[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                   AMTRAK'S FISCAL YEAR 2014 BUDGET:

                 THE STARTING POINT FOR REAUTHORIZATION
=======================================================================

                                (113-8)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON

                       RAILROADS, PIPELINES, AND

                          HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 11, 2013

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
TREY RADEL, Florida
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
VACANCY
                                ------                                7

     Subcommittee on Railroads, Pipelines, and Hazardous Materials

                   JEFF DENHAM, California, Chairman
JOHN J. DUNCAN, Jr., Tennessee       CORRINE BROWN, Florida
JOHN L. MICA, Florida                DANIEL LIPINSKI, Illinois
GARY G. MILLER, California           JERROLD NADLER, New York
SAM GRAVES, Missouri                 ELIJAH E. CUMMINGS, Maryland
SHELLEY MOORE CAPITO, West Virginia  MICHAEL H. MICHAUD, Maine
CANDICE S. MILLER, Michigan          GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               ALBIO SIRES, New Jersey
BOB GIBBS, Ohio                      ELIZABETH H. ESTY, Connecticut
PATRICK MEEHAN, Pennsylvania         PETER A. DeFAZIO, Oregon
RICHARD L. HANNA, New York, Vice     MICHAEL E. CAPUANO, Massachusetts
    Chair                            STEVE COHEN, Tennessee
DANIEL WEBSTER, Florida              DINA TITUS, Nevada
THOMAS MASSIE, Kentucky              NICK J. RAHALL, II, West Virginia
ROGER WILLIAMS, Texas                  (Ex Officio)
TREY RADEL, Florida
SCOTT PERRY, Pennsylvania
BILL SHUSTER, Pennsylvania (Ex 
    Officio)
                                CONTENTS

                                                                   Page

Summary of Subject Matter and addendum...........................    iv

                               TESTIMONY

Hon. Joseph C. Szabo, Administrator, Federal Railroad 
  Administration.................................................     6
Hon. Joseph H. Boardman, President and Chief Executive Officer, 
  Amtrak.........................................................     6

           PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS

Hon. Steve Cohen, of Tennessee...................................    50

 PREPARED STATEMENTS AND ANSWERS TO QUESTIONS FOR THE RECORD SUBMITTED 
                              BY WITNESSES

Hon. Joseph C. Szabo:

    Prepared statement...........................................    51
    Answers to questions from the following Representatives:

    Hon. Jeff Denham, of California..............................    66
    Hon. Lou Barletta, of Pennsylvania...........................    76
    Hon. Corrine Brown, of Florida...............................    77
Hon. Joseph H. Boardman:

    Prepared statement...........................................    81
    Answers to questions from the following Representatives:

    Hon. Jeff Denham, of California..............................    92
    Hon. Corrine Brown, of Florida...............................    96

                       SUBMISSIONS FOR THE RECORD

Hon. Joseph H. Boardman, President and Chief Executive Officer, 
  Amtrak, five slides.................................9, 11, 13, 15, 17
Hon. Jeff Denham, a Representative in Congress from the State of 
  California, submission of the following items for the record:..

    Slide entitled, ``PRIIA's Impact on Amtrak's Lines of 
      Business: Performance Since 2010''.........................    31
    Metropolitan Policy Program at the Brookings Institution, ``A 
      New Alignment: Strengthening America's Commitment to 
      Passenger Rail,'' (2013)...................................   119


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       AMTRAK'S FISCAL YEAR 2014 BUDGET: THE STARTING POINT FOR 
                            REAUTHORIZATION

                              ----------                              


                        THURSDAY, APRIL 11, 2013

                  House of Representatives,
              Subcommittee on Railroads, Pipelines,
                           and Hazardous Materials,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:08 a.m. in 
Room 2167, Rayburn House Office Building, Hon. Jeff Denham 
(Chairman of the subcommittee) presiding.
    Mr. Denham. The subcommittee will come to order. First, let 
me welcome our distinguished witnesses and thank them for 
testifying today.
    As you know, Chairman Shuster and I are committed to rail 
reauthorization this year, and hopefully this hearing will 
continue that bipartisan effort. The starting point for this 
reauthorization is Amtrak and the Administration's respective 
budget requests. This is our starting point, because the 
primary policy questions answered in this or any other 
reauthorization, or how much Federal funding do we allocate, 
and what should that funding be used for.
    Today we will hear from both Amtrak and the Administration 
regarding Amtrak's fiscal needs. As you may know, the Passenger 
Rail Investment and Improvement Act of 2008, PRIIA, authorized 
funding levels for Amtrak over 5 years for operating grants and 
capital grants.
    On the operating side, PRIIA authorized, Amtrak requested, 
and Congress has appropriated amounts higher than Amtrak's 
actual needs. In fact, since PRIIA was enacted, Amtrak received 
$2.6 billion in operating appropriations, but actually only had 
$2.1 billion in losses. While Amtrak did use this money on 
important projects like purchasing a new set of long-distance 
train sets, imagine if Amtrak could have leveraged this half 
billion dollars for its infrastructure needs on the Northeast 
Corridor. I look forward to exploring this matter with our 
witnesses.
    With regard to capital grants, the PRIIA reauthorization 
levels were higher than what has been consistently 
appropriated. In fiscal year 2014, Amtrak is requesting $2.27 
billion for its capital program, about $1.4 billion more than 
the 2013 amount. This additional funding includes the 
procurement of new rolling stock, initiation projects related 
to the new Hudson River tunnels in New York, and continued 
station compliance with the Americans with Disability Act.
    In addition to hearing about Amtrak's fiscal needs, both 
entities will also address the reorganization of Amtrak into 
business lines. Amtrak's decision to split out Northeast 
Corridor, State-supported routes, and long-distance routes will 
create more transparency and show stakeholders where Federal 
funding is needed.
    There is growing agreement between Amtrak, the 
Administration, and others like the Brookings Institute, that 
reorganization is a big first step toward running Amtrak more 
like a business, which would allow proper infrastructure 
development. The current operating structure does not allow 
proper infrastructure development because the profits of the 
Northeast Corridor go to subsidize losses in other routes, 
especially the long distance routes. We must find a better way 
to do this, and we are open to many new ideas.
    Before I close, I ask unanimous consent that the Brookings 
Institute report entitled, ``A New Alignment: Strengthening 
America's Commitment to Passenger Rail'' be included in the 
record.
    [No response.]
    Mr. Denham. Without objection, so ordered.
    [The Brookings Institute report entitled, ``A New 
Alignment: Strengthening America's Commitment to Passenger 
Rail'' can be found on page 119.]
    Mr. Denham. Again, I want to thank the witnesses for being 
here today. I would now like to recognize Mrs. Napolitano from 
California for 5 minutes to make any opening statement she may 
have.
    Mrs. Napolitano. Thank you, Mr. Chairman. And I too want to 
thank you for holding the hearing and kicking off our work to 
reauthorize Amtrak.
    I do believe the best way to approach Amtrak's future is to 
fully understand its past. In 1971, passenger rail service was 
in steep decline. And the creation of the Interstate Highway 
System and development of jet aircraft taken its toll on the 
private railroads. Losses reached an all-time high of about 
$750 million annually, or about $4 billion in today's dollars. 
To prevent elimination of passenger rail service in the United 
States, Congress did step in and created Amtrak, stating that a 
modern, efficient, intercity rail passenger service is a 
necessary part of a balanced transportation system, and that 
the public convenience and necessity requires a continuance in 
improvement of such service.
    At the time, Congress recommended moving away from treating 
passenger's rail as a separate entity. Congress wanted to focus 
on development of a coordinated approach to transportation that 
provided balance amongst all modes. Legislation to achieve that 
balance was, unfortunately, abandoned, as Congress feared that 
delaying the action on passenger rail legislation would lead to 
the demise of the entire rail system.
    As a result, when Amtrak was born, it was a mess. Just 
1,500 employees were responsible for safety operation of 26.3 
train miles. That infrastructure, facilities, and equipment 
that Amtrak inherited from railroads were in a serious state of 
disrepair. In one particular glaring example, Amtrak was not 
able to replace a 100-year-old bridge it inherited until 
enactment of the American Recovery Reinvestment Act in 2009, 
despite the service disruption the aging bridge had created for 
years.
    Similar challenges posed by aging infrastructure today 
seriously hinder Amtrak's ability to further improve service 
and increase revenues. Make no mistake about it: That is our 
fault. We never, ever gave Amtrak the resource it needs to 
accomplish a state of good repair, much less maintain its 
current system. In part, these challenges stem from the fact 
that, before Amtrak was created, the Federal Government has 
created--treated railroads, both freight and passenger, 
differently than other modes of transportation. We have a 
different planning process for highways, transits, and rail, 
which makes no sense. We have different funding streams.
    From 1947 to 1970, when Amtrak was created, the Federal 
Government spent $11.3 billion on aviation. In the same period 
we provided $52.4 billion for the development of Interstate 
Highway System. While most of the money came from user fees, at 
least $8 billion were from the General Fund. Today the annual 
Federal spending on highway construction exceeds $42 billion. 
We have not spent that much on improved rail services in 43 
years.
    We often gloss over the fact that this funding does not all 
come from user fees. But in 2008 a total of $46.3 billion in 
General Funds has been transferred to the highway account of 
the Highway Trust Fund to keep the trust fund solvent. And an 
additional $6 billion has been transferred to the mass transit 
account.
    Despite the considerable constraints that Amtrak is forced 
to operate under, our national rail carrier continues to set 
new ridership and revenue records, and demand for services is 
ever-increasing. Just last month, more Americans rode the rails 
than any other month in Amtrak's history. And Amtrak is on 
track to set yet another yearly ridership record.
    So, Mr. Chairman, we have an opportunity here to help 
Amtrak build on this considerable success. So let's go in a new 
direction, the one that--as envisioned by the creators of 
Amtrak back in 1970. And let's create a balanced surface 
transportation system. We have deficient roads, deficient 
bridges, and significant needs in transit and passenger and 
rail service--freight rail. That calls for unified short and 
long-term planning and dedicated financing, which our President 
proposed creating his fiscal year 2014 budget request, a 
Transportation Trust Fund to help finance our freight and rail 
passenger needs.
    I look forward to exploring this a bit more with the 
witness, and I thank Ms. Corrine Brown for asking that I come 
and sit in, because I wanted to learn more about Amtrak. Thank 
you, Mr. Chair.
    Mr. Denham. Thank you. I now call on the full committee 
chairman, Mr. Shuster.
    Mr. Shuster. Thank you, Mr. Chairman, and I appreciate you 
holding this hearing today. I want to welcome Administrator 
Szabo and Mr. Boardman. It is good to have you here today. And 
if we are going to enact meaningful reauthorization, we need 
both of your input as we move forward. So again, this is a good 
place to start that conversation.
    As I have previously noted before, the rail reauthorization 
is one of the committee's top priorities, and we have got a lot 
of hard work ahead of us to develop, draft, and pass a rail 
reauthorization. And a major part of that will be Amtrak as we 
move forward.
    From the beginning of our history in this country, from the 
canals to the transcontinental railroad, to the Interstate 
Highway System, infrastructure plays an extremely important 
part in the health of the economy of the United States. And 
now, more than ever, as the Nation continues to grow, as we go 
from 300 million to 400 million people, and you look--that 
population does not all move into the South and to the West, 
the Northeast Corridor and these other densely populated 
corridors are going to have to look at alternative ways to move 
people. And Amtrak needs to be part of that equation.
    Our role in the Transportation Committee is to make sure 
that we are investing money wisely in infrastructure to make 
sure that we are going to maintain competitiveness, globally. 
It is absolutely critical, if you are talking about jobs, 
economic development, trade. The fourth thing that you roll off 
your tongue is transportation. The system needs to be in place, 
again, to move people and to move goods.
    Amtrak in the Northeast Corridor is one of our most 
valuable assets. And we need to make sure that the investment 
that Amtrak is making is geared towards or focused on those 
important assets that we have. And, as I said, the Northeast 
Corridor is one of those that we need to focus like a laser on.
    We may disagree on the funding levels, but I am very 
encouraged that both the Administration and Amtrak believe that 
there needs to be reform and improvement as to how Amtrak 
operates. For the last 40 years, I don't believe the current 
structure of Amtrak has allowed it to run like an effective 
business. I know that Mr. Boardman has made some improvements 
at Amtrak, but I think there is a lot more we can do there. And 
again, the focus being on the Northeast Corridor, which has 
been underinvested over the last 40 years.
    But I believe this is a great starting point. All of us new 
Members and veteran Members need to take a real hard look at 
Amtrak and improving it as we work towards a reauthorization 
bill. So again, I thank the chairman for not only holding the 
hearing, but for diving into the policy details. He has been 
doing a great job, and we really appreciate that. So again, I 
yield back.
    Mr. Denham. I now recognize the former committee chair for 
any brief comments he may have. Mr. Mica.
    Mr. Mica. Well, thank you, Mr. Chairman, our subcommittee 
chair. I want to thank you for your leadership on this hearing 
and this issue. And, Mr. Chairman, thank you. Mrs. Napolitano, 
Ms. Brown, others who are working towards reauthorization. I 
think the last time we had a hearing we were reminded it took 
11 years to do passenger rail reauthorization with bipartisan 
cooperation working with Mr. Oberstar and others, people of 
goodwill, we passed that authorization which--the PRIIA--will 
need to be replaced. And we should do it as efficiently as 
possible, particularly in a time of taxpayer losses.
    You will probably hear some good news from Amtrak, and Mr. 
Boardman has done his best. The problem always isn't Mr. 
Boardman or Amtrak. The problem is sometimes Congress, in that 
it sets up the parameters by which Amtrak operates. That is why 
this reauthorization is so important.
    Some of the subsidies per passenger ticket have come down a 
bit. There is still $45.45 for last year, every single 
passenger ticket was underwritten. That is the operating and 
capital subsidy for Amtrak passengers. Some of the routes 
continue to be huge losses. We cited last time you could pick 
someone up in a limo in New Orleans, take them to the airport, 
fly them to Los Angeles, and have them delivered to their 
residence or location in the Metropolitan Los Angeles area less 
than you could for Amtrak, again, with the subsidization loss 
that we are now paying.
    The largest carrier in the United States is by surface bus, 
private operators, all who make a profit or go out of business. 
Many of our routes could be changed out.
    In a week in which we memorialize and recognize some of the 
efforts of Margaret Thatcher, you have to look at her example 
of privatization. Now, of course, back in 1971 we set up this 
Amtrak Corporation. It took from 1982, when she began 
privatization in the UK, to past her term with John Major 
instituting competition in rail in the UK. They have had 20 
years of experience, some of it good, some of it not so good.
    I intend to move forward with trying to open all passenger 
rail service in the United States currently operated by Amtrak 
to private competition. Nothing healthier than private 
competition. In fact, European Union--and I just got back from 
riding one of the trains there--improved State service because 
now in Italy they have private-sector competition. And I am 
hoping in this reauthorization we can lay the groundwork for 
better service for eliminating some of the routes that lose 
incredible amounts of money.
    When we are talking about closing down essential Government 
services, and we are underwriting still--and I am anxious to 
hear the projections for food service loss--where is my 
McDonald's here? Usually I have my McDonald's about this time. 
But we have--we grew from $83 to $85 million in losses on food 
service. And that, in a time of incredible stress on our 
economy, losses, increasing debt, we have got to address.
    So, you can only put so much--there is my McDonald's here--
of course I always use this as an illustration. Every cup sold 
on Amtrak, and even with the news of more passengers, it is 
more underwriting every time they buy a cup of coffee. While 
McDonald's can sell that for a dollar and make money, and some 
stores more, we lose $1.60 for every dollar spent on food 
service in Amtrak. But this wasteful loss has to come to an 
end. You can only put so much lipstick on a black hole 
financial operation, and you still have great losses to the 
taxpayer.
    So, I am interested in the bottom line and an open 
competition, and improving service and working with Amtrak and 
the committee to make certain that we go down a path of 
competition, a path of saving the taxpayer money, and providing 
good passenger rail service nationally for all the American 
people. With that, I yield back.
    Mr. Denham. I would like to again welcome our witnesses 
here today. Our first panel will include the Honorable Joseph 
Szabo, Administrator of the Federal Railroad Administration and 
the Honorable Joseph Boardman, president and CEO of Amtrak. I 
ask unanimous consent that our witnesses' full statements be 
included in the record.
    [No response.]
    Mr. Denham. Without objection, so ordered. Since your 
written testimony has been made part of the record, the 
subcommittee would request that you limit your oral testimony 
to 5 minutes.
    Mr. Szabo, you may proceed.

