Being Addressed by Amtrak
----------------------------------------------------------------------------------------------------------------
  PRIIA
 Section                     Title                                              Action
----------------------------------------------------------------------------------------------------------------
    203   Establishment of Improved Financial         Amtrak's previous financial accounting system did not
           Accounting System                           generate detailed data adequate to meet the requirements
                                                       of these three sections; the new system being implemented
                                                       under the Strategic Asset Management program is not yet
                                                       stable or fully operational.
----------------------------------------------------------------------------------------------------------------
    204   Development of Five-Year Financial Plan
    207   Metrics and Standards
----------------------------------------------------------------------------------------------------------------
   209a   State-Supported Routes                      Amtrak is working to negotiate a cost-sharing methodology
                                                       with affected states for establishing and allocating
                                                       operating and capital costs of intercity rail passenger
                                                       service. PRIIA requires that the methodology ensure equal
                                                       treatment of all affected states by October 16, 2013.
----------------------------------------------------------------------------------------------------------------
    211   Northeast Corridor `State-of-Good-Repair'   Amtrak issued the required plan, but used 2022 rather than
           Plan                                        2018 as the deadline for returning the Northeast Corridor
                                                       to a `state of good repair.' It is implementing the plan.
----------------------------------------------------------------------------------------------------------------
    212   Northeast Corridor Infrastructure and       Amtrak must submit a report detailing the infrastructure
           Operations Improvements                     improvements needed to provide regular high-speed service
                                                       between the District of Columbia and New York City, and
                                                       New York City and Boston. An interim report was
                                                       submitted, but new data are emerging. Amtrak officials
                                                       are deciding on how best to transmit these new data.
----------------------------------------------------------------------------------------------------------------
    219   Study of Americans with Disabilities Act-   Amtrak issued the required study, but used 2015 rather
           Compliance Requirements at Existing         than 2010 as the deadline for stations' compliance with
           Intercity Rail Stationsb                    the Americans with Disabilities Act. It issued updated
                                                       studies and will report quarterly on its progress.
----------------------------------------------------------------------------------------------------------------
a Selected by OIG for detailed review.
b In the next few weeks, we will issue a report on Amtrak's progress in complying with the requirements of the
  Americans with Disabilities Act of 1990.
Source: OIG analysis of Amtrak data

Implementing Amtrak's New Financial System Is Key to Completing Three 
        Provisions

    Amtrak has deployed a new financial accounting and reporting 
system, being implemented under the Strategic Asset Management 
program,\6\ but has encountered problems; the system is not yet stable 
or fully operational. As a result, according to Amtrak officials, the 
Company lacks the detailed financial information it needs to respond to 
three of the remaining PRIIA provisions. According to a senior Finance 
Department official, when fully stable and operational, the recently 
deployed system will help Amtrak meet these requirements.
---------------------------------------------------------------------------
    \6\ In 2008, Amtrak launched a company-wide, multi-year effort 
called the Strategic Asset Management program. The program's goal is to 
improve key operational, financial, supply chain, and human resources 
processes by replacing or enhancing many inefficient manual and 
automated systems with new systems and business processes.

   Establishment of Improved Financial Accounting System 
        (Section 203). This section required Amtrak to implement a 
        modern financial accounting and reporting system and report 
        annually on the allocation of all revenues and costs to each 
        route, line of business, and major activity. Amtrak officials 
        stated that due to the inadequacies of the previous financial 
        reporting system and the fact that its new system, being 
        implemented under the Strategic Asset Management program, has 
        not been stabilized or made fully operational, Amtrak's annual 
        reports do not yet include these costs. According to a senior 
        Finance Department official, Amtrak should be able to include 
        the missing data categories in future reports, once the program 
---------------------------------------------------------------------------
        is fully operational.

    Amtrak implemented its new financial management system under the 
        Strategic Asset Management program's first segment (Release 1a) 
        in June 2011. We issued two audit reports this year assessing 
        the challenges Amtrak faced during the program's development 
        and implementation.\7\ In January, we reported that the design 
        of automated controls to mitigate financial risks was generally 
        sound. However, we found gaps in the design of the controls 
        that did not fully mitigate the financial and operational 
        risks. These gaps put Amtrak at risk of not fully realizing the 
        program's full potential benefits. In particular, a lack of 
        adequate controls can lead to inaccurate financial reporting, 
        vulnerability to fraud, and inefficient business operations. In 
        June, we identified several gaps in the program's testing and 
        contingency plans. Amtrak agreed with our recommendations and 
        stated it is addressing them.
---------------------------------------------------------------------------
    \7\ Strategic Asset Management Program Controls Design Is Generally 
Sound, But Improvements Can Be Made (OIG Audit Report 105-2010, January 
14, 2011) and Strategic Asset Management Program: Further Actions 
Should Be Taken To Reduce Business Disruption Risk (OIG Audit Report 
001-2011, June 2, 2011).

   Development of Five-Year Financial Plan (Section 204). This 
        section required Amtrak to issue an annual budget and business 
        plan, along with a five-year financial plan. Amtrak has issued 
        the required annual budgets, business plans, and five-year 
        financial plans. These plans provide Congress with 
---------------------------------------------------------------------------
        significantly more information than was provided before PRIIA.

    However, Amtrak's two financial plans addressed most but not all of 
        the information required by PRIIA. For example, the five-year 
        plans did not address prior Fiscal Year and projected labor 
        productivity statistics on a route. According to a senior 
        Finance Department official, route-basis reports are not 
        available because Amtrak does not directly collect an employee 
        count for each route, so employee count projections per route 
        would be highly speculative. A senior Finance Department 
        official stated that the Strategic Asset Management program 
        should be able to generate these financial data.

    The two financial plans also did not address the requirement to 
        report on Amtrak's ability to efficiently recruit, retain, and 
        manage its workforce, although this information is available 
        within the Company.

   Metrics and Standards (Section 207). This section required 
        Amtrak and the Federal Railroad Administration, in consultation 
        with the Surface Transportation Board, host railroads, states, 
        Amtrak's labor organizations, and rail passenger associations, 
        to develop metrics and minimum standards for measuring the 
        performance and service quality of intercity passenger train 
        service, including cost recovery. It also required Amtrak to 
        provide the Federal Railroad Administration with reasonable 
        access to the necessary data to publish quarterly reports on 
        the performance and service quality of intercity passenger 
        train operations.

    Amtrak and the Federal Railroad Administration published draft 
        metrics and standards for public comment in March 2009; the 
        final metrics and standards became effective in May 2010. 
        However, Amtrak has not been able to provide the Federal 
        Railroad Administration with data for some of the financial 
        metrics, such as the percentage of short-term avoidable 
        operating costs covered by passenger-related revenues and the 
        long-term avoidable operating loss per passenger-mile, because 
        it lacks the detailed information. According to senior Amtrak 
        officials, the Company should be able to provide the missing 
        metrics once the Strategic Asset Management program is fully 
        operational.
State-Supported Routes (Section 209)
    This section required Amtrak--in consultation with the Department 
of Transportation, relevant state governors, and the District of 
Columbia mayor--to develop and implement a standardized, nationwide 
methodology for establishing and allocating operating and capital costs 
of state-supported rail passenger service. It also required that the 
methodology ensure equal treatment of all affected states by October 
16, 2013.
    Amtrak officials stated that negotiating cost-sharing agreements 
has been difficult--especially during economic conditions in which 
resources are scarce. However, Amtrak has made progress toward reaching 
a negotiated agreement. According to Amtrak, the Company and the state 
working group \8\ reached an agreement on a standardized methodology 
this past May. Further, an Amtrak briefing states that it issued a 
final draft package to all state partners last month for their 
approval.
---------------------------------------------------------------------------
    \8\ The States for Passenger Rail and the American Association of 
State Highway and Transportation Officials established the state 
working group to work with Amtrak in the development of a cost-sharing 
methodology.
---------------------------------------------------------------------------
    According to Amtrak officials, since PRIIA did not specify the 
amount that the states' share should represent, negotiations between 
the Company and its state partners never considered a fully allocated 
cost-sharing methodology. Amtrak reasoned that requiring such a 
methodology could lead some states to reduce or cancel some state-
supported routes if they considered their costs to be too great. Amtrak 
documents show that if some state-supported services were reduced or 
cancelled, it would not be able to reduce shared costs sufficiently to 
avoid increases in operating deficits and increased shared costs for 
all remaining services. While Amtrak estimates that the proposed 
methodology will increase annual state contributions by $127 million in 
FY 2014, a fully allocated cost-sharing methodology could increase 
state contributions by approximately another $100 million per year.
Northeast Corridor State-of-Good-Repair Plan (Section 211)
    This section required Amtrak, in consultation with the Secretary of 
Transportation, the corridor states, and the District of Columbia, to 
prepare a capital spending plan to return the Northeast Corridor to a 
state of good repair by the end of FY 2018.
    Amtrak issued the required spending plan in April 2009. However, it 
established an end date for returning the Northeast Corridor main line 
to a state of good repair that was later than the one specified by 
PRIIA. Amtrak officials concluded that this task could not be 
accomplished within that time frame without adversely affecting the 
level of service. They decided, instead, that the task could be 
accomplished by 2022 without an adverse effect on service. Amtrak used 
the 2022 date in preparing the required plan, which it is now 
implementing.
Northeast Corridor Infrastructure and Operations Improvements (Section 
        212)
    This section required Amtrak to submit a report detailing the 
infrastructure and equipment improvements necessary to provide regular 
high-speed service between the District of Columbia and New York City, 
and between New York City and Boston. Specifically, it requires the 
report to identify the infrastructure and equipment improvements 
necessary to provide regular high-speed service between (1) the 
District of Columbia and New York City in 2 hours and 30 minutes, and 
(2) New York City and Boston in 3 hours and 15 minutes.
    In October 2009, Amtrak issued an interim assessment of improving 
Northeast Corridor trip times,\9\ but also recognized that further 
refinements were likely, due to ongoing actions to improve 
operations.\10\ At the same time, Amtrak reported that it would update 
and expand upon the interim assessment with (1) completion of the 
ongoing cooperative activity, (2) consultation with the Northeast 
Corridor Infrastructure and Operations Advisory Commission, and (3) 
federally-required environmental analysis. According to a Policy and 
Development Department official, Amtrak is currently in the process of 
deciding whether to incorporate the additional data in an updated 
report or into a comprehensive plan to enhance the corridor 
infrastructure and operations.
---------------------------------------------------------------------------
    \9\ Amtrak, An Interim Assessment of Achieving Improved Trip Times 
on the Northeast Corridor (October 21, 2009).
    \10\ In September 2010, Amtrak issued A Vision for High-Speed Rail 
in the Northeast Corridor, which presents Amtrak's initial look at how 
high-speed rail service could be successfully developed in the 
Northeast Corridor.
---------------------------------------------------------------------------
Study of Compliance Requirements at Existing Intercity Rail Stations 
        (Section 219)
    This section required Amtrak--in consultation with station owners 
and other railroads--to evaluate the improvements necessary to make the 
stations it serves accessible to and usable by individuals with 
disabilities. It specified that the evaluation include a detailed plan 
and schedule for bringing all applicable stations into compliance by 
the 1990 Americans with Disabilities Act's statutory deadline of 
2010.\11\
---------------------------------------------------------------------------
    \11\ In the next few weeks, we will report on the progress Amtrak 
has made in complying with the Americans with Disabilities Act's 
requirements.
---------------------------------------------------------------------------
    Amtrak reported to Congress on its progress to comply with the Act 
in February 2009, and updated it in October 2010 and August 2011. 
However, Amtrak used a later deadline than the one specified by PRIIA 
because it reported that it could not meet the legislative time frame 
for achieving compliance. The Company initially used September 30, 
2015, as the goal for meeting this requirement. In the 2011 update, 
Amtrak reported that it will work to achieve the Act's compliance at 
all stations for which it has responsibility by the end of 2015. It 
also noted that progress has been slower than anticipated because of 
the challenges associated with management of a program of this size and 
complexity. Further, Amtrak expects that coordination with and 
cooperation from other entities (who own the stations or land) will 
continue to be a major challenge. It pledged in the update to report 
quarterly on the progress it is making.
Amtrak Did Not Respond to the Suggestion in the Section on Special 
        Trains
    Section 216, Special Passenger Trains, encouraged Amtrak to 
increase the operation of special trains \12\ funded by or in 
partnership with private-sector operators through competitive 
contracting to minimize the need for Federal subsidies. Although Amtrak 
operates special trains, officials of the Marketing and Product 
Development Department said they did not consider the suggestion and 
have not increased the number of special trains. Amtrak officials 
stated that the Company does not often operate special trains because 
it does not have the resources, such as the rolling stock and manpower, 
dedicated for this type of service. Consequently, special trains have 
traditionally generated a small portion of Amtrak's revenues. Still, 
without adequate analysis to determine whether additional special 
trains could generate profits that, in turn, could help reduce the 
amount of Federal subsidies needed, Amtrak may be missing a potential 
opportunity under PRIIA to generate additional profits by operating 
more special trains.
---------------------------------------------------------------------------
    \12\ A special train is one that does not appear on Amtrak's 
timetable since it is operated on an ``as-needed'' basis following a 
contractual agreement between Amtrak and the party requesting the 
service. An example is a passenger train added for a sporting event, 
such as the Super Bowl.
---------------------------------------------------------------------------
Amtrak Has Not Yet Been Required to React to Sections on a Decision-
        Making Methodology and Changes in Amtrak-Operated Routes
    Amtrak has not had to react to three sections because the events 
that are a prerequisite to requiring an Amtrak response have not 
occurred. Specifically:

   Because the Federal Railroad Administration has not 
        recommended any methodologies to determine which intercity 
        passenger routes and services to provide under Section 208, 
        Methodologies for Amtrak Route and Service Planning Decisions, 
        the precondition for Amtrak to respond has not been met.

