```

[Senate Hearing 108-1009]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 108-1009

                    NOMINATIONS OF ROBERT CRANDALL,
                 FLOYD HALL, AND LOUIS THOMPSON, TO BE
                   MEMBERS OF THE AMTRAK REFORM BOARD

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

                                HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 6, 2003

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                       U.S. GOVERNMENT PUBLISHING OFFICE
20-771 PDF                   WASHINGTON : 2016
_______________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].  

       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South 
CONRAD BURNS, Montana                    Carolina, Ranking
TRENT LOTT, Mississippi              DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas          JOHN D. ROCKEFELLER IV, West 
OLYMPIA J. SNOWE, Maine                  Virginia
SAM BROWNBACK, Kansas                JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              JOHN B. BREAUX, Louisiana
PETER G. FITZGERALD, Illinois        BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  RON WYDEN, Oregon
GEORGE ALLEN, Virginia               BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire        BILL NELSON, Florida
                                     MARIA CANTWELL, Washington
                                     FRANK R. LAUTENBERG, New Jersey
      Jeanne Bumpus, Republican Staff Director and General Counsel
             Robert W. Chamberlin, Republican Chief Counsel
      Kevin D. Kayes, Democratic Staff Director and Chief Counsel
                Gregg Elias, Democratic General Counsel
                            
                            
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 6, 2003.................................     1
Statement of Senator Hollings....................................     4
Statement of Senator Hutchison...................................     4
Statement of Senator Lautenberg..................................     5
Statement of Senator Lott........................................    34
Statement of Senator McCain......................................     1
    Prepared statement...........................................     3
Statement of Senator Smith.......................................    28

                               Witnesses

Crandall, Robert L., Nominee to be a Member of the Amtrak Reform 
  Board..........................................................     8
    Prepared statement...........................................     8
    Biographical information.....................................     9
Hall, Floyd, Floyd Hall Enterprises, LLC.........................    22
    Biographical information.....................................    23
Thompson, Louis S., Principal, Thompson, Galenson and Associates, 
  LLC............................................................    15
    Prepared statement...........................................    16
    Biographical information.....................................    17

                                Appendix

Letter dated October 30, 2003 to Hon, John McCain from James 
  Brunkenhoefer, National Legislative Director, United 
  Transportation Union...........................................    43
Letter dated November 5, 2003 to Hon. John McCain from Ross B. 
  Capon, Executive Director, National Association of Railroad 
  Passengers.....................................................    43
Response to written questions submitted to Robert L. Crandall by:
    Hon. Ernest F. Hollings......................................    45
    Hon. John F. Kerry...........................................    47
    Hon. John McCain.............................................    44
Response to written questions submitted to Louis S. Thompson by:
    Hon. Ernest F. Hollings......................................    53
    Hon. John F. Kerry...........................................    57
    Hon. John McCain.............................................    47
Response to written questions submitted to Floyd Hall by:
    Hon. Ernest F. Hollings......................................    61
    Hon. John F. Kerry...........................................    62
    Hon. John McCain.............................................    59

 
                    NOMINATIONS OF ROBERT CRANDALL,
                 FLOYD HALL, AND LOUIS THOMPSON, TO BE
                   MEMBERS OF THE AMTRAK REFORM BOARD

                              ----------                              

                       THURSDAY, NOVEMBER 6, 2003

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:34 a.m. in room 
SR-253, Russell Senate Office Building, Hon. John McCain 
[chairman] presiding.

            OPENING STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    The Chairman. Good morning. I would like to welcome our 
three nominees to the Amtrak Reform Board of Directors: Robert 
Crandall, Floyd Hall, and Lou Thompson. I extend my 
congratulations to you, or condolences, on your nominations. 
You certainly have your work cut out for you.
    If confirmed, you will be serving on the board of a 
corporation that: loses over $1 billion annually; refuses to 
change its network of trains regardless of fiscal realities and 
losses of hundreds of dollars on a per-passenger basis on many 
routes; invested $800 million in high-speed Acela equipment 
that was to be one of the answers to Amtrak's revenue problems, 
but instead is plagued by mechanical problems; has mortgaged 
virtually every asset it owns, including New York's Penn 
Station; has run up a debt of nearly $5 billion, the majority 
of which has occurred since enactment of the Amtrak Reform and 
Reauthorization Act of 1997; has received over $26 billion in 
Federal funding over its 32 years of operation; and is seeking 
nearly $2 billion for each of the next 5 years just to operate 
the existing network of trains.
    It is also a company that: still carries less than 1 
percent of intercity travelers; carries as many passengers in a 
year as the airlines carry domestically in less than 3 weeks; 
is touting record ridership in fiscal 2003, while failing to 
admit that the ridership increase was accompanied by a 
significant reduction in revenue due to steep fare cuts; until 
about a year and a half ago insisted it was on a ``glide path'' 
to self-sufficiency.
    With this kind of performance and a lack of ``straight 
talk'' until Mr. Gunn came on board, there is clearly room for 
improvement. The new Board can and must make some tough 
decisions based on fiscal realities and implement necessary 
reforms, many of which do not require legislation.
    Congress and the American taxpayers need a Board that will 
exercise its fiduciary responsibilities, initiate some real 
change at Amtrak, and provide Congress constructive input into 
what Amtrak can and cannot do depending on the level of funding 
it receives.
    We are very fortunate to have such qualified nominees as 
are before us today. Since 1997 the Amtrak board has been 
comprised mostly of politicians, including three Governors and 
one mayor, despite the fact the statute requires that board 
members have ``technical qualifications, professional standing, 
and demonstrated expertise in the fields of transportation or 
corporate or financial management.''
    I believe that the composition of the Board contributed 
greatly to Amtrak's disastrous results. For example, that Board 
allowed a new train to be operated in Wisconsin that ended up 
losing $1,200 per passenger before it was halted in 2002, and 
did nothing to ensure the Congress was provided accurate 
information with respect to Amtrak's true financial 
performance.
    The nominees before us bring a wealth of business and 
transportation experience to the Amtrak Board. Lou Thompson is 
the U.S. expert on international rail reform and earlier in his 
career managed the Northeast Corridor Improvement Project for 8 
years. In Bob Crandall, former CEO of American Airlines, and 
Floyd Hall, former CEO of K-Mart, we have two seasoned business 
executives who I hope can help Amtrak become a market-driven 
rather than a politically motivated company.
    I am anxious to hear from each of you about your views on 
Amtrak, how it can be reformed and improved and why you have 
agreed to serve on Amtrak's Board. I know your nominations are 
a great honor and that your families are very proud.
    Before I continue, I would just make one additional 
comment. I say to the nominees in all seriousness, I do not 
know of an issue that is more divisive in Congress than this 
one. There are honestly held views. They are--I have tried to 
treat those views with respect. What we have ended up with is 
sort of the worst of all worlds. We have not reformed Amtrak in 
a way that would put it on a track to really be a financially 
independent corporation, which is what the promise was in 1973 
would happen in 3 years when Amtrak was formed. And yet we have 
not given them enough money, in the view of those who have 
differing views, to really inject a huge amount of money to get 
them into a fiscally independent status.
    So we end up, it seems to me, over the last 17 years that I 
have been on this committee sort of having the worst of both 
worlds, and that is a continuous sort of life support system, 
but only life support system.
    I respect the views of Senator Hollings, Senator Lautenberg 
and Senator Hutchison, who feel very strongly about the need 
for a strong and viable Amtrak and will complain to you about 
the lack of funding. I also feel that our views that say there 
should be some fundamental reforms enacted as well as part of 
that should be respected as well. Unfortunately, never the 
twain has met, at least in the 17 years that I have been a 
member of this committee and interested in this issue.
    I kind of have no dog in this fight because Amtrak has very 
little presence in my home state of Arizona. It does not even 
stop in Phoenix any more. Very few Americans would rather take 
a train from Phoenix to Los Angeles than an airplane, for 
obvious reasons.
    I understand and appreciate the absolute criticality in the 
Northeast of Amtrak and I strongly support that. I have no 
vision at any time--and I hope the nominees would not, either--
of trying to do away with the Northeast Corridor. But I think 
we have an obligation to taxpayers to make those networks as 
financially responsible as possible.
    For years--and I apologize to my colleagues for this long 
opening comment. But the thing that is so frustrating is that 
for a number of years before this Committee, whether you are a 
supporter or detractor of Amtrak, we were not told the truth. 
We were told that, while Penn Station is being mortgaged, that 
we are on the, ``glide path'' to self-sufficiency, and 
everybody knew that it was not true.
    At least we ought to start out--and I congratulate Mr. 
Gunn--start out with some at least honesty and transparency 
about the depth of the challenges that Amtrak faces in the 
future.
    I apologize to my colleagues for the long opening comment, 
and I would ask Senator Hollings and then Senator Hutchison and 
then Senator Lautenberg to make any opening comments that they 
wish.
    [The prepared statement of Senator McCain follows:]

   Prepared Statement of Hon. John McCain, U.S. Senator from Arizona
    Good Morning. I would like to welcome our three nominees to the 
Amtrak Reform Board of Directors: Robert Crandall, Floyd Hall, and Lou 
Thompson. I extend my congratulations on your nominations. You will 
certainly have your work cut out for you.
    If confirmed, you will be serving on the board of a corporation 
that--

   loses over $1 billion annually;

   refuses to change its network of trains, regardless of 
        fiscal realities and losses of hundreds of dollars on a per 
        passenger basis on many routes;

   invested $800 million in high-speed Acela equipment that was 
        to be one of the answers to Amtrak's revenue problems but 
        instead, is plagued by mechanical problems;

   has mortgaged virtually every asset it owns, including New 
        York's Penn Station;

   has run up a debt of nearly $5 billion, the majority of 
        which has occurred since enactment of the Amtrak Reform and 
        Reauthorization Act of 1997;

   has received over $26 billion in Federal funding over its 32 
        years of operation; and

   is seeking nearly $2 billion for each of the next five years 
        just to operate the existing network of trains.

    It is also a company that--

   still carries less than 1 percent of intercity travelers;

   carries as many passengers in a year as the airlines carry 
        domestically in less than three weeks;

   is touting record ridership in Fiscal Year 2003, while 
        failing to admit that the ridership increase was accompanied by 
        a significant reduction in revenue due to steep fare cuts; and

   until about a year and a half ago, insisted it was on a 
        ``glide path'' to self-sufficiency.

    With this kind of performance, and the lack of ``straight talk'' 
until Mr. Gunn came on Board, there is clearly room for improvement. 
The new Board can and must make some tough decisions based on fiscal 
realities and implement necessary reforms, many of which do not require 
legislation. Congress and the American taxpayers need a Board that will 
exercise its fiduciary responsibilities, initiate some real change at 
Amtrak, and provide Congress constructive input on what Amtrak can and 
cannot do depending upon the level of funding it receives.
    We are very fortunate to have such qualified nominees before us 
today. Since 1997, the Amtrak Board has been comprised mostly of 
politicians, including three governors and one mayor, despite the fact 
the statute requires that Board members have ``technical 
qualifications, professional standing, and demonstrated expertise in 
the fields of transportation or corporate or financial management''. I 
believe that the composition of the Board contributed greatly to 
Amtrak's disastrous results. For example, that Board allowed a new 
train to be operated in Wisconsin that ended up losing $1,200 per 
passenger before it was halted in 2001, and did nothing to ensure the 
Congress was provided accurate information with respect to Amtrak's 
true financial performance.
    The nominees before us bring a wealth of business and 
transportation experience to the Amtrak Board. Lou Thompson is the U.S. 
expert on international rail reform and earlier in his career managed 
the Northeast Corridor Improvement Project for eight years. In Bob 
Crandall, former CEO of American Airlines, and Floyd Hall, former CEO 
of K-Mart, we have two seasoned business executives who I hope can help 
Amtrak become a market-driven, rather than a politically-motivated, 
company. I am anxious to hear from each of you about your views on 
Amtrak, how it can be reformed and improved, and why you have agreed to 
serve on Amtrak's Board.
    I know your nominations are a great honor, and that your families 
are very proud. Please feel free to introduce any family members who 
are present here today.

             STATEMENT OF HON. ERNEST F. HOLLINGS, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator Hollings. Thank you, Mr. Chairman.
    I would ask that my statement be included in the record.
    The Chairman. Without objection.
    Senator Hollings. And only comment to the effect that, 
while you have stated that over 32 years Amtrak received $26 
billion, I would only admonish that airlines, air travel, since 
9/11 in 2 years have received $30 billion, and they are all 
going broke.
    Other than that, the defense rests.
    The Chairman. Senator Hutchison.

            STATEMENT OF HON. KAY BAILEY HUTCHISON, 
                    U.S. SENATOR FROM TEXAS

    Senator Hutchison. Well, thank you, Mr. Chairman, and I 
appreciate that your holding this hearing. I appreciate knowing 
your views. I very much respect your views about reform of the 
system.
    My problem with Amtrak is that we have treated it like a 
stepchild and then wondered why it does not work. When a two 
hour ride is consistently six hours late, the system cannot 
draw riders.
    I have met with each of the nominees individually because 
this is so important to me, to know what they think. If any one 
of them had said, I am here to shut down Amtrak, I would be 
voting no and I would be speaking against him. Every one of you 
has said that you want to make it work, and some of you have 
been honest enough to say that it is going to take subsidies, 
for the rest of Amtrak's life it will take subsidies.
    Well, I have always believed that. There is not a 
transportation system in our country that is not subsidized. In 
any other country that has rail it is subsidized. My view is 
that we do need reform and we do need to treat rail like an 
equal part of our multimodal transportation system and give it 
the subsidies it needs, both capital and operational.
    I have legislation which I hope all of you will read and 
give me suggestions on ways to improve, but it does have 
financing for infrastructure improvements. It also does require 
that we have operational subsidies that will give us a chance 
to make it work.
    My motto has been ``National or Nothing'' because I do not 
think we should be subsidizing just one region of the country. 
I think we can have a skeleton that goes across the top of the 
country, the side, the bottom, and the side, and something 
right down the middle, and then I think other things will flow 
from that.
    I believe that David Gunn is trying to keep our national 
system intact, and my concern is that if we do not keep it 
intact it will be gone forever. So I think if we can reform it 
and hold it we will have an option available that will be a 
viable option, an important option, for our traveling public 
and our interstate commerce. But if we let it go we will never 
get it back.
    I am looking to the board for advice. All of you have 
terrific backgrounds in management and creativity, and that is 
what we need. We need creativity. Maybe a solution is not 
running on the freight rails. Maybe it is having a second track 
on the freight rail right-of-way. Maybe it is putting rail down 
the highway right-of-way. Let us think outside the box, but let 
us try to make a national system that is viable and is an 
alternative to the crowded freeways that many of us in our 
states have on routes that could be Amtrak routes.
    We are looking at rail going from airport to airport now in 
our major metropolitan areas in Texas, and I think that has a 
great potential for us. But I hope you will help us think 
outside the box. I hope you will put your great management 
experience to work for creativity for the system. I have faith 
in every one of you, and I have met each of you. And of course, 
I have known Mr. Crandall. I know he has real management 
expertise, and the other two of you as well have impressive 
backgrounds.
    I hope you will work with us. I will take any advice you 
give me. I may or may not offer legislation, but I will hear 
you out. If we can make something work that will put our system 
back on track, then I think we will have done what is right for 
America.
    The Chairman. Senator Lautenberg.

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Thanks very much, Mr. Chairman.
    First of all, I want to point out that this is not a 
balanced hearing. There are only three of us against the one of 
him. We need a few others in the room here to get on an equal 
footing.
    The Chairman of this Committee is known for one thing, 
which I widely respect, his candor. He lets you know just where 
things stand, even if you disagree, and we have had the 
opportunity to do that over the years.
    Before I comment on these nominees to the Amtrak Board--and 
I would almost like to strike out the word ``reform'' because 
that is not the mission. The policy has got to be made in a 
different place and the implementation has to be made by the 
members of the Board.
    I would like to note with pride the fact that we had 
Governor Dukakis and Governor Holt and Meridian Mayor Smith and 
Sandy Rose, all of whom have done, very much done their best to 
improve New Jersey's transportation network and the Amtrak 
system. They provided leadership and helped hold the railroads 
together during very tough fiscal times.
    The goal of the Board is to ensure that there is solvency 
attached to Amtrak while ensuring the high safety and service 
standards. It is important that the Board's members bring with 
them the certain background or expertise that benefits Amtrak.
    We have, Mr. Chairman and fellow members, three people of 
distinction. Their backgrounds are noteworthy. I take a 
particular delight in introducing a New Jerseyan, almost a 
neighbor of mine for many years living in New Jersey, Mr. Floyd 
Hall. Floyd has done a great deal to enhance the quality of 
life in our area by bringing into being a stadium and 
recreational facility with his leadership, and attached to our 
good friend Yogi Berra, who is also a New Jersey resident and 
an occasional golf partner of each one of us. So we are pleased 
to see Mr. Hall.
    Mr. Crandall and I had occasion to meet with smoking guns a 
few years ago when he was the Chairman of American and I was 
trying to get the American public to stop smoking in airplanes 
and he felt that it was an inhibition of rights and a 
disadvantage to the competitive position of American. But it 
all worked out well. We won. It was a good outcome.
    I served also as a Commissioner of the Port Authority of 
New York and New Jersey and I had been Chairman and Ranking 
Member of the Appropriations Subcommittee on Transportation for 
many years. I am familiar--and I was the CEO and Chairman of a 
fairly good-sized company in the New York region and New 
Jersey, and I am familiar with the responsibilities associated 
with operating a major transportation system and see the 
problems that we have had transporting people and goods through 
our area and the role that the railroads play there. It takes 
an appreciation of what the traveling public's needs are and 
how best to serve them. That is what we are talking about.
    Yesterday we had an occasion to meet in a secure classified 
meeting here, and I will not reveal anything that has not been 
in the public media, but one thing struck me. That is that 
there are 700,000 shoulder-type weapons floating around this 
world, and the fact of the matter is that it is something that 
the airlines in particular, but our society totally, has to be 
concerned about.
    Why bring it up in connection here with this review this 
morning? That is, heaven forbid that we have an attack on an 
airliner in this country that succeeds. We would be crippled if 
we did not have a railroad service to carry people back and 
forth. We saw it on 9/11, the nightmare that no one wanted to 
dream. That was when the aviation system was shut down cold, 
this wonderful system of ours. It was Amtrak that brought 
people between Washington and New York, critical that they were 
available.
    So I think it has to do with the security of our country, 
and I think it has to do with what kind of a transportation 
system we have.
    Now, the Chairman was right, they have mortgaged everything 
literally but the kitchen sink. But that is because we did not 
give them enough money to operate with. At one point in time, 
one point or another, we are going to have to give it the kind 
of capital investment that it desperately needs, because you 
can never get to the point that you want to by mini-repairs 
here and there.
    Mr. Thompson is an expert on railroads. In our conversation 
yesterday I noted with respect his experience. There is an 
agreement there: You cannot do this thing unless you decide 
once and for all that it is as important to this country as is 
aviation. Aviation may carry more people, but you cannot do 
without something that carried 24 million passengers last year. 
That is a goodly number, and for a lot of communities.
    That is the dilemma, is we try to decide whether or not 
routes should be taken down here or there, but----
    The Chairman. Senator Lautenberg.
    Senator Lautenberg. Yes?
    The Chairman. Could we move on here fairly soon?
    Senator Lautenberg. Would you like to hear the full 
statement? OK, we will accelerate the process if we can get 
some commitment for funding Amtrak.
    The Chairman. We are here to hear the views of the 
nominees.
    Senator Lautenberg. Oh, yes. Oh, I did not realize that.
    Anyway, I thank you and I thank my colleagues for indulging 
my enthusiasm, and I hope that I have persuaded them that the 
only way to go is fix Amtrak, put the money in there that it 
needs, have it properly managed, and continue choo-chooing 
along.
    Thank you very much.
    The Chairman. Thank you, Senator Lautenberg, and your 
complete statement will be made part of the record. All of us 
appreciate your passion on this issue and I thank you.
    I thank the witnesses. Before we move forward, if there is 
any family members you would like to introduce that are with 
you today, we would be pleased to welcome them. Mr. Thompson?
    Mr. Thompson. May I introduce my wife, Alice.
    The Chairman. Alice, welcome. Thank you.
    Mr. Thompson. As you know, in public life families become 
teams, and I certainly am glad to be a member of this team.
    The Chairman. Thank you. Thank you for his service, Alice. 
Thank you.
    Mr. Hall or Mr. Crandall?
    Mr. Crandall. No, thank you.
    The Chairman. Thank you. Then we will begin with Mr. 
Crandall, who is no stranger to this Committee. We have had the 
opportunity of exchanging views and receiving very valuable 
information from Mr. Crandall over many years. We welcome you 
and appreciate again your willingness to serve.

STATEMENT OF ROBERT L. CRANDALL, NOMINEE TO BE A MEMBER OF THE 
                      AMTRAK REFORM BOARD

    Mr. Crandall. Thank you, Senator. It is nice to see you 
again and I am glad to be here.
    The Chairman. Could I mention one thing. I am required to 
go to a speech, attend a speech the President is giving, and I 
will not be able to stay, and I apologize for doing so. Senator 
Smith will be taking over after I leave.
    Mr. Crandall.
    Mr. Crandall. Thank you very much.
    Based on your opening statement, I guess I would say that 
perhaps I am qualified to do this because your opening 
statement sounded very much like the airline industry.
    The fact is I am here today because I think that developing 
and implementing a sound U.S. transportation policy is an 
important task and because I believe that passenger rail should 
be a part of the service network by which that policy is 
implemented.
    My understanding of Amtrak at this point is clearly that of 
an outsider and is thus very limited. It does seem clear, 
however, that one of the fundamental challenges Amtrak faces is 
the lack of a clear and consistent policy position approved by 
both Congress and the Administration on which to base its 
operations. As I understand it, Amtrak by law is expected to 
serve as a national system. To do so, it needs substantial 
public resources, Congress and the Administration must decide 
whether to provide Amtrak the tools it needs, primarily 
financial tools, including adequate capital and necessary 
subsidies, to enable it to carry out that mandate or, 
alternatively, to modify the mandate.
    In my view, Congress and the Administration have a 
responsibility to agree upon an Amtrak policy and to provide 
the resources required to implement that policy. The Amtrak 
Board and Amtrak management in turn are responsible to see to 
it that the resources allocated are used in an efficient, cost 
effective way.
    If confirmed, I look forward to participating in the 
process of shaping Amtrak's future. I also look forward to 
responding to any questions you may have, either now or in the 
future. Once I have had a chance to study the situation of 
Amtrak more carefully, I will be in a position to answer 
detailed questions. As I am sure you will understand, however, 
I am not presently about to comment in any detail on Amtrak 
operations, management issues, or the role of the Board.
    Thank you for your attention and I look forward to your 
questions.
    [The prepared statement and biographical information of Mr. 
Crandall follows:]

Prepared Statement of Robert L. Crandall, Nominee to be a Member of the 
                          Amtrak Reform Board
    Thank you, Mr. Chairman.
    It is a pleasure to appear today before the Senate Committee on 
Commerce, Science and Transportation. I have a long familiarity with 
some of the work of the Committee, and over the years have enjoyed, on 
numerous occasions, the privilege of appearing before it. I am glad to 
be here again today.
    My name is Bob Crandall, and I am President Bush's nominee to serve 
as a member of the Amtrak Reform Board (a.k.a. the Amtrak Board of 
Directors). I am here because I believe that developing and 
implementing a sound U.S. transportation policy is an important task, 
and because I believe passenger rail should be a part of the service 
network by which that policy is implemented.
