Majority Statement

• Thomas Carper

  Senator
  Read statement

  Majority Statement

  Thomas Carper

  I’d like to thank Sen. Lautenberg and Sen. Lott for working with other Amtrak supporters to put this legislation together and get it moving so early in the 110th Congress.

  The lack of authorizing language governing Amtrak since 2002 has lead to sporadic, uncoordinated and often contradictory actions by the Administration, the Amtrak Board of Directors and Congress.

   

  This has included calls for reform through bankruptcy as well as various kinds of authorizing language attached to recent spending bills.

   

  It is clearly time to pass a new reauthorization bill and set out a comprehensive, steady policy for Amtrak.  And the bill we are discussing today is an excellent one – one that received the support of 93 members of the Senate last Congress.

   

  The most important thing in the Passenger Rail Investment and Improvement Act to me – a former governor – is the attempt to create a national rail policy that allows governors to make transportation decisions for their states based on the state’s transportation needs, rather than one that focuses on which mode of transportation is more highly subsidized by the federal government. 

   

  I also am eager to see the Northeast Corridor brought up to a state of good repair as well as similar corridor investment in other areas of the country.

   

  Again, I thank our chairman for putting a high priority on moving this important legislation quickly.  I look forward to getting this bill to the floor – and maybe even increasing our margin of victory by a vote or two.

   

• Frank R. Lautenberg

  Senator
  Read statement

  Majority Statement

  Frank R. Lautenberg

  “Let me welcome everyone to today’s hearing as we begin to fundamentally change the way America travels.

   

  Let me also thank our witnesses, some of whom come from states that are already embracing this change.  We welcome their input and ideas.

   

  Today’s hearing is about Senator Lott’s and my vision for our nation’s transportation system—a system with more options and convenience for travelers, less damage to our environment and less dependence on foreign oil. 

   

  Along with air and vehicle travel, passenger rail should be one of the three legs on which our transportation network rests.  And Amtrak should be among the great passenger rail systems in the world.

   

  The Passenger Rail Investment and Improvement Act of 2007 can help turn that vision into a reality.

   

  And as any traveler will tell you, we need to implement that vision—because strengthening this intercity travel option is long overdue.

   

  Our highways are jammed with cars.  The average New Jerseyan spends three hundred hours commuting by car every year—and fifteen percent of that time is wasted, sitting in traffic.

   

  And we know our skies are becoming jammed as more planes take to the air. 

   

  Last year was the worst year for flight delays since 2000.  One in four planes was late.  And we expect nearly five thousand new very light jets to add to this traffic over the next ten years.

   

  Between lines of cars on the highways and long security lines at the airports, America’s travelers need and deserve another choice.  And a world-class passenger rail system is it.

   

  Disasters such as September 11^th and Hurricanes Katrina and Rita also showed that America needs passenger rail. 

   

  When air travel was cancelled on 9/11, people rode the rails.  And when roads became lakes during Katrina and Rita, people could have turned to trains to evacuate some of our most vulnerable, and to move supplies.

   

  And Amtrak’s record ridership—nearly twenty-five million passengers last year—proves that Americans want passenger rail.

   

  Our bill will lay the tracks for a strong passenger rail network—one that will bring more balance to our national transportation system.

   

  Our bill will invest twenty billion dollars in America’s passenger rail system over the next six years, combined with a bond proposal that Senator Lott and I hope the Finance Committee will act on this year.

   

  It will fully fund Amtrak and allow it to upgrade its equipment, improve its security and return the Northeast Corridor to a state of good repair. 

   

  And it will create a new intercity rail grant program to build passenger lines between more of our country’s towns and cities.

   

  Just this year, the federal government will spend more than thirty-nine billion dollars on roads and more than fifteen billion dollars on airports—yet little more than one billion dollars on rail.

   

  It’s time for America to get on board with passenger rail transportation.”

   

                                                                                  ###

Opening Remarks

• The Honorable Edward G. Rendell

  Governor of Pennsylvania

  Co-Chair, Building America's Future
  Read statement

  Opening Remarks

  The Honorable Edward G. Rendell

  Statement of Governor Edward G. Rendell

   

  Subcommittee on Surface Transportation

  and Merchant Marine Infrastructure, Safety and Security

   

  February 27, 2007

   

   

   

   

  Good morning.  First I would like to thank you Senator Lautenberg for your longstanding commitment to transportation policy and transportation funding.  We need more voices like yours in Washington.  And  I applaud the leadership provided by many others on this issue as well; in particular the dedication Senator Lott has shown to Amtrak over the years.  And many others have contributed as well – Senator Smith, Senator Carper, of course my friend Senator Specter.  And we will all get a lot of help from Pennsylvania’s newest Senator, Bob Casey.  All of your dedication to supporting Amtrak across party lines has helped this issue remain bipartisan and the country is the better for it.  