   Because no Amtrak-operated route has been eliminated under 
        Section 215, Employee Transition Assistance, the precondition 
        for Amtrak to certify that it made a reasonable attempt to 
        reassign affected employees has not been met.

   Because no state has selected an entity other than Amtrak to 
        operate an intercity passenger train route under Section 217, 
        Access to Amtrak Equipment and Services, the precondition for 
        Amtrak to develop an access agreement to its equipment and 
        services has not been met.

    Senator Lautenberg. Thanks very much, Mr. Alves.
    Mr. Behm.

  STATEMENT OF MITCHELL BEHM, ASSISTANT INSPECTOR GENERAL FOR 
   RAIL, MARITIME AND ECONOMIC ANALYSIS, U.S. DEPARTMENT OF 
                         TRANSPORTATION

    Mr. Behm. Chairman Lautenberg, Senator Udall, thank you for 
inviting me here today to discuss FRA's progress in meeting its 
PRIIA responsibilities. As we testified in April 2010, PRIIA 
and ARRA together created significant challenges for FRA, an 
agency with no experience overseeing grant programs the size of 
those called for under PRIIA. My statement focuses on FRA's 
efforts to overcome these challenges.
    FRA has made noteworthy progress in meeting its PRIIA 
responsibilities, particularly related to Amtrak oversight. 
Specifically, FRA has established requirements for Amtrak's 
grant requests, developed metrics and minimum standards for 
measuring the performance and service quality of intercity 
passenger rail service, reviewed and approved Amtrak's capital 
plan to bring the railroad to a state of good repair, and 
established the Northeast Corridor Infrastructure and 
Operations Advisory Commission. FRA also issued interim 
guidance for high-speed rail grant program procedures, as 
required by ARRA, within the 120-day mandated timeframe.
    Despite these successes, FRA has yet to promulgate three 
rulemakings required by PRIIA. One rule would establish a pilot 
program for alternative passenger rail service on routes 
currently operated by Amtrak and two would govern the high-
speed rail grant program. According to FRA officials, these 
rules have been delayed because the agency has focused its 
limited workforce on issuing safety-related rules, consistent 
with the administration's priorities.
    Officials informed us that they plan to create a single 
comprehensive rule governing the grant program once all Fiscal 
Year 2009 and 2010 and ARRA funds have been obligated, and will 
incorporate lessons learned from the first rounds of grants.
    FRA also continues to develop its national rail plan, which 
the legislation required FRA to submit to Congress by last 
September. Without a final plan, FRA cannot complete PRIIA 
requirements to develop a process for designating, extending, 
or modifying high-speed rail corridors or a schedule for 
achieving measurable performance goals that include estimated 
funds and staff resources needed to accomplish each goal. A 
final national rail plan is also expected to provide a 
blueprint for States' intercity passenger rail plans.
    Both the preliminary plan and FRA's progress report on the 
plan, issued in September 2010, lack measurable goals to guide 
States' plans. For example, the preliminary plan and progress 
report do not define criteria that States can use to identify 
population densities and trip times that characterize high-
speed and intercity passenger rail markets. At the same time, 
it is unknown what role industry stakeholders, from equipment 
manufactures to service operators, will play. While rail 
industry stakeholders have expressed optimism about increased 
public investment in intercity passenger rail, there is 
uncertainty about how effectively private stakeholders can 
participate in the intercity passenger rail market without the 
final plan.
    Finally, FRA has not developed important grant-related 
regulations for application procedures and qualification 
requirements. As of August 2011, FRA had obligated well over 
half of its $10 billion capital grant program budget to more 
than 100 projects on the basis of its interim guidance. While 
the interim guidance describes possible factors for evaluating 
applications, such as transportation network integration, 
organizational capacity, thoroughness of management plans, and 
reasonableness of project completion schedules, these factors 
are largely qualitative. Without more quantitative metrics and 
specific grant-related regulations, FRA cannot be sure that its 
award decisions are based on sound ridership and revenue 
forecasts, public benefits valuations, and operating cost 
estimates. operating cost estimates. Moreover, it cannot ensure 
that its investments are based on competing projects' relative 
value.
    Promulgating effective grant-related rules and finalizing a 
viable national rail are no easy tasks, and FRA appears to be 
working hard to take these responsibilities head on. However, 
until the rules and plan are completed FRA cannot provide sound 
assessments of the net benefits of its high-speed rail 
investments.
    Mr. Chairman, this concludes my prepared statement. I'm 
happy to answer any questions you or other subcommittee members 
may have. Thank you.
    [The prepared statement of Mr. Behm follows:]

 Prepared Statement of Mitchell Behm, Assistant Inspector General for 
Rail, Maritime and Economic Analysis, U.S. Department of Transportation
    Mr. Chairman and members of the Committee,

    Thank you for inviting me here today to discuss the implementation 
of the Passenger Rail Investment and Improvement Act (PRIIA). As you 
know, PRIIA greatly expanded the Federal Railroad Administration's 
(FRA) role and tasked it with numerous significant responsibilities, 
including the creation of a High-Speed Intercity Passenger Rail (HSIPR) 
grant program and development of a National Rail Plan, which according 
to FRA would provide a blueprint for an efficient national system of 
passenger and freight rail corridors. In April 2010, we testified that 
this expanded role presented several challenges for FRA, including the 
development of policies to guide grant programs and the hiring of 
adequate staff to oversee implementation.\1\ The difficulty of these 
challenges has been exacerbated by the accelerated timelines and 
additional funding provided by the American Recovery and Reinvestment 
Act of 2009 (ARRA).
---------------------------------------------------------------------------
    \1\ DOT OIG Testimony, ``Federal Railroad Administration Faces 
Challenges in Carrying Out Expanded Role.'' CC 2010-050, April 29, 
2010. OIG reports and testimony are available on our website: 
www.oig.dot.gov.
---------------------------------------------------------------------------
    My testimony today focuses on (1) FRA's progress in meeting its 
PRIIA responsibilities, and (2) the challenges FRA continues to face in 
the expansion and improvement of intercity passenger rail. My testimony 
is based on our recent and ongoing work related to PRIIA, FRA, and rail 
issues in general.
In Summary
    FRA has made progress in meeting many of its responsibilities 
outlined in PRIIA. Most notably, FRA has made significant progress on 
requirements intended to improve its oversight of Amtrak. However, FRA 
has yet to complete its implementation of other PRIIA provisions, 
including finalization of rules that will provide specific guidance to 
HSIPR grant applicants in areas such as the forecasting of high speed 
rail projects' net benefits.
    Delays in the implementation of certain PRIIA provisions--
particularly the final National Rail Plan--significantly challenge 
FRA's ability to improve and expand intercity passenger rail. Without a 
final Plan, other PRIIA requirements cannot be completed and 
stakeholders' roles are uncertain. Furthermore, FRA has obligated more 
than half of its $10 billion HSIPR grant program budget for dozens of 
projects without providing applicants detailed guidance on how to 
prepare reasonable and reliable ridership and revenue forecasts, public 
benefits valuations, and operating cost estimates. As a result, FRA 
cannot be sure that it based these awards on the relative value of 
competing projects, or that its high-speed rail investments are 
prudent.
Background
    PRIIA, the first passenger rail authorization in 11 years, tasks 
Amtrak, the Department of Transportation, FRA, the States, and other 
stakeholders with improvements to rail service, operations, and 
facilities. PRIIA focuses on intercity passenger rail, including 
Amtrak's long-distance routes and the Northeast Corridor (NEC), State-
sponsored corridors throughout the Nation, and the development of 
designated high-speed rail corridors.
    With its numerous responsibilities for FRA, PRIIA has dramatically 
expanded the scope of the Agency's role. Historically, FRA's role has 
been limited primarily to the promulgation of railroad safety 
regulations, administration of several small grant and loan programs, 
oversight of Amtrak's operations, and disbursement of Amtrak's annual 
grant funds. PRIIA also calls for FRA to lead multiple new passenger 
rail service enhancement initiatives, and to develop from the ground up 
a multi-billion dollar high-speed rail discretionary grant program. 
PRIIA also enhanced FRA's Amtrak oversight role.
    FRA's new responsibilities under PRIIA took on additional 
significance when ARRA provided $8 billion to FRA and accelerated the 
timelines for the development of discretionary grant programs to jump 
start the development of high-speed rail corridors and enhance 
intercity passenger rail service.
FRA Has Made Progress Implementing PRIIA Requirements, But Key 
        Responsibilities Have Yet To Be Completed
    FRA has made significant progress implementing most of the 29 
responsibilities PRIIA required. Specifically, FRA has completed 9 of 
its responsibilities, and taken action on 16 more, including some key 
requirements we've identified. Finally, FRA has not started on 4 
responsibilities. Table 1 shows the status of FRA's efforts.

             Table 1. Status of FRA's PRIIA Responsibilities
                        [as of September 6, 2011]
------------------------------------------------------------------------
   PRIIA
  Section                   FRA Responsibility                   Status
------------------------------------------------------------------------
Sec.  206   Review and approve Amtrak's grant requests          
Sec.  207   Develop new or improve existing metrics and         
             minimum standards
Sec.  207   Collect data and publish quarterly reports on
             performance and service quality
Sec.  208   Obtain a qualified independent entity to develop
             and recommend objective methodologies for Amtrak
             Route decisions
Sec.  210   Monitor the development, implementation, and
             outcome of Amtrak's improvement plans
Sec.  211   Review and approve Amtrak's Capital Plan            
Sec.  212   Establish an NEC Infrastructure and Operations      
             Advisory Commission
Sec.  212   Establish an NEC Safety Committee
Sec.  214   Complete a rulemaking to develop a pilot passenger
             rail program
Sec.  215   Develop an employee transition assistance program   
             costs necessary to provide or improve intercity
             passenger rail transportation
Sec.  301   Issue a final rule establishing application and
             qualification procedures for intercity passenger
             rail grants
Sec.  302   Make grants to assist in financing the capital      
             costs for high priority rail corridor projects to
             reduce congestion or facilitate ridership growth
Sec.  303   Establish minimum requirements for the preparation
             and periodic revision of State rail plans
Sec.  304   Select and approve a new rail tunnel alignment in
             Baltimore and ensure completion of the related
             environmental review process
Sec.  306   Establish and carry out a rail cooperative
             research program
Sec.  307   Develop a long-range national rail plan
Sec.  307   Develop a schedule for achieving specific,          
             preclearance of passengers traveling from the
             U.S. to Canada
Sec.  407   Report to Congress on the results of a study and
             actions to streamline compliance with historic
             preservation requirements and on actions to
             expedite decisionmaking for capital projects
             involving properties of disputed historical
             significance in the States of Alaska and North
             Carolina
Sec.  501   Make grants to finance capital projects in          
             designated high-speed rail corridors
Sec.  501   Issue regulations for the high-speed rail corridor
             program
Sec.  502   Issue a request for proposals for projects in any   
             of the 10 designated high-speed rail corridors or
             the Northeast Corridor
Sec.  502   Evaluate high-speed rail corridor proposals
------------------------------------------------------------------------
 Completed
 In Progress
 Not Started
Source: OIG analysis.

    FRA has made significant progress implementing PRIIA provisions 
related to Amtrak oversight. Specifically, FRA has met its 
responsibilities to:

   review and approve Amtrak's grant request;

   develop metrics and minimum standards for measuring the 
        performance and service quality of intercity passenger train 
        service;

   review and approve Amtrak's Capital Plan; and

   establish the Northeast Corridor Infrastructure and 
        Operations Advisory Commission.

