The Senate Commerce Committee's Surface Transportation and Merchant Marine Subcommittee will hold a hearing on Thursday, April 21, 2005, at 9:30 a.m. on the Reauthorization of Amtrak in room 253 of the Russell Building. Click here for video of this hearing. Witnesses will are as follows:
U.S. Senator Ted Stevens
Full Committee Chairman Ted Stevens
Q&A at Amtrak Subcommittee Hearing
April 21, 2005
Chairman Stevens: Mr. Mead, I note that Amtrak is carrying a $3.2 billion debt and the interest rate is about 10 percent. Mr. Mead: A part of the sir, it is 9.8 percent, they mortgaged Penn Station a few years ago to some French – Credit Lyonnais, I think – and… Chairman Stevens: Did you ever make the recommendation that it be made tax free? Let them issue tax-free bonds? Mr. Mead: No, we didn’t make that recommendation, but we did recommend that, we are recommending that the reauthorization have the Treasury discharge that debt because you’re paying it anyway, you’re paying it at a higher interest rate. So, why not just, if you’re going to pay it anyway you might as well pay it at a cheaper interest rate. Chairman Stevens: It might encourage them to enter more debt if we made it part of the… Mr. Mead: Now, the second thing I would do Mr. Stevens, is freeze their ability to borrow. Their freedom to borrow is what got us into this hole. So, that’s the second thing I would do. Chairman Stevens: For the Amtrak people, you know when the Alaska Railroad got into trouble, we finally worked out an arrangement that our State bought the Alaska Railroad and now we have sort of a partnership as the President mentioned in connection with this issue when he sent up his recommendation. Have you looked at that proposal? Why shouldn’t each of these states buy a piece of this railroad and let us work together. Our State covers basically the operating expenses and the Federal government assists us in capital investment. What is the model for you all? Mr. Gunn: The problem, Senator, is that the Alaska Railroad is an intra-state operation and with Amtrak, the bulk of our service is interstate and some of our trains go through eight or nine states. Chairman Stevens: They all suffer when it fails, doesn’t it? Mr. Gunn: Yes, but I think you get into the situation where everybody will hold their money in reserve until their faced with a crisis and by that time its too late. I think Alaska was very wise in what they did. And, even in the Northeast Corridor, which is where we own track and run the whole thing, we still go through eight states. It is very difficult. Chairman Stevens: Have you suggested a model where there would be some kind of sharing? Why shouldn’t the states be part of this? Mr. Gunn: Well, actually, in the board package we do, the reform package that Amtrak’s put forward, the goal is to get the states to move to a situation where the states pay the operating deficits, similar to the Alaska situation, for their corridor services. That is what we are proposing. But, to do that, you have to have the partnership, which the Alaska Railroad has on capital. Chairman Stevens: Is the Amtrak Board representative of the states that really have the major part of the riders of Amtrak? Mr. Laney: Senator, I’m the Chairman of the Board and am delighted you joined us because we’ll want to visit with you further about what’s going on in Alaska. It’s a model that we’ve looked at carefully and that we’re going to look at a lot more carefully and it makes a lot of sense to the extent we can adapt elements of what’s being done in Alaska to what we’re doing. We have four members of the board and I think they represent a variety of states depending on where they live during the year, from the kind of states that have only long-distance service, the states that are centered right in the middle of the group of states that enjoy the benefits of the Northeast Corridor. So, I think we’re fairly well represented, as well as, as you know, one member of the board is Secretary Mineta and he has designated Mr. Rosen as his representative on the Board. So, we’ve got the Department of Transportation and its perspective brought to bear with all our discussions and thinking and planning as well. So, it’s a broad representation. Chairman Stevens: Well, have you engaged the states, you know, the Governors and their staffs in conversations in how to save this railroad? Mr. Laney: Yes sir, we have in a number of different ways and they’ve made it very clear, virtually all states that enjoy one benefit or the other from Amtrak, that they are very interested in being heard and we made it equally clear that we are very interested in hearing from them. They’ve already contributed a lot to what you see in our proposal with respect to long-distance and corridor service. Chairman Stevens: How important is long-distance service as compared to the commuter service in this train? Mr. Laney: I don’t know that I could compare the two. They’re apples and oranges, but both are essential elements, we believe to the future of inter-city passenger rail. Chairman Stevens: Well, when I came to the Senate, those of us in the West who came to the Senate went home many times by