   

  Our particular focus today of course is Amtrak.  The Northeast Corridor (NEC) is a vital link for the economy of Philadelphia and all of southeastern Pennsylvania, and it is crucial that federal support for this service and the people who provide it continues.  I am not telling you anything you don’t already know but I will say it nonetheless: it is vital that Amtrak funding be re-authorized without any interruption.  Too many people’s lives and livelihoods depend on it.

   

  One illustration of the importance of the Northeast Corridor to our regional economy comes from the our own local CEO Council, which is made up of over 60 CEOs of major corporations in the Philadelphia region.  These CEOs have made preserving and improving intercity and commuter service on the NEC one of their top priorities and they hope to work with business groups throughout the Northeast to ensure that Congress takes action to address the infrastructure needs on the NEC.  I hope that they can help educate critics within the Bush Administration about the importance business leaders place in fast and reliable rail service.

   

  While bringing the NEC back to a state of good repair is critical, I hope that we can also seek to move to the next level and address trip time and capacity issues as well.

   

  The NEC is the most advanced corridor in the nation, but there are many other corridors that hold great potential to be a relevant transportation alternative if only Congress would provide the same federal capital matching funds for intercity passenger rail that it does for other modes of transportation.

   

  The Keystone Corridor between Philadelphia and Harrisburg is a great example of what a federal-state partnership can accomplish.  Under the administration of my predecessor Governor Ridge – a Republican, I might add, in case anyone has forgotten – the Commonwealth of Pennsylvania and Amtrak entered into a partnership to invest in a major upgrade to this line to make it more reliable, faster and more attractive.  During my administration there was some question as to whether Amtrak would keep its end of the bargain due to its dire financial condition, but we worked with David Gunn to renew the partnership and finish the job.

   

  Altogether we each put in $74 million.  The result is substantially quicker trip times and big increases in ridership; the new service has been fully implemented in just the last few months and already we have seen a jump in ridership of 12 percent.  And I might add that the users of the service are paying a share as well – fares went up as the new service was implemented but this has had no effect that we can see on usage. 

   

  The moral of the story here is simple – people want better servive and within reason they’re willing to pay for it.  This is true for state government and it is true for riders.  But by themselves neither of these groups can bring about the improvements in service they so badly want.  Amtrak and the federal government have to take the lead or it will not happen. 

   

  There are other similar corridors with great potential in many other states: California, Washington, Oregon, Illinois, Wisconsin, Virginia and Maine and many more.  Many of these states have been putting money into these corridors on their own, but the progress they can make is limited without a reliable federal partner.

   

  Unfortunately, Amtrak's current policy threatens to take corridors in exactly the wrong direction.  Rather than promote and encourage these corridors, Amtrak is asking states to pay a higher share of current operating expenses.  I and many of my fellow Governors are willing to have a conversation about paying more to get better service, but asking the states to pay more just so the Federal government can avoid its responsibility to support a first class transportation system is just wrong.  

   

  This is what our former Secretary of Transportation Norm Mineta famously labeled “the shift and the shaft.”  Originally the states were told that we would be asked to pay higher operating expenses only in conjunction with a federal capital matching program, and in Pennsylvania we agreed to do so.  Investments were made in some corridors, but overall the much anticipated federal capital matching program was never created.  And yet Amtrak has continued to ask states with emerging corridors to increase their share of the costs.

   

  For my part, I see this debate over Amtrak as just one piece of the larger challenge that faces us on transportation and infrastructure overall.  In all of the areas that matter so much to our future – intercity rail, public transit, roads and bridges, clean water, aviation, you name it – the federal government pays for long term capital investments in infrastructure out of annual operating funds.  In some cases -- for example, the Highway Trust Fund – we have managed to create a dedicated fund, but even here our level of spending in any given year is dependent on how much comes in.  For Amtrak and other areas needing investment we don’t even have that, and investment levels are completely unpredictable from one year to the next.  This is no way to run a railroad.

   

  More to the point, it’s not how the private sector actually runs railroads, and for good reason.  Outside the federal government, most big companies and governments that have large capital investment programs finance capital and operations differently.  Operating costs are paid from operating revenues as they come it, and capital costs are paid for through borrowing, with the term of the borrowing matched to the likely useful life of the asset being built or purchased.  You wouldn’t buy a house with cash and we shouldn’t buy our bridges that way either.  This is a basic principle of finance called capital budgeting that everyone seems to have figured out but us. 