    FRA has also made progress on PRIIA's other Amtrak oversight 
provisions: quarterly reports on performance and service quality of 
intercity passenger train operations; monitoring of the development, 
implementation, and outcome of Amtrak's improvement plans for long-
distance routes; establishment of a Northeast Corridor Safety 
Committee; and the monitoring and periodic reviews of Amtrak's 
compliance with the Americans with Disabilities Act and the 
Rehabilitation Act.
    FRA met PRIIA's October 2009 deadline to complete a Preliminary 
National Rail Plan, but has yet to complete the final National Rail 
Plan. Although PRIIA does not impose a deadline for the final Plans' 
completion, the Consolidated Appropriations Act for Fiscal Year 2010 
required the Secretary of Transportation to submit the Plan to Congress 
no later than September 15, 2010.
    Furthermore, FRA has yet to promulgate three rulemakings required 
by PRIIA, and the deadlines for each have passed. One rule would 
establish a pilot program for alternative passenger rail service on 
routes currently operated by Amtrak, and two would govern HSIPR grant 
programs. In June 2009, FRA issued interim guidance for HSIPR grant 
program procedures, as required by ARRA, including guidance on the 
preparation of analyses, such as revenue forecasts, operating and 
maintenance cost estimates, and estimates of user and non-user benefits 
for HSIPR grant applicants. FRA is also required to implement 17 
separate rulemakings, such as specifications for Positive Train Control 
and hours of service for railroad operations employees, as a result of 
the Rail Safety Improvement Act, which was passed at the same time as 
PRIIA.
    According to a senior FRA official, the PRIIA-required rules have 
been delayed because the Agency focused on safety-related rulemakings, 
consistent with the Administration's priorities. Agency officials also 
stated that FRA's limited workforce capacity has affected its ability 
to issue rulemakings. Our work confirms that the rulemaking process is 
long and complicated. The officials informed us that they plan to issue 
a single, comprehensive rulemaking covering PRIIA's rules for governing 
the HSIPR grant program (Secs. 301, 302, and 501) once all of the funds 
appropriated in Fiscal Years 2009 and 2010 and under ARRA have been 
awarded. The officials further stated that this timing will allow the 
Agency to incorporate into the rulemaking lessons learned from the 
first rounds of grants.
Delays in Completing Certain PRIIA Requirements Create Challenges to 
        Expanding and Improving Intercity Passenger Rail
    Delays in the completion of certain PRIIA requirements--
particularly the National Rail Plan--have created a number of 
challenges for FRA. Without a final National Rail Plan, other 
requirements cannot be completed, and public and private sector 
stakeholders' roles are uncertain. Also, the lack of important grant-
related regulations for application procedures and qualification 
requirements could result in potential grantees' use of a variety of 
methodologies in the development of their applications.
Performance and Progress Measures Cannot Be Completed and the Role of 
        Stakeholders Remains Uncertain Without a Final National Rail 
        Plan
    According to FRA, a final National Rail Plan would be the basis for 
the completion of other PRIIA requirements, including a process for the 
designation and extension of high speed rail corridors, and could also 
define the roles of public and private stakeholders. The lack of a 
final plan has also delayed FRA efforts to satisfy PRIIA requirements 
to develop a schedule for achieving specific, measurable performance 
goals that include estimated funds and staff resources needed to 
accomplish each goal.
    A final National Rail Plan is also expected to provide a blueprint 
for interstate rail corridors to guide States' intercity passenger rail 
plans. Both the preliminary plan and FRA's progress report on the final 
plan--issued in September 2010--lack measurable goals to guide the 
States' plans. For example, one goal in the progress report is the 
establishment of community connections with high-speed and intercity 
passenger rail in areas where population densities and competitive trip 
times create markets. However, FRA did not define criteria that States 
can use to identify population densities and trip times that 
characterize high-speed and intercity passenger rail markets.
    At the same time, it is unknown what roles various stakeholders 
will play. Although FRA's September 2010 progress report states that 
successful implementation of high-speed intercity passenger rail 
requires participation of a number of industry stakeholders, from 
equipment manufacturers to service operators, it does not provide 
specifics about what their roles will be. Rail industry stakeholders 
have expressed optimism about increased public investment in intercity 
passenger rail, but without a final plan there is uncertainty about how 
effectively private stakeholders can participate in the intercity 
passenger rail market. The Government Accountability Office has 
reported that Federal guidance on the role of stakeholders could help 
provide structure to the intercity passenger rail market.\2\
---------------------------------------------------------------------------
    \2\ GAO Report, ``High Speed Rail: Learning From Service Startups, 
Prospects for Increased Investment, and Federal Oversight Plans'' GAO-
10-625, June 17, 2010.
---------------------------------------------------------------------------
Final Regulations Governing HSIPR Would Guide Assessments of the 
        Investments' Net Benefits
    As of August 2011, FRA had obligated more than half of its 
approximately $10 billion capital grant program budget on the basis of 
its interim guidance, which was developed under tight timeframes. 
Specifically, the Agency has obligated $7.4 billion to 102 projects 
without important grant-related regulations for application procedures 
and qualification requirements. While the interim guidance describes 
possible factors for the evaluation of applications--such as 
transportation network integration, organizational capacity, 
thoroughness of management plans, and reasonableness of project 
completion schedules--these factors are largely qualitative. This 
interim guidance also does not provide information on how these metrics 
should be weighted, increasing the subjectivity of the evaluation 
process. Without more quantitative metrics and specific grant-related 
regulations, FRA cannot be sure that its award decisions are based on 
sound ridership and revenue forecasts, public benefits valuations, and 
operating cost estimates. Moreover, it cannot ensure that its 
investments are based on competing projects' relative value.
Conclusion
    With the passage of PRIIA, FRA was given the daunting task of 
overseeing the implementation of the Nation's high-speed rail system--
at a time when a myriad of programs and projects vie for limited 
Federal dollars. While FRA has made notable progress in carrying out 
its expanded responsibilities with limited resources, finalizing the 
National Rail Plan and grant-related rules is critical to ensuring 
viable intercity rail plans, interstate cooperation, and sound 
assessments of the net benefits of high-speed rail investments.

    Senator Lautenberg. Thank you very much.
    Mr. Boardman, as part of the Fiscal Year 2012 budget 
request, Amtrak included funding to begin design on the Gateway 
Tunnel project. At the same time, Amtrak has been achieving 
record ridership levels. Now, what will be the effect expected 
if the Gateway Tunnel gets going and gets completed? What can 
it mean to future ridership for Amtrak?
    Mr. Boardman. I think it's not just Amtrak ridership, Mr. 
Chairman, that we're really talking about here, as I tried to 
relate a little bit earlier. It's ridership especially from 
that little State of New Jersey that needs to go across the 
river into its suburb of New York.
    But the ability to actually get more trains into Penn 
Station is absolutely critical, because more people want to get 
into Manhattan and back to New Jersey. In order to do that, you 
have to have a place to put the commuter trains. New Jersey 
Transit has not been able to have a station in New York to 
actually park its trains and to go back out again.
    So the critical piece is getting the tunnels, which gives 
us a redundancy between both the normal Amtrak services back 
and forth, and especially the new high-speed coming back and 
forth between Boston and Washington. But it also gives us a 
place to get the commuter trains out of the way for the 
increase in service and speed that needs to go through Penn 
Station itself.
    If we're not going to move forward with that, we're going 
to run out of capacity on the Northeast Corridor relatively 
soon. Within less than 20 years, there will be no additional 
capacity. So for all of those that believe that they can add 
more trains either south or north of New York, they'll not be 
able to because it'll be dictated by the bottleneck of the 
tunnels and the service area in Penn Station.
    Senator Lautenberg. So are you saying that the tunnel, if 
completed, will not produce the kind of efficiencies without 
having the new station built as well?
    Mr. Boardman. It'll improve efficiencies and speed. But the 
problem inside--it's kind of connected together. It's that 
Block 780 that's in Penn Station itself. Let me give you the 
example, I think, the analogy. Back when Long Island Railroad 
really wanted to improve the service in Penn Station, they 
built the huge West Side Yards. So when they come through the 
four eastern tunnels, they come into the station, they dwell a 
very short period of time, and they go store their trains to 
the west. That means that they don't have to go back through 
the tunnels again in order to increase the number of people 
coming in.
    The problem exists for New Jersey Transit as well and for 
Amtrak, but New Jersey Transit primarily, as they come through 
the two tubes that we have today and then they have to go back 
through those same tubes, which ties up the station. But as you 
have four tubes, four tunnels----
    Senator Lautenberg. Before we run out of time, the question 
now, as it developed is whether or not these are symbiotic 
things, whether a new terminal has to be built in order to 
maximize the efficiency of the tunnel.
    Mr. Boardman. That's the right question.
    Senator Lautenberg. But, Mr. Boardman, the problem that we 
have to face is, will we gain enough if we just look at the 
first phase, which is the tunnel?
    Mr. Boardman. Yes.
    Senator Lautenberg. Does that do anything with the present 
structure? And you know very well that Penn Station, New York, 
for everybody's information, carries more people in a day than 
three major airports, Newark, JFK, and LaGuardia. It's 
incredible the number of people that are forced to go through 
that space.
    Mr. Boardman. The answer is yes, but I want both.
    Senator Lautenberg. So that's two of us. Now where do we 
go?
    Anyway, thanks, Mr. Boardman.
    Senator Udall, you have some questions? Please.
    Senator Udall. Thank you, Senator Lautenberg. I really 
appreciate you doing this hearing.
    Mr. Szabo, back to my opening statement and why no high-
speed rail corridor exists in the Southwest. Could you explain 
the process for determining the locations of the corridors and 
is there a possibility for inclusion of additional corridors in 
the future?
    Mr. Szabo. I think the important thing to do is to go back 
to my testimony when I was talking about the growth of the 
mega-regions. Clearly, the region that you're talking about is 
one of those identified mega-regions where you are going to see 
substantial population growth and where there will be the need 
for alternatives like passenger rail.
    The process for creating the high-speed rail corridors 
comes from a decade-ago legislation that basically was to have 
grade crossing protection dollars available to those particular 
corridors. So it's something that, frankly, is evolving as we 
grow this high-speed rail program to take on a new and 
different meaning.
    When we release the national rail plan, quite frankly, it's 
going to put these designations--make them--render them moot. 
So as far as the ability for your region to be a part of the 
plan, it will be based on the good planning done by the States 
in cooperation with our FRA staff, and showing the ridership 
capacity of those particular markets that you're talking about. 
There will be no reason, with good planning, why there 
shouldn't be the opportunity for those to move forward.
    Senator Udall. That's good to hear, because I know that 
just a couple of years ago there was interest by the States. 
Both Texas and New Mexico and Colorado all showed an interest, 
in terms of writing to the administration and urging that there 
be some kind of corridor. So that's very, very encouraging. I 
appreciate that.
    I wanted to ask you--as you well know, and I think you said 
this in your opening statement, President Obama has made high-
speed rail a cornerstone of this administration, with the goal 
of providing high-speed rail service to 80 percent of Americans 
within 25 years. What percent of Americans currently have 
access to rail and what percentage of Americans are projected 
to have access upon the completion of the projects funded by 
ARRA and PRIIA grants?
    Mr. Szabo. We'll have to get back to you for the record 
with an answer to that.
    [The information referred to follows:]

    Approximately 70 percent of Americans currently have access to 
intercity passenger rail. With the exception of new services being 
introduced to connect Iowa City to Chicago and Brunswick, Maine to the 
Boston-Portland corridor--connecting an additional 550,000 Americans to 
passenger rail--all of the current American Recovery and Reinvestment 
Act of 2009 and FY 2010 Department of Transportation and Related 
Agencies Appropriations Act funded investments are improving existing 
corridors (or, in California, supporting development of a high-speed 
corridor that will serve most of the same communities as currently 
served by existing conventional corridors). The corridors receiving 
capital investments from the High-Speed Intercity Passenger Rail 
(HSIPR) program cumulatively serve approximately 44 percent of 
Americans.

