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66–529 PDF 2012

OPENING THE NORTHEAST CORRIDOR 

TO PRIVATE COMPETITION FOR 

THE DEVELOPMENT OF HIGH-SPEED RAIL 

(112–33) 

HEARING 

BEFORE THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MAY 26, 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 

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 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

REID J. RIBBLE, Wisconsin 

VACANCY 

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) 

(III) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... v 

TESTIMONY 

Bonilla, Carlos, Adjunct Fellow, Reason Foundation ........................................... 98 

Goetz, Michael, Executive Director, Railroad Cooperation and Education 

Trust (RAILCET) ................................................................................................. 98 

Hart, Thomas A., Jr., Esq., Vice President for Governmental Affairs and 

General Counsel, US High Speed Rail Association ........................................... 98 

Jayanti, Ignacio, Former Member of the Working Group on Intercity Passenger Rail, and President, Corsair Capital ...................................................... 98 

Lautenberg, Senator Frank R., a U.S. Senator from the State of New Jersey .. 9 

Richardson, James H., Senior Vice President, FC Asset Services LLC, a 

subsidiary of Forest City Enterprises, Inc. ........................................................ 98 

Wytkind, Edward, President, Transportation Trades Department, AFL–CIO ... 98 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Petri, Hon Thomas E., of Wisconsin ...................................................................... 152 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Bonilla, Carlos, and Poole, Robert W., Jr., 1 Director of Transportation Policy, 

Reason Foundation .............................................................................................. 154 

Goetz, Michael .......................................................................................................... 163 

Hart, Thomas A., Jr., Esq. ...................................................................................... 166 

Jayanti, Ignacio ........................................................................................................ 185 

Lautenberg, Senator Frank R. ................................................................................ 202 

Richardson, James H. .............................................................................................. 204 

Wytkind, Edward ..................................................................................................... 210 

SUBMISSIONS FOR THE RECORD 

Brown, Hon. Corrine, a Representative in Congress from the State of Florida, 

request to submit the following into the record: 

Article entitled, ‘‘Privatisation Fails to Cut Rail Costs,’’ Telegraph, May 

26, 2011 .......................................................................................................... 140 

Article entitled, ‘‘U.S. Transportation Secretary LaHood Announces $2 

Billion for High-Speed Intercity Rail Projects to Grow Jobs, Boost U.S. 

Manufacturing and Transform Travel in America,’’ May 9, 2011 ............ 127 

Report entitled, ‘‘Realising the Potential of GB Rail: Report of the Rail 

Value for Money Study—Summary Report,’’ May 2011 ............................ 19 

Hart, Thomas A., Jr., Esq., Vice President for Governmental Affairs and 

General Counsel, US High Speed Rail Association, request to submit 

H.R. lll, The Private Investment in High Speed Rail Act ......................... 106 

Mica, Hon. John L., a Representative in Congress from the State of Florida, 

request to submit into the record a chart entitled, ‘‘High-Speed Rail Comparisons—Private Sector Participation’’ ............................................................. 97 

ADDITIONS TO THE RECORD 

Brown, Hon. Corrine, a Representative in Congress from the State of Florida, 

letter to Hon. John L. Mica, a Representative in Congress from the State 

of Florida and Hon. Bill Shuster, a Representative in Congress from the 

State of Pennsylvania, June 2, 2011 .................................................................. 215 

Capon, Ross B., President and CEO, National Association of Railroad Passengers, written statement .................................................................................. 219 

Page

IV 

Geddes, R. Richard, Adjunct Scholar, America Enterprise Institute, written 

statement .............................................................................................................. 223 

1Mr. Poole did not present spoken remarks during the hearing. 

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(1) 

OPENING THE NORTHEAST 

CORRIDOR TO PRIVATE COMPETITION FOR 

THE DEVELOPMENT OF HIGH-SPEED RAIL 

THURSDAY, MAY 26, 2011 

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, WASHINGTON, DC. 

The committee met, pursuant to notice, at 10:04 a.m., in Room 

2167, Rayburn House Office Building, Hon. John L. Mica (chairman of the committee) presiding. 

Mr. MICA. Good morning. I would like to call this hearing of the 

House Transportation and Infrastructure Committee to order. I am 

pleased to welcome everyone today. 

The topic of today’s discussion and hearing is opening the Northeast Corridor to private competition for the development of highspeed rail. We have some distinguished witnesses today, and we 

are expecting Senator Lautenberg to join us shortly. There is a vote 

in the Senate. 

And then we will hear from some of the witnesses that we have 

called to hopefully provide us with some insight into achieving the 

objective of today’s hearing, and that is to try to develop our most 

expansive, congested, and probably ready corridor in the United 

States that would be conducive to using true high-speed rail. 

The order of business will be as follows. We will have opening 

statements by Members, and then we will turn to our witness panels as they join us. 

Let me take a few minutes and begin today’s hearing by kind of 

reviewing where we are and where we would like to go. Most people don’t realize this, but the Northeast Corridor is one of the actual pieces of infrastructure that Amtrak and the Government own. 

It is a 437-mile corridor stretching from just a few blocks from 

Union Station all the way up to Boston, through the principal and 

most congested, heavily populated areas of the United States. 

The interesting thing about this corridor is that it has been 

available since 1971 for the development of passenger rail service. 

As most people don’t understand, Amtrak has all of the franchise 

for passenger rail service in the United States. 

We are not talking about commuter or light rail or local transit, 

but intercity passenger services, a sole prerogative under existing 

statutes of Amtrak. But the only real corridor on which they own 

the infrastructure that also would be conducive to developing highspeed rail is the Northeast Corridor—again, some 437 miles. 

I think you hear a number of stories from Amtrak about how ridership has improved. And overall, they have gone up a small perVerDate Aug 31 2005 15:49 Mar 14, 2012 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\FULL\5-26-1~1\66529.TXT JEAN
2 

centage in ridership; I think it is from 27 million passengers to 29 

million passengers for the entire country. That is all of their service across the land. 

What is very interesting is the development of so-called highspeed service in the Northeast Corridor. And unfortunately, it is 

not truly high-speed; we are only operating about 83 miles an hour 

from Washington to New York, and a much slower speed, somewhere between 65 and 70 miles an hour, I am told—I get various 

figures—from New York to Boston. 

But this in fact is not high-speed rail. By Federal statute, under 

the PRIIA law, we define high-speed as 110 miles per hour average. 

I have got a copy of a picture of the Shinkansen. This travels 167 

miles an hour, which is about twice the speed of the Acela. The 

Acela top speed—we will put a little Acela up here—which we refer 

to as high-speed, again, is running 83 miles an hour, ironically, 

about half the speed. 

Amtrak has come forward with a couple of measures in a positive 

vein. First, they finally designated the Northeast Corridor as a 

high-speed rail corridor, and that was after decades of pleading 

that that corridor should have that designation and that, in fact, 

it has the greatest potential for high-speed service in the United 

States. That was several months ago. 

After, again, a lot of chiding by this committee, myself and others 

who are interested in true high-speed service, Amtrak has come 

forward with a proposal. That proposal is to develop high-speed rail 

in the corridor. However, it takes 30 years, would cost $117 billion, 

and their initial proposal came that forward was that would be all 

Government money. And I know they are looking at some options. 

But that kind of sets the stage for today. Now, they will tell you 

that they have—again, going back to the ridership numbers—that 

they have increased ridership substantially. Let’s put the chart up 

here. This is one of the most fascinating charts I have seen that 

actually shows what Amtrak has done and hasn’t done. 

Yes, we have gone from 27 million to 29 million passengers in 

the last year. What is interesting, in the Northeast Corridor—and 

these figures are all from Amtrak’s data provided to the committee—in 1977, the Northeast Corridor had 10.6 million passengers. In 2010, again from Amtrak’s report, then had 10.5 million 

passengers, actually down from 1977. To me, that is one of the 

most pitiful statements of achievement, after putting billions of dollars into the corridor, to see how underutilized that service is. 

Another interesting point: If you look at the highlighted area, we 

did go up to 12.9 million passengers in 2000 in the Northeast Corridor. So we have actually dropped from a peak, and that is even 

before 9/11. 

If you look at long-distance service, they went from 4 million passengers in 1977—again, the first record we have from Amtrak— 

and we are at 4.5 million passengers, long-distance service, another 

absolutely pitiful record of service. 

The only area in which we have had an increase in passengers 

is the 14.1 million passengers, which have grown from the 1977 

data that you have here. And again, these are some partnership 

initiatives that actually show successes in providing intercity pasVerDate Aug 31 2005 15:49 Mar 14, 2012 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\FULL\5-26-1~1\66529.TXT JEAN
3 

senger rail service. But this is probably one of the most dismal 

records on earth for any rail service, particularly in the Northeast 

Corridor. And again, it is not high-speed service. 

The 30-year plan is not acceptable. I want to just point out and 

give one illustration of what we can do. We met for an update; 

every couple of years, we hear from people around the world who 

have undertaken various projects. Let’s put up the Virgin Rail picture here. 

I met yesterday with executives of Virgin Rail, and we are going 

to ask them to come back and talk to us. This is an absolutely remarkable story. Let me have the statistics on Virgin Rail. And we 

will distribute them to all the Members here. 

In 2004 they took over two rail lines when England put all of 

their money-losing routes up for privatization. Various corporations 

bid on the service, and they had to come in with the lowest possible 

subsidization to the Federal Government there. 

They took two of the lines and put them up for bid, one from 

London to Manchester, the other one from London to Glasgow. In 

2004, these lines had 14 million passengers. In 2010, they had 28.6 

million passengers. They went from 14 to 28 million passengers, a 

100-percent increase, a not-too-dissimilar distance between London 

and Manchester as from Washington to New York. The travel time 

was dramatically improved. And they told me for every dollar in infrastructure that was improved, the private sector contributed 50 

percent, or 50 cents on the dollar. 

This line in England went from a loss of about a quarter of a billion dollars when it was inherited—that was a subsidization by the 

Federal Government of the U.K.—to a net positive of nearly a 

quarter of a billion dollars this past year. And it is on its way to 

providing about a half a billion dollars a year in income. That 

means with no subsidization, so they have doubled the service. 

For the union representatives that are here, and labor that is interested in what took place here, they had 2,500 approximate employees, all union, of course, when they started this. They now have 

3,800 employees. They have less hassles, better wages, and again, 

over 1,300 more people employed with the private sector operation. 

So this can be done. It can be done in a congested corridor—if 

London isn’t a congested corridor, I would like to know what is— 

and you can provide, again, outstanding service without being a 

burden to the taxpayers. 

In addition to money coming into the U.K. Treasury from this operation as opposed to money going out, they paid a dividend of $50 

million to Virgin Rail holders, the private sector investors in this. 

That to me is a remarkable model, and we can take others from 

Japan and from Germany. We don’t have a lot of time to go into 

that right now. But we will submit some of that for the record. 

So I believe that we have great potential in the Northeast Corridor. The only thing standing in the way right now is Amtrak or 

the Federal Government or Congress. And let me say what we plan 

to do in closing. 

First of all, we will be offering up in the next few weeks legislation. And right now, again, we are trying to mold the final version. 

But right now we are looking at taking the Northeast Corridor out 

of Amtrak’s purview, probably transferring it to DOT, but what we 

4 

would end up doing is putting the Northeast Corridor up for private sector bid. 

We would take offers from the private sector to control and operate its infrastructure and also operate the train sets. And we are 

looking at combinations, whatever would be the most beneficial to 

the taxpayer, in the structure that we will propose. 

We believe and we have heard, as you will hear today from some 

folks from the private sector, that you could probably do this with 

very little or no Federal Government taxpayer money. And if you 

are waiting for Congress to approve $117 billion over the next 30 

years to bring service in 30 years to the high-speed corridor, you 

are going to turn blue because it is not going to happen. 

I think that we will have a plan that will attract private sector 

investment; that we will have a plan for development, financing, 

building, and operating the corridor with the private sector. We 

will retain the infrastructure assets for the taxpayer and we can 

also return money, we believe, to the Treasury because of the incredible opportunity to increase service. 

And finally, we look to speed up the approval process for developing the Northeast Corridor, so that will be another element of 

the legislation and proposal we are coming up with. And finally, as 

part of what we proposed in the PRIIA Act, we will insist on service of 2 hours or less from Washington, DC, to downtown Manhattan. 

We have assembled people today who we think can help us 

launch America into true high-speed rail service. I couldn’t imagine, as a strong advocate of high-speed rail, a more disappointing 

start to high-speed rail in the country than we got off to. 

We have seen most of the proposals, which are not true highspeed rail. We have seen Amtrak hijack 76 of 78 projects, and then 

I believe 20 out of 21 additional awards, for basically slow-speed 

trains. But this is not high-speed rail, and it is a shame that we 

have squandered most of $10.5 billion and still will not have it, 

particularly in the corridor that we need it the most and in which 

the rest of the country can benefit by its example. 

As you may know, the Members that are here, more than 70 percent of our chronically delayed flights in this Nation start in the 

Northeast Corridor. So no matter where you come from across the 

country, you will benefit by the improvement of service here for 

high-speed rail, not to mention how you will benefit the taxpayers 

by eliminating a huge subsidy, in fact having net positive revenue 

coming into the Treasury. That would be a very unique approach 

for Congress and for the Federal Government, but I think we can 

do it. 

So with those long opening remarks and taking the privilege of 

the chair, I wanted to lay out where we are and where we hope 

go to. Let me now yield to Mr. Rahall. 

Mr. RAHALL. Thank you, Mr. Chairman, and I congratulate you 

for having these hearings this morning in regard to high-speed rail 

service in the Northeast Corridor. 

Despite wide recognition that high-speed rail creates jobs, reduces congestion on highways and airways, and decreases our dependence on foreign oil, the United States offers no high-speed passenger rail service, unlike other major industrialized nations. 

