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






                THE IMPORTANCE OF THE NORTHEAST CORRIDOR

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

                                (113-23)

                             FIELD 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

                               __________

                   JUNE 7, 2013 (New York, New York)

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure








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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

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

     Subcommittee on Railroads, Pipelines, and Hazardous Materials

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
























                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

John A. Fry, President, Drexel University........................     7
Robert D. Yaro, President, Regional Plan Association.............     7
Hon. Joan McDonald, Commissioner, New York State Department of 
  Transportation.................................................     7
Hon. Joseph H. Boardman, President and Chief Executive Officer, 
  Amtrak.........................................................     7

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

John A. Fry, prepared statement..................................    35
Robert D. Yaro, prepared statement...............................    41
Hon. Joan McDonald:

    Prepared statement...........................................    45
    Answers to questions for the record from Hon. Bill Shuster, a 
      Representative in Congress from the State of Pennsylvania..    48
Hon. Joseph H. Boardman:

    Prepared statement...........................................    51
    Answer to a question for the record from Hon. Jeff Denham, a 
      Representative in Congress from the State of California....    57


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                THE IMPORTANCE OF THE NORTHEAST CORRIDOR

                              ----------                              


                          FRIDAY, JUNE 7, 2013

                  House of Representatives,
Subcommittee on Railroads, Pipelines, and Hazardous 
                                         Materials,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:43 a.m., in 
Room 4500, Moynihan Station, New York, New York, Hon. Jeff 
Denham (Chairman of the subcommittee) presiding.
    Mr. Denham. The subcommittee will come to order.
    Let me also thank Congressman Nadler for welcoming us to 
his district. Thank you.
    This hearing continues our informal roundtable discussion 
yesterday on Amtrak and will hopefully reinforce the idea that 
investment in the Northeast Corridor is a priority.
    Last week in California, we learned a lot about the 
California high-speed rail program. We also learned how the 
first $6 billion in State and Federal funding the project 
received will go to upgrade current Amtrak service in the 
valley.
    The Northeast Corridor is the most highly trafficked rail 
corridor in the country and Amtrak's sole money-making 
enterprise. Infrastructure upgrades in this corridor are 
essential to serve a proven and dedicated ridership that 
continues to expand.
    I believe the $6 billion that was given to California high-
speed rail could be better spent on such upgrades as these 
projects where they are both clearly identified and necessary 
beyond dispute.
    To place $6 billion in perspective, this amount of money is 
enough to replace the Baltimore and Potomac Tunnels, which 
costs $1.5 billion; build a new Portal South Bridge with a 
four-track alignment into New York costing $1 billion with 
150,000 daily riders. We could replace the century-old 
Susquehanna River Bridge, $800 million, and replace the 
Gunpowder River Bridge, $600 million, with $2 billion left 
over. We saw all these projects yesterday, and obviously they 
are a challenge to deal with and they certainly slow down the 
commute time.
    These are just a few examples on a list of over $30 billion 
in identified projects. Each would substantially decrease trip 
times along the corridor by eliminating significant 
bottlenecks.
    Given that there are over 11.4 million Amtrak riders and 
over 200 million commuters that use the Northeast Corridor 
every year, it would be an investment in an area where we have 
proven ridership.
    Furthermore, there are still questions in California as to 
whether the improvements made by the Authority will even be 
used by Amtrak or even improve ridership as stations move from 
city centers to the outskirts. Simply put, this money would 
have been better spent here on the Northeast Corridor which 
continues to surpass ridership and revenue records for Amtrak. 
Also, unlike most other Amtrak services, the Northeast Corridor 
consistently turns an operating profit.
    I believe more investment must be made in the Northeast 
Corridor for continued success in the future, but when there 
was funding available, it was spent elsewhere. Indeed, the 
Northeast Corridor did not receive any of the President's high-
speed rail money until after the States returned theirs. 
Clearly this was not a priority.
    We have got to prioritize, fix it first, and address known 
problems, and our current policy structure does not encourage 
this.
    Finally, with years of trillion-dollar deficits, Federal 
resources are scarce and we have got to continue to work within 
existing funding levels. We have got to find ways to work with 
the private sector as well.
    Let me again thank our witnesses for being here today. We 
are open to all discussions, all suggestions, and I look 
forward to hearing from our witnesses.
    I would now like to recognize Ranking Member Corrine Brown 
from Florida for 5 minutes to make any opening statements she 
may have.
    Ms. Brown. Thank you, Mr. Chairman, and thank you for 
having this hearing here at the Northeast Corridor, the 
backbone of our Nation's passenger rail system.
    I want to thank Mr. Nadler for welcoming us to his 
district. We are physically in his district.
    And I want people to know who I am. I am Congresswoman 
Corrine Brown from Florida. I have already donated $500 million 
when my Governor sent $3 billion back, and I understand that 
you all have $500 million. So I am a contributor to the 
Northeast Corridor already.
    [Laughter.]
    Ms. Brown. More than 2,200 trains travel the corridor 
daily, only 157 of which are Amtrak trains that transport about 
16 million annual passengers. The commuters and freight 
railroads make up the rest of the trains on the corridor. I do 
not know if we have ever driven up I-95 to New York, but it is 
much better to do it by train.
    I am sure that many of you remember the Northeast Corridor 
improvement project in the early 1980s which modernized a 
number of facilities on the corridor. From 1990 to 2002, 
however, very little investment was made in the corridor.
    In 2003, things began to change with a new emphasis placed 
on bringing Amtrak equipment and infrastructure closer to a 
state of good repair. Amtrak began a process of ramping up a 
significant capital program and has since made substantial 
progress in addressing the backlog of capital needs throughout 
its system.
    In 2008, Congress charted a new course for passenger rail 
in the United States with the enactment of the bipartisan 
legislation, The Passenger Rail Investment and Improvement Act. 
That law created a new national program for the development of 
high-speed rail and intercity passenger rail in the United 
States, which later led to a significant Federal investment in 
the corridor throughout the American Recovery and Reinvestment 
Act of 2009. Some of those funds enabled Amtrak to replace a 
100-year-old bridge in Connecticut. The law also established 
the Northeast Corridor Infrastructure and Operational Advisory 
Commission to help develop a long-term vision and investment 
strategy for the corridor. The law also reenacted Amtrak 
through the end of this fiscal year.
    It is my hope that as we look forward to the 
reauthorization of Amtrak, that we build on the success of the 
act and continue to increase investment in Amtrak and the 
States. In fact, I support the President's fiscal year 2014 
budget proposed to create a dedicated funding source for Amtrak 
which would enable Amtrak to better budget its needs, including 
major infrastructure improvement. The fact is over the last 50 
years, the Federal Government has invested nearly $1.3 trillion 
in our Nation's highways and more than $484 billion in 
aviation, but only since 1970, when Congress created Amtrak, 
did we begin to invest in passenger rail. Since that time, we 
have invested just $67 billion in passenger rail, a small 
fraction of what the European and Asian countries have 
invested.
    In closing, let me just say that I want to, particularly, 
give a special salute to Mr. Boardman for joining us and for 
helping to organize this hearing. And I am really pleased that 
they have extended your contract. You have done a superb job 
working with all of the elements that you have to work with. 
Thank you.
    And, Mr. Chairman, I look forward to hearing from the 
witnesses.
    Mr. Denham. Thank you.
    I now call on the full committee chairman, Mr. Shuster, for 
any opening statement he may have.
    Mr. Shuster. Thank you very much. It is great to be in New 
York City. I thank the witnesses for being here today and thank 
Chairman Denham and Ranking Member Brown for putting together 
this hearing. It is an important hearing in Mr. Nadler's 
district.
    I was just talking to him about the size of his district. 
My district is about 180 miles across and about 70 or 80 miles 
deep. His district is a half a mile wide and 7 miles long. We 
were discussing one day where he was from. We were talking 
about his district. I said I come from a town of 2,000. He said 
I can shake 2,000 hands in 1 apartment building in a morning. 
So it tells you how different this country is. It is really 
amazing.
    It was great coming up here yesterday. Chairman Denham put 
together a rolling roundtable. So as we rolled up the Northeast 
Corridor, members from the different States' DOTs were getting 
on board talking about their projects, their needs. It was 
really a day full of gathering a lot of good information.
    Always when we are doing a Northeast Corridor hearing, I 
have to have full disclosure. I am from Pennsylvania, and 
everybody says, well, he is for the Northeast Corridor because 
he is from Pennsylvania. I do not live on the Northeast 
Corridor. My district is not on the Northeast Corridor. I am 
western Pennsylvania. So I am the other part of the State.
    But I believe that the Northeast Corridor is extremely 
important. As Chairman Denham talked about the density of 
population here, when you look at the density of population, 18 
percent of the Nation's population on 3 percent of our land 
mass, this is the perfect place to look at investing and making 
sure that passenger rail is viable. Again, you have got 4 of 
the 10 most populous metro regions in the Nation on the 
Northeast Corridor.
    When we look at the United States of America, it took us 65 
years to go from 200 million people to 300 million. In 2005, we 
crossed that 300 million person threshold, and they projected 
in 2005 that it would take 32 years to go from 300 million to 
400 million. We are 7 years into it. Not everybody is moving 
from the Northeast Corridor to Ms. Brown's State or Arizona. 
The density continues to grow and expand, and we need to make 
sure that the Northeast Corridor, which is our most productive 
region in the country because of the population and the 
economic activity that goes on here--we have got to make sure 
we can move people around. So making sure the Northeast 
Corridor--we pay attention to it and make sure it is reliable, 
it is efficient, that is what we need to do.
    Again, when you talk about what this administration has 
proposed, we recognize we do not have unlimited funds. So we 
need to make sure we focus on what makes sense and prioritize 
that investment in the infrastructure. And again, I believe the 
Northeast Corridor is one we have to pay attention to. And it 
is not high-speed rail, but higher speed rail, and we can make 
those investments here in the Northeast Corridor.
    High-speed rail is great in theory, but with the limited 
resources we have, as Mr. Denham pointed out, we need to make 
sure we are focusing those dollars in places where we can have 
a significant impact and not think of pie in the sky type 
investments that really are not going to give us the kind of 
benefits that we need.
    Responsible governing involves choices, and while this 
administration in its budget wants to fund everything, we 
really need to, again, focus like a laser on those things that 
are smart investments. All you have to do is look to 
Pennsylvania, from Harrisburg to Philadelphia, the investment 
that Amtrak and the State of Pennsylvania made in the Keystoner 
about 5 years ago. Since that time, they have reduced the 
travel time from Harrisburg to Philadelphia by about 20 
minutes, and ridership the last I checked, which was months 
ago, was up 60 percent. It is probably higher than that now.
    And, in fact, I tell people often, I should be the poster 
child for passenger rail because when my father chaired this 
committee and even before, when he was trying to reform Amtrak, 
I used to say to him as a 20-year-old that did not know a whole 
lot--I thought I knew a lot--I would never get out of my car 
and go to rail. I needed that freedom to leave, come and go as 
I pleased. But now today, I do not drive to Philadelphia or New 
York. I get on the train. I do not drive, whether it is from 
Harrisburg or Washington, DC, because it just makes so much 
sense. You can be so much more productive.
    So again, focusing on the Northeast Corridor, getting the 
investment from the private sector. I think we have to look at 
ways to do that to incentivize them to get in the game here in 
the Northeast Corridor.
    And I look forward to working with all of you trying to 
figure this out as we go.
    Again, thank you, Chairman Denham and Ranking Member Brown, 
for holding this hearing. Thank you.
    Mr. Denham. Thank you.
    I now call on Mr. Nadler for any opening comments he may 
have.
    Mr. Nadler. Thank you, Mr. Chairman. I want to thank you 
and Ranking Member Brown for holding this hearing today on the 
importance of the Northeast Corridor.
    I would like to welcome everybody to my district, although 
that has been commented on already, and thank everyone for 
taking such an interest in passenger rail which is so vital to 
New York and to other cities along the east coast.
    I ride Amtrak every week from New York to Washington and 
back again. Rail is the most reliable form of transportation, 
and it should be an option for all travelers within a 500-mile 
radius of any major city.
    But the 11.4 million people who ride the Northeast Corridor 
each year and the residents and businesses of the region do not 
need convincing. The importance of the Northeast Corridor goes 
without saying. The real question is how best can we improve 
the Northeast Corridor and institute true high-speed rail 
service.
    We all know that there is at least a $52 billion backlog 
just to reach a state of good repair and to accommodate future 
growth. The system is old. Much of it was constructed in the 
19th or early 20th centuries. Bridges, tunnels, tracks, and 
signals all need to be upgraded just to keep up with demand on 
the current system. And the main reason for this backlog is 
chronic underfunding by the Federal Government. We place 
requirements on Amtrak and then we provide the bare minimum 
possible for the railroad to function.
    In the fiscal year 2012 transportation appropriations bill, 
DOT received $71 billion, but of that, Amtrak only received 
$1.4 billion. That is about 2 percent of Federal transportation 
appropriations for Amtrak nationally, never mind the Northeast 
Corridor.
    And then we hold hearings to ponder how we are going to 
develop the Northeast Corridor. Well, one answer is to invest 
orders of magnitude more than we currently do in passenger and 
high-speed rail.
    Every major transportation system has been created with 
federally funded capital investments. Every mode of 
transportation, highways, transit, and aviation, relies on some 
form of public subsidy. Rail is no different. If we want to 
develop true high-speed rail in this country, it is going to 
take a much greater public effort.
    Unfortunately, the current budget situation in Washington 
makes it highly unlikely that we will be able to increase 
funding for critical transportation programs in the near 
future. We should but I doubt we will.
    I hope the situation changes and I will continue to work to 
undo the sequester and to increase investment in jobs and 
economic development. Everyone here who cares about high-speed 
rail should do the same.
    In the meantime, a constrained Federal budget is going to 
give people even more an incentive to turn to the private 
sector, and that is fine to a point. I think everyone here 
supports involving the private sector to some extent. Amtrak 
partners with the private sector now and is exploring 
opportunities to do so more in the future. But what we should 
not do is use private financing as an excuse to eliminate or 
reduce Federal investment in passenger rail. In fact, only with 
a strong Federal role will we be able to properly leverage 
private sector funds. And whatever we do, we must maintain 
proper Federal oversight and control, preserve good paying jobs 
and protect the public interest.
    The good news is that despite the strain on the Federal 
budget, a lot is actually happening on the corridor. The NEC 
Advisory Commission is developing its vision for the Northeast 
Corridor. This includes not just coordination among the States 
in identifying critical needs for future growth, but also 
advancing a long-term regional investment strategy. FRA is 
currently conducting an EIS for corridorwide development and a 
service development plan, which should be completed in 2015.
    I hope that we will build upon these efforts when we 
reauthorize PRIIA, the Passenger Rail Investment and 
Improvement Act, hopefully later this year. Amtrak provides an 
essential and valuable service. Amtrak and the development of 
high-speed rail is a critical part of any rational 
transportation policy.
    I look forward to hearing from the witnesses and to working 
with my colleagues to build a competitive and visionary 
passenger rail system.
    Thank you. I yield back.
    Mr. Denham. Thank you.
    Again, I would like to welcome our witnesses here today. 
Let me just go over some quick ground rules. We have got a 5-
minute timer up here. We are going to go through a couple of 
rounds of questioning, but just like a stop light: green light, 
keep going; yellow light, it is time to start hitting the 
brakes; and red light, your time is up.
    Our panel this morning includes John Fry, president of 
Drexel University; Robert Yaro, president of the Regional Plan 
Association; the Honorable Joan McDonald, commissioner of New 
York State Department of Transportation; and the Honorable Joe 
Boardman, president and CEO of Amtrak.
    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 that you limit your oral 
testimony to 5 minutes.
    Mr. Fry, you are first this morning.

