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65–396 PDF 2011

FINDING WAYS TO ENCOURAGE AND 

INCREASE PRIVATE SECTOR PARTICIPATION 

IN PASSENGER RAIL SERVICE 

(112–15) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

RAILROADS, PIPELINES, AND 

HAZARDOUS MATERIALS 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 11, 2011 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JOHN L. MICA, Florida, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

TOM REED, New York 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

FRANK C. GUINTA, New Hampshire 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

STEPHEN LEE FINCHER, Tennessee 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

NICK J. RAHALL II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

(II) 

SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

BILL SHUSTER, Pennsylvania, Chairman 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

TOM REED, New York, Vice Chair 

JAIME HERRERA BEUTLER, Washington 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

STEPHEN LEE FINCHER, Tennessee 

JEFFREY M. LANDRY, Louisiana 

JEFF DENHAM, California 

JOHN L. MICA, Florida (Ex Officio) 

CORRINE BROWN, Florida 

JERROLD NADLER, New York 

RICK LARSEN, Washington 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

NICK J. RAHALL II, West Virginia 

(Ex Officio) 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vii 

TESTIMONY 

Broadley, John H., John H. Broadley & Associates, P.C. ..................................... 11 

Feinsod, Stan, Secretary and Treasurer, Association of Independent Passenger Rail Operators .......................................................................................... 11 

Gardner, Stephen J., Vice President of Policy and Development, Amtrak ......... 11 

Simmons, Patrick B., Rail Division Director, North Carolina Department 

of Transportation ................................................................................................. 11 

Szabo, Hon. Joseph C., Administrator, Federal Railroad Administration .......... 11 

Wytkind, Edward, President, Transportation Trades Department, AFL–CIO ... 11 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Mica, Hon. John L., of Florida ................................................................................ 37 

Reed, Hon. Tom, of New York ................................................................................ 39 

Shuster, Hon. Bill, of Pennsylvania ....................................................................... 40 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Broadley, John H. .................................................................................................... 44 

Feinsod, Stan ........................................................................................................... 55 

Gardner, Stephen J. ................................................................................................ 70 

Simmons, Patrick B. ................................................................................................ 89 

Szabo, Hon. Joseph C. ............................................................................................. 95 

Wytkind, Edward ..................................................................................................... 106 

SUBMISSIONS FOR THE RECORD 

Bracy, Steven F., Director of Structured Finance, Ross, Sinclaire & Associates, LLC, statement ........................................................................................... 2 

Broadley, John H., John H. Broadley & Associates, P.C., responses to questions from Hon. Bill Shuster, a Representative in Congress from the State 

of Pennsylvania .................................................................................................... 51 

Feinsod, Stan, Secretary and Treasurer, Association of Independent Passenger Rail Operators: 

Responses to questions from Hon. Corrine Brown, a Representative in 

Congress from the State of Florida ................................................................. 63 

Responses to questions from Hon. Bill Shuster, a Representative in Congress from the State of Pennsylvania ............................................................. 68 

Gardner, Stephen J., Vice President of Policy and Development, Amtrak: 

Responses to questions from Hon. Corrine Brown, a Representative in 

Congress from the State of Florida ................................................................. 80 

Responses to questions from Hon. Bill Shuster, a Representative in Congress from the State of Pennsylvania ............................................................. 85 

Szabo, Hon. Joseph C., Administrator, Federal Railroad Administration: 

Responses to questions from Hon. Corrine Brown, a Representative in 

Congress from the State of Florida ................................................................. 101 

Responses to questions from Hon. Bill Shuster, a Representative in Congress from the State of Pennsylvania ............................................................. 104 

Wytkind, Edward, President, Transportation Trades Department, AFL–CIO: 

Responses to questions from Hon. Corrine Brown, a Representative in 

Congress from the State of Florida ................................................................. 113 

Responses to questions from Hon. Bill Shuster, a Representative in Congress from the State of Pennsylvania ............................................................. 115 

Page

VI 

ADDITIONS TO THE RECORD 

Capon, Ross B., President & CEO, National Association of Railroad Passengers, statement ............................................................................................... 116 

Hannig, Gary, Secretary, Illinois Department of Transportation, letter to 

Hon. Daniel Lipinski, a Representative in Congress from the State of Illinois ........................................................................................................................ 119 

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(1) 

FINDING WAYS TO ENCOURAGE 

AND INCREASE PRIVATE SECTOR 

PARTICIPATION IN PASSENGER 

RAIL SERVICE 

FRIDAY, MARCH 11, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON RAILROADS, PIPELINES

AND HAZARDOUS MATERIALS, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:00 a.m. in room 

2167, Rayburn House Office Building, Hon. Bill Shuster (Chairman 

of the subcommittee) presiding. 

Mr. SHUSTER. The hearing will come to order. I would like to welcome everybody here this morning. Unfortunately, at some point I 

am going to have to step out. I am going to turn it over to the vice 

chair, Mr. Reed. And since I’m going to do that before I do my 

opening statement, I would like to introduce my distinguished 

panel here this morning, and again welcome you all. Thank you 

very much for coming and spending the morning with us. 

First, the Honorable Joseph Szabo, the administrator of the FRA. 

I am sure he will be here shortly. Stephen Gardner, vice president 

of policy and development for Amtrak, welcome. Pat Simmons, rail 

division director for the North Carolina Department of Transportation. John Broadley, John H. Broadley and Associates, P.C., 

thank you for being here. Stan Feinsod, who is the secretary/treasurer of the Association of Independent Passenger Rail Operators, 

and Ed Wytkind, who is president of the Transportation Trades 

Department of the AFL–CIO. Again, welcome, all of you, for being 

here. 

Also, I would like to ask unanimous consent to put a statement 

into the record from Steven F. Bracy, who is the director of structured finance of Ross, Sinclaire and Associates. It’s entitled, ‘‘Finding Ways to Encourage and Increase Private Sector Participation 

in Passenger Rail Service.’’ 

So those are the types of things we like to enter into the record. 

[The information follows:] 

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7 

Mr. SHUSTER. And welcome to the administrator, Mr. Szabo. You 

have already been introduced, and thanks for coming this morning, 

we appreciate it. 

Two and a half years ago, President Bush signed the Passenger 

Rail Investment and Improvement Act, which was the first rail reauthorization bill in 11 years. And that bill, which I helped author, 

included important reforms in the operation of Amtrak, America’s 

intercity passenger railroad. 

The act also opened the door for the private sector to participate 

in providing passenger rail service in a number of important new 

ways. For the first time, rail capital investment programs were established that gave States primary control to improve and expand 

intercity passenger rail service, and I am proud to say that the 

State of Pennsylvania has been doing that on the Keystone line, 

and it has been very successful. 

A pilot program was authorized to allow private-sector entities to 

operate current Amtrak intercity routes in much the same way 

that private-sector companies now compete with Amtrak to provide 

commuter rail service. 

The so-called Section 502 Program that I wrote, established a 

public-private partnership opportunity for high-speed rail development. Under this program, FRA solicited proposals to finance, design, construct, operate, and maintain high-speed intercity passenger rail systems within one of the 11 specific corridors, including the Northeast Corridor. 

Over 100 expressions of interest were submitted. And from these, 

FRA received eight credible proposals for development of highspeed rail corridor projects. The FRA process was kept completely 

separate from the Department of Transportation’s high-speed and 

intercity rail passenger grants, funds that came through the 2009 

stimulus bill. In my view, that was a mistake. Private sector participation can leverage Federal funds and make projects less expensive, get them built faster, and help keep operating costs down. 

I look forward to ways to encourage the private sector to participate in rail projects—design, build, operate, and maintaining this 

through financing. 

I would like to quote the chairman, who has, as we have, traveled the country talking about the next transportation bill, which 

will include a robust rail title, and it’s that we need to do more 

with less. And as we traveled the country to several States and 

many cities talking about this, I think that departments of transportation around the country understand this, and we need to look 

at innovative ways to get capital leverage for public funds and get 

those public funds into the transportation field. And of course rail, 

passenger rail, is certainly critical to that. 

So, I look forward today to hearing our panelists discuss this, 

and of course, questions from our Members. And with that, I would 

like to yield to the distinguished ranking member for her opening 

remarks. 

Ms. BROWN. Good morning, and thank you for this hearing. I am 

pleased to be here with this subcommittee meeting today to receive 

testimony on finding ways to encourage and increase private sector 

participation in passenger rail service. 

8 

This hearing is very timely. Just last week, we saw an example 

of a great passenger rail project with massive private sector participation die in Florida. In fact, private companies from all over the 

world was interested in Florida’s high-speed rail project. Yet, because our governor put politics before Floridians, we will no longer 

be the pioneers in high-speed rail in America. 

But we are not going to let him stop us. We will have high-speed 

rail for the people of Florida. This is truly a set-back. Florida was 

awarded $2.4 billion in Federal funds to develop high-speed rail, including 84 new miles of track and 240 planned miles. The first 

phase of this project would have connected two major tourist destinations, Orlando and Tampa. Florida’s plan was going to give the 

United States high-speed rail that will finally compare with our 

European and Asian neighbors. Trains were going to reach up to 

160 miles per hour on new tracks dedicated solely to high-speed 

rail. Trains will have reduced trip time from Tampa and Orlando 

from 90 miles by car to less than 1 hour. 

And I want to extend the remarks, because it’s not just the time, 

but it’s the number of people that we would have taken out of cars, 

and the pollution, and on and on and on. 

Unfortunately, despite the fact that just last year the Florida legislature and the governor approved appropriation money for this 

project, Florida’s new governor, who won by 48 percent of the vote, 

rejected the money, claiming it is a waste of Federal taxpayers’ dollars, even though it is gasoline tax and not foreign sources. 

On the contrary, this is an example of Florida taxpayers’ money 

coming home to them. Florida’s governor is much more interested 

in politics than in creating jobs or improving the transportation 

system for Florida residents. This decision would do nothing to 

help reduce Florida’s 12 percent unemployment rate. The highspeed rail plan for Florida serves as a perfect example of a successful public-private partnership that would have created tens of thousands of jobs—by Florida DOT estimate, 48,000. The high-speed 

rail line between Tampa and Orlando was going to produce publicprivate partnerships. And, in fact we had 55 creditable countries 

and companies competing for that transportation public-private 

partnership. 

Today’s hearing will also focus on section 214 of the Passenger 

Rail Investment Improvement Act of 2008, which requires the Federal Railroad Administration to develop a program to contract out 

or privatize two Amtrak routes to freight or commuter railroads 

that own infrastructure over which Amtrak operates. I did not support this program, I did not vote for it. But I am looking forward 

to the FRA discussing it. 

