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







       THE ROLE OF INNOVATIVE FINANCE IN INTERCITY PASSENGER RAIL

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

                                (113-29)

                                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

                               __________

                              JULY 9, 2013

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure





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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
TREY RADEL, Florida
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
                                ------                                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
                                Panel 1

Hon. John Porcari, Deputy Secretary, United States Department of 
  Transportation.................................................     5

                                Panel 2

Beverley K. Swaim-Staley, President and Chief Executive Officer, 
  Union Station Redevelopment Corporation........................    29
Frank Chechile, Chief Executive Officer, Parallel Infrastructure.    29
John Robert Smith, Cochair, Transportation for America; President 
  and Chief Executive Officer, Reconnecting America; and Former 
  Mayor of Meridian, Mississippi.................................    29

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

Hon. John Porcari:

    Prepared statement...........................................    41
    Answers to questions from the following Representatives:

        Hon. Jeff Denham, of California..........................    55
        Hon. Corrine Brown, of Florida...........................    56
        Hon. Richard L. Hanna, of New York.......................    58
        Hon. John L. Mica, of Florida............................    61
Beverley K. Swaim-Staley:

    Prepared statement...........................................    62
    Answers to questions from Hon. Jeff Denham, of California....    68
Frank Chechile:

    Prepared statement...........................................    69
    Answers to questions from the following Representatives:

        Hon. Jeff Denham, of California..........................    79
        Hon. Corrine Brown, of Florida...........................    81
John Robert Smith:

    Prepared statement...........................................    82
    Answers to questions from the following Representatives:

        Hon. Jeff Denham, of California..........................    95
        Hon. Corrine Brown, of Florida, including supplementary 
          information............................................    98



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       THE ROLE OF INNOVATIVE FINANCE IN INTERCITY PASSENGER RAIL

                              ----------                              


                         TUESDAY, JULY 9, 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 10:05 a.m., in 
Room 2167, Rayburn House Office Building, Hon. Jeff Denham 
(Chairman of the subcommittee) presiding.
    Mr. Denham. The committee will come to order. First let me 
welcome our distinguished witnesses and thank them for their 
testimony today. As I have said during every hearing we have 
held, I am committed to rail reauthorization this year. One 
area the next rail bill will likely need to address is the role 
innovative financing tools can play to advance intercity 
passenger rail projects. We all need to be creative in ways to 
stretch the Federal dollars and work with our partners in the 
States, with communities, and the private sector.
    I have consistently advocated for the need to leverage 
private-sector financing in my home State for the construction 
of high-speed rail. Without private-sector engagement in 
financing, the California project is doomed to repeat the 
mistakes of the past, and will require endless subsidies from 
Federal taxpayers.
    Innovative finance has been increasingly used in the United 
States for highway mass transit projects. And one of my goals 
for the upcoming reauthorization is to extend that trend to 
passenger rail. The Railroad Rehabilitation and Improvement 
Financing loan program is an example of a program I would like 
to leverage even more. Currently, RRIF is authorized to lend up 
to $35 billion in loans and loan guarantees for the development 
of railroad infrastructure.
    The program was created principally for short line and 
Class I freight railroads, though recently commuter and 
intercity passenger rail operators have expressed interest in 
the program. RRIF and other Federal credit programs can 
accelerate large infrastructure projects if stakeholders come 
together to identify repayment sources. For example, Denver is 
utilizing RRIF and TIFIA to complete a major expansion of 
Denver Union Station, which will improve intercity rail, 
commuter rail, and bus connections. The loans are being repaid 
with a combination of local revenue sources. This is an 
excellent example of States, the private sector, and the 
Federal Government partnering to build more infrastructure in 
new and creative ways. We need to encourage more of this type 
of innovative thinking at the State and local levels so 
entities like the Altamont Commuter Express, ACE, in my area, 
can make the infrastructure upgrades they need for the future.
    Station development is another tool that can be leveraged 
to support expanded and improved passenger rail services. Rail 
stations are often located in desirable downtown locations and 
can become the focus around which significant residential, 
commercial, and retail development can occur. Value capture 
methods, such as the tax increment financing, can be a means to 
leverage that private-sector development to spur transportation 
improvements.
    Finally, railroads themselves can proactively use their own 
property to create additional funding sources. For instance, 
railroad right-of-way can be used to place telecommunication 
and other nontransportation infrastructure. In 2012, Amtrak 
generated $94 million in real estate-related revenue. And I 
would like to work to see them grow that number even further.
    Again, I thank the witnesses for being here today.
    I would now like to recognize Mr. Nadler for 5 minutes to 
make any opening statement he may have.
    Mr. Nadler. Thank you, Mr. Chairman.
    I want to begin by thanking Chairman Denham for holding 
today's hearing on the role of innovative financing in 
intercity passenger rail.
    Unfortunately, Congresswoman Brown has an unavoidable 
conflict this morning, but I will do my best to fill in for her 
today as ranking member.
    In 2009, Congress passed the Passenger Rail Investment and 
Improvement Act, PRIIA, which expires at the end of this fiscal 
year. As the committee prepares to reauthorize PRIIA, it is 
important that we take time to explore the role that innovative 
finance can play in the development of intercity passenger 
rail. But we must also not lose sight of the bigger picture. 
Under PRIIA, we authorized a total of $9.8 billion for Amtrak 
for fiscal year years 2009 through 2013. However, actual annual 
appropriations for Amtrak over this period were significantly 
lower, only $7.3 billion, or $2.5 billion lower than the 
authorized amount. Funding for Amtrak pales in comparison to 
those investments we make as a Nation in our highways and 
airports.
    Today, Federal spending on highway construction exceeds $42 
billion annually. We have not spent that kind of money on 
passenger rail service over the entire course of Amtrak's 43-
year existence. Looking back, the figures are no different. 
From 1947 to 1970, when Amtrak was created, the Federal 
Government spent $11.3 billion in aviation, and $52.4 billion 
on the development of the Interstate Highway System and 
obviously nothing on Amtrak. There is no question we need to 
invest more in our railroads. A working group for the National 
Surface Transportation Policy and Revenue Study Commission 
reported that the total capital cost estimate of establishing a 
national intercity passenger rail network between now and 2050 
is about $357 billion, or $8.1 billion annually. We are nowhere 
near that. And the House is currently moving in the wrong 
direction. The Federal budget is being cut to unsustainable 
levels under the Budget Control Act and sequestration.
    The transportation appropriations bill for fiscal year 2014 
that was just reported out of committee slashes Amtrak's 
capital program by $352 million, or 37 percent below the fiscal 
year 2013 enacted level. And it slashes Amtrak operations by 
$119 million, 25 percent below the fiscal year 2013 enacted 
level. Many of us will continue to fight these cuts. But given 
the current fiscal climate, I can understand why many would 
turn to the private sector. We should explore innovative 
financing options, but they should supplement Federal 
investments in Amtrak. We should reject any illusion that 
private financing tools alone can fill the gap. They cannot 
replace them. We need to ensure that there is a strong Federal 
role to help guide and support the railroads to grow and 
succeed.
    In fact, only with a strong Federal role will we be able to 
properly leverage the private sector. Despite this lack of 
investment at the Federal level, the demand for intercity 
passenger rail service is growing. Amtrak continues to set new 
ridership and revenue records each year. And it is doing all of 
this while facing budget cuts and uncertainty. We should build 
upon Amtrak's success and give Amtrak the tools it needs to 
truly implement a national strategic vision for intercity rail.
    There are several existing programs and options that could 
be part of the solution. The FRA's Railroad Rehabilitation and 
Improvement Financing, RRIF loans program, is one tool that has 
the potential to help railroads, shippers, and States meet 
these rail infrastructure investment needs. Unfortunately, we 
are not taking full advantage of this program. We often hear 
that the application process is difficult, time consuming, 
expensive, and cumbersome. There has been bipartisan support 
for reforming the RRIF loan program, so I am hopeful that we 
will agree on improvements. As we draft the PRIIA 
reauthorization bill, it is the perfect time to look at the 
current RRIF program and other financing tools that we can 
create or improve to see what we can do to help this Nation's 
intercity passenger rail system succeed.
    Given the difficult economic climate, more and more States 
and localities are turning to Federal credit programs and 
public-private partnerships. We have an opportunity, as we 
write the reauthorization bill, to find new creative ways to 
help incentivize continued investment in intercity passenger 
rail from both public and private partners.
    But again, these innovative private financing options must 
be incentivized, they should be utilized better, we should 
reform them, but they cannot replace budget cuts or lack of 
adequate Federal investment. They are a supplement, they are 
not a replacement. Most of us here want to invest in and 
develop safe, efficient, convenient, and affordable 
transportation options like high-speed intercity passenger 
rail. But if we want to see actual results and improvements in 
the Nation's passenger rail system, we need a permanent 
solution. We need to show the public and the private sector 
that we support passenger rail, and give our States, 
communities, and the private sector the confidence they need to 
plan and invest. To do that, we must increase the use of 
innovative financing, but we must increase substantially 
increase the Federal investment of direct Federal 
appropriations in intercity passenger rail.
    Thank you, and I look forward to hearing our panelists' 
thoughts and ideas this morning. I yield back.
    Mr. Denham. Thank you. I now call on Chairman Shuster for 
any opening statement he may have.
    Mr. Shuster. I thank the gentleman. And I appreciate you 
holding this hearing today. As I have said previously, I think 
we have got to figure out ways to make sure the investments are 
made in intercity passenger rail. And I think that it is not 
only money, but it is reforming how we go about it.
    Mr. Secretary, I would like to welcome you here today. I 
should have started off with that. Thank you for being here. We 
need passenger rail in this country. We have got to take a hard 
look at it and figure out where we are going in the future. The 
number I constantly remind myself of is that this Nation is 
going to go from 300 million to 400 million people. The 
projection in 2005 was it was going to take 32 years. We are 
already 8 years into it, we are headed towards 400 million, and 
we are going to have to figure out how to get people between 
our major cities. You take the I-95 corridor. It is impossible 
to build another lane of highway there. So we have got to 
figure out how to improve moving people without moving them on 
the highways.
    I also believe that the partner out there is the private 
sector. There is countries around the world that have shown 
that private-sector involvement can be successful, and it is a 
way to get those additional funds and investments made. 
Programs like the RRIF program and TIFIA have shown us that we 
can leverage those scarce Federal resources to make sure we are 
making those investments that we need to. And we also need to, 
and we are talking about reform, is leverage the railroad 
assets, like stations and right-of-ways to make sure that we 
are developing and being able to capture that investment that 
is there. And again, we look around the world, there are places 
that have done that successfully.
    So again, I appreciate the chairman holding this hearing 
and for the chairman's hard work traveling the country. I know 
he has been around talking to stakeholders and making sure they 
are heard. So, again, Chairman Denham, appreciate all your hard 
work, and thanks for the hearing today.
    Mr. Denham. Thank you.
    I would now like to welcome Mr. Porcari as our first 
witness today, our first panel. Then we will go into a second 
panel. We will most likely have time for two rounds of 
questioning. We know that this is a very important topic. And 
we look forward to working with you on improving America's 
railroad.
    Amtrak, I agree with Mr. Nadler, has been improving. But we 
obviously have some safety concerns. We have got some 
infrastructure concerns. We have got some opportunities to 
really invest in continuing those improvements. And we look 
forward to working with you on that. I would 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 your oral testimony 
be limited to 5 minutes.
    Mr. Porcari, welcome.