TESTIMONY OF JOHN A. FRY, PRESIDENT, DREXEL UNIVERSITY; ROBERT 
   D. YARO, PRESIDENT, REGIONAL PLAN ASSOCIATION; HON. JOAN 
     McDONALD, COMMISSIONER, NEW YORK STATE DEPARTMENT OF 
  TRANSPORTATION; AND HON. JOSEPH H. BOARDMAN, PRESIDENT AND 
                CHIEF EXECUTIVE OFFICER, AMTRAK

    Mr. Fry. Thank you, Representative Denham. Good morning. I 
am John Fry, the president of Drexel University, which is 
located in Philadelphia. It is next to Philadelphia's 30th 
Street Station on the Northeast Corridor in University City.
    When I was the executive vice president of the University 
of Pennsylvania, which is right next door to 30th Station as 
well, I founded the University City District which promotes 
economic development throughout West Philadelphia.
    In between, I was president of Franklin & Marshall College 
in Lancaster, Pennsylvania, where I led the Northwest Gateway 
Project, a brownfield transformation that relocated a Norfolk 
Southern railyard in order to connect the Amtrak station in 
Lancaster to an approximately 60-acre educational and medical 
district.
    So I have a deep interest in how urban economic development 
and transportation intersect.
    Thank you for the opportunity to testify on the importance 
of the Northeast Corridor.
    America's 3 busiest train stations and 7 of the top 10 are 
on the corridor. Seventeen percent of the American population 
and 20 percent of the GDP come from the Northeast, with 15 
million new residents expected in the next decades.
    So the Northeast Corridor is the epicenter of American rail 
travel. And today, we are witnessing the incredible 
redevelopment of the urban cores that it connects.
    The millennial generation shows a strong preference to work 
and live in urban environments. Aging baby boomers are 
relocating to cities for convenience, culture, and overall 
social environment. These trends are creating new demand for 
commercial and residential real estate development. Some 
employers are relocating to access young talent and retain 
senior personnel, and retail and service firms are ramping up 
significant urban offerings.
    At the same time, highway and air travel in the Northeast 
are stretching beyond capacity. Fortunately, the Northeast 
Corridor rail service is a largely untapped asset that can be 
leveraged to take advantage of these trends. With reasonable 
investment, the corridor can produce considerable returns: not 
just improved transportation, but the development and long-term 
growth in its anchor cities like New York, Philadelphia, and 
Washington.
    There are great new ideas gathering around the urban 
stations at the core of the system. Each neighborhood has 
unique characteristics that can inform the best fit development 
for the regional economy. Here in New York at Hudson Yards, it 
is a mixed-use project on the river, an entirely new 
neighborhood built over a railyard. In Philadelphia, we are 
capitalizing on our educational, medical, and research 
concentrations to develop a new high-tech, transit-oriented 
neighborhood around 30th Street Station, and similar 
opportunities exist throughout the Northeast Corridor.
    Amtrak, to its credit, is studying how their stations can 
complement these urban neighborhoods. Amtrak's flagship study 
is the Washington Union Station master plan for Washington, and 
others are happening in Baltimore, Boston, here in New York, 
and in Philadelphia where Drexel is proud to be Amtrak's lead 
partner.
    Significant value can be created by developing air rights 
on adjacent land and improving station experiences, and that in 
turn will drive urban development and lead to reinvestment in 
Northeast Corridor operations.
    But the gains are hard to realize given the limited 
resources of rail operators and Government, and the solution is 
public-private partnerships either with corporate partners or 
with anchor institutions, particularly research universities 
and health care systems. And that is the model for Drexel's 
partnership with Amtrak and other Philadelphia stakeholders.
    Between our campus and 30th Street Station sits about 12 
acres of very underutilized land with the potential to yield 
6.4 million square feet of development next to the station. 
Even when commercial interests lagged, it was clear that these 
were incredibly important parcels. So our university has 
assembled these parcels at considerable cost to Drexel. Now we 
have undertaken a mixed-use development called the Innovation 
Neighborhood built on several principles.
    The first principle is to co-locate our vibrant 
translational research enterprise with corporate partners who 
can help us commercialize our research and work with us to 
transform the 30th Street Station area. Translational research 
thrives when commercial entities are deeply involved with an 
eye to licensing and eventually starting up new ventures. So we 
are in discussions with a number of companies, and I do not 
think it is farfetched to envision a high-tech business 
environment like Cambridge or Research Triangle Park with all 
the new jobs and economic growth that that implies locating 
next to 30th Street Station.
    Our second principle is to use the Northeast Corridor as a 
competitive advantage for our university, and the impact for 
Philadelphia when visitors disembark into a brand new 
neighborhood dedicated to learning, innovation, and 
entrepreneurship is just an incredible vision.
    But as exciting an opportunity as the Innovation 
Neighborhood is, the true transformational opportunity around 
30th Street Station is the development of the air rights over 
the 100-acre Penn Coach Yards owned by Amtrak and SEPTA. It is 
Philadelphia's own Hudson Yards, and it is a key dimension of 
the master planning process led by Amtrak and Drexel. It is a 
project measured in decades rather than years, but it is the 
right time to start this work and explore similar ideas along 
the Northeast Corridor and that is what we are doing now as we 
speak.
    So let us not fail to utilize these incredible assets, and 
let us be seen as the generation that invested in and leveraged 
the rail system to its full potential.
    Thank you.
    Mr. Denham. Thank you, Mr. Fry.
    Mr. Yaro?
    Mr. Yaro. Thank you very much for the opportunity to 
testify this morning. I am Bob Yaro. I am president of Regional 
Plan Association, which is a not-for-profit research group here 
in New York that for a century has done strategic----
    Mr. Denham. Can you pull the microphone closer?
    Mr. Yaro. Oh, sure.
    I am Bob Yaro. I am president of Regional Plan Association. 
For nearly a century, RPA has done strategic planning for the 
New York metropolitan region, infrastructure, environment, 
business development, and so forth.
    Several years ago, we began to look at the Northeast 
Corridor as one of the keys to New York's mobility and economic 
future, and again through my work at the University of 
Pennsylvania, I have led several research teams that have 
looked at the opportunities to develop and redevelop the 
corridor.
    Today we submitted testimony to you that outlines a 
proposed program that we are calling ``NEC Now,'' which would 
be a priority investment program. Many of the rogues gallery of 
failing bridges or antique bridges and tunnels that you saw 
yesterday--all of them, I guess, are on your list. We have got 
this problem of century-old infrastructure which is being held 
together by Amtrak with Band-Aids and bailing wire at this 
point. We learned with Sandy just how vulnerable it is to 
catastrophic damage with the flooding that we had in the Hudson 
River tunnels, which virtually shut down the mobility system of 
the Northeast for a week.
    This is a really expensive hobby. We have a $1.5 trillion 
economy here in New York. The Northeast has a nearly $3 
trillion economy. It is driven by accessibility. That is one of 
the reasons why people locate here and stay here. It is why 
talented people come here. It is why the Northeast has for 230 
or 240 years been the engine of the national economy and 
continues to be. Close to a quarter of the national economy is 
here in the Northeast.
    We virtually shut it down with Sandy and the loss of the 
Amtrak service and the intercity service.
    And by the way, it is not just Amtrak's service that we 
depend on. You know, it is about 11 million passengers a year. 
It is a total of 260 million passengers a year that use the 
commuter rail services in the Northeast. This is really the 
lifeblood of our economy. These tend to be the highly skilled 
people that drive the innovation economy of the Northeast: 
financial services, business services, science, technology, and 
so forth. And the reason, as President Fry mentioned, that we 
can think about having innovation districts around stations is 
that this mobility system, the Northeast Corridor, is critical 
to both the present and future economy of the Northeast.
    So we believe that the very first thing, of course, that 
has to happen--I was going to open--and you will see in the 
testimony that I opened with this bit of history. Fifty-one 
years ago this year, two New England politicians proposed long-
range visions for the United States, and one of them, of 
course, was President Kennedy's call for reaching the moon 
within a decade. The other was Senator Claiborne Pell's 
proposal for a high-speed rail corridor in the Northeast 
between Boston and Washington, which would have been the 
world's first. Of course, we did get to the moon. We did not 
quite get to Boston with the Northeast Corridor improvements.
    So elected officials have been kicking this one down the 
road for two generations, and we believe that it really is time 
to begin work not just in attaining a state of good repair, but 
actually creating improvements, expansion in capacity, 
reliability, travel time savings, and so forth.
    So in the testimony that we have submitted, you will see 
that we have outlined what we call the ``Northeast Corridor 
Now'' program, and this is not to in any way undercut the 
important work that the Federal Railroad Administration is 
doing with its NEC Future program, the long-range master plan 
for the corridor, which is urgently needed. But we have got a 
set of bridges and tunnels and interlockings, and so forth that 
are prone to failure. It is kind of like I have had back 
trouble, and there are times that people ask me how I am doing. 
And I said, well, I feel like a 90-year-old man. I am feeling 
really good today, but you do not know what is going to happen 
tomorrow. And many of these facilities really fall into that 
category.
    I think you will hear from President Boardman that Amtrak 
very often on the Susquehanna Bridge or some of the Connecticut 
movable bridges very often will have to have people out there 
with crowbars to get these things closed once they have been 
opened. You know, we really ought to secure some of these 
things for the Smithsonian Institution when we are done 
building their replacements because they really are industrial 
archaeology at this point.
    So the $39 billion program that we are recommending would 
be funded under this proposal, $10 billion in grants, $30 
billion in RRIF loans that would be repaid by the States and by 
Amtrak over an extended period of time. And we believe that 
there are real opportunities for private investment as well. 
And we believe that the Northeast Corridor division of Amtrak 
is well positioned to do that and could use some additional 
authority to enter into P3s and design/build projects to 
deliver this thing within a 10- or 15-year period.
    Thank you very much.
    Mr. Denham. Thank you.
    Ms. McDonald?
    Ms. McDonald. Good morning and welcome to Moynihan Station. 
I am Joan McDonald, commissioner of the New York State 
Department of Transportation. I am pleased to have the 
opportunity to discuss with you today the efforts of Governor 
Cuomo and New York State DOT as they relate to mutual 
cooperation, planning, and investment.
    We are all aware that realizing a bolder vision for the 
future requires unprecedented collaboration among States. New 
York State DOT is working through the Northeast Corridor 
Commission on comprehensive corridor planning. This is a 
daunting task for a corridor that spans eight States and the 
District of Columbia, supports nine passenger rail operations, 