    Having spent 40 years in the corporate world, my vantage point on 
Amtrak is that of a businessman. I recognize, of course, that Amtrak is 
a unique corporate entity which is a private corporation with a special 
responsibility to the public interest. If approved by this Committee 
and confirmed by the U.S. Senate, I will do my best to both carry out 
Amtrak's public mandate and to resolve its business challenges.
    My understanding of Amtrak is that of an outsider, and is thus very 
limited. It does seem clear, however, that one of the fundamental 
challenges Amtrak faces is the lack of a clear and consistent policy 
position--approved by both the Congress and the Administration--on 
which to base its operations.
    As I understand it, Amtrak, by law, is expected to serve as a 
national system. To do so, it needs substantial public resources, and 
the Congress and the Administration must decide whether to provide 
Amtrak the tools--primarily financial tools, including adequate capital 
and necessary subsidies--to enable it to carry out its mandate or, 
alternatively, to modify the mandate.
    In my view, the Congress and the Administration have a 
responsibility to agree upon an Amtrak policy and to provide the 
resources required to implement that policy. The Amtrak Board and 
Amtrak management, in turn, are responsible to see to it that the 
resources allocated are used in an efficient, cost effective manner.
    I look forward to participating in the process of shaping Amtrak's 
future. I also look forward to responding to any questions you may have 
now or in the future. Once I have had an opportunity to study the 
situation at Amtrak more carefully, I will be in a position to answer 
detailed questions. As I am sure you will understand, however, I am not 
presently in a position to comment in any detail on Amtrak operations, 
management issues, or the role of the Board.
                                 ______
                                 
                      a. biographical information
    1. Name: (Include any former names or nicknames used.)

        Robert Lloyd Crandall ``Bob''

    2. Position to which nominated: Member of the Amtrak Reform Board.
    3. Date of nomination: October 14, 2003.
    4. Address: (List current place of residence and office addresses.)

        Residence: Information not released to the public.
        Office: The Towers at William Square, 5215 North O'Connor, 
        Suite 1775, Irving, Texas 75039.

    5. Date and place of birth: December 6, 1935; Westerly, RI.
    6. Marital status: (Include maiden name of wife or husband's name.)
        Margaret Jan Crandall (maiden name: Schmults); July 6, 1957-
        Present.
    7. Names and ages of children: (Include stepchildren and children 
from previous marriages.)

        Mark William Crandall Born 08/12/1958

        Martha Conway Coleman Born 12/14/1960

        Stephen Michael Crandall Born 10/08/1962

    8. Education: (List secondary and higher education institutions, 
dates attended, degree received, and date degree granted.)

        Wharton School of Business & Finance/Un of PA, Philadelphia, PA
        09/1958-02/1960--MBA--02/1960

        University of Rhode Island, Kingston, RI
        02/1955-06/1957--B.S.--06/1957

        College of William & Mary, Williamsburg, VA
        09/1953-02/1955--None

        Barrington High School, Barrington, RI
        09/1951-06/1953--H.S. Diploma

    9. Employment record: (List all jobs held since college, including 
the title or description of job, name of employer, location of work, 
and dates of employment.)

        1973-1998--AMR Corporation/American Airlines, Fort Worth, TX

        1975--SRVP-Marketing

        1980--President, American Airlines

        1985-1995--Chairman, President and CEO, AMR Corp/American 
        Airlines

        March 1995 (named Don Carty President--American)

        March 1995-1998--Chairman and CEO, AMRIAA
        Retired 1998

        1972-1973--Bloomingdale Brothers, New York, NY
        Senior Vice President and Treasurer

        1966-1972--TWA, Inc.--New York, NY

        1971-1972--Vice President and Controller

        1970-1971--Vice President--Systems & Data Services

        1966-1970--Assistant Treasurer

        1962-1966--Hallmark Cards, Kansas City, MO Credit Supervisor

        1960-1962--Eastman Kodak Company, Rochester, NY

    10. Government experience: (List any advisory, consultative, 
honorary or other part-time service or positions with Federal, State, 
or local governments, other than those listed above.)
    07/1994 Appointed to President's Advisory Committee on Trade Policy 
and Negotiations (ACTPN)
    11. Business relationships: (List all positions held as an officer, 
director, trustee, partner, proprietor, agent, representative, or 
consultant of any corporation, company, firm, partnership, or other 
business enterprise, educational, or other institution.)

        American International Group, Inc. Advisory Council

        Anixter, Inc. (Director)

        Celestica (Director)

        Halliburton Company (Director)

        i2 Technologies, Inc. (Director)

        Air Cell Inc. (Director)

        MilePoint.com

        eZforex.com, Inc.

        Wilton Publishing, LLC

        U.S. Helicopter

        ICTS International NV

        AirTV Limited

        FAA-MAC

    12. Memberships: (List all memberships and offices held in 
professional, fraternal, scholarly, civic, business, charitable, and 
other organizations.)

        Air Transport Association/Aviation Safety Alliance--current

        International Air Transport Association (IATA)

        The Business Council

        Chicago Club

        The Conference Board

        Conquistadores del Cielo

        Crescent Club

        Eastern Point Yacht Club--current

        The Fort Worth Club

        Frontiers of Flight Museum--current (on Board)

        International Air Transport Association (IATA)

        La Cima--current

        Lyric Opera (Chicago)

        National Association of Manufacturers

        Northwood Club

        NYSE Listed Company Advisory Committee

        President's Advisory Committee on Trade Policy and Negotiation

        SMU Executive Board of the Edwin Cox School of Business

        University of Rhode Island President's Council

        Wings Club/New York--current

        World Travel & Tourism Council (WTIC)

        Harbour Ridge Country Club, Palm City, FL

        Piper's Landing Country Club, Palm City, FL--current

    13. Political affiliations and activities:

        (a) List all offices with a political party which you have held 
        or any public office for which you have been a candidate. None.

        (b) List all memberships and offices held in and services 
        rendered to all political parties or election committees during 
        the last 10 years. None.

        (c) Itemize all political contributions to any individual, 
        campaign organization, political party, political action 
        committee, or similar entity of $500 or more for the past 10 
        years. (Please see Attachment to #13(c)

    14. Honors and awards: (List all scholarships, fellowships, 
honorary degrees, honorary society memberships, military medals, and 
any other special recognitions for outstanding service or 
achievements.)

        Recipient of Horatio Alger Award in 1997
        Received Honorary Doctorate from the University of Rhode Island

    15. Published writings: (List the titles, publishers, and dates of 
books, articles, reports, or other published materials which you have 
written.)
    From time to time, I have written Op-ed pieces for The Wall Street 
Journal, New York Times, Washington Post, Directors & Boards, etc. None 
relevant to this position.
    16. Speeches: Provide the Committee with two copies of any formal 
speeches you have delivered during the last 5 years which you have 
copies of on topics relevant to the position for which you have been 
nominated.
    None relevant to this position. However, in the role of Chairman 
and CEO of AMR Corporation, I authored a great many industry-related 
pieces. Since retiring in 1998, I've made numerous speeches through the 
Washington Speakers Bureau--most related to leadership skills, managing 
transformational change, corporate governance, security issues, etc.
                          Attachment to #13(c)

                          Robert Crandall Political Contribution History Since 1997 \1\
----------------------------------------------------------------------------------------------------------------
                   Recipient Committee                                    Date                       Amount
----------------------------------------------------------------------------------------------------------------
Dean For America                                                                   03/23/2003               $500
                                                          ------------------------------------------------------
                                                                                   06/18/2003               $500
                                                          ------------------------------------------------------
                                                                                   08/17/2003             $1,000
----------------------------------------------------------------------------------------------------------------
Friends of Byron Dorgan                                                            06/23/1197             $1,000
----------------------------------------------------------------------------------------------------------------
McCain for Senate '98                                                              05/19/1997             $1,000
----------------------------------------------------------------------------------------------------------------
Greg Mullanax for Congress                                                         02/23/1998             $1,000
----------------------------------------------------------------------------------------------------------------
Kerrey for U.S. Senate Committee (Robert Kerrey)                                   09/07/1999               $500
----------------------------------------------------------------------------------------------------------------
Friends of Bob Graham Committee                                                    06/10/1997             $1,000
                                                          ------------------------------------------------------
                                                                                   06/10/1997             $1,000
----------------------------------------------------------------------------------------------------------------
Lipinski for Congress Committee (William Lipinski)                                 11/20/1997             $1,000
----------------------------------------------------------------------------------------------------------------
Bush for President, Inc.                                                           06/04/1999             $1,000
----------------------------------------------------------------------------------------------------------------
Mica for Congress (John Mica)                                                      08/26/2002               $500
----------------------------------------------------------------------------------------------------------------
American Airlines Political                                                              1997             $3,829
                                                                     $312 per month 1/97-7/97
                                                                    $329 per month 8/97-12/97
                                                          ------------------------------------------------------
                                                                                         1998             $3,619
                                                           $329 per month (no contribution in
                                                                                      August)
----------------------------------------------------------------------------------------------------------------
                      Total Federal Political Contributions Since 1997:                                  $17,448
----------------------------------------------------------------------------------------------------------------
\1\ Information collected from Federal Election Commission records

    17. Selection:

        (a) Do you know why you were selected for the position to which 
        you have been nominated by the President?
        Secretary Mineta has been aware of my interest in sharing my 
        transportation and management expertise.

        (b) What in your background or employment experience do you 
        believe affirmatively qualifies you for this particular 
        appointment?
        I have had broad experience in the transportation business and 
        in the area of corporate governance.

                   b. future employment relationships
    1. Will you sever all connections with your present employers, 
business firms, business associations, or business organizations if you 
are confirmed by the Senate?
    As this position is part time, I plan to continue my present 
activities and will ensure that I am not faced with any conflicts of 
interest.
    2. Do you have any plans, commitments, or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain.
    I am on the following corporate Boards, which have no relationship 
to Amtrak or passenger rail. I plan to continue serving on these Boards 
while on the Amtrak Reform Board. As indicated above, I will ensure 
that I am not placed in a position of conflict of interest. If one 
should arise, I would recuse myself.

        (1) Anixter--Director, May 12, 1999 to Present

        (2) Celestica--Director, July 7, 1998 to Present

        (3) Halliburton Company--Director, Feb 20, 1986 to Present

        (4) i2 Technologies, Inc.--Director, May 23, 2001 to Present

        (5) AirCell Inc.--Director Oct 23, 2004

        (6) Serve on the Advisory Board of the American International 
        Group

        (7) Serve on the Federal Aviation Administration MAC

    3. Do you have any plans, commitments, or agreements after 
completing government service to resume employment, affiliation, or 
practice with your previous employers, business firms, associations, or 
organizations?
    See question 2 above
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes
                   c. potential conflicts of interest
    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients, or customers.
    None applicable to this assignment
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. None
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated. None
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat, or modification of any legislation or affecting the 
administration and execution of law or public policy.
    As Chairman of a large corporation, I appeared numerous times 
before Congressional Committees--both as an individual witness and on 
panels regarding different issues.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.) No 
conflicts
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Yes
                            d. legal matters
    1. Have you ever been disciplined or cited for a breach of ethics 
by, or been the subject of a complaint to any court, administrative 
agency, professional association, disciplinary committee, or other 
professional group? If so, please explain. No
    2. Have you ever been investigated, arrested, charged, or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation, or ordinance, 
other than for a minor traffic offense? If so, please explain.
    From 1985 through 1998, I was Chairman and CEO of AMR Corporation, 
and American Airlines, Inc. Prior to that time, I held various 
executive positions with the companies in finance and marketing. As a 
consequence, I was frequently a named defendant in various lawsuits 
brought by employees (former and current) and customers of American 
Airlines.
    American Airlines, Inc., and I were named as defendants in a civil 
lawsuit brought by the United States of America on February 23, 1983, 
in the United States District Court for the Northern District of Texas. 
The complaint alleged attempted joint monopolization of airline 
passenger service to various cities served out of Dallas/Fort Worth in 
violation of Section 2 of the Sherman Act. In a decision rendered 
September 12, 1983, the District Court dismissed the complaint on the 
grounds that the conduct alleged did not violate the law. United States 
v. American Airlines. Inc., 570 F.Supp. 654 (N.D.Tex.1983). On appeal, 
the United States Court of Appeals for the Fifth Circuit held that the 
allegations were sufficient to state a claim and remanded the case back 
to the District Court for discovery and trial. United States v. 
American Airlines. Inc., 743 52d 1114 (5th Cir. 1984). The defendants 
filed a petition for certiorari in the United States Supreme Court, but 
before that petition was acted on by the Court, a settlement was 
reached effective October 31, 1985 pursuant to which American Airlines 
and I agreed to an injunction to not discuss pricing of airline 
passenger services with the management of any other airline. The 
injunction expired October 31, 1990.
    Also, some time ago, I and several other individuals were named as 
defendants in an action brought by the FDIC because we had served as 
directors of RepublicBank Texas. That matter was settled in 1990.
    In addition, I have been named as a defendant in various litigation 
matters brought by customers and employees of American airlines and its 
affiliates. All such suits which have been resolved to date have been 
concluded without any finding of liability for damages against me.
    In the years since 1998, when I retired from AMR Corporation/
American Airlines, I have served as a Director on various public 
companies, and have been named, from time to time, in lawsuits 
involving those companies. None of those actions have resulted in 
personal liability on my part.
    In 1999 AMR entered a plea agreement with the United States 
government with respect to a one-count indictment relating to the 
storage of hazardous materials. As part of the plea agreement, AMR was 
placed on probation for three years and adopted a comprehensive 
compliance program. AMR was released from its probation in 2002. 
Although the plea agreement was agreed to in 1999, the complained of 
activities occurred while I was Chairman and CEO of AMR.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in an administrative agency proceeding or 
civil litigation? If so, please explain.
    See question 2 above.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be disclosed in 
connection with your nomination. None
                     e. relationship with committee
    1. Will you ensure that your board/commission complies with 
deadlines for information set by congressional committees? Yes
    2. Will you ensure that your board/commission does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes
    3. Will you cooperate in providing the Committee with requested 
witnesses, including technical experts and career employees, with 
firsthand knowledge of matters of interest to the Committee? Yes
    3. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes
                  f. general qualifications and views
    1. How does your previous professional experiences and education 
qualify you for the position for which you have been nominated?
    I served for 25 years in various capacities with AMR/American 
Airlines, including 13 years as Chairman and CEO. This experience gave 
me an opportunity to become very familiar with transportation issues 
and with corporate management, both of which are relevant to a position 
as a member of the Amtrak Reform Board.
    2. Why do you wish to serve in the position for which you have been 
nominated?
    I believe that a good public transportation system is important to 
the vitality of the U.S. economy.
    3. What goals have you established for your first two years in this 
position, if confirmed?
    Before setting explicit goals for either myself or the 
organization, I want to learn more about the issues facing Amtrak from 
an internal perspective.
    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills? None.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when society's problems 
should be left to the private sector, and what standards should be used 
to determine when a government program is no longer necessary.
    In general, I believe that government should confine itself to 
doing those things which only governments can accomplish and which 
cannot be satisfactorily performed by the private sector. In certain 
situations, such as Amtrak, where the Congress has mandated that the 
public interest shall be served, that directive should be taken into 
account.
    6. Describe the current mission, major programs, and major 
operational objectives of the board/commission to which you have been 
nominated.
    I do not yet know enough about Amtrak to answer this question 
satisfactorily.
    7. What do you believe to be the top three challenges facing the 
board/commission and why?
    The issue of how to satisfy a Congressional mandate without the 
security of predictable funding is one of the biggest challenges facing 
Amtrak. As indicated above, I would want to study Amtrak from an 
internal perspective before rating various other challenges facing the 
Corporation.
    8. In reference to question number six, what factors in your 
opinion have kept the board/commission from achieving its missions over 
the past several years?
    In general, it is clear that there is broad disagreement in the 
government about the proper role of Amtrak. As a consequence, there has 
been no agreed on mission statement or consistent funding, which has 
resulted in a less than satisfactory performance.
    9. Who are the stakeholders in the work of this board/commission?
    There are many stakeholders. The taxpayers--as represented by the 
Administration and the Congress--the traveling public, cities and 
states served and not served by Amtrak, Amtrak employees and the labor 
unions which represent them, and Amtrak's management--are all 
stakeholders.
    10. What is the proper relationship between the position to which 
you have been nominated, and the stakeholders identified in question 
number nine?
    The role of the Board, in my view, is to balance the interests of 
all stakeholders so as to achieve a result consistent with maximizing 
composite benefits.
    11. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you?
    In general, sound supervisory/management relationships require 
mutually respectful interactions based on expectations of high 
performance, integrity and trust.
    12. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please explain.
    During my years as a senior executive, I often testified before 
Congressional Committees and discussed matters of interest to American 
Airlines with many individual members.
    13. In the areas under the board/commission jurisdiction to which 
you have been nominated, what legislative action(s) should Congress 
consider as priorities? Please state your personal views.
    I believe the Congress should develop a clearly defined national 
rail policy and pass whatever legislation is consistent with 
implementation of that policy.
    14. Please discuss your views on the appropriate relationship 
between a voting member of an independent board or commission and the 
wishes of a particular president.
    The President's views, and those of his Administration, are clearly 
an important part of any public policy dialogue as are the views of 
Congress, representatives of State and City governments and other 
stakeholders. Members of the Amtrak Reform Board should consider the 
views of all stakeholders and proceed as they think best.

    The Chairman. Do you envision a hub and spoke system for 
Amtrak, Mr. Crandall?
    Mr. Crandall. Senator, I do not believe so.
    The Chairman. Mr. Thompson, welcome.

          STATEMENT OF LOUIS S. THOMPSON, PRINCIPAL, 
             THOMPSON, GALENSON AND ASSOCIATES, LLC

    Mr. Thompson. Thank you, Senator. Thank you very much for 
the opportunity to be here today. I want to express my 
appreciation for this hearing.
    I would summarize my remarks simply by saying that I spent 
a lifetime in this field, a lifetime working on rail policy 
issues, both in freight and in passenger, and in the United 
States and abroad. This is an issue which, like many of you, I 
care passionately about, and I very much appreciate the 
opportunity to work on some of the resolution.
    I think that, as you said, the primary challenge for Amtrak 
is going to be deciding what do you want it to do. That is an 
issue. As you may know, I was at the Department when Amtrak was 
formed and I remember having exactly the same argument then, 
without good resolution, and I think we could have the same 
argument today. Clearly, we are having the same argument today.
    I think that if the Board can do nothing more than work 
with Amtrak management and with you and the Department of 
Transportation to get a better answer to that one question, 
what do you want Amtrak to do and then how can it be funded 
fully and adequately, I think that we would have all have made 
a major contribution.
    What the response to this question might be in terms of 
reform is something that I think it is a little bit too early 
to say, because it will depend a lot on what you finally decide 
the mission for Amtrak should be. But I certainly believe that 
it will benefit everyone if the information that is available 
is made a lot clearer than it has been; that if the functions 
that Amtrak performs for the national system versus the 
Northeast Corridor versus the short haul trains, that 
information is clearer, and then we will know a lot more about 
what we are talking about and how to make the decisions that 
need to be made.
    I also wanted to commend to you the change recently in 
which the Department and Amtrak have reached a kind of a 
contractual relationship, because I think that has gone a long 
way to clarifying what responsibility each has and how each can 
live up to it. It will make the life of a board member much 
easier.
    Beyond that, I will pass on the microphone. But I would 
like again to thank you and I would like to say, any questions 
you have I will certainly try to answer.
    [The prepared statement and biographical information of Mr. 
Thompson follows:]

Prepared Statement of Louis S. Thompson, Nominee to be a Member of the 
                          Amtrak Reform Board
    Mr. Chairman and Members of the Committee, I am honored to appear 
before you today, and I very much appreciate the opportunity to be 
considered for the Amtrak Reform Board. I have received both 
congratulations and condolences on the announcement of the nomination, 
and I think that both may be in order. The issues associated with 
Amtrak are among the most interesting in Washington, but the decisions 
the Board could face over the next few years may surely be among the 
most contentious, and possibly the most difficult as well. Membership 
on the Board will not be a responsibility to be taken lightly.
    I have had a long involvement in rail passenger and freight service 
issues. I worked at the U.S. Department of Transportation when Amtrak 
was created, and I later served eight years as Director of the 
Northeast Corridor Improvement Project, as well as being Associate 
Administrator at the Federal Railroad Administration in charge of the 
Department's oversight of the Amtrak budget. During this time, I also 
acted as the Associate Administrator for Policy Development and as 
Deputy Administrator. I have extensive experience in rail passenger and 
freight issues around the world through seventeen years as the Railways 
Adviser at the World Bank. I have published a number of articles and 
spoken on many occasions in the U.S. and around the world on the issues 
of railway economics and reform. I believe that, as much as anyone in 
the country, I have proven that I support rail passenger services where 
they are needed and if they are provided effectively.
    If confirmed, I believe that there are two roles to be played as a 
member of the Amtrak Reform Board. One is a continuing discussion with 
Congress and the DOT on rail passenger policy development, and the 
other is the fiduciary oversight of corporate matters. Let me address 
the policy question first.
    The Committee has received a large number of reports and pieces of 
testimony--from the DOT Inspector General, from GAO, from the CBO, from 
the Amtrak Reform Council, from the Secretary and Deputy Secretary of 
DOT, and from the Federal Railroad Administrator. All have had the same 
import: rail passenger service will not be able to meet the needs of 
the country in the future absent changes at Amtrak.
    Amtrak does need to change. For my part, support for change does 
not reflect a desire to abolish rail passenger service or to demolish 
Amtrak; quite the reverse, it comes from a determination to strengthen 
the rail passenger system, to improve the efficiency and quality of 
services and to reduce the cost to the taxpayer. I believe that rail 
passenger services have a vital role to perform in the transport system 
of the future and it is important that the opportunity not be missed 
through lack of adjustment at Amtrak.
    Amtrak has never really had a stable and agreed mission, resulting 
in a precarious existence and unpredictable funding. I believe that a 
more effective agreement can be forged among the Congress, DOT, Amtrak 
and the stakeholders at the State and local level if Amtrak's missions 
are more clearly distinguished as between the ``national system'' long 
haul trains, the short haul trains, Northeast Corridor higher speed 
trains, Northeast Corridor infrastructure and contract commuter 
operations. These are distinct services performed for different 
customers, and each would benefit from institutional, contractual, 
operating and funding arrangements better tailored to the individual 
circumstances. Whether this implies merely improved internal accounting 
at Amtrak, creation of internal lines of business, establishment of 
Amtrak subsidiaries, or even perhaps eventual spin-off of some of the 
functions (or some set of all of these) should be a matter of careful 
thought and consultation. I know of no easy solutions, I have no a 
priori conclusions, and my experience suggests an evolutionary 
approach. This may be especially true because Amtrak is under stress 
right now, and change should not be faster than the organization can 
absorb. I do believe, though, that the Board should be involved in this 
debate.
    The fiduciary role of directors has been difficult at Amtrak 
because everything Amtrak does (and will do) depends on public support 
to some degree, forcing Board members to make unclear tradeoffs between 
corporate interests and public benefits. The recent conclusion of an 
explicit grant agreement between DOT and Amtrak has clarified the Board 
members' role, because the interests of the corporation, as well as 
public interests, are more easily identified and reconciled. Indeed, 
these grant agreements establish Amtrak's role vis a vis DOT in a 
similar form to the agreements that Amtrak has with various State and 
local authorities to provide commuter service. Expanded use of such 
arrangements will offer better protection to all parties, and it will 
permit Board members to focus on ensuring that Amtrak operates 
effectively and transparently against clear and agreed objectives.