5 

In 2008, Congress chartered a new course for passenger rail in 

America. The bipartisan Passenger Rail Investment and Improvement Act created two national programs for the development of 

high-speed rail and intercity passenger rail in the U.S. That legislation laid the tracks for President Obama’s vision for high-speed 

rail, which called for historic investment in the development of 

high-speed rail and the $9.3 billion that was included for that purpose in the ARRA Act of 2009, the most significant investment in 

passenger rail since the creation of Amtrak in the 1970s. 

I think it is worth noting with my colleagues and reminding 

them that we created Amtrak because the private sector—the private sector—did not want to operate unprofitable passenger rail 

service. Private companies did not want to run passenger rail service then, and I am not convinced that they want to do it now. But 

here we are again, and this time we are told that the private sector 

is beginning to take it over. 

Today we will learn about a proposal to privatize high-speed rail 

in the Northeast Corridor. While we have not yet been provided the 

details of this proposal, I fear that it is just another veiled attempt 

to derailing Amtrak under the guise of better service and cost savings. 

Just 2 years ago the DOT issued a request for proposals for private companies to develop high-speed rail in the U.S. Guess how 

many companies were just chomping at the bit to get their hands 

on these projects? Not a one. Not one single proposal was submitted by the private sector for development of high-speed rail in 

the Northeast Corridor. 

We also heard at the committee roundtable in New York, Mr. 

Chairman, which you convened January, from several private investors who clearly stated that they would need to see substantial 

Federal funding in order to consider investing. The fact is, it is 

easy to criticize Amtrak, and it is easy to criticize its development 

in the Northeast Corridor, when for decades we have deprived Amtrak of the consistent and adequate funding that they need, and 

any business would need, to operate. 

Despite repeated efforts to derail Amtrak through starvation 

budgets, congressional efforts to eliminate routes, and a Bush administration budget proposal to destroy Amtrak through bankruptcy, Amtrak has survived. Ridership is up 200 percent, and Amtrak is turning a profit in the Northeast Corridor. 

Amtrak is making great efforts toward building high-speed rail 

in the Northeast. The Acela, although it may only average 83 miles 

per hour from Washington to New York, has made significant improvements over the past several years. It now boasts 3 million riders annually in the Northeast Corridor, and it has captured 69 percent of the air/rail market. 

In September 2010, Amtrak unveiled a plan for development of 

the true high-speed rail in the Northeast Corridor, to reach speeds 

of 220 miles per hour. Their bold vision would cost $117 billion 

over 30 years, or $3.9 billion annually. 

Some on this side of the aisle have criticized these estimates, but 

that investment pales in comparison to what other countries are 

spending on high-speed rail and the $1.8 trillion this country has 

spent on our world-class highway and aviation systems. Amtrak esVerDate Aug 31 2005 15:49 Mar 14, 2012 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\FULL\5-26-1~1\66529.TXT JEAN
6 

timates construction of the system would support 44,000 jobs annually over the 20-year construction period, and approximately 

120,000 permanent jobs. 

So in conclusion, Mr. Chairman, we ought to be looking at ways 

to help Amtrak achieve this goal, not looking at ways to dismantle 

it. We should be celebrating Amtrak’s 40th birthday, not trying to 

kick it in the caboose by selling off its assets to private companies. 

Thank you, Mr. Chairman. 

Mr. MICA. Thank the ranking member. 

Let me recognize Mr. Shuster as the chair of the Rail Subcommittee. 

Mr. SHUSTER. I thank the chairman, and thank all of our witnesses that we are going to hear from later today. 

I appreciate us having this hearing before we roll out the transportation bill, and I think that what the chairman has done in 

working with us, I think it is absolutely the right way to go, to deregulate passenger rail in this country. 

You heard what the chairman had to say. Some of it I will repeat 

because I think it is important that we hear it. But internationally, 

there are private sector companies out there, as you heard the 

chairman say, that are running private rails; turning money back 

to the Government, not taking it from the Government; creating 

jobs, union jobs, I might add. And as we recently heard in New 

York, there are investors that are interested in operating and investing in the Northeast Corridor. 

The ranking member is correct. There were no bids for the 

Northeast Corridor. But there were many attempts to make bids, 

but they were blocked at every turn. And then, of course, the stimulus came out, and there are billions of dollars of free money. So 

who is going to invest their money until they see where this free 

money is going to flow? So, really, it is not fair to say there is no 

interest in it because there certainly is interest in the Northeast 

Corridor. 

As I said, the stimulus money that came out was also misguided. 

The President said he had a vision for high-speed rail. I believe his 

vision is blurred. It is not possible, in my view, to have high-speed 

rail in 80 percent of the country, nor do I think Americans need 

or want high-speed rail in 80 percent of the country. 

Where we should have focused is where 20 percent of the country 

is: the Northeast Corridor, about 2 percent of our land mass. The 

congestion is there. We own the tracks. We should have focused 

that stimulus money on the Northeast Corridor. That is where the 

money should have gone. 

Let’s get at least one place in America where we have high-speed 

rail, or something approaching high-speed rail. Let’s have a success 

story, then roll it out around the country, because there are corridors in this country that I believe would sustain high-speed rail. 

As I said, the President put out dribs and drabs, sprinkled that 

money around the country, and it is not going to have a significant 

impact. However, because of Florida rejecting their high-speed rail 

money, there is going to be a significant investment in the Northeast Corridor, or at least more significant than there was. 

But if you know the region like I know the Senator does, he 

knows that there are really three major choke points in the NorthVerDate Aug 31 2005 15:49 Mar 14, 2012 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\FULL\5-26-1~1\66529.TXT JEAN
7 

east Corridor. There needs to be a new, expanded tunnel in Baltimore, an improved bridge from New Jersey into New York, and the 

catenaries need to be improved. 

When you do those three things, then you can start to talk about 

high-speed rail in the Northeast Corridor. You have to do some 

other things, but those are the three major investments that have 

to occur. And we haven’t really done that and haven’t been serious 

about it in the past couple of years, the past 40 years. 

And when it comes to Amtrak, it has been 40 years. It has taken 

billions and billions of Government dollars, and has not even approached a break-even point. When you look at the concessions on 

the railroad, they lose money. There is no reason in the world for 

this. You have a monopoly on the train selling concessions—there 

is only one place to buy water—and you can’t make a profit selling 

water on the Amtrak system, in the Northeast Corridor or anywhere, for that matter. 

The chairman did mention Virgin Rail. The numbers are staggering. They were receiving £300 million–£250 million in subsidy, 

now they are giving that much money back to the Government. 

They are returning money because the operations are turning a 

profit, going from 14 million riders to 28 million riders. 

In the Northeast Corridor, there are 10 million riders, and that 

hasn’t changed significantly over the past decade. But here you 

have a corridor in England that is probably about a third to a half 

the size of the Northeast Corridor, and they get 28 million passengers. And they are not doing it with high-speed rail, mind you. 

They are doing it at 92 miles an hour, and doing it very well at 

those lower speeds—again, but turning a profit. 

Also, for my friends in the union, the labor movement, that are 

here today, they added a third of the jobs. So let me forewarn you, 

I am going to ask the question when you testify today. You have 

gone from 29,000 workers in Amtrak to 19,000 workers over the 

past decade. Now, in most corporations—I won’t say all corporations—but in most corporations in America, if you lost a third of 

your business, you would probably be fired. 

We need the labor movement on board—excuse the pun—but we 

need you on board. These are going to be union jobs. We are going 

to create jobs in the Northeast Corridor. We are going to create 

jobs in the passenger rail system if we run it effectively so that everybody will benefit. 

As I said, the Northeast Corridor is the place to focus on. In our 

bill that we are going to put forward, we are going to move forward 

and move to deregulate. And, as I said, I think it is going to be 

good for all of Americans. Those that work in the system, those 

that use the system, and those that pay taxes are going to see that 

subsidy reduced and quite possibly start to see money flow back 

into the Government. 

So I am excited about this hearing. I am excited about our bill, 

and look forward to hearing from all of our witnesses. And I yield 

back. 

Mr. MICA. I would like to recognize one more Member on this 

side. Senator Lautenberg has joined us. I would like to extend the 

courtesy of having him, and then we will go back to Members. So 

one more Democrat Member, Mr. Rahall. Ms. Norton? 

8 

Ms. NORTON. Thank you, Mr. Chairman. I would just like to say 

to you and our ranking member on railroad that I share your enthusiasm for high-speed rail, and I share your enthusiasm for making it the Northeast Corridor. I do believe that while there was a 

call for this money from all over the country, that we need a project 

that works from which others can learn. So I really think that 

makes sense. 

I do think it is also important to understand how Europe developed high-speed rail as a 20th-century concept. I am embarrassed 

to be an American in the 21st century sounding forward-thinking 

talking about high-speed rail, which is really quite old-fashioned in 

Europe and Asia. The reason that it was developed in Europe and 

Asia, of course, is that the governments of those countries paid for 

the infrastructure, and then they are developed—and pay for most 

of it now. 

I would like to comment on what the chairman said about Virgin 

Rail because I was very interested in that, too, given the fact that 

Amtrak is pursuing private participation in its own proposals. 

The British Government has recently published a report on the 

privatization system that it has done, and it is true that there has 

been more than a 50-percent increase in ridership. But it is also 

true that Virgin Rail costs are 40 percent higher, and England’s 

costs, therefore, are 40 percent higher than Europe. There are 

tradeoffs here, and we have got to understand there is no free ride 

to high-speed rail. 

How did we even get Amtrak? This is not a Government that 

wanted to run a railroad. The railroads didn’t want to run a railroad. That is how we got it; they went bankrupt running passenger 

service. They begged the Government to take it, and the Government was the only place to go if you wanted to have passenger rail 

at all. This history has got to come into play to understand what 

we should do next. 

Now, Amtrak, which has shown it knows how to run a railroad 

because in the Northeast Corridor it is profit—and guess what? 

Those profits, it would be helping to pay for your districts because 

it is the only part of the system that is profitable. And you have 

got to ask yourself, what are you going to do about the rest of the 

country if Amtrak goes private and nobody cares except the investors? The Acela has helped make Amtrak profitable. But so have 

gas prices. So has collapsing airlines. 

Finally, I want to say, Mr. Chairman, I know you are trying to 

get a surface transportation bill done, and I commend you for trying finally to get a surface transportation bill out of here. But I 

hope you do not make it impossible to do so by putting a controversial proposal for privatization of Amtrak in your surface transportation bill. You are going to have a hard enough time getting it out. 

But unless there is bipartisan agreement about a surface transportation bill, it will kill the transportation bill and it will get nowhere when it comes to the Northeast Corridor that I think you 

and I agree should be started and should be started quickly. 

And I yield back the rest of my time, and thank you, Mr. Chairman. 

9 

Mr. MICA. Well, thank you so much, and I appreciate the 

gentlelady’s comments. And working with her, I think we can 

achieve a common goal. 

There are two things I’d like to mention before I recognize Senator Lautenberg. One, in the proposal that we put forward, we 

will—and I have talked to Ranking Member Rahall and Chairman 

Shuster and others—we will guarantee labor any current benefits 

and any current wage levels. In any proposal we submit, that will 

be part of our proposal. 

Also, our hope is to shave time. Right now, Amtrak has a 30-year 

plan; and I didn’t mention this, but we would like to do it in a third 

of the time and with very little Federal money, hopefully attracting 

private sector money. 

And just two quick points, again, on the amount of money. It is 

true that the Northeast Corridor currently breaks even. There 

might even be a slight return. And the gentlelady is correct that 

the money does go back in, but that is a very minuscule amount 

compared to the subsidization. 

The subsidization, if you look at it, was $1.5 billion, of which approximately half a billion went into operations. That means nearly 

all of a billion went into the Northeast Corridor because that is the 

only corridor that we actually own. 

If you could get a return similar to what they are doing with a 

quarter of a billion a year, escalating up to half a billion, giving it 

back to the Treasury or back into the system to improve the system, everyone will benefit—the taxpayers, along with others who 

want long-distance service or intercity passenger rail service. So we 

have the potential for less burden for the taxpayer, more money 

for—— 

Mr. SHUSTER. Would the chairman yield? Would the chairman 

yield for just a comment? Just 30 seconds. We have talked about— 

just 30 seconds. Fifteen seconds. 

Mr. MICA. Thirty seconds. Fifteen seconds. 

Mr. SHUSTER. We have talked about history here. But everybody 

needs to remember the history of why the rails gave up the passenger service. They weren’t profitable because the interstate highway system came on line and air travel became very popular. Now 

we have a different dynamic in America. People want to get back 

on the rails. So you have got to look at the whole history lesson, 

not just part of it. Thank you. 

Mr. MICA. Right. Well, we do have a very distinguished Senator 

waiting, and he has been very active in this issue. And we are 

pleased to recognize him and have him before our panel today. He 

was very courteous when I went over to his panel a few weeks ago. 

And I want to welcome, again, one of the Senate leaders and a very 

distinguished colleague from the other side of the aisle. 

Welcome, sir, and you are recognized. 

TESTIMONY OF FRANK R. LAUTENBERG, A UNITED STATES 

SENATOR FROM THE STATE OF NEW JERSEY 

Senator LAUTENBERG. Thank you very much, Mr. Chairman and 

members of the Committee on Transportation and Infrastructure. 

Thanks for the opportunity to come here to discuss my view before 

10 

this committee, a view of what the national passenger rail system, 

and specifically the Northeast Corridor, requires. 

America, as everyone here knows, faces a transportation crisis. 

The highways are jammed, the skyways are jammed, and our future depends on the steps that we take to meet the economic, environmental, and congestion challenges that face our workers and 

families and businesses every single day. 

But first we have got to recognize some facts. The Northeast Corridor is the most densely populated area in the United States, and 

it is not just the density of population that we have got to discuss 

when we talk about the Northeast Corridor. Whether for moments 

of distress or otherwise, it does possess the largest financial center 

in the world, and it is of critical business as it does many other industries and businesses that are essential to the well-being of our 

country. 