   

  Adoption of a capital budget allows those who manage the system to make long term capital plans and invest in their facilities at the time when the investment makes the most sense.  In practical terms this means we repair or replace an asset when it makes sense to do so from a life-cycle cost point of view, rather than when the cash flow looks good.  This is exactly how we financed our share of the Philadelphia-to-Harrisburg improvements I mentioned a moment ago, and as a result the investment happened on the front end even though the easiest way for us to pay for it is a little bit every year over time.  Which is just how we are experiencing the benefits of the project.  At its core, capital budgeting aligns costs with benefits over time, and it is a basic practice of good business.

   

  I believe it will be very hard for us to really fix Amtrak’s financial mess or make the investments we need to into roads and bridges, wastewater and other infrastructure systems until the federal government adopts a capital budget. 

   

  Getting back to our rail system, we have been at this for too long with too little progress.  Intercity rail corridors hold so much potential to improve mobility and get people off the roads into more energy efficient and environment-friendly trains.  With your leadership, I have renewed hope that we can end the tiresome yearly debates about whether Amtrak should exist and actually make progress on the Northeast Corridor, on the Cascades Corridor, on the Hiawatha line, on the Capital Corridor, and elsewhere.  I urge you to pass S. 294 and give this nation a rail policy that moves beyond ideological debates and gives us a new transportation alternative. Thank you for your leadership and I stand ready to assist you in any way possible.

  #

• The Honorable Frank Busalacchi

  Commission Member, Secretary

  Wisconsin Department of Transportation
  Read statement

  Opening Remarks

  The Honorable Frank Busalacchi

   

   Testimony of Frank J. Busalacchi

  Secretary, Wisconsin Department of Transportation

  Chair, States for Passenger Rail Coalition 

  to the

  Subcommittee on Surface Transportation and Merchant Marine Infrastructure,

  Safety and Security

  of the

  Senate Committee on Commerce, Science and Transportation
  
  

  Tuesday, February 27, 2007

   

   

  Chairman Lautenberg, Ranking Member Smith and distinguished Senators, my name is Frank Busalacchi.  I am Secretary of the Wisconsin Department of Transportation and Chair of the States for Passenger Rail Coalition. 

   

  I am also a member of the National Surface Transportation Policy and Revenue Study Commission. The National Commission is working to construct a new 50-year vision for the nation’s transportation system.  We are in the midst of our deliberations and my comments do not represent the views of the National Commission.  Every Commissioner is working to keep an open mind on all issues. 

   

  I appreciate this opportunity to share my comments on passenger rail issues and Senate Bill 294.  This bill is an important first step in creating a passenger rail program to meet the mobility needs of the public.

   

  Wisconsin passenger rail initiatives

   

  Let me begin by focusing on Wisconsin.  As Secretary of Wisconsin DOT, I know firsthand that the American public is clamoring for expansion of passenger rail services. 

   

  Our state provides financial support to Amtrak’s Hiawatha Service, which operates in the busy Milwaukee to Chicago corridor.  Since 1989, we have committed almost $100 million in capital and operating support for existing and future Amtrak service in Wisconsin.  This includes annual operating support, new or renovated stations, rail corridor acquisition, crossing improvements, and planning studies.

   

  ·         Wisconsin has worked in partnership with the state of Illinois to provide annual operating support for Amtrak’s Hiawatha Service.  Our state provided approximately $6.5 million last year.  Wisconsin Governor Jim Doyle has proposed another $500,000 in his 2007-09 biennial budget to add a car to each train, since many of the trains are so popular they now have standing-room only for a 90-minute trip.

   

  ·         Our state has also undertaken three major station development projects for Hiawatha Service customers.  In 2005, we opened a new passenger rail station at Milwaukee’s General Mitchell International Airport.  In 2006, the village of Sturtevant replaced a 100-year-old station with a brand new facility.  Later this year, we will finish a $16 million renovation of the downtown Milwaukee station. This public-private partnership will provide a new multimodal facility for Amtrak trains and Greyhound buses, along with commercial development opportunities.

   

  ·         Wisconsin has also invested funds to look to the future. Our state has conducted an environmental assessment of a project to expand service from Milwaukee to Madison and has received a federal Finding of No Significant Impact (FONSI). We have invested funds to purchase and preserve a portion of the rail corridor for this future extension.