   TESTIMONY OF HON. JOSEPH C. SZABO, ADMINISTRATOR, FEDERAL 
RAILROAD ADMINISTRATION; AND HON. JOSEPH H. BOARDMAN, PRESIDENT 
              AND CHIEF EXECUTIVE OFFICER, AMTRAK

    Mr. Szabo. Well, thank you, Mr. Chairman, Chairman Shuster, 
and to the members of the committee. Appreciate the opportunity 
to appear before you today to discuss rail policy 
reauthorization.
    Our budget request released yesterday reflects our 
reauthorization priorities, and also reflects an emerging 
consensus that rail is the mode of opportunity. By 2050 
America's transportation network will need to move 100 million 
additional people and 4 billion more tons of freight per year. 
And it will need to do it safely, reliably, and efficiently.
    Today our airports and highways are stretched close to 
their limits, hampered by congestion that costs our economy 
more than $120 billion per year. And these challenges 
underscore the need to invest in more underutilized 
transportation alternatives, such as rail, which can be the 
most cost-effective, least oil-reliant, most environmentally-
friendly, and the safest mode to move both people and freight.
    Congress recognized this need in 2008 when it passed, with 
bipartisan support, 2 pieces of legislation: the Rail Safety 
Improvement Act, and the Passenger Rail Investment and 
Improvement Act. Both have provided the policy framework for 
our safety and development initiatives now helping to fuel the 
resurgence of American rail. Since these two landmark acts were 
passed, railroad accidents have fallen to record lows, while 
Amtrak's ridership and on-time performance have risen to record 
highs.
    Intermodal freight traffic surge last year to near-record 
levels. And the freight rail industry continues to reinvest in 
capacity expansion like at no other time since the Gilded Age. 
Passenger rail too is experiencing a renaissance. Amtrak has 
set ridership records 9 out of the last 10 years. And since 
1997 its ridership has grown 55 percent, faster than any other 
major travel mode, and at a rate three times faster than the 
American population growth during that same period. And while 
all of this occurs, historic levels of public and private 
investment are laying a foundation for a higher performing rail 
system that is safer, more reliable, and more efficient.
    But PRIIA and RSIA and now set to expire at the end of the 
fiscal year. And as much as we have accomplished, much more 
needs to be done to rebalance our Nation's transportation 
network.
    Our budget lays out a comprehensive blueprint for moving 
forward. Its fundamental goal is to take a more coordinated 
approach to enhancing the Nation's rail system, a holistic, 
integrated strategy that addresses rail safety issues, 
passenger and freight service improvements, and planning. Our 
new approach builds on the core principles of PRIIA and RSIA, 
and it better reflects our on-the-ground experiences, including 
the complex reality of a rail system which mainly runs on 
privately owned track and carries a mix of passenger and 
freight trains.
    Safety remains our top priority. RSIA has enabled us to 
focus on risk-reduction program regulations in some of the most 
challenging areas of safety, from hazardous materials to track, 
highway rail grade crossings, and rail trespassing. Fully 
implementing these regulations will drive rail accidents to new 
record lows.
    But continued capital investment that upgrade or eliminate 
the need for public highway rail grade crossings, advancing the 
creation of sealed corridors, is another huge win for safety. 
We envision the domestic rail industry again being world-
leading, an industry that exploits intellectual capital--or 
exports, I should say intellectual capital--and rail products 
all over the world. And will continue to manage our investments 
through a transparent process. And, with your support, we can 
safely position our rail network for its increasingly vital 
role.
    Much of the rail infrastructure we rely on today was built 
by past generations of Americans who acted boldly on our 
behalf. Now the time has come for our generation, for the sake 
of our children and grandchildren, to recapture that visionary 
spirit. A sustained, long-term funding strategy similar to 
those in place for highways, transit, and aviation will make 
that possible. And it is appropriate, given the enormous pent-
up demand for rail projects.
    For the $10 billion this Administration invested in high-
speed and higher performing intercity passenger rail, we have 
received applications from 39 States, the District of Columbia, 
and Amtrak requesting 7 times that amount. Our reauthorization 
priorities will enable us to continue answering this strong 
demand, and it will enable rail to continue moving America's 
economy forward.
    So, I look forward to discussing our proposal and working 
with you, Mr. Chair and Mr. Chair, and the members of these 
committees, to meet our mutual goals this year. Thank you very 
much.
    Mr. Denham. Thank you, Mr. Szabo.
    Mr. Boardman, you may proceed.
    Mr. Boardman. Thank you, Mr. Chairman and all. One of the 
issues we have heard a lot about this year is cash management. 
Understanding how we do this is more important than 
understanding our budget request. Because we are a business, 
rather than an agency, our budgets are much more fluid. We 
generate revenues and our need for operating funding 
fluctuates, depending on our revenue performance.
    Over the last couple of years that performance has been 
very good, but it hasn't changed Amtrak's basic situation. We 
are a capital-intensive business that does not generate 
sufficient revenues to cover our operating costs, let alone 
fund capital investment. We are a heavily seasonal business, 
one that is frequently affected by weather and other events. 
And our real fiscal challenge is not so much budgeting as it is 
cash management.
    You will see that here, on the first slide. Over the last 3 
fiscal years we have used capital grant money to fund operating 
expenditures on four occasions, none longer than 9 days' 
duration and none more than 2 percent of the total value of our 
annual operating expenses. All of our capital funds were 
eventually used for activities in our approved capital plan.
    We have actually been recognized by Treasury & Risk 
magazine with their Alexander Hamilton Award for the efficiency 
of our cash management, since it minimizes the need for 
duplicative work, provides us with a much-needed flexibility, 
and saves on unnecessary expense.
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    The next slide will explain why this is necessary. The 
seasonality of our revenues is exacerbated by the periodic 
nature of our operating support payments and the challenges 
that come with an unpredictable budget cycle. I would add that 
those challenges aren't just associated with the Federal budget 
cycle, although that is challenging enough. Each of the 15 
States that partner with us to offer service has its own budget 
cycle, and those cycles can affect when States pay the bills 
they incur from operation of our State services.
    There is an aspect of due caution involved in budgeting for 
a $4 billion company that has little liquidity as Amtrak 
enjoys. We typically have about $200 million in cash reserves, 
and there are points where that reserve dropped below $100 
million, which is a major concern for us. Let me put it in 
real-life perspective. If you made $400 a week, that means you 
would carry $20 around in your pocket. We have had to deal with 
the challenge that comes from having a continuing resolution 
every year since 1998.
[GRAPHIC] [TIFF OMITTED] 80348.010

    This next slide will give you an idea of some of the 
challenges we face in building an operating budget for the 
coming fiscal year. We typically budget with the expectation 
that there will be certain levels of disruption. In part, we 
would rather ask for the money upfront than come back to 
Congress in the midst of a major event with a sudden request 
for more funding. As you can see from the chart, we are running 
a degree of calculated risk in 2014. Our budget includes a 
projected total of $85 million from the States generated by the 
Section 209 process that was mentioned earlier.
    But the process of concluding and funding the new contracts 
is still, for the most part, ahead of us. And if it doesn't 
work out, services will need to be cut. It will trigger shut-
down costs for Amtrak, with a change in revenue and generation 
cost structure.
    While we do need the flexibility to use capital money to 
cover operating expense on a temporary basis, there is another 
side to the coin. When the financial situation is favorable, 
Amtrak does use the operating money to meet capital and other 
expenses. For example, we have used operating funds to ensure 
that Amtrak's retirement fund is currently fully funded.
[GRAPHIC] [TIFF OMITTED] 80348.011

    In the next slide we will explain another one of the 
investments we have made. It will show a reduction in overall 
debt. And you can see that during that glide path to 
profitability back in 1999 to 2002, it was funded by increasing 
debt. During this period, the company was starved for cash. New 
York Penn Station was mortgaged, 30-year-old cars were sold and 
leased back to the company, all to generate money Amtrak needed 
to keep things moving. We have made a definite decision to 
change that.
[GRAPHIC] [TIFF OMITTED] 80348.012

    Be assured there are a lot of checks and balances in place 
to ensure that no abuses occur. And if you look at the next 
slide, you will see some of the agencies, firms, and bodies 
that oversee Amtrak's financial transactions. We report our 
cash balances to the FRA every day. And we also submit monthly 
reports so they are very aware of both our immediate balance 
and our longer term outlook. We are also audited on an annual 
basis, just as any publicly traded company would be. It would 
be hard to think of an entity, public or private, that is as 
thoroughly subject to scrutiny or oversight as Amtrak. Some 
even say we have more studies on us than the Kennedy 
assassination.
[GRAPHIC] [TIFF OMITTED] 80348.013