including four of the five largest commuter rail services in 
North America, serves four freight railroads, and has four 
separate infrastructure owners.
    We have risen to this challenge and made the most of the 
resources available and the expertise of the professionals who 
are dedicated to realizing our mission. Our goals are varied, 
but they are all crucial components of what we are ultimately 
striving for: economic growth, connectivity, improved service 
reliability, and improved travel time.
    While more resources are always needed to continue the good 
work we have already begun, the Northeast Corridor has 
benefitted from the $1.3 billion in capital funds appropriated 
to Amtrak in the ARRA act and another approximately $1 billion 
in high-speed rail program grants from the Federal Railroad 
Administration. On top of that, Northeast States have received 
almost $700 million in grants for connecting rail corridors, as 
Congressman Shuster said in Pennsylvania, as we have 
experienced here in New York between Albany and New York City.
    In New York, under the leadership of Governor Andrew Cuomo, 
construction is underway on a new grade-separated flyover at 
Harold Interlocking where Amtrak, New Jersey Transit, and Long 
Island Rail Road trains, 783 per day, converge north of Penn 
Station at the busiest junction in North America. The $368 
million removal of this bottleneck is funded in part with a 
recently awarded $295 million grant from FRA, but here in New 
York, we believe locals must also participate. So the MTA 
contributed a healthy $73 million in State funds towards that 
project.
    In addition, with the support of $83 million in Federal 
TIGER grant funds and $30 million in FRA funding, New York, in 
partnership with Amtrak and private developers right here at 
Moynihan Station, have begun construction on $297 million of 
improvements for passenger access under what is planned to be a 
new station on the site of the former Farley Post Office 
building where we are sitting adjacent to the existing Penn 
Station.
    As we look further ahead, much more is on the horizon. The 
Gateway project to expand capacity across the Hudson River and 
within Penn Station is in the preliminary design, as is phase 
II of the Moynihan Station project to construct the new train 
hall in this building. It is clear that ``New York Works.''
    And while we take pride in the accomplishments of my home 
State, my work as the former chair of the Northeast Corridor 
Commission for the past 2 years has been focused on the much 
bigger picture that the vast needs of the corridor entail, as 
well as the necessary and fulfilling task of strengthening 
existing partnerships and building new ones. I am proud of the 
way all of the States and DC committed to and endorsed each 
other's projects while never losing sight of our individual 
State core mission and goals. Connectivity is a key element of 
what we are working to improve in transportation and economic 
development, and connectivity is what we have achieved in this 
collaborative relationship.
    We know the Northeast Corridor must balance critical 
investment needs just to maintain the safety and reliability of 
current services with the concurrent need to address 
consistently growing passenger service demands. The fact that 
commuter services and Amtrak services interconnect at common 
facilities and on common trackage creates a situation where 
delays to any one service will quickly cascade and adversely 
affect the on-time performance of the other rail services. 
Without significant and sustained levels of infrastructure 
investment, rail operations on the corridor will suffer, as 
will the economic benefits of the corridor.
    The reality is that deferred maintenance of key components 
in the corridor is no longer an option. Infrastructure 
inherited from past generations can no longer provide the 
mobility needed to support continued, robust economic growth. 
New investment in state of good repair is essential. We often 
think what might happen if we lost this invaluable resource, 
and Hurricane Sandy brought that home.
    The PRIIA act which created this commission is about 
improvements, and this work is well underway. But PRIIA is also 
about investing.
    The Northeast Corridor is a national resource, and we look 
forward to working with you on the future. Thank you.
    Mr. Denham. Thank you, Ms. McDonald.
    Mr. Boardman?
    Mr. Boardman. Chairman Denham, Ranking Member Brown, 
Chairman Shuster, and Member Nadler, thanks for the invitation 
to testify this morning.
    Given that we have had an opportunity to see the Northeast 
Corridor firsthand, I think it probably will be more useful if 
I discuss this asset in the context of reauthorization and 
funding concerns rather than reviewing the plans and programs 
we discussed on our trip up to New York.
    As you probably know, Amtrak took the Northeast Corridor 
over from the privately owned Penn Central Railroad in 1976. 
Penn Central was then in bankruptcy, and the transfer of the 
Northeast Corridor to Amtrak was part of a much larger Federal 
plan involving Conrail. The Northeast Corridor passed to 
Amtrak, which implemented several significant repair and 
improvement programs in partnership with the FRA, transforming 
a dilapidated, midcentury rail operation into the high-speed 
and high-capacity rail route we have today.
    We have done a lot with that route, but today we face a lot 
of challenges. We have mapped out an investment plan to build 
capacity on the existing Northeast Corridor, but the limits of 
the existing infrastructure are the results of the limited 
investments that have been made available. We share the route 
with eight commuter operations, and several of the most 
important segments such as the New York tunnels are at 
capacity.
    Demand for intercity and commuter passenger rail is 
growing. The Federal Government must act now with this 
reauthorization opportunity to take the lead in funding a major 
program that will build out the rail infrastructure we are 
going to need in the next coming century.
    These are questions any reauthorization must deal with, but 
there is a more pressing and immediate question and that is the 
decapitalization of Amtrak's assets. Decapitalization occurs 
when the total annual capital allocation is insufficient to 
meet both the ongoing normalized replacement and the backlog 
capital requirements. And that means today we are eating our 
assets alive. That leads to rapidly increasing degradation of 
ride quality, reliability, and ability to support major 
projects like those discussed on our trip here and those being 
discussed this morning.
    On the way up, Chairman, I said to you that when Amtrak 
installed concrete ties, they were expected to last 40 to 50 
years. The average life was only 10 to 15 years. This premature 
failure has taken funding for replacement that would have gone 
to other work like interlocking replacement, ballast 
maintenance, and cleaning or the removal and replacement of the 
subsoil and ballast to stop the mud pumping. These things 
create a rough ride that may cause us to begin to slow down our 
speeds.
    Decapitalization is increasing the number of disruption 
incidents on electric traction and communication and signal 
systems that reduce reliability. These issues must be addressed 
and thought through for any reauthorization.
    Amtrak completed a comprehensive state of good repair plan 
in 2005, vetted it with appropriate parties, including 
Congress, the administration, the oversight agencies, and then 
Amtrak updated it every 2 years. The most recent update was in 
2011.
    The present backlog is $6 billion. I need $386 million 
every year for normalized maintenance and I need $396 million 
every year for the backlog work, and I need it for the next 15 
years. I need $782 million every year for the next 15 years. 
That will not address capacity improvements or trip time 
reductions or other new initiatives, but it will allow Amtrak 
to run a safe railroad at maximum allowed track speed, maintain 
an excellent on-time performance, and meet the basic needs of 
those who want to develop real estate and fill their 
development with people who they expect to come by train: by 
Amtrak, New Jersey Transit, Long Island Rail Road, Metro North, 
SEPTA, MARC, MBTA, Shoreline East, and VRE. The reduced level 
of investment has resulted in a cumulative degradation of its 
components, nearing the loss of asset functionality and 
decreased reliability of the system that threatens the 
successful continuity of Amtrak's passenger operation.
    Thank you very much.
    Mr. Denham. Thank you, Mr. Boardman and thank you to all of 
our witnesses.
    Let me just say that this committee is very focused on 
getting the passenger reauthorization bill done this year. It 
does expire in the fall, and we certainly want to work with all 
of you, as well as the stakeholders up and down the Northeast 
Corridor and across the Nation. You all have been very willing 
partners. It makes the job a lot easier to see the Northeast 
Corridor come together and prioritize working together. We have 
had meetings in DC. We have had our rolling roundtable now 
here, and we will continue to travel across the Nation looking 
at all rail projects, both long- and short-haul, State-
supported routes. We will be in Chicago next week and 
Springfield taking a look at the projects that are going there. 
So we are very committed to this and we certainly appreciate 
your partnership.
    Let me start with the questioning this morning. First, Mr. 
Fry. One of the things that we continue to talk about both in 
the challenges with California and its high-speed rail and the 
lack of a private investor there to be able to complete that 
plan. We are looking at private investment, public-private 
partnerships. And I wanted to start the questioning with you.
    Can you explain how you are funding your Innovation 
Neighborhood project? Explain a little more in detail how that 
is working.
    Mr. Fry. Thank you.
    So to date, Drexel has spent approximately $30 million to 
assemble the 12.5 acres that I mentioned earlier, which would 
yield the 6.5 million feet. So that has been our primary 
investment today.
    And in working with President Boardman, we have created a 
joint venture between Amtrak and Drexel to now study the 
feasibility of developing the air rights over the 100-acre Penn 
Coach Yards, which are owned and utilized by Amtrak and SEPTA. 
That study will be between $2 million and $3 million, and the 
university will fund that study because we believe, since we 
have initiated this and Amtrak obviously has its resource 
constraints, that the private sector, in this case Drexel, will 
step in and fund that study.
    Mr. Denham. $2 million for the study?
    Mr. Fry. Between $2 million and $3 million. Probably, let 
us say, $3 million.
    Mr. Denham. And $32 million was what Drexel----
    Mr. Fry. $30 million for the assemblage of the property 
around 30th Street Station, and we spent that over the last 
decade. So we are already really invested in just sort of 
assembling the ground and beginning to think about the 
development of the ground.
    In the meantime, what we are doing is now beginning to 
construct university buildings in that area, and so we are just 
about to open in September a $90 million business school 
located at 32nd and Market, which is in this Innovation 
Neighborhood, and we are now also getting prepared to put out a 
series of RFP's to begin to take a look at other parcels within 
that 12.5 acres to see if they can be developed for commercial, 
residential, and retail purposes. And we will do that all with 
private sector dollars.
    And so between the university and private sector developer 
partners, we intend to begin the orderly development of the 
12.5 acres that we control as we are studying the air rights 
development over the Amtrak and SEPTA properties. We think all 
of that will come together into a probably decades-long 
development, which again I think would be largely funded by the 
private sector.
    Of course, the key to taking this and bringing it to the 
next level is the high-speed rail which would bring us under 40 
minutes to New York and about an hour to Washington. I think if 