   

  The public has responded to all of these investments.  Last year, Amtrak’s Hiawatha Service carried 588,000 passengers – a 48 percent increase in just five years.

   

  Now, the public wants more.  With Amtrak providing excellent service from Chicago to Milwaukee and with engineering plans on the shelf and ready to go, the demand is strong to expand service another 90 miles to Madison. 

   

  Madison is ripe for passenger rail service.  It is the state capital, home to the University of Wisconsin, and it boasts a metro population of 450,000 that is highly supportive of alternative transportation options.

   

  Wisconsin is also looking to this service as a way to provide energy efficient transportation that can help reduce our nation’s dependency on foreign oil. Intercity passenger rail uses 17 to 18 percent less energy per passenger mile than commercial air travel or personal auto travel, according to the Oak Ridge National Laboratory.

   

  Wisconsin has already committed $48 million in bonding authority towards this service.  Governor Doyle has proposed increasing this to a total of $80 million in state bonding authority as a 20 percent match toward future federal funds for the Madison extension. Unfortunately, no program exists to provide federal funding, and Wisconsin simply cannot undertake these projects on its own.

   

  National passenger rail initiatives

   

  Wisconsin is not alone in this predicament.  The States for Passenger Rail Coalition represents 28 states that support intercity rail service around the country. Many states share Wisconsin’s experience and frustration regarding passenger rail service.

   

  Virtually all of Amtrak’s ridership gains over the past several years have come through state-sponsored services. 

   

  ·         Fourteen states provide annual operating support for Amtrak intercity corridor services.

   

  ·         These state-supported services account for 35 percent of Amtrak’s daily ridership and about half of all passenger trains in the system.

   

  ·         State-supported services such as Pennsylvania’s Keystone Service, Illinois’ Chicago to St. Louis trains, the Downeaster in Maine, and Oklahoma’s Heartland Flyer have joined Wisconsin’s Hiawatha Service in realizing double-digit percentage increases in ridership.

   

  ·         A GAO[1] report from this past November notes that total ridership on the state-supported corridor routes increased by 18 percent from 2002 through 2005, while ridership growth on other parts of the system remained relatively flat.

   

  From Washington to Florida, from New York to California and everywhere in between, states have committed hundreds of millions of dollars for short-term, incremental improvements that have fueled the growth in Amtrak ridership. States have completed environmental analyses, put plans on the shelf, and have passengers ready to board the trains. Around the nation, 35 states have developed intercity passenger rail plans.

   

  The support for S294

   

  What’s missing is a strong federal partner to make it happen.  That’s why I am grateful to Senator Lautenberg for introducing S294, the Passenger Rail Investment and Improvement Act of 2007.

   

  This legislation will stabilize Amtrak with necessary operating funds for the next six years. The bill provides $6.3 billion for Amtrak to implement capital projects, including those on the Northeast Corridor.  It also lays the basic framework for Amtrak to work in partnership with the states on an 80/20 federal-state share to implement regional capital projects.

   

  Both the Wisconsin DOT and the States for Passenger Rail Coalition endorse S294 as an initial step to bring fast, reliable and energy-efficient passenger rail service to a public that is demanding mobility options.

   

  The needs beyond S294

   

  While S294 is a good start, it does not contain the funding necessary to meet states’ needs around the country. Of the $6.3 billion in capital funds, state-sponsored projects are eligible to receive only $1.4 billion.  Under provisions of the bill, the most available to fund a single project in a given year is about $400 million. Wisconsin’s Milwaukee to Madison project will require $400 million alone. 

   

  A recent AASHTO[2] report identified $17 billion of needs in the near term for rail capital projects across the nation, including $10.4 billion of needs for state-based corridors.

   

  ·         In all, the AASHTO report identified nearly $60 billion in needed passenger rail capital investment over the next 20 years in the country, including for basic Amtrak system needs.

   

  ·         The November GAO report reiterated that the state-supported services are the most time and cost competitive for passengers, but these corridors face capacity constraints and long-term funding issues for capital needs.

   

  Therefore, as the Senate moves ahead on S294, I respectfully ask this committee to continue its efforts to provide a dedicated passenger rail capital program to fund the nation’s rail needs.  The federal government provides this support for highways – it is needed for passenger rail as well.  S294 includes provisions that could make it happen – stabilization of Amtrak, support for the Northeast Corridor, and the beginnings of an 80/20 capital investment program for state initiatives.

   

  The States for Passenger Rail Coalition (SPRC) is willing to work with the Senate and the House to help craft legislation that will fully support the needs of our nation.