TESTIMONY OF HON. JOHN PORCARI, DEPUTY SECRETARY, UNITED STATES 
                  DEPARTMENT OF TRANSPORTATION

    Mr. Porcari. Thank you.
    Chairman Shuster, Chairman Denham, Mr. Nadler, members of 
the committee, thanks for this opportunity.
    When President Obama took office, he laid out his vision 
for the 21st-century American rail, a vision that aims to 
connect 80 percent of the Nation's population to a high-
performance rail network within the next 25 years. Since 2009, 
the U.S. Department of Transportation has made unprecedented 
investments in America's rail infrastructure to help make this 
vision a reality. And every step of the way, we have put people 
to work and generated economic growth in communities across 
America.
    Today, 6,000 corridor miles are being improved, 40 stations 
are being upgraded, 260 next-generation passenger rail cars, 
and 105 locomotives are being procured. Our High-Speed and 
Intercity Passenger Rail Program is investing more than $10 
billion in strategic market-based projects in 32 States. Our 
successful TIGER grant program has awarded over $750 million to 
more than 45 rail projects, from station upgrades to large-
scale freight initiatives. Our Railroad Rehabilitation and 
Improvement Financing program, better known as RRIF, continues 
to support major rail projects. And it is a great example of 
how our investments are able to attract private capital.
    One loan we issued through RRIF allowed Amtrak to buy 70 
new locomotives to modernize its fleet in the Northeast 
Corridor. These locomotives are being manufactured as we speak 
at a Siemens plant in California that employs about 750 people, 
with suppliers in 23 States building component parts. We have 
also issued 29 RRIF loans to freight railroads, helping to 
upgrade our rail infrastructure and improve the movement of 
goods across America.
    Our innovative TIFIA program is another tool we are using 
to stretch our rail dollars further. TIFIA, that is the 
Transportation Infrastructure Finance and Innovation Act, 
provides direct loans, loan guarantees, and standby letters of 
credit for major infrastructure projects throughout the Nation. 
It is a powerful resource on its own, but when TIFIA is 
combined with RRIF the benefits are truly inspiring.
    For example, as you mentioned, Mr. Chairman, in Denver at 
Union Station Denver, both a RRIF loan and a TIFIA loan are 
being used together to leverage more than half of the total 
project funding for the redevelopment of Denver Union Station. 
More than 2 million square feet of mixed-use space development 
is now being built around the station, spurred by the 
revitalization of the station itself. And it is estimated that 
public sector investments will create 7,000 jobs during the 
construction of that project. As you can see, in cities and 
towns across the country, rail investments lead to more jobs, 
increase private-sector buy-in, and better infrastructure for 
everyone. It is a true win-win-win situation.
    To fully realize the potential for rail in America, we have 
to continue investing Federal resources and leveraging them 
with our public and private-sector partners. The President's 
2014 budget request proposes a 5-year, $40 billion rail 
reauthorization. And we are proposing to fund this 
reauthorization by creating a new rail account as part of our 
broader transportation trust fund, providing much needed 
funding predictability and consistency for both our public and 
private-sector partners.
    Our current authorizations, passed in 2008 in true 
bipartisan fashion, were game changing. Since they were passed, 
Amtrak's ridership, its on time performance, and its revenues 
have reached all time highs. The freight rail industry has 
invested in its infrastructure at a pace not seen since the 
19th century. And last year was the safest in railroading 
history.
    Now, imagine what we could do together if we treated rail 
like our highways and other forms of transportation and 
provided it with a sustained source of funding. Our highways 
and airports are already stretched to their limits and facing 
congestion that will only get worse with time. By 2050, we will 
need to move up to--we will have an additional up to 100 
million people in America, and 8 billion tons more freight per 
year.
    The demand for rail is at an all time high. In the last 10 
years, Amtrak's ridership has increased by 40 percent. This is 
the time to put rail funding on par with our other modes of 
transportation. Making large-scale investments on a year-to-
year basis we realize is both difficult and inefficient. No 
rail system in the world has ever been successfully planned and 
developed on that basis. Predictability in Federal funding is a 
necessity. It is what States, local governments, and private-
sector investors are looking for. It is what will move America 
forward. And it is what will ultimately support the public-
private rail partnerships that are needed to realize the 
President's vision for a national passenger rail network that 
is the envy of the world.
    Thank you, Mr. Chairman, for the opportunity to testify. I 
look forward to taking your questions.
    Mr. Denham. Thank you, Mr. Porcari.
    Let me first start by clarifying something that you said in 
your statement. I agree that there should be dedicated funding. 
I think if you are going to improve passenger rail across the 
Nation, there needs to be that dedicated funding stream. So 
what are your ideas? Is it an infrastructure bank? Is it some 
type of new tax? What does that dedicated revenue stream look 
like?
    Mr. Porcari. There are a number of ways this can be done. 
And if you look at the ways in the past that Congress and the 
executive branch have worked together in a true bipartisan way 
to identify revenue sources, the entire spectrum of potential 
revenues would be out there.
    What is true, Mr. Chairman, is that any major 
infrastructure investments, whether it is our highway system or 
aviation, has required core public funding on a multiyear basis 
to be effective. So we look forward to working with you and 
members of the committee and Congress on identifying those 
revenue sources.
    Mr. Denham. Thank you.
    And I would agree we need a 5- or 10-year plan to be able 
to plan any long-term project. There is no plan that the 
administration has out there in print today that I haven't 
seen, is there?
    Mr. Porcari. The President's fiscal year 2014 budget does 
identify pay-fors for the rail portion of the plan from the 
Overseas Contingency Operations Accounts. And we think of it as 
some Nation building right here at home.
    Mr. Denham. OK. I think we have scored the downsizing of 
the war in many different funding scenarios. But we 
nevertheless, we look forward to working with you on that 
because we do agree that a long-term funding source, like the 
Highway Trust Fund--only a Highway Trust Fund that actually is 
fully funded, as well. We have some big infrastructure 
challenges that I think we can work on, on a bipartisan level.
    But let me start with a question about the RRIF loan. In 
2011, the Department of Transportation approved to Amtrak a 
$563 million RRIF loan for the procurement of 70 electric 
locomotives. The loan will be repaid with revenue generated 
from Amtrak's Northeast Corridor services. In your view, are 
there further opportunities to leverage Amtrak's Northeast 
Corridor profits to accelerate the state of good repairs along 
the whole Northeast Corridor both on safety as well as creating 
better efficiencies? I have taken that train a few times now to 
see how many challenges there are and the number of projects 
that are in dire need of funding.
    Mr. Porcari. Yes, Mr. Chairman. The short answer is yes, we 
believe there are further opportunities, whether it is through 
the RRIF loan program, through, as you point out, station 
development opportunities, and other value capture 
opportunities, and baseline funding to restore some of the 
Northeast infrastructure. Despite the historic disinvestment in 
the Northeast Corridor, as you know, ridership growth has been 
steady and very impressive. The rolling stock, in particular, 
these new locomotives, will be very helpful. But I think it is 
worth noting that the Acela trains, the newest rolling stock in 
the Northeast Corridor, are now 20 years old.
    Mr. Denham. And would it be helpful, as we are putting 
together the PRIIA reauthorization, to separate Amtrak's lines 
of business to make sure we are making loans to Amtrak that are 
not being paid for with a Federal subsidy so that we have 
directed funding just on infrastructure improvements?
    Mr. Porcari. Yes, Mr. Chairman. We have been supportive of 
having transparency into Amtrak's lines of businesses to better 
support investment decisions, but also from a national 
perspective, especially when it--because it is important to 
serve rural areas throughout America on cross-country service 
as well, to understand what it will take to support that 
service in the long term.
    Mr. Denham. And the RRIF, the whole overall RRIF program 
has not been fully utilized. There is obviously a great deal of 
money that is sitting out there that could be loaned out. And 
recently the RRIF loan program has garnered interest for 
advancing new intercity passenger rail projects. Does DOT 
believe that the RRIF program can be used successfully to 
support passenger rail projects as well?
    Mr. Porcari. Yes, we do believe the RRIF program has a part 
in both freight and passenger rail. There are some very 
interesting both applications and potential proposals out 
there. As you know, the RRIF program is our one underutilized 
financial resource for both freight and passenger rail. We look 
forward to working with the committee and the users to find 
more effective ways to implement the RRIF program.
    Mr. Denham. And I know that there are high-speed rail 
opportunities to loan RRIF dollars. What role, if any, do you 
think RRIF can play in the California high-speed rail project, 
which, as you know, will require billions of dollars in grant 
funding that is unlikely to materialize without a dedicated 
source?
    Mr. Porcari. The RRIF program is a potential source of a 
portion of the financing for the California program. That will 
have to stand on its own legs financially. Like every other 
RRIF application, it would have to make financial sense in its 
own terms. But it is a potential tool, as are other State and 
Federal revenue sources.
    Mr. Denham. Thank you.
    We certainly agree on that. I think that they will have to 
prove their business plan to be worthy before they could apply 
for a loan. But we are certainly looking at other 
opportunities.
    Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman.
    I just want to, before you answer my questions, I want to 
follow up on that. Do you believe that a high-speed rail system 
or any transportation system has to stand on its own in terms 
of turning a profit or at least breaking even, as opposed to 
being subsidized from the outside?
    Mr. Porcari. Mr. Nadler, we don't have any portion of the 
transportation system that stands totally on its own legs 
financially.
    Mr. Nadler. Exactly.
    Mr. Porcari. What I was referring to is a specific RRIF 
loan proposal, if we get one from the California High-Speed 
Rail Authority, would have to make financial sense.
    Mr. Nadler. Yeah, obviously. But we have to understand, I 
assume, that loan programs, and any other innovative financing 
systems that I haven't heard talked about--I have heard PRIIA 
and RRIF--are loan programs. They have to be paid back. They 
have to be paid back out of revenues. And you are not going to 
build or maintain major systems out of their own revenues, even 
if you use part of that--especially if you use a larger and 
larger part of that for debt service. You have to have an 
outside subsidy from somewhere, correct?
    Mr. Porcari. That is correct. Mr. Nadler, we wouldn't have 
an Interstate Highway System, we wouldn't have the aviation 
system that is the envy of the world if we didn't have trust 
funds with dedicated revenue sources that year after year 
provided the baseline funding.
    Mr. Nadler. So we have to find some revenue source from 
outside in addition to creative use of PRIIA and RRIF and 
anything else we can come up with and PPP, we have to find some 
source which we don't have now of large-scale annualized public 
funding for passenger rail?
    Mr. Porcari. We do.
    Mr. Nadler. And there is no proposal on the table at the 
moment.
    Mr. Porcari. Apart from the President's proposal in the 
fiscal year 2014 budget. We look forward to working with the 
committee and Congress on a multiyear proposal.
    Mr. Nadler. Thank you. The President proposed in the fiscal 
year 2014 budget, and I think this may have been what you were 
just referring to, $300 million. Why is that necessary? I am 
sorry, for State corridors, $300 million for State corridors.
    Mr. Porcari. We have historically as a Nation underinvested 
in these corridors. There is great demand for--grade ridership 
demand that individual State corridors, and regionally and 
nationally, we have not been able to fulfill. The idea is to 
jump-start the infrastructure investment process with some 
critically needed investments. Overall, the fiscal year 2014 
proposal has a number of different categories which we are 
proposing to fund both passenger and freight rail needs. And I 
mention those in the same sentence because, with limited 
exceptions of true high-speed rail, we will have a mixed system 
in the United States.
    Mr. Nadler. And these are grants, not loans, correct?
    Mr. Porcari. Primarily they would be grants.
    Mr. Nadler. Good. Thank you. Now, you mentioned that the 
administration proposes to fund Amtrak--or actually you were 
talking with the chairman, and you mentioned that the 
administration proposes to fund Amtrak through business lines 
rather than the traditional operating and capital debt service 
grants. Last week, the FRA, the Federal Railroad Administrator, 
testified that financing along business lines would not make 
sense with the low appropriations levels proposed by the 
Appropriations Committee in the House for Amtrak. Why is this 
so? And what do you believe would occur in the short term and 
long term with such low Federal financing levels? And do you 
think the private sector would come in to take up the slack?
    Mr. Porcari. Basically, providing transparency along the 
lines of business will highlight, as the Administrator pointed 
out, the underfunding and the problem. It will show very 
specifically by line of business where more investment is 
needed. There is certainly a role for public-private 
partnerships, and we want to encourage those and maximize those 
to the extent possible. There is a large part of the system 
that is simply a public good that is not going to fit the 
profile of what the private sector would co-invest in. So the 
bottom line is a better, more consistent, and higher baseline 
level of public funding is needed, along with better and more 
public-private partnerships.
    Mr. Nadler. That makes sense. But the Federal Railroad 
Administrator testified that financing along business lines 
would not make sense with the low appropriations levels. Now, 
did he mean or would you say that what doesn't make sense are 