that occurs over time, that takes what we are doing, which is a 
pretty significant thing, and drives it to the next level in 
terms of its potential.
    Mr. Denham. And did you initially do an analysis to 
determine what spending levels you would need, what resources 
would be available to improvements?
    Mr. Fry. That is what this study--this $3 million study we 
are engaging in will basically be a technical study to take a 
look at the air rights development to understand what is the 
feasibility of that, first of all, technically because the big 
issue, of course, is to not impact in any negative way rail 
travel through 30th Street Station. That is sort of job one. 
And then job two is to figure out, if it is technically 
feasible, what is the financial investment, and how would that 
be made, and how would that be financed over time.
    Mr. Denham. Thank you. And since we are at the ground level 
of development without any additional funding, how can Federal 
policymakers encourage more developments like your project?
    Mr. Fry. We would like to see as many tax incentive 
programs as possible for rail development around major train 
stations like 30th Street Station. The incentive programs 
really work well. We have something called the Keystone 
Opportunity Zone in Philadelphia which has really been a pretty 
brilliant incentive for development in Philadelphia. It is sort 
of a 10-year tax abatement. Ten of our sites within the 12.5 
acres have this Keystone Opportunity Zone designation. If there 
could be other Federal programs that would help stimulate 
development around stations like 30th Street, that would be 
enormously helpful. I would say that is the first thing. And, 
of course, funding for high-speed rail would be the other 
thing.
    Mr. Denham. Thank you.
    Ms. Brown?
    Ms. Brown. Thank you, Mr. Chairman.
    I guess I am really smiling because for once, I think we 
are all on the same page. And, Mr. Chairman, we have you on 
tape saying that we want more speed. And the question is how 
are we going to get there.
    There are a couple of questions. The RRIF loan. We all 
supported it. I do not care whether it was the Bush 
administration or the present administration. There is some 
reason why we cannot get that program to work, and I would like 
to know what are the things that we could do to get the 
improvements in that program. We have bonding capacity for how 
much money?
    Mr. Yaro. $30 billion.
    Ms. Brown. $30 billion, and you say you want it all?
    But just tell me how can we improve that program? And also 
you mentioned it is 53 miles--I think it is in the New York 
area that the train has to go a certain speed? What is the 
speed that they can go?
    Mr. Boardman. It is the territory north of New York to New 
Haven, Connecticut.
    Ms. Brown. Yes. And so that is one of the reasons why we 
cannot speed it up. So can you discuss those two things?
    Mr. Boardman. I can talk about it a little bit, 
Congresswoman.
    We have a commuter operation that owns the piece of the 
property after you go into New York and on to Connecticut that 
only has a need of a speed of about 70 miles an hour. It is an 
area that we believe we could do 110 miles an hour and reduce 
the amount of time traveled because it is a 50- to 60-mile 
piece of railroad. And it is something that means that all of 
that would need to be upgraded, which would take investment, 
either transit investment or Amtrak or----
    Ms. Brown. What is the cost on that?
    Mr. Boardman. I do not have it here. I think we have an 
estimate that that could be identified. I do not think that is 
in the critical infrastructure. Is it, Joan?
    Voice. No.
    Mr. Boardman. That did not get put in there.
    Ms. Brown. That is something that we need to know how could 
we----
    Mr. Boardman. Yes, we can do that, and we can follow up 
with a response on that.
    Ms. Brown. But the RRIF loan, because that has been a 
sticking point, and I think all of the members support 
improving the program because that is one way that we could 
fund the system.
    Mr. Yaro. I can comment on that. I think what we need to do 
is to modify the program so that it works more like the TIFIA 
program which does wok on bridges and highways well.
    I think one of the issues is the extreme requirement for 
collateral upfront. Amtrak, for example, cannot use its budget 
as collateral towards RRIF loans. What we would suggest is that 
in fact any Federal grants that are made to Amtrak or to the 
States along the corridor, that they be able to use their 
Federal funds as collateral towards the RRIF loans. I mean, 
they have pretty good credit--these States. And in fact, you 
know, it is a publicly owned asset.
    And I think part of the problem is that the RRIF loan 
program was written with private freight railroads in mind. 
Here we are talking about a publicly owned asset. It is a 
federally owned asset for the most part. States own pieces of 
it and so forth. It is not going away. It is a public 
responsibility. And so I think it is probably safe to assume 
that this is a safe credit risk if in fact we make loans and 
made those modifications. So that is really essential and that 
would be something that we would hope would be included in the 
new PRIIA legislation.
    Ms. Brown. Mr. Boardman?
    Mr. Boardman. Bob is right in many ways, but the difference 
with TIFIA and with highway is you have contract authority, and 
year after year, you receive a funding on the highway side, 
whereas with Amtrak it is year to year. So the way OMB or the 
risk folks would really look at this is you may not have an 
appropriation the following year, which means there is no money 
there to pay back the loan. That is the reason that occurred 
that way.
    Ms. Brown. Mr. Fry, having gone to Europe, everywhere there 
is a high-speed station, there is development around those 
stations. And even, let us say, Crystal City where I lived for 
10 years, every place that you have a development like that, 
all kinds of opportunities develop whether it is daycare, hair 
salons, drugstores, or coffeeshops. So that is the key to get 
those developments around those stations.
    Mr. Fry. I could not agree more, and I think that in 
addition to the things that you outlined, in University City, 
home to the University of Pennsylvania, Drexel University, 
Children's Hospital of Philadelphia, Hospital of the University 
of Pennsylvania, there is over $1 billion of sponsored research 
being conducted within a half a dozen blocks of each other. And 
so the idea of taking this area and devoting it to the purposes 
of innovation and entrepreneurship and new business formation, 
in addition to building strong neighborhoods next to the 
station, is a really exciting type of thing.
    Ms. Brown. Yes, sir.
    Mr. Denham. Mr. Shuster?
    Mr. Shuster. Thank you.
    Ms. McDonald, I know you are the former chairwoman of the 
Northeast Corridor, and if you would, can you tell us some of 
the concerns States have when they are asked to invest their 
money into Amtrak?
    Ms. McDonald. Sure. You know, we have been in existence for 
2 years, created as a result of the PRIIA legislation. And I 
think, as I mentioned in my testimony, one of the key areas is, 
you know, States are very proud of their home States, and when 
the funding became available from Florida and other States and 
got reallocated, we made the decision to endorse each other's 
projects. And that was a huge first step because it really 
demonstrated to each of us that we were not only committed to 
our home State but to the corridor.
    Some of the frustrations with any construction project is 
how quickly they get off the ground. And we have had this 
conversation with FRA, getting some of the funds out the door. 
The most difficult part of these construction projects is doing 
the work in active railroads, and it is not just the active 
Amtrak intercity passenger, but for almost every State, the 
commuter rail and making sure that the work gets done in very 
tight windows. You know, like Steven Gardner mentioned 
yesterday, the tunnel--the work that gets done on the weekends, 
which is one of the busiest ridership times. So there are 
frustrations, as with any capital construction project. Work 
takes too long.
    In New York, we just adopted, under Governor Cuomo's 
leadership, design/build legislation which really gets the 
projects out the door much more quickly. So we want to make 
sure that both FRA and Amtrak are using all of the tools at 
their disposal also.
    Mr. Shuster. Well, I am a big fan of design/build. We ought 
to be pushing that everywhere we can.
    Ms. McDonald. It has helped tremendously. Tremendously.
    Mr. Shuster. Can you provide us information on the savings 
that you believe you have reaped or the time savings, the 
dollar savings?
    Ms. McDonald. Yes, I would be happy to do that. It is 
primarily with our road and bridge projects, but we can show 
where it has worked and how it is providing great benefits.
    Mr. Shuster. Mr. Yaro, in PRIIA, we passed the legislation 
that says the States going forward are going to pay their fair 
share. I do not know if they are paying enough, and I just 
wanted your view on the benefits that these commuter rails in 
communities receive from Amtrak. Do you believe it is the right 
thing to do in these communities to share in the maintenance?
    Mr. Yaro. Yes. As you know, the PRIIA legislation called 
for the commission to develop a cost allocation formula 
essentially. And that analysis is being done. The negotiations 
are underway between the States.
    The challenge is that as Joe Boardman said, we have a 
depreciating asset here. We have an asset that is 
deteriorating. The backlog of deferred maintenance and normal 
replacement investments has gotten bigger, not smaller. And so 
basically what we are asking the States to do is to belly up to 
help fund a depreciating asset. So I describe it, it is kind of 
like going over here to Macy's and saying we have got a great 
sale here. We are going to ask you to pay more for less. You 
know, it is really a hard sale. And I think what we need to do 
is to change that so that in fact there is an upfront 
commitment by the Federal Government to finally restoring this 
corridor to a state of good repair. You add it up. What is it, 
Joe? It is close to 40 years now since the Federal Government 
took this thing over, and we just keep kicking this down the 
road.
    It is very interesting. I think, if you guys have not done 
it, take a look at the experience in the United Kingdom where 
they privatized the rail system without investing in it 
upfront. They had several disastrous train wrecks and so forth. 
They renationalized it, then dropped close to $100 billion into 
bringing the whole system back to a state of good repair. And 
then they were able to bring in private--you know, P3s and so 
forth to operate trains. They are now talking about privatizing 
it again. But this time they got a real opportunity to do it 
because it is a functioning asset.
    Mr. Shuster. Well, and also what we have learned in Europe 
is by 2014, the EU has passed a law that on any passenger rail 
line, there is going to be competition. So that is something 
else we can look at over there.
    And to my good friend from Florida, I do believe in higher 
speed. I am not so sure in my lifetime if we are going to see 
high speed. I think the example in England that I learned is it 
is not always about speed. It is about reliability and it is 
about frequency.
    Mr. Yaro. And capacity, right.
    Mr. Shuster. Exactly.
    Virgin Rail told the story--I forget what line it was going 
into London. It was an hour and 15 minutes, and as any good 
company would do, they went and polled their customers and said 
we are going to take it from an hour and 15 down to 55 or 50 
minutes. And it was overwhelmingly rejected. So they did focus 
groups and said why do you not want to get there quicker. And 
they said an hour and 15 minutes is perfect timing for me to 
get on the train, get a cup of coffee, boot up my computer, do 
some work, and when I get to work, I have been productive. But 
50 minutes--they said by the time you get your coffee, boot up 
your computer, we are there. So it is not always about speed.
    Mr. Yaro. But when you go back to the United Kingdom, they 