More than 1,800 trains operate each day on the Northeast Corridor—1,800 trains. And on weekdays, more than 700,000 passengers use these rails daily—700,000 people. The Northeast Corridor alone replaces 243 flights daily, and 30,000 cars are not on 

our highways each weekday. 

But put another way, if we shut down the Northeast Corridor 

rail service, you would have to build seven new lanes on Interstate 

95 just to carry all the travelers that use these trains every day. 

Imagine what that would look like: cars piled up on the highways, 

pollution spitting into the air, pockets drained at the pump, businesses waiting hours or days for products they need to sell to make 

payroll and boost the economy. The fact is that Amtrak makes our 

region work, and we have got to invest in this critical asset. 

I believe that we ought to look at Amtrak and rail service in the 

same way we might view FAA and the controller services. It is essential for our country to have these facilities. We can’t go backwards, and that means that we have got to therefore find ways to 

invest in the future. 

And we can talk about the private sector; I have had some experience there. Last year we spent more than $40 billion on highways. Over Amtrak’s entire 40-year history, we have spent just 

under $38 billion. And that is worth repeating: Amtrak has received less Federal money in its history than highways get in a single year. 

Other countries, including China, Spain, France, Japan, and Germany, are prioritizing rail investments while we are stuck at the 

station. And this must change. We must be bold enough to make 

the investments that will make our economy and our country more 

prosperous, more efficient. 

We started this process in 2008 when both parties came together 

and passed a passenger rail investment piece of legislation that I 

initiated, and it reauthorized and strengthened Amtrak. It was a 

bipartisan bill, a bipartisan bill signed into law by President 

George W. Bush. 

Our Amtrak law created the high-speed rail grants that we are 

moving forward today in my State and many of your States. It also 

made critical investments in the Northeast Corridor, and required 

Amtrak to work with the States and the Federal Government to 

bring the corridor into a state of good repair. 

11 

Amtrak has been making great strides to improve its service in 

the Northeast Corridor, and the proof is evident in the skyrocketing ridership numbers. And we have shortened the tim between New York and Boston and New York here, and the ridership 

has followed right behind that, and it has been terrific. 

Last year Amtrak’s nationwide ridership hit historic heights, carrying nearly 29 million passengers, and it is on its way to beat that 

number this year. And I see it directly because I take the train at 

least twice a week, and I see how much more difficult it is to get 

seats and how much more crowded the train is. 

Amtrak also recently launched an ambitious and aggressive plan 

to enlist private sector investment, asking the private sector to submit a robust business and financial plan to develop higher speed 

rail in the Northeast Corridor. And so far, several investment firms 

have expressed interest in working with Amtrak. 

Now, the one thing that we all have to know, and that is that 

investors expect yields on their investment. They expect a return. 

And as a consequence, they are going to want to price the product 

at a sufficiently high price to get that return. So we have to be 

careful about that. Investors know that working with Amtrak to 

strengthen passenger rail will help our economy as businesses flock 

to communities served by faster trains. 

A stronger national rail service will also be good for our national 

security, and the environment that it will help, it will be significant 

in helping our country to kick its dangerous oil addiction. But I 

want to be clear. Privatizing the Northeast Corridor is not a smart 

or viable way to meet these challenges. 

You can’t forget—it has been repeated here several times—Congress created Amtrak in 1970 because the private railroads could 

no longer sustain intercity passenger service on their own. And to 

our colleague who said, yes, but we have to remember that airplanes came into service and that there were more investments in 

highways—but there hasn’t been a similar thing happen to Amtrak 

as our population grew, 100 million people in the last 30 years. 

One hundred million people. So what was doesn’t work any more. 

If we all do our part, we will be able to build great projects like 

the Gateway Tunnel, an innovative project that will expand highspeed rail in the Northeast Corridor. And I remind everybody that 

investments, private investments, in rail are going to be quite an 

accomplishment to complete. The Portal Bridge outside Newark 

would cost over a billion dollars alone to get done, but it is essential because you can’t continue to go over a bridge that is 100 years 

old without something terrible happening. 

Building the Gateway Tunnel and achieving high-speed rail service in the Northeast Corridor are no small undertakings. Unfortunately, some way we can’t afford vital public investments right 

now. But I would argue that we cannot afford not to make these 

investments. 

I built a business. I was chairman of a company that I started 

with two other friends. The company is called ADP; we have 45,000 

employees today. We had nothing when we started the business 

over 50 years ago, nothing. And so I understand something about 

balance sheets and yield on investments and the opportunities you 

do have to amortize those investments. 

12 

So if we want to be successful in the future, and America desperately needs that push, we have got to begin laying the foundation today. And the same principle applies here. If we want to leave 

our children and grandchildren a better, safer country, we have to 

make smart investments on their behalf, and that means investing 

in a system that will help us carry freight and passengers across 

this great country of ours on a reliable and better environmental 

situation for our people. 

So I thank you, Mr. Chairman, and I hope that we will have opportunities to continue to discuss this situation. And I invite you 

to come back to the Senate along the way, and though the participation will be less in numbers, nevertheless we respect what you 

do and we would like to air the views. 

Mr. MICA. Thank you, Senator Lautenberg, for joining us today, 

for your continued interest, for your ringing endorsement today of 

my proposal—— 

[Laughter.] 

Mr. MICA. And we are going to rely a lot on your expertise in the 

private sector to bring them very effectively, and hopefully productively, into this process; and also for your leadership in the Senate, 

to get the damn thing passed over there. So we need you. 

Senator LAUTENBERG. I will rely on your humor, Mr. Chairman. 

Mr. MICA. We need you on board. And again, we are honored 

that you would come over and spend time, show your interest in 

this important subject that is not only important to the State you 

represent, New Jersey, and the Northeast Corridor, but the entire 

Nation. So thank you so much. 

And we will excuse the Senator. You came over from a vote, and 

I know you have to go. 

Senator LAUTENBERG. Thank you. 

Mr. MICA. And again, we appreciate it. 

May I now yield to—let me see who I have waiting—Mr. Petri. 

Mr. PETRI. Thank you very much, Mr. Chairman, for holding this 

important hearing today. The Northeast Corridor between Washington and Boston, much of which is currently an embarrassing national environmental eyesore, holds the potential to become a true 

high-speed rail operation, with maximum private participation in a 

new generation of public/private partnerships. And I commend you 

for the priority you are giving to this initiative. 

In this regard, I am particularly interested in the testimony we 

will be hearing from the Alliance for Passenger-Oriented Development. They are proposing station area development across the 

Northeast Corridor as an integral part of an emerging high-speed 

rail system. The plan would capture some of the increased value 

of the development, which in turn would help finance high-speed 

corridor infrastructure and operational expenses. 

The organized commercial development plan would put an emphasis on intermodal connectors, state-of-the-art, mixed use, that 

can create vibrant communities along the corridor as has been done 

in a number of countries in Europe and other places in the world, 

and is underway in some of the communities here in our own country. 

A national reform initiative for rail passenger-oriented development has the potential to add a vital new element to leveraging 

13 

private participation in the development of high-speed service in 

the Northeast Corridor and the rehabilitation of intercity passenger 

corridors across the country. 

I look forward to working with the committee to craft a rail initiative that will encourage competition to transform the Northeast 

Corridor into a true high-speed rail system. 

Thank you, Mr. Chairman. I yield back. 

Mr. MICA. I thank the gentleman. 

Let me recognize the gentleman from New York, Mr. Nadler. 

Mr. NADLER. Thank you, Mr. Chairman. I want to begin by 

thanking you and Ranking Member Rahall for holding this hearing 

on the Northeast Corridor. And I want to thank you, Mr. Chairman, and agree with you that any high-speed rail ought to start 

with a major investment in the Northeast Corridor. 

This is where we have the density of population and the density 

of travel population to make high-speed rail viable. And I certainly 

agree that we ought to concentrate here initially, at least, rather 

than trying to spread it all across the country with the available 

funds. 

And I also agree that we ought to look at all different financing 

alternatives, including looking at private/public partnerships, looking at getting capital from private sources as well as what we have 

been doing. 

And I certainly hope that the Federal Government will see the 

wisdom of investing a lot of money in high-speed rail along the 

lines—not along the lines of, but certainly, at least, along the 

amounts of—what the President has proposed, which was $8 billion 

or $9 billion in the American Recovery Act. And in the bill that the 

committee developed 2 years ago, we had put $50 billion for highspeed rail, and I certainly think we ought to be doing at least those 

amounts of Federal investment. 

I have my doubts, to put it mildly, about allowing the Northeastern States—about the proposal that has been outlined here. As 

I understand the proposal, it would envision allowing the Northeastern States to take control of the corridor’s infrastructure and 

operations and issue an RFP for bids from the private sector to finance the design, construction, and operation of service. 

But we have started down this road before. In PRIIA, we required DOT to issue a similar RFP, and last I heard, DOT had not 

heard any real expressions of—any real responses for the Northeast Corridor. At the field hearing in New York earlier this year, 

we had a roundtable with representatives from the private sector, 

and as I recall, any interest indicated there was predicated on 

some form of backing from the Federal Government as a backstop. 

Now, I have supported the chairman in his quest to research and 

review privatization proposals, but I certainly do not think the case 

has been made to justify moving ahead with any such scheme at 

this time. And we must absolutely not take any action that would 

disrupt current service or cost good-paying jobs, which I fear this 

proposal might very well do. 

I also question the idea of handing over the NEC, the Northeast 

Corridor, to the States. Aside from the fact that this would just 

shift the burden to local governments, it also risks any State being 

14 

in the position of a Rhine River pirate, being able to block the entire corridor. 

Any State along the way could pull out of the program, could decide that it didn’t want to or didn’t want to invest as much money 

or wanted to charge a higher fare, perhaps. And as we have seen 

from some of the States that recently withdrew from high-speed 

rail proposals, in the Northeast Corridor, which goes from Washington through Maryland, Delaware, Pennsylvania, New Jersey, 

Connecticut, Rhode Island, Massachusetts—what is that, eight or 

nine States—any one State could interfere with all the others if we 

were to do this. So I don’t think that is a—I think there are a lot 

of dangers with that. 

Ironically, Amtrak itself just issued an RFP to solicit proposals 

from private companies to partner with Amtrak to finance infrastructure and equipment upgrades. I am not clear—it is not clear 

to me—why it is better for the States to partner with the private 

sector as opposed to Amtrak or the Federal Government partnering 

with the private sector. 

Amtrak provides a service that is much too valuable to risk by 

going out with a scheme that isn’t fully prepared yet. I certainly 

urge questions as we move forward, and I certainly hope—I don’t 

think that we are prepared to go ahead with any privatization 

scheme at this point. 

And I want to echo Ms. Norton in saying that I hope that any 

such provision is not in the reauthorization bill because we all 

know we need to unify on a major reauthorization bill for a lot of 

reasons. And we may or may not be able—I doubt we will be able 

to unify under this kind of a proposal in time for a reauthorization 

bill, and that it probably ought to stand on its own as a separate 

proposal. 

In any event, I thank the chairman for calling this hearing 

where we can explore some of the perhaps advantages and some 

of the real pitfalls in these kinds of proposals. 

I thank you and I yield back. 

Mr. MICA. I thank the gentleman. 

I recognize Mr. Graves, the gentleman from Missouri. 

Mr. GRAVES. Thank you, Mr. Chairman. I want to thank you and 

Ranking Member Rahall for, obviously, holding this important 

hearing today. And I would also like to welcome our witnesses. 

The Northeast Corridor has a great potential for becoming the 

first true high-speed rail corridor. Unfortunately, the existing passenger rail service operator in this corridor will never meet the 

high rail standards that we see in other places. 

Currently, Amtrak has a de facto monopoly in passenger rail 

service on the Northeast Corridor and across the country, and is 

heavily subsidized by the American taxpayers. I believe there are 

private companies out there that can offer better, cheaper, and 

more efficient rail service. In fact, I know there are. 

Herzog, a company that is headquartered in my district, operates 

a few rail services in the U.S., and on each route, ridership has significantly increased over the last 5 years. If we open up the Northeast Corridor to competition using an open and transparent bid 

process, companies like Herzog can bring innovation to this corVerDate Aug 31 2005 15:49 Mar 14, 2012 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\FULL\5-26-1~1\66529.TXT JEAN
15 

ridor and perhaps one day offer true high-speed rail service. And 

this can be done with private investment. 

I keep hearing, and the gentleman from New York reminded us, 

about the 2008 PRIIA law. And I got to thinking and consulting 

with my friend here to the right. Mr. Shuster put a provision in 

there to require that we open up, at list for bid or for competition, 

at least two of Amtrak’s money-losing routes. That was in the 2008 

PRIIA law. 

Amtrak has failed yet to do that, to open up any of those two to 

competition. So we keep hearing over and over and over again 

today that there aren’t any private companies out there that are 

interested in doing rail service any more, passenger rail service, 

but yet we can’t even find out if anybody is interested or not. So 

how would we even know? 

Again, I mentioned in my opening statement or just a few minutes ago what I was reading, that we need an open and transparent bid process. Well, let’s have it. Let’s have an open and 

transparent bid process and see what interest is out there and if 

private investment can do a much better job. 

I believe they can, and I appreciate, Mr. Chairman, the opportunity to speak. 

Mr. MICA. Thank you. I will let Ms. Brown get settled. We will 

go to Mr. Denham. I know he had requested time. And then we will 

catch Ms. Brown as soon as she takes the chair. 

Mr. Denham, you are recognized. 

Mr. DENHAM. Thank you, Mr. Chairman, not only for recognizing 

me, but thank you for your leadership and oversight on this issue. 

I want to reiterate that I support the concept of high-speed rail. 

And even in my home State, as a State senator, I voted for the 

high-speed rail bond, a $33 billion project, $9.95 billion the taxpayers supported in California. 

