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



 
            UNDERSTANDING THE COST DRIVERS OF PASSENGER RAIL

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



                                (113-17)

                                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

                               __________

                              MAY 21, 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
                                ------                                

     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........................................    iv

                               TESTIMONY

Robert Puentes, Senior Fellow and Director of the Metropolitan 
  Policy Program, Brookings Institution..........................     4
Hon. Joseph H. Boardman, President and Chief Executive Officer, 
  Amtrak.........................................................     4
David B. Kutrosky, Managing Director, Capitol Corridor Joint 
  Powers Authority...............................................     4
Ross B. Capon, President and Chief Executive Officer, National 
  Association of Railroad Passengers.............................     4

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

Robert Puentes:

    Prepared statement...........................................    30
    Answers to questions from the following Representatives:

        Hon. Jeff Denham, of California.......................... 43-44
        Hon. Corrine Brown, of Florida........................... 43-44
Hon. Joseph H. Boardman:

    Prepared statement...........................................    46
    Answers to questions from the following Representatives:

        Hon. Jeff Denham, of California..........................    58
        Hon. John L. Mica, of Florida............................    59
        Hon. Michael H. Michaud, of Maine........................    61
        Hon. Corrine Brown, of Florida...........................    62
David B. Kutrosky:

    Prepared statement...........................................    66
    Answers to questions from the following Representatives:

        Hon. Jeff Denham, of California..........................    74
        Hon. Michael H. Michaud, of Maine........................    74
        Hon. Corrine Brown, of Florida...........................    75
Ross B. Capon:

    Prepared statement...........................................    78
    Answers to questions from the following Representatives:

        Hon. Jeff Denham, of California..........................    88
        Hon. Corrine Brown, of Florida...........................    92
        Supplementary information................................    95

                       SUBMISSION FOR THE RECORD

Hon. Richard L. Hanna, a Representative in Congress from the 
  State of New York, submission of chart that lists long-distance 
  transportation costs per passenger and auto train losses.......    25

                         ADDITION TO THE RECORD

Hon. Michael H. Michaud, a Representative in Congress from the 
  State of Maine, submission of letter and supporting documents 
  from Patricia Quinn, Chair, States for Passenger Rail 
  Coalition, regarding the Passenger Rail Investment and 
  Improvement Act, Section 209, April 25, 2013...................   105


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            UNDERSTANDING THE COST DRIVERS OF PASSENGER RAIL

                              ----------                              


                         TUESDAY, MAY 21, 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 1:17 p.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 their 
testimony today. Some frequent attendees.
    This hearing is another step towards the committee's 
bipartisan efforts to complete a Rail Reauthorization bill this 
year.
    One of the key goals of the current Passenger Rail 
Investment and Improvement Act was to seek cost efficiencies 
and savings in Amtrak's operations. Since the enactment of 
PRIIA in 2008, Amtrak has achieved notable improvements in its 
financial condition.
    On the Northeast Corridor, Amtrak earns a substantial 
``above the rail'' operating profit, and with the introduction 
of the Acela, Amtrak has captured 75 percent of the Washington 
to New York rail to air market. Amtrak has also seen 
significant ridership increases on its State-supported routes, 
which connect metropolitan areas less than 750 miles apart. In 
many ways, these are the routes where rail makes sense--
connecting densely populated areas where rail trip times are 
competitive with air and automobile options.
    PRIIA included an important change to this part of Amtrak's 
business by requiring the States to contribute more to maintain 
services. We look forward to hearing how that process is going 
with our witnesses today.
    The one area that PRIIA, and indeed multiple rail bills, 
have not seen success is improving the financial performance of 
the long-distance routes. Year after year these routes lose 
money. In 2012, they lost a combined $600 million. We simply 
cannot afford to continue these levels of subsidized losses 
year after year.
    PRIIA requires Amtrak to develop and post on its Web site 
performance improvement plans for its long-distance passenger 
routes and implement those plans for its worst performing 
routes. This all was supposed to be done by 2012. However, as 
we all know, long distance has been losing more and more since 
PRIIA became law.
    To illustrate, since PRIIA became law the NEC has increased 
its profits by 143 percent, State-supported routes have reduced 
their losses by 24 percent, while long-distance routes have 
increased their losses by 11 percent. It is clear that FRA and 
Amtrak did not follow PRIIA's intent to reduce long-distance 
costs, so it is up to us on this committee to find better 
solutions.
    Finally, Amtrak's labor force is by far the largest 
component of the company's overall cost, and Amtrak is 
currently negotiating collective bargaining agreements through 
2015. It is important for this committee to understand how 
Amtrak management and personnel decisions affect the full cost 
of rail service and if any efficiencies can be found to reduce 
the overall cost for providing passenger rail service across 
the country.
    Again, I want to thank the witnesses for being here today. 
We are open to all suggestions, and look forward to hearing 
from your testimony today.
    I would now like to recognize the ranking member, Corinne 
Brown from Florida, for 5 minutes to make any opening statement 
she may have.
    Ms. Brown. Well, thank you, Mr. Chairman, for holding this 
hearing. As the committee prepares for reauthorization of the 
Passenger Rail Investment and Improvement Act, I think it is 
important that we take time to better understand Amtrak and how 
it operates.
    As our Nation's transportation infrastructure falls further 
and further into disrepair, we are focused on terminating our 
country's national rail system while cutting off the only 
public transportation system available to many Americans.
    Without Amtrak's long-distance service, 23 States and 223 
communities--that is about 4.7 million people, including some 
in my home State of Florida--would have no access to intercity 
passenger rail, many of which are not served by air or bus 
service as we speak. As some Members advocate for dismantling 
long-distance rail service, I think it is critical that we put 
Amtrak service and the subsidies it receives into perspective.
    Amtrak, like many companies, has room for improvement. But 
it has made great progress in improving its business model and 
service. For example, Amtrak has:
    Increased ridership in 9 of the last 10 years;
    Reduced its requests for Federal operating subsidies;
    Reduced its debt to less than 1.7 in 2012; increased its 
revenue by 42 percent, from $1.9 billion to $2.7 billion in 
2012, including an operating profit in the Northeast Corridor 
of $288 million;
    Increased its shares in the travel market in the Northeast 
Corridor by 77 percent, Washington, DC, and New York by 54 
percent, and between New York City and Boston;
    Improved--this is really interesting--its credit rating in 
the last 2 years to the equivalent of A-plus, the highest 
rating by Moody's in the history of the company--that is an A;
    Received clear audit opinions in each of the past 10 years;
    Began procurement of new cars and locomotives, which are 
being built--built--in America by American workers in New York, 
California, Georgia, and Ohio. I wish it was Florida.
    The Federal Government subsidizes all forms of 
transportation. Let me just say this again. The Federal 
Government subsidizes all forms of transportation. But our 
Transportation and Infrastructure Committee only wants to focus 
and criticize Amtrak.
    If not for the strong support of the Federal Government, 
the airline industry would not be making a profit. Repeat: 
Airports and air control towers are subsidized. TSA service--
subsidized. Essential air service--subsidized. And airlines are 
paying for part of the Reserve Air Fleet. Moreover, all Federal 
travel must be on U.S. airlines, and airlines are protected 
from all foreign competition, while Amtrak bears subsidized 
foreign competition regularly.
    Even the Highway Trust Fund has been subsidized by $54 
billion in general revenue over the last several years, and no 
new funding sources have been identified as we begin to look at 
reauthorization.
    I will make additional comments during my questioning 
period. But I think every American taxpayer should be concerned 
about the fact that we spent $60 billion in reconstructing Iraq 
alone. It is just inconceivable that we do not want to invest 
our tax dollars, American tax dollars, into making sure that we 
can move our people, goods, and services so we can be 
competitive with the rest of the world.
    With that, Mr. Chairman, I yield back the balance of my 
time.
    Mr. Denham. Thank you. I now recognize the previous full 
committee chairman, Mr. Mica, for a brief opening statement.
    Mr. Mica. Thank you so much.
    Ms. Brown. Mr. Chairman? Mr. Chairman, I object.
    Mr. Mica. Thank you.
    Mr. Denham. Mr. Mica.
    Mr. Mica. Thank you so much. Mr. Chairman----
    Ms. Brown. Mr. Chairman? Are we operating on different 
rules? My understanding of Rule 6 of this committee is that 
unless you have the concurrence of the ranking member, no 
Member can speak unless prior approval, based on Rule 6. Has 
something changed? Why is the Transportation Committee----
    Mr. Mica. To the point, Mr. Chairman, it has been the 
custom afforded in this committee that always extended to the 
previous chairman when the previous chairman attended a 
hearing, whether it was Mr. Oberstar or Mr. Young, we always 
extended the courtesy to that former chair to have, if they 
wished, the courtesy of allowing them a statement.
    Ms. Brown. On the point, Mr. Chairman, this rule was 
adopted in this Congress as a request of the chairman, Mr. 
Shuster. There was lengthy discussions between Chairman Shuster 
and Ranking Member Rahall and the staff.
    At no time did anyone indicate that this committee would 
act any different from the rest of the subcommittees. At my 
understanding, and maybe you had better call in one of your 
attorneys, unless I concur, it cannot happen.
    Mr. Denham. Thank you, Ms. Brown. I do not think we will be 
going to court over this issue. But point well taken. We will 
address Mr. Mica during the full committee statements.
    Ms. Brown. Thank you, Mr. Chairman.
    Mr. Denham. I would like to again thank our witnesses for 
being here today. First on our panel, Mr. Robert Puentes, 
senior fellow at the Brookings Institution; the Honorable 
Joseph Boardman, president and CEO of Amtrak; David Kutrosky, 
managing director of the Capital Corridor; and Ross Capon, 
president and chief executive officer of the National 
Association of Railroad Passengers.
    I ask unanimous consent that our witnesses' full statements 
be included in the record. Without objection, so ordered.
    Since your written testimony has been made part of the 
record, the subcommittee would request your oral testimony 
limited to 5 minutes. Mr. Puentes, you may proceed.