are now investing--it is about $60 billion in a high-speed 
service between London and Manchester. Eventually it will be 
extended to Scotland. And they are doing it to create the kind 
of economic transformations that John Fry was talking about to 
create real synergies between the economies of the cities in 
the Northeast. We do need to strive for that. We can move 
towards higher speed service, and that is really what the Acela 
service is. And that has proven that people will pay a premium.
    Mr. Shuster. I have violated my own rule. I have gone over 
the 5-minute rule. The chairman is staring me down. So I yield 
back.
    Mr. Denham. Thank you.
    Mr. Nadler?
    Mr. Nadler. Thank you, Mr. Chairman.
    Commissioner McDonald, some have suggested mandating 
competition on the Northeast Corridor. We were just talking 
about that. The corridor is jam-packed. We know all the 
statistics. I think we should be focusing on addressing the 
backlog on the corridor and needed infrastructure improvements. 
What are your views on that?
    Ms. McDonald. I agree with you. I think investments in the 
corridor are key. And as Bob just pointed out, that is what is 
going to make a successful railroad. And I was thinking, as he 
was discussing with Chairman Shuster, what Metro North and Long 
Island Rail Road have done over a 30-year period is they have 
invested $22 billion, almost all of it in state of good repair, 
and one of the reasons they have been able to do it is because 
they have known 5-year capital plans so they can make those 
state of good repair investments. And I think the investments 
has to be the top priority.
    Mr. Nadler. Thank you.
    Mr. Boardman, can you comment on the same thing?
    Mr. Boardman. I would be happy with 5 years of capital 
investment that we could count on. Absolutely.
    Mr. Nadler. You do not have 5 years now.
    Mr. Boardman. No, we do not. We have plans, but we have----
    Mr. Nadler. No assurances.
    Mr. Boardman. No assurances.
    Mr. Nadler. Thank you.
    Mr. Boardman, some in Congress have proposed separating 
Amtrak's operations and maintenance into two separate 
businesses. Do you have any concerns with that?
    Mr. Boardman. Yes. I think you have to have a system that 
operates for the safety of the public and for efficiency 
together, not separately.
    Mr. Nadler. Thank you.
    And also, do you believe the private sector would invest in 
the Northeast Corridor in its current state? And if not, what 
would it take to attract private investment?
    Mr. Boardman. Actually--and I think John Fry talked about 
it--they are already investing in the Northeast Corridor from 
the standpoint of the real estate development.
    Mr. Nadler. I do not mean that. It is obvious to me that 
where you have assets, especially air rights or territory 
around rail hubs, that you should use those assets and you 
should have private sector partnerships, sell them, whatever, 
and develop exactly as Mr. Fry was talking about, and realize 
income for the railroads too. But I mean invest in the railroad 
itself.
    Mr. Boardman. I think that Perry Offutt answered that in a 
couple previous--and he is an investor here in New York. There 
would have to be some availability payments. If the private 
sector was going to invest in anything, there would have to be 
a guarantee that the Federal Government would continue to 
provide a subsidy or investment, however you would look at it. 
If there was not enough revenue, then there would be 
availability payments from the Government. And that is how it 
has worked almost everywhere.
    Mr. Nadler. No Congress can bind its successor, as you 
know. So would a multiyear authorization be sufficient to 
provide such guarantees?
    Mr. Boardman. I would have to ask the private sector to 
deal with that. But there are a lot of innovative ways today 
that the Federal Government and others have looked at doing 
something like that. It does not mean that sitting here, as the 
president of Amtrak, that I am supportive of it. The fact is 
that there are a lot of creative ways today to do something 
different, but you do have to have contract authority to do it.
    Mr. Nadler. And some have recommended a new governance 
structure for the corridor. Do you have any views on that?
    Mr. Boardman. We have one. We already have one.
    Mr. Nadler. And a sufficient one. OK.
    And finally, Congress has failed to provide the high-speed 
intercity passenger rail program with any Federal funding for 
the last 2 fiscal years. With future funding still uncertain, 
can you explain why funding is so important and what is at risk 
in the Northeast Corridor if we fail to make adequate 
investments?
    Mr. Boardman. Well, I think that a lot of people talked 
about that all the way around that this morning. I think that 
the financial community of this Nation, New York where we are 
sitting today, is at real risk without the investments that are 
going to be necessary to become competitive globally, and that 
includes faster railroads in the Northeast.
    Mr. Nadler. So we cannot depend on P3s or private sector 
investment for that. We have got to have substantial Federal 
investments.
    Mr. Boardman. Absolutely. There are no really fast 
railroads today that have avoided having Government take a lead 
role.
    Mr. Nadler. Thank you.
    Finally, Mr. Yaro, you stated that the RPA recommends that 
the next Federal rail bill authorize funding to completely 
eliminate the $9 billion backlog of major state of good repair 
problems and make certain improvements and substantial 
additional funding to address major infrastructure needs in the 
corridor.
    Mr. Yaro. Yes.
    Mr. Nadler. Do you believe that it should be financed by 
the Federal Government, and at what point would there be the 
greatest potential for private investment?
    Mr. Yaro. Well, I think, you know, everywhere in the world, 
the Government investments have had to come first to 
essentially prime the pump. I think once that happens, there 
could be opportunities certainly for design/build, and that 
provides real efficiencies, shares some risk, and so forth.
    Mr. Nadler. But not until the Federal investment.
    Mr. Yaro. Again, we have got this thoroughly depreciated 
asset. It has got to be a viable asset. And I think once that 
happens that, yes, indeed, there would be opportunities for 
public-private partnerships.
    One key thing to keep in mind is that when private 
investors put money into a project, they generally want to get 
their money back with interest. We have got 260 million 
passengers a year in the corridor. The projection is that if we 
make these investments, it will go up to 410 million over a 25-
year period. So the potential is there for the passengers to 
help finance this thing, and that might be a way to do public-
private partnerships.
    Mr. Nadler. Thank you.
    I yield back.
    Mr. Denham. Thank you.
    Mr. Boardman, what is your definition of ``fix it first'' 
with regards to the Northeast Corridor?
    Mr. Boardman. I think it is getting as close to the state 
of good repair as we possibly can along the corridor.
    Mr. Denham. And would you prioritize existing 
infrastructure replacement and improve ahead of your high-speed 
rail vision?
    Mr. Boardman. Yes.
    Mr. Denham. So the $30 billion is fixing it first. We have 
got to fix the current situation.
    Mr. Boardman. Yes. The $6 billion is what I am really 
talking about, Chairman, that absolutely needs to be done to 
the basic infrastructure on the corridor. When we get to $30 
billion or the $52 billion, or whatever you call it, in the 
critical infrastructure, that is more than state of good repair 
in terms of the basic infrastructure. It includes rebuilding 
other facilities at a much higher level.
    Mr. Denham. Thank you.
    And when you prioritize investment, is there a cost-benefit 
analysis conducted with ridership, economic benefits to local, 
State, and Federal entities?
    Mr. Boardman. Well, there is some. I do not know if it has 
the detail that people would really be looking for, but we have 
done several studies that look at cost-benefit based on speed, 
reliability, on-time performance. All of those exist. It has 
not been broken down, I do not think, to every particular local 
jurisdiction, but for the corridor itself, yes.
    Mr. Denham. Thank you.
    And if you could provide that cost-benefit analysis to us.
    Mr. Boardman. Sure. I think it has been provided to you but 
we will look and see whether the business plan that was put 
together for the high speed has been supplied. I think it has.
    Mr. Denham. Thank you.
    I think I have a little difference of opinion with the 
Chair. I do think that we will see high-speed rail in my 
lifetime. The question is what is it going to look like. And my 
concern with California is it was passed by voters as a $33 
billion project. It was supposed to have a private investor 
that was going to pick up a third of that and buy the rolling 
stock. It had a pretty aggressive timeline. Now that timeline 
is much longer, and they have got a real shortfall in funding 
by their own numbers, which raises big questions about their 
own numbers. But by their own numbers, there is a $38 billion 
shortfall. So they are breaking ground in 2 months, going to 
spend the first $6 billion. They have a $38 billion shortfall.
    I would assume that once the project starts, that there 
will be a push from my friends in Congress to finish that 
project. With limited funds, if you spend $38 billion in 
California, I would assume, because the project has started, 
that has some type of effect on the Northeast Corridor. I mean, 
we have a big problem with funds today.
    So do each of you have concerns with California high-speed 
rail and whether or not--you know, we can see, just riding 
yesterday, what needs to be done. My concern with the Northeast 
Corridor is we cannot afford to wait until something breaks or 
there is a safety issue before we fix it. I would like to have 
each of you comment on the funding issue from a Federal 
perspective and whether you have concerns with the California 
high-speed rail project.
    Mr. Yaro?
    Mr. Yaro. Well, if you are looking for somebody to do a 
hatchet job on California high-speed rail, I am not sure I want 
to do that.
    Mr. Denham. And I am not asking you to pick on California 
high-speed rail. I am asking specifically about the Federal 
funding.
    Mr. Yaro. Well, let me put a different----
    Mr. Denham. Because we have to prioritize. There is only so 
much money, and we are going to be looking at the entire 
Nation, different high-speed rail projects, different long-/
short-haul routes, as well as the improvements on the Northeast 
Corridor, and hopefully some day soon, actually high-speed rail 
in the Northeast Corridor. But we have to figure out how to 
fund those projects.
    Mr. Yaro. Well, as you and I were chatting before the 
hearing began, these are very different projects. We have the 
most densely used, heavily used transportation corridor in the 
United States here in the Northeast. The Central Valley piece 
of the California project, which is in your district, of 
course, there is no effective rail system now. There is, I 
guess, a very slow Amtrak line that uses an existing freight 
line and so forth. So it is very different.
    The challenge in the Northeast is to accommodate the next 
20 million people that we expect to have here in 30 years. And 
in California, it is virtually the same number. It is about a 
15 million or 20 million increase in the population of the 
State of California. Both places have enormous problems with 
the capacity of airspace and the aviation system and the 
roadway system to accommodate the projected growth in intercity 
travel demand. That is what we are dealing with.
    Mr. Denham. That is from a funding issue. I mean, we are 
going to deal with the same thing on the highway bill. There is 
a huge shortage of funds. We have got to fix the highways, but 
we only have about 2 years' worth of funding for a 5-year bill. 
We are going to deal with the same thing on the rail as well.
    We want to improve the Northeast Corridor, but if you are 
trying to come up with a new $38 billion for California high-
speed rail and that is somehow prioritized over the Northeast 
Corridor, does that concern you?
    Mr. Yaro. I think it does, yes.