Now that project has doubled, with no oversight. Private investors continue to talk about it, but there is no business plan. So my 

concern as we continue to look at public/private partnerships is 

making sure that you have not only got a transparent process, but 

can show how we can save taxpayer dollars. 

I agree with the chairman—we need an alternative to Amtrak’s 

vision as well in the Northeast Corridor. There is a staggering cost 

of a $117 billion project in my State. While it will go from L.A. to 

San Francisco, again, a 400-mile project was proposed at $33 billion, and it is supposed to be done in just a few years. This proposal is a 30-year project. 

I agree this can be done in our country. It was done in Japan 

before I was born. Due to increasing debt, that rail system was also 

privatized in 1987. Now each private regional operator pays the 

Government a leasing fee for access to the line, which is then used 

to invest in new infrastructure. Since privatization, annual ridership on the original line from Tokyo to Osaka has risen from 102 

million in 1988 to 138 million in 2010, with a high mark of 151 

million passengers in 2008. 

That line also has reduced travel times from 4 hours in 1964 to 

its current 2 hours and 25 minutes. This is over a 320-mile line. 

By comparison with the Northeast Corridor, which stretches 225 

miles from DC to New York, it takes 2 hours and 45 minutes. 

16 

As this committee continues its oversight over high-speed rail in 

America, I encourage its focus on creating partnerships with the 

private sector. I would much rather see a private individual on the 

hook for making sure the business plan works and the ridership 

numbers pencil out than have something that is going to cost billions of dollars in subsidies from people in my district. 

I believe a purely publicly funded and publicly run system just 

will not meet the needs of taxpayers. We must see better planning 

and more creative financing in order to increase efficiencies and 

produce long-term transportation benefits for all of America. 

Thank you, Mr. Chairman. I yield back. 

Mr. MICA. Thank you. And I am pleased to yield at this time to 

the ranking member of the Rail Subcommittee, Ms. Brown, the 

gentlelady from Florida. 

Ms. BROWN. Thank you, Mr. Mica, for holding this hearing, and 

Mr. Rahall, today on whether or not we should have more competition in the Northeast Corridor to private competition for the development of high-speed rail. 

I, too, support the private sector involvement in passenger rail 

and believe there is a lot we can learn from the experience of the 

private sector. But I don’t support cherry-picking the best routes on 

our national system and turning them over to private companies. 

We need to make sure that people that ride public transportation 

don’t have to worry about the service, not some stockholder who is 

riding around in a limousine. That is the problem we are facing in 

healthcare; the insurance companies aren’t concerned about all the 

care their customers get. They are concerned about how much 

money their stockholders make. And I can also add the oil industry 

to that. 

I want to take this time to express my strong support for Amtrak. Congress has micromanaged and financially stopped them for 

most of their existence. We created Amtrak because the freight rail 

couldn’t make a profit and didn’t want it on passenger rail, yet we 

continue to hammer Amtrak for making money. 

And let me be clear. There is no form of transportation that pays 

for itself, none. The Bush administration even went so far as to oppose in the fiscal 2006 budget to force Amtrak to go into bankruptcy. We demand that they operate in the 21st century a rail system and infrastructure built in the 1890s; it defies logic. 

Since we are discussing private sector involvement in rail today, 

I want to once again express my deep disappointment over Governor Rick Scott’s decision to kill high-speed rail for the citizens of 

my home State of Florida. The high-speed rail plan for Florida 

served as a perfect example of a successful public/private partnership that would have created tens of thousands of jobs. The Florida 

DOT said as much as 48,000, and the private sector said an additional 10,000 or 15,000 jobs. 

The high-speed rail between Tampa and Orlando was going to be 

one of the models for high-speed rail in the country, and we had 

eight different consortiums that wanted to participate. Now we 

have to wait a little longer for having high-speed rail in Florida, 

but we will get there. 

But that is why I am disappointed particularly that the committee invited the Reason Foundation to testify, knowing that GovVerDate Aug 31 2005 15:49 Mar 14, 2012 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\FULL\5-26-1~1\66529.TXT JEAN
17 

ernor Rick Scott made his decision based on their recommendation. 

If anyone thinks that asking the private sector to invest significant 

money and manpower to apply to operate a high-speed rail system 

and then cancel it, cancel the project, we need to be clear that the 

private sector had invested millions getting ready for Florida. Millions. 

I met with someone yesterday. They talked about this is not the 

first time they have gone and invested dollars. They did it 5 years 

ago, and now once again. So if we are going to be a serious partner, 

we have got to find a way that the whims of politics doesn’t affect 

the public/private relationship. 

And with that, Mr. Chairman, I yield back the balance of my 

time, and I am waiting for the presentations. 

Mr. MICA. I thank the gentlelady for her spirited commentary. 

And we had another request for time. Mr. Southerland, the gentleman from Florida. 

Mr. SOUTHERLAND. Thank you, Mr. Chairman. And I also represent the State of Florida, and I applaud our governor for the 

courage he took not to invest, not to take this loss leader, and take 

the taxpayers in the State of Florida down a boondoggle. This was 

clearly a bridge to nowhere. 

And so I am just as passionate for fiscal responsibility. Florida’s 

2nd Congressional District expects much, and when you are given 

much, they should expect much. We are broke. We are broke. We 

are broke here at the Federal Government, and in Florida, I saw 

our legislature have to find $4 billion because general treasury revenues were down for like the fourth consecutive year. I think the 

American people have had enough. 

I will tell you what bothers me is we had our Senator today 

came, and he spoke about privatization and the dangers of privatization because there is an expectation of a return on investment, 

as if that is a bad thing. And yet we take the taxpayers’ money 

every single day and we think a return on the investment is a bad 

thing for them, that they shouldn’t expect a return on the investment. 

That is why Washington, DC, is broken. It is broken. How pathetic that we will take money from the American citizens who are 

working hard to keep their nose above water. And we take their 

money and we are pathetic with it. We pass a DOT project, and 

it takes 13 years. Thirteen years. 

We don’t run a competitive business in our Postal Service and in 

Amtrak. And so we need to ask this question. If this is something 

we had never started, would we start it today? And ask hard questions. In light of our past circumstances, our current situation, and 

our future hopes and dreams, what is the very wisest thing for us 

to do? The American people deserve us to ask that question. 

Mr. Chairman, I applaud you for having this hearing. I applaud 

you for examining other opportunities than the broken, failed systems that this city has applied to so many areas in our lives. I applaud you and I thank you, and applaud Governor Scott for not 

taking the bait. 

Ms. BROWN. Mr. Chairman, I ask unanimous consent—— 

Mr. MICA. The gentleman yields back. Did you have a quick comment? 

18 

Ms. BROWN. Yes, I did, sir. I ask unanimous consent to include 

in the hearing record a report just released by the British Government showing that the privatization has not worked and it has increased costs, and also submit for the record this morning’s Financial Times article announcing that Virgin Rail is turning its line 

back over to the Government. 

And I also want to say that I want to submit for the record the 

report that indicates that the States that are benefitting from Florida’s gasoline tax—the fact is, when I was elected, for every dollar 

we sent to Washington, we were getting 77 cents back. Now we are 

getting close to 92 cents back. But we still are a donor State. The 

money that Rick Scott sent back is going to my colleagues, and 

they are very happy, and they are going to invite the governor to 

the ribbon-cutting. 

Mr. MICA. I thank the gentlelady. And without objection, we will 

include in the record the articles referred to. 

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Mr. MICA. I might say, just before we recognize our witnesses— 

I don’t think there were any other Members who sought recognition, so we will go to our witnesses—but just two things for the 

record. 

One, the Florida project was not in fact high-speed rail. It was 

intercity passenger service that went from Tampa to the Orlando 

airport, a distance of 84 miles, in 1 hour. It did not connect into 

any fixed system. Tampa and Orlando currently do not have a fixed 

system. Orlando is planning, and we hope the Governor approves 

it, a fixed commuter rail system. And the part from the tourist area 

to Tampa did show very negative ridership figures as far as high 

subsidization costs. 

And prior to the gentlelady’s arrival, the ranking member—we 

did cite and included in the record accurate and up-to-date information on two of the lines that Virgin Rail operates that are returning about a quarter of a billion dollars now with no subsidization to the Federal Government, plus a $50 million return to the 

investors. So we also will make certain that information is in the 

record and has been referred to. 

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Mr. MICA. So now we will go to our witnesses. We were pleased 

to have earlier Senator Lautenberg. 

Now we have Carlos Bonilla, who is an Adjunct Fellow, who was 

welcomed very heartily by the ranking member. He is from the 

Reason Foundation. Ignacio Jayanti is president of Corsair Capital. 

We have James Richardson, senior vice president of Real Estate 

Asset Services, Forest City Enterprises; Thomas Hart, vice president of the governmental affairs at the US High Speed Rail Association; Michael Goetz, who is executive director of the Railroad Cooperation and Education Trust; and Mr. Ed Wytkind, who is president of the Transportation-Trades Department at AFL–CIO. 

Welcome, all of our witnesses. Thank you for your patience. As 

you can see, we will have some testimony from you. We have had 

great interest from our panel here today, and we are continuing the 

debate, hopefully in a constructive manner, to achieve, again, highspeed rail where it can be successful. And hopefully, as we address 

the Northeast Corridor and approaches to that, you will address 

that in your commentary today. 

So with those comments, let me first turn to Mr. Bonilla from the 

Reason Foundation. Welcome, sir, and you are recognized. 

TESTIMONY OF CARLOS BONILLA, ADJUNCT FELLOW, REASON 

FOUNDATION; IGNACIO JAYANTI, FORMER MEMBER OF THE 

WORKING GROUP ON INTERCITY PASSENGER RAIL, AND 

PRESIDENT, CORSAIR CAPITAL; JAMES H. RICHARDSON, 

SENIOR VICE PRESIDENT, FC ASSET SERVICES LLC; THOMAS 

A. HART, JR., ESQ., VICE PRESIDENT FOR GOVERNMENTAL 

AFFAIRS AND GENERAL COUNSEL, US HIGH SPEED RAIL ASSOCIATION; MICHAEL GOETZ, EXECUTIVE DIRECTOR, RAILROAD COOPERATION AND EDUCATION TRUST (RAILCET); 

AND EDWARD WYTKIND, PRESIDENT, TRANSPORTATION 

TRADES DEPARTMENT, AFL–CIO 

Mr. BONILLA. Good morning, Mr. Chairman, members of the 

committee. It is a pleasure to be here. I am Carlos Bonilla, former 

Special Assistant to the President, George W. Bush, for Economic 

Policy. I am here today as an Adjunct Fellow of the Reason Foundation. 

My original work that forms part of the basis for this testimony 

was originally published by the American Action Forum. My coauthor is Robert Poole, director of transportation policy at the Reason Foundation. He has advised the U.S. DOT Office of the Secretary, numerous Federal and State agencies and State DOTs, and 

for 20 years he has specialized in transportation policy, including 

public/private partnerships. 

As you mentioned earlier, in 2010 Amtrak laid out its vision for high-speed rail at a cost of $117 billion. That system would have 

shown an operating profit of $928 million a year, but fully amortizing the construction costs adds an additional $7.2 billion, for a 

built-in loss of $6.25 billion per year. Envisioning 17.7 million passengers, each of those trips would have had a subsidy of $400. 

Clearly, not all benefits from high-speed rail are captured directly on the train. A study in 2010, however, offered cautionary 

lessons from the European and Japanese experience. Among them 

were: 

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High-speed rail does not generate net new economic activity, nor 

does it attract new firms and investment to a country, but it does 

help to consolidate and promote ongoing economic activities in 

large cities. 

High-speed rail may put medium-sized cities at a disadvantage 

due to some shifting of economic activities, and political pressures 

for additional stops often lead to higher costs and reduce benefits. 

It is widely acknowledged that only two of the world’s high-speed 

lines may be recovering their capital costs as well as their operating and maintenance costs from fare box revenues, the first Japanese line, from Tokyo to Osaka, and the first TGV from Paris to 

Lyon. All subsequent high-speed rail lines have involved significant 

Government subsidy of their capital costs. 

The overall global experience cautions against assuming highspeed rail in the Northeast Corridor will be a self-supporting 

project. The challenge is to figure out how to harness the incentives 

provided by a public/private partnership to minimize the degree of 

taxpayer subsidy required. 

A notable model for a public/private partnership was found in 

two recent high-speed rails, the TGV from Tours to Bordeaux and 

the Spanish Rail from Perpignan to Figueres. In both cases, Government is providing approximately half the project costs. In both 

cases, the revenue will come from fees paid to the company by 

train operating companies. 

Thus, in those two projects, the infrastructure companies are 

taking on traffic risk rather than relying on guaranteed annual 

payments from the Government. Thus, all stakeholders have common interests in the economic success of the venture, from design 

and construction all the way to operation. 

Part of the reason for Amtrak’s planned huge costs was its assumption of mostly new right-of-way, with curves no sharper than 

a 3-mile radius, much new station construction, and a somewhat 

arbitrary 220-mile-an-hour top speed. The central question is, how 

much is enough? 

Would, for example, adding high-speed rail in the Amtrak rightof-way be good enough to attract significant new ridership? And 

how much would rail passengers be willing to pay for various reductions in trip times? 

Assuming Congress decides to separate the NEC from Amtrak in 

order to revamp it via long-term private/public partnership, a useful first step would be to issue a request for information from potential developer operators to present the elements of a viable business plan. The RFI should make clear that Congress is willing to 

start with a clean sheet of paper. 

Among the factors that might make a considerable difference: 

No specified speed requirement, leaving that to be determined as 

part of the business plan; 

Freedom to define stations served and not served; 

Exemption from the Buy America provisions to permit acquisition of off-the-shelf rolling stock from abroad; 

Labor-management relationships based on the premise that compensation must be based on the profitability of the enterprise, 

which could, of course, include profit-sharing. 