However, I want to make it clear that North Carolina and Florida don’t have to use Amtrak. They choose to use Amtrak. So I am 

interested in the input. And I want to be clear that the freight rail, 

if they wanted to, could offer a passenger rail as we speak, but the 

reason why they decided not to participate in the program was why 

we started Amtrak in the first place, because we do have the number one freight rail in the world. But passenger rail is something 

that we have to work to make sure that we have the support of 

the public and high-speed rail is what—where we’re headed for. We 

have got to be able to move people, goods, and services. 

9 

And so, with that, I am looking forward to the hearing. 

Mr SHUSTER. I thank the gentlelady for her statement. And I certainly understand your disappointment on what happened in Florida. I happened to be with Chairman Mica that day, and he is 

equally disappointed. 

But that being said, if Florida isn’t able to use that money, I certainly would encourage the Administration to look to the Northeast 

Corridor. My friends, I don’t actually live in that rail corridor, I live 

90 miles west of Harrisburg, so it’s not going to directly benefit me, 

but I believe it will benefit the entire country if we turn the Northeast Corridor into high-speed rail. But—— 

Ms. BROWN. Would the chairman yield? 

Mr. SHUSTER. Yes. 

Ms. BROWN. I am not disagreeing that the Northeast Corridor 

shouldn’t get a part of it, but we just had a hearing in California, 

and the mayor of California, LA, was there. And the senator from 

there. So I don’t know that we should be picking winners and losers, but there is a lot of States that would be interested in participating. 

And you mentioned the study. So what is the best way to do it 

is to put the money back out and let the States compete for it, in 

my opinion. 

Mr. SHUSTER. I—— 

Ms. BROWN. The one that come together with the best proposals 

and ready to hit the ground running, and put people to work. 

Mr. SHUSTER. I appreciate the gentlelady’s comments, but we do 

pick winners and losers, that’s what we have been doing with this 

money. And I believe that the money going to the Northeast Corridor, specifically to three projects that have to be done or there 

will never be high-speed rail in the Northeast, and that’s the tunnel to Baltimore, the bridge—I believe it’s the portal bridge from 

New Jersey to New York, and the catenaries. And $2.4 billion 

would go a long way to alleviate those choke points and those significant problems. 

So, again, Mr. Szabo, I guess I’m asking, when you go back to 

the Administration, that at least one Member of Congress here 

thinks that there can be a huge winner in this high-speed rail, 

which would grow to the rest of the country organically. High-speed 

rail, when we see it succeed in one place, people will clamor for it. 

So, anyway, sorry about that—— 

Ms. BROWN. Mr. Chairman, I do want you to know that I agree 

that we need to improve the Northeast Corridor. I am just not in 

the business of sitting up here and deciding that California should 

be left out. 

Mr. SHUSTER. I understand completely. And the record notes 

that, your position on that. 

We will proceed with our witnesses. I am going to—and I am 

going to encourage the vice chairman, when he is at the chair, to 

enforce the 5-minute rule with brutality. So at about 4 minutes and 

45 seconds, I will start to tap the gavel a little bit and ask you to 

summarize. 

But before we do that, I would like to yield for an opening statement, if he has one, the chairman of the committee, Mr. Mica. 

10 

Mr. MICA. Well, thank you so much for yielding. And I will just 

take a minute to make a couple of comments. 

Two and a half years ago President Bush signed Passenger Rail 

Investment and Improvement Act, commonly referred to as PRIIA. 

And it was our first rail reauthorization in 11 years. Worked with 

Ms. Brown, Mr. Oberstar, at the time, and of course, Mr. Shuster 

to try to put some important reforms that were missing in Amtrak, 

and try to improve the terms and conditions and opportunities for 

passenger rail service across the United States. 

We currently—no offense to Amtrak, but basically we run what 

I term as Soviet-style passenger train system. Amtrak controls all 

of the franchises, all of the routing and service for passenger rail 

in the United States. It is done so at a high subsidization by the 

taxpayers. Last year, every single ticket on Amtrak was underwritten, $54.48. That’s every single ticket. We only had about 28 

million passengers. Half of those were in the Northeast Corridor. 

Mr. Shuster and I attempted in the legislation that was written 

to request Amtrak to look at some of the money-losing routes—and 

there are some routes that are documented, where we underwrite 

$200, $300 a ticket. Now, I know there is subsidization of some air 

service. I know there is subsidization of highways, et cetera. 

But there is no reason why some of the money-losing routes cannot be put up for private sector competition. We have seen models 

where that has been done, and there is no reason why the existing 

provisions of the law cannot be complied with. We are not talking 

about, for our labor friends, any difference in terms for labor. We 

are actually talking about, for labor, for employment, and for passenger service, an increase in all of the above. We would have more 

employees, we would have more service if we ran better routes. 

There are plenty of examples. There is German regionalization 

privatization. I met recently with one of the leading Japanese entrepreneurs in passenger rail service willing to put up huge 

amounts of investment, transfer technology to the United States, 

only to have an opportunity to provide some service. 

And our thoughts and prayers go with the Japanese people 

today, just an incredible natural disaster that they experienced in 

the last number of hours. 

But you can look to the East, to Asia, you can look to Europe. 

And you see rail passenger service, you see private sector innovation. I also use as an example—and don’t tell me that you cannot 

make money moving passengers by rail—Richard Branson took two 

lines and when they privatized operations for rail service in England. He has paid a dividend the last 5 years, and almost totally 

eliminated Federal subsidization of that activity. 

Not that I am unwilling to have the Federal Government underwrite some of the construction costs of the infrastructure and also 

maintain the infrastructure in the title of the American people, 

which we should do to protect their interests in all of this. But 

from an operational standpoint, I know that we can again attract 

private-sector capital if they have the opportunity not only to help 

develop, help finance, help construct, and also help to operate. Because they’re not in it for the time of day, they’re in it to return— 

to gain a return on their investment, which is a great motivator. 

11 

So, I look forward to hearing ideas on how we can do a better 

job. I intend, if we don’t do another rail reauthorization, to have 

one in the major transportation legislation, which we extended to 

September 30th last week with the help of Members on this panel 

and Members in the House, and we will have a robust provision. 

We will make certain some of the opportunities that were missed 

in the PRIIA legislation are addressed in a robust rail section. And 

if we can’t get cooperation, in fact, we will very specifically direct 

actions to be taken, both to allow private competition and also to 

expand private sector investment opportunities in passenger rail 

service. 

We will drag the Congress and whoever else kicking and screaming into the 21st century of passenger rail service with private sector participation, one way or the other. With those remarks, Mr. 

Chairman, I am pleased to yield back. 

Mr. SHUSTER. Thank you, Mr. Chairman. And again, we will proceed with the testimony. And again, I am going to be brutal with 

the 5-minute clock. So I would ask you to sum up when you see 

the yellow, or when you start to hear this, all right? 

So, with that, Mr. Szabo, please proceed. 

TESTIMONY OF HON. JOSEPH C. SZABO, ADMINISTRATOR, 

FEDERAL RAILROAD ADMINISTRATION; STEPHEN J. GARDNER, VICE PRESIDENT OF POLICY AND DEVELOPMENT, AMTRAK; PATRICK B. SIMMONS, RAIL DIVISION DIRECTOR, 

NORTH CAROLINA DOT; STAN FEINSOD, SECRETARY AND 

TREASURER, ASSOCIATION OF INDEPENDENT PASSENGER 

RAIL OPERATORS; JOHN H. BROADLEY, JOHN H. BROADLEY 

& ASSOCIATES, P.C.; AND EDWARD WYTKIND, PRESIDENT, 

TRANSPORTATION TRADES DEPARTMENT, AFL–CIO 

Mr. SZABO. Thank you, Chairman Mica, Chairman Shuster, 

Ranking Member Brown, and members of the committee. As always, it’s an honor to have the chance to come and appear before 

you today to talk about the Passenger Rail Investment and Improvement Act, otherwise known as PRIIA. 

In 2008, Congress passed the most sweeping piece of legislation 

aimed at FRA since the Agency was created. For the first time, in 

one piece of legislation, both parts of FRA’s mission, safety and infrastructure investment, were addressed in a comprehensive manner. 

PRIIA specifically addressed three issues critical to the future of 

intercity passenger rail service. First, it addressed the mission of 

Amtrak. Second, PRIIA created a new vision of the investment relationship needed to deliver intercity passenger rail service. And finally, PRIIA addressed high-speed intercity passenger rail service 

from both the public and private investment perspective. 

Before PRIIA, most States had no established passenger rail programs, and those that did were primarily focused on existing Statesupported Amtrak service. States had a more limited vision of a 

more robust role for intercity passenger rail and, many States had 

limited rail staff expertise. 

The good news is, because of PRIIA, parties have been rapidly 

expanding their capabilities. The public sector and the private railroads have come to understand the roles, responsibilities, and obliVerDate Aug 31 2005 15:30 Sep 16, 2011 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\RR\3-11-1~1\65396.TXT JEAN
12 

gations that flow from public investments in private assets. Indeed, 

the States and railroads have reached agreements on the development of most of all of the major intercity passenger rail corridors 

where high-speed rail passenger service will use freight rail infrastructure. 

We are also seeing States develop projects with private-sector investment in mind. The California high-speed rail program anticipates that a third of the project’s cost will come from the private 

sector. And in Florida, before rejecting high-speed rail funding, the 

State was prepared to seek an expression of interest from privatesector consortiums on a design, build, operate, maintain, and finance arrangement that would have the private sector bear the 

construction and operating risks of developing high-speed rail service in the State. 

And, of course, we continue to work with DesertXpress, a private 

sector-driven project for high-speed rail in Nevada. So, the Secretary and I look forward to working with Congress to better define 

these structures for private investment. 

One of the specific issues that you asked to be addressed at this 

hearing is the potential for competition in providing intercity passenger rail service, particularly under section 214 of PRIIA. This 

section would allow for a pilot project involving competition on up 

to two Amtrak routes. 

Mr. Chairman, I want to assure you that we will expeditiously 

move forward on this rulemaking. And, assuming that we do have 

the adequate resources in this budget year, look forward to having 

a notice of proposed rulemaking underway this year. 

Key considerations in this rule will include a commitment to 

safety, efficient service, accountability for liability, and a level playing field, whereby all providers of intercity passenger rail service 

are railroads, as covered by the full spectrum of railroad laws. We 

want to work with you to ensure that the private sector is a partner in the success of our high-speed rail program. 