TESTIMONY OF ROBERT PUENTES, SENIOR FELLOW AND DIRECTOR OF THE 
METROPOLITAN POLICY PROGRAM, BROOKINGS INSTITUTION; HON. JOSEPH 
  H. BOARDMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMTRAK; 
 DAVID B. KUTROSKY, MANAGING DIRECTOR, CAPITOL CORRIDOR JOINT 
   POWERS AUTHORITY; AND ROSS B. CAPON, PRESIDENT AND CHIEF 
 EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF RAILROAD PASSENGERS

    Mr. Puentes. Thank you very much. Good afternoon, Chairman 
Denham, Ranking Member Brown, and members of the committee. I 
appreciate the invitation to appear before you this afternoon.
    The purpose of my testimony is to discuss Amtrak's 
financial and operational performance. I am going to underscore 
the new and emerging partnerships that are emerging between the 
Federal Government, Amtrak, and the States, and describe an 
approach for sharing operating costs for the long-distance 
routes.
    As you know, it is an opportune time for this hearing, 
given the expiration of the Passenger Rail Investment and 
Improvement Act this September. Among other things, that law 
laid out a bold new vision for passenger rail that emphasized 
better performance, both financial and operational, and set the 
framework for a new kind of commitment for Amtrak's State 
partners.
    States now share operating costs for most short-distance 
rail corridors which stretch 750 miles from end to end. Today 
these routes are Amtrak's high performers, carrying about 85 
percent of travelers, the vast of which between our Nation's 
largest 100 largest metropolitan areas, the engines of our 
national economy.
    Spurred on by Federal action and recognizing the value that 
passenger rail provides in supporting these major metros, 
States have stepped up and identified their own solutions to 
support Amtrak both within and beyond their borders.
    For example, New York State recently assigned $44 million 
in its current budget to support its obligation for the Empire 
Corridor. Virginia's new transportation package includes over 
$50 million in dedicated revenue for capital and operating 
costs.
    Pennsylvania recently agreed to contribute $4 million per 
year to support the Pennsylvanian, keeping service 
uninterrupted in the western part of that State. Vermont is 
budgeting an additional $3 million for its share of the 
Vermonter, and California's revised budget proposal now 
includes an additional $19 million to cover the operating 
requirements for the Pacific Surfliner.
    Other States like Michigan support passenger rail through 
nondedicated allocation of revenue from their transportation 
fund, or in the case of Wisconsin and Missouri, its general 
fund. Oregon uses a dedicated portion of revenue from their 
personal license plate fees to support its service; and 
Washington State taps motor vehicle sales taxes and car rental 
fees.
    My point here is that a new 21st-century federalism model 
is emerging that challenges our States and metropolitan areas 
to develop deep and innovative approaches to solve the Nation's 
most pressing transportation problems.
    However, we think more needs to be done. Ensuring an 
efficient and effective passenger rail network in a constrained 
fiscal environment will require building on the Federal/State 
partnership initiated by PRIIA and applying it broadly across 
the transportation network. In this way it should be a top 
priority to expand the requirement for State operating support 
to include the long-distance routes.
    The 15 long-distance routes carry a small share of national 
ridership, 15 percent, and largely responsible for the ongoing 
operating deficit. They do, however, provide extensive service 
to isolated rural areas and support national connectivity.
    The goal of expanding the requirement for State support 
should not be to eliminate the routes or to simply offload 
responsibility from the Federal Government to the States, but 
to strengthen the partnership, to build off the innovation, and 
reaffirm the commitment of States to long-distance routes over 
time.
    State and Federal stakeholders have undertaken a rigorous 
and complicated exercise to establish standard pricing policies 
and cost methodology for short-distance routes in accordance 
with Federal law. It is reasonable to apply the lessons from 
this exercise to long-distance routes as well through careful 
and collaborative work with State leaders and the freight rail 
companies.
    Of course, I recognize that the long-distance routes are 
much more complex for several reasons, including their length 
and the fact that they operate in more than one State. 
Therefore, a negotiated approach should recognize that long-
distance routes do not provide the same service to all States 
along their route, nor do they serve the same function as 
short-distance routes.
    For example, the Lakeshore Limited between Boston and 
Chicago only travels through Ohio during low ridership 
overnight hours, but it serves other States during typical 
travel times.
    Now, in exchange for greater responsibility from 
Washington, States should have added flexibility to design and 
allocate what are likely to be shrinking levels of resources. 
As you know, current Federal law allows States to use 
Congestion Mitigation and Air Quality program dollars for rail 
operations, but it is limited to only 3 years.
    As AASHTO and others have encouraged, that cap should be 
removed. Doing so does not change the distribution of funds, 
nor does it mandate the use of CMAQ funds for passenger rail. 
It simply gives States and groups of States the flexibility 
envisioned in Federal law, and empowers them to devise their 
own solutions.
    Mr. Chairman, I firmly believe that scrutiny should be 
applied evenly to the entire transportation network and not 
just to Amtrak alone. Much attention is given to the fact that 
other nonprivate transportation passenger modes are not 
profitable, nor do they concern themselves with being so.
    Yet while Amtrak has done a lot to remake itself in recent 
years, States need to continue to reaffirm their commitment for 
the model to be sustainable. The upcoming reauthorization and 
the finalization of the National Rail Plan, coupled with 
increased attention on the role of passenger rail in States, 
make this the right time to focus on the future of Amtrak 
despite these fiscally constrained times.
    Thank you again for the invitation to appear before you 
this afternoon.
    Mr. Denham. Thank you, Mr. Puentes.
    Mr. Boardman, you may proceed.
    Mr. Boardman. Mr. Chairman, Ms. Brown, and Members, over 
the last 10 years our ridership has been rising consistently, 
particularly on our national system, which is also known as the 
long-distance trains. We are, on average, as full at peak as 
our Acela trains on the Northeast Corridor. This has helped us 
raise revenues, which have improved our recovery to nearly 88 
percent.
    The operation of the national system is a core Federal 
responsibility since 1971, and if we are going to offer train 
service, a Federal-funded national system is the best way to 
keep costs low, provide the customer choices that build 
ridership, and develop economies of scale.
    I spent the last week and a half riding the Zephyr to and 
from the west coast to celebrate both the National Train Day 
and the unveiling of the 70 new Siemens locomotives built in 
California. I think the Zephyr is a good case study in some of 
the challenges along the long-distance trains.
    Each train can carry and accommodate 365 passengers at a 
time. The average number of passengers carried per trip in 2012 
was 512. And while the peak load is lower, we come close to 
filing each seat twice during the course of the 2,438-mile 
trip.
    We can have up to six separate trains labeled the 
California Zephyr out on the road simultaneously. And we have 
six different crew bases because of the mandated Hours of 
Service Act, and we have got onboard staff that stays with the 
train for the whole trip, providing customer service. So it 
takes 254 crewmembers to maintain a daily schedule for the 
Zephyr.
    We have invested approximately $54 million in stations and 
facilities on the Zephyr route since 2006. That pales, though, 
in comparison to the $6.5 billion investment being made in 
Denver that will include commuter rail, bus rapid transit, 
light rail service with major investment from the FTA, an 
investment that would likely have happened if Congress had not 
required a national system to be preserved.
    We cannot ignore the economic development that is being 
supported in every city, village, or town that Amtrak operates 
in the 35 stations on this route. Even Salt Lake City--5 years 
ago, Utah started the FrontRunner Commuter Rail, and is 
investing in a comprehensive network of public transit options 
for their residents, again with major Federal investment from 
the FTA. Amtrak ridership at Salt Lake City has grown over 50 
percent in the last 5 years, and that is in the middle of the 
night.
    Seventeen of the thirty-five stations on the Zephyr route 
provide mass transit connectivity to the communities we serve. 
Forty-three percent of the riders who come into Chicago connect 
with another Amtrak train. And while I was in California, I was 
at Sacramento for the National Train Day. Sacramento, our 
seventh busiest station on the Amtrak national system with over 
a million riders, is making major investments for connectivity 
that will soon drive ridership, mobility, and economic 
development even higher.
    Amtrak's labor cost is not unique to the service industry. 
Some service industries can consume 70 percent of their 
operating expenses on labor cost. It is our largest single 
cost. Labor is the primary cost driver for most American 
businesses today. According to KPMG, labor is typically 30 
percent of total manufacturing cost in developing markets, and 
it is 55 percent of the manufacturing expenses in New York, and 
one of the reasons that offshoring has occurred with 
manufacturing.
    The numbers are correct in the above table, which came from 
the memo that the committee put out. They are correct, but they 
are not complete. The total, if added, would be $3,184,000,000, 
and would show labor at 63 percent of the cost. Instead, the 
number from the financial audit that Amtrak has is 
$4,035,000,000. Amtrak spent 50 percent on labor in fiscal year 
2012. It is a number that is comparable to mfg.
    Long-distance trains are a core public service provided by 
the United States for national connectivity and mobility, and 
it is clear they are doing more than that. These trains cross 
State lines in interstate commerce, clearly a Federal 
responsibility.
    Amtrak has a clear Federal mandate to run these services. 