the low appropriations levels? And with those low 
appropriations levels that don't make sense, if you had 
financing along business lines that would make it more 
transparent and show more--how much it doesn't make sense? Or 
instituting such a system doesn't make sense with inadequate 
financing levels?
    Mr. Porcari. What the President's budget is proposing is 
transparency by lines of business and higher levels of funding. 
If you look at the current funding and the House proposal for 
funding, there would be some very difficult choices that the 
House would need to make on actually cutting back service.
    Mr. Nadler. But if you had a very inadequate level of 
funding, would it still make sense to fund through business 
lines to make it more transparent, or is there some reason that 
wouldn't make sense if you were having senseless inadequate 
levels of funding?
    Mr. Porcari. We have been promoting transparency across the 
transportation network, along with performance measures, as a 
way to restore public confidence and show the transportation 
investments on a business case basis make sense. So we would 
propose to do that.
    Mr. Nadler. Even if you had inadequate levels of financing?
    Mr. Porcari. That is right.
    Mr. Nadler. My time has expired. I yield back. Thank you.
    Mr. Denham. Mr. Shuster.
    Mr. Shuster. To follow along the line of questioning that 
the gentleman of New York, senseless underfunding, putting into 
a system that is not operating well or inefficiently, the whole 
system is senseless. And so that is why I believe we have got 
to start with reforming it how we move forward and then try to 
figure out how to get those funds.
    I think everybody agrees that there has to be some level of 
investment from Federal to State, from the Government. As the 
Secretary said, none of our transportation modes goes along by 
themselves without some assistance. But again, going back to 
the investments that are made and not being properly invested, 
not being done in a way that we can maximize the return I think 
is wrong.
    But I look at Amtrak, and the ridership has gone up 
significantly. We use all the time the Keystone corridor from 
Harrisburg to Pittsburgh, which has gone up I think now about 
70 percent in the last 5 years. Pennsylvania and Amtrak made 
that investment. I think that is senseless sitting in traffic. 
Every time I get on there and I do the back of the envelope, 
and I did one right here to make the calculation, there is 
three prices basically, $19, $29 and $39. That might have gone 
up a little bit. But when you take that $29 or $39, which is 
what the typical business traveler is going to pay, $58 or $78 
round trip, if you take the tax, the gasoline you used, the 
parking you are going to have to take into consideration and 
the toll, it is $62 to $72. So as I tell the Governor of the 
State of Pennsylvania--who is in control over the price in that 
line--the price needs to be higher. Nobody wants to pay more, 
but as a business traveler, as somebody that values my time, 
the calculation needs to be made how much more productive can I 
be? Because I think that that is a problem. That goes to the 
point of the management of it is not like a private-sector 
company would look at it, look at price elasticity, and they 
would say, hey, we can get $100 or $110 round trip and increase 
our revenues. We are not doing that.
    My son traveled from Harrisburg to New York City round 
trip. Good for me it was $108. I couldn't believe it was $108. 
I probably would have paid $208 easily to make sure that he 
didn't have to take his car into New York City and deal with 
all the headaches and hassles.
    So that is the core to the problem I think is we have got 
to figure out how to reform Amtrak, to manage it the way a 
private-sector company does. And when we are talking about 
separating business lines, it makes a lot of sense to me. Now, 
as I said, below the rail, that is where the investment is 
going to have to be coming from help from the Federal 
Government. But above the rail, by putting private-sector 
practices, or by bringing the private sector into the process, 
I think we can look at these things, these different lines as 
standalone businesses.
    And that long, lengthy statement brings me to my question 
to you, Mr. Secretary. The President has talked a lot about it, 
but I don't think his actions have put the focus where they 
need to be. Dribs and drabs everywhere. I am not a fan of the 
California high-speed investments being made there because I 
don't think they can afford it. But do you agree we need to 
really focus on the corridors that make the most sense? For 
instance, the Northeast Corridor, or a heavily traveled 
corridor, Chicago to St. Louis, those places like that. Do you 
think we need to focus on those corridors and not try to spread 
our money so thin we are not going to have any kind of impact?
    Mr. Porcari. Mr. Chairman, much the same way that the 
interstate system was built, the passenger rail corridors are 
starting off as city pairs. You mentioned St. Louis-Chicago as 
a great example, where that investment of Federal public 
dollars has now resulted in 110-mile-an-hour service for a 
portion of it. Likewise, Detroit to Chicago, most of that will 
be 110-mile-an-hour service in the next few years. As the city 
pairs start connecting with each other, you are building a 
network from the ground up.
    This is not a Federal Government master plan map of the 
country imposed from the top down. It is really demand starting 
with city pairs and emerging corridors building up. And again, 
I would point out that that is the way, whether it is highway 
or aviation or any other part of the transportation system, 
that is the way most of our system has been built, from the 
ground up.
    Mr. Shuster. Except when you look at the New Orleans to Los 
Angeles, the Sunset Limited, that is the biggest loser I 
believe we have. What are your thoughts on that?
    Mr. Porcari. Some of the cross-country service is very 
important for the rural areas that it serves. Part of the 
conversation should be those communities along the way and 
connected to a nationwide network through Amtrak. As we are 
losing intercity passenger bus service, for example, Amtrak is 
becoming more and more important for those rural areas that 
simply don't have transportation options otherwise.
    Mr. Shuster. We are losing those intercity bus travel?
    Mr. Porcari. Yeah, well, the bus industry is changing 
rapidly, and a number of towns and areas that had been served 
with scheduled service don't have that anymore.
    Mr. Shuster. Right. Right. If the chairman will indulge me 
for another 20 seconds, just a statement. I agree with you, we 
need to figure out how to improve RRIF loans, get them out 
there. Thirty-five billion dollars that is available, and we 
are not even close to that. We tried, Chairman Mica and myself 
tried to in MAP-21, tried to reform that but we were unable to. 
So I look forward to working with him improving RRIF.
    Thank you, Mr. Chairman.
    Mr. Denham. Thank you.
    Mr. Michaud.
    Mr. Michaud. Thank you very much, Mr. Chairman.
    And thank you for being here this morning. I want to follow 
up, you mentioned that there is some collaboration between 
freight and passenger rail, particularly in rural areas that 
make sense to do that. How many areas, number one, is that 
collaboration going on? And do you envision, do you have any 
plans to increase that collaboration to include more passenger 
and freight rail?
    My second question is, as you look at trying to hold down 
the costs, have you, the department, thought of utilizing the 
National Guard to use that as a training project so when they 
can use the man-hours and equipment to actually build passenger 
rail, help hold down the costs?
    And my third question is since the United States is 
negotiating with the EU for a trade deal, and if you look at 
the shipping lanes for that trade deal, it makes a lot of sense 
to actually have it shipped on the east coast. And once it gets 
on the east coast, I will just use Maine for an example, 
Eastport is the deepest water port on the east coast, doesn't 
have to be dredged. How would you get that product from say 
Maine to California using rail? Have you looked at that as 
well?
    Mr. Porcari. Let me try to take those questions in turn. 
First, in terms of shared tracks, it is important to state that 
we have the best freight rail system in the world. It is the 
envy of the world. And one of the reasons that our economy is 
strong is because over the last 25 or 30 years, the freight 
rail system has come back very strongly. And in the vast 
majority of cases where we have passenger rail service, it is 
on shared tracks where it is serving both freight and passenger 
rail needs. That will continue to be true under almost any 
scenario.
    So we focus on the safety of the interaction between 
passenger and freight, but we are very mindful from an economic 
development point of view that we want to promote the freight 
side of it as much as passenger. And we try to make sure we 
have that balance there. As far as the National Guard, to my 
knowledge, we have not looked at that as an option. We have 
focused very much on the safety of the system. And that in part 
has been from the rigorous training requirements and safety 
management systems and other safety cultural issues that we 
have worked on together with the various railroads for a steady 
increase in safety.
    On the shipping lanes and the ports, it is a great point, 
because what we have not been able to do much in the past is 
focus on the seams in the transportation system. We may have 
great ports that have a 50-foot channel and a 50-foot berth, 
but if we don't have great rail and highway access to that port 
we haven't done anything. By category, one of the single 
biggest winners in our TIGER grants over the various rounds has 
actually been freight rail and ports. And it is because we have 
been able to take very specific, relatively small targeted 
investments and eliminate bottlenecks. And there is great 
examples all over the country where taking a systems approach, 
we have been able to eliminate some of those bottlenecks. 
Through the RRIF program, through a continued TIGER program, 
and through base funding at an adequate level for a passenger 
rail system, we believe that we can actually keep working on 
those bottlenecks and build a system that serves both the 
freight and passenger rail needs. Mindful also that there are 
other development opportunities and value capture opportunities 
for that right-of-way and the stations as well.
    Mr. Michaud. Thank you.
    I think it is very important that when you look at 
passenger, freight, and what is being negotiated like with the 
EU, that you also look outside the box. My biggest concern, 
without getting the wrath of my friends from New York, is my 
understanding that they are going to have to spend about a 
billion dollars raising a bridge. They are going to have to 
spend a ton of money dredging, which is costly, so here is to 
me anyway, is a waste of taxpayers' dollars when there are more 
economical ways of probably looking at ways how things go. And 
I would be willing to talk to Ranking Member Nadler about that 
as well.
    But my next question is, and I heard Chairman Shuster 
mention it, about how businesses can afford more as far as the 
costs. Have you done an analysis, maybe businesses can, but on 
your ridership? Where is that return rates going to be? So if 
you do raise the rate, are you going to be losing customers 
because they can no longer afford the higher rate.
    Mr. Porcari. As a general principle, Amtrak, commuter 
railroads, other operators are looking at that the elasticity. 
They do it on different schedules and in different ways. On the 
Keystone service, I am not certain of where that point is. But 
I think the chairman's point is a good one, when the service 
started, the point was to build ridership. Now that ridership 
has been built and the base ridership is there and it is still 
growing, there may be pricing opportunities. I am not sure.
    Mr. Michaud. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Denham. Thank you. Mr. Williams.
    Mr. Williams. Yes. Mr. Secretary, thanks for being here. I 
appreciate it. I am a business guy. I am from Texas. So I am a 
big private-sector guy, believe in the private sector.
    My experience has been that big government and regulations 
and processes choke the heck out of opportunities for the 
private sector to get engaged. I guess my first part of my 
question would be, what do you propose? I mean, we haven't 
talked too much about regulations and how hard it is for the 
private sector to get involved with the Federal Government on a 
private partner relationship. What do you propose do about some 
of these regulations that seem to go on and on and on?
    Mr. Porcari. Yeah. First, sir, on the public and private 
investment, there is great example I wanted to mention in Texas 
of Tower 55, which is a truly a national bottleneck.
    Mr. Williams. Right in my backyard.
    Mr. Porcari. Absolutely. And a joint investment from the 
Class I railroads and the Federal Government is eliminating one 
of the worst bottlenecks in America. And I think that is a 
great illustration of the approach we are trying to take to 
eliminate regional and national bottlenecks through joint 
public-private investments. On the regulation side, we are 
working very closely with industry on the implementation of, 
for example, positive train control, as mandated by Congress. 
We have made modifications to that program that we think make 
sense. And we have done that working closely with the industry. 
That is one example.
    I would say that there is a strong shared sense of safety 
and building a safety culture that, with or without 
regulations, cuts across the railroad industry. And it is one 
that we share with both our freight and passenger railroads.
    Mr. Williams. Sometimes the process is pretty cumbersome, 
and there are ways, hopefully you will find ways to make it 
easier to be a partner.
    Mr. Porcari. And I believe positive train control is an 
example of that, where the regulations that were mandated by 
Congress have actually been modified in response to legitimate 
points brought up by industry.
    Mr. Williams. The other thing is of course we all talk 
about where the cash flow is, don't we? And the public sector 
has got their cash flow, the Government has got their cash 
flow. You know, as mentioned earlier, where is the--where do 
you propose the Government's money comes from? Are you talking 
about more taxes? Are you talking about tax increases? I heard 
you say earlier we are talking about also money that the 
President is planning on from the withdrawal from the wars. It 
seems everybody has got their hand in that. Where is the money 
going to come from? Are we going to tax? Are we going to have 
higher taxes? More taxes?
    Mr. Porcari. Well, first, the specific discussion about the 
fiscal year 2014 President's budget does have that pay-for, the 
Overseas Contingency Operations Account. And again, we think of 
it as Nation building right here at home and investments that 
will pay off for generations. We look forward to working with 
Congress on a larger discussion on a bipartisan basis of the 
levels of funding that will actually rebuild our infrastructure 