100 

And a comprehensive review of the Federal Government of how 

existing policies and regulations either foster or hinder the goal of 

successful high-speed rail. 

It would be wise for Congress to take the prior step of separating 

the NEC organizationally from Amtrak. Such a move would increase the transparency of Amtrak’s financial reports, which currently blend the NEC with all other operations, making it difficult 

for parties to accurately gauge the risks and rewards of entering 

into a partnership. 

One key question that should be explored is whether the private 

sector would be interested in simply revamping, operating, and 

maintaining the infrastructure, or whether they would prefer to develop high-speed rail and other services as a vertically integrated 

infrastructure plus train operations business. 

As general guidelines for the RFP, we suggest: 

Offering a long-term concession for the NEC right-of-way, with or 

without train operations; 

Permitting multiple train-operating companies to provide service; 

Teams would compete on the least amount of Federal capital 

subsidy required for construction; no operating subsidies would be 

offered. 

And only companies or teams that had previously submitted 

their qualifications and made it onto an approved short list would 

be allowed to respond to the RFP. 

Finally, the costs and benefits of high-speed rail must be weighed 

against the costs and benefits of alternatives. 

Thank you very much. 

Mr. MICA. Thank the gentleman. 

And I will recognize Mr. Jayanti, who is president of Corsair 

Capital next. And we will withhold questions till we have heard 

from all the witnesses. Thank you. 

Mr. JAYANTI. Mr. Chairman, distinguished committee members, 

I thank you for allowing me to testify today. 

I think the debate has been well-framed by the committee so far. 

And I would like to take a step back, before talking about the 

Northeast Corridor, to emphasize that this should be about creating jobs, improving service quality on the corridor, improving the 

frequency of service as well as reducing trip times, all within a goal 

of having a better financial model for the U.S. Federal Government. 

By way of background, I am an investor and a businessman. In 

1997, I was invited by the then-chairman of this committee, Bud 

Shuster, to participate in the working group on intercity passenger 

rail. The key conclusion of the majority side of this working group 

was that a division between the infrastructure management and 

the operations afforded the best chance for preserving, and in fact 

renewing, passenger rail service in this country. I believe that this 

is still the case today. 

The goal of the committee is to open the Northeast Corridor to 

private competition for development of high-speed rail. I believe the 

solution is to separate the infrastructure management from the 

transportation service. This will open up opportunities for competition, competition to bring in new operators to operate alongside 

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aging the infrastructure from leading engineering, construction, 

and logistics firms; and competition for all the new work contracts 

and new employees that will be required to revitalize the corridor. 

The vision of this proposal takes into account a very positive 

view of the Northeast Corridor passenger rail potential. It sees the 

tremendous untapped business opportunities. And most importantly, something that hasn’t been said before, the private sector 

is willing and prepared to make a substantial investment in the 

corridor, along the order of $50 to $60 billion of private sector capital, over the lifetime of this concession. 

This, I emphasize, is $50 to $60 billion of private sector investment with no Federal subsidies to maintain the infrastructure, a 

very important point in the context of my earlier comment around 

managing this within a set of financial constraints that face the 

Federal Government today. 

As part of the vision, this plan envisions reduced trip times between New York City and Washington, DC, for example, of 2 hours 

versus 3 hours currently. There are 14 new train stations planned, 

and we expect to develop effectively a super-subway system along 

the Northeast Corridor with more passenger options, more reliable, 

faster, and less expensive service. We will help establish dedicated 

airport express train services. 

We do believe that there is great demand for passenger service 

that is not being met today. The Northeast Corridor ridership numbers, as stated earlier by the chairman of this committee, are static. They haven’t moved in 30 years. That is not a success. 

This is the most densely populated and affluent corridor in the 

world. But the service over the past 30 years has not adapted to 

meet the needs of the traveling public. The problem is the current 

model, which doesn’t allow for competition and fails to address 

long-term, significant need for investment in the infrastructure. 

The plan that we have devised can be implemented and does address these issues. The infrastructure management organization 

plan, the so-called IMO plan, sees Amtrak separated into two federally owned entities. 

First, Amtrak as a passenger rail service entity, continues to provide transportation services to its customers. The second Federal 

entity would own Amtrak’s current infrastructure, mostly the 

Northeast Corridor, and conduct a competitive solicitation to select 

a private sector infrastructure manager to manage the infrastructure. This organization would be subject to strict oversight, reporting requirements, and regulations. 

The infrastructure manager would borrow up to $25 billion from 

the RRIF program. That loan would be fully secured so there is no 

risk on that principal to Federal Government or taxpayers. All 

NEC stakeholders are protected. Organized labor would have all of 

its existing contracts honored, pay increases expected for all the infrastructure workers, as well as thousands of new jobs created. 

The commuter carriers would be granted vested operating rights 

and avoidable cost access fees to be maintained. There is no additional financial burden on the States, and more resources freed up 

for Amtrak’s nationwide system. 

The Federal Government and the taxpayer will continue to benefit from the ownership of the corridor and the significant upgrades 

102 

that would be achieved through investments of over a billion dollars a year during the life of this concession. This will also make 

operations very much more available for the traveling public. 

The status quo has failed. Our plan is transformative. The model 

relies on proven principles of competition with Federal oversight 

and public sector partnership. This model is consistent with all 

other modes of transportation and the way the rest of the world is 

going in terms of how it structures passenger rail service. 

It is about creating jobs. It is about improving the service in the 

corridor, within the financial constraints and without further Federal funding and significant, $50 to $60 billion private investment. 

Thank you very much. 

Mr. MICA. Thank you for your testimony. 

We will recognize Mr. Richardson, who is the senior vice president, Forest City Enterprises. 

Mr. RICHARDSON. Mr. Chairman and distinguished members of 

the committee, I thank you for this opportunity to testify. This testimony is on behalf of Forest City Asset Services, which together 

with Woolpert has formed an Alliance for Passenger-Oriented Development, APOD. 

In previous testimony introduced into the record by Congressman 

Tom Petri on March 11, we recommended an organized approach 

to station area development that would make commercial improvement an integral element in the revitalization of passenger rail corridors across the country. 

The goal is to create a package that provides a stream of revenues from escalating land and commercial values in the station 

area. This revenue can then be plowed back into operating subsidies, maintenance, and capital projects across a high-performance 

intercity and urban passenger rail corridor. 

Currently, station-oriented development is undertaken on an ad 

hoc basis. There is frequently little coordination between economic 

development opportunities, passenger rail operation itself, and the 

intermodal connections to that operation. We submit that this new 

proposal can be part of a holistic solution to the most vexing problem of providing high-performance passenger rail corridors, additional streams of revenues that will underpin the operations. 

A summary of our legislative proposal is attached to the end of 

this testimony. We believe this approach can apply to any urban 

rail or intercity passenger corridor, and is ideal for the Northeast 

Corridor. There are incredible commercial development opportunities along the Northeast Corridor. 

With this plan, we are proposing to capture some of the value of 

these developments, opportunities to help finance high-speed corridor infrastructure, investments, and operational expenses. Following are the principles that we recommend for the Northeast 

Corridor. 

A corridor-wide real estate plan should be developed under a 

master planner development administrator, MPDA. While certainly 

European and other international developers with experience 

maybe subcontractors, this should be an American-led planning effort. 

The MPDA would have specific responsibilities. Prior to any competition that would open the Northeast Corridor to public/private 

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partnership control, there should be a survey of all available real 

estate and an overlay of an estimate of development potential that 

should be made available to help support the infrastructure, operation expenses, and development opportunities that would be available to bid consortiums. 

Following the completion, the design, construction, management, 

operation, maintenance of the high-speed rail system, and commercial development for the corridor should be under the singular control of a corridor management group, which will work through the 

MPDA to: 

Create revenue capture assessment districts in each station area; 

Establish a Northeast Corridor rail corridor development fund 

that will plow back revenue into infrastructure and ongoing highspeed rail service requirements; 

Create continuity with common branding across all station areas 

in the corridor, with maximum revenue generation from advertising and related sources, as well as 

Coordinating all the stations to create destination centers that 

will drive ridership and revenues. 

Combine the above to establish a core development program that 

will be corridor-wide. The core program would generate income and 

be under the direct ownership and control of the corridor management group. This should not be less than 10 percent of the total 

target commercial investment. These will be in central properties, 

particularly those tied to intermodal connections. 

The control of the core will provide leadership and leverage. This 

will, in turn, yield consistency and financial stability over the entire corridor commercial development program. 

Because these projects will combine public interest mobility and 

rail access with commercial development, pure commercial bank interest rates and terms will not work. Therefore, we propose to access innovative finance such as the Railroad Rehabilitation and Improvement Financing and the Transportation, Infrastructure, and 

Innovation Act that can leverage private investment in a true public/private P3 arrangement. 

As America is lagging far behind most of the developed world in 

high-speed rail, we would suggest a special initiative for high-performance corridor development in the Northeast Corridor and other 

emerging corridors. Perhaps a national corridor bonding or a passenger corridor infrastructure bank could be established. 

Through this dedicated mechanism, this innovative finance could 

be made available to each corridor for both operation and qualified 

station area development. This program should be deficit-neutral. 

Revenues from the corridor development fund could be used to pay 

back the funds, the bonds, as well as to support operational cost. 

This proposal will provide a new source of revenue for the basic 

maintenance and upkeep of the high-speed rail operation. Just as 

importantly, it can be made a large contribution by creating vibrant urban communities with state-of-the-art intermodal station 

areas that will integrate access to passenger rail service with other 

transportation options. 

In conclusion, we propose Congress make station area development an integral part of emerging high-speed rail operation under 

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east Corridor. We believe the same concept can be applied to the 

designated State-supported corridors that have the potential to become the backbone of a high-performance American intercity passenger system. 

By engaging P3s and station-oriented development together with 

streamlining regulatory approval, we believe the objective can be 

achieved in the shortest possible timeframe. 

And I thank you for the opportunity. 

Mr. MICA. Again, we thank you for your testimony. 

We will now recognize Mr. Thomas Hart. He is the vice president 

of governmental affairs for the US High Speed Rail Association. 

Welcome back, Mr. Hart. 

Mr. HART. Thank you, Chairman Mica. Thank you, Ranking 

Member Rahall, Subcommittee Chair Shuster, and Subcommittee 

Ranking Member Corrine Brown. On behalf of the United States 

High Speed Rail Association, its directors Andy Kunz, Joe 

Shelhorse, and its 250 members, I extend greetings to this prestigious Transportation and Infrastructure Committee. 

I am here representing the United States High Speed Rail Association as its vice president for government affairs and general 

counsel. I also serve as the director of the Washington office of the 

national law firm of Quarles & Brady. 

The United States High Speed Rail Association is a nonprofit association committed to advancing a state-of-the-art, nationwide, 

true high-speed rail system in America. Our mission is to build 

widespread public, business, and political support for major investments in the Nation’s high-speed rail network by the public the private sector. 

America has a history of investing in transportation infrastructure, with the Government funding the base infrastructure and private companies operating the transportation vehicles that work 

within that base infrastructure. This is how our highway system 

works. It is how our aviation system works. 

The infrastructure was built and is owned and maintained by the 

Government, while the vehicles are operated by private, for-profit 

companies. Given today’s economic and political environment, we 

believe this is the best model for the new high-speed rail network 

in America. It is also the way many high-speed rail systems are developed and are being operated around the world. 

The key to unlocking the great value of the Northeast Corridor 

is twofold. First of all, we must upgrade the network in the Northeast Corridor to the international standards that the chairman 

spoke about earlier. We need to reach speeds of 220 miles an hour, 

or even faster. That can only be done with dedicated track. 

Number two, the train’s operations need to be separated from the 

infrastructure operations, as it is in other forms of transportation 

in this country. This will allow private, for-profit rail operators to 

compete for passengers in the Northeast Corridor, and the infrastructure would be owned and controlled by the U.S. Government. 

However, it could be maintained and managed by private companies for a profit. 

Mr. Chairman, as you know, this committee is well-known for its 

bipartisanship. But this particular issue sharply divides this committee. There are some on this side that would like to zero out AmVerDate Aug 31 2005 15:49 Mar 14, 2012 Jkt 000000 PO 00000 Frm 00116 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\FULL\5-26-1~1\66529.TXT JEAN
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trak’s budget. There are others on this side that might give Amtrak 

sacred cow status and continue to throw money at it. 

The United States High Speed Rail Association is somewhere in 

the middle. Over the past 40 years, Amtrak has provided a unique 

service, a valuable public service to the Nation as its primary carrier of the Nation’s passenger rails. Amtrak has over 19,000 employees, many of whom come from 13 organized, hard-working, deserving employee unions. 

Amtrak has a very tough job. It coordinates eight corridors in 

rail and 2,000 trains per day over the Northeast Corridor track. 

Amtrak deserves credit for their recent commitment to high-speed 

rail by appointing Al Engel as their vice president for high-speed 

rail deployment. Al is a seasoned veteran and an expert in this 

field. Amtrak and the Nation are lucky to have him leading this 

important project. 

Although Amtrak has made a number of recent advancements, 

including making a privilege last year, it must do more to reach its 

full potential. The current slogan in Washington is that everything 

is on the table, and that must include Amtrak. 

Although the United States High Speed Rail Association does not 

support the privatization of Amtrak, the association does call for 

rapid improvement in rail service created by competition, innovation, and private investment. 

Over the past 40 years, Amtrak has become one of the Nation’s 

major recipients of Government funds and subsidies, getting over 

$38 billion. Amtrak recently received $450 million for improvements in the Northeast Corridor. Although Amtrak has begun its 

procurement process, it has yet to develop a comprehensive plan for 

small business involvement that set goals, timetables, and procedures. 

Like the Federal Rail Administration, Amtrak lacks clear Government mandates for small and minority business development. 

As this committee examines ways to increase private investment 

and create jobs in the rail industry, this committee should also develop procedures and programs to ensure that small business has 

a role to play in the procurement by Amtrak. 