    These are only broad points about a very complex set of issues that 
will challenge us all. I hope to have the opportunity to work with the 
Committee, the DOT and the Amtrak Board of Directors in trying to make 
progress on them.
    Thank you for the opportunity to appear before you, and I welcome 
any questions the Committee may have.
                                 ______
                                 
                      a. biographical information
    1. Name: (Include any former names or nicknames used.)
        Louis Stanley Thompson (Lou).
    2. Position to which nominated: Member, Amtrak Board of Directors 
(Amtrak Reform Board).
    3. Date of nomination: October 15, 2003.
    4. Address: (List current place of residence and office addresses.)

        Residence: Information not released to the public.
        Office: Louis S. Thompson, Principal, Thompson, Galenson and 
        Associates, LLC, 2804 Daniel Road, Chevy Chase, MD 20815-3149.

    5. Date and place of birth: May 28, 1941; Tampa, FL, USA.
    6. Marital status: (Include maiden name of wife or husband's name.)
    Married to Alice C. Galenson (she did not change her name). 
Previously married and divorced from Margaret Thompson (deceased), 
maiden name Cosler.
    7. Names and ages of children: (Include stepchildren and children 
from previous marriages.)
    Kim M. Thompson (32), Michael L. Thompson (29), Joel D. Galenson 
(17--adopted)
    8. Education: (List secondary and higher education institutions, 
dates attended, degree received, and date degree granted.)

        Bartow Senior High School, Bartow, FL

        MIT, 1959 to 1963, B.S. in Chemical Engineering, June 1963

        Harvard Business School, 1963 to 1965, MBA, June 1965

    9. Employment record: (List all jobs held since college, including 
the title or description of job, name of employer, location of work, 
and dates of employment.)

        (1) The Badger Company, Cambridge, MA, and The Hague, The 
        Netherlands, Project Engineer, June 1965 to August 1968

        (2) U.S. Dept of Transportation, Office of the Secretary, 
        Budget Analyst and Policy Analyst, Washington, D.C., Nov. 1968 
        to Nov. 1973

        (3) Richard J. Barber Associates, Associate, Washington, D.C., 
        Nov. 1973 to May 1978.

        (4) U.S. Dept of Transportation, Federal Railroad 
        Administration, Washington, D.C.. Director, Northeast Corridor 
        Improvement Project (NECIP). Associate Administrator, Intercity 
        Programs (NECIP and Amtrak Budget). Associate Administrator, 
        Passenger and Freight Programs. Acting Deputy Administrator (6 
        months). Acting Associate Administrator for Policy Development 
        (6 months). May 1978 to Oct 1986.

        (5) World Bank, Washington, DC, Railways Adviser, Oct 1986 to 
        May 2003.

    10. Government experience: (List any advisory, consultative, 
honorary or other part-time service or positions with Federal, State, 
or local governments, other than those listed above.)
    Member and now Chairman of Transportation Research Board Committee 
reviewing the R&D budget of the FRA. 1997 to present.
    11. Business relationships: (List all positions held as an officer, 
director, trustee, partner, proprietor, agent, representative, or 
consultant of any corporation, company, firm, partnership, or other 
business enterprise, educational, or other institution.)
    Since retirement from the World Bank, my consulting activities have 
included OECD (analysis of future rail developments and regulation in 
Russia), Charles River Associates (analysis of world transport 
projections) and the World Bank (advice on rail issues in India, 
Bangladesh and China).
    12. Memberships: (List all memberships and offices held in 
professional, fraternal, scholarly, civic, business, charitable, and 
other organizations.)
    Smithsonian Associates, Washington Opera Society, Sierra Club, The 
Nature Conservancy, National Association of Railroad Passengers, 
Transportation Research Board.
    13. Political affiliations and activities:

        (a) List all offices with a political party which you have held 
        or any public office for which you have been a candidate. None.

        (b) List all memberships and offices held in and services 
        rendered to all political parties or election committees during 
        the last 10 years. None.

        (c) Itemize all political contributions to any individual, 
        campaign organization, political party, political action 
        committee, or similar entity of $500 or more for the past 10 
        years. None.

    14. Honors and awards: (List all scholarships, fellowships, 
honorary degrees, honorary society memberships, military medals, and 
any other special recognitions for outstanding service or 
achievements.)

        (1) FRA Administrator's Award for Superior Achievement (1979)

        (2) DOT Secretary's Award for Meritorious Achievement (1980)

        (3) DOT Secretary's Award for Outstanding Achievement in 
        Promoting Equal Opportunity (1982)

        (4) U.S. Presidential Meritorious Rank Award ($10,000) (1982)

        (5) FRA Administrator's Award for Outstanding Employee (1986)

        (5) World Bank President's Award for Excellence (1999)

        (6) World Bank Award for Excellence in Project Supervision 
        (2000)

    15. Published writings: (List the titles, publishers, and dates of 
books, articles, reports, or other published materials which you have 
written.)
    Please see attachment 1 for list of publications.
    16. Speeches: Provide the Committee with two copies of any formal 
speeches you have delivered during the last 5 years which you have 
copies of on topics relevant to the position for which you have been 
nominated.
    Please see attachment 2 for speeches and papers.
    17. Selection:

        (a) Do you know why you were selected for the position to which 
        you have been nominated by the President?
        I believe I was selected because of my experience and expertise 
        in U.S. and worldwide railway issues.

        (b) What in your background or employment experience do you 
        believe affirmatively qualifies you for this particular 
        appointment?
        In my original term at the DOT in the Office of the Secretary, 
        I was one of the team that created Amtrak, and I was deeply 
        involved in the development of the original Northeast Corridor 
        Project. In my second stint at the DOT/FRA, I ran the $2.5 
        billion Northeast Corridor Improvement Project for 8 years. In 
        addition, I managed the Amtrak budget process for 6 years, and 
        represented the Secretary of Transportation on the Board of 
        Directors of Amtrak for two years. At the World Bank, I worked 
        closely with rail passenger issues in nearly every railway in 
        the world. I have written many articles and spoken in many fora 
        around the world about the issues in railway structure and 
        policy. During my time at the World Bank, I continued to follow 
        Amtrak issues and have participated in many discussions about 
        Amtrak issues from a worldwide perspective.
                   b. future employment relationships
    1. Will you sever all connections with your present employers, 
business firms, business associations, or business organizations if you 
are confirmed by the Senate?
    I am retired from the World Bank and may (at age 65) elect to 
receive my Federal pension and (at 67) Social Security. I have, and 
will have, no other connections with employers.
    2. Do you have any plans, commitments, or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain.
    My wife and I own a small consulting company (Thompson, Galenson 
and Associates, LLC). Under this company, I have a personal services 
contract (up to 120 days per year as agreed) with the World Bank. 
Through this company I have also done consulting for other clients 
(OECD and Charles River Associates). I intend to continue doing this 
type of private consulting subject, of course, to any conflict of 
interest with Amtrak Board duties. I will inform Amtrak Counsel and the 
Board of all consulting activities and be governed by their decision if 
they believe it constitutes an appearance of conflict of interest. 
Moreover, I will not allow my consulting to interfere with Amtrak Board 
duties. Since the Amtrak Board is neither full time nor compensated, I 
do not believe I am required to restrict my professional activities 
solely to Amtrak, subject to being sure to avoid conflicts of interest 
or divulging confidential information.
    3. Do you have any plans, commitments, or agreements after 
completing government service to resume employment, affiliation, or 
practice with your previous employers, business firms, associations, or 
organizations?
    I have no such plans or commitments.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No.
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes.
                   c. potential conflicts of interest
    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients, or customers. None.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated.
    As discussed above, I will continue doing personal consulting so 
long as it does NOT involve any conflict of interest with my Amtrak 
responsibilities. Other than this, I have no other investments, 
obligations, liabilities or other relationships that could involve a 
potential conflict of interest.
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated. None.
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat, or modification of any legislation or affecting the 
administration and execution of law or public policy. None.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.)
    As stated, I will keep the Amtrak Board and Amtrak Counsel informed 
of all consulting activities I may do and will be governed by their 
decision if they find any possibility of an appearance of conflict of 
interest between my consulting and my Amtrak Board duties.
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position?
    Yes. In fact, the designated ethics official at Amtrak has cleared 
me of any conflict of interest on the grounds above. I should add that 
I have been offered a position on the Board of Directors of a private 
freight railroad (Rail America). This offer was discussed with the 
Amtrak ethics officer and the White House Conflict Counsel. I . agreed 
to terminate any contact with this company if confirmed to the Amtrak 
Board. I have informed Rail America of this decision and we have, by 
agreement, suspended any further discussion of membership on their 
Board until action on my nomination to the Amtrak Board has been taken 
by the Senate.
                            d. legal matters
    1. Have you ever been disciplined or cited for a breach of ethics 
by, or been the subject of a complaint to any court, administrative 
agency, professional association, disciplinary committee, or other 
professional group? If so, please explain. No.
    2. Have you ever been investigated, arrested, charged, or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation, or ordinance, 
other than for a minor traffic offense? If so, please explain. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in an administrative agency proceeding or 
civil litigation? If so, please explain. No.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be disclosed in 
connection with your nomination. None.
                     e. relationship with committee
    1. Will you ensure that your board/commission complies with 
deadlines for information set by congressional committees?
    I will do whatever is within my power (I would be only one vote out 
of seven) to ensure that all deadlines for information are met.
    2. Will you ensure that your board/commission does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the Committee with requested 
witnesses, including technical experts and career employees, with 
firsthand knowledge of matters of interest to the Committee? Yes.
    4. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.
                  f. general qualifications and views
    1. How does your previous professional experiences and education 
qualify you for the position for which you have been nominated?
    My degrees in engineering and management are a good background for 
dealing with the technical and financial issues involved in managing 
Amtrak. My experience in the U.S. Government and in private consulting 
with economic regulation of transportation is a good basis for 
understanding the legal and competitive issues that Amtrak will face. 
Having managed the North East Corridor Improvement Project (NECIP), I 
am intimately familiar with the technical, operational and financial 
challenges involved in owning and operating the NEC. Managing NECIP 
also made me closely familiar with all of the State and local agencies 
(and objectives) involved in the NEC. My involvement in the creation of 
Amtrak and subsequent oversight of the Amtrak budget has made me 
familiar in detail with the Amtrak route structure and the political 
and financial issues involved. Seventeen years at the World Bank 
dealing with passenger and freight issues worldwide have given me a 
unique perspective on rail policy issues which I believe will be 
valuable in membership on the Amtrak Board.
    2. Why do you wish to serve in the position for which you have been 
nominated?
    I have a 35 year career in transport issues, particularly rail 
freight and passenger questions. I was in on the creation of Amtrak and 
I have followed its development ever since. I am now retired and have 
the time and expertise to devote to the Board. I care very deeply about 
rail passenger (and freight) development in the U.S., and I would like 
to be involved in shaping Amtrak's future.
    3. What goals have you established for your first two years in this 
position, if confirmed?
    I do not think that a single member of a 7 member Board can 
establish goals for the corporation. If confirmed, my personal areas of 
emphasis will be on clarifying the missions of Amtrak and improving 
Amtrak's effectiveness in fulfilling those missions.
    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills?
    I believe I have all the skills needed. What I do hope to do, if 
confirmed, is gain a much deeper understanding of the current physical 
condition and problems of the system. This will require a significant 
allocation of time at the outset to inspect facilities and meet with 
Amtrak, State and local officials.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when society's problems 
should be left to the private sector, and what standards should be used 
to determine when a government program is no longer necessary.
    This is not an easy question to answer succinctly. I have an 
engineering degree, a business degree, a lot of economics training, 8 
years in the private sector in engineering and economic consulting, 13 
years with the U.S. Department of Transportation, and 17 years in the 
non-governmental public sector (World Bank). have held responsible 
managerial positions in public and private sectors and have extensive 
experience in both.
    I suppose it would be fair to say that I have gradually acquired 
heterodox rather than dogmatic views. Philosophically, I believe first 
in the rights and responsibilities of individuals: nothing replaces 
individual initiative and personal responsibility. I believe that most 
commercial activity should be the responsibility of an ethically 
managed, effectively regulated private sector. I believe that the realm 
of government includes those things that individuals or groups cannot 
or will not do for themselves, including public goods such as defense, 
law enforcement, public health, labor safety and working conditions, 
economic regulation and infrastructure planning on a national or State 
scale, to mention only a few.
    As regards rail passenger service specifically, there is both a 
public and a private set of objectives. On the private side, Amtrak and 
the commuter rail agencies compete in a transportation market with 
cars, taxis, buses and airplanes. Depending on the speed, frequency, 
cost, and reliability, of the choices, passengers will make their 
decisions, and the market will produce an efficient solution. At the 
same time, this market may have external effects, such as noise, air 
and water pollution, traffic congestion, security, accidents, or 
others, which cannot readily be managed by the private sector. I think 
it is a proper role of government to intervene, by regulation, tax or 
subsidy, to ensure that these external effects are minimized. This does 
not answer the question of whether in specific cases the potential 
social benefits are worth the costs in taxes and subsidies; this is a 
responsibility of government as well.
    I wish I could provide good standards as to whether a government 
program either has finally become necessary or is finally no longer 
needed, but I cannot. This is partly because benefits and costs are 
hard to measure, and partly because one person's benefit is another 
person's cost. I do believe that the best way to support good decisions 
is in forcing clarity of definition of costs and benefits and putting 
emphasis on measuring and reporting them as well as possible.
    6. Describe the current mission, major programs, and major 
operational objectives of the board/commission to which you have been 
nominated.
    Amtrak currently operates all of the intercity passenger trains in 
the U.S. and is subsidized by the Federal Government and (to a lesser 
degree) State governments in doing so. I believe that Amtrak actually 
has three different types of mission: Northeast Corridor 
infrastructure, long haul passenger trains and short haul passenger 
trains. Amtrak is proposing a large and extended program of investment 
in recovering from deferred maintenance in rolling stock and in the 
Northeast Corridor infrastructure. Each of these missions or programs 
has different customers, costs and benefits. In each, the objective is 
(or should be) improving the quality of service and reducing the cost 
to government(s) of the rail passenger services they need.
    7. What do you believe to be the top three challenges facing the 
board/commission and why?
    First, clearly defining the different functions that Amtrak 
performs (NEC, long haul and short haul trains), and getting agreement 
with Congress and the States on this definition.
    Second, achieving the right balance of responsibility (planning and 
funding) among Amtrak, the Federal Government and the various State and 
local governments.
    Third, ensuring that the agreed missions are matched by adequate 
funding to permit stable and effective management over a reasonable 
period of time.
    8. In reference to question number six, what factors in your 
opinion have kept the board/commission from achieving its missions over 
the past several years?
    Amtrak has been handicapped from its very beginning by confusion 
over what it was supposed to do and who was supposed to pay. The past 
few years, in particular, have been troubled by the requirement that 
Amtrak ``break even'' without an agreed definition of break even, or on 
the consequences if Amtrak did not do so. I believe that this issue 
will only be resolved when Amtrak's mission is agreed and the 
availability of adequate financial resources, including subsidy and 
capital support by appropriate levels of government, is stabilized.
    9. Who are the stakeholders in the work of this board/commission?
    Amtrak has many stakeholders. First, of course, there are Amtrak's 
passengers. The Congress and the U.S. DOT (both FRA and FTA) are the 
largest financial stakeholders. Amtrak provides service in all but four 
States, so most State governments are stakeholders. There are a number 
of traditional interest groups such as the National Association of 
Railroad Passengers (NARP), the American Public Transportation 
Association (APTA), the Association of American Railroads (AAR), and 
the Coalition of Northeast Governors (CONEG), among many others. There 
are a number of equipment suppliers such as Alstom, Bombardier, General 
Motors (EMD), General Electric, Taiga, Siemens and the Railway Progress 
Institute. There are the freight railroads over whose tracks Amtrak 
operates (20 or so). There are 13 States with which Amtrak contracts to 
provide 8 commuter rail services. Amtrak operates major intermodal 
facilities (bus/rail as well as airport connections) in 15 cities. 
Amtrak has 15 labor unions. There are four holders of Amtrak's common 
stock, and there are a large number of financial institutions holding 
Amtrak's debts and leases.
    10. What is the proper relationship between the position to which 
you have been nominated, and the stakeholders identified in question 
number nine?
    The basic relationship vis a vis all of these stakeholders is to be 
accessible, to listen carefully and to try to find ways to meet their 
objectives consistent with Amtrak's mission and resources. This said, 
there is a distinction between a Board member and the Chief Executive 
of Amtrak: if confirmed, I hope to spend my time on missions and 
policies and will try not to interfere in the day-to-day operation of 
the company unless appropriate to do so.
    11. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you?
    I have always tried to treat employees with respect and have 
encouraged all Employees to take on a maximum degree of responsibility 
consistent with their position and capabilities. Fundamentally, 
managers lead, set policies and objectives, and obtain resources: they 
must rely on their employees to get things done. I have never had an 
employee complaint brought against me. In fact, at the FRA, I received 
a number of awards for effective management and promotion of equal 
opportunity.
    12. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please explain.
    As an Associate Administrator at the FRA and Director of the 
Northeast Corridor Improvement Project, I worked extensively with 
Senate and House Commerce Committees and with Senate and House 
Appropriation Committees. I have testified many times at both 
authorization and appropriation hearings. I have always tried hard to 
be accessible to committee staff and to members when requested. If 
confirmed, I will continue to try to do so.
    13. In the areas under the board/commission jurisdiction to which 
you have been nominated, what legislative action(s) should Congress 
consider as priorities? Please state your personal views.
    I believe that Congress and the Administration will need to clarify 
the expectations of Amtrak's future missions, and will need to ensure 
that the resources available to Amtrak are adequate. This involves: (a) 
defining which things Amtrak will be doing in each of its major 
activities (NEC, long haul trains and short haul trains, contract 
operations for others, non-rail activities); (b) deciding at which 
level of government(s) each of these should be planned and funded; (c) 
deciding the roles of Amtrak versus other possible rail passenger 
service providers (Amtrak, private operators, local governments); and, 
(d) deciding who pays and how (passenger fares, Federal shares, State 
or local shares, and non-rail revenues).
    14. Please discuss your views on the appropriate relationship 
between a voting member of an independent board or commission and the 
wishes of a particular president.
    Amtrak Board members must give careful consideration to the views 
and proposals of the President, just as they must consider the views of 
Congress. At the same time, perhaps uniquely with Amtrak since it is a 
corporation, members of the Board have a fiduciary role that gives them 
legal responsibilities (and personal liabilities) that can only be 
overridden by legislation or Court decisions. I would like to make it 
clear that, if confirmed, my votes on the Board will be decided by what 
I think is in the interest of the corporation, based on my best 
judgment, and after taking the advice and wishes of the President and 
the Congress into full consideration.

    The Chairman. Thank you very much.
    Mr. Hall, welcome.

                   STATEMENT OF FLOYD HALL, 
                  FLOYD HALL ENTERPRISES, LLC

    Mr. Hall. Good morning. Thank you. Mr. Chairman, it is a 
pleasure to be here today to be considered for appointment to 
the Amtrak Board. My comments are going to be very brief, 
primarily because my knowledge of Amtrak's history, its 
failures, its needs, its opportunities and potential is very, 
limited, in fact limited to my first in-depth discussions on 
Amtrak took place yesterday morning. I very much enjoyed 
hearing the comments made this morning, as well as those 
meetings that I had yesterday that shed a lot of light on this 
problem.
    I would like to say that, first of all, I believe in Amtrak 
and its future, and I want to assure you that if I am confirmed 
I am going to approach this directorship with an open mind and 
I will do my utmost to contribute to this Board, and I am very 
pleased to be sitting here with two such outstanding experts in 
the field of transportation. I think that this Board will 
approach all of the decisions with commonsense and review the 
issues in great detail, and I am hopeful that I will be able to 
make a significant contribution to the board and to the efforts 
of the management team.
    So thank you very much. I would be happy to answer any 
questions, but, as I said, I think my insight on any questions 
is going to be very limited.
    Thank you.
    [The biographical information of Mr. Hall follows:]

                      a. biographical information
    1. Name: (Include any former names or nicknames used.) Floyd Hall; 
also known as Leo Floyd Hall.
    2. Position to which nominated: Member of the Board of Amtrak.
    3. Date of nomination:
    4. Address: (List current place of residence and office addresses.)

        Residence: Information not released to the public.
        Office: Floyd Hall Enterprises LLC One Hall Drive, Little 
        Falls, NJ 07424.

    5. Date and place of birth: September 4, 1938; Duncan, Oklahoma.
    6. Marital status: (Include maiden name of wife or husband's name.)
    Married to Janet Lee Phillips July 20, 1957
    7. Names and ages of children: (Include stepchildren and children 
from previous marriages.)
    Son--Larry F. Hall, age 44; Daughter--Karen D. Visceglia, age 42
    8. Education: (List secondary and higher education institutions, 
dates attended, degree received, and date degree granted.)

        Bakersfield High School graduate

        Southern Methodist University attended Adult Evening Classes in 
        1971 and 1972

        Harvard Business School Advanced Management Program attended 
        June to September 1976

    9. Employment record: (List all jobs held since college, including 
the title or description of job, name of employer, location of work, 
and dates of employment.)

        August 1956--Department Manager/Salesman Montgomery Ward--
        Bakersfield, CA

        September 1966--National Sales Manager Montgomery Ward--
        Chicago, IL

        February 1970--Regional Vice President Singer Company--Dallas, 
        TX

        September 1974--President and Chief Executive Officer B. Dalton 
        Bookseller--Minneapolis, MN

        January 1981--President and Chief Executive Officer Target 
        Discount Stores--Minneapolis, MN

        April 1984--President and Chief Executive Officer/Minority 
        Owner Grand Union Supermarkets--Wayne, NJ

        September 1988 Sold Grand Union and Retired from Corporate 
        Management

        From May 1989
                1. Founded and Served as CEO
                        A. The Museum Co--Wayne, NJ

                2. Purchased and Served as CEO
                        A. Alva Museum Replicas
                        B. Glassmasters Stained Glass Manufacturing Co.

                3. Held Majority or Minority Interest in:
                        A. The Safety Zone--Retail Stores
                        B. Lynx Technology--International Tele Comm. 
                        Co.
                        C. Kenwood Productions-Video Producers of WWII 
                        Docudramas

        June 1995 to May 2000--Chairman, President and Chief Executive 
        of K-Mart Corporation located in Troy, Michigan

        June 2000 to present--Founded Floyd Hall Enterprises LLC owner 
        and operator of a sports organization consisting of a 
        professional baseball team, ice arenas and an equestrian 
        facility.

    10. Government experience: (List any advisory, consultative, 
honorary or other part-time service or positions with Federal, State, 
or local governments, other than those listed above.) None.