    Senator Udall. OK. Well, I'd very much appreciate you doing 
that.
    Mr. Boardman, I wanted to ask a little bit about the impact 
of privatizing Amtrak's NEC. Amtrak's two long distance routes 
in New Mexico, the Sunset and the Southwest Chief, play a 
crucial role in connecting communities, especially in my rural 
State of New Mexico. These trains provide much-needed efficient 
transportation for communities and tourists throughout New 
Mexico. In addition to serving passengers in five New Mexico 
cities, every year the Southwest Chief also transports Boy 
Scouts from my State and across America to Raton, New Mexico, 
to attend the Philmont Scout Ranch, where they camp and train 
in 137,000 acres of high adventure wilderness in the Sangre de 
Cristo Mountains.
    I'm concerned by the current proposals to make drastic 
changes to Amtrak, most notably to separate the Northeast 
Corridor from the rest of the Amtrak system. How would 
transferring the Northeast Corridor's title and assets impact 
Amtrak's long distance routes and would Amtrak's long distance 
routes, such as the Sunset and Southwest Chief, be able to 
continue service at the same level?
    Mr. Boardman. I think it's a difficult question to answer 
in the time that's given, but let me go at it this way. There 
are three critical pieces that Amtrak needs--services that 
Amtrak provides: the Acela service and its cousin, the Regional 
operation in the Northeast Corridor; the long distance trains; 
and the State corridors that feed much of the system itself.
    One of the things I thought about as we really looked at 
what the House mark was by taking away all the State services, 
which is in effect what the plan would do by eliminating any 
Federal support of State service, it's almost half the service 
that Amtrak operates. As you talked to Administrator Szabo a 
couple of minutes ago about the potential for high-speed rail 
or no rail at all in the Front Range service that was talked 
about from Cheyenne all the way down through New Mexico in the 
past, the critical piece is to keep the current service to 
begin with.
    The service right now is in jeopardy in a lot of ways, the 
long distance trains, for things that are happening to us that 
we have no control over. For example, at Raton, if you 
remember, BNSF recently was going to abandon that particular 
section all the way over to Trinidad. And we resisted that. We 
said, we're not going to move down to the Transcon Corridor. 
Instead, we'll stay where we are at this point in time.
    So part of the difficulty that we're having here today is 
to understand we need to maintain--and you correctly pointed it 
out--the connectivity, the Southwest Chief and the Sunset 
Limited, in order to be connected to the rest of the country. 
And yet the Southwest Chief is one of the highest-cost services 
for Amtrak to operate. Everybody believes it might be the 
Sunset Limited, but the fact is, because we have an excellent 
railroad, BNSF, that provides us with more timely service more 
often than anybody else, they receive more performance bonuses 
as a result.
    So if you were to look at it purely in terms of which one 
costs the most, the first long distance train that would go 
would be the Southwest Chief, and yet it's one of the best 
routes we have for connectivity.
    I spent a couple of days in Denver in this past flood 
season and heard and listened to people who said that Denver 
might be a hub for that whole area, including the Front Range 
service. Your real question is the Northeast Corridor and the 
privatization of it. It has a different answer, but the part of 
the answer that relates to what we're talking about is again 
that connectivity. You don't get to the 30 million riders that 
Ted talked about a few minutes ago without having a place for 
people to go and a seamless way for them to connect.
    Senator Udall. Thank you.
    Chairman Lautenberg, I appreciate your courtesies on the 
time and running over a little bit. Thank you very much.
    Senator Lautenberg. Not at all. You can choose to stay, if 
you have other questions. Otherwise, as you know, the record 
will be open and you can submit questions in writing.
    Senator Udall. Thank you.
    Senator Lautenberg. Mr. Szabo, last Thursday night, 
President Obama called for increased investment in passenger 
rail as part of the American Jobs Act. Yet House Republicans 
last week voted dramatically decreased funding, including a 60 
percent cut in Amtrak's operating budget. What kind of a price 
will we pay for jobs, economic competitiveness, if this 
continues as they propose?
    Mr. Szabo. I think it's important to note--and I believe I 
stated this in my opening testimony--that congestion today is 
costing families and businesses, and our economy nearly $130 
billion each year. We're wasting around 4 billion gallons of 
fuel every year because of congestion. Families are also 
wasting roughly 5 billion hours annually because of congestion. 
That's the cost to our economy today.
    We've got to start building now to address the future, 
because by the year 2050 we're going to have another 100 
million people in our country. To put that 100 million people 
into perspective, that's like the population of another 
California, Florida, Texas, and New York all combined. Again, 
as I stated in my testimony, the vast majority of this is going 
to be concentrated in the mega-regions where you're seeing the 
population growth today.
    So this congestion that is already costing us nearly $130 
billion a year is just going to get substantially worse. We 
have to start providing travel alternatives to our citizens. We 
have to find ways to better balance our transportation networks 
so we're able to use the mode that's most efficient for a 
particular journey. When you have sufficient population 
densities in radiuses of 500 to 600 miles, when measured by 
fuel consumption, poisonous emissions, the consumption of land, 
passenger rail is simply the most efficient mode of 
transportation. So it has to be part of the mix.
    Senator Lautenberg. Thank you.
    Mr. Boardman, House Republicans have also proposed 
eliminating State-supported Amtrak service. What happens if you 
do that? What impact will that have on Amtrak's ability to 
continue support for passenger rail service across the country?
    Mr. Boardman. We had a policy in PRIIA and it was the 
section 209 policy that was established. It wasn't a dictated 
policy that you go out to the States and say: This is what 
you're going to pay. It was a negotiation, a discussion about 
the fact that there were costs. The States will cover all of 
our direct costs, all our labor costs, all our fuel costs, 
those kinds of questions, but how much more of the service's 
costs to the country, to Amtrak, do the States need to pick up? 
It's a significant amount.
    It's not every nickel that you're going to drain out of the 
States to make this work. But over time the States need to be 
paying for their service. And they all recognize that. So we've 
been moving in that direction and it's out right now for a vote 
by the States.
    But in their wisdom, there was a decision made that, by 
October 1, if it were to pass, we would cutoff the States 
entirely, without any compassion and understanding of the 
people that needed to get to work or to a doctor's office. 
Forty-two percent of our passengers with disabilities who 
traveled on Amtrak last year rode long distance trains, so a 
significant portion rode the State trains. It's a lot easier 
for them to use our trains than it is to use another mode of 
transportation. And there is no other mode on the surface of 
the United States that connects the country together like rail, 
none.
    Senator Lautenberg. Why is it so hard to convince people of 
that? It's a mystery.
    Earlier this year, the House Republicans released a 
proposal to fully privatize the Northeast Corridor. In New 
Jersey, the corridor is a vital component of our transportation 
network, providing access for hundreds of thousands of 
commuters using Amtrak and New Jersey Transit every day. If 
this proposal moves forward, what might the potential impacts 
be to commuter service on the Northeast Corridor?
    Mr. Boardman. I think, Mr. Chairman, that there are two 
huge risks here that are not well understood, and yet they 
should be. The first is safety, and I know Senator Toomey's 
gone now, and he talked about positive train control and I'm 
strongly supportive of positive train control and Amtrak will 
meet that requirement by 2012. And we recognize that there are 
going to be difficulties for others to meet that, and we're 
aware of that and we'll deal with it.
    But safety itself--there are many parts of the world that 
are not paying attention to safety like America pays attention 
to safety, for example China, and recently their high-speed 
trains that were 220 miles an hour have been reduced to 186 
miles an hour, and that was because they had problems in 
construction. They may reduce it again with the recent 
derailment that they had. Britain tried a privatization model, 
then changed, but they didn't change until there was 
significant loss of life.
    So what I see is safety, which is a huge issue, and those 
models that one talks about are generally all foreign models, 
models that don't deal with the facts of the Northeast 
Corridor. I think there's a huge risk for safety as we apply 
our facts to somebody else's model or vice versa. We know what 
our facts are and we are improving the Northeast Corridor.
    The second risk is environmental. Many of the communities 
around the world, other countries around the world, don't pay 
attention to the needs and the rights that people have or to 
look at what would happen environmentally. So it takes us 
longer in many cases to get the job done. So I see those as two 
huge risks.
    Senator Lautenberg. As I see our plans developing, I'm 
reminded of my personal situation, where I take the train 
regularly from Washington to New Jersey and vice versa. And I 
wonder whether there would be a significant discount if I 
bought a 20-year pass on the railroad?
    [Laughter.]
    Mr. Boardman. No, but we can guarantee it wouldn't shake 
any longer.
    Senator Lautenberg. Mr. Boardman has heard my complaints 
about trying to write on the train as I ride. I don't want 
people to see that shaky handwriting. That has to do with age, 
not with me.
    [Laughter.]
    Senator Lautenberg. Mr. Alves, recently Amtrak selected a 
consultant to develop a business plan for high- speed rail on 
the Northeast Corridor that will attract more private 
investment while maintaining Amtrak's control over the 
corridor. What impact might this kind of a business plan have 
on Amtrak's bottom line?
    One of the things that we never really discuss is what's 
the net result of these things, can it help Amtrak get on a 
solid footing where each year doesn't bring more indebtedness. 
What can happen on the private sector side when Amtrak insists 
on maintaining its control, because we know very well that one 
of the great fears--and we've seen this in other countries--is 
that, given the opportunity not only to invest, but also, 
frankly, to manage direct policy, there's a conflict that 
immediately can creep in there between getting a better return 
on their investment for the investors, and the need to be able 
to carry passengers at a reasonable rate.
    Mr. Alves. We are very supportive of Amtrak's efforts to 
involve the private sector. Because we haven't done work on 
Amtrak's efforts to attract private investment, I'm not in a 
position to be able to comment on the results of that. But 
beyond that piece of your question, I think you're asking an 
important question about Amtrak's ability to operate 
efficiently and effectively and provide high quality service. 
Amtrak, under Joe Boardman's leadership and under the Board of 
Directors' leadership, is making significant improvements in 
the operations of the business and trying to operate the 
business like a business.
    Improved customer service is a critical and important 
strategic goal that Amtrak has identified. Operating as a 
business and improving financial results are goals.
    Amtrak is about to complete a strategic plan that 
identifies those strategic goals and makes some major changes 
to the way the company is organized and directed. So without 
rambling on and on, I would say that Amtrak has the potential 
to operate more efficiently than it does today. They're heading 
in the right direction to do that and at the same time provide 
good customer service.
    Senator Lautenberg. But what this gets to is what can 
possibly be imagined here that an investor would expect to get 
in return, and is it likely that an investor would put up the 
resources without demanding tighter control over operations, 
let's say, of the railroad?
    Mr. Alves. I'm going to have to defer that one to Joe 
Boardman, who's in a better position to answer than I am.
    Mr. Boardman. It's a question I think we've started to ask 
ourselves, Senator. We know that no one would come in here to 
do anything without Amtrak as a partner, regardless of what you 
may hear. I often ride on the head end of our trains, an Acela, 
up with the locomotive engineer. It was shortly after the 
privatization issue came out and there was the typical 
worrying, and I said to him, because I think it's important 
that we not get distracted from the work we've got to get done: 
What are you worried about? He said, ``well, will I have my 
job? ''I said: Who's going to run this train? Whoever owns it, 
they can call Amtrak peanut butter, you're the one who's going 
to operate this train, and Amtrak's going to run the train. The 
Amtrak people, the women and men of Amtrak, are those who are 
going to get the job done.
    So Amtrak is a key partner. They understand, going back to 
what I said earlier, the facts of this corridor. We're trying 
to figure out ourselves that all this discussion of 
privatization--we have lots of people that are interested. What 
are they interested in? Are they interested in running trains? 
We don't really think so.
    Senator Lautenberg. I spent a lot of time in the business 
world. Miss it on paydays, but other than that I like being 
here better. The question is whether or not there are going to 
be demands made in fairness on the agreements, the contracts, 
that say, OK, we the investors reserve a right that if Amtrak 
doesn't do this, that, or another thing, the way we think it 
should be done, we reserve the right to come in and manage it 
and control it.
    Mr. Boardman. I understand those may be some of the things 
that we'll face and have to deal with.
    Senator Lautenberg. Certainly in my view it could very 
significantly raise the question about, what's the return 
likely to be?
    Mr. Boardman. Right. I think that part of the return, where 
we're seeing about a billion dollars, at least in the initial 
study, and we're refining that study, as revenue in excess of 
what it takes to run the operation. Now we're looking at excess 
revenue as paying for the capital investment, like the 70 
electric locomotives that we just purchased with debt from the 
FRA, from the RIF program.
    Those dollars then are not available to put into helping 
subsidize the long distance trains, where we're not receiving 
enough funding to maintain them.
    So all of those funding levels will shift differently and 
there will be an expectation by any investor that there will be 
a return that comes from those kinds of operations for the 
future, along with any other development potential. I don't 
remember what the French told us. We had two peer organizations 
look at the plans and they thought we were maybe estimating a 
little less than we should be for revenue and a little more in 
terms of costs than we should be. But they have a significant 
amount, percentage of revenue, that doesn't come from train 
operations. It comes from other activity. I don't remember what 
that percentage is.
    But all of those are things that we're going to be asking 
this study to help us identify.
    Senator Lautenberg. I'm going to close this hearing, 
thanking all four of you for your presentations today, but also 
for your interest. I make a strong personal commitment here. 
Since I have been in the Senate, now 27 years, I have worked as 
hard as I could to help Amtrak become a more efficient, more 
competitive avenue of transportation than we presently have 
with automobiles or airplanes.
    If we could, it was once mused about that maybe one day we 
could have a 90-minute ride from Washington, D.C., to New York. 
Mr. Boardman, you talked about that. If that could ever be, the 
efficiencies that could be gained, it would relieve room in the 
sky because the shuttles that now are employed for short 
distances are really the most efficient way to travel. The 
highways, everybody knows they should be called ``slow ways'' 
and not ``highways.''
    But the one thing that all of us here who have an interest 
have to maintain is our determination to fight against these 
reckless cuts that are done without understanding what the 
consequences may be. It sounds good in political wordsmithing, 
but it doesn't work when you think about it. We are such an 
advanced country in so many ways. I remember when the highway 
system was developed in the 50s with President Eisenhower, and 
there were several unintended consequences. Number one is that 
we didn't allow room with which to build more of these systems.
    Second, that we built it for--and Mr. Szabo I think 
mentioned something that I talk about frequently, and that is 
the incredible growth in population that we've seen. In the 
last 40 years we grew by more than 100 million and the next 100 
million is going to come in a much shorter period.
    So here we have a system that was fundamentally established 
in the 50s. What the population was, we can guess but it was a 
heck of a lot less than we have now. And we have more cars 
coming to the road, and we don't want to stop personal use of 
automobiles, but how much of the Earth's surface can we use? 
How much of the air can we spoil? How much of the time can we 
lose?
    We've got to think about these things, and I don't know how 
we drill this into the skeptics any harder than we do, but 
we've got to keep on doing it.
    And I thank you all for your interest, and we're going to 
continue this battle together. Thank you very much.
    [Whereupon, at 11:10 a.m., the hearing was adjourned.]
                            A P P E N D I X