Between 1971 and 1997, we were required to operate a DOT-
designated basic system that included long-distance routes. 
Today the Rail Passenger Services Act, as amended by PRIIA, 
requires us to operate a national passenger rail system that 
includes long-distance routes. That legislation included a 
``sense of Congress'' statement asserting that, ``Long-distance 
passenger rail is a vital and necessary part of our national 
transportation system and economy.''
    Should Congress again decide in the next reauthorization to 
continue a national system, Amtrak is dedicated to ensuring 
that long-distance trains are sustained and that they are run 
as efficiently and effectively as possible.
    Thank you.
    Mr. Denham. Thank you, Mr. Boardman.
    Mr. Kutrosky?
    Mr. Kutrosky. Thank you, Chair Denham and Ranking Member 
Brown and committee members. I am here to provide insight on 
the tools that States can use to manage their State-supported 
services.
    On the Capitol Corridor, for which I am the managing 
director, it is the third-busiest corridor in the Amtrak 
system, connecting Sacramento, San Francisco Bay area, and San 
Jose/Silicon Valley. Throughout its inception, the State of 
California has provided 100 percent of the operating support 
for these trains.
    Over the last 3 years, we have noticed the main cost 
drivers for the service include fuel, which is rising at about 
6 percent per year; direct route costs, approximately 2 percent 
a year; and shared costs, approximately 2.3 percent a year.
    Over the last 15 years, the Capitol Corridor Joint Powers 
Authority has been working with its local Amtrak team to 
control operating expenses while maximizing revenues, yet 
making sure we employ those amenities which will improve the 
customer's experience.
    With fuel as a cost driver, what we do with Amtrak as they 
purchase the fuel is to develop conservative cost estimates to 
make sure that fuel spikes do not negatively impact our budget. 
And we also opt into the fuel hedging program. And while 
hedging does not guarantee a reduction in costs, it does help 
provide a moderating factor. It levels out the potential for 
large spikes in fuel prices.
    One of the other areas that we use to control operating 
costs is to optimize the service performance. We recently did 
that in August 2012, and we were able to drop our operating 
expense by $2\1/2\ million, approximately 4 percent of our 
operating budget.
    So as you can see, the ability to control operating costs 
while maintaining a solid, consistent performance and keeping 
the passengers happy, requires that strong relationship between 
the manager and the operator of these State-supported trains.
    I would like to transition to PRIIA Section 209 policy, 
where States now begin to have a better idea and better way of 
understanding and controlling their operating costs. Section 
209 provides a policy for which States will now be able to 
engage with Amtrak on the allocation of operating costs and 
equipment capital costs with a policy that is fair, equitable, 
and transparent.
    States have been working cooperatively with Amtrak over the 
last 2 years, and we have seen significant progress in the 
policy. We have developed a menu of 15 items from which States 
can select those services for Amtrak to provide these services, 
and also help develop cost-effective budgets.
    Most recently, on April 18, the States received their 
fiscal year 2014 projections, and we have been working with the 
27 routes. We pulled them all together and made one worksheet 
so that we can do a comparison. We met with Amtrak yesterday in 
an all-day meeting. It was a very productive meeting, where we 
are lining up those costs to make sure they adhere to the 
Section 209 policy. And we will be continuing to meet with 
Amtrak over the next 2 months.
    Just to give you an example of what we are seeing as 
States, in fiscal year 2013 the estimated contribution by 
States for these State-supported routes is $193 million. That 
number increases to $317 million in fiscal year 2014. That is 
an increase of $119 million, or 60-percent increase, a lump sum 
payment.
    Now, having said that, the States have been working with 
their legislative houses and Governors' offices to increase 
their share of support for these services. And now, as I said, 
we are doing this side-by-side comparison with Amtrak. We are 
making sure that these forecasts can line up with the policy, 
and also that these States can absorb these costs in their 
fiscal year 2014 budgets.
    So upon closer evaluation, we are starting to see that the 
States and Amtrak will have to form a stronger, more 
transparent bonding together to make sure that these costs are 
transparent, equitable, and fair. We have a menu of items from 
which States to select Amtrak for those particular services in 
that menu.
    We are all driven to make sure the service performance and 
ridership and revenue meet the goals of each State budget. And 
one of the things we were working as well besides costs is also 
revenues. So we want to make sure that we maximize revenues as 
best as possible.
    So in closing, the Section 209 policy allows State 
intercity passenger rail agencies to acquire the tools to 
understand and control those cost drivers in their State-
supported services. These tools can help States make business-
based decisions in the delivery of their intercity passenger 
rail services that meet the needs of the traveling public while 
also ensuring these services are cost-effective and efficient.
    Thank you for the opportunity to present my testimony.
    Mr. Denham. Thank you.
    Mr. Capon?
    Mr. Capon. Thank you, Mr. Chairman.
    Broadly speaking, the major drivers of net costs of Amtrak 
service are Northeast Corridor capital costs and long-distance 
train operations. The Northeast Corridor requires considerable 
capital just to maintain its current condition.
    Our two major concerns about the Northeast Corridor are: 
Because it is at or near capacity, fares continually rise, and 
the proportion of the population that can afford to ride falls; 
and public discourse has overemphasized the difference between 
capital and operating costs.
    The latter point has caused many people to believe that the 
Northeast Corridor is profitable in a private sector sense. The 
reality, of course, is that without Federal capital support, 
the Northeast Corridor's downward drift would become a death 
spiral. And without the rest of the system, a sizable chunk of 
the fully allocated costs of the long-distance trains would not 
go away, but would be reassigned to the Northeast Corridor.
    Amtrak's individual routes are part of an interactive and 
interdependent system. The impact of eliminating any route or 
group of routes involves assumptions about what would happen to 
revenues from passengers connecting with surviving trains, and 
distinguishing between costs that would be eliminated and those 
that would be shifted to surviving trains. Fully allocated cost 
figures vastly overstate what could be saved by eliminating any 
one service.
    The long-distance trains are heavily used by people who get 
on and off at intermediate points, and accounted in fiscal year 
2012 for 43 percent of all Amtrak intercity passenger-miles, 
and provided the only Amtrak service in 23 States.
    Our view is that we should be increasing the service, 
lengthening trains; filing gaps in the national network; making 
track, signal, and station improvements, many of which are 
going forward, and procuring high-performance modern equipment.
    Amtrak's network is so skeletal that attempts to eliminate 
individual routes would seriously weaken the system's 
credibility, and also likely lead to wasting a lot of energy, 
Amtrak staff time, Capitol Hill staff time, and a lot of 
others. There is scant evidence that elimination of routes in 
the past has resulted in meaningful improvements to Amtrak's 
bottom line.
    The report that Rob Puentes authored well outlines how 
growth on Amtrak has outstripped the population growth, the 
real GDP, and growth in use of other modes of travel. At the 
same time, airline and intercity bus services have been 
reducing their service to small markets to focus on larger 
markets.
    A study released this month by MIT found that in the past 6 
years, there was a 14-percent decline in yearly scheduled 
domestic flights from the U.S. air transportation system, with 
small hub and medium hub airports disproportionately affected.
    There has been some discussion about shifting cost of the 
long-distance trains to the States. PRIIA, the 2008 law, 
reaffirmed the long-distance trains as a logical Federal 
responsibility. These trains could not survive a mandate that 
they get State support.
    For a route to survive, every State along it would have to 
agree to fund the service and agree on schedules, service 
amenities, and cost allocations. That means funding service in 
the middle of the night in most of Nebraska because of the 
crucial marketing importance of hitting Chicago, Denver, and 
Bay Area markets at attractive hours.
    Any single State not cooperating could torpedo an entire 
route, and any route dropped from the system would shift some 
costs to surviving routes. And the revenue impact on surviving 
routes would mainly be negative due to loss of connecting 
revenue.
    Our members are bemused by the intense focus inside the 
beltway on subsidies to passenger trains in contrast with 
highways and aviation. Starting in 2008, $53 billion in general 
funds have been transferred to the Highway Trust Fund. That is 
about three times what the Federal Government has spent on 
Amtrak operating grants over 42 years.
    What is worse, once this money is transferred to the 
Highway Trust Fund, it takes on the same restrictions as if it 
had been paid by highway users. In general, railroads need not 
apply. This is but one example of transportation policy out of 
touch with demand trends, and one reason why we frequently hear 
that the public is ahead of the politicians. For aviation and 
highways, subsidies are scattered over many different balance 
sheets, less concentrated, and less obvious than Amtrak's.
    We support the budget requests of the administration and 
Amtrak, and would point out that Amtrak does reduce costs in 
other areas by removing passengers from highways, encouraging 
denser development around many of its stations, adding to the 
attractiveness and cost-effectiveness of transit systems by 
serving passengers making connections and by sharing 
facilities, and running electric locomotives on the Northeast 
Corridor and fuel-efficient diesels elsewhere.