and turn over to the next generation what we inherited, which 
was a transportation system that drives the Nation's economy 
and builds a better standard of living.
    Mr. Williams. But you are not ready to commit for tax 
increases right now.
    Mr. Porcari. I am not proposing anything.
    Mr. Williams. I yield back, Mr. Chairman.
    Mr. Shuster [presiding]. Thank the gentleman.
    And with that, Mrs. Napolitano is recognized for 5 minutes.
    Mrs. Napolitano. Thank you, Mr. Chairman.
    And I am glad that we have an opportunity to go over some 
of the issues that are very important to my district and for 
California.
    Secretary Porcari, there have been very some potential 
successful RRIF applicants in the program that raised some 
questions to me and to some of my colleagues because of the 
length of time of the review, the inefficiencies in the 
process, the lack of staff authority, the lack of 
communications, and other processes. In 2012, $83,710,000 were 
loaned to the Alameda Corridor Transportation Authority, ACTA, 
in California. It took them 33 months to get that loan. When 
they applied, it was during the recession, and there were 
problems with being able to pay the loan because the ridership 
was down, and apparently, they were requesting some relief to 
be able to refi their loan.
    Do you believe there have been problems with the program? 
What are you doing to fix them? The statute gives DOT 90 days, 
but it doesn't begin to count until the application is deemed 
complete. Thereby, it took 6 months for their application to be 
deemed complete, even though there were no additional 
information requests to the ACTA. Are we working on being able 
to expedite, cut the timeframes? Do we have enough trained and 
experienced personnel to do it in your staff? And what should 
be the time limitation between the submission of an application 
and then of course the deemed complete portion of it? Because 
one barrier for some applicants may be the costs also for the 
transaction. And if you would explain also, if you can, in the 
short frame time what they are, what those costs are, and why 
they may change during the RRIF approval and negotiation 
process.
    Mr. Porcari. Thank you, Ms. Napolitano. I will try to 
unpack that series of questions.
    First, as you know, the Alameda County Transportation 
Authority refinancing was, as you point out, through a very 
difficult economic time. Every one of our RRIF loans, as I 
mentioned, has to stand on its own legs financially. It is an 
incredibly important corridor for national trade. But it is one 
where the refinancing as first proposed did not make sense and 
from my perspective was not approvable because of some of the 
financial issues. It took some time to work through that given 
the size and scope of the project, and again, the national 
importance of that corridor to domestic and international 
trade.
    We clearly understand that there are process improvements 
that make sense and that we can do. Thirty-three months is not 
the norm. But that is a project that, as originally submitted, 
needed substantial work together to get to an approvable state. 
Now, there are specific steps within the RRIF loan application 
process. I will be happy to go through those. But maybe the 
most important one is the independent financial adviser, who on 
an independent basis is evaluating the creditworthiness of that 
specific application. And that creditworthiness review often 
takes a number of back and forth rounds and modifications to 
the proposal before we can get to a point where it is approved. 
We have been--tried to be very good stewards of the public 
trust in only approving RRIF loans that make sense. We have a 
lot more capacity to approve RRIF loans. We do think that we 
can front load the process better than it has been done in the 
past, where we can get to a complete application faster. And I 
think that is really the key to having a better process.
    Mrs. Napolitano. Should there be a time limitation between 
the submission of the app and the deem of complete?
    Mr. Porcari. Well, before the application is deemed 
complete, I can think of several examples of RRIF loans that 
simply didn't have enough information to act on. And if we were 
required to deem them complete before the applicant 
supplemented that information, those loans would have been 
denied. So I think that there is a balancing act there in how 
quickly we can get to deemed complete. It is in our interest to 
do that, too.
    Mrs. Napolitano. Can you quickly address the barrier for 
some applicants for the costs issue?
    Mr. Porcari. Sure. Especially for the smaller RRIF 
applicants, I believe the smallest RRIF loan we did was on the 
order of about $85,000. So the transaction costs are very 
important, but especially important in the smallest ones. There 
is an investigation fee, which is one-half of 1 percent. That 
is what pays for the independent financial adviser. There is 
the credit risk premium, which is required by the enabling 
legislation. We don't have appropriated funds for RRIF. So the 
applicants have to pay that in the RRIF program. And basically, 
the less creditworthy the higher the premium. So that can be a 
substantial barrier.
    Mrs. Napolitano. Is there any way to be able to help the 
smaller entities? Because this could be one of the problems for 
the small entity being able to be successful.
    Mr. Porcari. Well, we do recognize, the RRIF program was 
originally set up, as you know, to help the short line 
railroads. And it is an incredibly powerful economic 
development tool for a railroad siding, a little bit of rolling 
stock for smaller businesses in particular.
    We can focus on ways to minimize the transaction costs. But 
the things like payment for the independent financial adviser, 
payment of the credit risk premium, really aren't negotiable. 
And then of course the interest rate itself doesn't vary 
widely, but it does float based on I believe the Treasury bill.
    Mrs. Napolitano. Mr. Secretary, I would love to have--and 
Mr. Chair--any information to this committee on how we can help 
reduce those costs for smaller entities.
    Mr. Shuster. Certainly. Thank you.
    Mr. Webster from Florida is recognized for 5 minutes.
    Mr. Webster. Thank you, Mr. Chairman.
    Thank you for this meeting. And I had a question about 
something local to Florida. There is an innovative, 
groundbreaking private-sector project underway called All 
Aboard Florida. And it will bring not only modern passenger 
travel rail from Miami to my hometown of Orlando, but also be 
great for economic development and also just great employment 
opportunities as well. Are you aware of that project?
    Mr. Porcari. Yes, I am.
    Mr. Webster. I think it is probably the only green filled 
passenger rail project that will be completed here in the next 
few years. Is there anything that you believe DOT could do in 
order to help that project along and move it forward quickly 
and also without unnecessary delays?
    Mr. Porcari. Well, it is one of the RRIF loan applications 
that we are looking at right now. I would say it comes in with 
some natural advantages in the sense that for the most part it 
is existing right-of-way, and has, for at least a portion of 
the line, the environmental clearances that are required. So 
those are big pluses. I know, and you will hear more about it I 
suspect on the second panel--but there are more--there are some 
right-of-way and other issues to be worked out. But overall, 
there is a real need. This is a great example of, for the most 
part, what would be continue to be a shared use corridor, where 
both freight and passenger activity can co-exist very well. I 
don't know of any show stoppers for the proposal. But I don't 
know enough of the details at this point to know that there 
might be some. But in general, we welcome the proposal. We know 
the need is great. And for a system that could serve in phases 
or all at once, Miami to Orlando would be a big boon to the 
State.
    Mr. Webster. Just as a side note, I am familiar with TIFIA. 
I am not as familiar with RRIF as I am with TIFIA. But people 
seem to like TIFIA. People don't like RRIF. Is there a way to 
come up with a hybrid program that would be more modeled after 
the TIFIA program?
    Mr. Porcari. One of the reasons that people like TIFIA is 
because they are not paying the credit risk premium. In RRIF 
they are. And again----
    Mr. Webster. This is more also there is just some 
objections to the--it is kind of cumbersome in the way it is 
set up.
    Mr. Porcari. I think the point is well taken. And we know 
that in terms of re-engineering the process that we can make it 
both an appropriately scrutinized process that includes the 
independent financial review, but we can also make it a better 
process. And as I mentioned, front loading--everything else 
being equal, doing more work together with the applicant 
upfront rather than having a consecutive process where you are 
asking them questions or sending them requests for information 
and then providing it----
    Mr. Webster. That is what I heard, there is like this back 
and forth that seems unending.
    Mr. Porcari. We are not interested in turning this into the 
consultants full employment act. What we would like to do is 
make it both a responsive and responsible process.
    Mr. Webster. Thank you. Yield back.
    Mr. Shuster. Thank the gentleman.
    And the gentleman from Minnesota is recognized for 5 
minutes, Mr. Walz.
    Mr. Walz. Thank you, Mr. Chairman.
    And thank you, Mr. Porcari, for being here.
    I represent a small city of about 110,000 people in 
southern Minnesota. It also happens to be the world's premier 
medical destination, Rochester, Minnesota, and the Mayo Clinic. 
They have 2.75 million visitors a year, generating $10 billion 
of economic activity. They employ 40,000 people, which is more 
than Chrysler's entire workforce in the United States. They are 
fed by two highways that are at one point within 20 miles of 
the city two lanes that are on there. That is the situation. 
There has been a concerted effort of local, State, private 
partners to build intercity rail to obviously the destination 
of the Twin Cities and the airport, where the bulk of those 
2.75 million people fly into. My question as we go forward on 
this, and I often hear it appears like when we talk about these 
things that some of my colleagues believe our best days are 
behind us. We have economic engines that are outpacing anything 
in the world. We have innovation that is out-innovating anybody 
else in the world. What is holding us back is an outdated, 
outmoded transportation system that is going to take creative 
thinking. My question to you is, and I hear it, is, how does a 
city of 110,000 compete with a Miami, a Los Angeles, a Denver, 
the Eastern corridor here? How do we make those investments 
there, where I can guarantee you your return on the dollar is 
going to be higher than any place else you get? How do the 
programs, and I am glad to see the budget sets aside money, but 
how do regional planning authorities compete with the 
metropolitan planning authorities? And how are you envisioning 
that to make sure that multimodal intercity rail transport is 
available to the people in southern Minnesota?
    Mr. Porcari. Excellent question, Mr. Walz. First of all, 
the clinic is a great example of an anchor institution that is 
a major employment node that our transportation system, whether 
you are talking about highway or rail or aviation for that 
matter, really hasn't kept up with. And transportation is 
economic development. At the end of the day, this country was 
built on tough investment decisions in transportation 
infrastructure that our parents and grandparents and great 
grandparents made. And I think what you are pointing out is, as 
new employment nodes emerge, we have an obligation to serve 
them as well. I am familiar with the discussion about passenger 
rail service to the facility. It is a great example of what may 
be an emerging node that would later be part of a larger 
regional and national connection. And I mentioned city pairs is 
one way that it works. Major employment nodes is another. We 
don't see this as a zero sum game in the sense that with 
adequate baseline funding, there are emerging rail markets all 
over America that really can be served and can be served very 
well. And for families, for patients, for others that want 
transportation choices and don't want to have to drive, it 
would give them those choices. So we see that as a great 
example of how an intercity passenger rail program that 
operates on various levels, regional, local, and true high-
speed----
    Mr. Walz. How do we get away from the chicken and the egg 
scenario that our local private partners are waiting for the 
commitment and the investment, and then we keep hearing we need 
to see that local commitment going? How do we get started and 
break this logjam? Because the Chamber is all in. Labor is all 
in. I mean people are all in on this thing. But we are caught 
in this dilemma that, well, how do we know the Federal 
Government is going to be there to do it? This is the case of 
you can take your ideology and throw it out the window on this 
one. This is going to be a public-private partnership. Without 
the Federal Government and the State government, it won't 
happen. Without the private sector, it won't happen. How do we 
get there? What is the catalyst?
    Mr. Porcari. Well, we will be happy to be the convening 
group for that. But as you point out, that is a very likely 
candidate for a public-private partnership, where there are 
private investment opportunities, private redevelopment value 
capture opportunities. It will take some substantial level of 
public investment, most likely at both the State and Federal 
level, to make that happen. So if you think about three 
parties, private sector, State, and Federal, it will likely 
take all three of those parties for that service.
    Mr. Walz. I look forward to working with you. I think it is 
an incredible opportunity to make it happen. Thank you.
    Mr. Shuster. Thank the gentleman.
    Mr. Hanna is it recognized for 5 minutes.
    Mr. Hanna. Thank you, Mr. Chairman.
    You said that you believe in RRIF loans. You think it is a 
good process for the most part, problematic in many ways. And 
you have identified ways that you think it should be changed. 
Things go concurrently, not consecutively. But yet in your 2014 
budget, you have made no changes in the process. Perhaps that 
is not a relevant way to go about it. But specifically, what 
would you do differently than you are doing? Because there is 
no indication that there are any changes being made.
    Mr. Porcari. Some of the same principles and practices that 
we have applied to the President's dashboard process--if you 
are familiar with that, we have taken Projects of National and 
Regional Significance and greatly reduced the timeframe, in 
some cases from a 5-year environmental document to 14 months, 
for example.
    The principles are things like concurrency. You don't need 
to do everything consecutively. If you can chart it out and do 
the processes concurrently----
    Mr. Hanna. Right. But you have not made any changes in the 
program, but you intend to make changes in the program, or you 