    One thing I would suggest--and I recommended that we pull 
down as much as the $30 billion in RRIF loans that are 
available for the Northeast. One thing to handle this thing is 
to say we are going to make loan funds available for high-speed 
and intercity transportation projects and allow for a 
competitive process. In the Northeast, I know that the capacity 
is there to pay back those loans because we have got the 
ridership now and the projected increases in ridership in the 
future to support that. That might be a way of handling it.
    Mr. Denham. Ms. McDonald?
    Ms. McDonald. Sure. I want to focus on a couple issues that 
you raised. First of all, you mentioned the potential of $38 
billion in shortfall. And in my 20-plus years in 
transportation, one of the things that both Government, the 
construction industry, and elected officials all participate in 
is like you said. Once the shovel is in the ground, nobody is 
going to stop construction. So how do we deal with cost 
overruns? And that is an issue that is confronting, like you 
said, both on the transit side and on the road and bridge side.
    And what we have adopted at New York State DOT is the 
preservation first, which speaks to Joe Boardman's point of 
investing the $6 billion or $9 billion, whichever it was, in 
state of good repair. You start to get to that steady state and 
you have certainty as to what those costs are going to be over 
a 5- to-year horizon. You then have more discretion to do the 
capacity building projects, but it requires what I call small 
``p'' political will which are all of us as managers to hold 
people's feet to the fire and use the innovative contracting 
mechanisms, design/build, using guaranteed maximum price, using 
incentives and disincentives for contractors, and being 
forthright at the front end what the true cost of the project 
is. We cannot say it is a $1 billion project if it everybody 
around the table knows it is really a $4 billion project. And 
we have to make sure that those conversations happen. But it 
really is, I believe, using the different contracting 
mechanisms and having strong management and disincentives when 
costs overrun.
    Mr. Denham. Thank you.
    Mr. Fry?
    Mr. Fry. I cannot really comment on the funding situation, 
but I can say that it would be nice to be able to demonstrate 
to the American people that there is a project out there that 
actually could get done that would demonstrate in visible ways 
what high-speed rail can mean. And, of course, in a very self-
centered way, I would love that project, the first one, to be 
from Philadelphia to New York. It is a reasonable distance. I 
think it would prove the concept to everyone who would take 
advantage of that right now. Again, that is obviously biased on 
my part. On the other hand, I think that is a relatively 
manageable distance. It is two very populated cities, and I 
think it then lends itself to phasing in other parts of the 
east coast.
    Mr. Denham. Thank you.
    Ms. Brown?
    Ms. Brown. Thank you, Mr. Chairman.
    Let me just say that if you get on a train in downtown 
Paris, you can go from downtown Paris to downtown Brussels, 200 
miles, in 1 hour and 15 minutes. I mean, that is the world. Our 
competitors, like China, invest $350 billion in rail. And we 
are fighting about--well, let me just read the staff notes. The 
Northeast region essentially equates to the United Kingdom. It 
is worth noting that the UK spends billions more than the U.S. 
invests in the entire Nation. In fact, they spend $6.6 billion 
annually in maintenance and improvements.
    So, you know, I just feel like we need to get serious about 
rail like we are definitely serious about highways in the 
United States and airports and think outside the box. First of 
all, how can we harden the system so that we can protect the 
passengers from attack from the outside, whether it is a 
natural attack or whether it is from someone that is trying to 
infiltrate the system. I mean, we need to think how we can move 
the Northeast Corridor. And we all support that, and I support 
high speed or more speed in the Northeast Corridor.
    When you think about what can we do, maybe it is a one-stop 
permitting process. You know, we say design/build, but there 
are other factors that increase how long it takes to develop a 
project. So if you want to respond to that.
    Mr. Yaro. Well, I started out by talking about Claiborne 
Pell's vision for the Northeast as the world's first high-speed 
rail system. There are now 14 of these systems operating around 
the world, 12 more being planned. All of our competitors are 
making these investments, and it is high speed and it is 
intercity rail and higher speed services. But the notion is 
creating balanced transportation systems so that you have got 
modes that get people where they need to get in the most 
efficient way possible. That is really what we are talking 
about here in the Northeast, and I think nationally that is 
what we need to be thinking about.
    You know, you opened up, Chairman Shuster, your comments 
about the growth in the population of this country. We have an 
enormous opportunity here to create new capacity in the economy 
of this country. It is something that the Europeans and the 
Japanese and the Chinese do not have where they have got stable 
or declining populations. We have got an increasing population. 
You know, there is another committee somewhere that is talking 
about what we need to do to educate people and do all that sort 
of thing.
    What we are talking about here is creating the physical 
infrastructure that is needed to make this economy in this 
century what it was in the last century, the most efficient 
place to move people and goods in the world, so that we can 
create an economy--you know, we have got a $15 trillion economy 
by midcentury. We ought to be looking at a $45 trillion or a 
$50 trillion economy, creating the capacity for that economy to 
occur. That is how you finance these improvements, and that is 
what the rest of the world is doing, is making those 
investments, creating new productive capacity. And then that 
creates the tax revenues and the private sector activity that 
you can use to support both public and private investments in 
these infrastructure systems.
    But what we have learned all over the world is that public 
money has to prime the pump, and once you have done that, then 
it is possible to attract the private investment. It is 
possible to create the ridership that you can use then to 
finance both public and private investments, repay private 
loans and public investments.
    Ms. Brown. If each one of you could give us a 
recommendation as to what this committee needs to do, what 
would be your number one priority?
    Mr. Yaro. Well, I think you heard it from all of us. First, 
let us invest in knocking off the backlog in state of good 
repair improvements in the Northeast Corridor. That is about $6 
billion.
    We have got this project here in New York and New Jersey, 
the Gateway Tunnel project under the Hudson. It is the biggest 
single bottleneck in the corridor. There is another one across 
the street here at Penn Station that is part of this whole 
thing. If we can fix those two things, we can uncork the 
capacity of the whole Northeast Corridor, dramatically improve 
the reliability, frequency, capacity of the corridor and so 
forth. There are a set of investments that we have outlined 
that add up to about $39 billion. That actually came out of the 
Corridor Commission--the list, and a very carefully vetted list 
of priority projects that essentially kind of unleash the 
potential of this system, again, to underpin the kind of 
expanded economic activity that we are all talking about here.
    In my testimony, you will see the list of projects. It is 
the same list of projects that the Northeast Corridor 
Commission has come up with. It is in the Amtrak master plan 
and so forth. We all agree on what needs to be done here. It 
will require an upfront Federal investment to make it happen. I 
think if we do that, you know, we have got to incentive the 
States to come forward and to do their share and so forth. I 
think there is the potential for riders to pay more, 
particularly the commuter rail passengers who want 
reliability--you have all said it--reliability, frequency, as 
much as travel time savings.
    Mr. Denham. Thank you.
    Mr. Shuster?
    Mr. Shuster. Thank you.
    First of all, I just want to remind my good friend from 
Florida that in Europe where they are making these investments, 
they use a cost-benefit analysis and it is brutal. If it does 
not make sense, they do not do it, and if they are going to do 
it for Brussels or for Berlin, they are going to make that city 
put forth a good chunk of the money.
    And the other thing is in China my understanding is if you 
bring a lawsuit in China, you show up with your attorney, they 
show up with a bulldozer. In essence, you are going to get 
crushed if you do not get out of the way.
    So we have very different systems.
    Again, as I mentioned earlier, passenger rail in Europe, 
there are going to be at least two competing lines or two 
competing operations on every line.
    So we have not learned with Europe still and we ought to 
take up some of those cost-benefit analyses, put competition 
in. You know, the States own these operations to a great extent 
and they are more capitalistic than we are. They are trying to 
be more free enterprise-driven than we are. So we need to look 
at that.
    Mr. Boardman, what is a bigger priority for Amtrak? The 
Northeast Corridor or the long-distance lines, long-distance 
services?
    Mr. Boardman. The long-distance services.
    Mr. Shuster. Why would they be the priority?
    Mr. Boardman. Because you would not have expected that 
answer, Chairman.
    [Laughter.]
    Mr. Boardman. And I say that partly in humor, but I think 
that where the core of this company came from and the reason it 
was created in 1971 was to relieve what are now the freight 
railroads from a money-losing passenger operation.
    This Nation needs to be tied together on the surface of the 
United States from coast to coast, border to border. We feed a 
half a million riders a year into the Northeast Corridor. The 
Northeast Corridor is an extremely important asset, and I sat 
in Joan's seat in the past and understand the necessity here to 
make sure that this is a high priority. It is a struggle.
    And let me go back to something. And I did not answer the 
question, and I will answer the question of high-speed rail in 
California. And that is, your folks are in a very difficult 
position trying to figure out how to balance the funding in the 
United States for all the things that need to be done. And I 
appreciate that and understand that, and I appreciate the 
thoughtfulness in how you are trying to deal with this.
    It is not just high-speed rail in California. It is the 
next generation of air traffic control. It is what you are 
doing with the water system. It is how do we maintain the 
Interstate Highway System. And the battles that occurred--and I 
was there for some of them. I am getting old now--of how we 
actually got some of the interstate highways funded, just like 
Interstate 88 and how your dad handled route 15, which was 
never really identified the way it needed to be to make 
improvements.
    But what we found in the end, as we got to the end of that, 
is that every one of those were important to the local 
communities or at least some segment of the local community and 
to the economy where it was actually invested in. And so for 
that reason, I support high-speed rail in California and I also 
support the high speed, to the extent they can get it, in 
Michigan and Illinois and in Texas and even in Florida if it 
happens.
    Mr. Shuster. But the reality of the world today--as you 
mentioned, we are struggling with financing. And as the head of 
the organization, it seems to me your biggest priority has to 
be that which makes you money to help us to go forward towards 
reforms, to help us be able to sell to our colleagues these 
reforms are in place. They are going to focus on them. They are 
going to make money and not eliminate, not stop forever, but 
maybe look at suspending some of these routes and saying, OK, 