In the State of the Union address, President Obama added to his 

bold vision for intercity passenger rail transportation. To realize 

this vision, we will need to continue to build upon the success of 

PRIIA. 

The President’s fiscal year 2012 budget proposes that funding be 

made available for intercity passenger rail, and should be done so 

with the same degree of predictability and multi-year commitment 

that helps define our successful highway and transit programs. 

Secretary LaHood and I look forward to working with Congress 

to ensure that America can fully realize the benefits of rail transportation. And I will be happy to address any questions the committee may have. 

Mr. SHUSTER. Thank you, Mr. Szabo. I appreciate that greatly. 

And I look forward to seeing a schedule on that schedule 14, the 

implementation of it, because it’s a change in policy. And we appreciate that gratefully. 

Next, Mr. Gardner, before I turn it over to you, I am going to 

step away from the dais and the vice chair, Mr. Reed, is going to 

take over. But I will be back. 

So, Mr. Gardner, please proceed. 

13 

Mr. GARDNER. Thank you, Mr. Chairman and Ranking Member 

Brown and members of the subcommittee. I am Stephen Gardner, 

vice president for policy and development at Amtrak. And it is a 

pleasure to appear before the subcommittee today to talk about increasing private sector participation in intercity passenger rail. 

On a personal note, this is also a homecoming for me. I began 

my congressional staff career on the Hill as an intern for this subcommittee in 2001. So it’s a real pleasure to be here, and thank you 

for your leadership on rail issues for all these years. 

The two and a half years since the enactment of PRIIA have 

been an extraordinary time for Amtrak and intercity passenger rail 

service. I would like to share with you what Amtrak has accomplished during this time. 

First, Amtrak’s ridership and revenue have both increased to 

record levels. This year’s ridership is running 6 percent above last 

year’s record ridership, and has recently been trending higher still. 

Our $2.5 billion in revenue in fiscal year 2010 set another record, 

and ticket revenue in the first 5 months of fiscal year 2011 are running 11.3 percent higher than last year. This continues a growth 

trend which has made 7 of our last 8 years record years for revenue and ridership, giving us the highest passenger rail cost recovery ratio in all of the United States. 

Meanwhile, Amtrak’s on-time performance has increased from 71 

percent in fiscal year 2008 to 82 percent last year. And our Acela 

high-speed rail service, North America’s only high-speed rail trains 

operating at 150 miles an hour, celebrated its 10th year of success 

this year. Together with our State partners and the FRA, we have 

improved nearly every aspect of our system, and we are very proud 

of the progress we have been making on behalf of the American 

people. 

We have worked diligently to also fulfill all of our PRIIA requirements, meeting or beating all of our deadlines. And more about 

that can be found in my written testimony. 

And focusing on the topic of this hearing, I believe it’s helpful to 

consider the historical backdrop regarding the private sector’s role 

in intercity passenger rail service before and since the creation of 

Amtrak. The reason Congress created Amtrak in 1970 was that the 

operation of intercity passenger trains was no longer viable by the 

private sector. 

Responding to requests from the private railroad, Congress, in 

the Nixon administration, considered a number of alternatives for 

preserving intercity passenger service, but ultimately decided to 

create predominantly a publicly owned company, Amtrak, to operate an inter-connected network of routes benefitting from nationwide marketing, support services, and equipment. 

Amtrak initially contracted with private railroads, actually, to 

operate these trains. But Congress quickly decided this approach 

was too costly, and did not provide sufficient control to ensure acceptable levels of service. So the law was changed to require that 

Amtrak operate and directly control its operations, but still allowed 

Amtrak to use the private sector when appropriate. 

Today, Amtrak purchases nearly $1.5 billion in goods and services from the private sector, from cleaning and mechanical services 

to commissary management and part supply. Further, with our 

14 

State partner routes, States can and do contract with private companies to provide services other than train operations, as you will 

hear from Mr. Simmons today. 

Amtrak has also been pursuing partnerships with the private 

sector. We formed a consortium with SNCF, the French national 

railroad, and Bechtel, an international engineering company, to 

pursue the now-halted Florida high-speed rail project, in fact. We 

have also been reaching out to the leading high-speed railroads of 

the world to give us feedback on our vision for high-speed rail development in the Northeast Corridor. 

As the committee knows, PRIIA contains several provisions to facilitate increased private sector participation in passenger rail. Utilizing the private sector for intercity passenger rail is not a new 

idea. And while Amtrak is the country’s national passenger railroad, Amtrak does not have an exclusive right to operate intercity 

passenger trains. Since Amtrak’s inception, private companies have 

initiated operation of more than a dozen intercity passenger rail 

services. Most have ceased operations after a short period, due to 

financial problems. Most noteworthy is the original Auto Train Corporation, begun in 1973, but entering bankruptcy in 1981, after 

which Amtrak took over the operation in 1983. 

Amtrak generally supports these efforts to augment today’s current network, and is presently working with several private companies that wish Amtrak to help them in operating additional services, including the proposed Greenbrier Express, serving West Virginia. 

One of the important issues to consider here is access rights, and 

Amtrak’s access to the national system. These rights ensure Amtrak’s ability to operate over freight rail lines and regional transportation authorities, and they were given in exchange for a relief 

of the private rail—to operate their own passenger trains. 

Those that would seek to transfer these rights now, 40 years 

after that original deal, face, I think, steep opposition from the Association of American Railroads and other private railroads that 

agree that this deal was created to create access for the public, not 

for private sector access to their assets. 

Future efforts to encourage private sector involvement in investment in intercity passenger rail should take into consideration this 

point and two others. First, private-sector investment is not a silver bullet that ensures success. Competition can reduce costs, but 

it can also lead to fragmentation of service, and elimination of network efficiencies. Most of the world’s passenger systems are operated by State-owned railways. 

In conclusion, renewed private-sector interest in passenger rail is 

a welcome development. We are not afraid to compete in this market. But competition requires a level playing field. And if other 

companies wish to operate in this service, they must be subject to 

the same laws and follow the same rules that Amtrak does. Thank 

you very much, Mr. Chairman. 

Mr. SHUSTER. Thank you, Mr. Gardner. 

Mr. Simmons, we will move on to you. 

Mr. SIMMONS. Thank you, Mr. Chairman, Ranking Member 

Brown, and members of the committee, for the opportunity testify 

today. My name is Patrick Simmons, I am director of the rail diviVerDate Aug 31 2005 15:30 Sep 16, 2011 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\RR\3-11-1~1\65396.TXT JEAN
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sion with the North Carolina Department of Transportation. I also 

serve as a member of the PRIIA section 209 State working group, 

and the section 305 next generation equipment committee. 

Today I speak on behalf of other States through the American 

Association of Highway and Transportation Officials. AASHTO represents all 50 State departments of transportation, as well as the 

District of Columbia and Puerto Rico. 

My boss, Secretary Eugene Conti, serves as chairman of SCORT. 

State-supported services not only have the most robust growth in 

ridership and passenger revenues across the country, they are also 

the Nation’s laboratory for innovation. And States take the lead in 

implementing the newly created high-speed and intercity passenger 

rail program. It is through States that opportunities for public-private partnerships will grow. States strongly support the need to 

fund Amtrak and to provide for a national intercity passenger rail 

network. 

States also want to provide efficient, high-quality mobility for our 

citizens. And we recognize that to accomplish this goal will require 

many public and private partners. 

Section 209 of the PRIIA is the requirement that Amtrak work 

with States to develop a transparent cost-accounting model. It 

places Amtrak in an usual position of transparency similar to what 

a government agency would have, but in a private sector competitive arena, it also means that they reveal proprietary information. 

That’s a point of opportunity. 

It also means that, of—the 36 trains that have historically been 

operated and paid for by Amtrak will now become State-supported. 

States do need a consistent budget planning process, so that we 

can provide for the appropriate cost of operation, no matter what 

the components are. 

Some examples of innovation in North Carolina are our municipalities own our stations. We contract with Amtrak for operation. 

On one of our trains we provide equipment. That equipment is 

maintained through a third-party operator. For stations that do not 

have the ridership to support full-time Amtrak staffing, we also 

contract for a third party operator to man those stations. 

In Maine, the northern New England passenger rail authority 

contracts out in food and beverage service and turn-around 

maintenancing. In California, through the Capital Corridors, they 

have opted out of the Amtrak call reservation system, and CalTran 

not only owns their own equipment, but they jointly own a mechanical facility, as well. There are other examples around the country 

of partnerships that include third-party operations. 

Stephen spoke earlier about one of the areas where Amtrak does 

have a birthright, an advantage, and that is, of course, the right 

of access. In addition to that is the pooled liability insurance. Those 

are issues that any operator that wants to get into the business 

will have challenges with. 

Mr. Chairman, I look forward to responding to any questions this 

committee may have. 

Mr. REED. [presiding.] Thank you, Mr. Simmons. Move on. 

Mr. Broadley, please. 

Mr. BROADLEY. Mr. Chairman, Madam Ranking Member, I would 

like to thank you for inviting me to participate in this hearing. I 

16 

am John Broadley, and I have been working in the vineyards of 

rail reorganization since 1975. My resume basically shows that I 

have worked through the Conrail, the Amtrak, I have litigated 

train cases for Amtrak back in the 1980s. 

But I am here this morning to outline for the committee some 

of the approaches to the privatization of rail passenger service that 

have been adopted in Europe, specifically in Britain and Germany. 

I think international experience can shed some light on alternatives that are available to us in the United States. 

First, we need to establish comparability of conditions. U.S. passenger rail operations fall into two groups. The first is a group of 

low-frequency and relatively slow passenger trains that operate 

predominantly on freight-owned lines. Most of Amtrak’s long-distance trains fall into this category. For example, the Washingtonto-Chicago service. The second is a group of high-frequency train, 

and relatively fast trains that operate primarily on the Northeast 

Corridor. Operating economic characteristics for these two groups 

of trains are very different. 

And I want to focus on the Northeast Corridor passenger services, because they present economic and operating characteristics 

that are similar to those in several western European countries. 

The attachments to my written testimony summarize these similarities. 

First, the Northeast Corridor has a relatively high population 

density. They have major cities spread out along the corridor. Second, most of the population centers along the Northeast Corridor 

have good public transportation systems serving their city-center 

rail stations. Again, that is comparable to the European situation. 

Third, the Northeast Corridor is heavily used for both intercity and 

commuter operations. Many European lines are under the same 

circumstances. 