    Thank you very much for your time.
    Mr. Denham. Mr. Puentes, your report states that top 
priority of this upcoming reauthorization should be to expand 
the Federal and State cost-share partnership to Amtrak's long-
distance routes to improve their financial performance.
    Can you explain what is the justification for why you 
believe that?
    Mr. Puentes. Thank you, Mr. Chairman. To clarify, it is not 
just to improve their financial performance, although we think 
that that is certainly a big piece of this. The analysis that 
we conducted looking at the short-distance routes, we included 
the State revenue sources that were coming in as revenue for 
these routes in our calculation. We found much more positive 
balances on the operating side when you include these there. So 
there is a financial piece to it, as you mentioned.
    But in a lot of the work that we are doing, not just for 
Amtrak but across transportation and other areas in general, 
when the States have a role to play in this, when the States 
have skin in the game, and when they participate with the 
Federal entities for things like Amtrak service, we are seeing 
much better-run service. We are seeing new innovations, new 
ideas. And we are seeing better integration of passenger rail 
within the existing network that they are operating.
    Mr. Boardman and others talked already today about some of 
the interesting things that are happening in I guess it was the 
California Zephyr, in Colorado, and in Salt Lake City. We are 
seeing in North Carolina and Maine and a bunch of other places 
a very different type of service that is much more attuned to 
the unique traditions and the cultures and just the preferences 
of these individual States.
    So a big piece of it, as you mentioned, is about the 
financial performance. But we think that having the States be 
committed to having these services, putting skin in the game, 
not just results in better financial balances but also results 
in better service overall.
    Mr. Denham. Thank you.
    Mr. Kutrosky, while we are talking about Section 209, 
Amtrak recently released its projections for fiscal year 2014 
and under 209, which is significantly higher than amounts that 
were estimated using 2011 and 2012 data.
    How confident are you in their estimates? And have they 
provided you backup that you need to plan your business in the 
estimates?
    Mr. Kutrosky. Chair Denham, that was exactly what we were 
talking about in yesterday's meeting. So we are starting to get 
that information provided to us. We are finding one of the 
larger increases is the equipment capital charge; it was based 
on a formula that has changed, and that has caused an increase 
in the equipment capital charge.
    That is the most obvious one that we have seen so far. But 
we need to get into further details there and find exactly what 
you are asking.
    Mr. Denham. In your 15 years of experience with Section 209 
State-supported routes, what policies would you change? What is 
working well? And what are some of the cost drivers that make 
it a challenge for you to control your business?
    Mr. Kutrosky. Sure. Exactly. Thank you. I would say the 
cost drivers, as I mentioned, are fuel and direct costs; and 
the shared costs, most importantly is fuel. As we have all seen 
when we go to go fill up at the gas pump, that seems to be--or 
I know that is for us. I'm not sure about the other States, but 
that seems to be the largest driver.
    So hedging helps, and developing an optimized service plan 
that reduces fuel as best as possible. As far as the labor 
costs, as Mr. Boardman, President Boardman brought up, those 
are matters of their national agreements.
    But I will say one of the areas that we are looking at, and 
this has been part of the Section 209, is the menu of services. 
So some States can opt to another provider. For example, on the 
Capitol Corridor, our call center goes to the local transit 
agency. Those operators who answer the phones are cross-trained 
so they can handle not only transit-type questions but also 
questions on the Capitol Corridor.
    On the Downeaster, they outsource their food and beverage 
service to a catering company. And in North Carolina, their 
State-supported Piedmont route, they have a third party 
maintain their equipment, which is owned by the State of North 
Carolina.
    So those are just some examples of what is available to 
help control costs. We still have a very strong partnership on 
the Capitol Corridor with Amtrak. They provide a safe, reliable 
product for our passengers, and our passengers have some of the 
higher customer satisfaction scores thanks to those crews.
    Mr. Denham. Thank you.
    And Mr. Capon, every time we have one of these hearings, a 
fact always gets thrown out about subsidies for aviation and 
buses and highway bills and everything else.
    Would you want to take the same subsidy as aviation? Would 
that be an equitable solution?
    Mr. Capon. Well, I think the goal should be to have an 
efficient system that serves the public. So I think that the 
financial performance of the long-distance trains and the 
State-supported transactions are roughly similar if you are 
just comparing costs and passenger revenues and take out the 
State payments.
    For example, the Essential Air Service program is a $200 
million-a-year program, but the nature of the service is very 
different from a train. Essentially, you serve a particular 
airport in rural Montana. Say they may have a flight from St. 
Paul or wherever.
    You can decide that that particular airport does not need 
service and take out that flight, and it does not have a 
dramatic effect on the rest of the system; whereas if you 
decide that, say, Grand Junction or Denver is not going to be 
served on the California Zephyr, you essentially have to take 
out the entire route because the California Zephyr would not be 
viable without the ability to serve Denver.
    So I would say----
    Mr. Denham. I will come back to that because I am out of 
time.
    Mr. Capon. Yes.
    Mr. Denham. But I just wanted to make the point that 
aviation per-passenger receives a subsidy of about $4.28, mass 
transit about 95 cents per passenger, Amtrak $46.33 per 
passenger. So there is definitely a big discrepancy.
    But that is one of the issues that we are going to try to 
get to in this whole PRIIA reauthorization, is how much subsidy 
is fair for the American taxpayer? How much should we be 
subsidizing every ticket? And are there more efficient ways to 
run this?
    Mr. Capon. Right. Thank you.
    Mr. Denham. But I will come back to that. I am out of time.
    I now yield 5 minutes to the ranking member, Corinne Brown.
    Ms. Brown. Mr. Boardman, first of all I want to thank you 
for your leadership. You know, I serve in the people's House, 
and it is just very interesting that the people--I don't know 
what they think about cost-shifting because basically, the 
States, they are out of money, and it is whether or not we 
think it is important to invest in a comprehensive system.
    I want to thank you for participating in Train Day. I also 
have supported Train Day. But the point is, you mentioned Salt 
Lake City, Utah. You know, they have money that came from 
Florida. And they developed the system, and the routes are 
developed, and they are moving their people, goods, and 
services. Money that was slated for Florida went to Salt Lake 
City. I rode the train. It goes all up in the mountains, moving 
the students. And everywhere they built a station, it was 
economic development.
    So as we move forward--and I am so sorry that the House--
really, it used to be the leader in coming up a bill that was 
comprehensive, and the Senate would kind of just take our work. 
Now we have just got to take the Senate's work because we are 
not able to do our work.
    Can you talk about the importance of having an integrated, 
comprehensive system? And when you talk about California--I 
have got to say it--I recently was out there. I am on VA, and I 
went there, and we have 400 units that were built with Federal 
Government money that are standing idle because the State of 
California doesn't have money for operation.
    So we are looking at an economic system that we need to 
kick start. But it has to be a partnership between the State, 
local, and Federal Government. And I do not know. It is all the 
same taxpayers' dollars whether it is coming from the Federal 
Government or whether it is local government. It is not foreign 
sources.
    Would you respond to that?
    Mr. Boardman. Yes, I will. And I think you have hit an 
absolute point, the need for connectivity and network. I think 
that Brookings identifies that as well. They have a different 
idea on how that might really work. And my expectation is that 
the committee really does want to see that happen, have that 
connectivity and that network.
    I was hoping that what you would say is that you would 
provide the assistance, Mr. Chairman, that is provided to 
aviation in the 50,000 employees of DOT that provide the air 
traffic control system, which I do not know if it is included 
in that subsidy number that you really talked about. But with 
DOT being a 60,000-person agency and 50,000 of the people being 
at FAA, that is a pretty significant subsidy, I guess you would 
call it.
    Mr. Denham. Mr. Boardman, I would just add that it is 
included in that number.
    Mr. Boardman. Good. Then we have a lot of passengers that 
it is being applied to.
    The idea, though, that you could have a railroad system 
that operated around this country without having it being 
connected together of course does not make sense to anybody. It 
absolutely would be dangling pieces all over the country, and 
it really would not work.
    When Denver had the opportunity to grow its service, the 
only reason that you really had a station there was because 
Amtrak had been coming in and out of that location. And there 
was a lot of stress at that period of time about whether you 
would maintain a connection further to the west, to the Front 
Range, because they wanted to build a new sports arena.
    And Amtrak and FRA at that time really were able to work 
together with the transit system out there to make a new system 
really work. And that is where that $6\1/2\ billion investment 
really came from.
    Ms. Brown. One last thing. You know the Sunset Limited. I 
want that reinstated. But I have talked to the mayors in all of 
those cities, from New Orleans to Orlando, and there is energy 
there. But of course, it was not profit-making.
    So a lot of the system is not profit-making. When I think 
about New Orleans and Katrina, I think we need to think out of 