   

  ·         SPRC supports HR-1631, the Railroad Infrastructure Development and Expansion Act for the 21^st Century (RIDE-21) that provides $12 billion in tax credit bonding authority for states to use on corridor projects.

   

  ·         SPRC also supported past legislation, including S1516, the Passenger Rail Investment and Improvement Act of 2005, the predecessor to S294, though the $1.4 billion in this bill for state corridor grants did not fully address the national needs.

   

  ·         SPRC members call for balance in the federal transportation funding programs.  Only 4 percent of federal transportation dollars are dedicated to rail programs, yet rail provides incredible potential to carry millions of passengers on energy-efficient and time-competitive services in corridors of national significance. 

   

  Conclusion

   

  In conclusion, I want to again thank Chairman Lautenberg and the S-294 co-sponsors for recognizing what we in the states have seen first-hand – the demand for fast, efficient train service by our citizens.  Working together, the states and the federal government can provide the mobility options that intercity rail can bring to our citizens. 

   

  Thank you for the opportunity to speak with you today. I appreciate your attention and look forward to answering your questions. 

  
  

  ---

  [1] United States Government Accountability Office

  [2] American Association of State Highway and Transportation Officials

• The Honorable Joseph H. Boardman

  Administrator and Secretary's Representive to the Amtrak Board

  Federal Railroad Administration
  Read statement

  Opening Remarks

  The Honorable Joseph H. Boardman

  Statement of

  The Honorable Joseph H. Boardman

  Federal Railroad Administrator

  Before The

  Subcommittee on Surface Transportation and Merchant Marine

  Committee on Commerce, Science and Transportation

  United States Senate

   

  February 27, 2007

   

  Mr. Chairman,  Ranking Member Smith,   I appreciate the opportunity to appear before you today on behalf of Secretary of Transportation Mary Peters and the Bush Administration to discuss the reauthorization of Amtrak and the future of intercity passenger rail service in the United States.

   

  This hearing is particularly timely.   If the Congress and the Administration cannot agree on legislation authorizing Amtrak and the Federal role in intercity passenger rail service, October 1 will mark the beginning of the sixth year since the end of the authorization of appropriations contained in the Amtrak Reform and Accountability Act of 1997.   Unfortunately, operating without authorization, other than that conferred by annual appropriations acts, is not the exception for Amtrak but is increasingly becoming the rule.  Over the last 25 years, Amtrak has had to rely on appropriators rather than authorizers for intercity passenger rail service authorization about 40 % of the time.  Thus, Secretary Peters and I both hope that the Congress and the Administration can reach a consensus on intercity passenger rail policy, if not in this session, then certainly during the 110^th Congress. 

   

  However, our overall assessment of S. 294 is that it does not include enough meaningful reforms.   Amtrak is an outdated monopoly that is based on a flawed business model.  It does not provide an acceptable level of service, nor has it been able to control its finances.  Our goal is improve the nation’s intercity passenger system to make it responsive to the needs of the traveling public, state and local governments, and ultimately to the taxpayers.  To accomplish this, we urge the Congress to pass legislation that reflects the core reform principles originally presented by Secretary Mineta.  Passing an authorization that does not fundamentally reform Amtrak -- but provides a higher level of Federal subsidy for it -- is not an acceptable outcome. 

   

  The Administration’s View On Intercity Passenger Rail Reform

   

  It’s been nearly five years since then-Secretary of Transportation Norman Y. Mineta presented the Bush Administration’s five principles for intercity passenger rail service reform.  These principles are:

   

  1. Create a system driven by sound economics.
  2. Require that Amtrak transition to a pure operating company.
  3. Introduce carefully managed competition to provide higher quality service at reasonable prices.
  4. Establish a long-term partnership between states and the federal government to support intercity passenger rail service.
  5. Create an effective partnership, after a reasonable transition, to manage the capital assets of the Northeast corridor.

   

  The Administration proposed legislation in 2003 and 2005, the Passenger Rail Investment Reform Act (PRIRA), to implement these principles.    While PRIRA is one way to implement the principles, Secretary Mineta maintained that PRIRA was not the only way to achieve these goals.  He consistently expressed his willingness to work with the Congress to develop meaningful intercity passenger rail reform legislation acceptable to both the Congress and the Administration.   Secretary Peters shares this view.   However, she believes, as do I, that the principles articulated by Secretary Mineta in 2002 must still be addressed by any Amtrak reauthorization legislation that we could recommend that the President sign.  It is from that perspective that I offer some general comments on S. 294, the Rail Investment and Improvement Act.

   

  Observations on S. 294

   

  To provide structure, these comments are organized by the Administration’s five principles of reform.