    11. Business relationships: (List all positions held as an officer, 
director, trustee, partner, proprietor, agent, representative, or 
consultant of any corporation, company, firm, partnership, or other 
business enterprise, educational, or other institution.) Member of the 
Board of Directors of the following mutual funds:

        American Eagle Capital Appreciation Fund

        American Eagle Large Cap Growth Fund

        American Twenty Fund

        Jundt Growth Fund

        Jundt Opportunity Fund

        Jundt U.S. Emerging Growth Fund

        Jundt Mid Cap Growth Fund

        Jundt Science & Technology Fund

        Jundt Twenty-five Fund

        Chairman of the Board and Chief Executive of the following:

                Floyd Hall Enterprises LLC

                Hall Sports Enterprises LLC

                Eagle Ice Sports Enterprises LLC

                Eagle Sports Management LLC

        Member of the Board of Directors of the following nonprofit 
        organizations:

                Community Anti-Drug Coalition of America

                Committee for Corporate Philanthropy

    12. Memberships: (List all memberships and offices held in 
professional, fraternal, scholarly, civic, business, charitable, and 
other organizations.)

        Member Montclair Golf Club, Member Card Sound Golf Club, Class 
        Secretary
        AMP76 Harvard Business School

    13. Political affiliations and activities:

        (a) List all offices with a political party which you have held 
        or any public office for which you have been a candidate. None

        (b) List all memberships and offices held in and services 
        rendered to all political parties or election committees during 
        the last 10 years: None.

        (c) Itemize all political contributions to any individual, 
        campaign organization, political party, political action 
        committee, or similar entity of $500 or more for the past 10 
        years.

 
 
 
July 1996             Zimmer for Senate                          $1,000
August 1996           NJ State Republican Party                  25,000
August 1996           Republican Nat'l. Comm                     75,000
Feb. 20, 1997         Victory 1997                               10,000
Feb. 26, 1997         Michigan Nat'l.                             4,200
Sept. 29, 1997        Election Friends                              500
Nov. 21, 1997         Tom Longmack                                1,000
Jan. 23, 1998         Rich Smith for Congress                       500
Feb. 2, 1998          Engler for Governor                         6,800
Nov. 5, 1998          NJ Republican State Comm                   10,000
Oct. 25, 2000         Governor Engler of Michigan                10,000
Nov. 1, 2000          Town MI                                    25,000
Nov. 6, 2000          RNC Team 200                               75,000
Dec. 1, 2000          Bush Cheney Recount                         5,000
March 5, 2001         DiFrancesco for Governor                   5,200.
May 1, 2001           NJ State Republican Comm                   20,000
Sept. 28, 2001        Boughton for Mayor                          1,000
Dec. 18, 2001         Republican Nat'l Comm                      25,000
April 16, 2002        Republican Nat'l Comm                     225,000
April 24, 2002        Republican Party of Fla                    25,000
June 10, 2002         Coleman for U.S. Senate                     2,000
June 10, 2002         Talent for Senate                           2,000
June 10, 2002         Friends of Mike Ferguson                    1,000
June 12, 2002         John Thune for South Dakota                 1,000
Oct. 11, 2002         Friends of Pataki                          25,000
Oct. 17, 2002         Garrett for Congress                          500
Dec. 20, 2002         Committee to Reelect Mgmt                   1,000
July 2, 2003          Council 2003                                1,000
 

    14. Honors and awards: (List all scholarships, fellowships, 
honorary degrees, honorary society memberships, military medals, and 
any other special recognitions for outstanding service or 
achievements.)

        Honorary Doctorate Degree, Montclair State University 2000

        Humanitarian recognition by:

                The Center on Addition and Substance Abuse at Columbia 
                University

                The Archdiocese of New York

                The American Paralysis Association

                The Hugh O'Brien Foundation

                D.A.R.E America

                March of Dimes

                Give Kids the World

                National Retailer of the Year 1999

    15. Published writings: (List the titles, publishers, and dates of 
books, articles, reports, or other published materials which you have 
written.) None
    16. Speeches: Provide the Committee with two copies of any formal 
speeches you have delivered during the last 5 years which you have 
copies of on topics relevant to the position for which you have been 
nominated. None
    17. Selection:
    (a) Do you know why you were selected for the position to which you 
have been nominated by the President?
    White House personnel apparently felt my 30 years as chief 
executive officer of four major corporations would be beneficial to 
Amtrak's strategic, organizational and financial planning and more 
importantly its operational and financial performance.
    (b) What in your background or employment experience do you believe 
affirmatively qualifies you for this particular appointment?
    I have significant turnaround experience. As CEO of Grand Union 
Supermarkets, a $4 billion, 400-store retail chain, I repositioned the 
Company's strategic direction, changed the culture and reversed several 
years of significant losses ($150 million per year). The Company 
returned to profitability in 9 months and attained industry-leading 
profitability two years later.
    In 1995, after 7 years of corporate retirement, I was recruited by 
the Board of Directors of Kmart to orchestrate the largest turnaround 
in retail history. Kmart with its 275,000 employees, $36 billion in 
annual revenues and 2,100 stores was literally on the brink of 
bankruptcy. In one year, we restructured the balance sheet, divested $5 
billion in non-core assets and returned to profitability. From 1997 to 
2000 we compounded earnings at a 30 percent annual rate by attaining 15 
consecutive quarterly earnings gains. Profits were used to reduce debt 
(by $1 billion), repurchase stock and for capital expenditures. With 
the Company in solid financial position, I retired in June 2000.
                   b. future employment relationships
    1. Will you sever all connections with your present employers, 
business firms, business associations, or business organizations if you 
are confirmed by the Senate?
    Yes, other than the businesses I own, which will continue to be 
operated by my son.
    2. Do you have any plans, commitments, or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No
    3. Do you have any plans, commitments, or agreements after 
completing government service to resume employment, affiliation, or 
practice with your previous employers, business firms, associations, or 
organizations? No
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes
                   c. potential conflicts of interest
    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients, or customers. None
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. None
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated. None
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat, or modification of any legislation or affecting the 
administration and execution of law or public policy. None
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.)
    Not applicable
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Yes
                            d. legal matters
    1. Have you ever been disciplined or cited for a breach of ethics 
by, or been the subject of a complaint to any court, administrative 
agency, professional association, disciplinary committee, or other 
professional group? If so, please explain. No
    2. Have you ever been investigated, arrested, charged, or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation, or ordinance, 
other than for a minor traffic offense? If so, please explain. No
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in an administrative agency proceeding or 
civil litigation? If so, please explain. No
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be disclosed in 
connection with your nomination. None
                     e. relationship with committee
    1. Will you ensure that your board/commission complies with 
deadlines for information set by congressional committees? Yes
    2. Will you ensure that your board/commission does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes
    3. Will you cooperate in providing the Committee with requested 
witnesses, including technical experts and career employees, with 
firsthand knowledge of matters of interest to the Committee? Yes
    4. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes
                  f. general qualifications and views
    1. How does your previous professional experiences and education 
qualify you for the position for which you have been nominated?
    Please see response to A. 17 above
    2. Why do you wish to serve in the position for which you have been 
nominated?
    I am aware of Amtrak's enormous subsidies and yet I believe Amtrak 
fills a significant void in our Nation's transportation needs. 
Hopefully I can assist the Board and management in making it 
substantially more efficient.
    3. What goals have you established for your first two years in this 
position, if confirmed?
    First, to acquire an in-depth knowledge of Amtrak's history, 
failures, current problems and needs as well as its areas of 
opportunity and second, to contribute to accomplish the goals and 
objectives of the board.
    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills?
    I believe I have the skills, but my knowledge of Amtrak's 
strengths, weaknesses and potential is lacking.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when society's problems 
should be left to the private sector, and what standards should be used 
to determine when a government program is no longer necessary.
    Philosophically, I believe that government's primary role is to 
provide programs and services that are beyond the administrative or 
financial capabilities of the private sector. A listing of some of 
these programs and services includes protecting our individual rights 
and liberties, national defense, social security, public health, law 
enforcement and energy management to name a few.
    I believe government should occasionally be involved in the private 
sector, but generally it should be limited to only those times when the 
majority of Congress agree to the need for a given program, project or 
service. I have great confidence in the private sector's ability and 
social conscience. Their focus is dictated by the demanding performance 
criteria used to measure the commercial feasibility of most 
investments. Their efforts, balanced with government oversight and 
regulation help assure ethical and accurate management practices.
    Unfortunately, I have no experience or recommendation as to what 
standards should be used to determine when a government program should 
be eliminated.
    6. Describe the current mission, major programs, and major 
operational objectives of the board/commission to which you have been 
nominated.
    As of this date, primarily because of conflicting schedules, I have 
not been briefed on Amtrak's mission, objectives, challenges or 
history.
    7. What do you believe to be the top three challenges facing the 
board/commission and why?
    Please see F. 6.
    8. In reference to question number six, what factors in your 
opinion have kept the board/commission from achieving its missions over 
the past several years?
    Please see F. 6.
    9. Who are the stakeholders in the work of this board/commission?
    Please see F. 6.
    10. What is the proper relationship between the position to which 
you have been nominated, and the stakeholders identified in question 
number nine?
    Please see F. 6.
    11. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you?
    I believe in teamwork. Begin with an honest and candid discussion 
of the issues, proceed to collective agreement on the plans of action, 
and a clear understanding of individual responsibilities, followed by 
an allocation of the resources needed, and lastly, frequent review of 
the individual's and team's progress on the action plans.
    I believe all employees want to do a good job and are motivated by 
high standards. People fail when they don't understand what is expected 
of them, don't have the training or resources to do the job, are afraid 
to ask for help and are not redirected when they get off course.
    I've never had a complaint filed against me and have always tried 
to treat every associate with respect.
    12. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please explain. None
    13. In the areas under the board/commission jurisdiction to which 
you have been nominated, what legislative action(s) should Congress 
consider as priorities? Please state your personal views.
    Please see F. 6.
    14. Please discuss your views on the appropriate relationship 
between a voting member of an independent board or commission and the 
wishes of a particular president.
    As Amtrak is a corporation, a board member must be fully cognizant 
of his legal and fiduciary responsibilities. In addition he has an 
obligation to fully immerse himself in the problems and opportunities 
of the company, its mission and the worthiness of the enterprise. Votes 
on the board can then be based on objective rationale and good 
judgment. Certainly the wishes of a particular president must be fully 
considered and with the knowledge that his viewpoint is framed with 
information, priorities and opinions of the highest caliber. His wishes 
should be honored to whatever degree possible without a board member 
compromising his values or obligations.

              STATEMENT OF HON. GORDON H. SMITH, 
                    U.S. SENATOR FROM OREGON

    Senator Smith [presiding]. Thank you very much, gentlemen. 
We do appreciate your being here and your willingness to serve.
    Given that Senator McCain, Chairman McCain, has given me 
the gavel, I will ask that my full statement be put in the 
record and in the interest of time turn to the Ranking Member, 
Senator Hollings.
    Senator Hollings. Thank you very much, Mr. Chairman.
    Mr. Thompson, do you think the Nation needs a national 
passenger rail service or system, and do you think the Nation 
can afford it?
    Mr. Thompson. I think the question of whether the Nation 
needs it was decided in about 1970 and I am not sure that there 
has ever been a change in the answer to that question. Yes, the 
Nation does want a national system of passenger trains, for a 
lot of reasons.
    Can the Nation afford it? I cannot imagine that the Nation 
could not afford to pay for something that it wants.
    Senator Hollings. Very good. How about you, Mr. Hall?
    Mr. Hall. I certainly agree that it needs it, and I believe 
that we can afford it. I do not know what necessarily ``afford 
it'' means, but yes.
    Senator Hollings. Well, and Mr. Crandall has already 
indicated that we need it, we can afford it, and I am looking 
forward to supporting your appointment and working with you.
    Knowing that, let me give it to you straight: You are lucky 
you are not brought on to find a new director or administrator 
or president or whatever he is of Amtrak. We are lucky we have 
Mr. David Gunn. He is thoroughly experienced, absolutely fair, 
has the confidence of the White House and has the confidence of 
all sides here in Congress.
    Now, he comes up with a bare bones budget before this 
Committee for $1.8 billion. He knows he has cut back and cut 
back and everything else, but he says: Here is what I need. And 
incidentally, he tells his Board and carries to them a track 
that is half worn out, and he says: ``We have got lengths of 
this in the system that absolutely have got to be repaired 
immediately.'' He talks about the cable systems underneath the 
tunnel there going into New York, three of them. One of them is 
already broke, the other one was broke and been repaired, and 
we have only got one good one since 1935. He says the repaired 
one, up in Canada their experience was it is not going to last 
more than 6 months.
    He said: ``I have got to have the money to get these rails, 
these cables, get this operation, get this repair and 
maintenance going. So I am going to ask for at least $1.8 
billion.'' I said: ``What does the board say? The board, he 
said, they just look at me.''
    I hope you can do better, because we have not heard from 
the board in support of Mr. Gunn since I have been here.
    Second, I said: ``What about the Administration?'' He said: 
``They cut me in half and recommend $900 million, just half of 
what I am asking for.''
    So he comes before this Committee and we--the House gives 
him the $900 million. That is all they give him. So at the 
present minute what we have is we passed in the Senate, 
struggling, $1.3 billion plus forgiveness of $100 million or 
really $1.4 billion. He is still short, but he says: ``Unless I 
get that $1.4 billion, I am going to have to come back early 
next year for a supplemental. Otherwise it is just going to 
have to close down.''
    Now, nobody doubts the competence of Mr. Gunn and his 
dedication to trying to get this thing done. I hope you can get 
with him and support him and then thereby support us, because 
that is the pillar to post. Just like the distinguished 
Chairman said, in 32 years they got $26 billion. He does not 
like railways to go broke, but he loves airlines, Mr. Crandall, 
to go broke. We have already given them in 2 years $30 billion 
and they are still all going broke. So we all enjoy airlines 
going broke, but we resent railroads going broke.
    Come on, we have got to get with the program here. I 
appreciate your answer because if you believe in a national 
rail system, Senator Hutchison does and the other Senators here 
believe in it, and their States are putting out money, and I am 
trying to get the State support right now to get a real system 
going.
    So look at it. Talk to Mr. Gunn and then help us help 
Amtrak.
    Thank you, Mr. Chairman.
    Senator Smith. Senator Hollings, I wonder if you would 
yield to a question, because I think it follows onto what you 
are asking them. Is it not true that what really divides 
Senators on the issue of Amtrak is whether or not Amtrak is a 
business or whether Amtrak is a public service?
    Senator Hollings. Amtrak has got to be a public service. 
That is the experience the world over. We never have known--the 
railroads had it in the beginning. Mr. Thompson, you know about 
railroads. They had the passenger rail service after World War 
II. They had it exclusively, and in 1970 they said: Here, you 
take the passenger cars, take the system, and everything; we 
give it to you, because we cannot make it.
    Senator Smith. Would you ask them, Senator Hollings, 
whether they think it is a public service or a business?
    Senator Hollings. Do you think it is a public service or a 
business? Mr. Crandall, what is your answer?
    Mr. Crandall. I am going to ask you a question back, 
Senator.
    Senator Hollings. Sure.
    Mr. Crandall. I think, for example, that every function of 
government should be run like a business, in this sense: I 
think every enterprise, whether it is a business or a function 
of government, should keep its books accurately. I think every 
function of government and every business should administer its 
affairs carefully.
    Now, if you are a business you have to make a profit. 
Passenger rail service can never be profitable and it never 
will be profitable. So as I said in my opening remarks, in my 
view Congress and the Administration, which I think are the 
shareholders in a sense of this corporation, have a 
responsibility to decide on a consistent plan what is it you 
want Amtrak to do, and then you have a responsibility to 
provide the needed funds.
    We have a responsibility to be sure that those funds are 
spent in a businesslike way. They should be spent efficiently. 
Every dollar should be accounted for, and we should tell you 
the truth. In that sense, it is a business.
    But in terms of whether it is profitable, passenger rail is 
not and will not and cannot be profitable. If we want a 
passenger rail system, then we have to provide it as a function 
of government.
    Senator Hollings. Have you ever talked to the President 
about Amtrak?
    Mr. Crandall. I have not.
    Senator Hollings. Please do.
    I will take it, Mr. Hall, you and Mr. Thompson both agree 
with Mr. Crandall's comments there or response?
    Mr. Thompson. I wanted to add, Senator, that in fact Amtrak 
is a little bit of both. It serves a public need which you 
define, but I hope it is operated like a business so that it is 
operated effectively and efficiently. That is why I said that 
the new grant agreement or contractual arrangement between 
Amtrak and DOT is actually a very good thing, because it 
permits Amtrak to serve a defined public requirement, but to do 
it in a much more effective way than it has in the past.
    Senator Hollings. Good answer.
    Mr. Hall?
    Mr. Hall. I agree.
    Senator Hollings. Thank you very much, Mr. Chairman.
    Senator Smith. Thank you, sir.
    Senator Hutchison.
    Senator Hutchison. Thank you, Mr. Chairman.
    I will say that normally I would be chairing this Committee 
when Senator McCain left, and he asked me to, but I have to go 
manage the floor. So I am very pleased that Senator Smith has 
agreed to do it.
    Before I leave, I would just like to talk about the amount 
of funding Amtrak needs. I appreciate what all of you are 
saying, that passenger rail is a government service and will 
not be profitable. There are people in Congress who actually 
believe it should be operationally self-sufficient. As long as 
there are people who believe that, then there are people who 
are going to say we must eliminate it because it is not 
operationally sufficient, self-sufficient.
    So let me say this. The administration asked for $900 
million, as Senator Hollings said, and the Senate was able to 
get $1.3 or $1.4 billion, which David Gunn said is the absolute 
minimum level needed to continue operating. But right now in 
the conference committee the amount stands at the House level 
of $900 million.
    Do you believe that we can go forward in any responsible 
way for another year with $900 million for Amtrak, from what 
you know so far? All three of you, please. Mr. Crandall?
    Mr. Crandall. Well, Senator, the fact is I have not had an 
opportunity to look at the numbers, so there is simply no way I 
can comment because I do not know the numbers. Let me start 
with a presumption. If you start with the presumption--I have 
heard a lot of praise from both sides of the aisle about David 
Gunn. If you start with the presumption that David Gunn's 
numbers are correct, that the $1.8 billion is required to do 
two things--first, to provide the operational subsidy; and 
second, to make the capital investments that he believes are 
essential. If you start with the presumption that those numbers 
represent real minimums and that they are honest numbers, then 
obviously you cannot get by with $900 million without not doing 
something.
    Senator Hutchison. Mr. Hall?
    Mr. Hall. I agree, I do not know enough to really comment 
on it intelligently. It does seem to me that if management has 
submitted that much larger budget, it was submitted because of 
a rationale that the management team has put together over a 
period of time. My inclination would be to listen to the 
management team until I knew better.
    Senator Hutchison. Mr. Thompson?
    Mr. Thompson. I too, do not want to comment on $1.8 billion 
versus $.9 billion. What I will tell you is that I am going to 
make a major effort to find out what those numbers mean and 
what is really behind them.
    But I would also say that this is another example of where 
we have been in past years of pay me now or pay me later. It is 
possible that Amtrak could scrape through on some number that 
is less than $1.3 billion or maybe even around $1.0 billion, 
but all that does is buy a more serious problem in the future.
    If you really want this to be stable, if you really want it 
to perform the service that you want it to perform, then you 
cannot keep on postponing the problem year after year. At some 
point it has to be fixed.
    Senator Hutchison. Let me ask just one more question. In 
the past, we have never separated infrastructure costs and 
operational subsidy. Because some argue we should not have 
operational subsidies, funding has come in a lump sum. I think 
it is time for us to assess and address capital expenditures 
versus operational subsidies, and I think you are providing a 
dose of reality here.
    The legislation that I have introduced, which has 
bipartisan support--there are some differences on the 
Democratic side regarding some of the union issues, but in 
large part it does have bipartisan support, has Senator Lott as 
a major co-sponsor. It also has bonding authority for 
infrastructure investment to give Amtrak a chance to succeed.
    I would ask you if you think that bonding for 
infrastructure, as we use in highway and airport construction, 
is also valid for rail infrastructure, and would you be--I am 
not saying are you supporting my bill, but would you be 
generally supportive of this bifurcation of infrastructure 
needs and operational subsidies? Mr. Crandall?
    Mr. Crandall. Well, I think bonding, of course, is just 
another way of borrowing money. I think it would be perfectly 
fine for Amtrak to borrow money. I suspect, however, that if we 
are going to provide bonding authority that the Congress should 
decide how it is going to provide a dedicated stream of revenue 
to Amtrak.
    You have to keep in mind that every time you borrow money 
your operational subsidy has to go up, because now you have got 
to take out of your operational subsidy the money required to 
pay back both the debt that you have incurred and the interest 
on that debt. So yes, you can borrow money as an alternative to 
getting an allocation of funds from Congress, but at the same 
time you have to recognize that each dollar you borrow has to 
be paid back and that is going to increase the operational 
deficit.
    Senator Hutchison. Mr. Hall?
    Mr. Hall. I think clearly I agree with separating the 
operational funding needs from the capital expenditure needs. I 
think both of those really need by the Board diligent study and 
the Board should be looking for improvements in the operational 
issues to fund those needs that are pretty obvious for the 
capital expenditures.
    As to how it is funded, I really cannot comment. I think 
there are a lot of people much more capable of commenting on 
that than I am.
    Senator Hutchison. Mr. Thompson?
    Mr. Thompson. Senator, you made one point that I would I 
think like to stress also, and that is infrastructure in this 
case includes the Northeast Corridor and then it includes 
rolling stock and other infrastructure that Amtrak has. I 
really do think that it is critical to distinguish these 
financially because otherwise I do not think we will be able to 
show people what is the money going for and are you really 
getting your money's worth. So I completely agree with you that 
clarity on that regard is really important.
    On the funding, I guess I have the same feeling that Mr. 
Crandall does, that the issue is how does it get paid back. You 
can be clear that the operation of Amtrak will not generate the 
money required to pay anything back. That will have to be part 
of the funding stream that Congress provides or that is 
provided for in the way that the bonding is done.
    Senator Hutchison. Well, we do have a mechanism in the 
bill--I will not go into it now--that might be helpful. But I 
would encourage you to look at that and other alternatives and 
just give us advice.
    I thank you very much, Mr. Chairman.
    Senator Smith. Thank you, Senator Hutchison.
    Senator Lautenberg.
    Senator Lautenberg. Thanks, Mr. Chairman.
    I, like the three of you, have had boardroom experience and 
worked hard to build a company and know a lot of the questions 
that I would ask myself. None of you have had any discussions 
with David Gunn?
    Mr. Crandall. Correct.
    Senator Lautenberg. I would like to think, Bob Crandall, 
that if you were--and I know you are on a lot of boards. Would 
you not typically--if I was Chairman of ADP again, as I was, 
and I invited you to come to the Board, I would sit down with 
you, have lunch or dinner or schedule a chat. Frankly, I am 
surprised that not one of the three of you did--you did talk?
    Mr. Thompson. I have met with David Gunn, Senator.
    Senator Lautenberg. OK. You did not come from the corporate 
world.
    You would not have had a chance to look at the operating 
conditions, have it reviewed, before you are put in these 
chairs to make a decision about whether or not this ought to 
happen, that ought to happen. So I would commend to you that 
you get to know something about it so that you can answer a 
question: Is $900 million good, is $1.3 billion good over the 
years?
    This skinny little railroad, I am going to call it, since 
1971 to date there has been 25, just over $25 billion put into 
the railroad. In my mind it is a commodity. It is not different 
than TVA or some of the other semi-government operations.
    Mr. Crandall, if you say it should operate like a business, 
I have got to ask, what kind of business? A business like 
Enron, a business like WorldCom, a business like Tyco, or even 
like Fannie Mae or Freddie Mac or the Putnam Funds or the New 
York Stock Exchange, or United Airlines? Which of those 
businesses would we like to emulate in the operation of Amtrak?