Again, attachments two and three to my written testimony show 

the passenger density on the Northeast Corridor, and compare it 

to passenger density on European lines. And you will see that the 

Northeast Corridor ranks very high. That’s both in terms of passenger route kilometer and in terms of passenger kilometers per 

route kilometer. 

Fourth, the NEC is publicly owned or controlled, and is predominantly a passenger facility. This is another point of commonality 

with the European system. And finally, long-distance passenger 

services on the Northeast Corridor, the Acela and the Northeast 

Regional Service, are within striking distance of financial viability 

on what we call an above-the-rail basis. Again, this is comparable 

to the European situation. 

The—in—prior to 1974, British Rail was owned and operated and 

integrated—vertically integrated railroad. British Rail owned the 

infrastructure, operated the infrastructure, ran the trains. The 

same situation prevailed in Germany. 

In the early 1990s, the British Government undertook a rootand-branch restructuring of the rail system, in which they transferred the infrastructure to an outfit called Rail Track. They transferred the equipment to a group of leasing companies, which generally are referred to as ROSCOs, and they put out each of the 

major routes, passenger routes, to competitive bidding by pasVerDate Aug 31 2005 15:30 Sep 16, 2011 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\RR\3-11-1~1\65396.TXT JEAN
17 

senger operating companies. The freight business was split into a 

number of separate companies. 

The basic structure established in 1994 continues to exist. There 

have been some changes in the players. The Rail Track, which received the infrastructure in 1994 morphed into what they call Network Rail now, which is a semi-private/semi-public entity that operates on a non-dividend-paying basis. 

The franchising responsibility is now lodged with the department 

for transport. And the franchising is done on a leased subsidy 

basis. All of the lines require subsidy. And the decision is made— 

other things being equal—on the basis of the required subsidy. 

Further details are included in my written testimony, and I would 

be very pleased to respond to questions. 

Mr. REED. Thank you very much. 

Mr. Feinsod? 

Mr. FEINSOD. Thank you, Mr. Chairman and Ranking Member 

Brown. I am here to represent the Association of Independent Passenger Rail Operators. This association represents companies, U.S. 

and international, rail operators in the private sector who have the 

qualifications, interest, experience, and commitment to operate and 

maintain passenger railroad operations in the United States. This 

group is already doing that for that segment of the railroad industry that we call commuter rail, which has been opened and is subject to competition. 

AIPRO supports the innovations introduced in the PRIIA, and 

was formed in recognition of the fact that PRIIA states that the 

States themselves should have the freedom to choose the passenger 

rail operators. This law created a first-ever program to support the 

States, to revitalize high-speed and intercity passenger rail, and to 

expand competition, giving States a greater role in passenger rail 

decisionmaking. 

In line with the President’s ideas put forward in the State of the 

Union, we believe that America should seek a passenger railroad 

network that meets evolving world standards. Our member companies focus on service delivery, efficient use of resources, and sustainable business models. We are prepared to engage in a new era 

of passenger rail public-private partnerships, and to expand competition. 

We support the right of freight railroads for a fair return on their 

private investment under models similar to the public-private partnership arrangement, to improve assets on the capital corridor. We 

believe the surface transportation act should contain a rail title, 

and it should maintain the robust investment in our freight network, and stimulate cost-effective passenger rail expansion. 

We emphasize the rights of labor, and those that are stipulated 

in PRIIA should be fully honored. 

The public benefits of adding improved rail capacity are many. 

We must establish a vibrant passenger rail system. We propose 

that in all elements of this reform, access to track and fees for that 

access should be on a negotiated basis. We believe the new rail title 

should be deficit-neutral and success-oriented, a program that cuts 

red tape, streamlines project delivery, and increases private investment, encouraging open and fair competition. 

18 

As a direct outgrowth of PRIIA, we propose to reorganize the current approach to regional service with a new intercity State corridor program. This will lead to tangible improvements in services 

in the most productive corridors, and will prove that passengers 

will be attracted in large volumes to a high level of service that begins to meet international standards. 

Competition involving private-sector companies offers the advantages of bringing innovation, capital investment, efficiency, energy, 

and enthusiasm to the expansion of our passenger railroad services. We know that expansion will result from competition, and we 

will create new and expanded numbers of middle-class, private-sector railroad and related industry jobs, helping to reverse a decadesold reduction in railroad employment. We have seen this happen in 

markets overseas. 

So, we recommend the following reforms. Revise PRIIA to create 

an intercity State corridor program, which encourages competition 

and private sector involvement. The new program should be based 

on the German model, and provide the States with the option of 

managing their intercity corridor service. We would also recommend a special initiative for the NEC. 

The capital grants that are available from PRIIA follow the principle in highway and aviation programs that the Federal Government should provide infrastructure support and guidelines. This 

was a good first step. Now we should authorize an intercity State 

corridor program. 

We would propose a Federal commission on intercity rail publicprivate partnering, and then a transfer of corridor service to a 

budget-neutral program that permits the States to secure the funds 

that are now being used in those corridors that are going elsewhere. We would define a new method of establishing and allocating the costs, and invigorate the system with competition, as we 

have seen in Europe and Asia. 

Thank you. My written statement says more things. 

Mr. REED. Well, thank you very much. I know the time gets you 

at times. We will move on. 

Mr. Wytkind, please? 

Mr. WYTKIND. Thank you, Mr. Chairman and Ranking Member 

Brown, for inviting me and having the labor movement appear before the subcommittee. 

Our 32 member unions have a long history of supporting infrastructure investments in this country, and making our transportation system the best it can be in the world. Today, we believe— 

and we want to spend some time on this—there is a great story to 

tell about Amtrak and its employees, a story that can’t be ignored 

as the committee considers ways to propose new advancements in 

passenger rail policy in this country. 

Amtrak and its employees are performing better than at any 

time in the history of the company. As we heard from Mr. Gardner, 

the company is growing monthly. It’s operating in the black on the 

Northeast Corridor. It’s expanding and modernizing, and is already 

the premier provider in this country, in fact, in North America, 

with the most qualified workforce to handle the growing demand 

for high-speed rail across the country. 

19 

We believe those who seek to slash Amtrak’s budget, as we have 

already seen in this Congress, or privatize services, are setting the 

company up to fail at the very time it is on course to finally find 

stability and increase ridership. It is up to Congress, together with 

the Obama administration, to foster and not derail the continued 

transformation of Amtrak. 

We now have a President who has made it a priority to build and 

expand passenger rail in this country. His recent budget calls for 

billions of new funding for Amtrak, as part of a broader vision for 

passenger rail. 

Regarding the private sector’s role, its role in building, maintaining, and operating the Nation’s passenger rail and freight transportation system has always been significant. Out of our 32 member 

unions, we represent many private-sector unions. We are not just 

a public-sector union organization. And we believe that private sector plays a crucial role, one that we are working to enhance in 

manufacturing, as well, the goods and equipment needed to operate 

and maintain the system. Without a strong well-capitalized private 

sector in our transportation industry, America will not remain the 

world’s strongest economy. 

We are not opposed to private sector participation. In fact, there 

is plenty of it today. But we are opposed to breaking up Amtrak. 

It is not the answer, if we plan to maintain a national passenger 

rail network. Those who believe that privatization is a panacea are 

ignoring the fact that, under this model, service would only be provided where it is profitable to do so for private investors. 

None of the world’s finest passenger rail systems operate with 

this model. In fact, no transportation system in any mode of transport anywhere in the world operates free of subsidy. The idea that 

rail systems around the world are profitable and operate independent of government assistance is pure fiction. 

Look at the UK. I was actually stunned to hear the UK model 

as a citation for progress in the future. It did not increase efficiency 

when that privatization experiment was tried in the early 1990s. 

In fact, it unleashed a torrent of problems: higher fares, massive 

layoffs, maintenance and safety problems that culminated in the 

Stafford Rail crash in 1996; 31 lives were lost. And only a decade 

later, British Rail privatization was scrapped. 

Back home, Amtrak has been forced to limp along from one budget crisis to the next. The fact is that no public or private corporation can operate when it doesn’t understand what its next year’s 

budget is going to be. 

Let me also state that if entities other than Amtrak are going to 

provide passenger rail service, it must be ensured that the employee protections and statutes, such as Railroad Retirement or the 

Railway Labor Act, are applied to all the workers in the rail industry and their operators. It is wrong to allow private-sector competition, and then leave behind an unlevel playing field. 

In addition, we would argue that Davis-Bacon prevailing wage 

laws, as they have for decades, should continue to apply to all construction work that is funded with Federal assistance. 

And I have got a question of those who are talking about 

privatizing Amtrak. Have you asked the freight railroads what 

they think? We are aware of significant misgivings that the freight 

20 

rails have that would allow other companies access to their private 

rail tracks, and they have publicly stated that they embrace their 

relationship with Amtrak as the main provider of passenger rail in 

this country on their private network. 

Lastly, investing in passenger rail can also boost our manufacturing industry. With strong Buy America requirements, Federal 

intercity passenger and high-speed rail funding can boost this important middle-class sector. These investments will create jobs here 

in the U.S. and not abroad. And this funding stream will provide 

the stability for private manufacturers to set up operations because 

they see a long-term market capability. 

I would just finish with the following proposition. Too often in 

Washington time is wasted creating new programs, rather than 

perfecting the ones we already have. This committee has a long 

history of making sure the transportation system has the capital 

and the operating support that it needs to succeed. And we believe, 

without a Federal vision, with long-term funding commitments that 

ensure a stable fully capitalized Amtrak operation, the goal of 

boosting private-sector participation will never be fully realized. 

We thank you for the opportunity to testify, and look forward to 

your questions. 

Mr. REED. Thank you, Mr. Wytkind. I believe at this point in 

time we will move into some questioning of the witnesses. Ms. 

Brown, I will yield to you first. 

Ms. BROWN. Thank you very much. And thank you, Mr. Administrator, for being here. And I want to thank you for your leadership, 

working with Florida and with the Secretary, Mr. Ray LaHood, 

which is really—he is a bright spot in the administration, and really has worked with Florida. And I know we have learned some lessons from that. 

And as we move forward, I guess I am concerned that as we develop high-speed rail, I mean, when you have communities like Orlando, Tampa, Miami, we need to have a model that they can come 

together and work with us in a way—I mean this is a lesson that 

we can take to the rest of the country, because let’s say if the State 

doesn’t want to participate, how can we have a program that the 

communities come together, and we can work with them in order 

to get commuter rail, or to get high-speed rail? 