the box. We need a system in place that when we have natural 
disasters or we are being attacked, we can move people out of 
harm's way.
    We have got to think out of the box. I mean, we have got to 
figure out how we can make sure that we are moving--we used to 
be the leaders in rail, and now we are the caboose, and we do 
not use cabooses any more.
    Thank you again.
    Mr. Boardman. You are welcome.
    Ms. Brown. I yield back the balance of my time.
    Mr. Denham. Thank you.
    Mr. Mica?
    Mr. Mica. Thank you, Mr. Chairman. First off, some comments 
and then one or two questions, since I did not have an 
opportunity to make them at the beginning.
    You have heard a fairly rosy picture painted by some of the 
current operators and advocates of Amtrak. And let me just take 
parts of this apart here.
    First, the Northeast Corridor--and no one is a bigger fan 
of coming up with out-of-the-box thinking. In fact, if we 
privatized the Northeast Corridor, opened it to competition--we 
will just say opened it to private competition--Amtrak would be 
put out of business in a nanosecond because it is still a 
Soviet-style train operation, and as long as you have that, 
people will not be thinking out of the box till. We truly open 
competition, that is going to take place.
    And then the--I call it ``Fantasyland finances'' of Amtrak. 
I will tell you the Northeast Corridor is making money, and 
only in that Fantasyland financing do you not even amortize 
over some period of time some of the capital costs because we 
have been pouring billions into the Northeast Corridor, which 
is the only stretch of track that they really own of any 
consequence.
    First, the Northeast Corridor lack of progress will 
continue. It does not make money no matter how you cook the 
books.
    Let's go next quickly to--I worked hard on PRIIA. We passed 
it, Mr. Oberstar and I, the first reauthorization in 11 years. 
We came up with performance improvement plans for each of these 
long-distance money-losing propositions. And we wanted to 
improve the service.
    Mr. Capon and others, are you aware that we are actually 
losing ground from last year? And I had the staff produce this. 
Mr. Boardman highlighted the Zephyr. We have gone from the loss 
per passenger of $165.80 to $182 in a year, from 2011 to 2012.
    The Southwest Chief, the Chicago to Los Angeles, $177 was 
the loss. It is now $183.40. And then the whopper of all the 
losers, which is the Sunset Limited, and I pointed out a year 
ago that again--the loss was $375 a ticket, per passenger.
    And we looked online, and you could order a limousine from 
anywhere in New Orleans to the airport, buy the ticket, and go 
in a few hours to Los Angeles, and then deliver someone to the 
Los Angeles area, and it would cost less than it costs for 
Amtrak to operate. We would actually save money. And the loss 
with the Sunset Limited has increased from $375.10 to $400. 
This is a great concern because we have tried to do better.
    So the losses continue. They are pooh-poohed. It is over a 
half a billion dollars, as the chairman of the committee has 
pointed out. And again, $46 and some cents for every ticket. 
It's so off the charts.
    I might remind folks--and when we pass these out, we also 
have the bus routes which can get you there faster and at lower 
cost in almost every instance. So there is plenty of service, 
and you can stem some of the loss and bleeding, and people can 
get where they want to.
    By the way, too, the surface carriers--the Greyhounds, the 
Megabus, all the dozens of surface carriers--are the largest 
carriers in the United States, more than aviation, far more 
than 31 million, which is almost a joke in rail terms in world 
rail passenger service. But they all make money. They pay 
taxes. And they are not subsidized. I know that is shocking to 
folks.
    So Amtrak again comes forward with losses. Anything they 
touch seems to turn to--I will not say it here because it is a 
public audience, but look at Auto Train losses to Florida. They 
have grown in a year from $108.90 to $122.60. So we are going 
south rather than making progress forward.
    My final question, Mr. Boardman: How much are the losses--I 
asked you last time; you were going to provide the committee--
on food service to Amtrak, which were in the $80-plus million? 
I do not have that for 2012. Could you inform the committee 
today?
    Mr. Boardman. Mr. Mica, our food and beverage revenue is 
about 6 percent of our total revenue, and our costs are 
typically about 5 percent of that.
    Mr. Mica. What was your loss? It was $84 million, $83 
million?
    Mr. Boardman. I am looking here right this minute. The 
total revenue is 132. Our net loss was $72 million.
    Mr. Mica. $72 million. Thank you.
    Mr. Denham. Thank you.
    Ms. Esty.
    Ms. Esty. Thank you, Mr. Chairman.
    Last Friday as I was heading home and looking at the 
committee's schedule for this week, I was thinking about this 
hearing, and then I got news about a trail derailment in my 
State. Worst and with children who ride that line all the time, 
we were all just incredibly grateful that no one was killed.
    You know, it appears now that an eastbound Metro North 
train on the New Haven line derailed, struck a westbound train 
causing it to derail, over 70 people injured, several critical, 
and many are crediting our relatively new railcars, which we 
have been investing in, for saving lives in that accident, and 
while the NTSB is continuing to investigate the accident, it is 
worth noting that the NTSB reports that the eastbound engineer 
noted a broken rail just the time of the incident.
    We are continuing to rebuild the affected track, and it is 
my understanding at the time of the derailment there were only 
two operational tracks on the Northeast Corridor at that 
location, and with the other two lines out of service for major 
update work.
    This work eliminated critical capacity, and on a Friday, 
the Northeast Corridor was closed. I will note also this is 
also on a graduation weekend. Considerable traffic, 
considerable disruption to hundreds of thousands of people, and 
I have heard from folks across Connecticut that the upgrade 
work on the line and on these additional operational tracks 
cannot be accelerated due in part to the fact that Connecticut 
does not receive funding for this portion of the Northeast 
Corridor from the funds appropriated to Amtrak for the 
corridor.
    Now, Mr. Puentes, the Brookings Institute in your proposal 
has been discussed with my folks at the DOT in Connecticut, and 
they have pointed out to me that in your plan to turn 
responsibility over to the States, you assume that States would 
be able to draw on the Highway Trust Fund.
    However, we are all very well aware that the Highway Trust 
Fund with its current obligations and funded by the current gas 
tax is not sustainable in its present state.
    Does the Brookings Institution support raising the gas tax 
while suggesting that the Trust Fund take on passenger rail 
infrastructure?
    Mr. Puentes. Thank you very much.
    So, first of all, we do not advocate just turning over the 
routes to the States. We have tried to go to great pains to 
make the point that we are really talking about a partnership 
that is not just a Federal operation, particularly for the 
long-distance routes in certain places, but we are so 
encouraged and so optimistic by these great examples of 
partnerships that we are seeing all across the country. And so 
that is the kind of thing that we are trying to see proliferate 
around the U.S.
    Now, that said, not being naive or ridiculous about it, we 
certainly know that the States are facing tremendous budgetary 
challenges all across the board, transportation being one of 
the key ones. A lot of that is because of challenges with the 
Federal Highway Trust Fund. We certainly know that, and we do 
not see that increasing, you know, anytime soon.
    But to your question, we do think that it is the 
flexibility that we should be providing, that the Federal 
Government should be providing to the States if there is going 
to be then this deal where the States are picking up more of 
the responsibility in this greater partnership. That to be 
coupled with additional flexibility, again, not just for 
Amtrak, not just transportation, but as we are starting to 
experiment with these new models for federalism, you know, that 
has got to be kind of part of it. That has got to be this 
flexibility.
    Ms. Esty. But no additional money, just greater flexibility 
in deploying the money from the highways that are falling apart 
in Connecticut to the rails that are falling apart?
    Mr. Puentes. That is a big piece of it. We certainly think 
that additional money would be tremendous. I mean, we think the 
Federal gasoline tax has not be raised in 20-plus years. We all 
know that. We all know the current condition of the Federal 
Highway Trust Fund. A gasoline tax is long overdue in this 
country. I personally would support that.
    I think that there is a need to do that. I think that we 
have seen that we can spend that money much better, and we 
certainly know that the maintenance needs all across the 
transportation network are in terrible shape. So we certainly 
need to do that.
    That being said, I just do not see it happening any time 
soon. If there is not going to be additional money there needs 
to be flexibility.
    Ms. Esty. I would agree with that.
    It is well documented the Northeast Corridor, like much of 
our infrastructure, has a huge backlog of capital needs. It is 
estimated under the Master Plan this is a backlog of $8 
billion. Very quickly from each one of you, yes or no, do you 
believe that this backlog in the Northeast Corridor is a 
Federal responsibility on capital needs?
    Mr. Boardman. Yes.
    Mr. Capon. Yes.
    Mr. Kutrosky. Yes.
    Mr. Puentes. Partly.
    Ms. Esty. Partly. All right.
    In closing, I would like to note that according to the 
Connecticut DOD--we like these answers--Connecticut has already 
spent $5 billion of its own money on the New Haven line, but it 
is estimated that it is going to take another $4.6 billion on 
this line for a major part of the Northeast Corridor just to 
get to the general state of good repair and modernization.
    So as we look at these different models, partner States are 
going to have to rely on each other and deal with the Federal 
Government to travel on this most used line, and we do need to 
take into account these capital costs which are significant, 
and in light of super storm Sandy, where we had the New Haven 
rail line under water during that storm. So we cannot take into 
account just operating systems, but the capital costs.