   Response to Written Question Submitted by Hon. Maria Cantwell to 
                          Hon. Joseph C. Szabo
    Question. Mr. Szabo, as you know, in my home state of Washington, 
we've had our Amtrak Cascades rail service operating as a partnership 
between Amtrak, Washington and Oregon for many years. If the provision 
included in the House FY2012 Transportation-HUD Appropriations Act, 
which would prohibit Federal Amtrak funding on state-supported routes, 
passes into law, there will be significant changes to how Amtrak 
Cascades operates in Washington--including immediately eliminating one 
of four daily round-trips between Seattle and Portland.
    At the same time, the Washington State Department of Transportation 
(WSDOT) has begun investing $781 million in the Pacific Northwest Rail 
Corridor to build new track, reduce delays, improve reliability and on-
time performance, and eventually add two daily round-trips between 
Seattle and Portland. Funded through high-speed rail grants 
administered by the Federal Railroad Administration, these upgrades are 
possible due to recent agreements signed by our state DOT, Amtrak, 
Sound Transit and BNSF Railway.

          What would the effect of the House language, which 
        would undermine the current agreed-upon Amtrak Cascades service 
        outcome levels, be on the agreements required by FRA and signed 
        by WSDOT, BNSF and Amtrak for the obligation of high-speed rail 
        money in Washington state?

          How would this affect agreements related to the 
        obligation of high-speed rail money nationwide?

    Answer. The proposed language in the House version of the FY2012 
Transportation-HUD Appropriations Act that would prohibit Federal 
Amtrak funding on state-supported routes would have an effect on 
service outcome agreements signed by High-Speed Intercity Passenger 
Rail Program grantees and stakeholders. The agreements for all HSIPR 
projects assume continuing existing passenger rail service and tie the 
investments to improved service and benefits on top of the existing 
service. If the House language was implemented, approximately $13 
million per year in operating subsidies would be needed in order to 
continue existing service and approximately $7--$11 million on top of 
that would be needed for improved service after the completion of the 
HSIPR funded project.
    However, the final FY2012 Transportation-HUD Appropriations Act, 
signed into law by the president on November 18, did not include the 
language that would prohibit Federal Amtrak funding on state-supported 
routes and thus there will be no effect on the Pacific Northwest Rail 
Corridor high-speed rail project or any other high-speed rail projects 
nationwide.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Frank R. Lautenberg to 
                          Hon. Joseph C. Szabo
    Question. Due to costs and technology implementation concerns, 
railroads--particularly commuter rail--are having difficulty meeting 
the 2015 requirement to install Positive Train Control. Yet the 
Administration's current budget proposes no funding for the grant 
program that helps railroads prepare. With the 2015 deadline looming, 
what is the Administration doing to help cash-strapped commuter 
railroads meet this mandate?
    Answer. The level of funding required by the commuter railroads to 
implement Positive Train Control (PTC) on their systems exceeds the 
funds authorized by the Rail Safety Improvement Act of 2008 (RSIA) to 
advance ``the deployment of train control technologies, train control 
component technologies, processor-based technologies, electronically 
controlled pneumatic brakes, rail integrity inspection systems, rail 
integrity warning systems, switch position indicators and monitors, 
remote control power switch technologies, track integrity circuit 
technologies, and other new or novel railroad safety technology.'' \2\ 
The Administration's Fiscal Year 2012 Budget Request did propose $50 
million in Railroad Safety Technology Grants (RSTG) within the Capacity 
Building & Transition Assistance program in the Network Development 
component of the National High Performance Rail System. The budget 
request indicated that this level of funding would help identify common 
issues and solutions that will facilitate national deployment of PTC.
---------------------------------------------------------------------------
    \2\ See 49 U.S.C. 20158(a).
---------------------------------------------------------------------------
    The RSTG Program was authorized through RSIA at $50 million each 
year between 2009 and 2013, but only $50 million has been appropriated.

   Even if all the funds authorized under this program were 
        available, and dedicated solely as direct grants for PTC system 
        implementation on commuter railroads, the $250 million total 
        amount would not satisfy the total financial requirements of 
        the commuter railroads.

   In Fiscal Year (FY) 2010, FRA had more than $230 million in 
        grant applications for the $50 million in appropriated funds--
        providing evidence that the demand for such resources is much 
        higher than the funds available.

    In allocating the $50 million appropriated, FRA identified a number 
of PTC technical issues that are common to all railroads (both commuter 
and freight) that impact PTC implementation, and elected to use the 
funds to address these shared issues. Some of the common hardware and 
software developmental issues are interoperability in a high-speed rail 
environment, limited shared communications in a single high-density 
infrastructure, security and identity management standards, and a rapid 
and reliable track database verification system. By doing so, FRA hopes 
to leverage the appropriated funds to gain the following:

   Greater understanding regarding limited shared 
        communications in a single high-density infrastructure.

   Design work on Electronic Train Management System/
        Interoperable Electronic Train Management System (I-ETMS) and 
        Advanced Civil Speed Enforcement System (ACSES)/Advanced Speed 
        Enforcement System interoperability.

   Security and identity management standards.

   A rapid and sufficiently reliable track database 
        verification system.

   Validated ACSES standards.

   A line safety and security risk route evaluation tool.

   A 220 MHz PTC radio design and small scale production units.

   Verification that I-ETMS will operate in a high-speed rail 
        environment (above 125 mph).

   Limited analog to digital communications infrastructure 
        upgrade (with lessons learned).

    FRA is attempting to reduce the engineering efforts required of the 
commuter railroads by:

   Issuing ``Type Approvals'' for PTC system configurations. 
        Commuter railroads using the previous type-approved systems 
        eliminates the need for them to reproduce certain complex 
        safety documents.

   Providing commuter railroads access to technical data being 
        funded as part of the RSTG Program.

    FRA is working closely with the Federal Communications Commission 
to determine if communications spectrum can possibly be reallocated 
from existing license holders to address the spectrum needs of the 
commuter railroads. Such a reallocation, however, has significant 
adverse costs and programmatic implications to the existing license 
holders. Spectrum is a scarce resource, and because of the limited 
spectrum availability, supporting the commuter railroads may 
potentially result in simply transferring the problem to another set of 
authorized spectrum users.
    Commuter railroads may also potentially qualify for a loan or loan 
guarantee under the FRA Railroad Rehabilitation and Improvement 
Financing Program (RRIF). FRA is authorized to provide direct loans and 
loan guarantees up to $35 billion. Direct loans may fund up to 100 
percent of a railroad project, with repayment periods of up to 35 
years. FRA has no active RRIF applications from commuter railroads for 
PTC projects at this time.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Claire McCaskill to 
                          Hon. Joseph C. Szabo
    Question 1. There was tremendous difficulty in getting high speed 
rail grant awards obligated in Missouri because of performance and on-
time metrics that the Federal Railroad Administration (FRA) added after 
the awards had gone out. In one case, it took over a year to have FRA, 
the Missouri Department of Transportation and Union Pacific come to an 
agreement on the metrics, meaning that we lost valuable time in getting 
the projects started. These projects create jobs and will improve the 
ability to move more passenger trains in my state. I recognize that FRA 
had a lot on its plate with the amount of rail projects that were 
awarded and that it wants to ensure the money is spent correctly. I 
admire the agency's diligence in doing so. But the coordination on the 
metric requirements was poor and it took far too long to resolve. Going 
forward on future rail projects, it is important that all parties get 
on the same page before award decisions are made. How can we improve 
this coordination between the FRA, the states and the rail companies 
that own the lines? Is there more information that FRA needs beforehand 
from the other parties that would streamline this process?
    Answer. The High-Speed Intercity Passenger Rail (HSIPR) program has 
created new relationships between FRA and the States and between the 
public sector and the private sector railroads. Each of the parties had 
to learn somewhat new roles, responsibilities and expectations. I 
believe that much of the concern expressed behind your question has 
been addressed as we have successfully entered into agreements with the 
States, and the States have entered into agreements with the railroads, 
that have permitted FRA to obligate essentially all of the HSIPR 
funding made available under the American Recovery and Reinvestment 
Act. Since HSIPR was a new program, many States had not undertaken all 
of the feasibility, preliminary design, and engineering and 
environmental studies that are prerequisites for project 
implementation. Developing this information in advance would help 
streamline the process of application review, obligation and project 
implementation. I would note that FRA is now funding these activities 
on a number of corridors.

    Question 2. While the future of funding for high-speed rail 
projects is less certain today, there are still funding programs for 
rail improvements that can improve passenger rail speeds in Missouri 
and other states. The Missouri Department of Transportation has put a 
great deal of work into planning and projects to improve passenger rail 
performance and we are starting to see positive results. Where do you 
see the priorities for passenger rail funding going forward? How should 
states focus their funding efforts?
    Answer. The President has set out a bold vision--making high-speed 
and improved intercity passenger rail service available to 80 percent 
of Americans in just 25 years. He proposed this to help meet the 
mobility needs of a growing population in a cost-effective and 
sustainable manner and in a way that can help expand the domestic 
economy and employment. The priorities for future funding will be on 
cost effective projects that deliver on this vision and generates the 
employment, economic and environmental benefits as well.