    Over the last decade we have grown our ridership, cut our 
debt, reliance on Federal support, and we brought new service 
to States and regions that have fewer and fewer choices. We are 
doing the right things and we are doing things right. Congress 
should be proud of the job we have done.
    But we faced very real capital challenges that have to be 
addressed. If we do not invest, we would expect to see not 
lower operating costs, but higher ones. Not higher speeds, but 
lower ones. Not better on-time performance, but worse. Our 
fleet and Northeast Corridor infrastructure are old and getting 
more fragile than they have ever been. Each day the investment 
need grows. This reauthorization provides an opportunity to 
make a decision about what kind of railroad we want and what 
kind of business we are going to run.
    For the benefit of our customers, our employees, and our 
Nation, I ask you to address the needs for investment that 
provide for the safe, secure transportation of our customers at 
competitive trip times, with greater capacity to support our 
economy, and with a national intercity mobility and 
connectivity in mind for Amtrak, America's railroad. Thank you.
    Mr. Denham. Thank you, Mr. Boardman. Mr. Szabo, I wanted to 
start first by discussing the budget that was recently 
presented. This year Amtrak received $1.5 billion in Federal 
funds, but the Administration is now requesting $2.7 billion 
for Amtrak in 2014, and an average of $2.6 billion per year for 
the next 5 years.
    You are seeking an additional $1.2 billion for Amtrak. What 
is the need for the additional funds? Where do you expect the 
expenditures to take place? And what is the revenue system you 
are looking to generate or offset that?
    Mr. Szabo. It is really a matter of taking a look at what 
does it take to do this right and to make sure that rail, 
whether we are talking passenger or freight rail, plays the 
role that it is going to have to play in meeting our growing 
transportation needs.
    And so, it is a matter of drilling down in each of the 
distinct business lines which we propose separating out and 
fully understanding what are the capital needs to bring that 
railroad to a state of good repair, and ensure kind of three 
tenants that I come back to: safety, efficiency, and 
reliability. And making sure that we are making the capital 
investments so infrastructure and equipment is fully refreshed, 
and then the capitalization takes place on an ongoing basis for 
continuing renewal of the infrastructure in the fleet, again, 
to make sure that we operate safely, efficiently, and reliably.
    So, we drill down in each of the business lines--as I said, 
the Northeast Corridor--and take a look at the substantial 
backlog of state-of-good-repair needs for the corridor to bring 
it to the state that it should be.
    And the other business line with the States, of course that 
responsibility is now transferred to the States under PRIIA 
Section 209, both the operating as well as the renewal of 
capital. And so we are proposing that transitional assistance 
for the States that phases out over the 5-year period.
    And then again, for the long-distance network, which is 
kind of that third critical business line, understanding, 
again, what it is going to take to do it right, to make sure it 
is safe, efficient, and reliable.
    And then the fourth category in the business lines would be 
those national assets. To a great extent, one-time improvements 
that need to be made, such as bringing all the stations into 
ADA compliance, positive train control investments, as well as 
what would--the elimination of legacy debt--and again, those 
are the three things that would fade away--while also providing 
for the overhead items such as the national reservation system, 
security, and IT systems.
    Mr. Denham. And to pay for it?
    Mr. Szabo. President proposes that we pay for this--take 
roughly--of the $600 billion savings from the drawdown of the 
overseas conflicts, $300 billion of that would go directly to 
deficit reduction, $214 billion of it would go to the 
Transportation Trust Fund, and out of there we would take the 
$40 billion that we need for a strong 5-year rail 
reauthorization program.
    Mr. Denham. Thank you. And on the capital investments, how 
much of the capital investments are you looking at for track, 
new track, or track upgrades versus new trains versus bridges 
and stations, positive train control----
    Mr. Szabo. Yes.
    Mr. Denham [continuing]. How much of it is going to debt?
    Mr. Szabo. I can give you that drill-down for the record. 
We can provide that for the record. But essentially, what we 
have looked at, we have accumulatively, you know, taken a look 
at what all of those capital needs are. And so we can provide 
you a more detailed breakdown for the record.
    Mr. Denham. Thank you. Look forward to seeing that. The 
2009 transitional assistance. PRIIA has been in place for 5 
years now. Obviously, we are very anxious to get a new PRIIA 
reauthorization. But back to the 2009 transition assistance, 
what States are requesting assistance right now?
    Mr. Szabo. Virtually all of them. I can provide for you the 
list that has come in. But there have been several individual 
States that have requested help, as well as broader----
    Mr. Denham. Do the States not have it in their current 
budgets?
    Mr. Szabo. It is a challenge for them. It is a serious 
challenge----
    Mr. Denham. It is a challenge for the entire Nation. We 
have increased our debt by a huge amount.
    Mr. Szabo. Yes.
    Mr. Denham. But the States, under 209, have each put it 
into their current budgets. So my question to you is, if they 
have got it in their current budgets, why would, after a 5-year 
transitional period, after 5 years of PRIIA in place, why would 
we now reauthorize PRIIA with an additional transition 
assistance? I am sure they would like the additional revenue. I 
am sure they would like to have a number of different revenues 
from the Federal Government. But this was an agreement 5 years 
ago. Why would we extend new monies for States that are already 
budgeting in their current budgets?
    Mr. Szabo. Chairman, at this time there are, in fact, 
States that have not budgeted the appropriate dollars to 
maintain their current level of services. And so there are 
States that--where service is at risk if some form of funding 
is not found.
    Mr. Denham. We would like to see a list of those.
    Mr. Szabo. Very good. We can provide that.
    Mr. Denham. Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chairman. And on the same 
line of questioning is, what would happen if they do not pay 
for some of those services? What would happen to the rail line?
    Mr. Szabo. The service goes away. You know, in this--under 
PRIIA Section 209, the responsibility for that corridor service 
becomes the State's responsibility. And so, if the State cannot 
pay, you know, for their service, their service would have to 
disappear.
    Mrs. Napolitano. And is this something they are aware of, 
and are--have you notified them? Is this part of the incoming 
budget?
    Mr. Boardman. It is my responsibility to notify them, and 
that will happen next week.
    Mrs. Napolitano. It will happen?
    Mr. Boardman. Yes.
    Mrs. Napolitano. But would you mind sending us a notice so 
I can follow it up in my own area?
    Mr. Boardman. Certainly.
    Mrs. Napolitano. Thank you. Both of you, California has 
three of the top five busiest Amtrak corridors, and they are 
all State-supported service routes: the Pacific Surfliner, the 
Capital Corridor, and the San Joaquin. What does the budget, 
the Administration's budget for these services, how will the 
Administration, Amtrak make sure that the State-supported 
routes continue to pay their--what are you going to do?
    What is it that you are going to convince the States to pay 
their fair share? Because some of them apparently do not. And 
how will they be forced to do that fair share? Will you 
diminish the amount of service, or will you just totally say, 
``Sorry, you are not paying your fair share''?
    Mr. Szabo. Yes, the fair share allocations actually were 
addressed under PRIIA. Under PRIIA Section 209, Amtrak, with 
the assistance of FRA and all of the States, was required to 
come up with a methodology, an agreed-to methodology, that 
would fairly allocate the cost and expense among the States. 
And in a consistent basis. So this way, every State would pay 
their fair share, based on the level of service that they chose 
to operate.
    And so, ensuring the implementation of 209 is the, you 
know, surest way to ensure that consistency. It is one of the 
reasons why our program proposes the transitional assistance to 
the States, to make sure that they have the ability to absorb 
this burden.
    You know, and then, of course, through the second part of 
our reauthorization proposal, the Rail Service Improvement 
Program, States would have the opportunity then to apply for 
the grants on a competitive basis for those service 
improvements that they would like to make.
    Mrs. Napolitano. Thank you. Then another question is the 
Highway Trust Fund is exclusively financed by highway users. 
This is what our opponents have continued to argue, that this 
is something they have a problem with. But that is no longer 
the case. But the--Congress appropriate a billion revenues from 
the Highway Trust Fund. How can for-profit corporation 
effectively plan for the future when it does not know how it 
will be funded on a year-to-year basis? And does the current 
way of Amtrak financed end up costing the taxpayer more money? 
And what suggestions do you have to move forward with respect 
to this funding?
    Mr. Szabo. I will let Joe, in a minute, comment on the 
effects that it has on his organization in trying to plan, you 
know, in an environment where there is no consistency. But one 
of the most important reasons why we are proposing a 5-year 
reauthorization, and why we are proposing that a rail fund be 
created inside a broader Transportation Trust Fund, is to 
ensure that we can put rail on parity with other modes like 
highways and aviation, and actually allow Amtrak and allow 
States to do good, long-range planning.
    You know, the surest way to ensure, you know, success is to 
have predictability and to be able to plan for it. And so that 
is part of the reason why we believe it is so important that 
there be a dedicated trust fund.
    Mrs. Napolitano. And we agree with you. Mr. Boardman, the 
Passenger Rail Investment Improvement Act authorized the 
Secretary to finance the early buy-out options in your leases 
to reduce the overall debt. How much did you save, and thus 
save the taxpayer, the Federal Government? How much would 
extending that authorization save Amtrak and save the taxpayer 
money?
    Mr. Boardman. We think right now, for--we have got for 2014 
to 2019, there is a cost to do this of a little over a half-a-
billion dollars, $572 million, with a net savings in the cost 
of $393 million. So, going forward, we see a real potential 
here, even just in fiscal year 2014. What we are requesting 
right now is to do a leveraged buy-out of nine leases, costing 
$197 million. And that savings would be $107 million.
    Mrs. Napolitano. Thank you very much, Mr. Chair. I look 
forward to a second round.
    Mr. Denham. Mr. Shuster.
    Mr. Shuster. Thank you, Mr. Chairman. Mr. Szabo, I want to 
start with you. The 209 funding that you are providing, it 
seems to me the surest way for the States not to come up with 
the money is for the Federal Government to say, ``Oh, we are 
going to have this fund out here for you, so you are not going 
to have to come up with it.'' What would be the incentive for a 
State to come up with those dollars if the Federal Government 
is saying, ``Don't worry about it, we are going to provide you 
that funding''?
    I think that is the wrong approach. And in Pennsylvania--
just so everybody knows, when Pennsylvania decided to keep over 
the Pennsylvanian--the Governor made that decision--the line 
that goes right through my district, and that was a decision by 
the State, and I think that that came up, they worked with Mr. 
Boardman to figure out the funding levels, and so they came up 
with it.
    Again, far too often in the Federal Government--and we are 
going through this right now with sequestration--a 2-percent 
cut and the world is coming to an end. We have to make sure 
that Federal Government as well as State governments, everybody 
is rolling up their sleeves, figuring out in these tough 
economic times, these tough budgetary times, how they are going 