    You cannot do it, gentlemen. You cannot operate it as a 
business.
    Mr. Thompson, I ask you: Do you know any railroad, 
operating railroad, across the world that does not have a 
government subsidy supporting it?
    Mr. Thompson. Well, there are some. There are some in 
Japan, for example, that are very large operations----
    Senator Lautenberg. Tell me one?
    Mr. Thompson.--and they do make money. It depends a little 
bit on----
    Senator Lautenberg. Turned over, fully paid for.
    Mr. Thompson. Yes. Yes, they were. And there are certainly 
private operators who provide passenger services for a profit 
under contract with their governments.
    Senator Lautenberg. Some of the amusement parks have them, 
I know that.
    Mr. Thompson. Well, and in that sense this is why I said 
Amtrak could be a little bit of both, because I think that I 
hope that this board will view, as Mr. Crandall said, will view 
the way the company operates providing a service to you, I hope 
that the Board will view it with great severity. I really want 
to know what is going on and what are the issues, what are the 
costs, how efficient are we, how can we do better? I am going 
to try to do that every day.
    But it is not a company selling a commercial product that 
can be left to the market. That is very clear. It is a public 
need and the public sector has to say what they want and then 
has to be willing to pay for it.
    Senator Lautenberg. Mr. Crandall, I read about your views 
on labor unions and you expressed the view--and you too are 
noted for your candor; I too. When you had your days at 
American Airlines you had some comments to make about the 
unions. Now, in your potential role as a member of the Board of 
Amtrak you have got a large number of union employees. Will 
there be an adversarial relationship with the unions here or 
are they a fact of life as you see it?
    Mr. Crandall. Well, the unions are a fact of life. There 
will not be any adversarial relationship unless they choose 
one.
    My relationships with unions, and indeed every executive's 
relationships with the unions in the airline business, have 
been difficult. Nonetheless, over a 25 year period we increased 
Americans employment by about 60,000 people, most of whom were 
union members. I think if you went back and asked the union 
leaders at American whether they thought my leadership was 
successful, they would tell you outstandingly so.
    Senator Lautenberg. Well, I hope that it is recognized that 
this is a situation that is an integral part of the existence. 
I am not saying that whatever the unions say is correct, not at 
all, not at all. But I think if we go in there with boxing 
gloves on there is going to be a knockout someplace and you 
have to be very careful.
    Mr. Thompson, I want to get back to something that we just 
talked about and that is a study, a CRS study, showed that of 
14 countries examined for their rail privatization efforts, 
only in Japan is intercity passenger rail service consistently 
profitable. However, this is based on the Japanese government--
I think this is something that you are quite familiar with. The 
Japanese government transferred about $300 billion in debt from 
the former Japan National Railway to a government corporation 
rather than to the national railway's successor company. Only 
in Japan, it says, one place.
    So we come down to the question, and I think Senator 
Hutchison raised it, it is not how you divide the balance sheet 
or you divide the operating statement. It is a question of what 
you put in there to make this a whole piece of business.
    I thank you, all of you, for your response and for your 
willingness to take on this task. You may see me along the way.
    Senator Smith. Thank you, Senator Lautenberg.
    Senator Lott.

                 STATEMENT OF HON. TRENT LOTT, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Lott. Thank you, Chairman Smith.
    Gentlemen, thank you for being willing to take on this 
task. It is not an easy one. But you all have impressive 
credentials and I hope you can only aspire to do as well as a 
recently retired Member of the Amtrak Board, Mayor John Robert 
Smith, who was Chairman of the Board, from Meridian, 
Mississippi.
    I have been a supporter of having a national rail passenger 
system. I have been a supporter of Amtrak. I think the record 
would be clear that I helped pass the last legislation that 
authorized Amtrak to keep, to stay in existence and be where it 
is now.
    But I think you have to always keep asking yourself, are 
you making the right decision. I think the choice that some of 
you have outlined is true: Do we want a national rail passenger 
system or not? Can we afford it? Do we need it? Do the people 
want it?
    At some point we may have to say: Well, it is nice, we 
would like to have it, but people are not riding it, people are 
not willing to pay what it would take for it to make ends meet, 
and goodbye. Right now I am reevaluating all of that, because I 
am just not sure.
    For instance, Mr. Crandall, you came from the airline 
industry. The airline industry is having problems, but it is 
sure a hell of a lot easier to get on a regional jet at 
Meridian, Mississippi, and fly to Atlanta and get on an airline 
there and fly to Washington, a lot easier, a lot quicker, and 
not a whole lot more expensive than riding a train overnight 
the same.
    So I do not know. Why would, other than just having to say 
``I rode the train once,'' why would people do that? Is this 
nostalgia? Are we in love with an idea? I think I am. I really 
think part of my problem is I cannot let go of something that I 
guess has been critical. I have ridden a train twice in my 
life. Well, I guess more than that. I ride Amtrak up to New 
York, but not a whole lot.
    How about that, Mr. Crandall? Do we need this thing?
    Mr. Crandall. Senator Lott, I do not know. The fact is, 
like you, I am a bit of a train buff. I used to ride back and 
forth between Chicago and Providence, Rhode Island, when I was 
knee high to a grasshopper on the train. I remember those days 
with pleasure. I took commuter trains for years when I lived in 
New Jersey and worked in New York.
    Again, you come to the question of the roles of the 
players. To be candid with you, whether we should have a 
national rail system is a question that has to be decided above 
my pay grade. That is your job. It is the job of Congress and 
the Administration to decide what our national transportation 
policy should be and to decide whether it should include rail 
and, if they decide affirmatively, to fund it.
    It is the Board's job, I think, to be sure that whatever 
funds you provide and whatever system you incorporate into our 
national transportation policy is effectively and efficiently 
administered, and it is our job to give you advice if you ask 
for it. But that policy has to be decided, I think, by 
Congress.
    Senator Lott. Let me try to ask you a couple of direct 
questions that should allow you to give a short answer. Is this 
bonding idea one that we should do or not.
    Mr. Crandall. It is just borrowing money, Senator. If we 
want to borrow money as opposed to appropriating money, suer, 
you can bond it. But you have got to have a stream of revenue 
to pay it back.
    Senator Lott. Mr. Hall?
    Mr. Hall. I agree. Borrowing money, it is a question of do 
you pay an interest on it or do you not, and what kind of 
interest would you pay.
    Senator Lott. But is it not--OK, maybe it is an escape 
hatch for us to find a way to get money into the system without 
having to ante up in the regular appropriations process.
    But let me ask you, Mr. Thompson. I have read some of your 
writings. You obviously have looked at railroads, thought a lot 
about it. So you should be an interesting member of the board. 
But somebody said that we want to make sure that Amtrak has 
been operated effectively and efficiently. Has it been?
    Mr. Thompson. In many ways it has not.
    Senator Lott. OK, I think you are right. I, too, think that 
Chairman John Robert Smith has done a good job. I think Mr. 
Gunn is a good man. I think he is more candid, more blunt with 
us. I do not know if he needs $1.8 billion. I mean, he has been 
around long enough, he knows if you ask--if you want $1.2 
billion, you ask for $1.8 billion, you might get $1.2 billion.
    But no, part of the problem is we set it up where it could 
not work. We tried to take some of the shackles off of it in 
1996, 1997, when we passed the last Amtrak legislation, allowed 
them to be able to compete, allowed them to be able to make 
money, and allowed them to privatize some of the things where 
they could not make money. I even wanted them to be able to 
wield power. Of course, the utilities did not think much of 
that.
    But if we are going to tell them, you have got to operate 
like a business, we have got to allow them to operate like a 
business, for God's sake.
    How about it?
    Mr. Thompson. Well, I think that is the import of what we 
are saying also, that we would really like to be able to work 
with David Gunn and make the company as efficient as possible. 
Why should you pay any more for the services you are buying 
than you have to?
    Senator Lott. Now, I believe, Mr. Crandall, you suggested a 
dedicated stream of money. Where do you suggest that come from? 
Nothing is dedicated that comes from Congress. We may be $900 
million this year, $1.6 billion next year, who knows the next 
year. That is not a dedicated stream.
    Are you advocating a trust fund, or some sort of tax on 
riders or something that would go into a trust fund dedicated 
specifically for Amtrak?
    Mr. Crandall. I think if you want Amtrak to have borrowing 
authority then Amtrak is going to have to have some kind of 
dedicated revenue stream to pay it back.
    Senator Lott. Well, what? I mean, that is a nice 
suggestion. I agree. What? I am looking for it.
    Mr. Crandall. Well, Senator, you are much better versed in 
the possible sources of dedicated income streams than I am.
    Senator Lott. No, you guys have more experience in raising 
money. All we do is just spend the people's money and that is 
not a dedicated stream of money.
    Mr. Thompson. My experience is in lending money, Senator, 
not in raising it.
    Senator Lott. Well, if you think of a good idea on a stream 
of money, we would like to get it real quick.
    Now, Mr. Thompson, you have written a great deal about 
privatization and advocacy issues. Are you an advocate of 
privatizing the national rail passenger system?
    Mr. Thompson. Well, Senator, I am glad that the ``p'' word 
came from you rather than me, because I have discovered that it 
is a very emotive term that causes a lot of people to get very 
worried. What I would rather say is this. I believe very 
strongly that we need to make Amtrak stronger and we need to 
make it more effective.
    I do not think privatizing Amtrak would do that or anything 
close to that because, as has been made very clear, it is not a 
business in the sense that it can charge its customers enough 
to cover its costs, period. That is true now and that will be 
true forever. So it is always a business supplying services to 
Congress.
    Could you make the role of the private sector more 
effective in all of this? I think that you could and I think 
that we should look at all of the alternatives that are 
available for reducing the call on the public money.
    Senator Lott. Two quick points. You did write in September 
2001 a paper entitled ``Directions of Railway Reform,'' in 
which you said the British effort to privatize the rail system 
basically, what, that it did not fail, but that it did actually 
lead to increased government subsidies. Is that a fair 
characterization?
    Mr. Thompson. It is fair to say that I believe that it did 
not fail, certainly not as badly as the newspaper reports would 
have it.
    Senator Lott. That it did not fail?
    Mr. Thompson. No. Some things failed and others did not. It 
is like everything else, it was a complicated problem and some 
things worked and others did not. For example, the system is 
actually carrying more passengers now, passenger miles now, 
than it did in 1947, so hard to call that total failure.
    But there were problems and there certainly have been 
problems with it, and I think they are trying to fix it.
    Senator Lott. I do hope that, with regard to the union 
questions from Senator Lautenberg, as the son of a shipyard 
worker, a pipefitter, union member, I think that there needs 
and concerns need to be addressed. But when I hear suggestions 
from one of the Amtrak unions or a couple of them they are 
going to strike and put thousands, maybe millions, of people 
inconvenienced and in difficulty because they are mad that 
Congress will not give them the money they want, it is about 
the height of--that is the kind of irresponsible conduct by the 
unions that ruins their reputation.
    So while I hope that you will be understanding of the 
workers, that you will do anything you can to discourage that 
kind of irresponsible suggestion, let alone act.
    Thank you, Mr. Chairman.
    Senator Smith. Thank you, Senator Lott.
    Gentlemen, in my opening statement that I put in the record 
I was going to spend some time bragging about the Cascade Line 
in the Pacific Northwest. From 1993 to 2000 ridership has gone 
from 94,000 passengers to over half a million a year, and that 
record will be broken this year.
    It is my personal feeling that part of the success of that 
line is that the States of Oregon and Washington help provide a 
revenue stream. They contribute scarce State dollars now to 
make it a great system. One of the I think complaints I have is 
that some States contribute, others do not. I think where they 
do you have got a better system.
    I wonder if you have a feeling about whether they ought to, 
whether they should not, or whether this ought to be a fairer 
process whereby States contribute if they want to participate, 
or should they just be absolved of any responsibility? Maybe 
you want to take a shot at that.
    Mr. Crandall. Mr. Smith, I do not want to duck your 
questions, but that is an issue that involves networks of 
trains and the nuances of financing arrangements that I simply 
am not familiar with at this point. I will be happy to study 
the matter for a couple months, come back and tell you what I 
think.
    Senator Smith. I think it is worth--you know, Senator Lott 
mentioned a revenue stream. I think that is a revenue stream 
that has proven, at least in our part of the country, to have a 
benefit beyond just the dollars, a benefit that involves more 
people in making the thing successful and promoting it.
    Mr. Thompson. Senator, I did mention earlier that Amtrak 
effectively is doing three things. One is the operation in the 
Northeast Corridor, one is the national system, and one is the 
series of shorter haul trains where the State role really 
should be clearer and better. And I think States who do get 
involved end up getting better service, which is only fair.
    Senator Smith. Well, I just, I commend it to you as a 
policy idea that I think needs to be uniformly applied, because 
I think the results will be better for operating it as a public 
service, but running it according to prudent business 
principles. So I commend that to you.
    There are certainly some lines where States are not 
contributing, and I hope I am not wrong in representing this, 
but it seems to me that the Sunset Limited Line, Los Angeles to 
Orlando, that lost over $400 per passenger in Fiscal Year 2002. 
You just wonder sometimes when there is no State involvement 
and there is that kind of Federal subsidy how that is fair.
    Maybe you can come back to us and tell us where there are 
just some egregious examples of this line or that line just not 
working and how either they can be made better or eliminated, 
because I think there are some examples that really do retard 
the ability of some of us who want to support Amtrak to getting 
it by some of the arguments raised that I think represent clear 
abuse of the system. I commend that to you as well.
    I am also wondering, Mr. Crandall, if you think that Amtrak 
can compete with the airlines in terms of travel and 
convenience. Are there areas where you think that makes sense?
    Mr. Crandall. Mr. Smith, trains and planes for the most 
part are not really competitors. They are complementary parts 
of a transportation system. There are places where a train, an 
optimized train service, I think, can compete very well. For 
example, if you took Washington to New York and if you repaired 
the power source and if you straightened out the rails and if 
you could run the train 125, 150 miles an hour across that 
whole distance, I think you would find that--I think in that 
particular area that trains would be a very attractive 
alternative to airlines.
    Now, in the context of an integrated transportation policy 
that would have some other benefits. It would have the benefit 
of not having to further develop LaGuardia Airport, because 
many of their short haul slots, if you would, would be used to 
fly longer distances. It would have a similarly favorable 
impact on Reagan Airport here in Washington, where you could 
now fly, instead of half the slots or a substantial percentage 
of the slots being used to fly short hauls, you could use them 
for the long haul flights.
    So in a real integrated transportation planning exercise, I 
think what you would do is you would say, well, I am going to 
spend some money to fix the track and I am going to save some 
money on airports, and I am going to allow the airlines to use 
their airplanes in more productive ways, and the net benefit in 
an integrated transportation policy might be very favorable. 
Unhappily, for whatever reason, our country does not seem to do 
that kind of integrated transportation planning.
    If this Board can be helpful in moving us a step in that 
direction, I would like to see it happen. I think it makes good 
sense.
    Senator Smith. I think as you evaluate it we would, I 
would, greatly appreciate and respect your recommendations on 
these kinds of proposals. I am interested in high-speed rail 
and how that might relate to being afforded, provided for, 
budgeted for, if we can show some savings in other places, 
because I think--I do not know how many more airplanes we can 
put in the sky and safely provide transportation for the 
public.
    I think there are places where high-speed makes a ton of 
sense. So I hope we get there. Maybe we can duplicate the few 
lines in Japan that are actually profitable, because that is 
high-speed. I have ridden them.
    Mr. Crandall. It does seem to me if the French can do it we 
ought to be able to do it.
    Senator Smith. That is a very good observation. There is a 
challenge.
    Senator Lautenberg for a second round.
    Senator Lautenberg. Thank you very much.
    I could not help but be a little amused at some of the 
discussion that took place, but I first wanted to ask Mr. 
Thompson a question. A Columbia University economist wrote 
that: ``The disastrous privatization experience of British Rail 
provides an important precedent. There, the breakup of the 
system was followed by serious accidents, financial insolvency, 
further public subsidies. Here, privatization yielded the worst 
of both worlds: chronic service failures, no effective market 
discipline, wasted public revenues.''
    What do you think, Mr. Thompson?
    Mr. Thompson. I do not want to defend or be in the position 
of defending everything that the British did in privatizing 
British Rail. It is clear that they made a number of decisions 
that they have now changed or are trying to fix. Fragmenting 
the system into 25 operating companies did not make any sense. 
They agree on that now. The way in which the infrastructure 
company was privatized did not work for a lot of reasons, and I 
think they have changed that now, forming Network Rail.
    But there were certain aspects of it, like the ridership 
actually went up, that I think were favorable. The other things 
is that, yes, funding has gone up, but that is because the 
basis that they tend to compare it with was the tail end of the 
British Rail regime when the government had starved British 
Rail, a lesson that we might want to think about. The 
government had absolutely driven the funding to British Rail 
down as far as it possibly could and it was eroding. Now we are 
comparing what the government is spending now with what it was 
spending then, and that is not entirely a fair comparison.
    Senator Lautenberg. I thank you for the explanation.
    Mr. Crandall, have you looked at the details surrounding 
Amtrak enough to suggest that they are fairly well borrowed to 
the hilt, as the Chairman, Chairman McCain, before said, 
including the property up in New York City that was mortgaged 
practically before ownership transferred. Is Amtrak, do you 
think, fairly well borrowed out?
    Mr. Crandall. So far as I know, Senator, although I am not 
familiar with the financials in detail, but I am told that 
Amtrak has effectively borrowed all that it can borrow against 
its fixed assets.
    Senator Lautenberg. That is as I see it, and I look at it 
fairly carefully.
    The thing that amused me here is it was suggested, at least 
intimated, that what should happen is maybe loans be made to 
Amtrak and get it done that way. Well, if they are borrowed up 
to here it is not a good idea to extend borrowing capacity.
    But as we argued that or debated that this morning, I am 
reminded of a debate that took place, Senator Smith, just a 
week ago, when we had a hell of a fight about whether or not to 
grant Iraq money or to loan them money. Everybody was insisting 
that we grant them money. And they sit on their fat treasury, 
if I can use the expression, of hundreds of billions of 
dollars, maybe even a trillion dollars, worth of liquid gold 
there. But no, we wanted to make sure it was a grant.
    Here in this railroad, which is an integral part--Mr. 
Crandall, you said it and it was just perfect, I think, coming 
from you: the recognition that, while aviation has a critical 
role in this country--I think it helped build the country, very 
frankly, in a very significant way--but not to have another 
means of transportation that is viable is kind of not the way 
to go. I see it that way, that there is fundamentally a 
commodity service attached to it.
    So when we look at the proposal in front of us, I think, 
for better or for worse, rail has to be part of our existence. 
We can look at maybe cutting it up. I do not approve of that 
because I think the whole thing is a network.
    For Senator Smith, our friend Senator Crapo--and I do not 
believe this was a private observation--from Idaho said that 
both he and your colleague feel that it would be wonderful if 
they could reestablish a rail link from Boise, Idaho, to 
Portland, Oregon. Well, I do not know whether it would carry 
enough passengers to ring the cash register, but the fact of 
the matter is that it would be a wonderful adjunct, I think.
    It is not just the Northeast Corridor. I think if there was 
a decent rail line between, let us say, Las Vegas and Los 
Angeles or Chicago and St. Louis or other places around the 
country where you could develop pretty good revenue streams, I 
think that is worth looking at.
    The one thing that we have to come to a decision about is 
are we going to starve this beast or are we going to finally 
feed it enough to make it stronger? So yes, there will be a 
subsidy each and every year as long as any of us inhabit this 
earth, and I think we have to step up to it.
    Mr. Thompson, you essentially said that: ``You pay one way 
or the other. There is no such thing as a free trip.''
    Mr. Chairman, thanks very much for your indulgence, and I 
thank all three of you witnesses, excellent candidates, and we 
wish you well. But we hope that we will be able to look at your 
history in a few years from now and say: Wow, those guys were 
great; look at what they did for the country.
    Thank you very much.
    Senator Smith. Thanks, Senator Lautenberg. And I appreciate 
the comments of many of my colleagues and each of you nominees 
about the importance of rail in an integrated system for 
transportation. I came through a huge fight in Oregon over 
whether to put light rail in Portland. Well, we used to have, 
before I was ever born, we had a rail system in Portland. When 
I grew up here in Chevy Chase, Maryland, I remember streetcars 
all over this city. And we tore them all up and we put 
everything in freeways and automobiles, and after a while you 
figure out that there is no quality of life if that is your 
only option.
    I cannot imagine this city now had there not been a 
recognition of this and an investment made in a rail system for 
this city. We would be at a standstill. The city would be 
standing stiller than Congress a lot of the time.
    We have got to preserve a rail system. It is a public 
service, and what we are asking for is what is the dollar sign? 
What business sense can you bring to this to help us to make 
the case to our colleagues at a number that we can defend? I 
think that is really where your expertise is appreciated and 
most needed.
    I hope when the Chairman asks you your opinion, you will 
not give him a blank look, because there is a lot of horsepower 
in each of you gentlemen.
    We appreciate your willingness to serve. It is the 
intention of the Committee to move your nominations to the 
floor, and we look forward to hearing back from you as to how 
best to proceed with a national rail policy.
    With that, we are adjourned.
    [Whereupon, at 10:48 a.m., the Committee was adjourned.]

                            A P P E N D I X

                                United Transportation Union
                                   Washington, DC, October 30, 2003

Hon. John McCain,
U.S. Senate,
Washington, DC.

Dear Senator McCain:

    The Committee on Commerce, Science and Transportation will soon be 
holding hearings on the nominees for Member of the Amtrak Reform Board. 
I wanted to call your attention to one of the nominees, Louis S. (Lou) 
Thompson, of Maryland.
    Lou has had a long career in transportation. He was a member of the 
team that created Amtrak in 1970. He was the Director of the Northeast 
Corridor Improvement Project (NECIP) and Associate Administrator of the 
Federal Railroad Administration supervising the Amtrak budget. He then 
spent 17 years as the Railways Adviser at the World Bank working in all 
the areas of the world on the Bank's railway lending.
    He has a reputation for competence and willingness to listen. The 
Amtrak Board found that he ``approached matters pertaining to Amtrak 
with reason, wisdom, and good judgment,'' and commended him for ``the 
many contributions he has made to improve rail passenger service, not 
only in the Northeast Corridor, but throughout the Amtrak system.'' A 
New York Times editorial said: ``A new Director [of the NECIP], Louis 
Thompson, has the respect of the region's planning and transportations 
officials . . .''
    Amtrak will be facing difficult decisions in the near future as the 
company begins to recover from a number of years of underinvestment. 
The Congress and the Department of Transportation will likewise need to 
make complex decisions about the future of rail passenger service in 
this country. The Amtrak Board will need people with the expertise to 
understand the issues, the personal skills needed to listen to all 
sides, and the credibility to help reach agreements. I would like to 
commend Lou Thompson to you as a person who fully meets these tests.
            Sincerely yours,
                                       James Brunkenhoefer,
                                     National Legislative Director.
                                 ______
                                 
                National Association of Railroad Passengers
                                                   November 5, 2003

Hon. John McCain,
Chairman,
Committee on Commerce, Science, and Transportation,
U.S. Senate,
Washington, DC.

Dear Mr. Chairman:

    The National Association of Railroad Passengers is pleased to 
support the nomination of Louis S. Thompson to the Amtrak Board of 
Directors.
    We do not expect to agree with him on all issues, but we think his 
selection is an example of the nomination process at its best: someone 
who has a detailed knowledge of the rail passenger business both here 
and abroad. This is not to say that such knowledge should be a 
prerequisite for every board member, but the level of expertise he 
brings will certainly be an asset.