    Question 3. There has been a great deal of debate over the 
implementation of Positive Train Control (PTC) as we required in the 
Rail Safety Improvement Act enacted in 2008. I have heard about the 
difficulties in implementing PTC from the rail companies and the 
support for a sensible approach to implementing PTC from shippers who 
ship chemicals, hazardous materials and other products. Rail companies 
have raised concerns have been raised about the cost of the 
implementation as well and the reliability of the technology. Many 
shippers are concerned that railroads will stop shipping certain 
products, particularly hazardous materials, if PTC is not implemented 
properly.
    Some data has shown that PTC-preventable accidents account for just 
four percent of railroad main line accidents. In your view, is this 
data accurate? Are we missing opportunities to focus on other measures 
that could also bring safety benefits?
    In addition, all parties would be benefit from a safer and more 
efficient national rail network. How have costs for PTC been evaluated? 
Has there been a comprehensive cost/benefit analysis so that we can 
ensure that costs are allocated correctly among all parties involved?
    Answer. The exact percentage of PTC-preventable accidents (PPA) 
varies based on the period over which the collected data is evaluated 
as well as the way in which a PPA is defined. However, FRA fully agrees 
that the percentage of PPAs is very small when compared to the causal 
factors for all accidents.
    FRA has conducted detailed cost benefit analyses of the 
implementation costs of PTC in relation to the gained safety benefits. 
The results from the 1994, 1999, and 2004 studies, as well as the most 
recent 2009 regulatory impact analysis, have uniformly indicated that 
the safety benefits alone for PTC systems were relatively small in 
comparison to the large capital and maintenance costs. Independent 
studies in 2010 by the Association of American Railroads, as well as 
the Chlorine Institute, reaffirm that PTC cannot be justified based 
solely on safety benefits alone. The railroads have maintained in 
commenting to each study, especially the 2004 study, that there is no 
reason to expect that business benefits, and the societal benefits that 
would flow from such business benefits, would come from any PTC 
systems. According to the railroads, generally such business benefits 
could be achieved at less expense through systems not connected with 
PTC. Based on the information contained in the railroads' PTC 
implementation plans, systems would not easily be adapted to create 
business benefits. At this time FRA does not believe the potential 
business and societal benefits will be realized through PTC systems.
    The reason behind the lack of economic justification regarding the 
safety benefits is that the majority of PPAs are minor and FRA 
crashworthiness standards help mitigate the potential loss of life or 
release of hazardous chemicals. For example, in the 20 years between 
1987 and 2007 prior to the Chatsworth, California, accident, there were 
only two PPAs \1\ with major loss of life (16 deaths in the Chase, 
Maryland, accident (1987) and 11 in the Silver Spring, Maryland, 
accident (1996)).
---------------------------------------------------------------------------
    \1\ Prior to the RSIA, PTC did not include switch point monitoring 
as a required functionality. The Graniteville, SC, accident involving 
that occurred on January 6, 2005, resulting in 9 deaths and the 
evacuation of the town, would not have necessarily been prevented by 
PTC systems available at that time. It is as an outgrowth of 
Graniteville that switch point monitoring has been added as a required 
PTC functionality.
---------------------------------------------------------------------------
    Implementation of PTC represents a significant unfunded Federal 
mandate to both freight and passenger railroads. The industry's total 
required capital expenditures for PTC is approximately $10 billion. 
Undoubtedly, these capital investments could be made elsewhere to 
address the elimination or mitigation of other human factor-, track-, 
or equipment-related causal factors associated with much more prevalent 
accident scenarios. The full extent of potentially lost opportunities, 
however, is very hard to estimate given the wide variety, and number, 
of alternative safety investments that could be made.
    Cost-benefit analysis (CBA) can be a useful tool for highlighting 
the potential costs and benefits of a proposed decision and its 
alternatives. However, there are many limitations that need to be 
recognized. In conducting a CBA, economists and engineers often have to 
make assumptions regarding the financial value of non-economic values, 
whether they are costs or benefits. As a consequence, a CBA can yield 
dramatically different numbers, especially as different methodologies 
for assigning economic values to non-economic benefits can vary 
significantly.
    Costs can be in the form of added capital investment, added 
transaction costs, decreased market share, or other impacts that 
readily lend themselves to economic quantification. Benefits, however, 
can be more difficult to quantify than costs. Benefits in a CBA often 
include subjective assumptions regarding non-economic values.
    While the analysis process usually highlights the various 
qualitative costs and benefits, the process of assessing the actual 
quantitative values can be quite contentious. As a result of these 
limitations, it is essential to use a CBA carefully. A CBA can help to 
inform decisions, but ultimately it is only one of the tools available 
to determine policy. While the economic costs of implementing, 
complying with, and enforcing a particular policy may be higher than 
the quantifiable benefits, there may still be compelling reasons to 
implement and enforce the policy. Legislators may determine such non-
quantitative compelling reasons exist.
    Non-quantitative benefits might include such things as ensuring 
that passenger rail travel is perceived as safe, or that communities 
through which PIH traffic moves are perceived as safe from the kinds of 
disruption that might occur in a significant release of PIH materials. 
Equity issues might include such concerns as burdening railroads with 
the costs of PTC even though the railroads will accrue little of the 
benefit, or avoiding burdening communities through which PIH traffic 
flows with the risks of PIH traffic, even though those communities 
receive little benefit from the PIH traffic.
    An even more serious limitation of a simple comparison of costs and 
benefits is that it ignores the equity implications of the fact that 
the costs and benefits are often borne by different groups of people 
and firms. It should be noted that the aggregation of costs and 
benefits without consideration of equity is value-laden itself. It is a 
decision to ignore equity.
    Finally, the comparisons of costs and benefits of a regulation must 
in turn be compared against what might have happened in the absence of 
that regulation. For example, if we were to estimate the benefits and 
costs of adopting a safety standard for a consumer product, we must ask 
whether the producer industry might not have made the product somewhat 
safer in the absence of regulation in response to increasing product 
liability suits in the courts. In this example, it would not be correct 
to attribute to the regulation either all of the costs expended or all 
of the benefits conferred. What alternative scenario the evaluator 
chooses can, of course, make the actual regulation look better or 
worse. These are inherent limitations of a CBA as the sole basis for 
social decisionmaking.
    In analyzing the 2010 PTC final rule FRA estimated the 20-year 
total cost at $9.55 billion (net present value using a 7 percent 
discount rate) and $13.21 billion (net present value using a 3 percent 
discount rate), and FRA also estimated 20-year railroad safety 
(railroad accident reduction) benefits at $440 million (net present 
value using a 7 percent discount rate) and $674 million (net present 
value using a 3 percent discount rate).
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                           Joseph H. Boardman
    Question 1. Mr. Boardman, two of the desired outcomes of the 
Washington state projects funded under the American Recovery and 
Reinvestment Act High-Speed Intercity Passenger Rail program are 
shorter travel times and improved on-time performance and reliability. 
Projects must identify how many minutes they will save. As you are 
aware, there is a long standing issue which, if resolved, could shorten 
travel times by at least 15 minutes and increase predictability on the 
southbound leg of the two daily round trip train runs between 
Vancouver, B.C. and Seattle at a relatively small cost. Currently, the 
U.S. Customs and Border Protection (CBP) clears passengers on 
southbound trains from Vancouver, B.C. using a two-step process. 
Immigration clearance occurs at the Vancouver, while Customs clearance 
occurs on a track siding outside of Blaine. The Customs clearance 
results in a delay to rail passengers that makes traveling this route 
by rail less competitive with other modes of transportation.
    Section 406 in the Passenger Rail Investment and Improvement Act of 
2008 (PRIIA) required Amtrak to develop recommendations for the 
Department of Homeland Security to efficiently process rail passengers 
traveling on Amtrak Cascades across the Canadian border during the 2010 
Olympic Games. These recommendations are also applicable to travel 
after the Olympics. Additionally, my provision authorized the 
Department of Transportation and other Federal agencies to establish 
facilities and procedures to conduct preclearance of passengers 
traveling on Amtrak trains from Canada to the United States. Amtrak 
recommended combined immigration and customs pre-clearance in 
Vancouver. From Amtrak's prospective, why hasn't DHS implemented your 
2009 recommendation?
    Answer. A number of recommendations for successful combined pre-
clearance procedures have been completed, including the funding and 
construction of the facility at Pacific Central Station in Vancouver, 
BC.
    The next action needed would be to execute Amtrak's recommendation 
to have Congress request the Department of State begin discussions with 
the Government of Canada to consider amending the Canadian Pre-
Clearance Act of June 17, 1999. The amendments to the Canadian Pre-
Clearance Act would need to extend authority and protections that 
currently cover United States Customs and Border Patrol (USCBP) at 
specific Canadian airports to include certain rail stations (ports), as 
well. Additionally, the two agencies would need to review and possibly 
amend the Bi-National Pre-Clearance Agreement for concurrence with the 
Pre-Clearance Act.
    Amtrak believes that there is an opportunity to demonstrate that 
combined pre-clearance operations can be successful and achieve the 
goals of the Amtrak Cascades service, as you referenced above. Since 
there is a strong working relationship between the governments of the 
State of Washington and the Province of British Columbia, as well as 
both nation's border agencies, the Pacific Central Station facility in 
Vancouver, British Columbia is an excellent candidate for a 1 year 
combined pre-clearance pilot program. The combined pre-clearance 
operational data gathered from this pilot program can support the 
discussions to extend, and include, pre-clearance authority to select 
rail stations (ports) between the United States and Canada.

    Question 2. Mr. Boardman, as you know, Amtrak and the states have a 
long history of partnering to provide intercity passenger rail service. 
Amtrak funds some of the operating costs of state-supported trains in 
15 states, which support 110 daily trains operating over 27 intercity 
passenger service routes across the country. Some of those lines have 
been in operation for over two decades. In my home state of Washington, 
we've had our Cascades passenger rail service, a partnership between 
Amtrak, Washington and Oregon, for 17 years.
    However, a provision in the House FY2012 Transportation-HUD 
Appropriations Act would end that partnership, shifting all of the 
costs onto the states, with no notice and with no time for states to 
find alternate revenues with which to backfill the lost Amtrak 
investment. This comes at a time when we are seeing record ridership on 
intercity passenger rail, and at the same time that Amtrak is already 
working with states under Section 209 of the Passenger Rail Investment 
and Improvement Act to shift more of the cost of this service onto 
states by Fiscal Year 2014.
    In Washington State, the House provision would immediately cut one 
of our daily Amtrak Cascades round trips between Seattle and Portland, 
meaning they'd go from four daily round trips to three. This would 
happen just as WSDOT is in the middle of investing a significant amount 
of Federal high-speed rail funding to move from four daily round trips 
to six, as well as to reduce travel time and increase reliability.
    How would this House provision affect the other 14 states that 
support passenger rail routes for which Amtrak currently provides a 
cost share?
    Answer. Our other state partners would also be affected by this 
House provision, and in many states there would be consequences similar 
to what you describe in Washington State. Like Washington State, many 
other partner states have certain round trips on their routes that are 
currently funded by Amtrak. These states include California, Illinois, 
Michigan, New York, Pennsylvania, and Virginia. If these states could 
not quickly find alternative ways of funding the full cost of these 
services, net of passenger revenues, the services would have to be cut.
    Even for states supporting all of the corridor round trips in their 
states, Amtrak still covers around 20 percent of direct and shared 
costs, which are not passed on to states. Under the House provision, 
Amtrak would have to pass on all of these costs to our state partners. 
So the rest of our state partners would be in a similar position of 
having to quickly find funding for the remaining costs. This would 
affect the states of Maine, Missouri, North Carolina, Oklahoma, Oregon, 
Texas, Vermont, and Wisconsin.
    As you mention, Amtrak has been working with the states to develop 
a uniform cost sharing policy for corridor service as called for by 
Section 209 of PRIIA. Not only did Section 209 require Amtrak to 
develop this cost sharing policy in collaboration with the states, but 
it required the governors of each affected state to concur with the 
policy. As of today, 16 of 19 eligible states have formally expressed 
their support of this proposed policy, which we believe shows the 
ability of Amtrak and the states to work together as Congress directed 
us to, and to develop a policy that is fair to all parties. Washington 
State has not yet formally concurred with the proposed policy, but 
WSDOT has informed us that that they have recommended concurrence to 
Governor Gregoire, and we look forward to receiving her reply. With the 
vast majority of current and potential state partners supporting the 
results of the Section 209 process, we hope that Congress will let us 
finish the cost-sharing work they set out for us in PRIIA, and not 
preempt it with the House provision.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to 

                          Hon. Joseph C. Szabo
    Question 1. Positive Train Control: The 2008 rail safety law 
required railroads to install Positive Train Control (PTC) on certain 
tracks by the end of 2015. I introduced legislation earlier this year 
that would address imbalances in PTC implementation for the freight 
railroads, and the Federal Railroad Administration (FRA) is now working 
to address these problems in their August Notice of Proposed 
Rulemaking. We are now hearing that the Nation's commuter railroads are 
struggling to meet the timeline for implementation. What are your views 
on PTC implementation for the commuter railroads? Do you believe they 
would benefit from an extension of the implementation deadline?
    Answer. All commuter railroads submitted PTC Implementation Plans 
(PTCIP) for completing the installation of PTC by the Rail Safety 
Improvement Act of 2008 (RSIA) statutory date of December 31, 2015. The 
schedules in these plans are very aggressive, and all were based on a 
number of assumptions, which can be summarized as:

        1. No significant emergent technical issues.

        2. No significant financial issues.

        3. No significant contracting issues.

    It appears in some cases that one or more of these assumptions has 
been proven incorrect. For example, the specifications required to 
define interoperability have not yet been fully developed. Without 
these specifications, contractual requirements cannot be completed. In 
such situations suppliers are understandably reluctant to proffer 
tenders as the lack of knowledge of all requirements represents 
significant financial risks. In some situations, where suppliers have 
proffered tenders, the tenders have been significantly higher to 
mitigate for the suppliers increased risk exposure. This increase in 
costs further exacerbates the funding difficulties being experienced by 
the commuter railroads.
    Another example where the assumptions have not held up as the 
railroads have worked on deployment relates to communications. As I am 
sure you are aware, PTC systems are reliant on a robust communications 
infrastructure to properly function. Because of superior propagation 
properties when compared to other available spectrum bands, the freight 
railroads have coalesced on frequencies in the 220 MHz range and have 
designed their PTC communications infrastructure accordingly. In order 
to interoperate with the freight railroads, commuter railroads must 
also operate in the same spectrum band. Without the use of common 
communications spectrum, interoperability as defined by the RSIA, 
becomes difficult and costly, if not impossible.
    This issue can cause significant difficulties for the commuter 
railroads in meeting the December 31, 2015 deadline. Spectrum is a 
limited resource, and competition for it is very high. This appears to 
becoming even more so as the existence of a captive secondary market 
has been identified. The result of this can only be significantly 
increased costs to some of the commuter railroads as they attempt to 
procure the necessary spectrum to support their operations. In some 
cases, the terms and conditions required by the current 220 MHz license 
holders for the sale or use of the necessary spectrum become so onerous 
as to make spectrum procurement by commuter railroads cost prohibitive
    As public agencies, commuter railroads are also required to comply 
with many of the same, or similar, statutory and regulatory 
procurements regulations as the Federal government, making it more 
difficult to compete effectively in the secondary market place. Private 
organizations are not bound by these requirements and can respond more 
quickly when secondary market spectrum becomes available.
    The extent of the issues and their impacts on future PTC 
development are still unclear. Although FRA's evidence is anecdotal, 
the commuter railroads difficulties could impact the build out 
requirement date of December 31, 2015. There have been no significant 
changes to the FRA-approved PTCIPs that reflect the specific technical, 
financial, and contractual issues being encountered by individual 
railroads and their associated impacts. Consequently, FRA is currently 
unable to accurately assess the impact of these issues on the 
individual railroads' ability to complete by December 31, 2015, and the 
extent of relief would that potentially be required.
    FRA has had, and continues to have, ongoing liaison and is working 
with the Association of American Railroads, the American Public 
Transportation Association, and the individual railroads to identify 
and document the scope and impact of the issues. The majority of these 
issues are related to specific technology development, deployment, 
contracting, and funding concerns. Where qualified FRA staff is 
available, FRA is providing their expertise as general technical 
resources. The scope and nature of the issues, however, would require 
the commitment of government resources well in excess of what is 
currently possessed by the agency and require levels of involvement in 
railroad specific technical, contract, and funding issues to fully 
address.
    FRA has accelerated completion of the December 2012 PTC 
implementation status report to Congress to identify the currently 
known impediments to completion by December 31, 2015, and act as an 
advocate of the railroads for possible legislative relief and/or 
funding.
    FRA is attempting to reduce the engineering efforts required of the 
commuter railroads by:

   Issuing Type Approvals for PTC system configurations. 
        Commuter railroads using the previous type-approved systems 
        eliminate the need for them to reproduce certain complex safety 
        documents.