we have got to turn the ship right. We have got to make sure we 
are focusing on the right things and move forward on the 
Northeast Corridor, making sure it is right, to provide those 
revenues, to help us then move out. And I believe if you get 
the 10 or 12 corridors right in this country, organically it 
will grow back to--continue to connect and be on the ground 
because we are connected on the ground from highways, parts of 
it in rail. But again, we have got to put the reforms in place 
if we are ever going to get to where you want to get, where I 
want to get, where all of want to get. We have got to do it in 
a measured way and a step-by-step way. And I think again 
focusing on where your profits are to me should be the 
priority.
    The other thing--you and I have had this conversation--the 
pricing that Amtrak does. On the Harrisburg to Philadelphia 
line--I have said this over and over--they do not charge 
enough. And look, nobody wants to pay more but at the end of 
the day, if you are getting value for it, you will pay more. 
For me to go from Harrisburg to Philadelphia, $29--I will pay 
more than that.
    I just sent my son from Harrisburg to New York City 
roundtrip, 108 bucks. I mean, I was fully expecting to pay $200 
because when I do the calculation of car, tolls, gas, headache, 
and traffic, $108, really the value is much more than that.
    And I am going to continue to talk about this, not only the 
State of Pennsylvania that determines what the price of a 
ticket is from Harrisburg to Philadelphia, but also the 
Northeast Corridor. We need to look at this pricing and value.
    Thank you, Mr. Chairman, for keeping me under control.
    Mr. Boardman. Thank you.
    Mr. Denham. Thank you.
    Mr. Nadler?
    Mr. Nadler. Thank you.
    We have largely been agreeing on everything today, and I am 
going to change that now. The chairman of the full committee 
just said we have to look at the reality of the world. We are 
struggling for funding. We are, indeed, struggling for funding, 
but that is entirely a political construct. The fact of the 
matter is we are spending on infrastructure a fraction of what 
we should be spending. We are sitting here talking about tough 
choices within a very limited framework and a framework that is 
limited in developing the economic potential of the country and 
that is going to help destroy our competitiveness with foreign 
countries.
    We can borrow money at negative interest rates right now. 
Negative interest rates. People are paying us to take their 
money. We ought to be borrowing a lot of money and spending it 
on infrastructure. We ought to be tripling and quadrupling and 
quintupling our investments here and spread our horizons.
    Thirty to forty years ago, we were spending about 3& 3.5 
percent of GDP on infrastructure. Now we are spending under 1 
percent on infrastructure. China is spending 9 percent on 
infrastructure. And guess who is going to have a more 
efficient, competitive economy 20 years from now.
    So, yes, for the moment until probably another couple of 
elections, we are in a rather foolish economic world in which 
we are not investing the money we ought to be investing--and I 
say ``investing.'' That is ``funding''--but investing the money 
that we ought to be investing in infrastructure. We ought to be 
doing the entire cost of high-speed rail in the Northeast 
Corridor, bringing the corridor up to snuff, and investing in 
high-speed rail and doing it in California and having a 
national system so that we can develop the economy of the 
country for its increasing population and for staying 
competitive with the Chinas of the world that we are not going 
to be competitive with if they keep investing 9 percent of GDP 
in infrastructure and we are investing under 1 percent of GDP. 
We cannot maintain the systems we have.
    Reference was made that in the 20th century or the early 
part of the 20th century, we had plenty of money. We were 
investing in infrastructure. Now we do not. Why did we have 
plenty of money? Simply because we had a positive feedback 
loop. We invested and the economy grew. We invested. Now we are 
going into a negative feedback loop. We are not investing. The 
economy is not growing nearly as fast.
    So we have to discuss much of what we have been spending 
our time discussing, namely how to prioritize within a very 
narrow, short-sighted economic vision. But we also ought to be 
discussing how to get out of that very narrow, short-signed 
economic vision and eliminate this nonsense with austerity and 
these budget cuts and start really investing again.
    Having said all that, let me ask Mr. Yaro. What is your 
view on developing a transportation trust fund or an 
infrastructure bank to provide dedicated funding from the 
Federal Government for Amtrak, for development of high-speed 
intercity passenger rail? How would that impact private 
investment?
    Mr. Yaro. Well, I think we should do that, and I think----
    Mr. Nadler. And how we fund such an infrastructure bank?
    Mr. Yaro. Well, as I said earlier, you know, I have been a 
skeptic on P3s simply because, you know, it is actually cheaper 
to do tax exempt bonds and to finance projects that way. 
Private investors will want a return on their investment. They 
will be looking for 4, 5, at least 6 percent from pension 
funds, higher than that from other investors.
    But I am coming around to the idea--Felix Roland has been 
very helpful to me on this--is that even though it would cost 
more, if that is what it takes to develop the political will to 
move ahead with a----
    Mr. Nadler. In other words, that extra cost is the price we 
pay for lack of proper political will?
    Mr. Yaro. Well, you know, going back to your earlier 
statement, most of the infrastructure that we built in the 19th 
and 20th century was built with private investments. The 
Federal Government primed the pump. The Federal Government 
provided--usually in the West it was land grants. In your part 
of the country, it was land grants to get the railroads to make 
those investments, the Southern Pacific, Union Pacific, and the 
rest of them, and so forth. But in other parts of the country, 
we had other Federal incentives. It was mostly European 
investors who put money into, first, canals and then into 
railroads and so forth.
    And I think we can do that again and attract the kind of 
capital that you are talking about here. I understand that it 
is going to cost a little more to do it that way, but if that 
what it takes to make these investments, you get it all back if 
you create new, productive capacity and if we create the kind 
of economic growth that the country should have and that we 
need to provide to our kids. It more than makes up for the 
difference, I think, in the additional cost of capital.
    So one way or another, let us find the political will to 
make these investments. So I have come around to the notion 
that if we need to do P3s to build bipartisan support for 
making these investments, by God, let us go ahead and do it.
    Mr. Denham. Thank you.
    Well, Mr. Nadler is correct. We do have a disagreement on 
this one. I agreed with the President 5 years ago when he said 
a $9 trillion debt is un-American. Now we are double that. We 
have not had a budget in 5 years now. We have some big 
challenges ahead of us.
    But I think where we all agree is finding a dedicated 
funding stream to make sure that these ongoing projects happen 
every year so that we do not have this huge backlog like we 
have today where we are not only prioritizing projects but we 
are really in a situation where our bridges across the Nation--
some of them are falling apart. And rail--we have got some 
very, very outdated rail that could leave us with safety 
concerns as well. And so we have got to have that dedicated 
revenue stream. We are looking at that with the highway bill, 
you know, evaluating the Highway Trust Fund and how you create 
greater revenues to be able to fully fulfill that. We need to 
do the same thing on rail. We need to put the cost controls in 
to make sure that the projects happen not only on time but on 
budget, and then ultimately we have got to figure out how we 
are going to come up with this money so that we can continue to 
not only improve infrastructure but really build high-speed 
rail and do it in a right way where we have got these public-
private partnerships.
    While we are talking about the contracts and making sure 
that these are happening, Mr. Boardman, have you seen the Tutor 
Perini contract? I am sorry. The California high-speed rail 
initial segment funding contract.
    Mr. Boardman. I have not see the contract, no.
    Mr. Denham. When you put together a contract on a new asset 
improvement, when you do a contract with a public-private 
partnership or even a contract with a builder if you are doing 
a design/build, do you not have the cost controls in place to 
make sure that it happens on time? If it does not happen on 
time, there are penalties, as well as making sure that there is 
a guarantee so that there are not a bunch of add-ons at the 
end.
    Mr. Boardman. We generally have that, yes.
    Mr. Denham. Thank you. We could not get an answer on that 
last week on the California high-speed rail issue. So the 
contracting left me concerned about this first phase getting 
done on time and on budget.
    Ms. McDonald, as the former chairwoman of the Northeast 
Corridor Commission, what are some of the concerns that States 
have when being asked to invest their own funds in Amtrak 
infrastructure?
    Ms. McDonald. You know, I think as we have been talking 
this morning, first and foremost the collaboration between the 
States and DC is better than it has ever been.
    Second of all----
    Mr. Denham. We appreciate that.
    Ms. McDonald. Thank you and we appreciate your support 
along those lines as well.
    You know, I think the point that you just highlighted with 
Joe is different States have different procurement policies, 
and it is really making sure that the dialogue is with Amtrak 
to make sure that we are using the best procurement method 
available to us. And when I say ``us,'' it is ``us'' 
collectively. And the hurdle of getting the work done, while 
not only Amtrak is operating trains but Metro North is 
operating trains, New Jersey Transit, MARC, everybody is 
operating trains, the windows to get the work done are very 
tight, and it is working through some of those to make sure we 
get the work done.
    Mr. Denham. And what are some of the steps that you take or 
have taken to mitigate those concerns?
    Ms. McDonald. Well, what we have done with Amtrak and with 
CSX on the Hudson Line, which is our equivalent of the 
Pennsylvania line, is we have several agreements and they are 
operating agreements, capital agreements. We have in place for 
that line a capital construction committee which consists of 
New York State DOT, Amtrak, and CSX. And we do prioritize and 
we very closely track how the projects are progressing and 
where the potential cost overruns could be and what are the 
risk mitigation measures that we can put in place.
    Mr. Denham. Thank you.
    Ms. Brown?
    Ms. Brown. Thank you, Mr. Chairman.
    The last time I was in a similar hearing, Mayor Bloomberg 
was here and former Pennsylvania Governor Ed Rendell was here. 
And the discussion was the same. You were here at that meeting.
    Let us just be clear. Without long distance, Amtrak would 
be a commuter rail. There would be no connectivity between the 
east coast and the west coast. And currently four States have 
no passenger rail service. Without long distance, 23 States, 4 
million people will be without any service whatsoever. We are 
talking about air, passenger, bus service, air, or rail. So I 
mean, to discuss that we want to do away with long-distance 
service is like saying that we want to do away with, you know, 
the mail system.
    I mean, basically we have a lot of people that are not 
thinking forward. And transportation used to be the engine that 
put American people to work. We have not had a WRDA bill in 7 
years. That is the bill that funds the ports and the Coast 
Guard. So, I mean, we are really--for the first time, I feel 
that we are beginning to move forward on some of the 
transportation issues that would actually put the American 
people to work. Sadly, for the first time, I have found people 