    I want to thank the chairman for the hearing and yield back 
my time.
    Mr. Denham. Thank you.
    Mr. Hanna.
    Mr. Hanna. Thank you, Chairman.
    Mr. Capon, you mentioned that in some way this Congress or 
our policies are out of touch with demand. Yet in your own 
statement--and there is all kinds of demand for all kinds of 
things--but you say that key stations and overall fleets are 
near capacity. Fares are continually rising, and the proportion 
of population who can afford to ride Amtrak continually falls, 
yet demand goes up.
    So I mean it could be possible, but how are both possible? 
What is wrong with letting supply and demand work when 
apparently ridership is relatively inflexible to the price? And 
as you say in your own statement, the demand is easily 
outstripping the supply and continues to go up.
    What is a case for continuing to subsidize ridership that 
has such inflexibility in its demand?
    Mr. Capon. Well, the ridership, it is a strong market. A 
lot of people are turning away from highways and from aviation, 
and Amtrak is compelled to have the highest revenues that they 
can consistent with reasonable load factors because they are 
under pressure to keep their operating grant requirement low.
    When facilities are at capacity, I mean, the most obvious 
issue would be the two tracks under the Hudson River, one of 
which is out of service all weekend for maintenance.
    Mr. Hanna. But we are talking about two different types of 
demand here. I am talking about the apparent inflexibility of 
demand for the product, for the ride, wherever someone is 
going.
    I guess directly why do we keep fares low when that X/Y 
axis which one would use if it were a business, you would raise 
the price to a point where you saw ridership decline?
    What is the justification for having it that way?
    Mr. Capon. Well, first of all, we have a taxpayer supported 
railroad that a lot of people cannot afford to ride on because 
the fares are so high. It provides----
    Mr. Hanna. That is conjecture though. I mean, how do you 
know that? Do you have studies that can show that fares are so 
high that a lot of people just choose to go nowhere?
    Mr. Capon. Well, a lot of people are riding BoltBus and 
Greyhound and crowding the highways, a higher rate of pollution 
than on the train. There is a lot of anecdotal evidence that--
--
    Mr. Hanna. But that does not speak to your statement which 
says that they will not use the train; that on the margin, 
people would continue to decline to use the train if you raise 
the price.
    Clearly, that is not true because you say in your own 
statement ridership continues to go up regardless of the price, 
yet you object to the raising of the price.
    Mr. Capon. Well, the biggest percentage growth in Amtrak 
has actually been outside the Northeast Corridor, partly 
because of the very aggressive fares that they are forcing----
    Mr. Hanna. But they are still at capacity.
    Mr. Capon. It is at capacity, but it is at a ridiculously 
constrained capacity.
    Mr. Hanna. Mr. Boardman?
    Mr. Boardman. We have used the same method that the 
airlines do in terms of managing our prices, and especially on 
the Northeast Corridor, where we can price higher, and we try 
to price to an elasticity where we would have the maximum 
amount of revenue.
    Mr. Hanna. And you feel like you're continually doing that, 
or is there something, as Mr. Capon said, there is some public 
service involved beyond that justifies the public paying for 
these subsidies?
    Mr. Boardman. We are not seeing that. We do not see it that 
way as a provider of service. We are trying to maximize the 
amount of revenue we receive per ticket.
    If you really looked at the cost per ticket and you really 
applied even the service especially on the Northeast Corridor 
that Member Esty was talking about in terms of the connectivity 
of the Connecticut service, the tracks that we own, everything 
along the corridor, you are looking at a subsidy for Amtrak of 
about $5 per ticket nationwide by applying everything.
    Mr. Hanna. Have you done studies to prove Mr. Capon's point 
that people drop out of the system at some marginal point?
    Mr. Boardman. We are looking all the time. We keep an eye 
on Megabus, for example. What is the profile of the rider? How 
many riders do they have? What do we potentially think their 
revenues are?
    We look to see that we are maximizing our revenues and 
filling our trains. So we are really managing the buckets on a 
regular basis.
    Mr. Hanna. You can kind of see the irony though that 
ridership goes up; the price goes up. Ridership continues to go 
up.
    Mr. Boardman. Yes.
    Mr. Hanna. If you and I were in business together, we would 
look at that and say this is a source of unrealized revenue 
because demand is so high.
    Mr. Boardman. But you can only raise it at certain times. 
For example, starting at noon on Wednesday, our Acelas at about 
11 o'clock in the morning to noon become full going back to New 
York Wednesday, Thursday and Friday.
    Mr. Hanna. Thank you. Thank you both. My time has expired.
    Mr. Denham. Thank you, Mr. Hanna.
    Mr. Webster.
    Mr. Webster. Thank you, Mr. Chairman.
    I only have one question, and it came from a previous 
question where four of you were asked would you be for taking 
the Transportation Trust Fund using that money to subsidize the 
lack of maintenance on the Northeast Corridor railroads, and 
three of you answered yes.
    My question is: would you still answer yes if you were from 
a heavy donor State?
    Mr. Boardman. I did not answer yes to that question.
    Mr. Webster. OK. What did you answer?
    Mr. Boardman. I answered yes to the question, sir, that do 
I think it is a Federal responsibility to fund the backlog, not 
to where it comes from out of the Federal Government.
    Mr. Webster. OK. Thank you.
    I yield back.
    Mr. Denham. Mr. Radel.
    Ms. Brown is being very generous in allowing us to ask all 
of our questions. We are going to try to get through here. We 
are expecting votes any minute now, and rather than call all of 
you back again, I would prefer to try to see if we cannot 
manage our time.
    So thank you. Mr. Radel.
    Mr. Radel. Thank you.
    Mr. Boardman, you come here and you put up with quite a bit 
with maybe this side drilling with some questions here. I am a 
freshman so maybe I have no idea what I am talking about, but 
here is what I do know.
    Just having owned a business in the real world and worked 
in the private sector all my life, I am just trying to wrap my 
head around where we are at right now in terms of spending and 
subsidizing, but also what we do forward. And I will tell you I 
do believe that I would work with our colleague from Florida in 
understanding that there is a role that the Federal Government 
plays in our infrastructure, and yes, it can be right here 
right now, but just a few kind of real world questions if I 
may.
    We know that we are losing about $400 million, $400 
million--even when you just say that number out loud--a year in 
operations. That is what is subsidized. Are we negotiating pay 
raises right now with employees?
    Mr. Boardman. We have labor contracts that we have on a 
regular basis, yes.
    Mr. Radel. OK. How do I explain that to people at home who 
do not have Amtrak in south Florida?
    Mr. Boardman. I think certainly it is a very fair question. 
I think what you have is you have engineers and conductors, 
maintenance people all that do the same work whether they do it 
for freights or whether they do it for commuters or whether 
they do it for Amtrak.
    If you look at a long-distance train, for example, the 
recovery ratio of what we cover in terms of our costs are 
pretty close to what commuters do. So Amtrak gets dealt with 
many ways in a sense of a loss rather than a purchase of the 
services that really are out there for mobility, for 
connectivity.
    If you looked at another model like Britain, it is not that 
they are losing money the way they are talking about it. It 
actually is costing the British Government more money now that 
they have privatized than it used to cost them when they did 
British Rail, and the way they get around that is they put it 
out for bid, and then the British Government pays the cost of 
that bid, and we get rid of this idea of a subsidy because that 
is the provision of the cost.
    It is the same thing that is happening here with 209. They 
are----
    Mr. Radel. That is OK. How do I justify a pay raise when we 
are just shelling out money? It is your money, your money, you 
when you pay taxes.
    Mr. Boardman. It is the same for a highway contractor in 
the States when the Federal Government provides $4 billion to 
New York State to reconstruct the highway. They pay the 
contractors because the work is done.
    Mr. Radel. All right. Long-distance routes losing $575 
million a year, that is it. We can talk about the semantics of 
subsidizing and funding, et cetera, but where I think that we 
as Democrats and Republicans can work together and work with 
you is what are we doing to reform these. What are we doing to 
do everything that we can to maximize our dollar and stop 
bleeding money?
    Mr. Boardman. I do not think you are going to be able to 
cut the cost a substantial amount if you continue to provide a 
connected system across this country.
    Mr. Radel. Are we looking to ways to even do that?
    Mr. Boardman. Actually, you have been taking the excess 
funds from the Northeast Corridor and putting them into the 
long-distance trains to reduce the Federal subsidy to the long-
distance trains.
    Mr. Radel. In terms of practically speaking, technically 
speaking, which is way beyond me, but that is why we are here 
today, are we looking at any other areas physically to reform 
to make the rail more efficient or more cost effective besides 
just taking money from one place and putting it into another?
    Mr. Boardman. Well, we certainly look to try to provide a 
better service on a regular basis and keep our costs down, but 
what you really look at here is that the labor is the labor. 
The fuel, as David talked about is something that is much more 
difficult to identify.
    The major drivers of cost to provide this service is the 
same for all of us.
    Mr. Radel. All right. Good. Well, look. I hope moving 
forward if there is anywhere where we can be of assistance, 
again, in finding areas that we can cut costs and quit bleeding 
money, I think that in the most bipartisan way we all will do 
everything that we can to move forward with that.
    Thank you. I appreciate your time. I appreciate you putting 
up with us.
    Mr. Boardman. Yes, sir.