rail. We find it very much more convenient and less expensive than travel by air. I really don’t understand the necessity for long distance, federally supported trains. Tell me, why is there a necessity for these long distance trains going West? Mr. Gunn: I’ll take a crack at that, if I may. I think if you look at the ridership on the long-distance trains, we’ve got a report that details each of the trains, which you’re welcome to see, you’ll see that the ridership on the bulk of these trains or the bulk of the ridership on these trains is not endpoint to endpoint. If you take the Empire Builder, for example, that Senator Dorgan was talking about, that train serves a lot of areas that have no other options, probably a lot like the Alaska Railroad in the north. So people will ride from Minneapolis to Rugby or Minneapolis to Haver or Shelby and these trains, and they’re busy, the trains are not empty. They actually carry a lot of people and on a number of these trains you’re providing services where there is no good option for the people. I would submit that if you actually rode, we’ll deal with the Empire Builder as we’re talking about it, you’d be surprised at the on and off through all of these towns that we go through. Most of the towns are two hours apart, but it’s a busy train and it provides, I think an essential service to those communities. Chairman Stevens: Respectfully, I don’t think that answers the long-distance thing, but my time is up. I hope you’ve all read that delightful new book, the Christmas Train. If you haven’t it would be worthwhile. Mr. Mead: I have some numbers here that respond to the question you’ve asked. There’s about 4 million riders on the long-distance train that you referred to. Chairman Stevens: Annually? Mr. Mead: That’s an annual figure for ’04, four million. Chairman Stevens: Are they going the long-distance or are they just riding a part way on the long-distance? Mr. Mead: I’m coming to that. Senator Sununu: Four million riders, you mean four million embarkments. Mr. Mead: I’m going to answer, I know the question and if you let me get out the number – there were four million total riders for 2004 that got on a long-distance train. Of that number, only 527,000 went from beginning to the end. Also, there were 400,000 that went between city pairs, where you already have Amtrak corridor service on another train. That left three million riders and our analysis shows that those three million people rode, between 500 miles and 700 miles, and that’s how it broke down. And there’s a total ridership of… Chairman Stevens: How many 500 miles? Mr. Mead: Three million went from between 500 and 700 miles. Chairman Stevens: Has that changed since 9-11? Mr. Mead: I don’t know sir. Mr. Rosen: I don’t think so. Subcommittee Chairman Lott: Mr. Rosen, do you… Mr. Rosen: It’s basically unchanged since 9-11, if anything a slight decline. Subcommittee Chairman Lott: Well, we’ll continue for another round. Thank you very much, Mr. Chairman.
The Honorable Trent Lott
This morning the Subcommittee on Surface Transportation and Merchant Marine will be receiving testimony on the policy issues surrounding the reauthorization of Amtrak. As Chairman of this Subcommittee, enacting legislation to reform Amtrak is one of my top priorities for this session of Congress. I am willing to work hard on developing consensus, bi-partisan legislation, but only if the legislation truly improves things. Ten years ago, when I also served as Chairman of the Surface Transportation subcommittee, I helped write the legislation which eventually became the Amtrak Reform Act of 1997. Unfortunately, many of the Act’s provisions intended to improve Amtrak’s performance were never used. Despite assurances from Amtrak management that the railroad was on a “glide path to self-sufficiency”, Amtrak still requires large Federal operating subsidies. One of my goals for today’s hearing is to determine what went wrong with the 1997 legislation so we don’t repeat these mistakes this year. The President proposed zero funding for Amtrak – not to kill it, but to send Congress a wake-up call that the time to reform Amtrak is now. That wake-up call has been heard loud and clear in Congress. Last week the Administration resubmitted its legislative proposal for reforming Amtrak. It is quite a radical proposal and I am sure that it will provoke some good discussion today. The Amtrak Board and David Gunn, the Amtrak President and CEO, have put together a Strategic Reform Initiative including some legislative proposals. We will also hear from the Department of Transportation’s Inspector General who has worked on these Amtrak issues for many years both at the Department of Transportation and at the General Accounting Office. I look forward to hearing from the witnesses.
Witness Panel 1
The Honorable Jeffrey L. RosenGeneral CounselU.S. Department of Transportation
Mr. David GunnPresident and CEONational Railroad Passenger Corporation -- Amtrak
Please see Mr. Laney's testimony above.
The Honorable Kenneth MeadInspector GeneralU.S. Department of Transportation
Mr. David M. Laney, Esq.Chairman of the BoardNational Railroad Passenger Corporation -- Amtrak