   Providing commuter railroads access to technical data being 
        funded as part of the Railroad Safety Technology Grant Program.

    FRA is working closely with the Federal Communications Commission 
to determine if communications spectrum can possibly be reallocated 
from existing license holders to address the spectrum needs of the 
commuter railroads.
    FRA has dedicated all funding previously provided as part of the 
Fiscal Year 2010 appropriation for the Railroad Safety Technology Grant 
Program to mitigate the impact of shared PTC implementation issues.

    Question 2. National Rail Plan: One of the most important mandates 
from the 2008 passenger rail bill was the requirement that the Federal 
Railroad Administration (FRA) issue a National Rail Plan creating a 
framework for investing in our Nation's rail infrastructure. The plan 
is now more than a year overdue. How can we justify continued 
investment in high-speed rail without a national blueprint to target 
our investments to the most appropriate corridors?
    Answer. DOT and FRA are guided by the underlying statutes for high-
speed and intercity passenger rail in the Passenger Rail Investment and 
Improvement Act (PRIIA) as well as the requirements in the Recovery Act 
and Fiscal Year (FY) 2010 high-speed and intercity passenger rail 
appropriations. Those statutes and appropriations laws provided the 
framework for the Preliminary National Rail Plan (October 2009) 
produced by FRA and then again in the National Rail Plan Progress 
Report in September 2010. These two documents meet the PRIIA national 
rail plan mandate; however FRA envisions the plan as a ``living'' 
document that will evolve based on new ideas, new priorities, and new 
challenges. At its core (and as established in PRIIA), the passenger 
rail program is a state led, but federally assisted program that relies 
on state-created high-speed and intercity rail plans identifying each 
state and region's specific transportation needs and priorities. DOT 
and FRA provide technical expertise, planning guidance and assistance 
to states as well as help in bridging multi-state or other regional 
rail issues, and allocate funds based upon how state proposals meet the 
criteria defined in PRIIA and the several Notices of Funding 
Availability issued by FRA. States also have FRA's HSIPR strategic 
plan, Vision for High-Speed Rail in America, and FY 2012 budget 
proposal documents to further signal the long-term direction of the 
program. Most recently, FRA completed a series of passenger rail 
corridor business and public investment cases that further provide a 
comprehensive analysis on four high-speed and intercity passenger rail 
corridors in the U.S. that have been or are in development with 
participating Federal funds.

    Question 2a. How can we be sure that the FRA made wise investment 
decisions with the over $10 billion in taxpayer dollars that have been 
awarded to date?
    Answer. As discussed above, the allocation of funds available for 
the High-Speed Intercity Passenger Rail Program has been merit based 
through evaluation of applications by the Department of Transportation 
using clear and transparent priorities identified in the strategic plan 
for the high-speed intercity passenger rail program, Vision for High-
Speed Rail in America (April 2009) and the related Notices of Funding 
Availability.

    Question 2b. When will the final plan be released?
    Answer. The national rail plan (NRP) and subsequent update provided 
to Congress in September 2010 represents the most recent progress. In 
addition, any related documents produced by FRA will continue to 
reflect advancing aspects of the NRP, such as the Business and Public 
Investment Case for FY 2010-Funded Passenger Rail Corridors. The 
Recovery Act and FY 2010 appropriations brought new focus and funding 
on passenger rail and provided states and agencies a chance to revisit 
corridor plans in the U.S. The NRP and related documents will 
incorporate any new developments through future updates. PRIIA does not 
require a ``final'' plan, and indeed this should be a living document 
that evolves as the passenger and freight rail industry evolves. As a 
consequence, as FRA continues to analyze changes in population and the 
related changes in demand for transportation services, it will continue 
to update and release those findings.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to 

                           Joseph H. Boardman
    Question 1. Amtrak Funding Levels: Amtrak has been forced to manage 
inconsistent funding levels throughout its history. The last several 
years have been good for Amtrak; with the railroad receiving 
historically high levels of appropriations and grant awards. With 
expected fiscal constraints in the foreseeable future, I would like to 
learn how Amtrak is utilizing that windfall to ensure the continued 
success and growth of the railroad in leaner times.
    Answer. When Congress enacted PRIIA, it recognized that Amtrak will 
require both operating and capital support from the Federal government 
for the foreseeable future, and authorized funding for both for the 
FY09-13 period. Subsequent appropriations, including those made by the 
American Recovery and Reinvestment Act (ARRA), presented an 
unprecedented opportunity for capital investment in intercity passenger 
rail. As a government-supported business, we never lose sight of the 
responsibilities that come with taxpayer support, and have focused on 
using this opportunity to advance capital projects that will generate a 
return on investment. Many of the investments that FRA, Amtrak, and the 
States are making now will generate increases in ridership and revenue 
in the coming years, or improve our cost recovery rate, which is 
already the highest of any U.S. passenger railroad.
    For example, we used $1.3 billion in ARRA funding provided directly 
to Amtrak to return nearly 100 stored and wrecked pieces of equipment 
to service, providing more capacity to meet demand. We also used ARRA 
dollars to rebuild or modernize mechanical facilities and stations, and 
to improve the reliability of Northeast Corridor infrastructure, among 
other investments. An area of particular emphasis in our current 
capital program is technology. We are investing in projects that, if we 
can manage our funding to complete them as planned, will reduce 
operating costs and make for a more attractive service. In FY10, for 
example, we introduced free Wi-Fi on our Acela trains. We estimate that 
Wi-Fi has delivered $6.5 million incremental revenue in FY11, and are 
now in the process of extending it to our eastern and western corridor 
trains. We are developing electronic ``point-of-sale'' systems on-board 
trains to replace time-consuming and costly manual inventory tracking 
systems in our cafe and dining cars, allowing our workforce to focus 
instead on making sales. And we are also implementing an e-ticketing 
system that will deliver real-time manifest information, improve 
customer service, and reduce costs.
    Additionally, Amtrak is a major beneficiary of the roughly $10 
billion in grant awards made by the Federal Railroad Administration 
under the High-Speed Intercity Passenger Rail Program (HSIPR). We were 
awarded a $450 million grant that will result in increased operating 
speeds and improved reliability on a heavily-traveled segment of the 
Northeast Corridor, and are also working closely with more than 30 
States to implement HSIPR-funded projects for which they sought and 
received funding to expand or improve Amtrak service. The public 
benefits gained from these investments, including additional 
frequencies, reduced trip-times, and improved on-time performance, will 
lay the foundation for more effective and efficient service in future 
years.
    Effective capital investments such as these can help us manage our 
long-term operating costs. Amtrak already funds a significant 
percentage of its annual operating requirement from revenues; during 
the FY11-15 period, the company expects to fund 82 percent of its 
operating need from revenues, and this will increase as more costs are 
shared with state partners under PRIIA Section 209. However, a need for 
continued Federal operating support will remain, particularly in order 
to meet some of the performance and customer service metrics and 
standards established under PRIIA Section 207.
    In addition to capital and operating support, a portion of Amtrak's 
annual grant is typically reserved for debt service. We have worked 
aggressively to reduce our debt from a high of $3.9 billion in 2002 to 
under $1.8 billion in 2011. In FY10 alone, we reduced our debt by $850 
million. This was accomplished in part by taking on no additional debt 
between FY02-10, making all scheduled repayments on principal, 
negotiating defeased leased terminations, and periodically making 
opportunistic early debt pre-payments. Amtrak now has some ability to 
take on additional debt, and the FRA Railroad Rehabilitation and 
Improvement Financing Program is one potential source of credit 
assistance. Amtrak was approved for a $562 million RRIF loan in June 
2011 to pay for 70 new, American-built electric locomotives that will 
replace the aging Northeast Corridor electric fleet.
    Additionally, under PRIIA Section 205, we worked with the U.S. 
Departments of Treasury and Transportation to exercise 13 early buyout 
options on existing Amtrak leases over three Fiscal Years. These early 
buyouts will save the Federal taxpayer roughly $162 million over three 
Fiscal Years. According to the Amtrak Inspector General, additional 
savings could be achieved if Treasury's authority to restructure Amtrak 
debt is extended.
    Ridership and revenue growth lie at the core of our plans for 
continuing Amtrak's success, ensuring the company's future economic 
health, and managing our future public funding requirements. Since 
2003, Amtrak has generally enjoyed continuous and significant ticket 
revenue growth, aside for a brief interruption in FY09 when market 
conditions caused by the economic recession resulted in ticket revenues 
falling short of FY08 levels. Some of this favorable revenue was 
utilized to retire equipment leases, make capital investments in 
renewing our fleet, and reduce our operating subsidy need. The trend 
continued in FY11, as we reached all-time highs of 30.2 million riders 
and $1.9 billion in ticket revenue.
    Our revenue projections for FY12-15 assume continual gradual 
economic improvement as well as operational improvements that result in 
consistently growing ridership and ticket revenue. These plans are 
potentially vulnerable to a range of external economic forces. 
Ridership growth is in part a product of economic growth, and poor 
economic conditions could conceivably hinder growth. Even prosperity 
carries risks, as a boom in freight traffic could lead to difficulties 
on freight carriers if growing traffic and poor dispatching practices 
lead to decreases in on-time performance of Amtrak trains.
    I understand that there will be some difficult choices this year 
and in the coming years with regard to the Federal budget. Despite the 
recent spike in intercity passenger rail funding, many critical needs 
remain. Capital funding, for instance, has not been sufficient to 
achieve a state-of-good repair on Northeast Corridor infrastructure and 
other Amtrak assets. Additionally, we have important requirements to 
meet with respect to ADA compliance at our stations and Positive Train 
Control, both of which will require future capital funding. We're also 
faced with the challenge and significant capital cost of replacing an 
aging and well-worn fleet of equipment.
    Continued capital investment in intercity passenger rail will allow 
us to reduce or eliminate problems that translate into higher levels of 
operating expense. But the nature of continued capital funding is also 
important. Amtrak's history of inconsistent funding is the product of 
being subject to an annual appropriations process that typically falls 
short providing funding at authorized levels and begins well into the 
Fiscal Year. Both factors make truly efficient planning illusionary. 
Establishing a dedicated, reliable source of multi-year capital 
funding, as is available for other modes of transportation, would 
greatly aid our ability to manage complex, multi-year capital projects.
    In the meantime, we will continue to provide financial transparency 
for all of our programs so that Congress and stakeholders have the 
information they need on how Federal resources are being invested.