I know that you can’t do it without some participation from the 

State. But the way the proposal is written, it requires a great participation from the State. So, as we go forward, we need to think 

about how we can work private-publicly, and move—because when 

you get 100 percent of the funding, and you got 90 percent Federal 

funding, gasoline tax, and you got 10 percent guaranteed—and, in 

fact, I want to have submitted in the record the study that we paid 

for, as soon as we can get it from the State of Florida, indicating 

how, even in the first year it would have made a profit. 

Can you respond to that? 

And then I have some other questions about Amtrak. And I really get, you know, challenged constantly about the discussion about 

privatizing Amtrak when clearly we know that for 8 years we zeroed out the funding for Amtrak, and it was all we could do to just 

hold on while we got the opportunity now to move forward with 

passenger rail. 

21 

And, in fact, I went to Salt Lake City, Utah 2 weeks ago. And, 

I mean, they are moving 40,000 people a day in commuter rail. And 

so we’ve got to figure out how to move people. You know, when people say, ‘‘Well, we just need another lane on I–4,’’ we got 8. One 

more won’t help us. So help me. 

Mr. SZABO. Well, thank you, Congresswoman. And, if you would, 

please make sure that everybody knows I was late getting in here 

because we were discussing some other business. So you were taking advantage of the opportunity. 

To your first point about trying to find a mechanism for local 

communities to come together, the biggest challenge here is that 

PRIIA, by law, actually states that it has to be a State or an entity 

established by the State. So that becomes a little bit of the challenge that we have to work with, in finding a legitimate legal 

means for communities to come together to actually make application or execute delivery of a project. 

Ms. BROWN. Would Amtrak meet that criteria, in that they already have certain criteria that they can move within the State? 

Or could some of these private rail companies, you know—if they 

were interested in—let’s say FEC says they’re interested in doing 

passenger rail from Jacksonville to Miami, would they be eligible 

for—— 

Mr. SZABO. Obviously, it always depends on the legal structure 

of the body. There certainly is a chance that an agency might be 

eligible, assuming that they were established under State statute. 

I mean, you know, counsel would have to review that. But it would 

sound like the door could be opened there. Clearly, there could be 

ways for Amtrak to be that body under PRIIA. 

But I would come back to a point that you also made in your 

comment, that it is close to impossible to do without a level of engagement by the State DOT. You know, while there is a way for 

the State DOT to hand it off, there is no way to entirely erase the 

involvement of the State DOT. 

Ms. BROWN. My time is almost up, but there is a chart. Put the 

chart up, please. Can they put it up? There is a chart that shows, 

over the past 60 years, that the U.S. has invested $1.3 trillion in 

highways and $84 billion in aviation, but only $37 billion in passenger rail. Meanwhile, countries like Germany invested $104 billion in passenger rail. 

Over 10 years—and I have got to tell you I was recently talking 

to the Chinese, and I indicated that they were going to put about 

$300 billion in rail, and they said, ‘‘No, Congresswoman, it’s 3–5– 

0.’’ And they plan on tripling the size of their system beyond the 

rest of the world by 2012. Now, I know we can’t compete with the 

Chinese, but the point of the matter is we have started investment, 

and hopefully in the next, you know, 5 years, when we do the reauthorization, we will look at putting at least $50 billion, so that we 

can really have a system that will compete and move our people, 

goods, and services. 

And thank you again for your leadership. I yield back the balance of my time. 

Mr. REED. Thank you very much. At this point, the chair will 

recognize the chairman of the full committee, Mr. Mica. 

22 

Mr. MICA. Well, thank you. And thank you again for conducting 

this hearing, and for trying to look at how we can do a better job 

in getting private sector contributions and activity. 

You know, Mr. Szabo and Mr. Gardner, I don’t think there is any 

way we could possibly mess up a launch of expanded high-speed— 

well, creation of high-speed and expanded passenger rail service in 

the United States than we have done with the manner in which 

the 78—whatever the number—of grants that were given, and now 

have them coming back. 

I am so dismayed. I consider myself one of the stronger supporters of bringing true high-speed rail to the United States and 

also expanding passenger rail service where it makes sense for the 

taxpayers. But the launch has been an absolute disaster. And now, 

with Wisconsin, Ohio, Florida rejecting the money, it’s made—we’re 

going to have to almost restart our efforts to gain some credibility. 

And I hate to tell you this. I was out in California, in Fresno, 

and that one is not looking rosy, either. The ridership is very marginal. The farmers are up in arms, and the community of Fresno 

and Bakersfield doesn’t have the population base to support this. 

So it’s going to be a dramatically subsidized route. 

So, how do we recover? I pleaded and begged to look at the 

Northeast Corridor. They have come up with a—I’m trying to be 

polite. If I say ‘‘half-baked,’’ that’s not a good term. They’ve come 

up with a plan that’s not going to cut it. And $117 billion gets us 

to, what, 2030, 2040? 

VOICE. 2040. 

Mr. MICA. 2040, with little, tiny, incremental improvements. So 

my question is, how do we recover credibility after so much damage 

has been done? And, two, how can we find a better opportunity in 

the Northeast Corridor, rather than what’s being proposed? 

I think your proposal could be cut down, with a little help from 

Congress in getting the private sector, to 10, 12 years to put the 

service in, if we would allow, again, those to participate. 

So, credibility, restore credibility, and then having one success in 

the only corridor which we own that would fit the model. Mr. Szabo 

and then Mr. Gardner. 

Mr. SZABO. Thank you, Mr. Chairman. First off, I believe that we 

continue to have credibility. And the fact that three States haven’t 

chose to continue to move forward doesn’t change the fact that a 

majority of the States in this country do plan to continue to move 

forward. 

Mr. MICA. But none of those are really high-speed service. 

Mr. SZABO. California is, in fact, high-speed service. 

Mr. MICA. Well, I guess—and again, it does have the private sector component. 

Mr. SZABO. Right. 

Mr. MICA. But the problem is the route that was chosen. There 

are many bumpy ties in the track along the way on that one. I 

don’t consider Chicago to St. Louis high-speed. 

Mr. SZABO. All right. If I can continue on then, sir, first off, let 

me say we agree with your vision that the Northeast Corridor 

needs to be a priority. We have existing infrastructure there that 

can be substantially upgraded and improved to actually continue 

the positive operating ratio that Amtrak is achieving there, conVerDate Aug 31 2005 15:30 Sep 16, 2011 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\RR\3-11-1~1\65396.TXT JEAN
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tinue to reduce the trip times, improve reliability, which are the 

crucial elements to success. 

And with California, it’s really important that you put into perspective that what is being constructed there is a very, very first 

step that is no different from how the interstate highway system 

was constructed some 50 years ago. The very first segment was 

just a few miles in rural Missouri. 

Mr. MICA. Mr. Szabo, I am giving that same spiel. I mean your 

last sentence is in paragraphs of what I’m doing to respond to people. 

Mr. SZABO. Great. 

Mr. MICA. But—— 

Mr. SZABO. Great. 

Mr. MICA. But again, I think we have to restore some credibility. 

We have got to find some successes. That is going to be a tough—— 

Ms. BROWN. Will the chairman yield? Will the chairman yield? 

Will the chairman yield? 

Mr. MICA. Only if it doesn’t count against my time. 

Ms. BROWN. Yes, well—— 

Mr. MICA. The clock is rolling. 

Ms. BROWN. I just want to say—30 seconds—because I hope you 

are not blaming the Administration for the ill-fated governor that 

we have that won 48 percent of the vote and has come in here, and 

the credibility of the studies showed that the ridership would have 

made money. You know, yourself, that all of the communities support it. So let’s don’t blame—it’s not that it’s a lack of credibility 

with the program. It’s a lack of leadership in the State of Florida 

on one person. 

Mr. MICA. Yes. Now—— 

Ms. BROWN. One person. The legislature had voted for it. The 

House and Senate had voted for it. All of the communities had 

voted for it. So, clearly, we got a vote. But let’s don’t put it on the 

Administration. I know we try to put everything on the Administration. But the Administration has nothing to do with—the fact is 

that we have a governor that has killed this program. So let’s don’t 

say that it’s a lack of credibility with the program. It’s a lack of 

leadership in the State of Florida. 

Mr. MICA. Well, if it was just the State of Florida, that might be 

the case. But of course we have multiple States now who have rejected significant—— 

Ms. BROWN. We got multi-governors. 

Mr. MICA. I yield and reclaim my time back. But again, regardless, the money is coming back. The credibility moving forward has 

been damaged. I mean, again, the public views these now as failed 

attempts, whoever the parties are. 

So, I was concerned about the manner in which the projects were 

chosen, and that’s a matter for our investigative activities to proceed, so that we can avoid this in the future. We have got to restore 

credibility, because we need to be having systems like they take for 

granted in other countries. We need to bring the private sector in. 

That’s the purpose of this hearing. And we need to look at what 

failed in that process. If projects didn’t make sense to the governors 

or to whoever, so be that. I have always wanted to have successes, 

not a series of failures, whoever’s account, whoever’s watch. 

24 

But that being said, again—now, one question. Gardner, we 

didn’t get a response from you, but I could probably give it. And 

I don’t want to take away from anything you would add to the conversation, but that being said, now the money is coming back. Are 

you all being consulted by the Secretary on where that money goes, 

Mr. Szabo? 

Mr. SZABO. There continues to be a discussion, and making 

sure—— 

Mr. MICA. And Mr. Gardner? 

Mr. SZABO [continuing]. That we again have a open and transparent process. 

Mr. MICA. Mr. Gardner? 

Mr. GARDNER. Mr. Chairman, we await for the FRA to decide 

how they will allocate that—funds, whether they will be made reavailable for competition—— 

Mr. MICA. Have you provided any memo direction or anything to 

where the money should go, either to the FRA or the Secretary? 

Mr. GARDNER. Not directly. We do, of course, have a wide knowledge of the projects. 

Mr. MICA. Is it a phone mark, or is there an email trail somewhere? 

Mr. GARDNER. Yes, we have absolutely our eyes on the opportunity here. 

Mr. MICA. I’m not trying to be too smart, but the money is going 

to be spent, because the Secretary and the Administration have the 

authority to spend it. 

Congress is not in a position because of our CRs and all of that, 

probably, to take it back and put it in the treasury, because many 

people out there want to reduce the debt. I agree with them. But 

if it’s going to be spent, I’m concerned about how we spend even 

the Florida $2.4 billion. 

And while I’m not a big fan of the Northeast Corridor plan that 

you have, there is certainly some improvements there. But there 

are some improvements that, for national security purposes, for 

transportation purposes, that we could best utilize going out, instead of having another half-baked attempt of a project that might 

again come back on us. 