to make ends meet.
    So, again, explain to me why we think that is going to be 
helpful, and not hurtful, for these States having to make the 
reforms the need.
    Mr. Szabo. Yes, your comments are fair, but let me say 
this. I think the key here--two things. The first one is I want 
you to understand we are not talking about funding transitional 
assistance for their entire financial burden. We are talking 
about--only talking about the delta, the increase in the burden 
that States are going to be facing.
    Secondly, instead of this dropping on them all at once like 
an anvil, it comes back to what I said before of the ability to 
predictably plan. And so, a 5-year incremental phase-down 
allows them to do that, to make sure that they can get their 
budgetary constraints in order. They are going to assume the 
entire burden, but allows it just to be phased in in a little 
more fair or rational approach, rather than slugging them right 
in the face all at once.
    Mr. Shuster. Well, again, they have known for some time now 
that this was coming. And so, again, I think States need to--if 
they are getting the service from Amtrak, step up to the plate. 
And again, I am just concerned this is going to just allow 
States to punt on this one and just wait until the Federal 
Government provides them with the funding.
    Talking about certainty, PTC. I understand that it is going 
to be--very difficult for us to hit that timeline. So is the 
Administration looking at moving that date from 2015 down the 
road to allow for these folks to be able to purchase or develop 
the PTC?
    Mr. Szabo. Only Congress can change the date.
    Mr. Shuster. Well, I----
    Mr. Szabo. You know, our responsibility is, in essence, to 
execute the requirements you give us. And as of right now, the 
requirement that we are obligated to execute is that deadline 
of 2015.
    Now, we did issue our report to Congress last year that 
does itemize the list of challenges that the different rail 
carriers are facing. And I do believe that full implementation 
across the Nation is going to be very, very difficult, if not 
impossible to achieve by that 2015 date. We can see partial 
implementation.
    And so, if you go back to our report, what we recommended 
is that Congress not in a carte blanche manner extend the date. 
But instead, give FRA the authority to grant extensions on an 
as-need basis, you know, based on a verified--you know, very 
verified and documented understanding of the challenges that a 
particular railroad might be facing.
    Mr. Shuster. So you are in agreement that 215 is probably 
not going to be met by a significant number.
    Mr. Szabo. Not fully implementation. Partial, yes.
    Mr. Shuster. And final question for you, the Administration 
is proposing $190 million in grant funding to support freight 
rail projects. Given that the freights are investing record 
numbers, why does the Administration, especially at this time 
when our budgets are as tight as they are, why are you 
proposing those freight rail----
    Mr. Szabo. A couple of reasons. First off, again, we want 
our reauthorization proposal to be viewed as one that is 
holistic. You know, understanding that this isn't about 
passenger rail, you know, it has got to be about the rail 
industry. And it is all intertwined.
    There are certainly rail projects out there where there can 
be well-defined public benefits. And so we are talking about 
being able to invest in the value of those public benefits, not 
the private benefits. And I can give you some good examples, 
things like, in the past, the Heartland Corridor or Crescent 
Corridor, the intermodal operations that CSX and NS have 
invested in, projects like the Indiana Gateway, where, you 
know, there is just tremendous rail congestion that is 
affecting the movement of both freight and passenger trains in 
and out of Chicago through a very, you know, tight funnel there 
in Indiana, and has negative impacts upon the community.
    And so, there are public benefits in these investments. And 
we would only expect our dollars to go in to matching those 
public benefits. We also believe that as the role that freight 
and passenger rail grows, there will be additional negative 
impacts upon communities.
    And so, we believe that it is in the public interest to 
provide for community mitigation that eliminates some of those 
negative impacts on those communities and enhances safety: 
grade crossing improvements, underpasses, overpasses, things of 
that nature.
    Mr. Shuster. And there will be a process, we will be able 
to see some transparency on where those----
    Mr. Szabo. Absolutely. We would talk about a competitive 
grant process, and one that would provide full and complete 
transparency.
    Mr. Shuster. I see my time has expired. Are we going to 
have a second round?
    Mr. Denham. Yes, we will have a second round. We will 
actually be showing some slides on the funding of the different 
routes.
    But I just want to clarify. In the budget we are continuing 
to have questions about this $300 million on the State 
corridors. That is a big disconnect from what we have up here. 
You are requesting $300 million, but State-supported routes is 
about $100 million, $85 million of what we expect. So where is 
the other $200 million for State-supported routes?
    Mr. Szabo. I will get back to you on the record, Chairman, 
to make sure we have got a very clear breakdown for you.
    But this is, again, holistically understanding both the 
capital, as well as operating needs that the States are now 
going to have to incur.
    Mr. Denham. This is not my time, I just want to clarify, 
because that is a huge disconnect.
    Mr. Boardman, do you have any idea of the----
    Mr. Boardman. Yes, I believe that Joe is probably right. 
There is a capital component of what they are talking about. So 
it would be operating, because the 305 committee, as a part of 
PRIIA, began to buy equipment and locomotives for the States.
    Mr. Denham. OK, thank you.
    Mrs. Napolitano. Mr. Chairman, could I request that that be 
part of the record, to submit to us what the changes are, or 
what the distribution is?
    Mr. Denham. Yes.
    Mr. Szabo. Yes, definitely.
    Mr. Denham. Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman. Mr. Boardman, with 
respect to capital funding, the PRIIA authorized $6.7 billion 
in capital grants to Amtrak for fiscal years 2009 through 2013. 
The committee, this committee, worked closely with Amtrak on a 
bipartisan basis to determine appropriate authorization levels.
    Unfortunately, congressional appropriators provided Amtrak 
with $4.7 billion instead of $6.7 billion, a shortfall of $2 
billion. What impact did this shortfall in the appropriations 
have on Amtrak? And does shortchanging Amtrak result in more of 
a backlog which ends up costing us more, eventually?
    Mr. Boardman. Yes. I think, Congressman, that what happened 
always happens, and that is you do fall farther behind. Today, 
just in what we need to get done, we are in a backlog of about 
$5.8 billion.
    But I think, more importantly--and I entered it in the 
record last time, so I don't need to do that again--is that it 
has been all documented now at $52 billion. The number used to 
be $40 billion. It is now----
    Mr. Nadler. What is $52 billion? I am sorry.
    Mr. Boardman. $52 billion to really bring the Northeast 
Corridor to a state of good repair.
    Mr. Nadler. So this $2 billion shortfall was for the 
Northeast Corridor?
    Mr. Boardman. Yes.
    Mr. Nadler. And the--can you tell us what impact that has 
had so far, besides just a long-term piling up of more deferred 
capital?
    Mr. Boardman. We have been able to maintain our services 
through maintenance. But, as I said in my testimony, the 
continuing underfunding of what needs to be done will result in 
potentially slower speeds and potentially worse on-time 
performance, and just generally degrading the Northeast 
Corridor.
    Mr. Nadler. Let me ask you one other question. I am more 
familiar with the New York City Transit Authority. The mean 
distance between failures today is about 170,000 miles. In 
1976, after years of deferred maintenance such as Amtrak is 
undergoing now, that figure was 6,000 miles. We instituted a 
series of capital plans and got it from 6,000 miles to 170,000 
miles. When it was 6,000 miles you couldn't go anywhere because 
the cars were breaking down all the time.
    If we keep underfunding the capital needs of Amtrak, you 
are going to have to do deferred maintenance. Can you see 
anything like that happening over a period of time?
    Mr. Boardman. On equipment itself, we have a very strong 
program of rebuilding and maintaining reliability. But I do see 
a problem, especially on the infrastructure of the corridor, of 
maintaining it at the speeds that we really are operating now.
    Mr. Nadler. So we have to slow the speeds?
    Mr. Boardman. Yes.
    Mr. Nadler. Thank you. And also, the Disaster Relief 
Appropriations Act of 2013 provided Amtrak with $86 million in 
capital grants and $32 million in operating grants to address 
repairs related to Hurricane Sandy. I understand that Amtrak 
has decided not to accept the $86 million in capital grants 
because language contained in the Act would prohibit Amtrak 
from using any of its capital or debt service grants for 
operating expenses, including temporary transfer of such funds.
    Why is this language a problem for Amtrak? And what impact 
will not being able to accept the $86 million have on Amtrak?
    Mr. Boardman. I think I tried to address that in slide 2 of 
my testimony. Where Amtrak really has been was in a situation 
where it had regularly--at least in four times in the last 
couple of years--used the capital funding to support the 
liquidity it needed to operate the railroad. There was a clause 
in the Sandy Bill that said we couldn't do that. So----
    Mr. Nadler. Did that clause apply only to the $86 million, 
or to all capital funds?
    Mr. Boardman. Well, we saw it in the future as being all 
capital funds. But it did apply to the $86 million 
specifically, or that is the way we initially----
    Mr. Nadler. So you didn't accept the $86 million because 
you were upset with the precedent that might inhibit your 
future use----
    Mr. Boardman. We actually didn't--we actually used capital 
funds for 2 days after this bill was signed. So we weren't 
really eligible for the $86 million at that point in time.
    Mr. Nadler. Because you used it for operating for 2 days.
    Mr. Boardman. Because we dipped into the capital side. So 
we need a legislative fix in order for us to access the $86 
million.
    Mr. Nadler. When this was being considered by Congress, you 
were aware of it? And did you oppose it, this provision that 
said you couldn't use the capital for operating?
    Mr. Boardman. I believe we had discussions about it and 
were not happy about it. I don't know all the detail of that.
    Mr. Nadler. And Mr. Szabo, Administrator Szabo, does this 
language cause concern for FRA?
    Mr. Szabo. Well, it is certainly not prohibited by our 
grant. And understanding that Amtrak is a private corporation, 
it is actually somewhat a--the, you know, pooling of cash and 
floating of cash is a widely accepted practice in private 
industry.
    Mr. Nadler. So you--so this language for Amtrak causes you 
concern?
    Mr. Szabo. The language would cause us concern, yes, yes. 
We--you know, we believe that it is a practice that should not 
be prohibited, and that the $86 million is, you know, so 
vitally necessary for Amtrak.
    Mr. Nadler. Thank you.
    Mr. Denham. Thank you. Mr. Mica.
    Mr. Mica. Thank you. Again, we have made some progress in 
accounting and some progress in paying down debt and lessening 
some of the subsidies. But I am still concerned about the size 
of the losses.
    Mr. Szabo or Mr. Boardman, can you tell me from last year 
what the loss was on food service? I go back to my McDonald's 
illustration.
    Mr. Boardman. I will provide a written response----
    Mr. Mica. No, I want--no one has a clue as to how much we 
lost and----
    Mr. Boardman. No.
    Mr. Mica. Do you have a clue?
    Mr. Szabo. I prefer to be accurate----
    Mr. Mica. Because you say you have got all these----
    Mr. Szabo [continuing]. Congressman, so we will provide----
    Mr. Mica. You said you got all these accounting awards and 
everything, and neither the FRA Administrator nor the Amtrak 
leader can tell us how much they lost in food service.
    Mr. Boardman. Nobody would ever give me an accounting 
award, but they did give that to Amtrak.
    Mr. Mica. But it is a simple thing. We went from $83 