    Mr. Thompson asked for our support. He then participated in a 
telephone conference call with five members of our executive committee, 
including me. After receiving a report on that call, our full executive 
committee voted overwhelmingly to endorse him.
    We believe he would be a capable, knowledgeable and responsible 
person to work with in trying to help rail passenger service develop an 
agreed and stable future.
    Thank you for considering our views.
            Sincerely,
                                             Ross B. Capon,
                                                Executive Director.
cc: The Honorable Ernest F. Hollings
The Honorable Kay Bailey Hutchison
The Honorable Daniel K. Inouye
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John McCain to 
                           Robert L. Crandall
    Question 1. I am very interested in hearing why each of you is 
interested in serving on the Amtrak Board of Directors. [did you offend 
the President in some way?]
    Answer. My career has been in transportation. I believe that this 
country needs a comprehensive transportation policy, that the policy 
should focus carefully on what each mode of transportation does best, 
and that passenger rail has a role to play. I regard this appointment 
as an opportunity to contribute my experience to shaping the Nation's 
transportation policy and I look forward to doing so.

    Question 2. What do you consider to be the appropriate role of the 
Amtrak Board of Directors? Do you see yourself as taking an active role 
in determining the future of Amtrak?
    Answer. I believe that the most important role of the Board of 
Directors is to assure that the company is well and efficiently run, 
lives within the financial resources available to it, and complies with 
the statutory directives related to the company. Additionally, since 
the Board will have detailed knowledge of Amtrak's strengths and 
weaknesses, I think the Board should offer its advice to both the 
Congress and the Administration. Only the Federal Government--the 
Congress and the Administration--can decide policy and allocate 
funding, but the Board can be a source of reliable, candid advice.
    In its advisory mode, the Board may play a role in determining the 
future of Amtrak.

    Question 3. Who do you believe you represent in your capacity as a 
Board member?
    Answer. Since the Board is appointed by the President and confirmed 
by the Senate, I believe that the Board's primary duty is to represent 
the public's interest.

    Question 4. Amtrak operates a number of long-distance routes that 
lose hundreds of dollars per passenger. The Sunset Limited, which 
operates from Los Angeles to Orlando, lost over $400 per passenger in 
Fiscal Year 2002. Do you think this kind of subsidy is warranted?
    Answer. I do not believe it is the role of the Board to determine 
whether a specific subsidy is warranted. That is the role of the 
Federal and state governments that provide those subsidies. I see the 
role of the Board as making Amtrak the most efficient provider of 
service as possible and then being able to accurately inform the 
Administration and Congress and the states what it will cost to run the 
trains. Then it is the role of the Federal and state governments to 
determine whether they are willing to pay to keep the trains running.

    Question 5. How do you believe decisions should be made to add, 
reduce, or eliminate train service?
    Answer. My preferred approach is that an efficient Amtrak is able 
to accurately inform the Federal and state governments what it costs to 
run each train service and let them decide which they are willing to 
pay for. Absent that, then the Board has an obligation to ensure that 
the company lives within the level of revenues (including subsidies) it 
has available, even if this means elimination of trains.

    Question 6. What is your assessment of the Administration's 
legislative proposal for reforming Amtrak?
    Answer. I haven't had an opportunity to review any of the pending 
Amtrak legislative proposals in the level of detail necessary to make 
an informed assessment of their pros and cons.

    Question 7. In a normal business, the consequences of not meeting a 
company's business plan include a lower stock price, cost-containment 
measures, reductions in service, salary freezes, and the elimination of 
bonuses. Amtrak has consistently failed to meet its business plan, but 
the only real consequence has been to increase the financial burden on 
the American taxpayers. What consequences should apply to Amtrak? 
Wouldn't the introduction of competition help motivate Amtrak to 
operate more efficiently and follow through on its business plan?
    Answer. Amtrak needs to present to the Federal and state 
governments an accurate business plan that lays out the true net cost 
of providing the services that cannot stand on their own. If these 
subsidies are provided, then it is up to the Board to make sure the 
corporation is managed so as to live within the funding provided. If we 
can't do that, then Amtrak needs a new management and Board of 
Directors.
    The competition part of this question raises an interesting issue 
with respect to whom is the intended beneficiary of competition--Amtrak 
or the consumer (including the government bodies subsidizing Amtrak 
service). My background was in the highly competitive aviation 
industry. Based upon that experience, I can say there are both 
advantages and disadvantages to competition. Great ideas can come from 
companies seeking a competitive advantage. Competition forces companies 
to focus on the key aspects of a service--price and quality--with a 
benefit to the consumer, but sometimes to the detriment of the company, 
if the company ends up cutting prices below the cost of a service. 
Another issue could be the extent to which Amtrak has the freedom to 
exit certain markets. If the better performing routes were ``cherry 
picked'' and the company could not exit the worst performing services 
then Amtrak as a company could be in worse shape than now. At this 
point I am still learning about Amtrak so I am not in a position to 
comment on the particular circumstances and conditions under which 
competition would benefit Amtrak as opposed to the consumer.

    Question 8. If confirmed, will you be willing to comply with the 
Security and Exchange Commission's new corporate governance rules for 
publicly-traded companies, including the rule that non-management 
directors meet at regularly scheduled executive sessions without 
management?
    Answer. Yes.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Ernest F. Hollings to 
                           Robert L. Crandall
    Question 1. There are a number of bills pending in Congress now 
proposing substantial changes intended to improve Amtrak's performance, 
fiscal health, and infrastructure. However, the bills take very 
different approaches in attempting to achieve those improvements. What 
do you believe the Federal government's role should be in making the 
very needed improvements to Amtrak?
    Answer. The Federal Government--Congress and the Administration--
have a responsibility to plan an integrated transportation system for 
the United States. Since it is generally acknowledged that passenger 
rail service cannot be profitable, the Government also needs to provide 
funding for whatever rail transportation component is included in its 
integrated transportation plan.

    Question 2. Are there specific provisions in the Administration's 
proposal for restructuring Amtrak that you believe have particular 
merit? Are there provisions that concern you as being unworkable? Do 
you believe that the states will participate to the extent envisioned 
by the legislation? What do you think of the proposal to establish a 
state compact to manage the Northeast Corridor? Do you support 
separating infrastructure from operations in the Northeast Corridor?
    Answer. I have not had an opportunity to study the Administration's 
bill nor have I had an opportunity to study either Amtrak's operation 
or its finances. Those who have studied it tell me that it proposes a 
fundamental shift in the Nation's transportation policy as it relates 
to passenger rail service. In the end, the Amtrak Board will have no 
choice but to implement whatever transportation policy the Congress 
adopts.

    Question 3. (If you are not familiar with the Administration 
proposal, you may view the legislation as well as Secretary Mineta's 
press release on the bill at http://www.dot.gov/affairs/dot06303.htm.)
    One of the immediate issues facing Amtrak is that of appropriations 
for the coming year. The Senate has voted to appropriate $1.346 
billion, while the House has voted to give Amtrak $900 million. Amtrak 
has said that it will need $1.8 billion just to tread water. At this 
moment, I we cannot predict what the Congress will appropriate for 
Amtrak, whether it will be $900 million or something closer to the 
Senate figure. But I think we can assume with some certainty that 
Amtrak will not get $1.8 billion it says it needs. Obviously, difficult 
choices will have to be made about how the money is to be spent. As an 
Amtrak board member, where will you recommend Amtrak should focus its 
limited funds next year?
    Answer. Since I have not yet met with Amtrak's management, nor 
reviewed its operating plan, and since no one knows how much money the 
Federal Government will allocate, it is not possible to offer a 
sensible response to this question.

    Question 4. How will you prioritize the spending needs, including 
infrastructure improvements, maintenance of safety, security, service 
improvements, and operation of long-distance trains?
    Answer. The first priority of every transportation system is 
safety, and that will always come first. Beyond that, since I have not 
reviewed Amtrak's operating plan, I cannot offer a comment.

    Question 5. What sort of financing do you believe is necessary in 
order to grow intercity passenger rail service in the United States?
    Answer. Since I have not yet reviewed Amtrak's operating plan, and 
have no detailed knowledge of either system utilization or system 
costs, I cannot offer a sensible answer. It is clear that if we want 
more passenger rail service, more operating subsidies and more Federal 
capital funding will be required.

    Question 6. With your years of experience with American Airlines, 
including 13 years as chairman and CEO, you certainly have a lot of 
knowledge about the aviation industry. However, the aviation industry 
in the United States has evolved along a different pathway than has the 
passenger rail industry. When railroads in this country realized that 
they couldn't afford to operate passenger rail service any longer, the 
government took it over. We preserved the passenger rail system just as 
it was in 1970, so that rail service would not be lost for all time in 
some parts of the country. By contrast, when the airline industry 
reached a crossroads, we took the opposite approach by de-regulating 
the industry. The result was that air travel became more affordable, 
but then air service was lost to many small cities. Both approaches 
have had their share of problems. How do you think your experience in 
the aviation industry will translate to the needs and issues facing the 
passenger rail industry today?
    Answer. I hope to bring a new way of looking at the issue of 
passenger rail and the challenges it faces. While the lessons learned 
in aviation are not exactly congruent with Amtrak's current challenges, 
I believe that goal of delivering an efficient transportation option 
for the customers is achievable.

    Question 7. What do you plan to do to bring yourself ``up to 
speed'' on the passenger rail industry in general and on Amtrak in 
particular?
    Answer. If confirmed, I plan on spending time with Amtrak's senior 
management and other Board members in an attempt to learn details of 
Amtrak's current challenges. I believe there is a lot to learn from the 
experts on this issue, which I am not.

    Question 8. We frequently hear that Amtrak should cut its long-
distance trains. However, the fact is, these long-distance trains offer 
the only public transportation available to some areas of the country, 
especially after the loss of air service to many small cities. Do you 
think it is fair to eliminate all public transportation from some areas 
of the country while supporting both highway, rail and air service in 
other parts of the country? Do you think it would be wise to cut long-
distance service when once cut, they may be gone for good?
    Answer. I think the issues you raise are fair issues that warrant 
debate, however I do not see this as a responsibility of the Amtrak 
Board. The decision on individual routes and whether or not they should 
be subsidized belongs to the state and Federal governments that provide 
the subsidies.

    Question 9. You spent your career in the airline business, creating 
a huge airline, creating innovative programs like frequent flyer miles 
and building computer reservation system networks. You also are aware 
that in many parts of the country, for example the Northeast Corridor, 
Amtrak competes directly with many of your former competitors. These 
routes are some of the most lucrative in the country. Amtrak ads and 
airline ads constantly make comparisons.
    Given your investment in aviation, not to mention pension and 
portfolio, and given that air carriers that compete with American could 
gain or lose from what happens to Amtrak, how do you avoid any 
appearance of a conflict in any actions you might take with respect to 
the Amtrak Board?
    Answer. My role as a member of the Amtrak Board of Directors is to 
assist in having Amtrak deliver the best product possible. I do not 
believe there is a conflict with the aviation industry, however, if a 
significant conflict were to arise, I would recuse myself from any 
decisions that could be interpreted as favoring one transportation 
sector over another.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                           Robert L. Crandall
    Question 1. Do you support the $900 million budget for Amtrak 
proposed by the Bush Administration for FY 2004? If so, please describe 
how Amtrak will operate at this funding level.
    Answer. I do not have a position on the Administration's FY 2004 
budget proposal for Amtrak. Since I have not had an opportunity to 
become familiar with Amtrak's operation and finances, I do not know 
what choices the Amtrak Board and Management would make if Congress 
allocates only the amount proposed by the Administration.

    Question 2. Do you support the administration's proposal, now in 
the form of legislation, to break Amtrak apart into three separate 
entities, two of which would be run privately, and force states to pick 
up the majority of the operating costs? What are your views on this 
legislation?
    Answer. I have not had an opportunity to study the Administration's 
bill nor have I had an opportunity to study either Amtrak's operation 
or its finances. Those who have studied it tell me that it proposes a 
fundamental shift in the Nation's transportation policy as it relates 
to passenger rail service. In the end, the Amtrak Board will have no 
choice but to implement whatever transportation policy the Congress 
adopts.

    Question 3. Do you believe it is the responsibility of Board 
Members to support the current national passenger rail service operated 
by Amtrak, or do you believe that members should look for alternatives 
such as what the Bush administration is proposing?
    Answer. It is not the Board's responsibility to determine 
transportation policy. Rather, the role of the Amtrak Board is to 
implement, as efficiently as possible, whatever transportation policy 
the Congress adopts.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John McCain to 
                           Louis S. Thompson
    Question 1. I am very interested in hearing why each of you is 
interested in serving on the Amtrak Board of Directors. [did you offend 
the President in some way?]
    Answer. I was involved in the creation of Amtrak and I have 
followed its development over the years. I have also been involved in 
rail passenger issues all over the world. I genuinely care about this 
issue and would love to have the opportunity to influence what happens.

    Question 2. What do you consider to be the appropriate role of the 
Amtrak Board of Directors? Do you see yourself as taking an active role 
in determining the future of Amtrak?
    Answer. I believe that Board members should work with Amtrak 
management, the Congress and the Administration to agree on Amtrak's 
mission. Then the Board should set policies to implement this mission, 
and should make sure that Amtrak operates openly and efficiently. I 
accepted the offer of nomination because I would like to participate 
actively in the debate over Amtrak's missions and how they should be 
performed.

    Question 3. Who do you believe you represent in your capacity as a 
Board member?
    Answer. Board members of Amtrak are in an unusual position. Because 
they oversee the spending of public money, Board members should have 
something useful to offer in the discussion of what Amtrak should do 
and how Amtrak should do it. This said, though, the fiduciary 
responsibility of a Director still remains to ensure that all decisions 
are made prudently and all money is spent effectively. The advisory 
role is desirable: the fiduciary role is mandatory.

    Question 4. Amtrak operates a number of long-distance routes that 
lose hundreds of dollars per passenger. The Sunset Limited, which 
operates from Los Angeles to Orlando, lost over $400 per passenger in 
Fiscal Year 2002. Do you think this kind of subsidy is warranted?
    Answer. Since Amtrak was established, decisions about which trains 
to run have been partly economic and partly political, based on a lot 
of factors (social issues, geographic tradeoffs, rural connectivity, 
among others). The Board should do its best to tell you what various 
options cost and how they can be carried out most effectively; but, we 
will have to look to you and the Administration to decide which trains 
are run, and why.

    Question 5. How do you believe decisions should be made to add, 
reduce, or eliminate train service?
    Answer. In this, as in most other things, Congress and the 
Administration have to balance what they want against how much it will 
cost. I believe that Amtrak management and the Board can, and should, 
do a good job of telling Congress and the Administration what options 
are available and how much they would cost. In this regard, it seems 
very possible that better and more accurate measures of performance 
could be developed for your consideration. The challenge--and it is one 
that concerns me greatly--is in making sure that the system Congress 
and the Administration want is accompanied by the money needed to run 
it.

    Question 6. What is your assessment of the Administration's 
legislative proposal for reforming Amtrak?
    Answer. Please see the detailed answer attached.

    Question 7. In a normal business, the consequences of not meeting a 
company's business plan include a lower stock price, cost-containment 
measures, reductions in service, salary freezes, and the elimination of 
bonuses. Amtrak has consistently failed to meet its business plan, but 
the only real consequence has been to increase the financial burden on 
the American taxpayers. What consequences should apply to Amtrak? 
Wouldn't the introduction of competition help motivate Amtrak to 
operate more efficiently and follow through on its business plan?
    Answer. I believe very strongly that the Board must do a better job 
of making sure that business plans are realistic and that management is 
held accountable for meeting plans and commitments. As a general 
proposition, I have argued repeatedly that competition deserves 
consideration as a way to provide rail passenger services more 
effectively. In the Amtrak context, however, the issue is complex and, 
in my experience, as easy to get wrong as right. We would need to be 
careful, and we need to make sure that all aspects of the issue are 
considered.

    Question 8. If confirmed, will you be willing to comply with the 
Security and Exchange Commission's new corporate governance rules for 
publicly-traded companies, including the rule that non-management 
directors meet at regularly scheduled executive sessions without 
management?
    Answer. Yes.

    Question 9. You (bravely) admit in your Committee questionnaire 
that you were involved in the creation of Amtrak. How does the Amtrak 
that exists today compare to what was envisioned in 1970?
    Answer. It is hard to remember exactly what we thought at the time, 
and others might disagree with me. As I remember the original 
expectations, Amtrak is significantly different than expected. Many 
functions we expected to be performed by the freight railroads 
(locomotive crews and equipment maintenance) have been taken over by 
Amtrak. We did not expect Amtrak to own or manage the Northeast 
Corridor (NEC) infrastructure. Traffic growth has been slower than 
projected, and costs have been higher.

    Question 10. According to the General Accounting Office (GAO), the 
Federal Government has invested $3.6 billion to date on the high-speed 
rail improvement project on the Northeast Corridor, including $800 
million for the Acela equipment. Having managed the Northeast Corridor 
Improvement Project for 8 years, what is your assessment of this 
project and Amtrak's management of it?
    Answer. I think (and have always believed) that the NEC 
infrastructure is a vital national asset serving 8 States (and DC) in 
an increasingly urbanized area where congestion on the highways and 
airways is approaching intolerable levels. The original Northeast 
Corridor Improvement Project (NECIP) that I managed was truncated by 
order of the Administration in 1981 and we were forced to leave a 
number of problems unresolved--electrification of the North end, 
conversion of the electrification on the South end, and signaling 
upgrades, among a number of other things. By 1986 (when I left the 
FRA), the NECIP had been essentially finished and the bits and pieces 
remaining were handed over to Amtrak. What FRA handed to Amtrak was a 
facility that was upgraded in many respects, but still had well known 
gaps.
    In the meantime, Amtrak has addressed some of the gaps by programs 
such as completion of the electrification of the North end and purchase 
of the Acela. How well they have performed in managing these 
investments is something that the GAO is better qualified to answer 
than I am, as I have had no access to internal Amtrak information.

    Question 11. As I know you are aware, I have argued for years that 
Amtrak should not operate long-distance trains that cost the taxpayers 
$200, $300, or even $400 for every passenger they carry. And I note 
that in one of your speeches, you stated that ``higher income 
passengers, whose need for Federal subsidy is easy to question, occupy 
most of the sleepers on the long haul trains. Even the coach passengers 
are being hauled at a cost that is far above that of alternative 
modes''.
    As a Board member, what will you do to address this situation?
    Answer. If confirmed, I would push very hard to reduce the support 
required for running all services, short and long haul, coach and 
sleeper.

    Question 12. Why should Congress subsidize sleeping accommodations 
and dining car service for higher-income passengers?
    Answer. I have no good answer for this question, but I am not sure 
that I am the one to answer it. I am also not sure that all sleeping 
passengers are subsidized, given the large fare differences that exist 
between coach and sleeper fares on some routes. I would ask for, and 
hope to see, a good study of the actual degree of subsidy that is being 
provided to sleeper passengers, given accurate calculation and 
reasonable allocation of the costs involved. Support to dining services 
is a more complex issue, since diners serve all passengers, and not 
just sleeper services.

    Question 12a. How does Amtrak compare to railroads around the world 
in terms of:

    On-time performance.
    Answer. Good on-time performance numbers are not readily available 
for most railways. In my experience, most European railways and the 
Japanese railways would expect trains to be within 5 minutes of 
schedule significantly better than 90 percent of the time. Amtrak's 
short haul trains have averaged around 80 percent within 10 minutes of 
schedule and the long haul trains have averaged less than 60 percent 
within 30 minutes of schedule.

    Question 12b. Market share.
    Answer. European Union railways have about an eight percent share 
of the common carrier intercity market, Amtrak has less than one 
percent. Rail passenger market shares in Russia, China and India run 
above 30 percent on the same basis.

    Question 12c. Operating costs.
    Answer. It is very difficult to compare costs, since few countries 
publish their passenger costs separate from freight costs. It is 
possible to compare average passenger fares, although there are 
significant issues of differences in length of haul, type of service 
(especially the mix of commuter service and of luxury service, and the 
amount of high speed service), and currency conversions are 
questionable (I have used purchasing power parity conversion rates, 
which tends to reduce the difference between U.S. numbers and those 
elsewhere). I have appended a table for the year 2000, or latest 
available year, below. In summary, Amtrak's prices are significantly 
above those of other countries. Amtrak's costs are above its prices; a 
fact that I suspect is true in most other countries as well.

    Question 12d. Employee productivity.
    Answer. Employee productivity is also difficult to compare. There 
are different mixes of freight and passenger services and 
productivities in passenger service tend to be lower than in freight: 
Amtrak would naturally be lower than most other railways for this 
reason (the percentage of passenger service ranges from 20+ percent in 
China to 60+ percent in most European countries, to as high as 90 
percent in Japan and the Netherlands, to 100 percent for Amtrak). Wage 
rates differ among countries, and output per worker might legitimately 
be lower in low wage countries. Types of service provided also differ, 
and it is not entirely clear how service mix affects output per worker. 
I have appended a table showing output per worker in 1980 and 2000, 
along with a calculation of how much output per worker grew between 
1980 and 2000. In summary, Amtrak's output per worker is relatively 
low, and it has not grown as much, as in most other major railway 
countries.

    Question 12e. and other relevant measures?
    Answer. Please see the third sheet attached for general comparisons 
of a number of the world's major railways.

    Question 13. In your questionnaire, you state that Amtrak has many 
stakeholders, including Amtrak's passengers, Congress, the Department 
of Transportation (DOT), the National Association of Railroad 
Passengers, the Association of American Railroads, Amtrak suppliers, 
its unions and the holders of its common stock. I am concerned that 
you've left one of the most important stakeholders off the list--the 
American taxpayers. Do you not believe your fiduciary responsibility on 
the Board extends to the taxpayers who have to absorb the Amtrak 
subsidy year in and year out?
    Answer. Legally, I suspect that my fiduciary responsibility would 
attach primarily to the affairs of the corporation. I would surely 
agree with you, though, that I have a duty to the public and to the 
taxpayer to ensure that Amtrak's mission is fulfilled legally, 
ethically, effectively and transparently.

    Question 14. You have stated that Amtrak has many stakeholders, 
first and foremost Amtrak's passengers. Do you believe the trains 
operated by Amtrak, particularly long-distance trains that cannot 
compete with other modes of transportation, really reflect the needs of 
intercity travelers? Answer. In rough terms, Amtrak carries around 12 
million passengers annually in the NEC (1.7 billion passenger-miles), 
about seven million other short haul passengers (1.0 billion passenger-
miles), and 5 million long haul passengers (2.7 billion passenger-
miles). There clearly are needs being met in each of these categories. 
Whether the needs can be met more efficiently by Amtrak is a question I 
would like to investigate: whether the country should spend its money 
this way or some other way is a question I have to leave to the 
Congress and the Administration. Will you, if appointed to the Board, 
work to change the network of trains to concentrate on markets that 
Amtrak can compete for and meet a market demand?
    Answer. I believe the Board and Amtrak management should lay out 
for Congress and the Administration the costs and market potential for 
all Amtrak services. Given a better consensus on what Amtrak is 
supposed to do, I will work as hard as I can to ensure that all trains 
required by the Congress and the Administration are operated as 
effectively as possible. I certainly believe that market demand is an 
important factor in route structure decisions, but route costs are also 
important.

    Question 15. In your speech at the first conference on rail 
industry structure, competition and investment, you stated that, 
``Government policies and funding--and not the market--are thus the 
determinants of which rail passenger services Amtrak (or other 
operators) will provide''. Are you suggesting that Amtrak's ability to 
compete with other modes should not be consideration as to what trains 
are operated?