So, I am just throwing that out there, as you make those decisions and have discussions. I am willing to sit down and work with 

you, to look at how we could attract private investment, and with 

your plan of 30 years, I would like to cut it down to 10 or 12. We 

have talked about this. 

If we need to speed up any of the approval process, we can set 

the framework for that. If there is something in PRIIA that needs 

to be adjusted—and I think we do need to go back and readjust 

this—the money sort of got ahead of the projects. But I am open 

to working with you. And I know you’re just excited about working 

with me. 

[Laughter.] 

Mr. MICA. Is that right, Mr. Szabo and Mr. Gardner? 

Mr. SZABO. Mr. Chairman, we always like working with those 

who hold the rank of chair. 

Mr. MICA. Thank you. 

Mr. SZABO. Thank you. 

25 

Mr. MICA. Yield back. 

Mr. REED. Thank you, Mr. Chairman. At this point in time the 

chair will recognize the gentlelady from California, Ms. Richardson, 

Ms. RICHARDSON. Thank you, Mr. Chairman and Mr. Chairman. 

With all due respect to our chairmen, Mr. Szabo, I would actually 

like to weigh in somewhat differently, in the fact that I do come 

from California, and I am the co-chair of the high-speed rail caucus. So, for the record, I think it’s important to note that the chairman had a listening tour in Fresno. And although he might have 

had 20 farmers who were upset, there were over 150 people who 

were supportive of it. 

So I think, in all fairness—and what I would recommend is 

maybe what would be helpful is to have a staff briefing of all the 

status of the projects throughout the country, so we’re not using 

kind of bits of information that—we might be reading one article 

that’s in—up in arms that may not necessarily be reflective of the 

actual picture of what’s happening on the ground. 

I can say, from being in California, that there is actually several 

routes that are being considered. And whoever happens to complete 

their permit process in a better fashion, I think, would get the lead. 

The reason why I think the Center Valley was being more highly 

considered was because it was less in the urban area, and some of 

the other issues. 

But I do not agree—and I will say for the record I don’t agree— 

with what the chairman said, in terms of the current State of California. And what I don’t want you to walk out of here, in terms of 

being in the Administration, of thinking that’s the only way. I realize he is chair, but we actually have one vote for every seat here. 

And I hope that you would make sure that all of the information 

is collected before the Administration makes any final decisions. Is 

that fair, sir? 

Mr. SZABO. That is absolutely fair, Congresswoman, and the way 

that we plan to proceed. 

Ms. RICHARDSON. OK. I appreciate it. Mr. Szabo, also I wanted 

to build upon—clearly, the President has made a commitment to 

high-speed rail. I would even say so much as he might see it as 

a part of his legacy. What, however, can you help us to do to make 

sure that also a part of the legacy of this administration is taking 

care of what we have already built? 

As Ms. Brown said, we all support high-speed rail. It’s where we 

need to go. But we need to make sure that Amtrak is properly 

funded. And clearly, I don’t think it has gotten its fair shake. So 

how can you help us with that? 

Mr. SZABO. Well, Congresswoman, there is no question that there 

has been a history of under-funding for Amtrak, which has always 

hindered its ability to achieve its best potential. But the President’s 

fiscal year 2012 budget request really changes that. 

For the first time, there is a talk of taking a comprehensive look 

at the backlog of state of good repair that needs to be made, replacing the aged equipment, ensuring that there is appropriate transparency in the budgeting and a clear division in the business lines, 

and that there is the appropriate funding to see it excel. 

Amtrak has just now gone through 16 consecutive months of ridership growth. Last year they set an all-time record. In California, 

26 

the ridership growth alone has been tremendous. Statewide in the 

past decade, it’s up by 66 percent. On the capital corridors, it’s up 

100 percent. Just month after month, they are setting ridership 

growth records. And there is clearly this desire out there from the 

traveling public to see passenger rail as part of a balanced transportation network. 

Ms. RICHARDSON. Yes, sir. And my last question, which will lead 

to a comment—and then I’m going to turn to Mr. Wytkind—is I 

come from the private sector, I worked in the private sector. And 

what I will tell you is, when you have the resources needed to do 

the job you can often times do it more efficiently. But if Amtrak 

hasn’t been given the resources it needed to make the improvements and the enhancements that it could have, it could very well 

perform just as well as any alternative other financing mechanism, 

which—I would like to turn to Mr. Wytkind in my remaining 1 

minute. 

We—many of the gains that we have had, in terms of workers 

and standards and so on, translating those within the private sector is not always an assumption. All you have to do is look at Wisconsin and see that’s the case. Mr. Wytkind, would you like an opportunity just to express further, other than your testimony, what 

guarantees or things you would be looking for if so—we went down 

this route? 

Mr. WYTKIND. Well, thank you. I appreciate the question. And I 

appreciate your leadership on passenger rail issues in the caucus. 

I, by the way, spent 4 or 5 days in California. I share your view 

that there is a lot of enthusiasm in California for its initiative. I 

spent days meeting with the Members of the State legislature and 

other people out there. 

But we are very clear in our views. The private sector has always 

had a robust role in our transportation system. But to simply break 

up Amtrak, the only national passenger railroad that can operate 

high-speed service in North America, and subject it to open competition, is just a really bad idea. This country is filled with stories 

of broken privatization models that haven’t worked very well. And 

who usually loses out in those equations is the employees and the 

people that rely on the service. 

And lastly, I think there—can’t be lost here. There is a lot of 

blaming going on of the Obama administration’s views and programs on passenger rail. The truth is that Governor Walker of Wisconsin, Governor Kasich of Ohio, and now Governor Scott in Florida have literally thrown tens of thousands of people out of work 

with decisions to throw passenger rail money back to Washington. 

And that was probably the very first decision that Governor Walker made, as the governor-elect, was to tell a bunch of Wisconsin 

people that they’re not going to be gainfully employed—because of 

very, very vibrant investments in our passenger rail system. 

And so, I think that can’t be lost in the debate. This is not 

whether the Obama administration’s plan is perfect. But the plan 

can’t work if you have elected governors who throw the money back 

and do not want to invest in passenger rail in their States for the 

benefit of the country. And I think that that’s a huge loss for the 

country and for the people of those good States. 

Ms. RICHARDSON. Thank you, sir. Thank you, Mr. Chairman. 

27 

Mr. REED. Thank you. Mr. Bucshon from Indiana. 

Dr. BUCSHON. Thank you. I thank the panel for being here. I am 

a supporter of developing our high-speed rail system, and I have 

a question for Mr. Szabo. What do you see, in your view, is the biggest impediment to high-speed rail development in the United 

States? 

Mr. SZABO. I think, quickly, developing the intellectual capacity 

of all the players, the resources. Not intellectual capacity so much 

as the resources. You know, PRIIA, for the first time, put a significant responsibility on the States, gave them significant power, the 

right to choose their own operators, the requirement to do their 

own planning. It also put significant new challenges on my agency. 

And so there is a kind of a new paradigm created. 

State DOTs and the Federal Government are very, very good at 

constructing highways because they have been doing it now for 50 

years. We need to develop the same kind of standardized procedures and the same ability to almost systematically crank the 

projects out. 

Dr. BUCSHON. Thank you. We did a field hearing, as you probably know, in Grand Central Station on talking about high-speed 

rail in the Northeast Corridor. And it was very fascinating. And a 

couple of things that I learned—and I am going to ask a couple of 

different panelists their view on that—is that, in my view, you 

know, most people believe that high-speed rail in the Northeast 

Corridor will be successful. 

However, the many, many years it takes to get environmental 

clearance because of the multiple environmental groups that have 

issues with any type of development that is new that—becomes a 

significant impediment. And that includes getting permitting 

through the government and others. 

But—and the other thing is right of way issues, even—you know, 

for example, in the State of Indiana, Interstate 69, which we’re now 

building from Evansville to Indianapolis, has literally taken about 

30 years to develop, primarily based on those 2 issues. 

And I was glad to see Mr. Wytkind talk about public-private development. But the gentlemen from labor, at least in New York 

City’s view, was that they would not accept any type of public involvement in this type of development in the Northeast Corridor, 

because of concerns about safety and workers conditions, which— 

my dad was a United Mine Worker, so I understand those things. 

So, I guess I would like to—I mean I think there is an 800-pound 

gorilla in the room. There are many, many impediments to developing these things in our country. But I think also, on both sides 

of the aisle, we need to recognize that on both sides we have groups 

that are significantly slowing down progress in our country when 

it comes to these. 

And I would like someone to address the environmental issues, 

the civil liberty issues with right of way, and some of the labor— 

potential labor impediments to development of high-speed rail. Mr. 

Szabo? 

Mr. SZABO. Well, I think I can touch on that real quickly. Certainly the environmental process is important. You do have to 

make sure that the citizens that are going to be potentially negatively affected by new service have a voice in the process. I mean 

28 

that’s just kind of fundamental to the principles our Nation stands 

upon. 

But having said that, it really does tie in directly to the first 

comments I made about having the structural capacity of the DOTs 

and the Federal Government to work through these processes in 

the most expeditious manner. Doing what they call the preliminary 

engineering/NEPA work for the high-speed rail projects is something that is new to many of the States, and also to my staff, 

where, again, for highways it’s been well established for many 

years. 

Dr. BUCSHON. Mr. Wytkind, can you comment on that? 

Mr. WYTKIND. Yes, I would be happy to. A couple of points. 

First of all, I’m not really sure—maybe you can expand a little 

bit for me—what the labor impediments you’re referring to are. 

Dr. BUCSHON. Well, I’m not saying they are actual impediments, 

I’m just saying—— 

Mr. WYTKIND. No, I’m just curious what—if there is a specific 

issue I can address. 

Dr. BUCSHON. The comment that was made, the person that testified, literally, his opening line was that, ‘‘We will never accept 

private investment in the Northeast Corridor because we feel like 

it will lead to lower wages and less worker safety.’’ I mean that 

was the opening comment on the—— 

Mr. WYTKIND. Well, I would—— 

Dr. BUCSHON [continuing]. Panel. So I’m not—— 

Mr. WYTKIND. Yes. 

Dr. BUCSHON. I’m not agreeing or disagreeing. 

Mr. WYTKIND. I understand. 

Dr. BUCSHON. I just was curious. I think we all need to recognize 

there are many, many things slowing down this type of development, and it’s not always money from Washington. 