    Question 2. Northeast Corridor Financing: I understand that Amtrak 
is pursuing a $117 billion plan for high-speed rail in the Northeast 
Corridor between DC and Boston. How will Amtrak fund a project of this 
magnitude?
    Answer. Every high-speed rail system worldwide has relied on some 
degree of public funding. Bringing next-generation high-speed rail 
service to the Northeast Corridor will be no different; a significant 
portion of its funding will undoubtedly come from public sources of 
grants, loans, or some combination of both. However, we also believe 
that the project has significant potential for private investment. To 
explore such opportunities, Amtrak selected a financial planning team 
led by KPMG to assist in the development of a business and financial 
plan for the project.
    The business and financial plan will be developed with Amtrak as 
the operator of the system and will address a variety of project 
financing issues such as risk, credit, debt, and investment phasing. It 
will also determine how much of the total project cost can be paid for 
with private and public financing, and lay out a strategy for 
maximizing private investment and identifying funding sources.
    The plan will build on refined estimates of the project's 
ridership, revenue, and costs. Our September 2010 vision for next-
generation NEC high-speed rail estimated that the system would produce 
an annual operating surplus of $900 million, which presents 
opportunities to service debt and/or leverage private investment. We 
expect the plan to be completed by mid-year 2012.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to 

                             Theodore Alves
    Question 1. Amtrak Debt: Debt has been a major issue for Amtrak for 
several years. I know Amtrak has reduced its privately-held debt from 
$3.9 billion in 2002 to under $2 billion in 2010. What additional steps 
can Amtrak take to reduce that debt?
    Answer. As discussed in my testimony, a key step that could be 
taken is for Congress to consider reauthorizing Amtrak's authority to 
exercise early buyout options in its existing capital leases. The 
authority under PRIIA allowing Amtrak to restructure its debt expired 
in October 2010. However, prior to that date, savings of about $152 
million were achieved through early buyout of capital leases; our 
current work shows additional opportunities for estimated savings of 
over $400 million. These are savings that could be used to reduce the 
amount of Federal subsidy that Amtrak would need in the future and 
would, in turn, help contribute to deficit reduction. Let me give you 
some details on how this could be accomplished.
    Section 205 of PRIIA authorized the Secretary of the Treasury, in 
consultation with the Secretary of Transportation and Amtrak, to make 
agreements to restructure Amtrak's indebtedness. In restructuring the 
debt, the Secretary of the Treasury and Amtrak had to (1) consider 
repayment costs, the terms of any loans, and market conditions; and (2) 
ensure that the restructuring resulted in significant savings to Amtrak 
and the Federal government.
    In response to Section 205, Amtrak informed the Department of the 
Treasury of its debt as of April 30, 2009. At that time, Amtrak 
identified debt of about $2.9 billion, of which about $1.7 billion was 
attributable to capital leases. Leases associated with the majority of 
the debt have early buyout options that allow Amtrak to terminate them 
at a specified fixed price and date, one time only, and late in the 
terms of the leases. Amtrak identified 52 leases having early buyout 
options between FYs 2010 and 2019.
    The Department of the Treasury selected 13 leases of the 52 leases 
identified by Amtrak for buyout. The 13 leases selected had early 
buyout option dates that fell between FYs 2011 and 2013. Department of 
the Treasury officials informed us that they selected the 13 leases 
because the early buyout option dates fell between the effective date 
of the signed memorandum of understanding between the Secretary of the 
Treasury and the Secretary of Transportation (October 2010) and the 
expiration date of PRIIA's authorization (October 2013). The savings to 
Amtrak and the Federal government from paying off these leases amounts 
to about $152 million over time ($91 million in present-value dollars). 
To achieve these savings, Treasury will have to expend about $420 
million.
    Our ongoing work shows that paying off the remaining 39 leases when 
the early buyout options are in effect (through FY 2019) would result 
in an estimated $426 million in savings ($305 million in present-value 
dollars), at a cost of about $638 million. Amtrak recently informed us 
that some of its lessors may be willing to allow payoff of these leases 
earlier than the existing early buyout option date, which would allow 
even greater savings.
    Given that the authorization has expired under Section 205 and the 
information Amtrak presented to the Department of the Treasury was as 
of April 2009, we believe that Amtrak should update the information on 
the remaining 39 leases with early buyout options and report to the 
Congress, for its consideration, the savings that would accrue from the 
early buyout of these leases.

    Question 2. On-Time Performance: Generally speaking, what would be 
the most important action that Amtrak could take to improve the on-time 
performance of its trains?
    Answer. A key step that Amtrak could take is to develop a process 
and criteria to support using on-time-performance remedies authorized 
by PRIIA. Section 213, Passenger Train Performance, authorizes Amtrak 
to request that the Surface Transportation Board investigate 
substandard on-time performance of intercity passenger trains, which 
the Act defines as less than 80 percent on-time performance for two 
consecutive calendar quarters. The Board is then to determine the 
causes of not meeting the on-time-performance standard and, if the 
cause is the host railroad's failure to provide preference to Amtrak 
over freight transportation, the Board is authorized to award damages 
or prescribe other relief that it deems appropriate.
    While Amtrak continues to experience on-time performance rates for 
many routes that fall below the PRIIA-defined standard, it has not 
requested such an investigation. According to senior Amtrak officials, 
they are in the process of developing information and supporting 
documentation that could be used to make such a request. However, our 
work shows that Amtrak has not developed a structured process or 
criteria for making this determination. Developing processes and 
criteria are a prerequisite to Amtrak's determining whether to request 
an investigation. Further, sound processes and criteria could enhance 
the likelihood of the Board's agreeing with Amtrak's position.

    Question 3. On-Time Performance: Has Amtrak improved on-time 
performance over the past several years?
    Answer. Yes, Amtrak's on-time performance has generally improved 
over the past several years. For example, Amtrak's on-time performance 
improved from 69 percent for FY 2007 to 80 percent for FY 2011 (through 
May 2011). These gains were primarily because of the improvement in 
long-distance train on-time performance. Short-distance train on-time 
performance improved to a lesser extent.

    Question 4. On-Time Performance: If so, which routes or services 
still need the most improvement?
    Answer. I believe that the greatest need for improvement rests with 
the long-distance routes. These routes are still not meeting the on-
time-performance goals established by Section 207. For example, some of 
the long-distance routes requiring the greatest improvement are the 
Empire Builder, the Cardinal, the Capitol Limited, the California 
Zephyr, and the Lake Shore Limited.
    I would also note that, although the short-distance services are, 
in the aggregate, performing relatively well, some can also be 
improved. For example, the routes needing the greatest improvement are 
the Michigan (Blue Water, Pere Marquette, and Wolverine), Illinois 
(Illini/Saluki), Empire Corridor (Ethan Allen Express), Hoosier State, 
Cascades, and Carolinian.
    Table 1 compares end-point on-time performance of Amtrak's short-
and long-distance routes during the fourth quarter of FY 2010 and the 
first three quarters of FY 2011 against the 80-percent PRIIA on-time 
performance standard. Eight short-distance and 11 long-distance routes 
failed to meet the PRIIA on-time performance standard for two 
consecutive quarters. The causes of these delays include commuter and 
freight train interference, signal delay, mechanical failure, weather, 
and other factors.

 Table 1.--Amtrak End-Point On-Time Performance Results Compared Against
                      the PRIIA 80-Percent Standard
       [fourth quarter, FY 2010 and first three quarters, FY 2011]
------------------------------------------------------------------------
                                                       Missed PRIIA 80-
              Fourth     First    Second     Third     Percent Standard
   Route      quarter   quarter   quarter   quarter        for Two
              FY 2010   FY 2011   FY 2011   FY 2011      Consecutive
                                                          Quarters?
------------------------------------------------------------------------
                          Short-Distance Routes
------------------------------------------------------------------------
Capitol         96.7%     95.5%     95.4%     94.4%                  No
 Corridor
------------------------------------------------------------------------
Carolinian      53.3%     59.2%     75.6%     61.0%                 Yes
------------------------------------------------------------------------
Cascades        77.6%     77.0%     55.1%     71.3%                 Yes
------------------------------------------------------------------------
Downeaster      67.2%     84.8%     76.5%     81.8%                  No
------------------------------------------------------------------------
Empire          78.0%     80.1%     78.7%     79.4%                 Yes
 Corridor
------------------------------------------------------------------------
Heartland       66.8%     84.2%     91.5%     83.0%                  No
 Flyer
------------------------------------------------------------------------
Hiawatha        88.4%     86.2%     87.3%     91.8%                  No
------------------------------------------------------------------------
Hoosier         71.2%     59.4%     65.7%     52.4%                 Yes
 State
------------------------------------------------------------------------
Illinois        74.7%     65.7%     74.7%     67.9%                 Yes
------------------------------------------------------------------------
Michigan        47.0%     49.0%     39.8%     24.5%                 Yes
------------------------------------------------------------------------
Missouri        88.3%     91.6%     87.4%     89.8%                  No
------------------------------------------------------------------------
Pacific         69.9%     77.8%     81.8%     81.0%                 Yes
 Surfliner
------------------------------------------------------------------------
Pennsylvani     87.5%     89.7%     92.8%     76.9%                  No
 an
------------------------------------------------------------------------
Piedmont        86.3%     78.8%     79.6%     81.2%                 Yes
------------------------------------------------------------------------
San             92.9%     91.4%     90.2%     88.5%                  No
 Joaquins
------------------------------------------------------------------------
Vermonter       88.6%     83.2%     71.1%     81.3%                  No
------------------------------------------------------------------------
                          Long-Distance Routes
------------------------------------------------------------------------
Auto Train      91.2%     90.2%     93.9%     87.9%                  No
------------------------------------------------------------------------
California      33.2%     51.1%     52.5%     49.5%                 Yes
 Zephyr
------------------------------------------------------------------------
Capitol         59.8%     57.6%     57.8%     34.1%                 Yes
 Limited
------------------------------------------------------------------------
Cardinal        31.6%     41.8%     52.6%     25.6%                 Yes
------------------------------------------------------------------------
City of New     85.9%     69.6%     86.1%     64.3%                  No
 Orleans
------------------------------------------------------------------------
Coast           87.5%     78.1%     65.0%     77.3%                 Yes
 Starlight
------------------------------------------------------------------------
Crescent        73.4%     76.6%     75.6%     65.4%                 Yes
------------------------------------------------------------------------
Empire          74.2%     51.8%     33.8%     46.7%                 Yes
 Builder
------------------------------------------------------------------------
Lake Shore      65.8%     69.8%     55.2%     57.1%                 Yes
 Limited
------------------------------------------------------------------------
Palmetto        69.0%     75.5%     91.7%     75.8%                 Yes
------------------------------------------------------------------------
Silver          71.2%     79.9%     85.4%     79.1%                 Yes
 Meteor
------------------------------------------------------------------------
Silver Star     75.4%     73.9%     66.1%     70.3%                 Yes
------------------------------------------------------------------------
Southwest       67.9%     83.2%     77.8%     81.9%                  No
 Chief
------------------------------------------------------------------------
Sunset          84.8%     89.9%     83.1%     82.1%                  No
 Limited
------------------------------------------------------------------------
Texas Eagle     69.6%     70.1%     77.2%     45.6%                 Yes
------------------------------------------------------------------------
Note: Amtrak routes typically include more than one host railroad.
Source: OIG analysis of the Federal Railroad Administration's
  performance and service quality quarterly reports and PRIIA

                                 ______
                                 
Response to Written Question Submitted by Hon. Kay Bailey Hutchison to 
                             Mitchell Behm
    Question. Financial Management: I want to talk briefly about 
Amtrak's financial management. The Passenger Rail Investment and 
Improvement Act (PRIIA) required Amtrak to submit an annual financial 
plan to the Department of Transportation. The Inspector General is 
required to review this financial plan and submit his findings to 
Congress. What is your view of Amtrak's current 5-year financial plan 
and of Amtrak's financial management in general?
    Answer. As you noted, PRIIA calls for the DOT Office of the 
Inspector General to review Amtrak's annual budget and the 5-year 
financial plans to determine whether the plans meet PRIIA requirements. 
Accordingly, we completed assessments of Amtrak's budgets and 5-year 
financial plans for Fiscal Years 2010 and 2011. We found that the 
company has improved its compliance with PRIIA over time, though 
several elements of the plans require further development.
    In our first assessment, we found that Amtrak's 5-year financial 
plan for Fiscal Year 2010 complied with most PRIIA requirements, but 
noted that additional detailed financial information could bring the 
plan into full compliance. Additionally, we found that Amtrak's 
financial management had successfully incorporated the company's 
strategic goals into its budget and 5-year financial plan, leading us 
to conclude that Amtrak's 5-year planning efforts could lead to 
improved budget requests.
    In our second assessment, we found that Amtrak's 5-year financial 
plan for Fiscal Year 2011 complied with all PRIIA requirements. 
Although the plan included additional detailed financial information, 
such as key cost drivers for various expenses, which was lacking in the 
previous 5-year financial plan, some elements of the plan were still 
under development, such as improvements to the company's compensation 
structure and cost estimates for the new High-Speed Rail Department.
    By November, we anticipate issuing our assessment of Amtrak's 
annual budget and 5-year financial plan for Fiscal Year 2012. We intend 
to address the plans' compliance with PRIIA requirements, document 
Amtrak's progress in addressing previous plan deficiencies we found, 
and comment on the plans' consistency with the company's stated 
strategic goals.

                                  
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