just think that it is something you can do with the process?
    Mr. Porcari. The program is a work in process. And I would 
point out one other part, that I don't think we have done the 
job we need to do with the RRIF program, and that is reaching 
out to potential users of it. You know, we talk to the railroad 
industry, and we talk to railroad users. That is fine. But 
State and local economic development officials are actually the 
ones that could probably best use it. It has been a little bit 
of an eye opener to see that, for the most part, they don't 
even know about the program.
    Mr. Hanna. Let me ask you about another point that Chairman 
Shuster brought up, and that is the elasticity of demand for 
the product that you provide through, for example, Amtrak. And 
you indicated you weren't aware of when they go back and check 
demand versus pricing and how that is all done. But--and I 
think there is wide agreement here that the public has a large 
role to play in financing these things that are generally a 
public good and couldn't survive without public money. 
Everybody gets that.
    But how, on the other hand, can you justify additional 
public money without constantly looking at the demand-supply 
equation that exists out there? And clearly, there is--demand 
and supply are mismatched here, since we know that ridership is 
increasing, and yet it would seem as though that we are not 
getting the advantage of the elasticity of demand, which allows 
the individual using the service to pay more and I would argue 
a fairer share of the benefit.
    Mr. Porcari. Mr. Hanna, I would be happy to get the 
committee specific information on how and how frequently and by 
what process Amtrak evaluates their fares. I can tell you as a 
frequent Amtrak user, it seems to me that they are taking 
advantage of pricing opportunities wherever possible.
    Mr. Hanna. But yet you don't know when they do it or----
    Mr. Porcari. I don't offhand, but we would be happy to get 
that information for you.
    Mr. Hanna. Thank you very much. I yield back.
    Mr. Denham [presiding]. Thank you. Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman.
    You know I ride the Northeast Corridor just about every 
week. And the other day we had a bunch--a group of Members ride 
the corridor. And they pointed out to us some of the areas that 
we could work on to make it faster. But one of the things that 
I thought of as we were speaking is we are going to be making 
hundreds of millions of dollars of investment to save 4 minutes 
or 5 minutes on some of these turns. It just seems to me that 
it is very difficult to make a decision to spend that kind of 
money to save 4 or 5 minutes. Yet, you know we keep growing.
    I know I have been involved with light rail and so forth in 
many areas for many years. People don't want an increase in 
trains going by in their tracks, because people have moved in. 
Some of the old track, you cannot activate the abandoned 
tracks. So I don't know what you are going to do by the year 
2050 to move all of these people, the 100 million people and 
the freight and everything else, because it seems the 
communities are part of the problem. And obviously, in our 
area, as being so congested, the investment to save 3 or 4 
minutes is very hard because I can see some of the other 
Members saying, why should they spend $300 million to save 4 
minutes? And I understand it.
    And my friend from Maine he wants to take away the bridge 
in New Jersey, which has 260,000 people work because of those 
ports that come through there because of the ships.
    So I don't know how you are going to do this. And we are 
not making an investment. The President makes--he creates the 
transportation trust fund, and it seems like it is a one-shot 
deal. There is no real long-term vision for this. So, you know, 
I don't want to be in your shoes in 2050.
    Mr. Porcari. A couple of things, if I may. One, time 
savings is important. And you generally shave off a couple of 
minutes at a time. It is not a quantum leap.
    But what you get with that is even more important, which is 
first of all reliability and on-time performance, which in turn 
drives more ridership. And you also tend to get new capacity as 
part of that, too. So while the attention may be on the time 
savings, it is at reliability in terms of on-time performance 
and the capacity that is the big payoff.
    I would also point out in your Northeast Corridor example, 
the Northeast Corridor commission, which is the State DOTs and 
the other stakeholders, there is a long-term master plan 
process going on right now looking at that very issue of 
greatly increased capacity, how you get down to the specifics 
of providing that capacity, and it is a very collaborative 
effort of all the participating States.
    So while we have one eye on today and on-time performance 
and maintaining the system that we have, we are also paying 
attention to the future knowing that these major investment 
decisions sometimes take decades to do, and we need to tee 
those up and make sure they are appropriately scrutinized.
    Mr. Sires. Do you look at abandoned lines in terms of maybe 
it is easier to go activate the abandoned lines of trains, 
tracks?
    Mr. Porcari. Using the Northeast Corridor as an example, 
there are no abandoned lines that I am aware of that would have 
adequate capacity, that don't have at-grade crossings, that 
wouldn't be going through established residential neighborhoods 
or some kind of fatal flaw.
    There are opportunities for both passenger and freight rail 
and abandoned crossings. Many of them that have been converted 
to trails, for example, can support both rails-to-trails and 
rail service. But for the kind of capacity you are talking 
about for mainline service, I am not aware of any right-of-way 
that is magically out there.
    Mr. Sires. OK. Thank you very much.
    Mr. Denham. Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman.
    And Mr. Secretary, thank you for being here with us and the 
job that you do. Let me just ask you this. There seems to be 
pretty widespread agreement that the RRIF loan process is too 
cumbersome, too bureaucratic. And I wasn't here for most of 
your testimony, but I think I heard you say that you agree that 
it needs to be improved, speed it up, whatever.
    I notice that there are only seven RRIF loans that have 
been made since 2010, and how many applications are pending? 
Maybe you testified to that already.
    Mr. Porcari. I have not; it is a good question, Mr. Duncan. 
There are eight applications pending, ranging from the high end 
of about $3 billion to about $4.5 million. So kind of running 
the spectrum of different projects.
    Beyond that, we know that there is interest in additional 
projects as well, ranging from very small ones like a potential 
port project to much larger ones. So while there are these 
eight under review right now, there are other potential ones as 
well.
    We do agree that this is the one program where we have more 
official capacity than applications and it is a little bit 
frustrating for all of us that we know that we could be out 
there building more infrastructure.
    Mr. Duncan. Let me ask you this. I noticed that of those 
seven loans since 2010, they totaled a little over $800 million 
and that two-thirds of it, $563 million I think went to Amtrak. 
And I am told that the current Amtrak subsidy this year is 
about $1.4 billion and that that is a little less than half of 
the total operation. Is that roughly accurate?
    Mr. Porcari. I would have to go back and check that.
    Mr. Duncan. And I also am told that Amtrak does get some 
subsidies, although much smaller, but some from various State 
governments. Would you happen to know how much they get from 
the various States?
    Mr. Porcari. The States for rail service provided in the 
States are paying Amtrak. There are standalone separate deals 
for those. One of the provisions of the PRIIA legislation was 
actually to rationalize those and have the States pay a 
proportionate share. Under that, some States will be paying 
more than they are now; some States will remain relatively the 
same.
    But, yes, there are multiple examples where States are 
paying for service, and that service would not be there without 
the State support.
    Mr. Duncan. Apparently, there is a private-sector group, 
the Florida East Coast Rail Group, that sees some real 
opportunities or possibilities for the route from Orlando to 
Miami. And many years ago, when Graham Claytor headed Amtrak, 
he told me that they had a study at that point that if they 
were able to add another route, that the next their most 
preferred route that they thought would be the most used would 
be from Harrisburg, Pennsylvania, down through Washington, 
Baltimore, Roanoke and all down through my hometown of 
Knoxville into Atlanta.
    Have there been any studies or any updates or have you 
just--in recent years as to what lines might show some 
potential if Amtrak could get some assistance from the various 
State governments and so forth?
    Mr. Porcari. Yes, one of the things that high-speed rail 
funding over the last few years has funded has actually been 
corridor studies and corridor environmental work. So extensions 
of existing corridors, for example Richmond to Charlotte being 
one example, but other corridors as well. Using Atlanta as kind 
of a hub, there is a lot of interest and activity and some 
level of planning taking place on larger connecting corridors 
in and through Atlanta.
    Mr. Duncan. Before my time runs out, you said there is no 
segment of the transportation world that operates on its own, 
yet the story--the difference between Amtrak and the story of 
freight rail is dramatically different. And freight rail, for 
instance, they have told us that they have spent $25.5 billion 
just last year alone updating their own--privately updating 
their own infrastructure. What subsidies do you consider that 
freight rail is receiving at this time?
    Mr. Porcari. First, freight rail has been a great success 
and great example of private investment. And as I mentioned, I 
think that our private freight rail system is the envy of the 
world. Some of the public investments in it, recently through 
TIGER grants for example, have been co-funding the National 
Gateway Project with CSX that cuts through--goes through five 
or six States. I mentioned Tower 55 as an example in Texas. 
Colton Crossing in California. Those are just a couple of 
public investments where national bottlenecks would not have 
been eliminated without both private and public funding.
    Mr. Duncan. All right. Thank you very much.
    Mr. Denham. Thank you.
    Ms. Esty.
    Ms. Esty. Thank you, Mr. Chairman.
    Thank you for holding this very important hearing.
    Thank you, Deputy Secretary Porcari. I appreciate your 
testimony. Before I get to my questions, I want to just flag 
for subcommittee members something that is happening in 
Connecticut where these issues are tremendously important. And 
the State of Connecticut has launched a Web site called 
Transform Connecticut, and it is accessible to all users. I 
have gone on it. We are getting wonderful suggestions from all 
sorts of members of the public, stakeholders, and it is an easy 
access portal and something that we might want to look at more 
broadly in our--as we do this planning and innovation for 
improved passenger rail service.
    Last week I had the opportunity to meet with the 
Connecticut Metro-North Commuter Council, which has been very 
useful in doing surveys of users and giving us input which I 
will certainly send along to you.
    We all know that there is crying need and demand for this 
service. The question is, how are we going to pay for it? And I 
support the concept of innovative financing. I am a fan of and 
cosponsor of the infrastructure bank, but we need to figure out 
how to make this actually happen.
    In Connecticut, as we know, we had quite recently a 
derailment that shut down the entire system. And I would like 
to point out that over the last 10 years, Connecticut has 
invested $3.2 billion in this line, because Connecticut owns 
this portion of the line, not Amtrak. But our Transportation 
Commissioner Jim Redeker, who is also the current chair of the 
Northeast Corridor Commission, estimates an additional $4.5 
billion is needed to improve just our State's portion of that 
line to bring it to a good state of repair.
    I want to thank you, Commissioner--Deputy Secretary, for 
announcing last fall the $120 million high-speed rail portion. 
But, unfortunately, our chairman was stranded on that portion 
and saw how much that is in need of still being upgraded as he 
was stranded about a month ago on that line. I have to tell 
you, however, that our are State folks from DOT say they still 
do not have approval to spend those funds. It is my 
understanding that they are trying to coordinate and take three 
different grants and combine them into a single project. When 
can we anticipate receiving approval?
    Mr. Porcari. First, Governor Malloy and Commissioner 
Redeker have been great partners in this, and we appreciate the 
vision that Connecticut has as part of a larger system.
    We cannot simply take three grants and combine them. If you 
are familiar with grant procedures and the audit requirements, 
while projects can dovetail with each other, we need, from an 
accounting point of view, to separate the grants and keep them 
separate. We have been very scrupulous and careful in doing 
that.
    We do think--Connecticut is probably a good example of a 
State where a higher level of interaction and perhaps some 
training and maybe even shared services or loaned personnel 
would probably benefit that process.
    Ms. Esty. Well, that leads to my next question. Our State 
folks are pointing out that the Northeast is the only region 
with FRA does not have a PMO overseeing these projects, and our 
State staff is worried about their capacity to do this 
oversight. And I think you just flagged that as part of the 
issue. What sort of support might be available for States like 
mine for project management and oversight to help us in this 
process?
    Mr. Porcari. To be honest about it, the project management 
oversight capacity of the Federal Railroad Administration is 
strained right now. It is a program that we take very 
seriously. We have tried to work closely with Connecticut on 
the implementation of these grants. But given the financial 
pressures, including sequester, on our FRA staff, we need to 
husband those resources pretty carefully.
    I don't want to make a promise that we may not be able to 
fulfill. What I will commit to is, I will talk to Commissioner 
Redeker and explore ways that we can make this work faster. I 
know the will is there is both sides, and these are not will 
always easy projects. But we need to get them done and on time 
and on budget.
    Ms. Esty. I appreciate that. Given the large amount of 
upfront capital that is needed for these rail and 
infrastructure projects, can you project for us what a 
percentage of the financing that we should expect from the 
private sector if we are going to have a successful innovative 
project, what would that look like in your mind?
    Mr. Porcari. I can't give you a set percentage. It 
certainly varies from project to project. For example, projects 
that have good station development and redevelopment 