Mr. WYTKIND. Well, there are two points I would make. I would 

have to see the statement and understand the context in which it 

was provided. But I would say that the position we have expressed 

today is that we are for finding ways to ensure that the private sector has its role in participating in our transportation industry. 

The truth is that, whether we like it or not, the transportation 

industry has a robust private sector. Just in the construction industry, most of those building trade workers out there across America 

are working for contractors, private contractors, who are contractors under the Department of Transportation’s infrastructure programs. 

But on the issue of streamlining, we supported and worked with 

the committee to find a way to have some of these processes be 

more concurrent. One of the problems that I understood in the debates in the last Congress, when you were writing the surface 

transportation bill in this committee, was that a lot of the processes were layered in order, as opposed to occurring simultaneously. And, as a result, you had some natural delays, because 

you had to wait for this approval to begin deliberation on the next 

approval. 

The last thing is if streamlining means evading employee protections and the important railroad statutes, we would very strongly 

oppose that. 

29 

Dr. BUCSHON. As I would. 

Mr. WYTKIND. If it’s simply trying to find a way to find efficiencies, I think there is a way to do that, and I think there is a 

way for the labor movement to work with the committee to accomplish that. 

Mr. SHUSTER. [presiding.] The gentleman’s time has expired. I 

recognize Ms. Napolitano. Questions for 5 minutes. 

Mrs. NAPOLITANO. Thank you, Mr. Chairman. 

Mr. SHUSTER. We have a vote that’s going to come on here very 

shortly, so I would like to get through the questioning—and I think 

we’re going to be on the floor for a while, so if we could finish up 

here, that would be great. 

Mrs. NAPOLITANO. Thank you, Mr. Chairman, and I will keep my 

comments as brief as possible. 

I would like to maybe make a—not comparison, but state that in 

my area Metrolink has four routes and five stations. It’s operated 

by the private sector. But when the board found that the private 

operator continuously failed to comply with Federal and State regulations, they fired and then hired Amtrak to run them. So, you understand that there is issues. 

And then, there is issues with the high-speed rail authority in 

my area. And I was just talking to the Congresswoman Richardson, 

because the high-speed rail authority had not consulted with the 

cities in my district, because Amtrak does, if the route is proposed 

to go through my district. And it is high-speed rail that people in 

my community will not be able to afford to get on. I need passenger 

rail movement, I don’t need high-speed rail movement in my area. 

And that’s for the record. 

Mr. Feinsod, you recommend making the pilot program for contracting out Amtrak routes permanent. As part of your legislative 

recommendations, do you support or oppose requiring private operators to abide by all applicable labor laws? 

The Railway Labor Act, the railroad retirement and unemployment compensation, the hiring rights, the Davis-Bacon, would you 

support or oppose preventing operators from contracting out services to foreign entities and workers? 

How about liability insurance? Would you support or oppose having to purchase minimum liability insurance, like Amtrak is required to have, of $200 million? 

Now, I know you can’t answer all of those at once. I would like 

to have it in writing, if you would, please. But as much as you can 

in a short time, I would like to have that in answer. 

Mr. FEINSOD. Thank you, Congresswoman, for the opportunity to 

respond to you. I should point to the commuter rail industry in the 

United States, which has grown considerably in the last 15 years. 

Many new commuter railroads have opened. Many of them were 

created through public agency investment, in part through the Federal Government. And many of them are—— 

Mrs. NAPOLITANO. Would you answer my questions, please, about 

supporting or opposing? 

Mr. FEINSOD. Yes. The answer is that we would support the continued application of Federal railway law, because it is a requirement now, in the commuter railroad networks that are contracted 

out. It’s not anything unusual. 

30 

Mrs. NAPOLITANO. How about the retirement and unemployment 

compensation, the hiring rights? 

Mr. FEINSOD. Yes, ma’am. 

Mrs. NAPOLITANO. Davis-Bacon? 

Mr. FEINSOD. Yes, Congresswoman. These are framework requirements that would be part of any contractual basis and competition. 

Mrs. NAPOLITANO. Would you support or oppose the prevention— 

preventing operators from contracting out to foreign entities? 

Mr. FEINSOD. Well, I don’ know what you mean by that, but—— 

Mrs. NAPOLITANO. Having a foreign company come in and take 

over running some of those areas. 

Mr. FEINSOD. I think that in the United States we have open access to private companies that work within—— 

Mrs. NAPOLITANO. I realize that, and I understand that, except 

we are losing a lot of contracting services to foreign companies, because they underbid, because sometimes the governments do subsidize their contracting. 

And with that, Mr. Chairman, I would like to yield the remaining time to the Ranking Member Brown. Thank you, sir. 

Ms. BROWN. Thank you. Mr. Gardner, Mr. Mica constantly talks 

about high-speed rail plans in the Northeast Corridor making 

small improvements. Can you talk about that? Because it seems as 

if he thinks the Northeast Corridor is just one State, or one county, 

and it’s a whole group of entities working together. 

Mr. GARDNER. Yes. Thank you very much, Ranking Member 

Brown. It is a very complex and amazing system of both intercity 

service, freight service, and commuter service spanning eight 

States and the District. And we do have a plan for vast improvements in the corridor that will take some time. 

And to answer the earlier questions, the main issue here for expanding high-speed rail in the Northeast Corridor is stable, dedicated funding. And that is also the main issue of bringing private 

investment into this network. Until there is a dedicated, consistent 

source of funding for rail investment at the Federal level, you’re 

simply not going to attract the private-sector interest in this business. It’s true in all of our other modes in the United States, and 

it’s true internationally. The international experiments here all 

rely on very robust investments in this—in their rail networks. 

And off that base of public investment, you have been able to leverage private-sector involvement in certain portions of the network. 

And we, of course, see that opportunity in the Northeast Corridor. What it is going to take is that dedicated commitment of 

funding. Amtrak was not able to directly apply for funds in this initial round of funding for the Northeast Corridor. The States were 

needed to apply for those funds, and would have had to come up 

with the matching funds, in some cases, for those investments. 

So, we look forward to finding opportunities to invest more funds 

in the Northeast Corridor. We have immediate projects of more— 

something between $6 billion and $7 billion backlog of capital 

projects that need to be overcome. We have got opportunities to 

make real improvements. 

But I do want to say that the corridor has developed in amazing 

ways since Amtrak has taken over ownership in 1976 from a priVerDate Aug 31 2005 15:30 Sep 16, 2011 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\RR\3-11-1~1\65396.TXT JEAN
31 

vate-sector entity. And right now, above the rail, Amtrak is operating profitable services. Our regional services just covered 101 

percent of their cost, and the sales service most recently, I think, 

were covering 186 percent of their cost. 

So, we are making money above the rail operations in the Northeast Corridor today, with the opportunity to expand that going forward with the right level support, and bringing in private-sector involvement, as appropriate. 

Mr. SHUSTER. The gentlelady’s time has expired. Thank you. Mr. 

Barletta is recognized for 5 minutes. 

Mr. BARLETTA. Thank you, Mr. Chairman. Mr. Gardner, the 

Northeast Corridor is a critical area for our Nation’s rail system. 

Obviously, the large cities are connected along the East Coast. 

However, what is Amtrak’s vision for connecting those in smaller 

cities where trade service has been discontinued over the years, yet 

the demand remains? 

In my district, in northeastern Pennsylvania, over 30,000 people 

commute from the Poconos in Monroe County to New York City 

every week. And there is much interest in rail service from Scranton through the Poconos into New York. What would Amtrak’s vision be for that? 

Mr. GARDNER. Well, thank you, Congressman. And I am aware 

of the desire for the service there, and certainly the New Jersey 

Transit’s efforts to extend farther west in New Jersey, and conversations about bringing service to the Scranton area. 

Our vision for extending and expanding corridor service is to 

work in partnership with our States. We have 15 State partners 

today, including Mr. Simmons in North Carolina. And as he mentioned, we have a new process for being able to fairly and consistently allocate operating costs, and build services together. 

So, what we do is look for partnerships with States. We engage 

early with States to find opportunities for passenger rail, and then 

build with them a service model that will deliver service to their 

communities. So we remain open. We have been involved and had 

discussions with the commonwealth about this service. There is interest in service to Binghamton, a little bit to the north of you in 

New York. And we remain interested in looking at these options. 

What we need is a State partner. And together we look to expand 

the network every way we can that brings value to the service and 

to the taxpayer. 

Mr. BARLETTA. Thank you. Mr. Szabo, I’m concerned that we’re 

not taking a greater look at the private sector participation in 

other countries. As Mr. Broadley points out in his testimony, there 

are several similarities to our rail system, specifically in the Northeast Corridor. 

What steps have we taken to look at those models and see how 

we can implement them into our country? 

Mr. SZABO. Well, I would say that, actually, we have. We have 

taken a considerable look at the international experience in both 

Europe and Asia. Quite a bit of this was used in the formation of 

PRIIA. And, of course, then we have taken the next step with the 

President’s proposal in his fiscal year 2012 budget request. 

Under PRIIA, the States have the right to select the operator of 

their choice, whomever it is that they choose. In fact, since 1997, 

32 

under Amtrak law, the States have had the right to select whatever operator they chose. So, privatization has always been an opportunity that is there. But so far, States have just not found it in 

their best interest at this point to move in that direction. 

There was the section 502 provisions that asked us to take in 

these offers to look at privatization of the Northeast Corridor or 

some of the others, but surprisingly, there wasn’t a single international applicant or private company that made a submission on 

the Northeast Corridor. There were a few others, but in every one 

of them, none of them did contain the private funding that would 

have gone with it. 

And so, at this point the States do have a high element of flexibility. 

Mr. BARLETTA. Thank you. Mr. Chairman, I yield back the balance of my time. 

Mr. SHUSTER. I thank the gentleman. And I am not going to have 

a follow-up question now, but what Mr. Szabo said, not one person 

applied, not one entity applied for the Northeast Corridor, and, I 

think a lot of people followed the money. And there wasn’t much 

that went to the Northeast Corridor on those grants. 

With that, Mr. Sires, I recognize you for 5 minutes. 

Mr. SIRES. Thank you, Mr. Chairman. You know, as one that 

rides the Acela every week, back and forth—I represent the northern part of New Jersey—and I am thrilled that we have Amtrak 

running, because it’s really—going through the airport, going 

through the whole hassle, it’s just impossible. 