    Answer. No. What I meant was that essentially all of Amtrak's 
trains have a social component that purely market forces would not 
satisfy. If, for example, Amtrak were privatized--if the assets were 
simply sold to the highest bidder and all public support terminated--
very few, if any, of its services would survive.

------------------------------------------------------------------------
                                                    Average Passenger
                                                 Revenue in U.S.  Cents/
                                                     Pass-mile  (PPP)
------------------------------------------------------------------------
Amtrak                                                              29.1
------------------------------------------------------------------------
Austria                                                             10.7
------------------------------------------------------------------------
Belgium                                                             10.7
------------------------------------------------------------------------
Canada: Via Rail                                                    21.1
------------------------------------------------------------------------
China                                                                7.5
------------------------------------------------------------------------
Denmark                                                             11.3
------------------------------------------------------------------------
Finland                                                             12.9
------------------------------------------------------------------------
France                                                              12.0
------------------------------------------------------------------------
Germany                                                             23.6
------------------------------------------------------------------------
Greece                                                               6.2
------------------------------------------------------------------------
India                                                                4.1
------------------------------------------------------------------------
Italy                                                                8.6
------------------------------------------------------------------------
Japan                                                               16.4
------------------------------------------------------------------------
Netherlands                                                         15.4
------------------------------------------------------------------------
Portugal                                                             6.3
------------------------------------------------------------------------
Republic of Korea                                                   10.6
------------------------------------------------------------------------
Spain                                                                9.3
------------------------------------------------------------------------
Sweden                                                              13.5
------------------------------------------------------------------------
U.S. Suburban                                                       14.8
------------------------------------------------------------------------
United Kingdom                                                      21.5
------------------------------------------------------------------------
Data for 2000 or for latest available year
PPP means purchasing power adjusted.

                   Railway Output per Employee (000)*
------------------------------------------------------------------------
                                                              Percent
                                          1980     2000    Growth,  1980
                                                              to 2000
------------------------------------------------------------------------
Amtrak***                                   324      373              15
------------------------------------------------------------------------
Austria                                     244      482              98
------------------------------------------------------------------------
Belgium                                     245      373              52
------------------------------------------------------------------------
China                                       319    1,155             262
------------------------------------------------------------------------
Denmark                                     257      770             200
------------------------------------------------------------------------
Finland                                     472    1,056             124
------------------------------------------------------------------------
France                                      505      715              41
------------------------------------------------------------------------
Germany**                                   328      681             108
------------------------------------------------------------------------
Greece                                      178      182               2
------------------------------------------------------------------------
India                                       233      467             100
------------------------------------------------------------------------
Italy                                       252      618             145
------------------------------------------------------------------------
Japan                                       605    1,528             152
------------------------------------------------------------------------
Netherlands                                 441      752              71
------------------------------------------------------------------------
Portugal                                    289      465              61
------------------------------------------------------------------------
Republic of Korea                           840    1,323              57
------------------------------------------------------------------------
Spain                                       360      842             134
------------------------------------------------------------------------
Sweden                                      693    2,144             209
------------------------------------------------------------------------
U.S. Class I Railways                     3,040   12,724             319
------------------------------------------------------------------------
* Output per employee is defined as total metric ton-km plus total
  passenger-km divided by total employees.
** 1980 is overestimated because Eastern Germany is not included U.K.
  excluded because no comparable employment data for 2000.
*** Amtrak's productivity excludes contract commuter pass-km, but
  includes the employees associated with such traffic. An estimate
  indicates that Amtrak's output/worker would be about 15 percent higher
  in 2000 if the average commuter trip is about 20 Km. Amtrak's percent
  growth would be 32 percent on this basis.

                                                                       World Railway Data in 2000 or latest available year
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              Avg                   Total
                                                    Total     Passengers   Pass-Km    Frt Ton-km                 Avg Frt      Pass     Output/      Wages/    RatioPass    PPP Pass.    PPP Frt
                                                   Route km     (000)     (000,000)   (000,000)    Employees     Shipment     Trip    Empl (000)    Total     Fares/Frt   Rev/pass-km  Rev/ ton-
                                                                                                                Lgth (km)     (km)   (t-km+p-km)   Revenues     Rates                      km
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Amtrak                                               36,597       23,000      8,970                    24,000                   390          373      0.714       12.133        0.182
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Austria                                               5,780      186,600      8,318       16,311       51,100          200       45          482      1.567        1.144        0.067      0.058
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Belgium                                               3,471      153,300      7,755        7,674       41,400          125       51          373      2.885        1.070        0.067      0.062
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Canada: Via Rail                                     13,490        3,957      1,544                     2,958                   390          522      1.287        6.600        0.132
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Canada:CN                                            23,731                              154,057       20,504        1,274                 7,514      0.327                                0.020
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Canada:CP                                            15,749                              114,680       15,906        1,203                 7,210      0.318                                0.020
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
China                                                58,656    1,018,500    441,468    1,333,606    1,536,600          806      433        1,155      0.148        1.194        0.047      0.039
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Denmark                                               2,047      153,700      5,381        2,087        9,700          264       35          770      0.965        0.999        0.071      0.071
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Finland                                               5,854       54,783      3,405       10,107       12,800          250       62        1,056      0.768        2.467        0.081      0.033
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
France                                               32,515      849,800     69,860       55,448      175,300          391       82          715      1.109        1.542        0.075      0.049
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Germany                                              36,652    1,712,510     74,394       76,906      222,310          268       43          681      0.472        2.772        0.147      0.053
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Greece                                                2,299       12,300      1,583          326       10,500          136      129          182      3.734        0.395        0.039      0.097
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Hungary                                               7,729      160,000      9,906        7,426       54,287          170       62          319      0.800        0.340        0.036      0.107
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
India                                                62,759    4,584,900    430,666      305,201    1,577,200          669       94          467      0.491        0.307        0.026      0.084
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Italy                                                16,499      474,100     44,849       22,834      109,500          287       95          618      1.313        1.420        0.054      0.038
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Japan                                                20,165    8,797,700    240,793       22,313      172,200          565       27        1,528      0.376        2.173        0.102      0.047
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Netherlands                                           2,802      305,000     14,760        3,819       24,700          150       48          752      0.730        2.558        0.096      0.037
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Poland                                               22,560      332,000     22,467       47,909      145,000          287       68          415      0.483        0.789        0.040      0.051
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Portugal                                              2,814      148,600      3,632        2,183       12,500          243       24          465      1.251        0.862        0.039      0.046
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Republic of Korea                                     3,123      815,600     28,097       10,803       29,400          238       34        1,323      0.454        1.426        0.066      0.046
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Russia                                               86,075      757,100    131,920    1,440,900    1,294,700        1,363      174        1,054      0.316        0.974
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Spain                                                13,866      528,400     19,784       12,042       37,800          408       37          842      1.143        1.304        0.058      0.045
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
Sweden                                               10,068       49,900      6,006       19,084       11,702          359      120        2,144      0.726        2.341        0.085      0.036
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
United Kingdom                                       17,067      978,100     40,611       19,115       22,300          181       42                   0.937        1.623        0.134      0.083
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
U.S. Class I Railways                               157,515                            2,185,270      162,155        1,382                13,476      0.316                                0.015
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
U.S. Suburban                                        10,425      382,000     14,035                    22,399                    37          627                                0.092
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                                 ______
                                 
 Response to Written Questions Submitted by Hon. Ernest F. Hollings to 
                           Louis S. Thompson
    Question 1. There are a number of bills pending in Congress now 
proposing substantial changes intended to improve Amtrak's performance, 
fiscal health, and infrastructure. However, the bills take very 
different approaches in attempting to achieve those improvements. What 
do you believe the Federal Government's role should be in making the 
very needed improvements to Amtrak?
    Answer. There are three aspects of this question: what needs to be 
financed, who should finance it, and how should it be financed?
    Amtrak appears to have a substantial backlog of age-expired assets 
and deferred maintenance. Although it is always possible to postpone 
this kind of investment for another year or two, the net result is that 
service will be further downgraded and costs will continue to rise. At 
some point in the near future, it will be important for the new Board, 
along with Amtrak management, DOT and the Congress, to discuss and 
clarify what will be expected from Amtrak. Given clearer agreement on 
Amtrak's missions, we can be more confident in specifying what 
investment is needed and what the costs of funding it (or not funding 
it) are.
    There are already a number of models for deciding how the 
investments needed should be financed. Where a function is clearly a 
national responsibility, then a substantial Federal share makes sense. 
The long haul, national system trains, for example, fit this category, 
as does (in my opinion) the Northeast Corridor (NEC) main line 
infrastructure. Where a service is focused on a single state or a very 
limited number of states, then it is reasonable to expect a higher 
local share, both in capital and in operating support. In some cases, 
such as Amtrak's contract operation of commuter trains, the existing 
approach--that the sponsoring authority should pay all of Amtrak's 
costs (capital and operating support)--is a good one and should be 
maintained.
    I am simply not qualified to comment on the ``how'' of the 
financing. From Amtrak's point of view, though, I think it will be 
important to try to make the form in which money is provided match the 
time frame over which it is needed. Operating support can be funded 
year-to-year, though short-term, multi-year contracts between DOT and 
Amtrak might be more efficient (the British franchises used 5 to 10 
year periods, for example). It is much more difficult to manage the 
investments and rehabilitation effort needed to protect existing assets 
without assurance of stable funding, and it is nearly impossible to 
consider a serious program of capacity expansion and improvement 
without access to some form of assured, multi-year funding. How this 
might be done I will have to leave to the experts; but finding a 
workable solution is the sine qua non of real progress.
    One of the immediate issues facing Amtrak is that of appropriations 
for the coming year. The Senate has voted to appropriate $1.346 
billion, while the House has voted to give Amtrak $900 million. Amtrak 
has said that it will need $1.8 billion just to tread water. At this 
moment, I cannot predict what the Congress will appropriate for Amtrak, 
whether it will be $900 million or something closer to the Senate 
figure. But I think we can assume with some certainty that Amtrak will 
not get $1.8 billion it says it needs. Obviously, difficult choices 
will have to be made about how the money is to be spent.

    Question 1a. As an Amtrak board member, where will you recommend 
Amtrak should focus its limited funds next year?
    Answer. Amtrak has not been investing enough over the past five to 
seven years to maintain its equipment and fixed assets, and this 
threatens its ability to maintain its current schedule. Sustained 
under-maintenance also raises a concern for possible safety problems. 
Accordingly, if confirmed, my first priority would be to review the 
Amtrak plans to ensure that any potential safety problems have been 
addressed (I expect that they have). Next, I would support efforts to 
restore the essential capacity needed to reduce equipment-caused delays 
and provide adequate backup equipment. Such a program would protect and 
enhance train reliability where Amtrak controls operations (most of the 
NEC), and would reduce Amtrak's contribution to train delays outside 
the NEC, where on-time performance also depends on the efforts of the 
freight railroads.

    Question 2. How will you prioritize the spending needs, including 
infrastructure improvements, maintenance of safety, security, service 
improvements, and operation of long-distance trains?
    Answer. Safety and security should be the highest priority. The 
second priority should be simply to recover the capacity and 
reliability that have been lost as a result of not repairing wrecked or 
worn out cars and locomotives for long distance trains. Improving the 
availability and reliability of the Acela trains is also important, as 
Acela revenues are important for Amtrak's business. Even at the funding 
levels requested by Amtrak (which, as you suggest, may not actually be 
appropriated) it will be very difficult to increase either capacity or 
performance of the system beyond existing levels.

    Question 2a. What sort of financing do you believe is necessary in 
order to grow intercity passenger rail service in the United States?
    Answer. The types of things that would need to be financed to grow 
rail passenger service include: a better and larger rolling stock fleet 
(long haul and short haul); a continuing effort to upgrade the capacity 
and reliability of the infrastructure of the NEC; and, a concentrated 
program in cooperation with the freight railroads to identify and 
resolve operational problems on the long-distance network. A much 
larger program of growth would include the ``emerging corridors'' as 
studied by the FRA (``High-Speed Ground Transportation For America,'' 
U.S. DOT/FRA, August 1996). While I believe that great potential for 
growth in U.S. rail passenger service may lie in these short haul, 
emerging corridors, where growing highway and airway congestion may 
require increased use of rail capacity, I also take very seriously 
Amtrak's mandate to operate its overnight and transcontinental trains 
effectively.
    As to types of financing, it will be important that the length and 
availability of the financing be consistent with the investment needs. 
It is difficult and expensive to finance multi-year programs, which 
build long term assets, without a source of funding that is stable, 
predictable and with a long payback period.

    Question 2b. Your record demonstrates that you have extensive 
experience in the railroad industry, as an associate administrator at 
the Federal Railroad Administration and later as a railways advisor for 
the World Bank. In your position with the World Bank, you worked with 
passenger rail operations all over the world, using your expertise to 
offer advice about the many issues that face all passenger rail 
operations. From your record with the World Bank and from your 
published writings (of which there are many), you appear to be a 
proponent of privatizing publicly-run passenger rail systems. I have a 
few questions to ask you regarding this kind of privatization.
    Answer. I believe that my record demonstrates that I am a proponent 
of strengthening rail services, freight and passenger, by whatever 
means are most appropriate to the circumstances. I am not ``a proponent 
of privatizing publicly run passenger rail systems.'' Though I did 
support the concessioning (not privatization) of the operation of the 
suburban rail services and the Metros in Buenos Aires and Rio de 
Janeiro, I also supported far larger investments in the publicly run 
systems in over 25 other countries, including India, China and Russia 
(among the largest passenger railroads in the world). My entire career 
in the U.S. rail passenger area was spent in supporting public, not 
private, investment in rail passenger services. Of the 100 publications 
I identified for the committee, 80 dealt with issues unrelated to (or 
broader than) private involvement in railways. Of the 20 publications 
that did deal with private issues in transportation, most were related 
to the concessioning of freight railways, not passenger railways, and 
three dealt with privatizing trucking companies in Poland and Hungary 
(I am an advocate of private ownership and operation of trucking 
companies). Because my position on ``privatization'' of passenger 
railways seems to be important and has been distorted, let me quote 
from what I consider to be the most important conclusion of a paper I 
recently wrote on experience with rail restructuring: ``[e]xperience in 
all cases shows that dogma should be rejected on both sides of the 
private sector argument. There is simply nothing to support an argument 
that rail infrastructure or operations should necessarily be public (or 
private): there have been more or less successful approaches on either 
side.'' (page 351 in the paper ``Changing railway structure and 
ownership: is anything working?'' Copy furnished to the Committee). 
This was, and remains, my position: how this was converted into the 
allegation that I primarily support privatization of rail passenger 
services remains a mystery to me.

    Question 3. Privatized passenger rail systems in other countries 
continue to need public investment. If Amtrak were privatized at least 
partially, what kind of public investment would continue to be needed 
for passenger rail? Would the public investment be less or greater than 
it is now?
    Answer. Only in Japan were passenger rail services actually 
privatized; in all other cases they were concessioned or franchised, 
specifically because public money was going to be needed to support 
investment and to pay the difference between the fares the governments 
wanted to establish for social reasons and the costs of operation 
required. The difference between privatization and concessioning is 
significant. In virtually all rail passenger cases (including Amtrak), 
market-based revenues cannot cover costs, and privatization (where 
assets are sold and services that do not cover their costs are closed) 
would simply not be feasible. A decision to ``privatize'' Amtrak would 
be a decision to close it, and the same would be true for every other 
rail passenger service in the U.S. (and probably elsewhere, except 
Japan and possibly China). Concessioning or management contracting, in 
which the public sector plans and finances rail services, but asks the 
private sector to operate them, almost always requires continuing 
public assistance for both capital and operating support. The question 
is whether private operation yields lower costs than public operation, 
and this can differ depending on the circumstances. It is clear that 
concessioning or management contracting of Amtrak services would 
continue to require some public support for capital and operating 
deficits, but I do not know whether it would necessarily yield savings 
over Amtrak's current performance, nor do I know whether such an 
approach can be done in an acceptable way.

    Question 4. A recent CRS study shows that of 14 countries examined 
for their rail privatization efforts, only in Japan is intercity 
passenger rail service consistently profitable. However, this is based 
on the Japanese government transferring about $300 billion in debt from 
the former Japan National Railways to a government corporation rather 
than to the national railway's successor companies. That number 
represents well over 11 times the amount spent by the United States in 
supporting Amtrak in the last 30 years. This is an interesting fact 
considering that Japan is just a little larger than the state of 
California and has a much smaller population the United States. If we 
invested $300 billion in Amtrak's infrastructure and operations, would 
the system then be profitable? What does this say about the costs of 
making privatization acceptable?
    Answer. As noted in the paper (page 334) furnished to the 
Committee, of the $337 billion in debt accumulated by the old Japanese 
National Railways, $206 billion was assumed by the (public) Settlements 
Corporation (along with substantial assets) and $131 billion (almost 40 
percent) was transferred to the new, privatized companies. It is 
interesting that, in the comparison given, while Japan is only a little 
larger than California, it has a population of about 30 percent of the 
entire U.S. Moreover, because much of Japan is mountainous, the 
habitable land area is actually far smaller than California. As a 
result, population densities and distances in Japan are ideal for rail 
passenger services. In addition, gasoline in Japan costs over $4.00 per 
gallon and highway tolls are five to ten times U.S. levels. As a 
result, the (private) Japanese railways carry 380 times as many 
passengers as Amtrak, about 27 times the passenger-miles, and generate 
21.5 times more revenue (these ratios are 21.7, 10.5 and 12, 
respectively, if U.S. suburban operators are added to the Amtrak 
numbers).
    Whether a $300 billion investment would make an American intercity 
rail passenger operation ``profitable'' would depend on whether it was 
a grant or an interest-bearing loan, and on the way in which the money 
was invested. Past studies have suggested that certain investments in 
high-density rail passenger corridors could yield operations with a 
positive cash flow, if operated efficiently. Similarly, investments in 
the facilities and equipment of some long-distance routes might permit 
a higher quality of service that produces more revenues, lower unit 
costs, and a reduced deficit. In the absence of specific plans and 
detailed financial projections, I don't think I can say much more.

    Question 5. The British government, which privatized its passenger 
rail system a few years ago, wound up bailing out one private rail 
operator to the tune of 58 million pounds ($97M) and another private 
operator for 115 million pounds ($193M). Another private railroad in 
Britain was forced to cut 160 trains because of problems it had with 
recruiting and retaining train operators. The DOT recently issued 
proposed legislation that would make it possible after a few years for 
private rail operators to take over portions of the current Amtrak 
system. With the demonstrated failures in Britain in mind, do you think 
that the experience with private operators would somehow be different 
in the United States?
    Answer. The experience in the U.K. with rail passenger 
privatization is both mixed and mischaracterized (as discussed, for 
example, in the paper I furnished the Committee at pages 347 to 351). 
It is clear that the approach used was too complex, too fast, and 
without a clear concept of a longer-range government role. It is also 
clear that privatizing the infrastructure failed, and some of the 25 
franchises had problems requiring government intervention. At the same 
time, passenger-miles in the U.K. are higher than in any year since 
1947, and the actual safety record is significantly better than under 
British Rail. It is also critical to recall that the British Government 
did not undertake rail reform for no reason: they acted because they 
believed (rightly or wrongly) that the publicly owned and operated 
British Rail had failed, and could not be reformed in public hands.
    I believe that the main lessons for the U.S. from the British Rail 
privatization, the Latin American concessioning experience (passenger 
and freight), and the Japanese privatization are: first, if the 
existing approach is not going to suffice to meet future challenges, 
positive change is possible; and, second, if we are going to make 
changes, we should be very careful in how we do it. We need carefully 
assessed and agreed evolution rather than revolution, and we need an 
approach suited to U.S. circumstances and objectives.

    Question 6. In your past experience with the Federal Railroad 
Administration, I note that you were in charge of the $2.5 billion 
Northeast Corridor Improvement Project for eight years. This project 
was initiated in 1979 to improve high-speed rail passenger service 
between Washington, New York, and Boston. I was here in the Senate back 
then, and I seem to remember that the project ran into problems with 
cost overruns. GAO reports issued during that time found that the 
unexpected high costs of the project meant that some of the planned 
work had to be reduced. This problem of cost overruns is not a unique 
one in the transportation industry. (The best example going now: the 
Big Dig in Boston).
    What was your role in the project? How can you explain the repeated 
revising of costs? From your experience with the Northeast Corridor 
Improvement Project, what would you do to steer Amtrak clear of similar 
cost overruns as it makes needed infrastructure improvements?
    Answer. The Northeast Corridor Improvement Project (NECIP) was 
authorized in the Railroad Revitalization and Regulatory Reform Act of 
1976 (the ``4R Act''). The original NECIP budget was $1.75 billion, and 
the goal was that it would take 5 years to achieve a schedule of 2 hrs 
40 minutes from New York to Washington, DC, and 3 hrs 40 minutes from 
New York to Boston. The source of the original budget, timetable and 
trip time goals predated my management of the project, and I was never 
able to fully understand how they were established.
    By mid-1978 it had become clear that the project was over budget, 
behind schedule, and suffering from managerial and organizational 
problems. I was asked to return to the Government (I had been a private 
consultant for five years and had no involvement in the planning or 
initial management of the NECIP) to reorganize and direct the project 
in late May 1978, with instructions to produce a better budget and 
project schedule. In September 1978, I reported to the Secretary of 
Transportation that it would take $2.4 billion (an immediate correction 
caused this to be raised to $2.5 billion) and around 8 years to 
complete the project as planned. Congress agreed to increase the 
authorization to $2.5 billion in 1980. In 1981, the Administration 
directed that the project budget be reduced to $2.19 billion, and 
project scope was reduced accordingly (primarily by cutting the new 
electrification from New Haven to Boston and retaining the old style 
electric traction system between New York and Washington). The 1981 
cuts meant that the trip time goals north of New York could not be met, 
and they reduced the speeds attainable south of New York. In short, 
after I began managing the NECIP, the budget and schedule increased 
once in order to make them more accurate, Congress accepted this 
increase, and the budget never changed again: indeed, the budget was 
actually decreased. I received awards or recognition from the Federal 
Railroad Administrator, the Secretary of Transportation and Presidents 
Carter and Reagan for my accomplishments in setting the new budget and 
objectives, and in realizing them.
    The question of how to control public project costs is one that I 
have spent a lot of time thinking about because I have managed projects 
in both the public and the private sector. I fully share your concern 
over the performance of public agencies in controlling project budgets 
and schedules. I believe that the prevalence of public ``overruns'' has 
a number of causes.
    First, there are incentives on all sides to overstate benefits and 
understate costs of public projects, because ``under-promised'' 
projects are not funded, while few project promoters ever suffer from 
over promising. Many of the apparent overruns on public projects are 
actually due to unrealistic expectations in the first place. A related 
point is that multi-year project authorizations should be stated in 
constant, rather than current, dollars (appropriations would be in 
current dollars, of course). A crucial dilemma of the multi-year NECIP 
was that inflation was running in the 8 to 12 percent range, and the 
actual value of the authorization target was decreasing accordingly. 
The project manager should be responsible for project costs: he or she 
should not have to be an expert in predicting the course or effects of 
inflation.
    Second, most public projects have multiple objectives, and it is 
hard for the manager to make the required tradeoffs. On the NECIP, for 
example, there were clear, overall trip time goals; but, there were 
also objectives relating to historical preservation, creation of 
capacity for commuter operators, reduction of impact on freight 
railroads, building cost-shared stations and parking garages, and urban 
redevelopment, among others. It was never possible to meet all of the 
goals simultaneously, but it was common to be criticized if any of them 
were not met.