We need to continue our investment in high-speed rail, and 

under this current climate, that must depend on the private sector. 

The Obama administration did a great job over the last 2 years, 

but now it is time for public/private partnerships to take the lead. 

The long version of my testimony analyzes nine public/private 

partnerships that have been successfully initiated around the 

world. That 19-page report will be posted on our website today at 

ushsr.com, and it has been circulated to the members of this committee earlier. 

So we encourage public/private partnerships. We also have proposed legislation called the Private Investment in High Speed Rail 

Act of 2011, and we would like the chairman to keep the record 

open so that I could submit a copy of that proposed legislation in 

this testimony. 

[The information follows:] 

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Mr. HART. Moving forward, we look forward to working with this 

committee in developing the right model for public/private partnerships. And we look forward to your questions and comments today. 

Thank you very much. 

Mr. MICA. Thank you, Mr. Hart. 

We will turn to our next witness, which is Michael Goetz, executive director of the Railroad Cooperation and Education Trust 

Fund. Welcome, and you are recognized, sir. 

Mr. GOETZ. Thank you, Mr. Chairman, Ranking Member Rahall, 

distinguished committee members. My testimony today is on behalf 

of 30 railroad contractors and 3 international construction unions 

that build and maintain rail infrastructure across America. 

We ask that the rail title of the next Surface Transportation Act 

authorize a high-performance, intercity, urban passenger rail network. We suggest that the Northeast Corridor should be the crown 

jewel in that network. We agree with the President’s goal that 

within 25 years, 80 percent of all Americans should have the option 

of a high-speed performance rail passenger alternative to highway 

and aviation. 

In these difficult budget times, we know that we cannot meet the 

goal of a revitalized passenger rail network by enacting a massive 

new grant program, and we did with the creating of the interstate 

highway network. Therefore, we support new approaches to leverage resources through the introduction of innovative financing, 

public/private partnerships, and competition in the design, construction, and maintenance of rail passenger systems. 

High-speed rail service in the Northeast Corridor and the West 

and the existing State-supported passenger corridors should be the 

foundation for a new national, intercity, and urban passenger network. 

To transform the Northeast Corridor and existing intercity and 

urban routes into a high-performance network will be a massive 

undertaking over a long period of time. To be successful, it must 

have major private sector involvement and cost control in the construction, maintenance, and rehabilitation of this rail network. 

To provide the maximum value for the taxpayers’ dollars, we specifically call for fair and open competition for the construction of 

publicly funded or financed rail projects. We previous the following 

policy for rail construction. 

Number one, States and public authorities shall competitively 

bid out all publicly funded or financed rail construction, rehabilitation, and maintenance projects on publicly owned rights of way. 

Federal, State, regional, and local public authorities shall create no 

impediment to full, fair, and open competition on federally funded 

projects. 

Number two, to the maximum extent possible, States and public 

authorities shall competitively bid out all publicly funded or financed rail construction, rehabilitation, and maintenance projects 

on private rights of way. While the burden of proof should favor 

competition, we support limited exemptions to honor existing rail 

labor agreements in effect on the date of passage of the statute. 

Clear guidelines should be established to promote fair competition 

and enforcement by the Department of Transportation and the 

States. Suggested guidelines have been attached to my testimony. 

122 

In recent months, there have been some unfortunate statements 

made before the Rail Subcommittee that our contractors and their 

employees have less than professional skills and qualifications because they do not operate under the railway labor laws. This is 

nonsense. 

The fact that our employees are organized under the National 

Labor Relations Act, along with other private sector employees in 

America, does not adversely impact the quality of the work we perform or the conditions of employment. We have superior benefits 

with solid health and pension plans. We jointly administer worldclass training programs and utilize work standards that are second 

to none. 

We perform rail maintenance and construction efficiently and 

safely, as well as any in-house labor force. The skilled construction 

workers, from the carpenters, laborers, and operating engineers, 

perform complex construction projects in a wide range of industries, including rail projects. 

It is true that our companies operate in a highly competitive environment. Our unions and management work closely together 

through cooperative strategies that demand high quality at the 

best price. The bottom line is we must get our jobs done safely, on 

time, and on budget. We will happily compare our record of quality, 

safety, and productivity with any similarly situated in-house workforce in America. 

We also present a unified labor-management voice on legislative 

issues, as we are doing here today. We will work with Congress for 

a specific proposal on the Northeast Corridor. What we respectfully 

ask is that principles of competition for rail construction projects 

be applied here and on all other publicly funded rail projects. That 

way, as a high-performance American passenger rail network is developed, the taxpayer will receive the highest quality work at the 

best price. 

Thank you. 

Mr. MICA. Thank you, Mr. Goetz. 

And now, Mr. Wytkind, please proceed. 

Mr. WYTKIND. Thank you, Mr. Shuster. Thank you, of course, to 

Mr. Mica, Ms. Brown, and Mr. Rahall, and other distinguished 

members of the committee. Thank you for inviting transportation 

labor to testify today on behalf of our 32 member unions, and specifically on behalf of the vast majority of Amtrak’s 19,000 employees. 

We believe that wishful thinking won’t build and sustain a 21stcentury transportation system. A vision backed by policies and, yes, 

real dollars will. There is no high-speed rail system in the world 

that operates without robust Government support. So we need to 

stop all the tired privatization rhetoric and start having a conversation about how to get this done in the real world, in the way 

that transportation actually works, with both the public sector and 

the private sector involved. 

My message today is simple. Amtrak is doing a better job today 

than it ever has in a long time, and has well positioned itself to 

be the leader in delivering high-speed service both on the NEC and 

on other corridors across the country. Now is the time to boost inVerDate Aug 31 2005 15:49 Mar 14, 2012 Jkt 000000 PO 00000 Frm 00134 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\FULL\5-26-1~1\66529.TXT JEAN
123 

vestment in Amtrak and support its long-term vision for growth, 

which includes private investment. And we strongly support that. 

It is not the time to allow private companies to provide rail services that are profitable only by exploiting past taxpayer investments, by relying on continued Government support and cherrypicking the most lucrative routes. And that is the inherent problem 

with the topic of today’s hearing. 

Are there private companies that could offer NEC service that 

Amtrak provides today? Many claim there are. But as history has 

taught us, those entities will want to offer the services that are the 

most profitable and let the rest of the system wither. 

Even the parts of the system that may ‘‘turn a profit’’ will do so 

because the infrastructure is Government-supported. Besides skimming a profit for their shareholders and, yes, CEOs, I simply don’t 

see what we are getting in return for bidding out the world’s most 

prized and complicated transportation corridor. 

Many criticize Amtrak and liken it to an old-school Soviet passenger rail system. Those critics are not paying attention. And by 

the way, today Russia is planning for the future by developing a 

250-mile-per-hour service between St. Petersburg and Moscow. 

They are investing three times what our Government invests in 

rail as a percentage of their economy. 

And more to the point, the Amtrak that the critics disparage simply does not exist today; and unlike some of its predecessors, the 

current management actually is bringing forward a vision for the 

future, and doing so in partnership with its employees. 

Despite years of shoestring budgets, including many attempts to 

force a shutdown, Amtrak and its workers continue to push forward. Amtrak set ridership records in 7 of the last 8 years and is 

performing better than at any time in its history. The NEC service 

is booming. I won’t let any of the privatizers, carrying their bias 

and incomplete analyses of what true costs are, pretend otherwise 

simply because they can’t get their head around the idea that a 

Government-sponsored entity can succeed. 

Intercity rail addresses today’s transportation challenges. It provides convenience, reduces congestion on major corridors, and does 

so sustainably, helping to promote better local air quality and reduce greenhouse gas emissions. It is no coincidence that privatization advocates conveniently leave out these public benefits when 

they analyze the facts. 

We are not opposed to private sector participation on the NEC. 

In fact, we embrace it. Many of our members work for private industry. But we are opposed to privatizing Amtrak’s NEC operations 

and breaking it up. When you strip Amtrak of its most lucrative 

system, you doom the national system. And be real clear: For some, 

that is exactly their plan. 

Let’s not pretend that replacing Amtrak’s corridor operations 

would be an easy undertaking. Seven commuter rails, seven 

freights, and Amtrak operate over a nine-State region. Amtrak 

does the dispatching for all 15 of those carriers. It is a risky business to fragment these operations by doling out complicated aspects 

of the system to private bidders. 

The NEC region represents 20 percent of U.S. GDP every year. 

Every day on the corridor, 700,000 people use commuter rail. 

124 

Whatever Congress decides, it should not create chaos in a system 

that is central to our economy and serving the people well. 

Amtrak has unveiled its next-gen high-speed rail vision, and for 

part of that plan to work, Amtrak must operate the trains and 

maintain the system and equipment. That is our view. And it has 

proven its ability to provide safe, reliable service even in the 

leanest of times. 

The alternative is letting the system go the way British Rail 

went, and see how good that worked out. Fares jumped. Safety declined. People died. And of course, jobs were cut. And a decade 

later, British Rail looks a lot like Amtrak does today. 

Some have even criticized all passenger rail funding entirely. 

Clearly, they are unaware that trillions are spent in America and 

around the world building, expanding, and maintaining infrastructure. The purpose of the world’s transportation system isn’t simply 

about the profit of the system itself. It is about the goods and the 

people it moves and the jobs it creates and the productivity and the 

wealth that it creates across the economy. 

The private sector has a vital role to play, for sure. But an experimental free-for-all that puts jobs or the economy at risk we believe 

is a bad idea. We stand ready to work with this committee for a 

true public/private partnership on the NEC that recognizes our 

members’ contributions, but also maintains Amtrak as the centerpiece of high-speed rail in the Northeast Corridor. 

Thank you. 

Mr. SHUSTER. Thank you very much, I think, Mr. Wytkind. Wishful thinking. In 1970, I wonder where you would have been when 

we deregulated the freight rail system in this country. If you had 

made that same argument, your brothers and sisters in the private 

sector would have been making the same amount of money as your 

brothers and sisters in Amtrak make today. That is less money. 

Mr. WYTKIND. That is apples to oranges. Different point, wrong 

issue. 

Mr. SHUSTER. Second of all, I’m not cherry-picking. I put in 

PRIIA two losing lines, losing money. That is not cherry-picking. 

Mr. WYTKIND. You’ll be surprised we just disagree on that. 

Mr. SHUSTER. And third, I want to put in for the record that the 

Government of Great Britain is not taking away, necessarily, the 

western line from Virgin Rail. They are going through a bid process. They are the most profitable. They are giving back the Government £100 million this year, $163 million. So it is the most profitable system over there. And I certainly disagree with what you said 

on safety. 

But with that, I yield to the chairman for questions. 

Mr. MICA. Well, thank you. I will just ask a couple of questions, 

and Members, too. We were just notified there are going to be 

about an hour and a half or two hours of votes coming up, so I will 

try to be brief and ask a couple. Maybe we can get everyone in 

here, and then assemble a roundtable later on so we don’t keep 

people too long today. Maybe we can accommodate folks. 

Let’s see. Mr. Jayanti, you testified today that you think the private sector, without an outlay of cash but with a RRIF loan, could 

institute high-speed rail without significant Federal subsidization 

125 

or any. I wasn’t sure of the terms. But you believe that could be 

done. 

And how soon do you think you could get service? I am trying 

to do it in a third of the time, as opposed to the 30-year outline, 

$117 billion initial proposal by Amtrak. Again, could you just summarize what you think you could do? 

Mr. JAYANTI. Yes. Thank you, Mr. Chairman. I think that, as I 

mentioned earlier, there are significant private sector dollars that 

are available for investment in the corridor infrastructure. I believe, as chairman of the subcommittee Mr. Shuster said earlier, 

there are some critical infrastructure investments that need to be 

made that can be made within that 10-year timeframe and will 

substantially reduce trip times. 

So to your vision of providing true high-speed rail on the corridor 

within a 10-year time period, I think that is achievable. 

Mr. MICA. We heard two representatives from labor. And the 

facts are, if this is a record of success, again, I think we pointed 

out from Amtrak’s own reports, 1977, 10.6 million passengers; in 

2010, in the Northeast Corridor, 10.5. When I came to Congress, 

Amtrak had 29,000 employees. They have 19,000 now. To me, that 

is a record of failure. It is a record of labor leaving their employees 

behind and not really maximizing the asset that we have. 

Mr. Goetz, do you think we have the possibility? I gave one illustration, and of course, what we want to do is not adopt any failing 

efforts, whether it is in Europe or Asia, but there are models, don’t 

you think, that we could adopt? You heard that one line that we 

brought forth the exact figures on; again, from London to Manchester, we went from 2,500 employees in 2004, I believe it was, 

to this year, and we have 3,800 employees, all union-represented, 

all making better wages. 

Don’t you think that that’s possible, to increase employment, to 

model after successful models, and that people have done this before? 

Mr. GOETZ. Well, yes. We certainly do. But my comments are 

mostly directed at the construction side of this, as opposed to the 

operational side. And I don’t know if those—— 

Mr. MICA. But it can be done? 

Mr. GOETZ. Oh, yes. Yes. I just don’t know if those job losses—— 

Mr. MICA. And again, guaranteeing labor and protecting the public position. 

Mr. GOETZ. Right. 

Mr. RICHARDSON. Mr. Mica—— 

Mr. MICA. Wait a second. Mr. Bonilla had his hand up. 

Mr. BONILLA. No. I was just—— 

Mr. MICA. OK. I was just—all right. Well, again, I want everybody to have an opportunity—— 

Mr. WYTKIND. Could I try to answer that for the labor movement? Is that possible? 

Mr. MICA. Well, I didn’t recognize you. And I want to give Ms. 

Brown and others the opportunity to—— 

Mr. SHUSTER. I’m going to—when my question comes, I want to 

hear the answer. I am looking forward to that answer. 