   

  Create a system driven by sound economics.

   

  The Administration believes that intercity passenger rail must be a cost-effective provider of transportation services for it to achieve its potential of playing an increasingly more important role in our national transportation system.   Regular reports by the Government Accountability Office, the Department of Transportation’s Inspector General and Amtrak’s own Inspector General have identified how Amtrak has lost the focus of its statutory mandate to  “… be operated and managed as a for-profit corporation…”(49 U.S.C. 24301(a)(2)).   Instead, we have been faced with circumstances where 10 percent or more of the federal subsidy for Amtrak has gone to underwrite its food and beverage service while much needed long-term capital improvements to nationally-important infrastructure have been deferred.

   

  It is for this reason, the Administration believes that intercity passenger rail service must be operated like a business, with priority placed upon the financial bottom line.  Nothing in this testimony should be taken as criticism of Amtrak’s current Board of Directors and management who are addressing the Corporation’s financial performance on both the revenue and expense sides of the ledger.  There has been progress but this can only be viewed as a beginning effort that must be sustained.  It is thus as both a goal and an incentive that the Administration continues to believe that Federal operating subsidies should be eliminated within the next few years.

   

  S. 294 does not align with the Administration’s vision on this issue.  Overall, the bill authorizes approximately $2 billion annually for Amtrak, which represents a significant increase over its current subsidy.  The bill offers no programmatic justification for why this amount is needed or how Amtrak should or could spend these sums.  Beyond the fact that the bill authorizes funding in excess of even Amtrak’s own estimate of needs (by several hundred million dollars), authorizing such levels undermines the incentive for the railroad to become more efficient and business like.   Amtrak needs to be held accountable for its well-documented inability to control costs and manage its operations.  If the goal is to make Amtrak more fiscally responsible and self sufficient, ramping up its Federal subsidy would send the wrong message. 

   

  A key need of any private successful business is to make decisions on when to enter or leave markets based upon economics and not government policy.  The reestablishment of a “National Rail Passenger System” in section 201, would work against this end.  Specifically, the Administration finds it unacceptable to continue to subsidize poor performing, under-utilized long-distance routes that lose hundreds of millions of dollars annually.  The maintenance of a static nationwide network has been routinely cited as a major flaw of Amtrak’s business model.  As the GAO recently reported, long-distance trains “show limited public benefits for dollars expended,” and that “these routes account for 15 percent of riders but 80 percent of financial losses.”  Rationalizing the route structure must be a key element of any reauthorization legislation.  

   

  Furthermore, the chances of creating a system driven by sound economics will be undermined by altering the structure of Amtrak’s board of directors.  The bill proposes comprising the board with equal numbers of members from each political party, all of whom must be vetted through the Congress.  Introducing overt partisanship into the selection process would increase the chances the board would become deadlocked on issues and unable to provide decisive leadership for the company.  A strong unified board is critical for making changes at Amtrak. 

   

  On the other hand, the establishment of an improved financial accounting system (section 203),  recognizes that all businesses need to have accurate accounting of revenue and expenses, not just for the benefit of the independent auditors and shareholders, but for management to make critical business decisions.  Work is underway in developing such systems at Amtrak and FRA and this section is welcomed reinforcement.

   

  Perhaps the greatest opportunity to align S. 294 with the Administration’s vision of intercity passenger rail can be found in section 208 where FRA and Amtrak, in consultation with the Surface Transportation Board and others, would be directed to develop metrics and minimum standards for measuring performance and service quality.  Elsewhere (section 210) S. 294 would provide that FRA could withhold funds from routes based upon substandard performance against these standards.  The issue that needs to be addressed to make section 208 meaningful is for the Act to spell out the goals to be achieved.  The Administration believes that such goals should include elimination of Federal operating subsidy and in the interim, maximizing transportation benefit per dollar of Federal subsidy.  Performance measures alone will not address these issues, however.  Legislation must ensure that the railroad’s purpose and design allow it to make decisions based on sound economics.

   

  Require that Amtrak transition to a pure operating company.

   

  The management of Amtrak has three significant challenges – operating trains in a safe and cost effective manner; maintaining infrastructure essential for intercity, commuter, and freight rail transportation; and developing both internal and external resources to get this done.  History has shown that these are three difficult challenges to juggle regardless of the skill and good intentions of those in Amtrak’s management.  The most frequent results are priorities and tradeoffs that push both service and infrastructure in the direction of marginally “good enough”.   