possibilities would typically have a much higher percentage of 
private investment. If there are other uses of the right-of-way 
along the route, that too would tend to drive more private 
investment.
    So it is so project specific that I really can't give you a 
percentage. But I will tell you we are highly incentivized to 
maximize the private interest and investment in projects. First 
of all, it is a good sign that it is a healthy project. But 
beyond that, it helps us deliver a better project that serves 
the public better.
    Ms. Esty. Thank you very much.
    Mr. Denham. Thank you, Mr. Porcari.
    That wraps up our first panel.
    Mr. Porcari. Thank you, Mr. Chairman.
    Mr. Denham. Mr. Mica I think has one final question.
    Mr. Mica. Good try. Good try. So many questions; so little 
time.
    Welcome back, Mr. Secretary. And I enjoyed our working 
relationship. We have had some great successes. I would have 
actually spoken for you to be Secretary, but I thought it would 
have hurt your chances. I guess it didn't work out either way. 
Maybe I should have spoken against you. I will have to 
reconsider. But we look forward to having a new Secretary and 
new leadership.
    First of all, the productivity of the RRIF process, I heard 
Ms. Napolitano talk about 33 months. You said you had eight--
let's see, you have eight pending applications?
    Mr. Porcari. Yes.
    Mr. Mica. How many people work there at RRIF? Five, I am 
told? Five, six? Half a dozen?
    Mr. Porcari. Approximately that.
    Mr. Mica. Three quarters of a million dollars a year 
expenditure in processing? In 2012, they did two loans; in 
2011, three loans; 2010, two loans; 2009, three loans. It 
doesn't sound like a very productive shop. And eight pending?
    Mr. Porcari. In addition to the pending loans, I would 
point out that an important part of the workload is the 
previously approved RRIF loans, where in some cases, we have 
had to rework and refinance.
    Mr. Mica. If this was the private sector, you would be out 
of a job in an hour. You ought to look at the private sector 
maybe processing some of these. This is unbelievable. When she 
told me 33 months on that loan, it is just not very productive. 
And then Mr. Duncan pointed out--what did you say at the 
beginning? You had 29 loans, 29 RRIF loans you spoke to in your 
opening statement?
    Mr. Porcari. Yes, I believe.
    Mr. Mica. In what period? Well, I have got back a decade 
about 30. So it doesn't sound, again, like a very productive 
shop. It took 60 loans just to get to the amount of the one 
Amtrak loan, the $562 million. And I am not sure that I would 
have loaned them any money. Was that for equipment?
    Mr. Porcari. It was for equipment----
    Mr. Mica. Did you check their past history of buying 
equipment? Their Acela trains? That they misdesigned them? And 
then they had their tilt trains to go faster.
    Mr. Porcari. I am very familiar with that.
    Mr. Mica. They improperly designed them. I am sure you 
corrected that. Because if they went too fast, they would hit 
the other trains, so they put metal wedges in. So we now have 
trains that now work. Is this, I hope, a better purchase?
    Mr. Porcari. Mr. Mica, I am sure you would be pleased to 
know that the operating profit on the Northeast Corridor made 
for actually a very solid RRIF loan for the locomotives.
    Mr. Mica. Just for the record, too, I want to put in the 
list of FRA Administrators that doesn't quite equal the number 
of RRIF loans, but they did for about two RRIF loans per FRA 
Administrator. A question was asked of a witness of a previous 
panel for that.
    So, Mr. Chairman, I would like that made part of the 
record. And also the record of not processing loans and the 
inactivity of the RRIF process.
    Mr. Nadler. Would the gentleman yield for a question?
    Mr. Mica. Not right now, but if he gives me time at the 
end, I will go into that.
    The other thing, too, we are talking about financing. When 
is the administration--when are we prepared to open up the 
Amtrak monopoly on passenger rail service and let the private 
sector compete in some of these routes? Are you ready?
    Mr. Porcari. We have not, to my knowledge, seen any 
specific proposals for that corridor.
    Mr. Mica. Well, first of all, folks came in at the high-
speed rail time. They wanted to do the Northeast Corridor. They 
were summarily rejected with their proposals, and I would be 
glad to give you folks--the Northeast Corridor, this Member 
here from Connecticut--it is an embarrassment; 68 miles an hour 
from New York to Boston. The chairman who just left--he didn't 
want any mud splattered on him today--he just told me he was 
stuck an hour and a half going up to Connecticut to visit John 
Larson. Here is one I got: 261 passengers Sunday were delayed 
14 hours. This is 14 hours trying to get from New York to 
Richmond. It took them almost a half a day to get there.
    I mean, this just the other day. I am telling you, we have 
a Soviet style train operation. The private sector will invest 
if they are given some incentive. That incentive is a return on 
their investment, and you are not prepared to do that. The 
long-distance services are a joke. Here is the long-distance 
services. These are the money losers. This is what Amtrak is 
involved in; right?
    Mr. Porcari. Are there specific cross-country routes that 
you would propose to eliminate?
    Mr. Mica. Pardon?
    Mr. Porcari. Are there specific cross-country routes that 
you would propose to eliminate?
    Mr. Mica. First of all to get the private sector to compete 
for them, and I would look at redoing the schedules. They don't 
have to fly like planes every day. Airlines adjust their 
schedule. Amtrak can't. They bring in a conclave of chefs to 
cook up a more expensive menu to lose more money on their food 
service, which is mostly on the long-distance services.
    The top three all increased their losses in the last year, 
including in addition to that, autotrain to Florida, which 
serves my district. But they are all big money losers. When the 
private sector comes in, they can make money. If you work with 
them and give their some incentives and they have an 
opportunity to return. But the Soviet style thinking and 
operation of Amtrak prohibits us from moving forward into the 
21st century.
    Some of the others went over. Can I get a minute of grace? 
Just one more question. We worked very carefully together, and 
he did a great job--I will give him a compliment--the biggest 
carrier of people in the United States is not airlines and 
certainly not passenger rails. It is private passenger bus 
service, intercity, mostly. They run about 750 million people a 
year.
    After much work Secretary Porcari did, the private carriers 
located at Union Station over there on the second floor all co-
located. So the Greyhound riders and other people didn't have 
to meet in Chinatown or some place else. They could have an 
intermodal connection to the facilities. They were not second-
class citizens. We need to get people to use public transport 
if it connects.
    I heard from folks from Birmingham that they are building 
an intermodal facility there. I would like you to check and see 
it if there are Federal funds going into that, because they are 
excluding the private carriers. The private carriers are our 
biggest carrier. They make money. They pay taxes, and they move 
more people than any other mode. They are good citizens, and 
they shouldn't be denied access to a Federal facility, whether 
it is in Orlando--we have an issue there--Birmingham or any 
other city; right? Right? My question was: Right?
    Mr. Porcari. I missed the question--the lead up to the 
question. I will being happy to answer any specific question.
    Mr. Mica. I thought it was fairly simple. You have an 
intermodal facility. Private carriers should be able to 
access----
    Mr. Porcari. I will be happy to look at the Birmingham 
facility. I am not familiar----
    Mr. Mica. Shouldn't that be a Federal policy?
    Mr. Porcari. I don't know. I would be happy----
    Mr. Mica. You don't know? They are paying taxes. They are 
making money. They are providing the biggest connection of 
transportation for passengers in the United States, and you 
don't know whether we should let them in a Federal facility?
    Mr. Porcari. What I am saying is I am not familiar with the 
Birmingham facility, and I would like to actually know the 
circumstances before I answer. I just don't know.
    Mr. Denham. We look forward to getting that information.
    Mr. Nadler.
    Mr. Nadler. Thank you. I just had a follow up to some of 
the comments by our distinguished former chairman. Number one, 
on the private sector taking over the long-range routes, isn't 
it a fact that Amtrak has those routes because the private 
railroads all gave them up because they were losing money on 
them hand over fist?
    Mr. Porcari. Yes.
    Mr. Nadler. And I am not aware of any company that thinks 
they could make money running those long-range routes. Maybe on 
the Northeast Corridor, but certainly on some of these long-
range routes there is much smaller ridership.
    The second thing I wanted to ask you is, we talked about on 
the Northeast Corridor the average speed between Boston and New 
York is 68 miles an hour, which is a lot less than between New 
York and Washington. But isn't one the reasons for that that in 
a large portion of the route from New York to Boston, the track 
is owned by Metro-North, that is a commuter railroad, and the 
Amtrak train has to chug along behind a slower commuter rail 
because of the ownership priorities?
    Mr. Porcari. That is true.
    Mr. Nadler. So, aside from building a new line or maybe 
expropriating it from the commuter railroad, is there anything 
we can do about it that?
    Mr. Porcari. The basic answer is no. What we can do is make 
infrastructure instruments to maximize the capacity that is out 
there.
    Mr. Nadler. Adding an additional line in effect. Thank you.
    Mr. Mica. Will the gentleman yield?
    Mr. Nadler. Sure.
    Mr. Mica. Well, again, I think when we took over passenger 
rail service in 1971, there was a need for it. We have also 
taken over freight, and they have done fairly well with the 
private sector. I think some of these routes do need to be 
opened, if the administration was willing or Congress was 
willing, to give some private opportunity for private-sector 
competition. And you have to look at the schedule of service. 
You know, you don't want them just to cherry pick. We would 
have to look at the subsidization, look at what it is costing 
us now. I think that would be a fair route. I would be willing 
to work with the gentleman on something like that.
    But the Northeast Corridor, and I never did get to this, 
has incredible potential. In a report that was handed out to 
the committee--did you see this, Jerry? They give back about 
$94 million. Well, that is overall in revenue from real estate. 
I am told--I had some private-sector folks look at this and the 
value of your real estate, you should be getting about a 
billion dollars a year return, a billion dollars. That is what 
they are leaving on the table. That could finance a lot of 
improvements in the Northeast Corridor. That is one of the most 
incredibly valuable assets in the United States of America. I 
would be willing to work with the gentleman----
    Mr. Nadler. That we ought to look at. And I would be 
interested to know where that revenue would come from.
    Mr. Mica. From the utilization of the right-of-way. They 
get $24 million from the utilization of the right-of-way. That 
is peanuts. If I had a trillion-dollar asset and I was getting 
$24 million return, I should be put in the nuthouse.
    Mr. Nadler. Mr. Mica, we should certainly look at that in 
the Northeast Corridor and anywhere else where it is doable. 
But I was just expressing my doubt that on most of these long-
range routes, you have a potential or that any private company 
could make a go of it. The Northeast Corridor is quite 
different. And there may be some other corridors.
    Mr. Mica. The Northeast Corridor, too--if the gentleman 
would yield--you could take an operation like the route in 
England that Branson picked up. It went from $300 million a 
year Federal UK subsidy to a $100 million profit plus paying 
dividends to investors. The ridership went from 14 million to 
28 million on that one north-south route. That is almost equal 
to the entire ridership of Amtrak last year, which it is about 
31 million. Are you aware of that?
    Mr. Nadler. Yes.
    Mr. Mica. Thank you.
    Mr. Denham. Seeing all debate has ceased, Mr. Porcari, I 
just wanted to clarify one final point before we go to the 
second panel. It is true that Amtrak has above the rail on the 
Northeast Corridor profitability of around above $300 million.
    Mr. Porcari. Right.
    Mr. Denham. Isn't it also true that over 95 percent of the 
Northeast Corridor or Amtrak-owned infrastructure 95 percent is 
on the Northeast Corridor.
    Mr. Porcari. That is about right.
    Mr. Denham. It is also possible, we could use that above 
the rail profit as a dedicated funding source for the Northeast 
Corridor?
    Mr. Porcari. Yes, Mr. Chairman, it would cover a portion of 
the needs.
    Mr. Denham. And as we look across the Nation, other 
opportunities, we would be looking at intercity rail, we would 
be looking at passenger rail, and in some areas, even high-
speed rail, where you have significant profits that would 
guarantee a return for the investor to be able to pay back 
those loans.
    Mr. Porcari. Over the long term, there is a likelihood that 
other corridors would have the kind of ridership that would 
generate that operating profit. You would be building up that 
ridership over a substantial period of time.
    Mr. Denham. In an area where you have--I will use my area, 
for example--proven ridership, where we have above-the-rail 
profitability on the ACE train in the Altamont corridor, if 
they were going to expand and have dedicated track, they could 
actually apply for a RRIF loan utilizing that above-the-rail 
profit as security for----
    Mr. Porcari. That is right. And if the independent 
financial advisor believed it made business sense, that would 
be a good RRIF loan.
    Mr. Denham. Thank you. Well, we appreciate your testimony.
    Mr. Mica. Mr. Chairman, just one thing on that. That is 
above the rail, but the record should reflect also I believe 
that most of the $1.4 billion does go to the Northeast 
Corridor. The $562 million RRIF loan also went to the Northeast 
Corridor equipment. So there has to be some calculation of the 
math and what is in the rail in addition to what is above the 
rail.
    Mr. Denham. Thank you. We thank you for your testimony here 
today.
    Mr. Porcari. Thank you, Mr. Chairman.
    Mr. Denham. At this time, we will go to our second panel. I 
would like to welcome our second panel, Ms. Beverley Swaim-
Staley, president and chief executive officer of the Union 
Station Redevelopment Corporation; Mr. Frank Chechile, CEO, 
Parallel Infrastructure; and Mr. John Robert Smith, former 
mayor of Meridian, Mississippi, and president and CEO of 
Reconnecting America.
    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 a part of the 
record, the subcommittee would request that you limit your oral 
testimony to 5 minutes.
    Ms. Swaim-Staley, you may proceed.