million to----
    Mr. Boardman. I don't have the answer, Congressman.
    Mr. Mica [continuing]. $85 million. Well, I would like 
that, because this cup of coffee, again, I can buy at 
McDonald's, they can make a profit. If it cost $1 on Amtrak, it 
costs the taxpayers $1.60.
    And weren't you subject to some sequestration requirements 
in Amtrak?
    Mr. Szabo. Yes.
    Mr. Mica. Were you, Mr. Boardman?
    Mr. Boardman. Yes. Yes, we were, sir.
    Mr. Mica. What was it, 5 percent or something?
    Mr. Boardman. I don't really remember the total.
    Mr. Mica. Didn't you look for areas where you could cut 
your losses? Isn't this--$85 million----
    Mr. Boardman. Yes.
    Mr. Mica. A lot of our figures have been--we could close 
down food service on Amtrak and actually save taxpayers a huge 
amount of money.
    In fact, if you take the money that is coming in, which 
is--the 209 money will be about $85 million more, according to 
your chart, 209, the----
    Mr. Boardman. That is the expectation, yes.
    Mr. Mica. Yes, yes. And we take the loss from food service. 
I mean we are in the $200 million range.
    Mr. Szabo, you came here--well, first of all, we looked at 
the dipping in to the--if you look at the charts that were 
provided, it's kind of interesting, because Amtrak survives a 
lot on stealing capital for operating expenses, historically, 
at least with what you----
    Mr. Boardman. Well, it doesn't really steal. You put it 
right back again.
    Mr. Mica. But----
    Mr. Boardman. If you look at, really, what was there, you 
were taking it out and you were putting it back----
    Mr. Mica. Well, we are taking it from capital----
    Mr. Boardman [continuing]. To manage the cash. And that was 
what I was really trying to talk about. You had to have that 
cash management----
    Mr. Mica. And it is kind of interesting. If you see the FRA 
grants--now, some--not all the grants were subject to the 
restriction we put on some of the transfer of capital money. Is 
that correct, Mr. Szabo?
    Mr. Szabo. No. It is my understanding that the way the 
language is written, that it would prohibit the temporary float 
of any----
    Mr. Mica. OK.
    Mr. Szabo [continuing]. Capital dollars for the purpose 
of----
    Mr. Mica. Well, I see these FRA grants--and this is your 
chart----
    Mr. Boardman. Oh, no, it is our chart. It is not----
    Mr. Mica. OK. Well, somebody gave me the chart. It is 
showing the influx of FRA grants----
    Mr. Boardman. Well, that is when the--when we would receive 
money from the FRA----
    Mr. Mica. But that was going on----
    Mr. Boardman [continuing]. Which would be dependent on 
whether----
    Mr. Mica. Yes.
    Mr. Boardman [continuing]. Congress had passed the 
resolution.
    Mr. Mica. And then this chart shows the use of capital to 
cover operating expenses. That wasn't just Superstorm Sandy, 
because we have March of 2011----
    Mr. Boardman. Oh, no. We do that on a regular basis.
    Mr. Mica. September of 2011 there wasn't a superstorm.
    Mr. Boardman. That is correct.
    Mr. Mica. March of 2012 there wasn't a superstorm.
    Mr. Boardman. That is correct.
    Mr. Mica. So it is sort of a pattern.
    Mr. Boardman. Yes, it is. It is a pattern. We use it and do 
it on a regular basis.
    Mr. Mica. May need--you may need some operational reserves, 
and that would be prudent business practice----
    Mr. Boardman. It would cost us more money to do that than 
the way we are doing it now.
    Mr. Mica. Well, again, I look at some of the information 
provided and the calculations are a 4.5-percent increase in 
benefits and other costs.
    Mr. Boardman. Those are labor contracts, yes.
    Mr. Mica. Well, shouldn't they be subject to, again, some 
reductions, in either reducing number of employees or----
    Mr. Boardman. We actually have reduced the number of 
employees. But not on the operating side. We did not--we chose 
not to cut service, because that is where our customers need--
--
    Mr. Mica. What about on the management side?
    Mr. Boardman. It is on the management side that we have 
cut.
    Mr. Mica. OK. If you can provide the committee--I am 
interested--at a time when, again, we have got trillion-dollar 
deficits growing, we are--you can't even get into the building 
here, one of the guards got me this morning, ``Mr. Mica, we 
don't have enough people to service getting folks to their 
representatives.'' And we are paying a dollar--underwriting 
$1.60 for every dollar----
    Mr. Boardman. Well, I don't know that that is the case. 
That is the number that you testified to, but I don't agree 
with that.
    Mr. Mica. Well, I don't--and no one seems to know, even 
with the accounting awards, at how much our losses are on a 
major activity. How are we doing on our credit cards? Can you 
use a credit card for all transactions now? Are we a cashless 
operation on Amtrak?
    Mr. Boardman. We are not entirely cashless. People can 
still use cash.
    Mr. Mica. Oh, no. Please don't tell me that. I thought we--
this is something we have asked for----
    Mr. Boardman. I think if you read a dollar bill it will 
tell you you can use it, but yes, we are still using----
    Mr. Mica. Even with your mobile phone you can get a device 
now to charge things for people who do lawn work. And you 
can't--we still do not have common efficiencies in Amtrak. 
Yield back the balance of my time.
    Mr. Denham. Thank you. Ms. Esty.
    Ms. Esty. Thank you very much. And thank you to my 
colleague for allowing me to go and then return to a markup 
where we have votes very shortly.
    So, one just quick question, Mr. Boardman, as a frequent 
user of the Northeast Corridor--and I want to thank Mr. Nadler 
for asking a couple of the other questions that are of 
particular concern to us here. Section 212 of the Passenger 
Rail Investment and Improvement Act requires that the Northeast 
Corridor Infrastructure and Operations Advisory Commission--
requires them to develop a formula for compensating Amtrak for 
commuter rail usage of the infrastructure facilities and 
services in the Northeast Corridor. Amtrak is then required to 
work with the Northeast Corridor States to implement a new 
agreement based on the formula.
    Can you tell us what the status is of Section 212, please?
    Mr. Boardman. Yes, ma'am. We have had a regular working 
group going on at the commission, looking at how the 
methodology for providing those dollars would go forward. We 
are expecting a report out from the commission in, we hope, the 
spring. It may be summer before that happens. But we are 
working right along, as required.
    Ms. Esty. Thank you very much. Be very eager to see that, 
as I know my Governor is very eager to see it, as well. Thank 
you very much. And thank you again to the chairman and to my 
colleagues.
    Mrs. Napolitano. Would you yield, Ms. Esty?
    Ms. Esty. I yield back the balance of my time.
    Mrs. Napolitano. Would you yield to me? Thank you. Mr. Mica 
wants the cashless system, which means credit cards. Credit 
card companies do charge retailers, including Amtrak, fees for 
using them, which costs the taxpayer. How, then, is this going 
to save money? Or does it cost Amtrak additional money?
    I know you were talking about it costs more money to do it 
the other way, versus what you are doing now. Please explain 
the difference.
    Mr. Boardman. Well, we do have a pilot program going on 
right now with a cashless--in an effort to look at how a 
cashless system would really work. But we have not eliminated 
all the cash requirements at this point in time.
    The debt cards don't have all those same charges, I don't 
believe, but this is not an area I am a real expert in. There 
is going to be a demand for the future. Somebody told me that, 
``It is you old Baby Boomers are the ones that carry cash 
around in your pocket. It is not us Millenniums and younger.'' 
So there really is a demand for it, as well. That is how people 
do pay for things today. So we are trying to accommodate our 
customers.
    Mr. Szabo. And, Congresswoman, if I could make a comment, 
too, this is one of the important reasons--going back to 
Congressman Mica's concerns, one of the biggest reasons why we 
think it is important to now take a look at Amtrak by the 
individual business lines we would require a 5-year business 
plan from them for each one of their business lines. And in 
that business plan we can start talking about costs associated 
with things like food service, and better understand what is 
the plan to achieve better efficiencies.
    And certainly technology will likely be a part of that. It 
may not be the entire solution, for the very reasons you and, 
you know, President Boardman have discussed of meeting the 
needs of all of the traveling public, as well as the potential 
costs involved, both capital as well as operating, in just 
going entirely cashless.
    Mrs. Napolitano. Well, but how much does it cost Amtrak 
when a credit card is used? Every time.
    Mr. Boardman. I will get a response to you, a written 
response to you.
    Mrs. Napolitano. Would you? Because that adds up. I mean as 
many employees you may have, as many services you might need, 
then that would add up if--every time you do use your credit 
card. Whereas the cashless, do you pay by check or do you pay 
actual dollar bills?
    Mr. Boardman. We will give you a good----
    Mrs. Napolitano. Thank you, appreciate it.
    Mr. Boardman [continuing]. Detailed response.
    Mrs. Napolitano. Thank you very much. Thank you, Mr. Chair.
    Mr. Denham. Mr. Webster.
    Mr. Webster. Thank you, Mr. Chairman. I have a question for 
Mr. Boardman. Do you do market share studies?
    Mr. Boardman. Absolutely, yes.
    Mr. Webster. Florida, which is where I am from, we have 
millions of people--in fact, probably 100,000 a day--come to my 
area from just internal to United States. Is there a--do you 
have any plans for increasing your market share there, and 
possibly maybe even creating a better revenue source?
    Mr. Boardman. I recently went down and met with Secretary 
Prasad and discussed how we might be able to provide additional 
services. And so we are in discussion right now with Florida on 
what they would like to have us do, especially along the east 
coast. But we haven't arrived at any agreements at this time.
    Mr. Webster. Yield back.
    Mr. Denham. The Administration 2014 request proposes, Mr. 
Szabo, to fund Amtrak through lines of business, Northeast 
Corridor, State-supported routes, and long-distance routes. 
What is the benefit that FRA has in allocating funding in that 
manner?
    Mr. Szabo. According to the business lines, really, a 
couple of things. We believe that it just provides greater 
transparency, it allows for more accurate accountability, and 
we really feel it allows us, as the Federal Government, to 
better understand just what services that it is that we are 
purchasing from Amtrak.
    Mr. Denham. And I think it is important that we do separate 
them out that way. But followup would be the operating costs 
versus capital. It goes back to our question on the $300 
million on the State corridors. If the current 209 funding is 
at $100 million, why wouldn't we separate it? Or why isn't the 
Administration separating out the operating costs versus the 
capital expenditure cost?
    Mr. Szabo. You are talking about for the State-supported 
service? I mean, actually----
    Mr. Denham. Well, I'm talking about all lines. I mean, 
obviously----
    Mr. Szabo. Yes, yes, yes.
    Mr. Denham [continuing]. Northeast Corridor still has----
    Mr. Szabo. Yes. I mean, clearly, strong estimates were put 
together in both operating as well as capital needs in the 
preparation of the budget. But it really would come back to the 
preparation of that 5-year business plan in better 
understanding what will be Amtrak's operating and capital 
needs, based on that business plan, in each of the next 5 
years.
    So, it allows for some elements of flexibility, again, to 
make sure that we are getting the maximum value that the public 
should expect for the services we are buying.
    Mr. Denham. And I would like to put up a slide quickly 
here, as I utilize the rest of Mr. Webster's time. Northeast 
Corridor profits up 143 percent, likely to continue to 
increase, continue to do a better and better job on the 
Northeast Corridor, very profitable, more and more people 
riding it. State-supported routes, we are doing a much better 
job, losses are down 24 percent. Federal share will continue to 
drop. I know we still have that concern or question about what 
the asset piece of this is. But dropping another 62 percent.
[GRAPHIC] [TIFF OMITTED] 80348.014