   

  The Administration believes that the infrastructure owned by Amtrak, particularly the Northeast Corridor and Chicago Union Station, is too important to be subjected to such tradeoffs.   It appears that S. 294 recognizes this concern.  The improved accounting system required in section 203 is intended to be able to “…aggregate expenses and revenues to infrastructure and distinguish them from expenses and revenues related to rail operations.”   In describing the grant process in section 205, the bill provides that funds cannot be moved among accounts – effectively preventing the use of capital funds for operating expenses – without the approval of the Secretary.  

   

  The Administration believes that to improve operating performance, Amtrak needs to shed its responsibilities for maintaining capital infrastructure.  This way Amtrak could focus on its core functions with dedicated funds.  We have previously presented a plan for accomplishing this goal, though as you know we would be open to other approaches that achieve the same ends. 

   

  Introduce carefully managed competition to provide higher quality service at reasonable prices.

   

  A fundamental underpinning of the Administration’s vision for the future of intercity passenger rail service is to create opportunities for competition by allowing new operating companies to compete for service contracts with States, groups of States, and regional authorities to operate the trains they believe important.  Competition will help control costs and improve service quality.  I recognize that some have said that such competition would not work in the passenger rail industry.  This is belied, however, by the relatively robust competitive environment that has developed for the operation of commuter trains in recent years.  Having States, groups of States, or regional authorities award contracts for passenger service would bring decisions about how much of which services to buy much closer to the customers for those services.  That, too, should result in better service.

   

  S. 294 provides some opportunities for competition.  For example, section 211 would permit FRA to select rail carriers that own infrastructure over which Amtrak operates to be considered as a passenger rail service provider, excluding many other potentially qualified operators including states themselves.   Section 218 would establish a mechanism for States to acquire access to Amtrak-controlled equipment if the State selects an entity other than Amtrak to provide intercity passenger rail service.  In section 301 (which proposes a new section 24402(b) (3) in Title 49), an applicant for a Federal/State passenger rail capital grant would have to provide a written justification to the Secretary if a proposed operator of the service was not selected competitively.  While these sections move in the right direction, overall, the competitive balance is still in Amtrak’s favor.  Except for the infrastructure owner, State selected competitors would not have the same right of access to the rail infrastructure as Amtrak and would not have access to the Federal subsidies made available for intercity passenger rail service except that limited amount available through the proposed State grant program.  S. 294 needs to establish a more comprehensive and level competitive environment.  The Administration envisions a system where states can contract with a company, potentially including Amtrak itself, based on cost and performance criteria.  Having a range of available competitors available is key to making managed competition produce improved system performance.

   

  Establish a long-term partnership between States and the Federal government to support intercity passenger rail service.

   

  Most publicly supported transportation in the U.S. is undertaken through a partnership between the Federal Government and the States.  This model, which has worked well for generations for highways and transit and airports, places the States, and in certain cases their subdivisions, at the forefront of planning and decision-making.  States are uniquely qualified to understand their mobility needs and connectivity requirements through statewide and metropolitan area intermodal and multimodal transportation planning funded, in part, by the U.S. Department of Transportation. 

   

  While intercity passenger rail has historically been an exception to the application of this successful model, in recent years some States have taken an active role in their rail transportation services.  Several States have chosen to invest in intercity passenger rail service provided by Amtrak as part of strategies to meet their passenger mobility needs.  Over the past 10 years, ridership on intercity passenger rail routes that benefit from State support has grown by 73 percent.  Over that same time period, ridership on Amtrak routes not supported by States has increased by only 7 percent.  In discussions with interested States, the U.S. Department of Transportation has found that the greatest single impediment to implementing this initiative is the lack of a Federal/State partnership, similar to that which exists for highways and transit, for investing in the capital needs of intercity passenger rail.

   

  S. 294 recognizes an important role for the States in section 302 by requiring development of State rail plans and in section 301 by  establishing a program matching Federal/State grants for intercity passenger rail capital investment.  While a start in the right direction, the Administration believes that a larger and stronger role needs to be established for the States.  Like the Federal Transit grants, we strongly urge that the State matching requirement be increased to 50 percent.  This would ensure a State’s full commitment to a project and would make States more accountable for selecting a well-justified project.  The State planning provision in section 203 is established as a stand alone rail planning effort.   Planning for rail transportation needs to be fully integrated in the multimodal State-wide planning that States already undertake under 23 U.S.C. 135.  It is essential, in my opinion, that States consider all modes when undertaking mobility planning and select the investments that best meet their mobility needs regardless of the mode.