that I do not think believe in putting the American people to 
work. They are just very backward. No one here, I am sure.
    But I would like to know what will your recommendations be 
for the Passenger Rail Investment and Improvement Act, starting 
with Mr. Boardman.
    Mr. Boardman. For the reauthorization of the act?
    Ms. Brown. Yes, yes. What would be your recommendation?
    Mr. Boardman. We need funding to maintain our railroad, and 
we need it on a multiyear basis.
    Ms. Brown. Dedicated funding.
    Mr. Boardman. Yes.
    Ms. Brown. All right.
    Mr. Fry?
    Mr. Fry. I would second that. I am not deep into this, but 
I think the way Joe has articulated all this in terms of first 
things first, I would support his position as well.
    Ms. Brown. Ms. McDonald?
    Ms. McDonald. I would agree. And as I mentioned earlier, 
when I said that New York State has invested over a 30-year 
period $22 billion in its commuter railroads, one of the issues 
that we are grappling with on the commission is how do we deal 
with States that have made prior investments and kept their 
state of good repair up to date and Amtrak has not. Is there a 
credit for that? Is there not a credit for that?
    So to answer your question and also to answer your 
question, Congressman Denham, the States have stepped up to the 
plate and we believe that the Federal Government and Amtrak 
also need to step up to the plate to make those deferred 
capital investments so that we can move forward and create 
jobs.
    Ms. Brown. What about those 53 miles--that I think go 
through New York--that if we could speed those up, that would 
improve the system?
    Mr. Boardman. Connecticut.
    Ms. McDonald. Connecticut.
    Ms. Brown. That is not you?
    Mr. Boardman. It is mostly Connecticut.
    Ms. McDonald. It is mostly Connecticut, yes.
    Ms. Brown. Yes, sir, Mr. Yaro?
    Mr. Yaro. It is owned by Connecticut DOT.
    I guess I would add a couple of things. First, the notion 
of getting dedicated funding, getting Amtrak into a trust fund 
type of arrangement the way the rest of the system operates.
    Then I think there is an opportunity to here to be thinking 
about--I will call it high-speed rail version 2.0 where 
strategic investments in the Northeast, I think in California 
finding the right place for the Federal Government to invest in 
the California system, and then a series of others, Florida. 
There is a new generation of projects at All Aboard Florida in 
Florida which is going to require grade separations, some 
right-of-way acquisition to get to Orlando. The Dallas to 
Houston project, the same thing. There is a public role in 
getting--even though it is mostly private investment, there is 
public money that is required for grade separations and other 
investments. The same thing in the Midwest in Chicago to 
Milwaukee and on to Minneapolis and so forth, Desert Express.
    So I think there is an opportunity here for the committee 
to think about what an effective intercity and high-speed rail 
program could be across the entire country. Obviously, we are 
partisan about the Northeast and this is probably the greatest 
need right here in the Northeast just to make the investments 
that we have been talking about here today. But there are 
projects around the country, in fact, that make sense. In fact, 
there are opportunities for P3s in all of them.
    Thank you.
    Ms. Brown. Florida would have been number one in high speed 
in the country if we had not--first of all, if we had not 
started with Jeb Bush sending the first money back and then 
with this present Governor, sending $3 billion back that the 
legislature had voted for, the taxpayers had voted for. When I 
went to Utah, they are riding with our money, and of course, 
you all are enjoying it here.
    Mr. Yaro. We appreciate your contribution.
    Ms. Brown. Yes, I know it. I know it. Yes, sir.
    Mr. Denham. Mr. Nadler?
    Mr. Nadler. Thank you.
    Let me ask the following question. Mr. Boardman first. Let 
us talk about the infrastructure bank. There is also the 
transportation trust fund that has been suggested. I am not 
sure what the difference is. Do you support the infrastructure 
bank proposal? How big should it be? The President proposed I 
think $60 billion at one point. And how should it be funded?
    Mr. Boardman. Well, I got to tell you I am the worst guy in 
the world to be up here talking about what the policies ought 
to be for how we raise the funds and what we need to do. That 
is not my shtick.
    But I've got to tell you that we need the money. We need it 
on a multiyear basis. And I think that is what we appeal to you 
to make a decision for.
    Mr. Nadler. I will ask the other members of the panel in a 
moment the same question, but let me ask you a specific 
question.
    In 1981, I think it was, the State legislature in New York 
passed something called ``contract bonds,'' in which we floated 
$800 million--which the MTA floated $800 million of bonds 
against a promise by the legislature to appropriate funding for 
debt service for the next 30 years. Is that a concept that you 
think would work on the Federal level?
    Mr. Boardman. I honestly do not know.
    Mr. Nadler. Commissioner McDonald, for both the questions.
    Ms. McDonald. You know, I do think there needs to be a 
dedicated transportation fund/infrastructure bank. Part of what 
we have all gotten used to is pay as you go. We get the money 
and then we spend it on projects. The TIFIA loan program, the 
RRIF program allow us to look at it differently, and I think 
future Federal dollars should be allowable to pay back a RRIF 
or a TIF regardless of which mode you are in. I think every 
revenue option should be on the table.
    Congresswoman Brown mentioned Governor Rendell. And Monday 
or Tuesday morning on ``Morning Joe,'' there was a big 
discussion about the offshore assets of U.S. companies, and he 
said, you know, you change the Federal corporate tax code and 
then you get some of those offshore assets back and you put 
them into the infrastructure bank. And I think that would be 
worth exploring.
    Mr. Nadler. Let me just say that I am vehemently opposed to 
that proposal.
    Ms. McDonald. OK.
    Mr. Nadler. Because we should not be bribing our companies 
to pay their taxes. We should mandate that they do so and at 
their regular rate, not at 5 percent or whatever because they 
will just not pay their taxes for the next 20 years expecting 
another amnesty like that. There have got to be better ways of 
funding an infrastructure bank.
    Ms. McDonald. He was not talking about an amnesty. He was 
talking about a permanent change to the tax code.
    Mr. Nadler. Even worse. Go ahead.
    Ms. McDonald. But that is one example that needs--but here 
we have a difference of opinion, and we are generally on the 
same page on some of these things. But it is looking at every 
revenue option to put into the bank and into the trust fund.
    Mr. Nadler. How big should an infrastructure bank be, order 
of magnitude?
    Ms. McDonald. Back when President Obama proposed the ARRA 
program and I was in Connecticut, Dick Levin, who was the 
president of Yale, said that we needed to put over $100 billion 
into infrastructure investment, which is transportation, water 
waste, water utility. There is a huge need.
    Mr. Nadler. Mr. Yaro?
    Mr. Yaro. I would just connect the dots between the 
different questions here. One is that PRIIA required that the 
Federal Railroad Administration complete a national rail plan. 
There was a draft plan. They never finalized it. And I will not 
comment on why it was not finished, but it has not been 
finished.
    You know, what the Congress needs I think and what the 
country needs is an agreed upon vision for the systems of 
investments that we need to make in roads and rails, aviation, 
waterways, and so forth. We are all talking about a set of 
depreciating assets at the moment that will not sustain our 
standard of living, our competitiveness in coming decades. So 
let us see if we can agree on a plan--sorry, on a plan--on a 
map and so forth that shows where these improvements need to be 
and so forth. Then I think we need to tote up what it is going 
to cost, and then we need to find the political will, both 
public and private investments. States need to participate. The 
Federal Government needs to incentivize the States to 
participate and to invest in these things, as it always has.
    This is as old as the republic. You know, George Washington 
insisted on getting the Interstate Commerce Clause in the 
Constitution because before he became President, he put 
together the C&O Canal, could not get the States of Maryland 
and Virginia to cooperate, insisted that the Federal Government 
play a role in incentivizing, planning, leading on 
infrastructure investments. I think that is what is needed, and 
I think it would be a wonderful thing, in fact, if this 
committee could come forward with that kind of approach.
    Mr. Denham. Thank you.
    Ms. Brown?
    Ms. Brown. Just the last thing. If you think about it, we 
have in WRDA the money there, but it is just sitting there and 
they just let it sit there and look at the deficit as opposed 
to using it.
    So one of the things, as we develop some infrastructure 
bank, we have got to make sure that we use it for the purpose 
we are talking about. It should be a direct user fee and some 
way to get it out in the system because we have billions of 
dollars in the harbor maintenance tax that we have collected, 
but we are not using it for that purpose. So it is not just 
setting up the funds, but we need a system that distributes the 
funds.
    And just like the--what is the fund? You know, we have the 
authority, but it just sits there, and we are not using it. 
RRIF, RRIF. It just sits there. It has $35 billion that we have 
the authority to use, and I do not think we have used $1 
billion.
    And so I yield back the balance of my time.
    But thank you all so much for your presentations. We all 
know the problem. How can we work together to move the issue 
forward. Thank you again.
    Mr. Denham. Again, thank you, each of you, for your 
testimony. This has been a very educational trip. Coming from 
California, I do not always get a chance to come up to the 
Northeast Corridor and certainly do not get the opportunity to 
really see some of the challenges that you have to deal with 
every day from the S-turns to the horseshoe turns and a lot of 
the upgrades that need to happen.
    And we are committed as a committee not only to getting the 
passenger reauthorization bill done but to working with you to 
address all of these challenges. And that is going to be a 
commitment that we are going to have to share with the States, 
as well as public-private partnerships, as we look at rail 
across the Nation. We need those public-private partnerships. 
If you are going to have an economic benefit by establishing 
businesses around a stop, then we want the private companies to 
be able to come in and help us with that as well, as well as 
the States. And we are only going to be able to get this plan 
if we not only work together, but also manage it together so we 
do not have cost overruns, so we do not have time delays, and 
we have good contracts negotiated.
    So we certainly want to work with you on all of that. We 
are looking forward to improving not only rail, but we are 
looking at the future vision of high-speed rail. But we have 
got to do it right, and we are committed to working together to 
make that happen.
    So, again, thank you for your testimony today.
    If there are no further questions, I would ask unanimous 
consent that the record of today's hearing remain open until 
such time as our witnesses have provided answers to any 
questions that may be submitted to them in writing and 
unanimous consent that the record remain open for 15 days for 
any additional comments and information submitted by Members or 
witnesses to be included in the record of today's hearing. 
Without objection, so ordered.
    Mr. Denham. I would like to thank our witnesses again today 
for their testimony.
    And if no other Members have anything to add, the committee 
stands adjourned.
    [Whereupon, at 11:27 a.m., the subcommittee was adjourned.]
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