  TESTIMONY OF BEVERLEY K. SWAIM-STALEY, PRESIDENT AND CHIEF 
  EXECUTIVE OFFICER, UNION STATION REDEVELOPMENT CORPORATION; 
       FRANK CHECHILE, CHIEF EXECUTIVE OFFICER, PARALLEL 
INFRASTRUCTURE; AND JOHN ROBERT SMITH, COCHAIR, TRANSPORTATION 
      FOR AMERICA; PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
RECONNECTING AMERICA; AND FORMER MAYOR OF MERIDIAN, MISSISSIPPI

    Ms. Swaim-Staley. Mr. Chairman, I appreciate the 
opportunity to be here this morning. My name is Beverley Swaim-
Staley, and I am the new president and CEO of Union Station 
Redevelopment Corporation, or USRC. Union Station, of course, 
was its own public-private partnership when it was redeveloped 
back in the 1980s. Congress passed a law and requested that the 
Secretary of Transportation in 1983 establish USRC to manage 
Washington's Union Station through the redevelopment in such a 
manner that would protect the historic character of the 
building, maintain it as an intermodal transportation facility, 
and permit it to operate as a commercial entity without subsidy 
from the Federal Government.
    So I have had the privilege of being the president and CEO 
for just 10 months, but I have been asked to be here talk about 
my experience in Maryland where I served as the CFO and deputy 
secretary and secretary of transportation for the past 3 years. 
I had the pleasure there of doing some innovative financing 
projects, and I will share a few of my observations with you 
here today.
    One of our projects you may be familiar with. It is a 
highway built very close to here, the Intercounty Connector in 
Montgomery County. It was one of the most expensive and largest 
highway projects built in the last 5 years, and it was an 
innovative financing project. We used seven different sources 
of funding for that project. Three financial tools that were 
available to us from the Federal Government and four different 
State tools that were available to us at the time. That project 
has been completed and is underway.
    We had two other very large projects that we needed to 
fund. One was at the Port of Baltimore. The port, obviously, is 
a major economic engine in the State of Maryland. We needed to 
rehabilitate our container terminal in order to be able to 
handle the larger ships that would be available as a result of 
the Panama Canal expansion. We did not have the money to do 
that. So we entered into a public-private partnership 3 years 
ago with Highstar Capital and Ports America. We leased the port 
for 50 years. They not only came in and within about 2\1/2\ 
years were able to rehabilitate the port, bring in the 
additional cranes. They are now open and operating 2 years 
ahead of the schedule.
    A second innovative financing project that I had the 
privilege of executing was with regard to travel facilities 
that were on I-95 in the northern part of Maryland. Those 
facilities also were a major economic generator to the State of 
Maryland, but they were over 40 to 50 years old and in bad need 
of repair. What we were able to do was lease those to a private 
entity for 35 years, and they came in and were willing to 
invest and are currently investing over $200 million to 
rehabilitate those facilities. So, with those two projects 
together, we were able to bring in almost $2.5 billion of 
private investment, long-term investment into the State of 
Maryland.
    So those were some of the examples that I am familiar with 
in terms of what we can do through innovative financing. The 
observations that I learned as a result of that that I would 
like to share with the committee today. First, every project is 
different. There is no one-size-fits-all approach. Each project 
must be custom fit based upon the financing components of the 
projects and the benefits to the users.
    Second, all the financing, public or private, must have a 
creditworthy repayment stream. There is no free money. The 
money must be paid back. The private investor, as it has been 
mentioned several times here today, also expects a return on 
their investment.
    Third, funding is the final solution. Before the financial 
equation can be solved, you have really have to know what the 
parameters are of the project. The first two questions to be 
answered are: Is the project viable from an engineering and 
constructability standpoint, and is there someone that wants 
the project badly enough to pay for the benefits?
    Fourth, define the elements of the project for which there 
is a direct connection between benefits and cost. For example, 
in private, in many transit-oriented elements, you start with 
the parking garage as the first vehicle for financing.
    And fifth, can the revenues and benefits from single assets 
such as a parking garage be leveraged to finance all or other 
portions of the project?
    I guess I will have the opportunity to learn from these 
experiences hopefully in my new position as the president and 
CEO of Union Station. As I am sure you are aware, we are about 
to embark on another redevelopment of the station. That station 
has functioned very successfully through the past 30 years, but 
we are currently at capacity. We service not only Amtrak but 
commuter rail and also the largest subway in the system.
    So we are undertaking right now the latest in the master 
plan redevelopment. And as I just said, the first thing we need 
to do before looking at financing there will be looking at 
exactly what the project is. But we will be looking at all the 
tools in the toolbox, many of which have been mentioned here 
today. Not only the Federal and State funding. We have many 
partners, but obviously value capture, tax increment financing, 
and whatever vehicles are available to us at that time.
    I thank you for the opportunity to testify, and I invite 
you to visit Union Station and hear more about our plans.
    Mr. Denham. Thank you.
    Mr. Chechile.
    Mr. Chechile. Good afternoon and thank you for this 
opportunity.
    Chairman Denham, Mr. Nadler, and members of the 
subcommittee, I appreciate the opportunity to participate in 
this hearing, and I am pleased to share with you a private 
industry perspective on innovative financing approaches that 
can benefit the passenger rail industry.
    My name is Frank Chechile, I am the chief executive officer 
of Parallel Infrastructure, which is an asset development and 
right-of-way management firm based in Jacksonville, Florida, 
and I am pleased to note the home city of our distinguished 
ranking member, Congresswoman Brown, who I understand can't be 
here this afternoon.
    Parallel Infrastructure is a wholly owned subsidiary of 
Florida East Coast Industries and together with our sister 
company, Florida East Coast Railway, our heritage was 
established more than 100 years ago by Mr. Henry Flagler.
    Although operated independently from one another, our 
companies are all focused on creating value from transportation 
opportunities, including associated real estate and right-of-
ways. Together, we want to maximize the value of our own 351-
mile rail corridor, which traverses through areas whose total 
population is just under 9 million people and stretches from 
Jacksonville to Miami and connects to three major seaports.
    I believe that the lessons we have learned can be employed 
to provide a new source of financing for intercity passenger 
rail systems in our country. Parallel Infrastructure was 
established just 2 years ago and has quickly become a national 
player. By entering into innovative revenue-share agreements 
with right-of-way property owners, we help to monetize their 
underutilized real estate without interrupting their core 
operations. The result is increased revenue for a right-of-way 
property owner with little to no risk. In collaboration with 
our clients, and using our own capital, we take the lead in 
proactively leasing right-of-way land, deploying communications 
facilities, creating energy distribution systems, such as 
pipelines, and building advertising, parking, and storage 
structures.
    In our short history, we have established asset development 
agreements with 28 freight railroads managing more than 5,000 
leasing contracts over roughly 1,800 miles of railway.
    Our business model is straightforward. We provide both the 
capital and resources to develop revenue-generating assets on a 
right-of-way property and share returns with the property 
owner. This frees the property owner to use their capital and 
the new revenue streams that we generate to improve their 
infrastructure. With more than 1 million miles of 
transportation corridors in the United States, the opportunity 
to earn revenues from this right-of-way real estate is 
significant. For example, assuming earnings of just $1,000 per 
mile from the activities I have described, a million miles of 
corridor would generate a billion dollars. While that number 
may sound ambitious, I will tell you that our own 351-mile 
corridor is generating about $50,000 per mile.
    Proactive and aggressive right-of-way management, whether 
in the public or private sector, maximizes the value earned 
from real estate assets, provides additional recurring revenues 
for the owner, and allows an owner to access new capital by 
collateralizing predictable revenue streams.
    For example, if a transit agency generates $10 million of 
annual revenue from their right-of-way, it can easily use that 
as collateral to secure $100 million in capital through 
financing transactions. So by unlocking the value of 
underutilized real estate and using a third party's capital, an 
agency is in position to leverage annuities to take on new 
projects.
    Another benefit of these types of arrangements is for 
landowners to obtain access to these new assets to fill their 
own operating needs. For instance, Parallel Infrastructure 
recently leased space in our corridor to a leading 
telecommunications company who is building an advanced network 
for its own customers. Through our arrangement, our All Aboard 
Florida and Florida East Coast Railway sister companies can 
also access these assets for their own needs, such as 
deployment of positive train control and offering uninterrupted 
WiFi service to the passengers of our All Aboard Florida 
intercity rail service.
    These examples--using existing assets to generate new 
sources of revenue--are one innovative way to finance passenger 
rail in the United States. When you look at intercity passenger 
rail systems, even in the well-utilized Northeast Corridor, 
Amtrak's passenger revenue and congressional subsidies combined 
do not adequately meet operating and capital expenditure 
requirements within the corridor. Amtrak's own estimates state 
that it will take up to 15 years to bring the Northeast 
Corridor to a state of good repair even if they received all 
their requested annual funding from Congress.
    I believe that innovative private-sector partnerships can 
close the funding gap and help shorten this timeframe. The 2008 
PRIIA Act sought to enhance the relationship between the States 
and Amtrak. PRIIA's successor should seek to strengthen those 
provisions and provide incentives that take advantage of 
private-sector expertise, where appropriate, particularly if 
they generate dependable revenue streams.
    By aggressively monetizing ancillary assets through 
proactive right-of-way management and asset development, 
intercity passenger systems will be financially stronger, more 
viable, and better positioned to leverage steady revenue 
streams, revive dormant assets, and ultimately thrive in ways 
that have not been accomplished in the last 50 years.
    I want to thank you for the opportunity to speak with you 
today, and I will be delighted to answer any questions or 
address any comments you may have.
    Mr. Denham. Thank you.
    Mr. Smith.
    Mr. Smith. Chairman Denham, Congressman Nadler and 
especially the two young folks that have joined us here at the 
podium, I served as the Republican mayor of my home town of 
Meridian, Mississippi, for 16 years and served as chairman of 
the board of Amtrak. I want to thank you for giving me the 
opportunity to share our thoughts about a subject that has 
occupied a good bit of my adult life, and that is how we take 
transportation systems--passenger rail in particular--and 
leverage the economic impact to our hometowns, whether they are 
large metropolitan areas or small urban places in rural 
America.
    I think that conversations should be framed by three 
guiding principles. The first of those is that a national 
passenger rail system provides significant economic value. When 
we talk about a National Highway System or a National Aviation 
System, we speak in terms of the economic development impact 
that comes to the cities and regions that they serve. We should 
use the same lens when we look at a national passenger rail 
system.
    More and more, people are using passenger rail to be 
connected to jobs, to health care, to education, and to 
tourism, which is the second or third largest industry in most 
States. Passenger rail connects senior citizens and college 
students alike. I have a letter from the president of Grinnell 
College in Iowa. He states that lacking the passenger rail 
connection to Chicago greatly hampers the growth and 
recruitment of that college and indeed the entire region.
    I have a letter from the mayors from New Orleans to 
Tallahassee, Florida, seeking restoration of the passenger rail 
service they lost due to Katrina. They believe that the right 
passenger rail service along that corridor promises great 
economic impact to that growing, developing, thriving linear 
region along the southern gulf.
    They recognize that the value is being part of a national 
system. That is why you see exciting projects like Union 
Station here in DC. It is not just Northeast Corridor trains 
that stop there. It is long-distance trains. It is corridor and 
State-supported trains as well. And when you cut service, you 
undermine the value of the entire system. When you expand 
service, you grow the value of the entire system. That value is 
sustained by investments in service and infrastructure to 
achieve a state of good repair. When infrastructure of 
passenger rail is not in a state of good repair, private-sector 
dollars remain on the sidelines.
    That brings me to my second point. If you want a national 
passenger rail system in a state of good repair, you must have 
dedicated stable Federal funding. Rail is part of an intermodal 
network of roads, bridges, transit, aviation and rail. None of 
those modes cover their costs, and at full allocation, they all 
lose money. But all of those modes receive dedicated stable 
Federal support except for passenger rail. And that makes it 
nigh to impossible for the operator, in this case Amtrak, to 
make the long-term investment decisions it needs when it 
doesn't know it will be funded from one year to the next at any 
level. That level of future funding uncertainty means that the 
private sector will not be there at the table. So the dedicated 
stable Federal funding of passenger rail is a first step 
towards the innovative funding that you seek.
    The third point is that investment in passenger rail 
stations and the property around them is ripe for innovative 
financing, and brings value to the entire rail system. I see it 
all over the country. Mayors who are Republican and Democrat 
are working with the private sector to invest in those rail 
stations and the surrounding property.
    We did that in my hometown of Meridian, Mississippi, 20 
years ago, when we built the South's first multimodal 
transportation center. The city invested $1 million, which 
leveraged an additional $5 million in Federal, State and 
private-sector investment. That project has leveraged today 
$135 million of additional public/private-sector investment 
within 3 blocks of that facility.
    And it is not just happening in Meridian, Mississippi. It 
is happening in Normal, Illinois. It is happening in Lincoln, 
Nebraska, and in San Bernardino, California, and in Memphis, 
Tennessee.
    I agree with members of this committee that the cumbersome 
RRIF loan program--from which the Florida East Coast Railway 
has submitted a request for a loan--must be retooled. If only 5 
percent of the $35 billion of RRIF loan funds available has 
been accessed, it tells me it is entirely too complicated for 
the private sector to use.
    TIFIA can be altered as well to bring in more private-
sector dollars. So innovative financing is an important piece, 
but it supplements, it does not supplant dedicated, stable 
Federal funding. That is why I will provide a letter signed by 
mayors from all over the United States to this committee 
seeking a commitment to dedicated Federal funding to support a 
national passenger rail system. They understand the economic 
development that commitment of this committee and Congress 
would bring. And with your commitment, the private-sector 
dollars will follow your lead. Thank you.
    Mr. Denham. Thank you. We look forward to seeing that 
letter.
    First, Mr. Chechile, in 2012, Amtrak generated about $30 
million in revenue from right-of-way-related activities. In 
your view, how does that compare to your experience in right-
of-way management around the entire country? And additionally, 
what additional revenue potential do you see, if any, for 
Amtrak?
    Mr. Chechile. That is a great question. Thank you. I think 
the best data point I could offer is that in our own corridor 
in Florida, we are generating approximately $50,000 per mile, 
which is very likely the best metric to use for evaluating how 
effective an organization is in its returns from real estate. 
That corridor goes through a population that totals roughly 9 
million people. If we took that $50,000 number and applied it 
against Amtrak's more than 500 miles of corridor and made some 
adjustment for population--the population through which the 
Amtrak corridor traverses is four to five times the size of the 
population that our corridor traverses in Florida--you arrive 
at a value, just using a two to three times multiple instead of 
a four to five times multiple for the population, of roughly 
$50 million to $100 million as opposed to the $20 million or 
$30 million they are currently generating.
    Mr. Denham. And what type of right-of-way-related 
activities would you foresee?
    Mr. Chechile. Well, the activities that typically take 
place in a right-of-way are somewhat standard. And in fact, 
they oftentimes are already occurring. And indeed, the fact 
that Amtrak generates the revenues that it does is certainly 
admirable and a demonstration of the fact that the 