   

  Decisions on where intercity passenger rail service should be operated, and the schedules and attributes of this service should flow from this State planning and informed decision-making and not the corporate offices of Amtrak.  While establishing a Federal/State capital program, section101(c) relegates this program to a secondary importance by continuing to provide the lion’s share of available Federal capital to Amtrak directly instead of to the States.  The Administration believes that most if not all of the capital designed for intercity passenger rail improvements should flow through the States who are in the best position to know about mobility needs.

   

  We fully support creating a Federal-State partnership for investing in capital infrastructure.  However, the framework presented in this bill gives too little responsibility to the States, while continuing to funnel most capital funding through Amtrak.  Instead, States should be empowered to decide how best to invest in intercity passenger rail facilities. 

   

  Create an effective partnership, after a reasonable transition, to manage the capital assets of the Northeast corridor.

   

  As discussed earlier, the Northeast Corridor infrastructure places significant burdens on Amtrak’s management.  Moreover, this is an essential transportation asset needed by commuters and freight carriers as well as Amtrak.  It should be managed for the benefit of the region’s transportation needs and not corporate priorities and the short-term financial fortunes of one should not affect the operations of all.  Decisions on essential infrastructure replacements and improvements should not have to compete, as they do today, with decisions on what will be served on Amtrak’s dining cars.

   

  S. 294 makes some modest movement in this direction.  Section 213 requires Amtrak, in consultation with the USDOT and the States, to develop a capital spending plan to return the Northeast Corridor to a state of good repair.  This is similar to a condition I required in Amtrak’s FY 2006 grant agreement and I appreciate the reinforcement that comes from inclusion of this provision in the bill.  Section 214 would establish advisory committees to promote cooperation in the planning and investment on the NEC and reinforces the STB’s authority over new usage agreements between Amtrak and the commuter rail operators.  I believe, however, based upon my past career in State transportation, that more is needed to keep the States from being reluctant partners in making the investments needed to preserve and improve the Corridor.  I recognize that creating a decision-making body to control the Northeast Corridor with representatives of the Federal Government, eight States and the District of Columbia will be a daunting task, but this is what is needed.

   

   

   

  Amtrak Debt

   

  The Administration believes that Amtrak’s debt is a private corporate matter and should remain so.  A quarter of a century ago, Congress relieved Amtrak of more than a billion dollars of debt without improving matters noticeably.  Amtrak simply incurred even more debt.  The Administration strongly opposes any attempts to transfer Amtrak’s debt onto the U.S. Treasury.  Amtrak, which incurred its debt independently and beyond the oversight of the government, must be responsible for retiring any debt using all the resources it has available.  Amtrak has over $3 billion in revenue annually and therefore has the wherewithal to address its debt without special assistance from the U.S. government.  Amtrak’s debt should not be misunderstood to be a de facto obligation of the Federal government.  Furthermore, the Administration does not believe that the bill should include a mechanism that would allow Amtrak to incur new government-backed debt.

   

  Other Provisions

   

  At two locations, section 101(d) and in section 301 (where it would create a new section 24403 in Title 49), S. 294 recognizes that the Department and FRA require fiscal resources to oversee implementation of intercity passenger rail capital projects and gives FRA the authority to retain a portion of the funds authorized to help fund such oversight.  This authority is much needed and is in accord with the Administration’s views.

   

  Title IV would include in this legislation the “Surface Transportation and Rail Security Act of 2007.”  On February 2, 2007, the Acting General Counsel of the Department of Transportation provided the Department’s views on this legislation to Chairman and Ranking Member of the full committee.  I wish to incorporate her letter into this testimony by reference.

   

  The foregoing comments reflect a high level view of major provisions of S. 294.  By all means these comments should not be considered comprehensive or the absence of a comment on a particular section be interpreted as Administration support.  Staff from the Department and FRA will be available to provide more detailed comments to the staff of this Committee at their convenience. 

   

  S. 294 is a complex bill that reflects much work and thoughtful consideration by the bill’s authors.  However, it falls short of making necessary reforms identified by the Administration and other independent experts.  Without the changes we have identified, we have serious reservations with the bill. 

   

  Secretary Peters and I look forward to a continuing dialogue with this Committee to develop a much needed consensus that can be embraced by the Congress and the Administration.

   

  I appreciate your attention and would be happy to answer questions that you might have.

   

  #

   

   

   

• Mr. Alex Kummant

  President & CEO

  National Railroad Passenger Corporation (Amtrak)
  Download Statement (36.43 KB)

• Ms. Kelly Taylor

  Administrator

  Rail Division, Oregon Department of Transportation
  Download Statement (159.52 KB)