But last year I took a trip—it was the year before—I took a trip 

to Spain, because Spain has the AVE. And I wanted to compare it 

with Amtrak. And I talked to a lot of people, you know. We even 

met with the port authority people in Barcelona, because we took 

the train from Madrid to Barcelona. There is a substantial amount 

of money coming in from the government to that train. So, when 

we say ‘‘privatization,’’ you know, when we talk about Europe, you 

know, there are huge investments by the government. 

And when I worry, Mr. Feinsod, about privatization, it’s that, to 

me, it means as you get your expenses—your expenses go up—and 

you privatize, it’s expensive—you go to the workers to give in, to 

get back. And as expenses go up, the workers suffer. 

I think there has to be a balance. I’m not saying that everything 

should be coming directly from the government, but there has got 

to be a balance where the worker is protected and there is some 

sort of subsidy, so these entities can run properly. 

You know, and it is difficult, I think, in the—on the east, to have 

anything similar to some of these European lines, because I know 

that the line from Madrid to Barcelona did not go through as many 

States as we do, or some of the tracks that I use for other things. 

So, you know, it’s pretty much a dedicated line. And we just don’t 

have the room in some of these places to do something similar to 

that. So when people say, you know, ‘‘Let’s do the European experiment,’’ all well and good, but we have to see where, you know, 

where we’re going to do this. 

And I hope that the service continues to improve in the Acela, 

because it really is a pleasant ride from Newark to Washington. 

33 

And I just have time—you know, can you answer some of those 

concerns that you have—that I have, Mr. Feinsod, when you talk 

about labor? Because to me, now, everything privatized just means, 

well, we go off to the unions, we get it from the unions, and, in 

many cases, let’s get rid of the union. 

Mr. FEINSOD. Well, I think that the only answer I can give you 

is that this is not what we see as a competitive environment, that 

the competitive environment is a creation of a higher energy level 

to provide for improvements to the corridors that might be competitively created. 

I don’t think we are talking about a Madrid Barcelona line which 

required significant government investment to create the line. It is 

being run by and operated by the Spanish State railroad, and has 

been extraordinarily successful, and is profitable, very profitable. 

But when we look at the regional, State-supported systems in the 

United States, we have an opportunity to open up the market to 

competition. And that competition would create the opportunity for 

innovation and improvement. And I don’t believe it is a natural result to hurt labor. In fact, we believe that if we have a more robust—— 

Mr. SIRES. Well, where are you going to get the money to offset 

it? 

Mr. FEINSOD. If we have a more robust market, we’re going to 

have higher ridership, and we are going to have more jobs. And the 

whole idea is to—— 

Mr. SIRES. Would you answer that, Mr.—— 

Mr. FEINSOD [continuing]. Increase the number of jobs. 

Mr. WYTKIND. Yes, I would. I don’t have—thank you for that 

question. 

Look, I think there is a—there are—there is a litany of examples 

across the country in the transportation industry and elsewhere in 

the economy where private contracting does result exactly as you 

have described, whether it’s to completely eliminate collective bargaining, which seems to be a popular theme these days with some 

Members in the political class, but more importantly, we have a lot 

of examples where private contracting resulted in people having to 

be the people that pay for the cost of either poorly managed contracts or, as you said, they run out of money and it’s got to come 

out of somebody. 

And so, I could submit to the committee a number of examples. 

A lot of them are in the mass transportation industry, where a lot 

of this privatization has occurred, where the workers have been absolutely the victim of those privatizations. 

Mr. SIRES. Thank you, Mr. Chairman. I yield back. 

Mr. SHUSTER. I thank the gentleman. We have got 10 minutes 

left in the vote. I am going to try to finish my questions, because 

then we’re going to have to probably be over there for a while. 

I have a few questions, and then we’re going to leave the record 

open for 2 weeks. We probably are going to submit some questions 

to most of you, if not all of you, to get them back in writing. But 

first question, Mr. Simmons, can you talk to me a little bit about 

the obstacles that you face for private rail operators coming in to 

running operations in your State? 

34 

Mr. SIMMONS. Thank you, Mr. Chairman. In my testimony I outline several opportunities where we already work with private companies. 

In terms of private railroads operating our existing service, the 

issue of access, the issue of maintaining the freight capacity, those 

kinds of things, are challenges that are in front of us and the companies. 

We open the door to the opportunity as we look to absorb and 

manage the growth opportunity that is in front of our State, adjoining States, and America to provide jobs both in the traditional industry, but there are other places, particularly in design, construction, and components of our operation where the private sector can 

and do play a role. 

Mr. SHUSTER. And I think that level playing field—which I think 

Mr. Szabo, Mr. Wytkind, and Mr. Gardner all sort of touched on 

when it comes to labor—and that—labor level playing field is in the 

law now that we passed. But what you’re talking about are some 

of the other issues: access, cheaper incremental costs that you have 

to—if you bring a private operator in, you have to negotiate with 

the freight rails. Is that—— 

Mr. SIMMONS. Yes. Yes, we would. But I want to say—speak to 

the issue of the labor, the existing agreements. In the law that is 

protected. Any operator that was not Amtrak would have to look 

at lot like Amtrak. So we’re not threatening that. 

We are—what we are faced with, and the largest challenge I 

have overall, is how to absorb and manage the growth. The tremendous opportunity that States have, that America has, to grow this 

business, not just from the business perspective, but to provide 

service and mobility for our communities and for our citizens, that’s 

the challenge that we have, that we face every day. 

Mr. SHUSTER. I appreciate that. And also, I guess my final question is to Mr. Szabo concerning the DesertXpress. I know that 

that’s come out before. It was supposed to be a $2 billion and now 

it’s, I think, a $6 billion project. It was supposed to be all private 

money, now they’re looking to the RRIF program. 

Can you talk a little bit about what your view is on that project? 

Is that something that you think is viable? I have concerns, you 

know, going from Las Vegas to Victorville—I didn’t know where 

Victorville is, but I know it’s not Los Angeles. 

Mr. SZABO. Well, ultimately, their plan is to connect with the 

California high-speed rail project. It’s just a matter of that final 

step through the mountains. So, again, a little bit like the interstate analogy we’re talking about, where legs get built in phases. 

You know, they continue to adjust their costs. That’s not unusual 

for a project of this magnitude. 

Mr. SHUSTER. Triple the cost, though? I mean is that reasonable? 

Mr. SZABO. You know, it’s a matter of refinement, and making 

sure they have accurate costs before they choose to move forward. 

Mr. SHUSTER. When you refine something, I thought it got better. 

Mr. SZABO. I’m sorry? 

Mr. SHUSTER. I said when you refined something, I thought it got 

better, not worse, in the cost. 

Mr. SZABO. The most important thing is to be accurate. Obviously, you have to know what the facts are, making sure it’s accuVerDate Aug 31 2005 15:30 Sep 16, 2011 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\RR\3-11-1~1\65396.TXT JEAN
35 

rate, before a decision is made to move forward, and so they can 

do their appropriate analysis to see if the right return on investment is there. 

But clearly, we do believe that it’s a project that has some very 

good potential. 

Mr. SHUSTER. Well, again, we have a vote. I appreciate you—— 

Ms. BROWN. I do have a final—— 

Mr. SHUSTER. Sure, I yield you 2 minutes. 

Ms. BROWN. OK. Well, I appreciate that, Mr. Chairman. 

A couple of things. Mr. Simmons, in the current law, do the 

States have the right to choose their passenger rail operators, or 

do they have to choose Amtrak? 

Mr. SIMMONS. Under the current law, we have the right to 

choose operators. But the environment that we work in can constrain that. 

Ms. BROWN. Absolutely. We have that same impairment in Florida, where we have one person making a decision. And I want to 

make sure that we put the study in the record that showed that 

the high-speed rail project would have made money the first year, 

based on the facts. 

Mr. Gardner, I have one other question for you. In doing my research, I found out that Amtrak subcontracts over 66,000 business 

annually. And I would ask unanimous consent to insert a list of the 

70 businesses into the hearing, but also make available those other 

66,000, so people know that Amtrak has a lot of partners, private 

partners. 

Mr. GARDNER. Absolutely, Madam Chair. We have, again, $1.5 

billion in services that we purchase, goods and services every year, 

from private entities that manage our part supply to cleaning and 

servicing and mechanical servicing and turnaround locations in 

some of our outlying points. 

Of course, through our procuring of equipment, we just place orders for 70 new electric locomotives with Siemens that will be built 

here in the United States, meeting Buy America requirements. So 

we are engaged in, every day, partnership with the private sector 

to deliver the services that we need to, to make this network work. 

So, it’s—and as Mr. Wytkind said, most of the big capital projects 

we do, of course, use contractors who are private sector entities to 

build big bridges and tunnels and so forth. So we rely on this, and 

we aim to grow it. And we will need the private sector, undoubtedly, to take this network to the next step and grow. 

Ms. BROWN. And, Mr. Szabo, you have my last minute. 

Mr. SHUSTER. The gentlelady doesn’t have a last minute, so Mr. 

Szabo, we will give you 30 seconds to answer succinctly—— 

Ms. BROWN. Oh, no, you—— 

Mr. SZABO. Very good, Mr. Chairman. 

Mr. SHUSTER. We’ve got 4 minutes left in the vote, and since I’m 

the chairman I do get the final word, fortunately. 

Ms. BROWN. OK, all right. 

Mr. SHUSTER. Go ahead, Mr. Szabo, 30 seconds. 

Mr. SZABO. Well, I’m sorry. Did you have another question? 

Ms. BROWN. I don’t have a question, I just want you to have the 

last word. 

[Laughter.] 

36 

Mr. SZABO. Well, the final word? Thank you for the hearing. This 

Administration is working very, very hard to make sure that highspeed passenger rail is a reality in this country. We believe we 

have a strong program. We are continuing to move forward. It is 

something that’s in its infancy, so you have those challenges that 

go along with something that is brand new. But the village is solid, 

and the partnerships are being developed, and we are moving forward. 

Mr. SHUSTER. Thank you, Mr. Szabo. I thank all of you for being 

here today. I appreciate it. 

And passenger rail in this country, I believe, is needed. I think 

we ought to look at the places where that investment needs to be 

focused. There are places that we can, I think, have it. 

But I hope that the Administration comes together, along with 

labor, along with the freight rails, along with Congress, to focus on 

the Northeast Corridor, because I think that is our best chance for 

the first successful operation of high-speed rail in this country. And 

I believe it will create economic opportunity for those in labor, 

those in business, and those communities along that corridor. And 

it will help all Americans, if they see its being successful. 

So, again, thank all of you very much, and this hearing is adjourned. 

[Whereupon, at 11:45 a.m., the subcommittee was adjourned.] 

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