    Third, the public project manager rarely has full authority over 
the work to be done. There are many decisions--personnel, procurement 
and legal, for example--for which the manager must seek the approval of 
others who do not have the responsibility for the outcome of the 
overall project. This diffusion of authority has an inevitable impact 
on cost and schedule, and it actually makes it impossible to hold 
anyone responsible for results. This was compounded on the NECIP 
because many of the decisions involved reaching agreement among the 
FRA, DOT, Amtrak, 3 freight railroads, 6 commuter rail authorities, 9 
States and many cities. Decisions took longer, and costs were higher, 
than they might otherwise have been.
    If confirmed, what I would like to emphasize at Amtrak is the 
clearest possible definition of what each project is meant to 
accomplish and why. I would put emphasis on examining the cost 
estimates and on post-project reporting to ensure that what is promised 
is delivered. I would ask that managers be identified in advance, given 
adequate authority, and held responsible afterward. More broadly, I 
would like to put a lot of emphasis on developing better information 
about nearly everything Amtrak does. Good information is the key to 
better management and will be crucial to developing a stronger 
consensus on Amtrak's mission.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                           Louis S. Thompson
    Question 1. Do you support the $900 million budget for Amtrak 
proposed by the Bush Administration for FY 2004? If so, please describe 
how Amtrak will operate at this funding level.
    Answer. I did not support this level of funding in my testimony, on 
the grounds that it would not deal with the backlog of maintenance and 
investment that faces Amtrak. I think Amtrak might be able to ``limp 
along'' for another year or so (as DOT's Inspector General said), but 
the problem should be faced sooner rather than later.

    Question 2. Do you support the administration's proposal, now in 
the form of legislation, to break Amtrak apart into three separate 
entities, two of which would be run privately, and force states to pick 
up the majority of the operating costs? What are your views on this 
legislation?
    Answer. Please see the answer provided separately, entitled ``Views 
on the Administration's Proposed Legislation: The Passenger Rail 
Investment Reform Act.''

    Question 3. Do you believe it is the responsibility of Board 
Members to support the current national passenger rail service operated 
by Amtrak, or do you believe that members should look for alternatives 
such as what the Bush administration is proposing?
    Answer. I believe that the Board has two responsibilities: first, 
it should advise the
    Congress and the Administration of the costs and demand 
implications of all route structure and investment decisions; second, 
it must ensure that all money entrusted to Amtrak is managed 
effectively. I think it is the responsibility of the Congress and the 
Administration to decide on Amtrak's mission and to provide adequate 
funding for that mission: it is the responsibility of the Board to 
ensure that Amtrak fulfills that mission.

Views on the Administration's Proposed Legislation: The Passenger Rail 
                         Investment Reform Act

Response by Louis S. Thompson to Question by Senator McCain, Senator 
        Hollings and Senator Kerry.
    At the request of Senators McCain, Hollings and Kerry, I have 
reviewed the Administration's proposals (the Passenger Rail Investment 
Reform Act--PRIRA) along with the sectional analysis. In this 
connection, I also reviewed the statement before the Committee, ``The 
Future of Intercity Passenger Rail Service and Amtrak,'' by Kenneth M. 
Mead, Inspector General of the U.S. Department of Transportation 
(October 2, 2003). My opening statement before the Committee on 
November 6, 2003 and the paper furnished to the Committee, ``New Rail 
Passenger Structures in the United States: Using Experience from The 
E.U., Japan and Latin America,'' are also pertinent to the answer 
below.
    I am not a lawyer, and I am not versed in the relationships among 
these legislative proposals and the complex body of existing law. 
Instead, my comments are only related to what I understand to be the 
content and vision embodied in the proposal.
    In his transmittal letter to the Congress, Secretary Mineta stated: 
``I am also convinced that intercity passenger rail service can and 
will continue to play a valuable role in the U.S. transportation 
system.'' He concluded, however, ``that Amtrak cannot survive as a 
viable mode of transportation without structural reform.'' Kenneth Mead 
agreed, ``that the current, overall approach to designing, governing 
and funding the intercity passenger rail system in this country is 
broken.'' The Committee has received very similar advice from the GAO 
and the Amtrak Reform Council. The underlying premise of the 
Administration's proposals, that the institutional framework needs 
change, seems to me to be established beyond further argument.
    In broad terms, the Administration's vision calls for a fundamental 
shift in the Federal role in intercity rail passenger transport. 
Explicitly, or implicitly, the proposal argues that:

   There is no continuing Federal role in the operation of the 
        17 long distance, ``national system,'' trains. Over a period of 
        six years, the various states would be given the opportunity to 
        establish Compacts to support these trains and the Compacts 
        would contract with a successor company to operate the 
        services. If Compacts are not established, or if some states 
        cannot or will not contract to pay the full deficits, then some 
        or all of these trains would be terminated.

   The continuing Federal role in the short haul services, 
        including the Northeast Corridor high speed trains and any new 
        ``Emerging Corridor'' trains, should be limited to paying half 
        the cost of eligible capital investments involved in retaining 
        or expanding capacity for services. There would be no 
        continuing Federal role in operating support. This parallels 
        the current approach to funding by the Federal Transit 
        Administration.

   The Federal interest in the Northeast Corridor 
        infrastructure, now owned by Amtrak, should consist of a fully 
        funded rehabilitation program, after which the eight states 
        (and the District of Columbia) should assume full managerial 
        responsibility, and the Federal role should be limited to 50 
        percent of capital investments as for any other short haul 
        services.

   Today's Amtrak would remain as a device for holding the 
        authority that Amtrak now enjoys for operations over the lines 
        of the freight railroads. Train operating authority would be 
        transferred to an operating company (the Passenger Rail Service 
        Provider--PRSP) that would provide passenger services under 
        contract to the U.S. DOT at the outset, but would shift 
        progressively to contracting to the State Compacts. The 
        provider would have the right to use the existing Amtrak 
        rolling stock. The Compacts would have the option of 
        contracting with other operating companies if they chose. 
        Management authority for the NEC infrastructure would be vested 
        in a new company, the Passenger Rail Infrastructure Manager--
        PRIM, which would carry out the NEC rehabilitation program and 
        schedule, maintain and dispatch the NEC under contract to the 
        NEC Compact.

   Though it is partly implied, the Administration's proposal 
        would open up the possibility for more private operation of 
        rail passenger services, either through eventual sale of the 
        shares in the PRSP or PRIM, or through allowing the new 
        Compacts to put the services up for competition if they choose 
        to do so.

   Amtrak's employees would be compensated (up to $50,000) if 
        adversely affected by the changes, and Amtrak's existing public 
        debts would be expunged: debt to private lenders would be 
        transferred to the successor compacts.

    The critical issues--is there a Federal role in funding the losses 
of any types of intercity rail passenger services, and what should be 
the balance between Federal capital funding for long haul versus short 
haul intercity rail passenger services--are clearly posed. On grounds 
of transport economics, there are obvious differences in the ``need'' 
for the various types of service. However, rail passenger support 
decisions are rarely, if ever, based solely on transportation 
considerations. Governments inevitably juxtapose economic with social 
issues--national connectivity, regional balance, need to provide 
service to remote areas, and tourism, among many others, to reach an 
approach that works. Amtrak management and the Board can advise the 
Congress and the Administration on the factual issues of costs, 
revenues and patronage of rail services. I am not well qualified to 
discuss the ``political glue,'' as Kenneth Mead phrased it.
    Federal financing shares in transportation have ranged from 100 
percent (construction and operation of waterways), 90 percent 
(Interstate Highways), 70 percent (Federal Highways), 50 percent (FTA 
contribution to local transit capital costs), to zero (most freight 
railroads). I do not see a compelling reason for choosing a particular 
percentage that would apply uniformly to all intercity rail passenger 
activities. I do believe that there is a good basis for shifting more 
of the planning and managerial burden for the short haul trains to 
State and local governments. This argues for a higher percentage of 
Federal involvement in the long haul than the essentially local, short 
haul trains: it also argues for giving the local authorities more 
control over which services are provided for them, and by whom. The 
Northeast Corridor--directly serving the transport needs of eight 
states and the District of Columbia (about 30 percent of the total U.S. 
population), and providing the terminus for 9 of the 17 overnight and 
transcontinental trains--is clearly of ``national'' significance, and 
should also qualify for a higher Federal interest.
    Separation of the Northeast Corridor infrastructure from all 
operators is (as Mead also argues), an area for caution. It is more 
important to distinguish the economics of the NEC than it is to 
separate its management. At least for the time being, the NEC 
infrastructure should be scheduled and dispatched by the end-to-end 
operator. Keeping the maintenance and construction activities under the 
control of the same agency would reduce the risk of disruption that 
separation would pose. In the longer run, if the states involved have a 
greater voice in the management of the infrastructure, they can make 
their own arguments as to the of future the NEC infrastructure and 
operations.
    The issue of opening a greater role for the private sector in 
providing rail passenger services is a hard one, partly because it is 
often presented in either/or terms rather than being seen as (only) one 
of the tools available for providing some services more effectively and 
with better customer focus. The issue should be on the table for 
discussion, but actually moving the boundary between public and private 
operation is a matter for careful analysis, negotiation and (as the 
legislation recognizes) compensation if harm is done. I do not favor 
privatization of Amtrak in the purely commercial sense: that would lead 
to an end to intercity passenger rail services. I do argue that there 
might be a positive role for the private sector in reducing service 
costs and improving quality.
    I would also like to discuss two areas that are not addressed in 
the Administration's proposal, but which seem essential to support 
change.

   The proposal authorizes ``such sums as may be necessary,'' 
        without providing a more specific estimate, or source, of the 
        funding to be required. Without a more definite estimate and 
        assurance of multi-year funding, it would be difficult for a 
        State (or a Compact) to know what kind of burden it is supposed 
        to assume if it accepts transfer of the responsibility for 
        providing a service. I believe that more specific numbers are 
        needed before any reaction can be expected from States. It may 
        take time to prepare and agree on these numbers. This would 
        clearly have a bearing on the feasibility of rapid 
        establishment of the large number of interstate Compacts 
        envisioned in the proposed legislation.

   A particularly frustrating aspect of Amtrak policy debates 
        is that the information needed to support decisions is often 
        either nonexistent or unreliable. For example, we do not know 
        how much it actually costs to operate or maintain the NEC 
        infrastructure. I am not at all confident that the existing 
        route-by-route profitability statements give a useful answer to 
        the question of what would happen if the route structure were 
        changed by adding or removing individual routes, or sets of 
        routes. Among other things, this makes it impossible to explain 
        why some routes are favored, and others deleted, in route 
        structure decisions. It also makes it impossible to determine 
        whether pricing and investment decisions generate the payoff 
        predicted, either in terms of revenues or the net effect on the 
        corporate funds flows. The Administration's proposal adopts a 
        relatively rapid approach in which improved information would 
        take longer to generate than the transition schedule will 
        apparently permit. If there is going to be a Federal role in 
        the support of intercity passenger service over the longer 
        term, even if solely in capital funding, I believe that an 
        effort to develop better information will be amply repaid.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John McCain to 
                               Floyd Hall
    Question 1. I am very interested in hearing why each of you is 
interested in serving on the Amtrak Board of Directors. (Did you offend 
the President in some way?)
    Answer. I believe that this country needs a passenger rail system. 
For years I have heard the debate about Amtrak, its huge losses, its 
inability to change and its lack of a universally agreed to near and 
long-term mission. The President wants to insure that sound business 
fundamentals are instilled throughout Amtrak and I am hopeful that I 
can contribute to his objective from a financial, strategic, and 
operational standpoint.

    Question 2. What do you consider to be the appropriate role of the 
Amtrak's Board of Directors? Do you see yourself as taking an active 
role in determining the future of Amtrak?
    Answer. It is clear to me that the Board of Directors must insure 
that Amtrak has a realistic operations plan and that it is implemented 
within acceptable budgetary requirements. Because of the Federal 
Government's involvement in Amtrak and the company's dependence on 
taxpayer monies, I believe that the Board has the responsibility of 
assuring accurate and timely accounting of how the funds are used and 
whether or not the spending attained their objectives.
    The Board has an obligation to oversee that the company is 
efficient and looking for ways to attract incremental revenue growth. 
In addition, the Board will be responsible for faithfully carrying out 
any reforms the Congress might enact. In this regard, I would expect 
that the Administration and Congress will seek input from the Board 
(once we are up to speed) on Amtrak's progress and its future outlook.

    Question 3. Who do you believe you represent in your capacity as a 
Board member?
    Answer. I believe I serve four constituents: The elected Federal 
and State Representatives, the taxpayers, the employees of Amtrak, and 
the customers using Amtrak's services.

    Question 4. Amtrak operates a number of long-distance routes that 
lose hundreds of dollars per passenger. The Sunset Limited, which 
operates from Los Angeles to Orlando, lost over $400 per passenger in 
Fiscal Year 2002. Do you think this kind of subsidy is warranted?
    Answer. With only one briefing, (1\1/2\ hours) I need substantially 
more information to intelligently address this question. As a taxpayer, 
my initial reaction is no. On the other hand, in many businesses it's 
not uncommon to subsidize a particular operational program when it's 
considered essential to the overall strategy. I'm also not aware of 
what efforts have been made to reduce expenses or increase revenues on 
the questionable routes.

    Question 5. How do you believe decisions should be made to add, 
reduce, or eliminate train service?
    Answer. The Board of Directors has a duty to inform its 
stakeholders what the costs are for each of the train services. By 
providing clear, accurate, and timely data, in addition to potential 
revenue gains, decisions can be made more easily, within an overall 
cohesive strategy.

    Question 6. What is your assessment of the Administration's 
legislative proposal for reforming Amtrak?
    Answer. I'm in the process of reviewing it along with the other 
foot of information I received at my first briefing.

    Question 7. In a normal business, the consequences of not meeting a 
company's business plan include a lower stock price, cost-containment 
measures, reductions in service, salary freezes, and the elimination of 
bonuses. Amtrak has consistently failed to meet its business plan, but 
the only real consequence has been to increase the financial burden on 
the American taxpayers. What consequences should apply to Amtrak? 
Wouldn't the introduction of competition help motivate Amtrak to 
operate more efficiently and follow through on its business plan?
    Answer. The Amtrak business plan must be realistic and measurable 
with specific timelines. Allocation of funds should be tied to the 
quality of the plan, its execution and the performance results. 
Assuming the Federal and State Governments provide adequate funding, 
the Board has a fiduciary responsibility to question variations in its 
planned objectives and make recommendations accordingly to improve 
efficiency. As indicated earlier, I have much to learn about the 
specific structural, legal, and working operations of Amtrak and I'm 
not in a position to comment at this time on how competition would 
affect Amtrak pro or con.

    Question 8. If confirmed, will you be willing to comply with the 
Security and Exchange Commission's new corporate governance rules for 
publicly-traded companies, including the rule that non-management 
directors meet at regularly scheduled executive sessions without 
management?
    Answer. Yes.

    Question 9. Mr. Hall, how do you think you can apply your 
experience turning around Kmart and Grand Union Supermarkets to 
improving Amtrak's performance?
    Answer. I believe that the vast majority, if not all, companies 
that are poor financial performers share common characteristics such 
as: a lack of good strategic planning, a clear agreed to mission 
statement, sufficient funding, accurate and timely accounting, 
professional management, unrealistic goals, an unproductive culture, 
poor cost controls and a fear of change; to name a few. Turning around 
a company requires identifying its problems and its opportunities, 
developing action plans and being obsessed with its progress on those 
plans. As a Director, I favor a partnership role with management to 
help correct the company's weaknesses and capitalize on its 
opportunities.

    Question 10. What similarities do you see between Kmart and Amtrak 
as businesses?
    Answer. All companies have more in common than differences. This is 
particularly true for financially troubled ones. In addition to the 
professional management techniques, procedures, and conditions I 
mentioned above, it appears from my limited review of Amtrak, that both 
companies also share(d): a poor infrastructure, (outdated and 
underfunded) high overhead costs relative to revenues, too much debt 
and a lack of focus on key issues. In addition, there are also 
similarities in logistics. Of Kmart's 275,000 associates, approximately 
60,000 are focused on moving $4 billion to offshore purchases and $33 
billion of domestic purchases by ship, air, rail, and truck to 2,100 
locations nationwide annually.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Ernest F. Hollings to 
                               Floyd Hall
    Question 1. There are a number of bills pending in Congress now 
proposing substantial changes intended to improve Amtrak's performance, 
fiscal health, and infrastructure. However, the bills take very 
different approaches in attempting to achieve those improvements. What 
do you believe the Federal Government's role should be in making the 
very needed improvements to Amtrak?
    Answer. First and foremost, I see my role as a member of Amtrak's 
Board, should I be confirmed, as helping to assure that the company 
operates efficiently and effectively consistent with existing law and 
sound business principles. We should be more of the implementer rather 
than the maker of Federal transportation policy.
    I have not yet read all of the proposed legislation addressing the 
future of Amtrak. I am aware, from my recent discussions, there are a 
number of different views as to the appropriate Federal role, but I 
don't know enough about the specifics of Amtrak's finances, operations 
and history to advocate one bill over another.

    Question 2. Are there specific provisions in the Administration's 
proposal for restructuring Amtrak that you believe have particular 
merit? Are there provisions that concern you as being unworkable? Do 
you believe that the states will participate to the extent envisioned 
by the legislation? What do you think of the proposal to establish a 
state compact to manage the Northeast Corridor? Do you support 
separating infrastructure from operations in the Northeast Corridor?
    Answer. As I have mentioned, I have not yet read all of the 
proposed legislation addressing the future of Amtrak. I don't know 
enough about the specifics of Amtrak's finances, operations and history 
to advocate one bill over another.

    Question 3. One of the immediate issues facing Amtrak is that of 
appropriations for the coming year. The Senate has voted to appropriate 
$1.346 billion, while the House has voted to give Amtrak $900 million. 
Amtrak has said that it will need $1.8 billion just to tread water. At 
this moment, I we cannot predict what the Congress will appropriate for 
Amtrak, whether it will be $900 million or something closer to the 
Senate figure. But I think we can assume with some certainty that 
Amtrak will not get $1.8 billion it says it needs. Obviously, difficult 
choices will have to be made about how the money is to be spent. As an 
Amtrak board member, where will you recommend Amtrak should focus its 
limited funds next year?
    Answer. If confirmed, my first objective is to meet with Amtrak's 
management to review in detail Amtrak's short-term investment plans and 
needs. I would prefer to defer opining on the specifics of next year's 
funding until I have had a chance to learn more from those closest to 
this issue. I will say, however, that as with all well run businesses, 
I would expect Amtrak's management to make a sound business case for 
its proposed investment plan and be able to discuss in detail, pros and 
cons of alternative investments.

    Question 4. How will you prioritize the spending needs, including 
infrastructure improvements, maintenance of safety, security, service 
improvements, and operation of long-distance trains?
    Answer. The safety and security of Amtrak's current operations 
should have the highest priority for the use of available funds, 
followed closely by expenditures that will generate profitable revenue 
growth.

    Question 5. What sort of financing do you believe is necessary in 
order to grow intercity passenger rail service in the United States?
    Answer. I don't know what funding mechanisms the Federal or State 
governments should use to cover the losses of the trains they choose to 
operate or the funds needed for infrastructure improvements.

    Question 6. You have extensive business leadership experience with 
several well-known American companies, including K-Mart, Grand Union 
Supermarkets, Target, B. Dalton Bookseller, Singer, and Montgomery 
Ward. All of these are (or were) organizations involved in retail 
marketing. They are (or were) supported financially through the sale of 
publicly traded stock. All of them had a number of direct competitors. 
Amtrak, on the other hand, has the single function of providing 
transportation to passengers by rail. It is funded solely and directly 
by the Federal Government. It is not answerable to stockholders, but it 
is subject to the vagaries of local, state and Federal politics. Its 
competitors are other modes of transportation which benefit from huge 
investments of Federal dollars.
    It seems to me that the companies you have led have nothing in 
common with Amtrak. Based on your experience, what do you think you can 
bring to the Amtrak Board?
    Answer. As I stated earlier, I feel there are many commonalities. 
In addition, during my twenty-nine years as a Chief Executive, I've ran 
or owned growth companies, (Target and Museum Company) sports and 
entertainment companies, (baseball, ice arenas, Essex Equestrian) 
manufacturing companies, (Alva and Glassmasters) international 
telecommunications company (Lynx Telecommunications) and a video 
production company of World War II docudramas (Kenwood Productions). 
All of these companies were focused on their customers and success was 
dependent upon fulfilling their needs and attaining a high level of 
customer satisfaction. This requirement is true of Amtrak and I trust 
an area where my past experience can benefit the corporation.

    Question 7. How do you think your experiences in the retail world 
will translate to leadership of an ailing, chronically underfunded, 
passenger rail system?
    Answer. I believe that the vast majority, if not all, companies 
that are poor financial performers share common characteristics such 
as: a lack of good strategic planning, a clear agreed to mission 
statement, sufficient funding, accurate and timely accounting, 
professional management, unrealistic goals, an unproductive culture, 
poor cost controls and a fear of change; to name a few. Turning around 
a company requires identifying its problems and its opportunities, 
developing action plans and being obsessed with its progress on those 
plans. As a Director, I favor a partnership role with management to 
help correct the company's weaknesses and capitalize on its 
opportunities.

    Question 8. What do you plan to do to bring yourself ``up to 
speed'' on transportation issues in general and Amtrak in particular?
    Answer. With only one hour-and-a-half briefing, I need to spend 
more time with Amtrak staff to get familiar with all the issues. I also 
need to complete reviewing the substantial amount of information that 
has already been provided to me.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                               Floyd Hall
    Question 1. Do you support the $900 million budget for Amtrak 
proposed by the Bush Administration for FY 2004? If so, please describe 
how Amtrak will operate at this funding level.
    Answer. If confirmed, my first objective is to meet with Amtrak's 
management to review in detail Amtrak's short-term investment plans and 
needs. I would prefer to defer opining on the specifics of next year's 
funding until I have had a chance to learn more from those closest to 
this issue. I will say, however, that as with all well run businesses, 
I would expect Amtrak's management to make a sound business case for 
its proposed investment plan and be able to discuss in detail, pros and 
cons of alternative investments.

    Question 2. Do you support the administration's proposal, now in 
the form of legislation, to break Amtrak apart into three separate 
entities, two of which would be run privately, and force states to pick 
up the majority of the operating costs? What are your views on this 
legislation?
    Answer. I'm in the process of reviewing it along with the other 
foot of information I received at my first briefing.

    Question 3. Do you believe it is the responsibility of Board 
Members to support the current national passenger rail service operated 
by Amtrak, or do you believe that members should look for alternatives 
such as what the Bush administration is proposing?
    Answer. It is clear to me that the Board of Directors must insure 
that Amtrak has a realistic operations plan and that it is implemented 
within acceptable budgetary requirements. Because of the Federal 
Government's involvement in Amtrak and the company's dependence on 
taxpayer monies, I believe that the Board has the responsibility of 
assuring accurate and timely accounting of how the funds are used and 
whether or not the spending attained their objectives.
    The Board has an obligation to oversee that the company is 
efficient and looking for ways to attract incremental revenue growth. 
In addition, the Board will be responsible for faithfully carrying out 
any reforms the Congress might enact. In this regard, I would expect 
that the Administration and Congress will seek input from the Board 
(once we are up to speed) on Amtrak's progress and its future outlook.

                                  [all]
```