    Mr. Denham. Thank you.
    Mr. Williams.
    Mr. Williams. Yes, thank you, Mr. Chair.
    I appreciate you all coming by, and I got here late. I got 
here late. So I am going to ask a pretty simple question.
    I am a business guy. I have been in business in the private 
sector for 42 years. I have fought every Government regulation 
you can throw at me, and I am a big private sector guy, and I 
have been riding on the trains since my mother took me to 
California on Super Chief in 1953.
    But anyway, here is my question, and I sit here as a 
taxpayer and somebody in Congress. Can you guys ever be 
profitable? Do you think about profits? Do you think about 
surplus?
    I mean, I know you have got contracts. You have got this 
and that, but I am going to tell you the private sector has 
been able to do things they never thought they could do before 
with the economy we have had since 2009, and they have been 
able to make it.
    You know, basically, we, and you are included, we are your 
banker, and if you are a banker, I want to know how you are 
going to get profitable, I mean, because you are talking to a 
bank that does not have any money.
    So when is Amtrak going to start thinking in terms of 
getting costs in line, giving good service, being competitive? 
And the question is: could the private sector do it better than 
you can?
    Mr. Boardman. We are the private sector. We operate like 
the private sector. Our costs are in line when you really look 
at what our costs are. They are in line.
    Mr. Williams. But in line to whom?
    Mr. Boardman. They are in line to what a similar service 
would be provided by anybody who operated rail.
    When you look at what, Congressman, we provide out there 
today, we provided in 1971 for Congress the ability for the 
railroads to get rid of a money losing operation, which was 
passenger rail. Congress decided it was important to have 
passenger rail in the United States across the country.
    It is a lot less expensive today in terms of subsidy to 
provide that passenger service with Amtrak the way we operate 
than it was back then. The decision to make that ability for 
the railroads, which are now considered freight railroads, and 
they were not freight railroads in 1971; they were railroads. 
They provided passenger service. They provided freight service.
    Now they provide freight, but they were not yet profitable 
even in 1971. It took the Staggers Act in 1980 to allow them to 
get rid of some expenses that allowed them then now to become 
the profit of the world or the envy of the world for the 
provision of freight movement that they provide.
    Mr. Williams. Do you foresee any time soon being 
profitable?
    Mr. Boardman. Not on the long-distance trains. When you 
look at covering our operating costs, if you were driving a bus 
up our railroad and did not have to pay for what is underneath, 
you would make a profit, and that is how we are talking about 
we are making a profit on the Northeast Corridor.
    Mr. Williams. Well, I appreciate you being here, but in the 
private sector world and the business world, if your expenses 
are more than your income, you are not making a profit. I 
appreciate your being here.
    Mr. Boardman. Yes, sir.
    Mr. Williams. I yield back.
    Mr. Denham. Thank you.
    Ms. Brown.
    Ms. Brown. Thank you.
    First of all, Mr. Chairman, I want to thank you for having 
this hearing, and I am looking forward to the Transportation 
Committee going on the road to hear from our stakeholders.
    Our freight rail is number one in the world, and everywhere 
I go, people are asking us about the freight rail, but I am 
asking them about their passenger rail because they move their 
people, goods and services, and they do not have the congestion 
that we have on the road. They do not have the pollution that 
we have, and as I said over and over again, we started the 
train systems in the world, and now we are the caboose, and 
they do not use cabooses anymore.
    And I would like for you all to respond because constantly 
we are talking about the long-distance services, and I keep 
saying we have got to think out of the box. When we had Katrina 
over 3,000 people died, and the buses went underwater because 
we were not able to move people.
    So it is not just profits. Government is just not in there 
for the profit. We are in there for service, service, service, 
and I would like for you to respond to how we can have service 
because there is no form of public transportation or rail that 
is not freight that makes a profit in the world, and their 
freight does not make a profit.
    Whether I am in Russia or wherever I am, they are asking me 
about the freight, but the reason why it does not make a profit 
is because it is separated, and I would like for you to respond 
to it because there is a lot of education that needs to go into 
making sure people in this committee understand what we are 
talking about.
    Mr. Boardman. Well, if I could start, Congresswoman.
    Ms. Brown. Yes.
    Mr. Boardman. I would tell you that we have had many 
foreign railroad executives and others come look at our 
Northeast Corridor and our vision on the Northeast Corridor, 
and we stand behind nobody in provision of services and 
revenues that we generate and the profile of our riders.
    Since 2000, the ability for us to really provide more 
service than any of the airlines put together in the Northeast 
Corridor was a major turnaround, and when the British and when 
SNCF and others came over here to look at, and even the 
Japanese, to look at what we were doing to increase revenues, 
they were, in fact, saying that our estimates for what we could 
really provide for the future were probably very conservative, 
and we were trying to be very conservative in how we would do 
this for the future.
    But the Northeast Corridor with 40 million people living 
within 40 miles of the corridor is probably a service that does 
not exist anywhere else just like it in the world because it 
supports the economy of the Northeast, more so than anybody in 
Europe could understand. Seventy percent of our ridership are 
business people on the Acela, and about 40 percent on the 
regional services. In Europe it is about 40 percent for 
business people.
    Ms. Brown. And the part that really gets me is Members 
think that we can go into the Northeast Corridor and say we are 
going to do it this way, not understanding that there are many 
communities, many States that have come together, and that is 
the Northeast Corridor.
    I know we think we are the big dog, but we are not the only 
one in the room.
    Mr. Boardman. That is exactly right, and you know, I was 
going to say earlier we lost $5 million over this weekend in 
revenue and fares because of this shutdown in Connecticut for 
service. So just the service between New York and Boston was 
about $5 million.
    Ms. Brown. Yes, and the others? Anyone else want to 
respond?
    Mr. Kutrosky. Yes, if I may, Ranking Member Brown.
    On the Capitol Corridor, we have developed, talking about 
service----
    Ms. Brown. Are you talking about California now?
    Mr. Kutrosky. In California, we have developed a public-
private partnership with our host railroad, Union Pacific, and 
what we do is we jointly develop our schedules with theirs. 
They have----
    Ms. Brown. That is taking the freight off, right, so you 
all can jointly use it.
    Mr. Kutrosky. Exactly. We use it together with them, and 
their needs are getting shipments in and out of the Port of 
Oakland, which our trains just happen to have a station nearby 
there so there is a lot of joint use and shared use of these 
tracks.
    And through our partnership working with them, we have been 
able to invest jointly in capitalized maintenance programs, as 
well as keep our service as one of the highest as far as on-
time performance.
    Ms. Brown. How about this positive train control? How is it 
affecting you all?
    Mr. Kutrosky. It has not affected us yet. There in 
California the focus right now is in the L.A. Basin, but 
working with Union Pacific, they said the second they are gone 
after L.A. is up on the Capitol Corridor because, once again, 
we have about 30 to 40 freight trains a day mixed in with our 
30 trains a day. So it is a positive performance.
    The other thing I would like to just hit on really briefly 
is when we talk about the communities in the Capitol Corridor, 
our $60 million annual investment comes to the equivalent of 
about $170 million in economic positive impacts for the 
communities up and down our corridor. So you have the private 
sector and then you also have your communities, and we feel as 
though we are, as President Boardman was talking about, the 
conductivity, we help to provide that through Northern 
California.
    So thank you very much for allowing me that opportunity.
    Ms. Brown. The last person.
    Mr. Capon. Yes, a couple of points. One is that on the 
Northeast Corridor, also to Mr. Hanna's point, I believe that 
one is transit Amtrak operates eight or nine cars, and by 
European standards that would be short. So I think, you know, 
Amtrak has put out a vision of a much higher capacity railroad, 
and that would be the basis, and it would probably have a lower 
operating loss as well with a much higher volume of passengers.
    Also to elaborate on the point about one of the benefits of 
the long-distance trains keeping the infrastructure in place, 
Virginia Railway Express, the Tri-Rail commuter rail in Miami, 
and the Washington-Richmond service that Amtrak operates, all 
of those are possible because the New York-Florida trains never 
stopped running. When Amtrak was created, none of those three 
services I named existed, and the Architect of the Capitol had 
his eyes on the First Street tunnel to take it away from the 
railroad.
    So one of the benefits of the long-distance trains is 
keeping that infrastructure in place, and I would also like to 
emphasize in terms of States and cities working to support 
long-distance trains, there is a lot that is happening not in 
terms of the operating cost, but in terms of developing modern 
intermodal stations. The most famous one is probably in 
Meridian, Mississippi, which Mayor John Robert Smith 
championed, but there are many other examples, Champaign, 
Illinois, of wonderful intermodal stations that have improved 
the economics of the long-distance trains even though they are 
not in the sense of Section 209.
    Ms. Brown. Thank you.
    Mr. Capon. Thank you.
    Mr. Denham. Thank you.
    And Mr. Hanna has entered information for the record. 
Without objection, so ordered.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] 81149.007
    