126 

What we are going to do is yield 5 minutes to the ranking member, and then from there on, 2 minutes to Members because we 

want to get as many questions as we can in. 

Ms. BROWN. Let me just be clear. I want to put into the record the copy of Secretary LaHood’s announcement of where the $2 billion from Florida—where it went. I want that for the record. And 

I also want to put in the record the comprehensive study that was 

done between Orlando and Tampa, and showing that it was a profitable route. 

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Ms. BROWN. In addition to that, I am going to let Mr. Wytkind 

respond. But I have an additional question for you. The high-speed 

rail discussion by Mr. Bonilla said that Amtrak would cost a subsidy of $353 per passenger. Can you respond to that in your response? 

Mr. WYTKIND. Thank you, Ms. Brown. Yes, I would love to. I was 

fascinated by Mr. Bonilla’s testimony, actually. A couple points. 

If you were to judge our transportation system based upon its 

profitability throughout the system, whether it is rail, transit, aviation, whatever the mode may be, and only ran in support of the 

system that ‘‘made money,’’ we would all have to have limousine 

service to get around town because there would be no transportation system anywhere in the country that runs. 

Two, Mr. Bonilla talked about pay for performance. I wonder 

whether he would support pay for performance for Wall Street 

execs who almost ruined our economy, and continue to make a lot 

of money today after doing so. So I wonder if those standards apply 

to both rank-and-file employees and to execs at Wall Street firms. 

Lastly, on the issue of how you define cost, the cost of our system 

is a cost that has to be borne with support from the Government. 

There is no transportation system in the world that doesn’t get significant Government support. All these so-called private models 

that continue to be pointed out by some of our witnesses and by 

members of this committee, all of those private models have significant, in some cases billions of dollars, in Government support as 

the underlying and underpinning principle for making them work. 

So it is a complete fallacy to say that you can run this thing as 

a purely private sector-based initiative. 

Regarding the comment and question that Mr. Mica asked, I 

think the direction of this debate needs to be pointed at the inability of Congress, throughout Amtrak’s entire history, to fund the enterprise. It is the classic starve-the-beast philosophy. You give the 

beast about half of what it needs, ask it to succeed, and then blame 

it for not succeeding 30 years later. 

The answer to the question is, when is Congress finally going to 

fund Amtrak at the level that it needs to run a real national system in the Northeast Corridor? Until that happens, there is no way 

you are ever going to have an oversight hearing where you are all 

happy about the performance because you continue to chronically 

underfund the company and then expect it to do wonderful things 

for the American people. 

Ms. BROWN. Thank you. Thank you. Let me just say that—I need 

to say something about this committee because this committee has 

always worked together. And we realize that this committee is really the engine. Without infrastructure, you don’t have jobs. Every 

billion dollars we invest, we generate 44,000 jobs. And the way we 

have to grow the economy is through infrastructure investment. 

Now, Mr. Mica, I want to summary to say that I am for a roundtable discussion, but not just with the players that we have in the 

room and not with a narrow focus. You are just interested in the 

Northeast Corridor; I am interested in the Sunset Limited. I want 

to see what private groups want to take it from New Orleans to 

Orlando. 

135 

There are many options out there, long distance. So when we 

have this discussion, it needs to be a comprehensive discussion on 

how we are going to move transportation in this country. We are 

not competing in Florida with Georgia and Alabama, my friends. 

We are competing with the Chinese that will put $350 billion into 

the system. 

And so, basically, if we are going to be there in competition, we 

have got to invest in infrastructure. When we are talking about the 

reauthorization, are we going to put the money in rows? That is all 

I hear. 

But the point of the matter is that in Orlando, folks that don’t 

understood Central Florida, we have got eight lanes. One more 

lane than the Governor come up here and discuss won’t help us. 

One more lane won’t help us in Florida. We have got to come up 

with a comprehensive way to move people, goods, and services so 

we can be competitive with the rest of the world. 

Mr. HART. Ranking Member—— 

Ms. BROWN. Mr. Hart, but I think—— 

Mr. HART [continuing]. Can I be recognized? 

Ms. BROWN [continuing]. Someone else raised his hand that 

wanted to respond. 

Mr. HART. Could I be recognized? May I be recognized? 

Ms. BROWN. All right, Mr. Hart. 

Mr. MICA. You have got about a minute. 

Mr. HART. Yes. One minute. 

Ms. BROWN. He get only 30 seconds of my time. Someone else 

wanted part of it. 

Mr. SHUSTER. [presiding.] You have 30 seconds. 

Mr. HART. Thank you. I want to agree with the ranking member 

that the Reason Foundation does have blood on its hands for killing the Florida high-speed rail project. That was a model project 

that did have bipartisan support. Even the chairman tried to save 

that particular project. It would have established a model for public/private partnerships that we could have built on as we looked 

at the Northeast Corridor, the Chicago hub, and in California. 

But before the opportunity was given to the private sector to fill the gap for $300 million, the Governor took the deal off the table 

and wouldn’t even give the private sector an opportunity to show 

that it was prepared to meet the burden of risk and financing for 

that program. 

Ms. BROWN. On that point, let me tell you, I have met with the 

private sector, and they are reluctant to invest their money since 

you are dealing with a partner that is not stable. The patient is 

on life support constantly. You invest your money, your dollars, 

and then when it is time to go to the table to do the project, well, 

you get one person saying, we are not going to do it, even though 

the legislature and the Congress have voted for it. 

Mr. SHUSTER. The gentlelady’s time is expired. 

Ms. BROWN. I have one question for Mr. Bonilla. 

Mr. SHUSTER. Well, we can submit it for the record because your 

time is expired. We are going to move on to other Members because 

we have votes here soon. 

So anybody over on our side have a question? Mr. Meehan, go 

ahead. 

136 

Mr. MEEHAN. Thank you, Mr. Chairman. And let me just begin 

my quick comment by recognizing a point Mr. Wytkind made, 

which is we are getting ready to invest in transportation on the 

highway system in which most of that money from the Federal, 

State, and local government is investments of government that underscore the transportation that everybody uses every day in their 

automobiles. 

But I have a question. I just need to have some understanding, 

Mr. Jayanti, because I don’t understand the economics of the idea 

of separating the operation of a rail system from the infrastructure 

of a rail system, presuming that the proceeds that drive the system 

generally go to the operation and the ticket prices. 

So how do you finance and make profitable simple construction 

and maintenance of infrastructure? 

Mr. JAYANTI. Thank you, Mr. Meehan. It is relatively straightforward. The infrastructure manager charges access fees for those 

companies that run trains over its infrastructure. 

Mr. MEEHAN. But that is going to increase the cost of tickets and 

other kinds of things. Right? 

Mr. JAYANTI. No, it will not. In fact, it will do the opposite because what you will do is attract additional passenger rail service 

providers to use the corridor. Today, the corridor—there are sections of the corridor where Amtrak is running four passenger 

trains per hour, when you could, in fact, with some infrastructure 

investment, run up to 30 or 40 trains per hour on the same infrastructure. 

So there are possibilities to both increase the revenue to the infrastructure manager as well as lower ticket prices for the citizens 

and traveling public who use it. This also will create jobs. It is not 

privatization because the Federal Government continues owning 

the infrastructure asset. It is a very different hybrid model of public/private partnership. Thank you. 

Mr. MEEHAN. Thank you. Mr. Chairman, in the interest of the 

questions, I yield back. 

Mr. SHUSTER. Thank you very much. We are going to get votes 

called here in about 5 minutes, so we will be here probably another 

10 minutes, 15 at the most. 

Ms. Richardson, you are recognized for 2 minutes. 

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

First of all I would like to refer to one of my colleagues who 

called Amtrak and the Postal Service a failure. I would like to suggest, take a look at Wall Street and car manufacturers. If we could 

give them a bailout, certainly we can support our own rail system 

and our postal system. 

Next, Mr. Jayanti, if you could briefly answer my question. You are proposing that the Federal Government would provide $25 billion up front in the form of Federal subsidized loans, which the 

Federal Government would have to borrow, so that you could invest 

in other financial instruments? Is that what you are suggesting? 

Yes or no. Just yes or no. I think you said it in the testimony. Yes 

or no? 

Mr. JAYANTI. Yes. My testimony stands. 

Ms. RICHARDSON. OK. I would like to say, I am sure Amtrak and 

a whole lot of other people could use $25 billion up front to invest 

137 

in the way that they should. I just find this witness is just really, 

in my opinion, not appropriate for this panel. 

My second thing: Mr. Bonilla, is your position to support Buy 

America? Should we develop high-speed rail in the Northeast Corridor? 

Mr. BONILLA. You have to—— 

Ms. RICHARDSON. Yes or no? 

Mr. BONILLA. Maybe. 

Ms. RICHARDSON. Yes or no? 

Mr. BONILLA. Should we support high-speed rail? If it is profitable and if it is done properly. 

Ms. RICHARDSON. No. My question, sir, was what is your position 

on whether we should use Buy America, and should it apply with 

the development of high-speed rail? Yes or no? 

Mr. BONILLA. Not necessarily. 

Ms. RICHARDSON. Thank you. 

OK. My last question, and I need it to be brief, Mr. Bonilla. Do 

you believe that the work of high-speed rail should be covered 

under the Railway Labor Act and the Railway Retirement Act? Yes 

or no? Yes or no? 

Mr. BONILLA. I think that is a foregone conclusion. 

Ms. RICHARDSON. Yes or no? 

Mr. BONILLA. Yes. 

Ms. RICHARDSON. Thank you. 

I yield my remaining 16 seconds to the ranking member, Ms. 

Brown. 

Ms. BROWN. Mr. Bonilla, I want to just ask you one question. Do 

you support intercity commuter rail, Sun Rail? Yes or no? You? It 

was your company—— 

Mr. BONILLA. Do I support intercity commuter rail? 

Ms. BROWN. Sun Rail in Central Florida. Do you support—— 

Mr. BONILLA. Oh, no. 

Ms. BROWN. OK. I want Mr. Mica to be here to know that because he certainly support it. 

Mr. SHUSTER. The gentlelady’s time is expired. 

Ms. BROWN. It is a project that we worked on for 7 years. 

Mr. BONILLA. We are aware of that. 

Mr. SHUSTER. The gentlelady’s time is expired. Her Governor is 

making her very upset here today, and has been for a couple of 

months. 

Mr. BONILLA. I am glad I wore my Kevlar suit. 

Mr. SHUSTER. I now yield 2 minutes to the gentleman from New 

Hampshire, Mr. Guinta. 

Mr. GUINTA. Thank you, Mr. Chairman. Thank you all for being 

here today, and I appreciate the different perspectives that we 

have from each and every Member who is testifying. 

I had a couple of questions for Mr. Wytkind. Thank you again 

for coming. I listened to your testimony, and it seemed pretty clear 

that you are advocating, and quite frankly suggesting, that without 

any additional dollars, we can have a real problem with long-term 

sustainability. 

I don’t disagree with that. I guess where may be I disagree is 

why would it be your position that private sector money should be 

excluded from those investments that need to be made? 

138 

Mr. WYTKIND. Well, thank you for the question. There is not a 

single word in my testimony that would even imply that I don’t see 

a role for the private sector. Understand, I represent 32 unions in 

the private and the public sector. Our members do everything you 

can possibly imagine to make our transportation system work. 

My testimony today is focused on not breaking up into pieces and 

privatizing Amtrak either on the Northeast Corridor or anywhere 

in the country because I believe Amtrak is the premier high-speed 

rail provider in this country. And if given the resources, which it 

never has had for 30-plus years, it can succeed because it has the 

best railroad workers in the world who perform the functions of operating and maintaining the system. 

That is the focus of my testimony. There is not a single word in 

here that suggests that the private sector shouldn’t be brought to 

the table. In fact, quite the contrary. It needs to be brought to the 

table because that is the way we are going to develop passenger 

rail, and frankly, all transportation in this country, is with a very 

robust private sector role. 

Mr. GUINTA. So you are in favor of some private sector dollars. 

On the public side, and I know my time is expired so if you can 

answer very quickly, where would those dollars come from, given 

the state of our economy? 

Mr. WYTKIND. Well, I think there needs to be priorities finally 

made about the need to invest in transportation. It is why I work 

so hard up here in this committee to help the leadership pass a 

surface transportation bill. We are falling behind the rest of the 

world. 

We are running a transportation system in the year 2011 on a 

1980s budget, and we wonder why it is failing. It is because the 

Congress needs to step up to the plate and invest more money into 

the entire system. 

Mr. GUINTA. Thank you. 

Mr. SHUSTER. The gentleman’s time is expired. 

The gentlelady from Florida, 2 minutes. I am going to enforce it 

strictly. 

Ms. BROWN. Yes. I want to put in the record this news article 

that I just got, ‘‘Privatization Fails to Cut Rail Costs.’’ I want to 

be clear. This is another instance. I believe in the private/public 

partnership, and I believe that is the way we have got to go as far 

as investments. But I do not agree that we need to destroy Amtrak. 

Amtrak is the leader at the table. And let me just tell the people 

in this room: We, as Members of Congress, will not decide who are 

the partners. That is the role of the administration, to be clear. 

And so people put in bids. They make decisions through that mannerism. 

We don’t pick the winners and the losers, who is going to do 

business with the Federal Government. We come up with the broad 

scope, and then privates make that decision. And we had 90 percent of the funding in Florida, and we had eight companies that 

were ready to be that 10 percent. It was 100 percent funding, for 

the information of the people in this room, 100 percent of our gasoline tax that we sent to Washington, that we were able to work in 

a bipartisan manner and send it back to Florida. 

139 

And let’s be clear. We have lost close to 60,000 jobs with a city 

and a community that has 11 to 15 percent unemployment. It is 

criminal what happened with the taxpayers’ dollars in Florida. And 

in 3 years, we are going to change that. 