opportunities are already there. The opportunities are varied. 
And sometimes they are just using the real estate and leasing 
that space to adjacent landowners. But where the value really 
exists, and where the benefit of the private sector I think is 
greatest, is if there is the actual creation of assets, which 
in turn generate even greater returns.
    So, for instance, the installation of telecommunications 
facilities, be they fiber optic conduits or cellular towers, or 
be they storage structures, car parking facilities, things that 
oftentimes are already present along the corridor but are not 
proactively pursued. Crossings in the corridor. Again, very 
likely do exist in the Amtrak corridor, are not likely 
proactively pursued. Pipelines are another popular 
infrastructure asset that you find deployed in a right-of-way 
corridor. And these are examples that we have in our own 
corridor in Florida. These are examples of opportunities we are 
working with other right-of-way clients around the country, and 
I think examples that all railroads already have in place.
    And again, the distinction really is about effectiveness 
and whether the organization itself sees the real estate as 
that asset and proactively works to seek a return from it or 
instead is just reactive to any inquiry they receive and defers 
to--defers its use to the rail operations exclusively.
    Mr. Denham. Thank you.
    And Ms. Swaim-Staley, you know, these rail stations often 
become the focal point of a community. Great opportunities for 
private real estate development. How can Union Station and 
other stations around the country utilize private investment in 
expanding, redeveloping?
    Ms. Swaim-Staley. Well, as I said, with regard to Union 
Station, we have not yet gotten to the stage, but certainly the 
first thing that you look at are the elements within the 
station development. So, for example, parking garages, whether 
it is at airports or any other facilities. And many transit-
oriented development around the country, it is the first thing 
you look at because it is a great opportunity to not only pay 
for the parking garage, but to flex those dollars to use for 
greater, larger portions of the development. So you look at 
each and every activity that you have within a station. So, as 
I mentioned, at Union Station in particular, we have, as has 
already been referenced, we are the intermodal bus facility. We 
are the largest subway station. We also have the commuter rail. 
We have actually more commuter rail passengers than we have 
Amtrak passengers coming into the station. We have partnerships 
with Maryland, Virginia, and the District. We have two private 
developers that are involved, one which purchased the air 
rights and a second one running the current station. So we will 
be working with all of our partners, both public and private, 
to determine what both financing tools are out there that are 
available, what opportunities, as I said, we have to leverage 
from the additional economic benefit that we are going to 
generate. I am sure we are going to be looking at value 
capture, tax increment financing with our partners, really the 
broad spectrum of the tools. And depending upon what is really 
available at the time, whether TIFIA, you know, is still out 
there, if RRIF is still out there, we would probably be looking 
into whether those worked for our purposes or not as well.
    So it is really about figuring out what elements you have 
within the project, what opportunities you can leverage, what 
elements would the private sector be interested in investing? 
Typically, in parking garages, things where there is going to 
be an immediate return, they will be very interested. In other 
places, you may have to rely more on public financing because 
you are not generating a benefit that is as attractive to the 
private sector.
    Mr. Denham. Thank you. And specifically for Union Station, 
Amtrak is looking at $8 billion. Do you have specific financing 
that you are looking at for Union Station?
    Ms. Swaim-Staley. Well, Amtrak announced their plan. That 
was for their portion of the plan. But as I said, the Union 
Station redevelopment would also then include development 
around the station; the air rights developer is also looking at 
financing. And at this point, we are trying to take the vision 
that was articulated that you are familiar with and really 
determine exactly what a revitalized Union Station would look 
like, what the components would be, where they would be within 
the air rights development and the other new development and 
the Amtrak redevelopment that is taking place. So we are not 
yet looking at the financing piece.
    Mr. Denham. Thank you.
    Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman.
    Mr. Chechile, in your testimony, you mentioned you were 
selected by Allegheny County to build facilities on county 
property, which you will lease and then share revenue earned 
from the facilities with the county. This will create a long-
term revenue stream for the county and for your company. Is 
this relationship typical when you work with the public sector 
to leverage railroad right-of-way?
    Mr. Chechile. It is. In fact, some of the arrangements that 
we have with railroads are actually with public authority 
right-of-way owners. So that arrangement, although with 
Allegheny County, it relates specifically to real estate 
parcels; there are similar arrangements that we have with 
authorities.
    Mr. Nadler. OK. Let me ask you the following question. So a 
railroad owns right-of-way. Let's assume that it decides that a 
good use of that right-of-way for ancillary revenue would be a 
telecommunications line, fiber optic. Why would it contract 
with a company like yours? Why would it not go directly to 
Verizon or AT&T or Sprint or whoever and have them make a deal 
with them? In other words, how does a company like yours fit 
into it?
    Mr. Chechile. Understood. A very good question. And in fact 
very likely much of the revenue, if not all of the revenue----
    Mr. Nadler. I can't hear you, sir.
    Mr. Chechile. I would say that in fact all--much, if not 
all of the revenue Amtrak derives today are very likely from 
the arrangement that your example cites, where it is between 
Amtrak and potentially an infrastructure provider. I think 
where our arrangement is different is that firms like that are 
typically looking for a way of deploying their assets in a 
right-of-way that allow them to serve their customers. And 
oftentimes they find that right-of-way owners are difficult to 
do business with. Our heritage with respect to working with 
railroads means that we have an understanding of how to, A, 
make those connections, and then B, willing to invest our own 
capital.
    Mr. Nadler. So you would be hired initially by AT&T and not 
by the railroad?
    Mr. Chechile. If we are the ones building an asset, then we 
in turn would be the one leasing the asset.
    Mr. Nadler. No, no, no. But I am saying it wouldn't be the 
railroad that would go to you; it would be the guy who wants to 
use--the company who wants to use the right-of-way?
    Mr. Chechile. The people--the way the commercial 
arrangement would work and has worked, for instance, with 
Allegheny County and others, is we sign an agreement to build 
the assets, the communications facilities in particular, and 
then it is our responsibility to go out and to identify tenants 
for those facilities. And we share the revenue.
    Mr. Nadler. You sign the original agreement with the 
railroad, not with AT&T.
    Mr. Chechile. Our agreement is with the railroad to share 
the revenues that we earn.
    Mr. Nadler. OK. Now, you said $50,000 a mile, or maybe $50 
million to $100 million. For what length of track did you say?
    Mr. Chechile. We are earning $50,000 per mile along our 
350-mile corridor. Amtrak has approximately 525 miles of 
corridor.
    Mr. Nadler. OK. So it would be $50 million to a $100 
million dollars over that.
    Mr. Chechile. That itself is $25 million. And then making 
some adjustment for four to five times the population count, 
which should imply----
    Mr. Nadler. OK. I thought I heard a few minutes ago someone 
estimate that that right-of-way in the Northeast Corridor could 
be worth a billion dollars.
    Mr. Mica. A trillion.
    Mr. Nadler. A trillion dollars. Is that realistic?
    Mr. Chechile. I am speaking specifically to the right-of-
way. And I think the Amtrak system includes many more real 
estate assets than just the right-of-way. So with respect to--
--
    Mr. Nadler. OK. So we are talking about apples and oranges.
    Mr. Chechile. I am talking about specifically the dirt the 
track runs along as opposed to maybe the stations and other 
opportunities.
    Mr. Nadler. OK. Let me ask you a different question. Thank 
you. In your testimony, you state that the time is now for the 
public sector to take the step towards actively managing rights 
of way by leveraging the private sector's experience and 
capital. Is there any way that the public sector can leverage 
railroad right-of-way to generate revenue without hiring an 
intermediary firm? And I suppose your answer would be, from 
what you said before, if it is dealing with a very large vendor 
like AT&T or somebody, but not otherwise.
    Mr. Chechile. I think there is a difference in terms of 
effectiveness. So theoretically what can be achieved by a 
right-of-way owner on its own would be the same. In practice, 
our experience has shown that that is not the case.
    Mr. Nadler. OK. Thank you.
    Ms. Swaim-Staley, in order to attract private support for 
the public-private partnerships that you talked about, how 
important is it to have strong political and financial backing 
for the project at the Federal and State level?
    Ms. Swaim-Staley. Well, it is obviously very important to 
have support from not only Federal and State, but your local, 
and in station redevelopment the neighborhoods as well, and the 
political support from all.
    Mr. Nadler. Thank you.
    My last question. Mr. Smith, you mentioned that a national 
passenger rail system has significant economic value, and that 
if any set of connections is eliminated, that is through 
reductions in service, the value to the entire network is 
diminished. That was your statement. Can you talk about why 
long-distance service is important and what it contributes to 
the economy? And what do you think will happen to the service 
if States are forced to pick up the tab for them? And do it in 
the context, please, of my understanding, or if I am wrong, 
please, tell me so in your opinion, that it is very rare for 
someone to take a long-distance route from let's say Chicago to 
L.A. by rail, but that the intermediate steps are what is 
really important, to go from Chicago to this place or from this 
place to that place is why you need those routes.
    Mr. Smith. You are exactly right, Congressman.
    Mr. Denham. Mr. Smith, I will give you 30 seconds.
    Mr. Smith. If you were to fly from one point to the other, 
you would not have those mid-point connections. When I take the 
Crescent home from DC to Meridian, there are segments that are 
joined together that make one continuous route. People can be 
on and off, and access it from State to State or city to city. 
So that is what you are talking about, linking those pairs of 
cities through a corridor that serves a region of the country 
that wouldn't be served otherwise.
    Mr. Nadler. That is economically important because?
    Mr. Smith. That is economically important because where 
that train stops in those cities is the opportunity for 
investment and leveraging that station and the property around 
it. You can see it up and down long-distance train routes and 
other passenger rail service all over this country.
    Mr. Nadler. Thank you. My time has expired.
    Mr. Denham. Mr. Mica.
    Mr. Mica. Thank you, Mr. Chairman.
    Mr. Smith, are you aware of what the Federal debt is 
approaching, what figure?
    Mr. Smith. I couldn't give you a specific number.
    Mr. Mica. More than $16 trillion, heading towards $17 
trillion. Would you say that is about right?
    Mr. Smith. If you say so, sir.
    Mr. Mica. I say so, and that is the fact. And right now, 
with deficit spending under this administration, we have been 
borrowing about 40 cents on every dollar that we are spending. 
That is the way we are financing things right now. Are you 
aware of that?
    Mr. Smith. Yes, sir, we are financing lots of choices with 
that.
    Mr. Mica. For example, I had a mother contact me, and they 
are cutting out hot meals, I guess warm breakfasts for our 
troops that are serving overseas. Were you aware of that 
cutback?
    Mr. Smith. No, sir. My focus is transportation.
    Mr. Mica. Yeah. And have you heard about the chef conclave 
to cook up new exotic dishes on the Amtrak money losing routes?
    Mr. Smith. I actually ride those trains, and the dishes are 
not exotic aboard that service. And I think that ignores the 
larger issue.
    Mr. Mica. Are you aware the Crescent, we lost $48 million, 
which we had to borrow?
    Mr. Smith. Yes, sir. But ridership is up on all of those 
long-distance routes.
    Mr. Mica. All the top three, it is actually down, and the 
losses have actually increased. So $40 million. And I have to 
make choices here, is it hot meals for my service or a gourmet 
meal?
    Now particularly--now let me ask you about your little memo 
that you sent to my mayor and other folks as a former mayor. 
You sent this to my mayor: House of Representatives is slashing 
Amtrak's funding, putting the future of national rail system in 
jeopardy. I think we went from $1.4 billion to $950 million. 
And that is going to put us in jeopardy? This is your----
    Mr. Smith. Yes, sir, it is. That is my statement.
    Mr. Mica. Did you coordinate this with anybody at Amtrak?
    Mr. Smith. No, sir.
    Mr. Mica. No one? You didn't talk to anyone?
    Mr. Smith. No, sir. That is our letter. I lived it and 
breathed it.
    Mr. Mica. That is your letter as former chairman. And you 
basically said that our passenger rail is under threat. Don't 
you think the United States is under threat when you are in 
debt up to your eyeballs, when you are borrowing 40 cents on a 
dollar to underwrite your service? You are aware that every 
ticket on Amtrak last year was underwritten more than $40 per 
passenger ticket. You are aware of that?
    Mr. Smith. I am aware that Amtrak is recovering 88 cents on 
every dollar.
    Mr. Mica. But you are aware that we subsidized every ticket 
on Amtrak over $40. And including these long-distance tickets, 
some of them more than $400? And we can't cut back, sir?
    Mr. Smith. We subsidize, or invest, depending on the verb 
you want to choose, in every transportation system--if I may 
answer.
    Mr. Mica. Go ahead.
    Mr. Smith. Every transportation system in this country, 
whether that is highway, aviation, transit, or rail. That is a 
fact. There is no passenger rail system in the world that pays 
for itself out of the fare box.
    Mr. Mica. That is not true. That is not true.
    Mr. Smith. No, sir, that is true.
    Mr. Mica. That is not true. Again, I beg to differ with 
you, and I can cite you examples. I just cited one line that 
has more passengers with a bigger return than Amtrak has. It 
has doubled the passenger ridership in the last 10 years, and 
actually gone from a deficit, one line, of $300 million to $100 
million in profit.
    Mr. Smith. That example ignores the capital costs.
    Mr. Mica. That is not true. Don't tell me that. Please, 
don't tell me that, because I have been there, looked at it, 
met with the people. They put 5 billion pounds--$10 billion in 
private money into the route. They will put money into a route, 
the Northeast Corridor, if they get a return and a piece of the 
action. If Amtrak continues its Soviet-style operations, 
whether it is to Meridian, Mississippi, or to New York, Boston, 
and Washington, you will continue to lose money. Are you aware 
how much Amtrak loses in food service?
    Mr. Smith. Not at the current moment.
    Mr. Mica. Well, you know, it is going to approach, the last 
12 years, a billion dollars. Did you know, a billion dollars in 
losses on food service? Last year, according to testimony, we 
had the guy sitting in the chair next to you a few weeks ago, 
it was $72 million lost last year. And I think they cooked the 
books on that. So you don't think we should cut back, that I 
should make the choices and have my--go back and tell that 
mother, you know, we need to put this money into Amtrak. We 
can't take any cuts out of Amtrak. Can you name any positions 
they have eliminated or anything they have done to cut back in 
Amtrak?
    Mr. Smith. That is a false choice, Congressman.
    Mr. Mica. Oh, it is not a false choice. These are choices I 
have to make. And I am not happy about Amtrak's performance. 
And I am not happy about your communication to my mayor. Thank 
you.
    I yield back.
    Mr. Smith. Thankfully, as a former mayor, I still have the 
ability to contact my colleagues across the Nation, and most 
respond and respond favorably because they live in the same 
environment that I lived in for 16 years.
    And I would just say on the subject of the long-distance 
trains, when my Senator, Trent Lott, got to see the 
Mississippians who use that system and saw it as vitally 
important to them, the retired couples who use that system to 
visit their dispersed families across the country, the single 
mothers with children, for whom the only way they could get to 
visit their grandparents affordably was through the use of that 
train, the disabled vets that were onboard that train, when he 
got to see the Mississippians impacted and affected he 
understood the importance of that train and that service.
    Mr. Denham. Thank you, Mr. Smith.
    And let me thank each of you for your testimony today.
    If there are no further questions, I ask unanimous consent 
that the record of today's hearing remain open until such time 
as our witnesses have provided answers to any questions that 
have been submitted to them in writing, and unanimous consent 
that the record remain open for 15 days for any additional 
comments and information submitted by Members or witnesses to 
be included in the record of today's hearing.
    Without objection, so ordered.
    I would like to thank our witnesses again for their 
testimony today. If no Members have anything to add, the 
subcommittee stands adjourned.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]
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