    The big question is the long-distance routes. Losses are up 
11 percent. PRIIA had no impact in reducing those losses. The 
question is on the long-distance routes. Actually, let me--Mr. 
Boardman, let me ask you. Can Amtrak continue to afford 
increased losses in long-distance routes?
    Mr. Boardman. I think that is up to Congress.
    Mr. Denham. Well, what procedures or mechanisms would you 
put in place to reduce those losses?
    Mr. Boardman. I think that it is very difficult with the 
way that we operate our business model on the long-distance 
trains to ever make it profitable, because you can't get enough 
people on the train to make that really happen.
    I think where Congress has been on this, right from the 
beginning, is that it is a common good for the United States, a 
connectivity and mobility of coast-to-coast and border-to-
border service. Even if you charged a greater amount than the 
$9.50 that Mr. Mica talked about earlier for a hamburger and a 
bag of chips, you are still not going to get the kind of 
revenue that you really would be looking for on some of these 
long-distance trains to really make this happen.
    There has to be an understanding that maintaining the 
connectivity and the mobility by Congress is a common good. If 
that is not understood, this will never continue.
    Mr. Szabo. And, Chairman, if I can add to that, I mean, 
first off, we believe that it is very important that rural 
America not be disenfranchised by, you know, eliminating this 
very necessary service for them.
    But we believe one of the strengths in our proposal, by 
having the separate business lines, requiring the preparation 
of 5-year business plans for each of those business lines, and 
again, making the appropriate capital investments--it is a 
critical part of it--to both infrastructure and equipment to 
make sure that this long-distance service is as safe, reliable, 
and efficient as possible, allows us to take a look at where we 
can achieve additional efficiencies through that business plan.
    You know, we should not suffer any illusions that we are 
ever going to make a profit on long-distance service. Clearly, 
on the corridor an operating profit can be made, and I think 
you are going to continue to see significant growth in State 
services.
    So the goal with long-distance, and I think we share this--
--
    Mr. Denham. I understand the goal. I am out of time. I 
understand the goal. Do we subsidize----
    Mr. Szabo. What we have to do is----
    Mr. Denham. Do we subsidize the long-haul bus routes?
    Mr. Szabo. Well, you are seeing all that service fade away, 
sir, which is what is making the long-distance----
    Mr. Denham. Is there a Federal subsidy to United Airlines, 
or any of the airline companies?
    Mr. Szabo. I think you could argue that actually there is, 
if you take a look at the entire transportation picture that 
every mode is subsidized in one form or another, including the 
bus routes, which are getting free use of a federally 
subsidized highway system. And, in the meantime, all of this 
bus service to rural America is going away, leaving Amtrak as 
the only alternative for these rural communities.
    Mr. Denham. Thank you. Time has expired. Mr. Cummings?
    Mr. Cummings. At some point, it seems to me, that what you 
said, Mr. Boardman, about connectivity and coast-to-coast 
transportation is something that all of us should strive for.
    You know, we can keep cutting and cutting, and you will end 
up with zero. And I live in an urban area. I have lived there 
all my life, and I will die there. But I will fight like hell 
for somebody in rural South Dakota or wherever to be able to 
have access to transportation.
    Now, there are several issues here, and one of them is this 
whole idea of competition. And I am convinced--see, you know, 
the--on the one hand you have got a goal, I guess, of trying to 
have transportation all over the country. And then you have got 
the Northeast Corridor doing a great job, I guess sort of 
subsidizing. Is that right?
    Mr. Boardman. That is correct.
    Mr. Cummings. The others. But do you think--I keep hearing 
these, you know, complaints about we need more competition, and 
that will help matters. And there is probably some truth to 
that. But, I mean, what is your reaction to that, Mr. Boardman?
    Mr. Boardman. I have a couple reactions. And one of the 
things, if you will permit me for just 1 second----
    Mr. Cummings. Yes, sure. I only got 3 minutes and 20 
seconds, but go ahead.
    Mr. Boardman. When we talk about profitability on the 
Northeast Corridor, for example, and 143 percent was put up on 
the screen, it is, I think, sometimes very difficult to 
understand that is only operating. That has nothing to do with 
capital. If you added this book or even part of it, or even the 
existing capital that we have in there, you would see numbers 
worse than what you see on the long-distance trains.
    And with long-distance trains, at least part of the cost is 
capital, because we are operating on the private railroads' 
line. And a huge part of the cost for us, and what we look for, 
is what we pay the freight railroads to provide that service. 
So, we are not really comparing apples to apples in the way 
that I know that we really want to.
    In terms of your question, though, about competition, and 
what does it mean--and Mr. Mica's gone. It wasn't Margaret 
Thatcher who privatized the British rail. In fact, she said 
that it was a privatization too far, and it wasn't something 
that she was really going to do.
    And one of my big worries and concerns here is that what 
the concept may be in reauthorization is we can split out the 
Northeast Corridor, privatize the Northeast Corridor, and then 
operate or not operate the rest of the country. This is a 
network operation. We bring over a half-a-million people a year 
into the Northeast Corridor from the long-distance trains. That 
is 1,300 and some odd people a day. That is 40 busloads of 
people that are being brought into the Northeast Corridor.
    Mr. Cummings. And it is also our constituents.
    Mr. Boardman. That is correct.
    Mr. Cummings. Let me ask you something, real quick 
questions. Amtrak now carries 75 percent of travelers between 
New York and Washington, DC. All of them travel through the 
Baltimore and Potomac Tunnel under the city of Baltimore, where 
I live. As you know, this tunnel is a bottleneck on the 
Northeast Corridor, and is in desperate need of repair. The 
American Recovery and Reinvestment Act provided $60 million for 
the development of a new tunnel alignment, as authorized in the 
PRIIA legislation.
    Can you give me an update on the status of this project, 
how far along we are in developing a new rail alignment? 
Further, once the alignment is identified, do you have any 
estimate of how much construction of that alignment would be 
actually--would actually cost?
    Mr. Boardman. Yes, we can. And we can do that, basically, 
Mr. Cummings, because of this report. If you open to page 20 on 
the report--and I think I gave every committee member a copy of 
this--what you find is that we are in the preliminary 
engineering and environmental analysis phase, which is a good 
thing. Because if you look at a lot of the other projects in 
here, they are not along that far.
    And what that is going to allow us to do, then, with 
funding from Congress, is to get to final design, and then we 
will know what it is really going to cost us to replace these 
tunnels. Right now the estimate is $1,500,000,000 in this 
report. So we are making progress, and we appreciate the 
support we have gotten from you and from others that we can 
make that progress.
    Mr. Cummings. And with regard to the--our--Penn Station, 
what funds are currently available to Amtrak to support station 
modernization?
    Mr. Boardman. I don't have the number with me, but I will 
respond to that in writing.
    Mr. Cummings. Well, we will send it to you in writing. 
Thank you, Mr. Chairman.
    Mr. Denham. Mr. Bucshon.
    Dr. Bucshon. Thank you, Mr. Chairman. Mr. Szabo, as you 
know, the Highway Trust Fund has not met the financial 
requirements for our infrastructure for quite a number of 
years, and has required other money to be appropriated from 
other areas of the budget to meet those needs.
    And I see the Administration proposed funding Amtrak by 
rolling it into an expanded Transportation Trust Fund funded by 
what is--and maybe I am ignorant to this, but financed with 
mandatory contract authority and discretionary obligation 
limitations. As you know, we already have a transit system in 
our cities that is part of the Highway Trust Fund designated 
funding stream, and we can't keep up with that, partially 
because they don't contribute to the Highway Trust Fund.
    So, I am just interested in why the Administration thinks 
that this is a good idea, other than taking away the 
discretionary process from Congress for Amtrak. And be more 
specific about how you think we can bring more money into what 
the Administration is calling an expanded Transportation Trust 
Fund.
    Mr. Boardman. Sure, sure. First off, Congressman, I think 
it is really important to note that with the establishment of 
the Transportation Trust Fund we are not--absolutely not--
talking about diverting any of the existing revenues that go 
into the highway or transit program. We are not proposing that 
any of those be diverted for rail. But we are, in fact, 
recommending that rail become a part of a broader 
Transportation Trust Fund.
    You know, recognizing the fact that we have to look at 
transportation holistically, multimodally, and start 
positioning ourselves so that whether it is moving people or 
goods, we can use the mode that happens to be most efficient 
for a particular journey. And so, rail, both passenger and 
freight, has clearly been the underutilized mode. And so we 
have to give a parity with the other modes.
    And so, that is why it is important that it become a part 
of the trust fund. The funding for our 5-year reauthorization 
proposal comes from the $600 billion savings from the overseas 
drawdowns, allows $300 billion of that immediately to go to 
deficit reduction, and then takes $214 billion to go into the 
Transportation Trust Fund to fully fund the highway piece 
through the year 2020, and transit, and allow the $40 billion 
that we are requesting for rail reauthorization for our 5-year 
program.
    Dr. Bucshon. So using the OCO funds, so-called OCO funds, 
Offseas Contingency Operation funds, obviously here in town we 
have tried to use that for almost everything possible.
    As you know, we are planning to draw down anyway. So in my 
view it would be like saying, you know, that I plan on buying a 
$40,000 car next year. And then, when next year comes around, I 
say, ``Well, I have decided not to buy the car,'' and all of a 
sudden my bank account has $40,000 in it because I didn't 
actually buy the car.
    So, I just--my point is that, you know, we already have 
trouble funding the Highway Trust Fund, based on the current 
funding stream through the Federal gas tax. I am a little 
skeptical that, with the proposal from the Administration, that 
we wouldn't just get ourselves in a pretty significant bind. 
And it is really theoretical money that really doesn't exist, 
because we are broke.
    And so, I was just curious. Like I said, other than taking 
away the annual or how many ever years we appropriate money to 
Amtrak, or authorize money for Amtrak and then appropriate it 
annually, other than taking that away from Congress, what would 
be the benefit of putting Amtrak into an expanded 
Transportation Trust Fund?
    Mr. Boardman. Predictability. It not only comes back to the 
parity that I talked about, but predictability. For the first 
time with rail, we would be able to make long-range plans and 
predictably invest, just as we have been able to do now for, 
what, seven decades for highways and roads, and you know, 
certainly several decades for aviation and transit. And so, 
again, it comes back to the need to give rail parity with the 
other modes, allow us to balance our transportation network.
    And, you know, in life all of us have to make priorities 
and choose. And it doesn't mean necessarily one thing or the 
other. It means doing two or three things over here, and not 
doing three or four things over here. And so, taking the $600 
billion in savings, directing $300 billion immediately to 
deficit reduction, and funding transportation with $214 billion 
we believe are appropriate priorities. It helps us get our 
house in order, both from a deficit reduction standpoint, as 
well as making the very necessary upgrades to our 
transportation network, particularly for rail.
    Dr. Bucshon. Thank you very much. I yield back.
    Mr. Denham. Thank you. Ms. Brown.
    Ms. Brown. Thank you. And hello, Honorable Szabo. I have 
not seen you in a long time. And Mr. Boardman. I have a couple 
of questions.
    Let me just say I was watching the news recently and I saw 
that Amtrak ridership was up. It was a big story. So can you 
give me some in-depth information about it? Because it is very 
exciting for me to know that people are riding the train. And 
we understand that we in Florida are not just competing with 
Alabama and Mississippi and those other nice States, but we are 
competing with the Chinese that have put $350 billion into 
rail. And we are just trucking along. You know, we are the 
caboose, and we don't use cabooses any more. So would you just 
give me some updates? I am very excited about it.
    Mr. Boardman. I----
    Ms. Brown. And I am one Member, and I am probably the only 
one, that would not put a dime of the savings into deficit 
reduction. That is a long-term problem. I would put every dime 
into infrastructure investments. That is my position, but I am 
not the President and I am not the only Member of Congress. But 
no, that is my position. I want to grow the economy. I want to 
invest in infrastructure.
    We used to do that. We used to do it on a bipartisan method 
here in Congress. And I hope we can get back to it. We want to 
put people to work. So that is my opening statement, Madam 
Chairman and Mr.--and my question, I told him. Tell me about 
two things. Tell me about that big news story I saw on 
television.
    Mr. Boardman. We have been--Congresswoman, it is good to 
have you here.
    [Laughter.]
    Ms. Brown. I was at the VA.
    Mr. Boardman. You always ask me the question, and then you 
take me on another trip.
    One of the things that I think that are--I don't have all 
the numbers in front of me, we would be happy to give you all 
the numbers--but we are setting records that we have had the 
greatest ridership on record for March in our history. For any 
month that Amtrak has operated.
    Why and how are we doing that? Well, I would like to think 
we are meeting our customers' needs. Their wants, their needs, 
their expectations. We are also managing our revenue. We are 
managing what we do for making equipment available, so we are 
maximizing the number of seats that are available, we are 
increasing our capacity in every way that we can. We are 
looking for ways to make sure that we are reducing the cost to 
the Federal Government for the services that are out there, 
whether they be capital investments or whether they be 
operating investments.
    So, it is really that foundation of safety, the focus on 
the customer, and then we see something better on the bottom 
line.
    Ms. Brown. Would you talk about Hurricane Sandy? How are we 
recovering from that?
    Mr. Boardman. We recovered a lot quicker than anybody 
expected. We pushed very hard. We were open again by the second 
night going into New York City. And within 3 days we were open 
again to Boston, because it was at a critical time for us to 
move for Thanksgiving, which is our greatest ridership and 
revenue in all the year.
    And what we found was even though the original projections 
were we were going to lose more, we actually began to recover 
quickly. So we are recovering what we will have lost, to the 
largest extent, because of this increase in ridership and 
revenue. We still had a problem in a short period of time, and 
we don't have the capital to fix the problems that we had 
during Sandy.
    Ms. Brown. Can you tell us the importance of dedicated 
funding source, and what would it do for passenger rail in this 
country?
    Mr. Boardman. I think it would stop us having to do these 
piecemeal investments. And I believe that all of you up there 
want to figure out a way to make that happen. I understand 
that. This is a difficult time in our Nation to figure out how 
to finance the things that we really need to do, and balance 
the transportation modes. I think that Joe and the 
Administration have really tried to look at this and put a 
reasonable foot forward on it. I think it is difficult on all 
of you to figure out how are we really going to make this 
happen.
    Ms. Brown. Mr. Szabo, I have got a few seconds. You want to 
add anything?
    Mr. Szabo. Well, just that, you know, we continue to see 
rail as the mode of opportunity for the future. I mean you just 
take a look at the dramatic growth in passenger rail. And it is 
not just on the Northeast Corridor or in the State-sponsored 
service, but it is also on the long-distance network. And the 
more that we can ensure the safety, improve the reliability, 
and continue to achieve efficiencies, the more it is going to 
continue to grow.
    Ms. Brown. Thank you.
    Mr. Denham. Mr. Boardman, we recently got the Brookings 
Institute's recommendations, the book that I had held up 