    Mr. Denham. Just a couple of followup questions.
    Mr. Boardman, following up on Mr. Radel's question about 
the union negotiations, my understanding, the majority of the 
unions have entered into an agreement with a 15 percent 
increase in salary, and there are two unions that are still 
holding out for a higher increase than that 15 percent. Can you 
explain if these final two unions are settled at a higher rate 
what happens to the other agreements?
    Mr. Boardman. Sure. What we are really talking about here 
is a 5-year contract. This is not a 1-year, 15 percent.
    Mr. Denham. Right.
    Mr. Boardman. We have under the Railway Labor Act a 
situation where we have to continue to allow the National 
Mediation Board to mediate with these unions until they release 
them. If they release them, then the decision for this goes to 
a Presidential Emergency Board so that a decision is not 
reached if it is not reached by us. It actually gets decided 
upon by a President's Emergency Board, which is the way much of 
the past has happened for Amtrak.
    Mr. Denham. My concern specifically is about the ``me, 
too'' provisions. You continuously talk about running as a 
business and more like a privatized business, but yet this is 
one of those costs that are outside of your control. If the 
``me, too'' provision goes through, if this is a higher 
negotiated contract than what the others have already agreed 
to----
    Mr. Boardman. It is a pretty typical thing with all of the 
unions. We have got 13 different unions, 24 different 
contracts. They all want that kind of provision. So it kind of 
goes up all the way through the process. It took a long time to 
finish off the negotiation with the most recent one that we 
finished because of that provision.
    But that provision then does cost us a substantial amount 
of money. I do not have what that is right this minute, but 
that would be decided also by the President's Emergency Board.
    Mr. Denham. Can you provide this committee the different 
scenarios that you are look at? I think you have concerns from 
members of this committee I would say on both sides of the 
aisle that a 15-percent increase at the time that we are doing 
furloughs and layoffs and sequestration and cuts, 15 percent is 
probably----
    Mr. Boardman. Well, it has already occurred for all of 
these unions.
    Mr. Denham. No, no, no. I understand, over a 5-year period.
    Mr. Boardman. Yes, sir.
    Mr. Denham. But if the two remaining, as I understand it, 
if the two remaining unions are able to negotiate a much higher 
level----
    Mr. Boardman. They are not going to be able to negotiate a 
higher level. It will be at the PEB.
    Mr. Denham. So you are not concerned right now that your 
costs will go up because of something that is outside your 
control?
    Mr. Boardman. Well, because it is in mediation already. So 
it is mediation at this point in time. The mediators are 
working with us on this. If they cannot get this worked out in 
a way that is acceptable to us and acceptable to the unions, 
then it goes to the President's Emergency Board.
    Mr. Denham. But the ``me, too'' provision does allow that 
if it goes to the President, if it does----
    Mr. Boardman. They can make that decision as well, 
President's Emergency Board. I am sorry. I do not mean to step 
ahead of you.
    Mr. Denham. So there is the potential with the ``me, too'' 
provision. Say the President and his administration agrees to a 
higher amount. That also gets translated to everybody else that 
has already negotiated terms.
    Mr. Boardman. Yes, but it is not just that. They can decide 
a higher rate on anything or everything or they can decide a 
lower rate as well.
    Mr. Denham. OK. Thank you.
    We are about out of time. We have called votes already, but 
I did want to get to a couple of brief final points.
    Mr. Boardman, last hearing I know we asked a lot of you. I 
know that you have come in here several times. It is always 
good to see you, and we have a number of different issues that 
we want to address in the future. We will try to do the 
majority of that through correspondence, but one issue that is 
still hanging out there, the April 11th hearing that we had we 
asked you for a number of different questions. We are still 
waiting to get that information back. That will help us to 
alleviate future hearings, as well.
    Mr. Boardman. I thought they were back. I will check on 
that immediately.
    Mr. Denham. Thank you.
    And just one final question briefly to each one of you. 
This kind of gets to the crux of our overall questioning. How 
big of a subsidy is enough?
    So we have got to look at the entire rail passenger network 
and whether we go to a 209 type process for the long-haul 
routes. We need to come up with a what is fair for the American 
public. And so I would ask each one of you: what type of 
subsidy per passenger would be, in your minds, fair for the 
American public to absorb to keep these long-distance routes in 
place?
    Mr. Puentes.
    Mr. Puentes. It is tough in the abstract, I think, to come 
up with a precise number. I would say though that I would love 
to see the States and the Federal Government work together and 
decide between them in a negotiated manner how much the States 
would want to pick up. I think on the Federal level it would 
probably have to be pretty uniform, but then it is up to the 
individual States to decide from their own resources how much 
of the system that they like to subsidize that way.
    Mr. Denham. Thank you.
    Mr. Boardman.
    Mr. Boardman. I think that it is difficult to figure that 
out. I think that is one of the things Congress does really 
need to help us with. What does Congress want to invest in this 
connectivity across the country? Because I think it is largely 
you are talking about the long-distance trains more than 
anything else, and it is a very tough business model, depending 
on how many people get carried in that train and a different 
part of the season.
    So I do not have a number for you, but I do understand what 
you are trying to get at.
    Mr. Denham. I am trying to get at your biggest cost 
drivers, the places that are outside of your control that cost 
you the greatest amount of expense or headache.
    Mr. Kutrosky.
    Mr. Kutrosky. Yes, Chair Denham. For us in California, our 
money is given to us through the Governor's allocation to us, 
and it has performance standards. So we have to meet those 
performance standards, and our subsidy is 50 percent.
    Having said that, I believe I concur with President 
Boardman. I think it is up to Congress to help us look at it 
from a systemwide perspective, maybe on a passenger-mile basis, 
and I am talking about all modes, to figure out how to level 
the playing field, so to speak. So I think that is something 
that everyone can understand if you look at it on a passenger-
mile because you are looking at the metric of the person 
traveling, be it either mode, but I believe that would help 
understand what the true costs are for each model.
    Mr. Denham. Mr. Capon.
    Mr. Capon. In terms of total costs, I would say that the 
Revenue and Policy Study Commission that President Bush 
appointed came up with a recommendation in the order of $8 
billion to $9 billion a year.
    In terms of net cost per passenger-mile I would say 
probably should be less than 40 cents. I would like to have the 
opportunity to submit some comments for the record in response 
to some of these statements made today, particularly about the 
Sunset Limited.
    Mr. Denham. Thank you.
    And I just want to state my personal goal in this is not to 
eliminate the long-distance routes. It is just to make them 
more efficient, to lose less money and make sure that we have 
got a national rail network, but do not do it as an expense. 
Let us make good decisions. Do we need to make a stop at 2 in 
the morning somewhere where nobody is getting on? Do we need to 
subsidize some of these routes $404 per passenger? Should the 
rest of the people around the Nation have to subsidize that?
    Or even in my home State, $182 per passenger for the Zephyr 
route, and I mean it goes on and on. There are some huge 
expenses with those subsidies. We have big challenges with 
infrastructure, with upgrading infrastructure, especially on 
the Northeast Corridor.
    If we are forcing you, if Congress is forcing you to take 
all of your profits off of the Northeast Corridor and then 
subsidize the rest of the Nation and do that on top of the 
subsidy that is coming from Congress, you will never get an 
opportunity to repair the rail and the bridges that you need to 
put into.
    So we want to work as a partner with you to not only get 
this new passenger reauthorization bill done, but get it done 
right and more efficiently, especially in today's huge deficits 
we are seeing from the Federal Government.
    Any final words, Ms. Brown?
    Ms. Brown. Yes. Mr. Chairman, I think you asked a good 
question. What are fair subsidies? And I would ask what is fair 
for highway, what is fair for aviation, what is fair, period?
    But, Mr. Chairman, I would like to definitely make a 
written statement concerning long-distance transportation costs 
per passenger, and I want to make sure I put that in the record 
because Mr. Mica made comments about the auto train losses and 
talked about Sanford, which is one of the most profitable 
routes that we have, moving people off of the highway and 
providing services.
    But I think I got a positive recommendation. I would 
recommend, as we have done in the past, to have a round table 
discussion with labor and call them in to discuss the issue 
that you raised today about, you know, the negotiation, and I 
think that we could call them in and talk to them about where 
we are. I mean, I think that sounds like a bipartisan 
recommendation.
    Mr. Denham. It sounds bipartisan to me.
    The votes have been called. We are going to have to cut 
today's hearing a little short.
    I would ask unanimous consent that the record of today's 
hearing remain open until such time as our witnesses have 
provided answers to any questions that have been submitted to 
them in writing and unanimous consent that the record remain 
open for 15 days for additional comments and information 
submitted by Members or witnesses to be included in the record 
of today's hearing.
    Without objection, so ordered.
    I would like to thank our witnesses again today for their 
testimony. If no other Members have anything to add, the 
subcommittee stands adjourned.
    [Whereupon, at 2:43 p.m., the subcommittee was adjourned.]
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