earlier, focusing on the Federal subsidies on the Northeast 
Corridor and the State-supported routes, and having States pick 
up more of the responsibility for money-losing long-distance 
trains.
    How would Amtrak support such a structural change to how 
the long-distance trains are funded?
    Mr. Boardman. For the record, because you have put the 
report in the record, I think that the Brookings Institution 
was right in some areas. They are not right about long-distance 
trains. There is not going to be a compact of States that begin 
to finance long-distance trains.
    States do not want--and, Chairman Shuster, in the 
discussion that led to the Pennsylvanian being resolved, there 
was an undertone all the time of the necessity or the lack of 
necessity that there was to actually get passengers to Chicago. 
That is not what Pennsylvania wanted to do. It wanted to get 
people from Philadelphia to Harrisburg, and then on to 
Pittsburgh. But they resented the fact that part of that 
train's function may really result in moving people in 
interstate service.
    And I think that is part of the problem here, in looking at 
a compact of States. I guess the way I look at it, Chairman, is 
that we have one. It is the United States. And it is the United 
States who has to figure out how, for the common good, we are 
going to connect our Nation together.
    Mr. Szabo. Just for the record, Chairman.
    Mr. Denham. Mr. Szabo.
    Mr. Szabo. The Administration would echo that, that when it 
comes to the long-distance network, we believe that compact of 
States is the United States of America. And so it becomes our 
responsibility to ensure that we have a strong, reliable, and 
efficient long-distance passenger rail network. We think the 
proposal that we have put forward gives us both the capital, as 
well as operating support that it is going to take to do that, 
that the more efficient that we can make--or I should say the 
more reliable we can make the system, the more efficient we are 
going to be able to make it.
    Mr. Denham. Thank you. I have limited time, but I do want 
to just touch on that real quickly. The question is efficient. 
And whether you are talking about California high-speed rail or 
the Northeast Corridor, you start having to make tough 
decisions on the amount of stops that you have. The more stops 
that you have, the less efficient you are.
    And the real question really becomes does a State need a 
stop if it stops at 2:00 a.m. You know, does that State then 
say, ``No, make the rail more efficient. Don't stop here. We 
will bus people to the next State so that we can have that 
connectivity''?
    Mr. Szabo. Let me answer that in two parts. I mean, first 
off, we really believe--and again, our proposal places a strong 
emphasis on this, that as we move forward, these decisions 
really have to be market-based. We have to do good planning, we 
have to do strong planning, and we have to make sure that 
States and regions, as they put their plans together, you know, 
understand the types and levels and frequency of service that 
are most efficiently going to meet their market needs.
    When it comes to the long-distance network, you know, yes, 
there are some challenges with service hitting these 
communities at 2:00 a.m. and 4:00 a.m. It is kind of the nature 
of the beast. And I am sure those communities would argue that 
they would prefer to see service in the a.m. You know, but 
unless you are having a conversation about doubling service on 
the long-distance network, there is going to be winners and 
losers in that a.m./p.m. battle.
    And for rural America, they are still going to tell you, 
Mr. Chairman, that they would rather have that service than not 
have any at all, because aviation is leaving these rural 
communities, intercity bus is leaving these rural communities. 
And rural America has to have some transportation options.
    Mr. Denham. Thank you. It is certainly an area that this 
committee will continue to look at. But I think that warrants 
probably a hearing all of its own.
    I did want to get back to the budget. Mr. Szabo, both the 
House and the Senate 2014 budget resolutions include no 
funding--no funding--for high-speed rail grants. Given that the 
reality of limited fiscal resources, huge trillion-dollar debt 
increases year after year after year, even though this 
President said it is un-American to have increased debt, we 
continue to see $8 trillion of new debt.
    I know the President's focus on fix-it-first. But if we are 
going to fix it first, why is the Administration again 
proposing billions of dollars of new high-speed rail projects, 
like in California, when there is $30 billion of backlog of 
capital projects on the Northeast Corridor? If we are going to 
fix it first, are we going to fix it, first?
    The question is are we going to fix it first, or are we 
going to continue to throw more money at things like California 
high-speed rail, the Recovery Act, the stimulus dollars, $8 
billion--and while I can appreciate Ms. Brown being willing to 
give Florida's money to Mrs. Napolitano, that money is still 
not being spent. So why increase spending in this year's budget 
for high-speed rail when we haven't even spent the money from 3 
years ago that is still sitting in a pot?
    Mr. Szabo. Well, actually, all of that money has been 
awarded and about $3.6 billion of the $10 billion is either 
construction that is completed, currently underway, or we will 
be initiating here in the next couple of months.
    But going back to our budget proposal, a significant 
portion of it, it is all about--the top half of our proposal is 
all about fix-it-first. It is all about meeting the state-of-
good-repair needs for the Northeast Corridor. So, we take into 
account all of those fix-it-first needs for the intercity 
passenger rail network.
    But again, it comes back to having priorities. And we 
believe that rail is the mode of opportunity, has to be put on 
equal footing with other transportation modes. And because, as 
a Nation we have failed to invest in higher performing 
intercity passenger rail and high-speed rail, that these 
investments need to be made.
    We have come forward with the funding plan, $600 billion of 
savings. These are real savings from the overseas drawdown, 
$300 billion immediately going to deficit reduction, $214 
billion going into the Transportation Trust Fund to make sure 
it is solvent through--I believe it is the year 2020. And then 
it funds our 5-year proposal, the $40 billion that we are 
looking to take care of both the fix-it-first needs, as well as 
moving forward with investments.
    Mr. Denham. Thank you. Mrs. Napolitano.
    Mrs. Napolitano. Yes. Just changing track, if you will. 
Your statement, Mr. Szabo, indicates that rail trespassing 
accounts for 63 percent of all rail-related fatalities. My 
district sometimes has more than one a year in rail crossings, 
whether it is railroad or Amtrak.
    They could be preventable. I know the railroad has a 
program. But what investment does this budget make in highway 
rail safety improvements and education? And where are these 
workshops referred to being held? And what is it that we need 
to know to be able to take advantage or--because I do have a 
lot of rail in my area, to be able to tell my cities, my 
communities, my schools, that they can access assistance in 
being able to educate their youngsters and their families.
    Mr. Szabo. Congresswoman, let me start by saying, first 
off, we are particularly proud that, by virtually every 
statistical measurement, this was the safest year in railroad 
history. But----
    Mrs. Napolitano. But it is still high.
    Mr. Szabo. Exactly. And that is where I was going to go. 
And that includes grade crossing fatalities. But they are still 
way too high and, you know, a significant challenge for us. I 
will, for the record, get you the information on where the 
additional workshops are being held as a followup to the 
workshop that we held in St. Louis last year.
    But an important component of our budget proposal, if you 
go down under the area for--it is titled, ``Freight Capacity,'' 
which really isn't the best title. In there we are also talking 
about things for community mitigation that would include the 
ability to do some good work like the State of North Carolina 
has done in sealing their corridors, in closing off additional 
grade crossings and building additional overpasses and 
underpasses. The safest grade crossing is one that doesn't 
exist.
    Mrs. Napolitano. Well, I know in our area we are trying to 
include more grade separations, because of the----
    Mr. Szabo. Yes, yes.
    Mrs. Napolitano [continuing]. Alameda Corridor, which could 
benefit the Amtrak.
    Mr. Szabo. And that is the type of project that would also 
be eligible under that particular line item, things like the 
Alameda Corridor.
    Mrs. Napolitano. Well, there is a lot of issues with the--
because we are such a community that is divided by avenues and 
boulevards, instead of long distances. So we really have a lot 
of contention when it comes to congestion, when it comes to 
rail crossings and all of that. The safety issue is great for 
us. So, I really would have a great need to be able to see how 
this is moving along. That is one area.
    Then the other area would be to address track cost 
accidents. FRA has issued regulation--concrete ties. Is it all 
Amtrak usage, or is it just Amtrak-owned or State-owned? 
Because this really is an issue. We have had--well, not 
recently, but we had about five or six rail accidents in my 
area back a few years back. And a railroad replied back by 
doing replacement of some tracks because they were having 
hairline cracks in their rail. What about Amtrak?
    Mr. Szabo. If I follow your question, the regulation on 
concrete ties would not mandate concrete ties to be used 
everywhere, but it does establish regulations for when they are 
used. And, obviously, there are freight scenarios where they 
are the safest and provide the best cost benefit to the freight 
carriers. They are certainly appropriate in higher speed rail 
operations like the Northeast Corridor. The work that is being 
done in the Midwest, much of it is being done with concrete 
ties.
    An important part of our budget proposal is into research 
and development. And we have been doing some very good R&D that 
I am hoping to advance even further on track inspection.
    Mrs. Napolitano. With which university?
    Mr. Szabo. I would have to get you that for the record. 
Actually, I believe there are a couple of them involved. But we 
are using laser technology now, or investigating laser 
technology that actually does a far superior job of not only 
detecting the flaws, but in hopefully, we hope, providing 
predictability in rail fatigue and helping us better understand 
when it is going to fail, so it can be replaced in advance.
    Mrs. Napolitano. Well, I hate to tell you, but laser 
technology was being used on the rail tie that failed. And it 
wasn't as helpful as----
    Mr. Szabo. Well, it certainly isn't the new technology that 
R&D is proposing now.
    Mrs. Napolitano. OK. Well, we would love to be able to have 
some of that information to be able to pass that on down.
    There are other questions I will submit for the record, Mr. 
Chairman, but I thank you for allowing us to do this.
    Mr. Denham. Mr. Shuster.
    Mr. Shuster. Thank you, Mr. Chairman. Long-distance rail. 
And I know New Orleans to Los Angeles, Sunset, is probably the 
biggest loser we have out there. Is there a breakdown from 
where the ridership is? I am sure there is, but like New 
Orleans to Houston. Does it go to Austin or San Antonio? I am 
not sure where--San Antonio?
    Mr. Boardman. San Antonio.
    Mr. Shuster. And then from Texas to Albuquerque, New 
Mexico. Is there a breakdown? I mean how many people are going 
from New Orleans to Los Angeles? I got to believe very few.
    Mr. Boardman. Yes. There is an awful lot of on and off 
traffic on the train. Maybe not so much on that particular one. 
That is not our biggest loser. Our biggest loser is the one 
that goes through Albuquerque. It is the Southwest Chief. That 
costs us the most.
    Mr. Shuster. Where does it go?
    Mr. Boardman. It goes from Chicago through La Junta, 
Colorado, over the Raton Pass, to Albuquerque, and then on to 
L.A. So--and I have a chart, Chairman, and it was in the last 
hearing, where if you took the top six losers, you cut off all 
service to the west coast from Chicago all the way--anything 
that lost over $10 million a year.
    Mr. Shuster. Right. It seems to me that these long-
distance--you know, are the biggest problem. You know, 
refocusing, looking at them from city to city, is that 
something that is possible to do?
    Because, again, at some point you are going to have to make 
decisions. We are going to have to make a decision. I believe 
we want a national rail system. But at this time, do we step 
back and focus on lines that, you know, city-to-city--New 
Orleans, the Houston, or whatever it is, and focus our efforts 
there? And maybe some of these for a period of time you step 
back away from them and suspend them--because I believe if we 
do this in the right way, organically this thing grows. We have 
tried to impose this on the Nation and it just doesn't seem to 
be working.
    And we talk about rural areas. I come from a rural area. 
Everybody has got--98 percent of the people have cars. People 
aren't clamoring to get on trains and travel the United States. 
They have their other modes to do it. And I know we don't want 
to cut off rural--as you mentioned, air service is being cut 
off. But again, people have the wherewithal, the vast majority, 
to move about.
    So, again, do you have an analysis on those city-to-city 
rides, and a breakdown----
    Mr. Boardman. Actually, people are clamoring to get on the 
trains, believe it or not. You can't get a bedroom, you can't 
get a seat many times in the summer time, because people do 
want to see the United States on the train.
    And if you looked at--back to your Sunset Limited example 
for a minute--we operate that 3 days a week. We looked at 
operating it 7 days a week, and the freight railroad that was 
involved said, ``OK, but it is going to cost you $700 million 
to do that, to get back on that route for 7 days a week.'' And 
that--therein, Chairman, is the problem with cutting back.
    If you cut back, then what you are going to have when you 
go back to put it back in service, if you ever do? You probably 
can't afford to do so. You lose it. And that is the biggest 
difficulty here, is losing the whole shebang.
    Mr. Shuster. All right. Well, you mentioned about people 
clamoring to get on trains. If they are clamoring to get on 
trains, then are we charging them enough money?
    Mr. Boardman. $900 for a bedroom. We are really charging 
them a lot of money. And I didn't mean to cut you off. It is 
just we have a very high rate to do this. But you have got few 
people that can get on that train.
    And you are not going to want--your freight railroads, if 
all the sudden you proposed to put another train out there, 
would be very negative on that. And I don't think that is what 
we want to do. We want to get them on the railroads and off the 
railroads as quick as we can.
    Mr. Shuster. Because when I talk about charging enough 
money, I ride the Keystoner frequently to Harrisburg. And every 
time I do, my little back-of-the-envelope analysis, they charge 
me somewhere between $29 and $39 one way. So, you know, $58 to 
$79--$60 to $80 round trip. When I do the analysis, I don't 
think we are charging enough on those trains. And I know--the 
Governor of Pennsylvania decides on rates, is that accurate?
    Mr. Boardman. We work with Pennsylvania on that.
    Mr. Shuster. That sound right?
    Mr. Boardman. But it is something they probably want to 
charge more for in the future.
    Mr. Shuster. And I guess it is getting close to break-even, 
what we have done there in the Keystone. Is that accurate?
    Mr. Boardman. Yes, I don't know. Depending on break-even 
operating----
    Mr. Shuster. Operation, operation.
    Mr. Boardman [continuing]. The capital.
    Mr. Shuster. Yes, operationally. So, again, and we need to 
look at those kinds of things. Because, again, I do an analysis 
and figure $100 for a business traveler being on the train, 
productivity, eliminate the headaches to get in and out of 
Philadelphia or New York or in the corridor. So I think those 
are things we need to really look at.
    You mentioned, too, that there is not a significant number 
of people on these long-distance trains--what kind of increase 
would you have to see to move the needle to see significant 
reduction in the cost?
    Mr. Boardman. I think what you are asking for--and we will 
give it to you--is an analysis of the long-distance network, 
and the way that it could operate or not.
    Mr. Shuster. Right. And I see my time has expired, but 
finally, you know, I think you said there is $10 billion--when 
the chairman was asking you about the money that is not spent, 
you said $3.5 billion is spent.
    I still think we have to take a real hard look at what we 
are doing in California. I mean it is not in my lifetime that 
they are ever going to come up with the money to build a high-
speed rail from San Francisco to Los Angeles because that State 
is in bad fiscal condition. But redirecting that money--and, of 
course, I would make the case, and maybe offending my 
California friends, that that money going into the Northeast 
Corridor would be a huge benefit. And 5.2--it is about two-
thirds of your backlog that you have in the Northeast Corridor.
    But even if I back off of that--I see Mr. Denham is 
lighting up the little--if you took that $3.5 billion and you 
put it into the San Diego-Los Angeles system, or the San Jose-
San Francisco, I am told by those folks that operate those 
trains in the transportation world there, that would be 
significant reduction in time from San Diego to Los Angeles. 
And if any place in the world needs help to reduce congestion, 
that is the Los Angeles and San Diego leg or the San Jose-San 
Francisco leg.
    So, I hope that is something that we look at, because that 
is $3.5 billion that they may build that length through the 
Central Valley, but $60 billion more is just--to me--I think it 
is going to be a complete boondoggle----
    Mr. Szabo. I will just say this, Chairman. We remain both 
committed and bullish on the California high-speed rail 
project. And one of the reasons why in our budget proposal, you 
know, we are calling for additional planning dollars is to make 
sure that we can continue and complete the Northeast Corridor 
future study, which is going to be imperative, so they are both 
eligible and ready for future investments.
    And that was the biggest challenge 4 years ago, because the 
States hadn't come together on a unified vision because good 
planning hadn't been done on the Federal level or the State 
level. They really weren't well positioned for the type of 
investment that you are talking about that is so necessary to 
allow that to become the shining star that it can be.
    You know, it is great service today. But there is no 
question that we can make----
    Mr. Denham. Mr. Szabo, I am going to have to cut you off, 
and--Mr. Shuster went way over his time, and I am trying to run 
a tight ship. And Ms. Brown has been very patient. She and I 
are going to be traveling quite a bit across the Nation, and I 
need to stay on her good side. So, Ms. Brown?
    [Laughter.]
    Ms. Brown. Thank you, Mr. Chairman. I guess you didn't 
think about that when you mentioned the fact that we sent $3 
billion to 18 other States that the legislature and the people 
of Florida had indicated that they were all on board and all 
supportive, and 1 person--the Governor at the time--sent that 
money back to the Federal Government. And over 200 stakeholders 
came to Washington on plane, rail, and everything else to try 
to get our money, and 18 other States got the money and put 
people to work.
    But let me just say something else. We did have an 
election. And I don't know what it means to anybody, but I 
think the President won. And I think some of his proposals 
should go through. I mean maybe I am by myself. But I do think 
some of his proposals should go through. And when I sit here 
and listen to people talk about transportation, I guess I am 
the only person in the room that remember when we had Katrina 
over 3,000 people died because they couldn't be moved out of 
harm's way. Over 3,000 people. They couldn't be moved.
    So, we need to think out of the box, like the rest of the 
world. Think out of the box. How are we going to move our 
people out of harm's way? How are we going to continue to do 
that? It is not just how much it costs. What is the cost of 
life? What is the cost of service?
    We--Mr. Boardman did not reinstate the Sunset Limited on 
the other side. I have had two meetings with the mayors, 
elected officials from New Orleans to Orlando that is 
interested in reinstating that system from New Orleans to 
Mobile to Pensacola to Tallahassee to Jacksonville and Orlando. 
That is a lot of interest in reinstating that area. How do we 
work with the local officials when you have Governors that have 
their head in the sand, or think like some of my colleagues 
that, I guess, everybody should have a car. Well, those people 
in New Orleans did not have cars.
    And now, if we have another hurricane, how we going to get 
them out of harm's way? That is--remains the problem. We need 
to continue to think out of the box. How we going to move our 
people if we are attacked? It can't happen the day that the 
attack occurs.
    Where are we--I know we did a study on the Sunset Limited. 
I have a meeting scheduled in July with all of those elected 
officials coming to Jacksonville. We are very interested in 
reinstating the Sunset Limited. And we know what was the 
problem. It wasn't that the people didn't want the services, 
but the freight rail interferes. And so you are arriving in New 
Orleans 2:00 in the morning. That is the problem. We need a 
direct from--and you can call it anything you want to--starting 
in New Orleans to Orlando, destination to destination.
    All right, Mr. Boardman.
    [Laughter.]
    Mr. Boardman. We did do the study, Congresswoman. And, as 
you know, our requirement on that particular study was to bring 
it back to Congress and ask Congress to fund it.
    Ms. Brown. Congress?
    Mr. Boardman. Yes.
    Ms. Brown. Oh.
    [Laughter.]
    Mr. Boardman. And that did not happen. So we didn't 
progress.
    Ms. Brown. What is the possibilities of doing--you know my 
colleagues always talk about outsourcing or partnering or--
there are other people that is interested in participating. 
What is the possibilities of us doing that?
    Mr. Boardman. We are always interested in working with our 
partners, and certainly working with you. In the end, though, 
we always come back to the dollars that it takes to get the job 
done. And I think that is what we have all been talking about 
here today is how are we going to do that. And we are certainly 
interested in it, but we have to have funding to make that 
happen.
    Ms. Brown. There are people that would be interested in 
just cutting out the long-distance so those people in rural 
areas would have absolutely no service, whether it is rail--
that is the only service they have now--I have forgotten the 
number of cities that is the only service they have--they don't 
have airplanes, they don't have buses. What--I mean I guess 
they don't want mail for them, either. I mean it is the United 
States of America.
    Mr. Boardman. I agree with that. I agree.
    Ms. Brown. I am not through. What I want to know is--back 
to this budget, I see the President's recommendation on this 
budget, $214 billion for infrastructure for the shortfall, and 
$40 billion for rail infrastructure. Is that going to be a 
grant-type program, what we already have, wherein the Federal 
Governments put the grants out and the State come in not with 
the Congress--I guess the Administration actually administers 
it--and we get all upset when we don't tell--when the States 
don't do what we want them to do.
    Mr. Szabo. Yes. Congresswoman, if I followed you correctly, 
if we are talking about the allocation of----
    Ms. Brown. Yes.
    Mr. Szabo [continuing]. The drawdown dollars, OK, $300 
billion go to deficit reduction, $214 billion would then go to 
help fund the needs of the Transportation Trust Fund. As you 
know, the Highway Trust Fund and others already have their own 
challenges, and so that would assist in essentially helping the 
Transportation Trust Fund for highways, transit, and rail, the 
highway and transit portion being fully funded out to 2020, and 
then taking care of the funding needs for the $40 billion 5-
year rail reauthorization.
    And yes, our program going forward for the rail service 
improvement program, the new improvements, would be a 
competitive grant process that has to be based on sound 
planning, good market analysis, and understanding the 
transportation needs of States and regions, and how rail fits 
that role.
    Ms. Brown. I just got one final question. When a State 
comes in and applies--like California, for example--and they 
said--I don't know why I want to use California, but they come 
in and apply and we in Congress don't think they made the best 
decision, but California and the people of California applied, 
and they got the grant, can we have the opportunity to change 
it if we decides--or is it something about states' rights that 
still exists, but only when we want it to exist?
    Mr. Szabo. Well, obviously, if you have a competitive grant 
process, and somebody is selected as part of that competition 
as having, you know, one of the most meritorious projects, I 
think it would be highly inappropriate or irregular for 
Congress to try and override the terms of a competitive grant 
process.
    Mr. Denham. Thank you. As we finish up this hearing, just a 
couple final questions on budgets and priorities. This was a 
good segue into that.
    Mr. Boardman, the Northeast Corridor asset improvements, 
about $30 billion?
    Mr. Boardman. $52 billion, according to the report.
    Mr. Denham. $52 billion? And how about total system 
improvements? What is the need?
    Mr. Boardman. Total system beyond the Northeast Corridor?
    Mr. Denham. Yes, sir.
    Mr. Boardman. I would have to get you a number back. I 
don't have it on my head. It doesn't--it is not a lot, because 
we don't own a lot. We have got Chicago, we have got New 
Orleans, and a few other things.
    Mr. Denham. And the $52 billion, that is just track, 
bridges--I mean that is just basic infrastructure. That is not 
trains.
    Mr. Boardman. It is not trains.
    Mr. Denham. And what about train and asset improvement?
    Mr. Boardman. We believe that we need to begin to replace 
the Acelas within the next 5 years or so, and we are going 
through an analysis right now of what that will cost.
    Mr. Denham. And in the $52 billion, that is also stations, 
as well, correct?
    Mr. Boardman. I believe so, yes. Correct.
    Mr. Denham. OK. So, Mr. Szabo, the question I have is----
    Mr. Boardman. And tunnels.
    Mr. Denham. I am sorry?
    Mr. Boardman. And tunnels.
    Mr. Denham. And tunnels. Obviously, I did not agree with 
the stimulus package, did not agree with the Recovery Act. But 
the point of it was, as Ms. Brown said, is the President was 
re-elected, and it was his funding. But it was supposed to be 
for shovel-ready projects. Obviously, we have got that money 
still sitting out there. These were all shovel-ready projects, 
where you could put people back to work not only immediately, 
but you could have put them back to work 3 years ago. Fifty-two 
billion--I mean that is a priority that needs to be in our 
infrastructure currently, our current plans.
    Two questions. First of all, the way that we fund our rail 
is far different from the way that we fund our overall road 
system, our highways across the Nation. Why not have a trust 
fund for Amtrak? And let me ask first, Mr. Boardman, would you 
want to have a trust fund?
    Mr. Boardman. If we found a way to have predictable, 
regular funding, absolutely. I don't know if it is a trust 
fund, or what it is.
    Mr. Denham. So why not have a trust fund? And for that 
matter, why not, like the Department of Transportation, have a 
separate line item for the overhead expense of just having a 
national rail system?
    Mr. Szabo. Well, I think, essentially, that is what we are 
proposing in our budget proposal. We are proposing that rail 
have its own dedicated trust fund, and we are proposing that 
we, you know, budget according to each business line so we 
understand the service that we are buying in each of those 
business lines and have, you know, full transparency and 
accountability.
    So I think what you are asking me or what you are proposing 
is certainly not far off from what it is we are proposing. I 
would, you know, like to have some dialogue to better 
understand the differences.
    Mr. Denham. I would appreciate that dialogue. Let me go a 
step further, because I don't feel like your priorities line up 
for that, at least the way that we are looking at in the 
budget.
    For $40 billion over the next 5 years, but of that $40 
billion 35 percent would go to Amtrak, 65 percent would go to 
high-speed rail, so you get a very small percentage of the $52 
billion that Mr. Boardman needs to have infrastructure 
improvements.
    Mr. Szabo. No. Actually, again, 100 percent of his state-
of-good-repair needs are fully met in our proposal. And then he 
remains one of the eligible applicants for additional growth 
and development and modernization.
    Mr. Denham. In the 5-year budget? You meet 100 percent of 
his needs in the 5-year budget?
    Mr. Szabo. His state-of-good-repair needs.
    Mr. Boardman. Not the $52 billion, but the backlog of the 
$5.8 billion that we talked about. And I think what he is 
saying is that we would be eligible for the other $52 billion 
out of the other 65 percent pot, if I understood your 
question----
    Mr. Szabo. Exactly. To enhance the Northeast Corridor to 
the next level, you know, making the NEC future vision become 
reality that would be eligible to compete under the Rail 
Service Improvement Program.
    Mr. Denham. OK. And as we are wrapping up here, just 
finally, the $40 billion Amtrak--$26 billion, 65 percent of 
that, is in this other pot. But you are saying that Amtrak 
would have an opportunity to bid----
    Mr. Szabo. Oh, absolutely.
    Mr. Denham [continuing]. As every----
    Mr. Szabo. Absolutely, yes.
    Mr. Denham. And of the $26 billion, 40 percent of that 
would be allocated to California and to the current high-speed 
rail--$2.4 billion, approximately.
    Mr. Szabo. No future dollars are automatically allocated 
anywhere. All projects would be expected to compete, you know, 
through a competitive bid process.
    Mr. Denham. You are already well on your way of funding 
California high-speed rail. You are not just going to let the 
track run from Merced to Bakersfield and then stop.
    Mr. Szabo. As I said, we are absolutely committed, as well, 
as I said, bullish on the project. But we will not presuppose 
that anybody gets any of these dollars that are expected to be 
competitively bid. And so, based upon the applications, based 
upon the sound planning that has been done, and based upon 
meeting--service being tailored to the market needs.
    Mr. Denham. So, of the $38 billion, approximately, that GAO 
says that California high-speed rail needs over the next 10 
years, the $10.4 billion, or the $40--the $26 billion, there 
are no guarantees in the $26 billion that California high-speed 
rail will get--there is no guarantee that they will get a large 
percentage of that, or any percentage of that.
    Mr. Szabo. They would have to effectively compete.
    Mr. Denham. Thank you. We do have a number of other 
questions. We will submit that to both of you individually, and 
look forward to a quick response.
    Mrs. Napolitano?
    Mrs. Napolitano. A very, very quick question, Mr. Chair, 
and that has to do with the service if the States do not comply 
and pay their fair share. We talked about that. And what would 
happen, then, to the labor--to the employees and the labor 
negotiations in any of the contracts you may have?
    Mr. Szabo. Talking about PRIIA 209?
    Mr. Boardman. Yes, let me answer that question.
    Mrs. Napolitano. It is 209.
    Mr. Boardman. That would be one of the shut-down costs if 
the States didn't come forward. If we couldn't find a place, 
then we would look for our employees to have--be able to move 
or shift----
    Mrs. Napolitano. Relocate?
    Mr. Boardman [continuing]. To another location. If that 
didn't happen, there is a provision called the C-2 provision, 
where they will be paid their salaries for a period of time. I 
don't have that in my mind right now, but that is a 
requirement.
    Mrs. Napolitano. Do you foresee any of this happening?
    Mr. Boardman. I do not know at this point in time. I think 
we have not received either enough yeses or noes from the 
States. We continue to hear from them, but we have not been 
told. They will be delivered a message from me next week that 
says we either have to have these contracts signed, or we will 
end service within 180 days.
    Mrs. Napolitano. So that would be----
    Mr. Boardman. October.
    Mrs. Napolitano. October. And based on that timeframe you 
are giving them, are you arranging to have some other contracts 
that would provide some service--not the same full service----
    Mr. Boardman. No.
    Mrs. Napolitano. Just----
    Mr. Boardman. None.
    Mrs. Napolitano. None. OK. Thank you, Mr. Chairman.
    Mr. Boardman. If they decide no, then we are not going to.
    Mrs. Napolitano. Thank you.
    Mr. Denham. Thank you. Appreciate both of your time today. 
Again I want to re-emphasize the fact that the passenger 
reauthorization is going to be up this year. We are going to be 
very aggressive in working with both of you to come up with 
something that is meaningful for the rest of the Nation. And 
Ms. Brown and I will be going on the road and working with each 
of you to understand the specifics of that around the Nation.
    So, again, thank you both for your testimony and your time 
today. Your comments have been very helpful.
    And if there are no other questions, I would ask unanimous 
consent that the record of today's hearing remain open until 
such time as our witnesses have provided answers to the 
questions that have been submitted to them in writing, and 
unanimous consent that the record remain open for 15 days for 
any additional comments and information submitted by Members or 
witnesses to be included in that record.
    [No response.]
    Mr. Denham. Without objection, so ordered. I would like to 
again thank our witnesses. If no Members have anything to add, 
the subcommittee stands adjourned.
    [Whereupon, at 12:08 p.m., the subcommittee was adjourned.]
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