And let’s be clear. All this talk about what we need to do about 

waste, the only waste is how we waste those taxpayers’ dollars in 

Florida and sent the money to my colleagues in other places. And 

they are so very grateful for the contributions that Florida has 

made to increase their transportation system. 

So with that, I yield back the balance of my time. 

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Mr. SHUSTER. Thank you very much. 

The gentlelady from Washington. 

Ms. BEUTLER. Thank you, Mr. Chairman. And this for Mr. 

Wytkind. Am I saying that—Wytkind? OK. 

In your statement, you said, ‘‘Private sector companies simply 

cannot make a profit without Federal support.’’ Yet we have seen 

the example of Virgin Rail in the U.K., where Virgin makes a profit 

without Government subsidy, as well as other models. Can you 

maybe elaborate on your statement in light of that? 

Mr. WYTKIND. Sure. Thank you. Thanks for the question. 

The premise of the question is not accurate. In all of these socalled private models, whether it is Virgin Rail or, frankly, any 

other one around the world, there is a massive underpinning of 

public support to build the infrastructure. As Ms. Brown said, 

China is spending billions—— 

Ms. BEUTLER. Wait a minute. Let me add a clarification there. 

You said underpinning of public support, or public investment? You 

are talking about public investment? 

Mr. WYTKIND. Well, that is what I mean by support, yes. Public 

money. Our infrastructure in this country, like it is around the 

world, governments are badly outspending us because they believe 

it is part of their economic future. And anybody can find a particular route or system in our transportation network that can 

‘‘make money.’’ But most of that making money is above the rail, 

and everyone knows that. 

Ms. BEUTLER. So can you identify—— 

Mr. WYTKIND. And we conveniently ignore the infrastructure 

costs that the Government put money in. 

Ms. BEUTLER. Let me head in there because I am interested in 

this. Rails is something in Washington State we utilize, whether it 

is passenger rail, freight rail, or possibly a high-speed rail. I have 

not seen an area where it makes money, or even pencils. Can you 

provide for me and for this committee some examples? Is that possible? 

Mr. WYTKIND. Well, that is the point I made in my testimony. 

There really is very little in our transportation system when it 

comes to our infrastructure that ‘‘makes money.’’ I know that Amtrak, which should have been a witness here today since they run 

the Northeast Corridor, makes money on the Northeast Corridor 

above rail. It ranges from 40, 45 cents to, I think, 75 to 80 cents 

on the dollar. That is pretty good metrics. But they weren’t invited 

here to provide those metrics for you. The truth is that they have 

the ability—— 

Ms. BEUTLER. I am sorry. I am out of time. 

Mr. SHUSTER. Finish your thought. 

Mr. WYTKIND. No. What I was going to say is there is a way to 

‘‘make money’’ and make some profit out of certain routes, certain 

systems within our transportation network. But the underpinning 

of the costs is the long-term infrastructure maintenance and other 

development costs that go into it. And without a robust Government role, it is an absolute losing proposition. 

Mr. SHUSTER. And the proposal that is coming forward is still 

going to include public sector money—— 

Mr. WYTKIND. Right. 

144 

Mr. SHUSTER [continuing]. Making those investments. But we are 

talking about, where you can recoup those costs, we should do it. 

And then the British Rail model, Virgin Rail, is doing just that and 

actually turning it back, creating jobs, too, union jobs, I might add. 

Mr. Bucshon from Indiana, 2 minutes. 

Dr. BUCSHON. Thank you. I have just a couple questions, basically for anyone on the panel. And I will just go down the line. 

Where do you think we should get the money to fund this stuff 

when the Federal Government is broke? Quickly. 

Mr. BONILLA. You have no options. You either look to the private sector or you look to Amtrak and $117 billion. If you don’t look to 

the private sector, there is no funding opportunity. 

If I could—briefly, the comment was made earlier that we are 

falling behind the rest of the world in high-speed rail. That may 

be true, but we don’t know if the rest of the world is racing off a 

cliff. 

Dr. BUCSHON. OK. Just go down the line. Because this is a problem not only in infrastructure but in a lot of things we are dealing 

with right now in the Federal Government. Where are we going to 

get this money? I am interested in people’s ideas. 

Mr. JAYANTI. I think it is easy to ask the Government for more 

money and more money and more money. We have heard that Amtrak has received over $38 billion in the last 40 years and is still 

requiring a billion and a half a year. 

Dr. BUCSHON. Well, let’s make the presumption that the Federal 

Government is broke and that we don’t have any money to hand 

out. So if that is the case, with that premise, where are we going 

to get the money for infrastructure? 

Mr. JAYANTI. You need the private sector. 

Dr. BUCSHON. Mr. Richardson? 

Mr. RICHARDSON. In order to get the private sector involved, you 

need to look at the stations and the locations and the destinations 

that you are creating. If you create strong destinations and service, 

you are going to increase your ridership and your revenues, and 

you will get private investment to come in to build developments 

around those stations, which will increase the tax coffers of the 

local communities and the States. 

Dr. BUCSHON. Mr. Hart? 

Mr. HART. Yes. Transit-oriented development is important. It is 

a source of revenue. So is competition. Amtrak should not be the 

only one operating trains on the Northeast Corridor. The infrastructure can be maintained, and there can be access fees provided. 

We can get capital from the private sector if the political dynamic 

is balanced and there is some certainty and continuity in our plan. 

There is $500 billion available for that. 

Dr. BUCSHON. I am going to move on to the last two. I am running out of time. 

Mr. GOETZ. Public/private partnerships. I think we need to get 

the private sector involved. 

Dr. BUCSHON. And Mr. Wytkind? 

Mr. WYTKIND. Well, I guess you won’t be surprised to hear I 

don’t think the Federal Government is broke. It just needs to 

reprioritize how it spends its money, and transportation needs to 

be—— 

145 

Dr. BUCSHON. Totally valid. 

Mr. WYTKIND [continuing]. A higher priority than it has been in 

the past. 

Dr. BUCSHON. OK. Thank you all. 

Mr. SHUSTER. Mr. Southerland is recognized for questions for 2 

minutes. 

Mr. SOUTHERLAND. I get pretty passionate about wasting taxpayer dollars. And we have made reference hr today about what is 

criminal. And I think what the American people are having to deal 

with right now is criminal. 

We often hear the raising China as the model. I have just got to 

tell you, we are financing their infrastructure. Pathetically negotiated trade agreements, where they have access to our markets 

and we don’t have access to theirs. That is criminal. 

And so Government regulation pushing down upon the family 

farm, pushing down upon oystermen and those that make their living working 20-hour days in the Gulf, trying to fish and perpetuate 

on boats that are being held together by paperclips, that is criminal. 

And so I just want to make sure that when we talk about that 

word, that we look no farther than what the American people right 

now are having to bear. To throw that word around—what I have 

seen here in 5 months sickens me. And I go home and I hurt with 

my people. That is criminal, what they are being made to bear. 

And so that is not a question, but that is a deeply held statement. Mr. Chairman, I yield back. 

Mr. SHUSTER. I thank the gentleman. 

Mr. Richardson, can you talk about some specific examples on investing along the corridor? Because I know that—I think it is in 

Hong Kong where they have invested in a station that is—that is 

the way they are making the money, or the bulk of the money, on 

the system. So I wonder if you could maybe talk about the Northeast Corridor or other places where we might make those investments to recoup our cost. 

Mr. RICHARDSON. Thank you. Our model pretty much—and let 

me give you an example. Let’s say if you took a station and you 

develop $100 million worth of commercial residential parking 

around the station or within the station itself, retail, et cetera. And 

you create a $10 million NOI on at that time, and then in addition 

to that you create a special tax district that took advantage of all 

the incremental increases of the taxes. 

You could probably raise another $10 million. So you basically have about $20 million a year to pay off a $100 million investment. 

Based on that, you would pay it off in less than 6 years. That $10 

million can then go back into the operation costs of the stations, 

and go back into infrastructure; and also, the other $10 million of 

the tax district goes back into the State coffers. 

You take and you can do multiple stations along a corridor, and 

you create the continuity and you create the branding between all 

these stations, and naming rights, and you increase more revenues. 

And that is where we should take advantage of those opportunities. 

Mr. SHUSTER. For example, taking the 30th Street Station in 

Philadelphia and building an office tower above it, or is that kind 

of—— 

146 

Mr. RICHARDSON. Absolutely. That is one thing we don’t do right 

now, and a lot of Amtrak stations you go in and you see a big hall. 

You don’t necessarily see the retail shoved back in a corner somewhere. It is not out in front. It is not taking advantage. 

So I understand the fact that you want to move people in and 

out of the stations. But it is the same thing as our airports; when 

they added the retail into the airports, it started creating revenues 

and started helping the operation costs of the airports themselves. 

So there is a tremendous advantage in the TODs and how to leverage them and get private investment in there. 

Mr. SHUSTER. Mr. Jayanti, can you comment on the British system, how they have gone about it, specifically Virgin Rail? And the 

East and the West Coast—the East Coast line is run by a Government entity, and I understand it is not profitable; and the West 

Coast line is Virgin Rail, and Virgin Rail actually have separated 

it three ways. There is an infrastructure company, there is a rolling stock company franchise, and then there is the operations side. 

In your plan, it doesn’t separate it out that way. Is that correct? 

And can you comment on that British model? 

Mr. JAYANTI. I can’t comment specifically on the British model. 

I can submit some facts for the record separately. But under our 

plan, the infrastructure is separate from passenger train service 

provision, and the infrastructure has a long-term investment plan 

attached to it which results in the ability to provide better service 

for the train ridership and I think will actually result in lower 

costs. 

Mr. SHUSTER. Good. Thank you. 

And Mr. Wytkind, come back to you on 29,000 and 19,000. Have 

at it. 

Mr. WYTKIND. We think that 19,000 should be 119,000. And if we 

actually invest—— 

Mr. SHUSTER. So you would agree to a Government mandate that 

we made it 119,000? 

Mr. WYTKIND. Yes. I could endorse that today. 

Mr. SHUSTER. I figured that. 

Mr. WYTKIND. The issue of—it is all related. It is the point I was 

making 10 minutes ago. We have underinvested in the enterprise 

by a lot, and that has led directly to the job creation or job loss 

issue at the company. The company has never been even—rarely 

has it ever even been fully funded, as authorized by this committee. It is always scrambling to come close. And so it is an underfunded enterprise, and then it is told it is a failure at the end of 

the process. 

So I think if we fully fund at this and give it a chance to compete 

as a centerpiece of high-speed rail, that 19,000 figure will boom off 

the charts. 

Mr. SHUSTER. So it is all about funding. It has nothing to do with 

mismanagement or contracts, labor contracts that don’t give us the 

flexibility to do things? Because when you look at Amtrak and you 

look at the concessions, they lose money. And it is a monopoly. I 

can’t stop at the local—put my hand out the window and get a 

Coke while I am going by. I have got to go to the rail car, the beverage car, and get my food there. 

147 

So how are they not able to do that? Isn’t that a mismanagement 

problem? 

Mr. WYTKIND. Well, my submitted testimony said—I have had a 

lot of differences with previous Amtrak management, and we have 

had a lot of problem with previous managers who didn’t really 

treat their employees right, and frankly, the way they managed 

collective bargaining wasn’t as good as it could have been. 

But the current leadership is attempting to transform the company, and it is now competing vigorously in the States to try to 

provide some of the higher speed rail that some of the States want. 

It has appointed a new person to oversee that area. And it has repaired the worst labor-management relations I saw in my career 

when Joe Boardman took over the company. The way it repaired 

it is that it became a collaborative process from the floor all the 

way up. 

And it is just a different kind of company. Perhaps we can give 

it a chance to succeed with the right level of funding. 

Mr. SHUSTER. He got a contract, too. That helps out a good deal, 

I am sure. 

Mr. WYTKIND. Well, obviously, collective bargaining is about—— 

Mr. SHUSTER. Now, I made the statement about the freight rails. 

I made the statement about the freight rails, and you said, ‘‘That 

is apples to oranges.’’ I get it. Freight is different than passengers. 

But it is still running an operation. The private sector in America 

versus everywhere else in the world, they make a profit. It doesn’t 

require the Government to put forth huge subsidies for operations. 

Mr. WYTKIND. But not in the public transportation of people. It 

is not—— 

Mr. SHUSTER. But why is that? Why can’t that be? Because we 

have never really tried it. 

Mr. WYTKIND. Because it is a worldwide problem. 

Mr. SHUSTER. We have never tried—but no, no, no. 

Mr. WYTKIND. You cannot—— 

Mr. SHUSTER. That’s right. The Governments control it. So why 

don’t we try a different mode? 

Mr. WYTKIND. No. The problem is the railroads got out of the 

business because they couldn’t make money doing it. 

Mr. SHUSTER. Why is that? 

Mr. WYTKIND. Bring the freight railroads up here to explain that. 

Mr. SHUSTER. I don’t need them here. I know the history. 

Mr. WYTKIND. Because in the 1960s they were going broke. 

Mr. SHUSTER. The issue is the interstate highway system and the 

airlines started to transport people. And people wanted to fly, and 

people wanted to drive cars on these new modern highways. That 

is what happened. 

Now things have changed in this country. We have recurring congestion. The Senator said earlier we went from 200 million to 300 

million people over 60 years. We are going to go from 300 million 

to 400 million people in 30 years. 

Mr. WYTKIND. Right. 

Mr. SHUSTER. We have got to figure out better modes of transportation. But we are not going to be able to expand I–95, so we 

need passenger rail. So would you agree that we should focus on 

the Northeast Corridor? Would you at least agree with me on that? 

148 

Focus on the Northeast Corridor, to make that a high-speed rail 

corridor. 

Mr. WYTKIND. We also believed you should focus on the Northeast Corridor. But don’t ignore all the other highly successful corridors that will even be more successful if you give them a chance 

to have higher speed service. 

Mr. SHUSTER. Do you support what the President did, just sprinkling money everywhere and having no real impact? 

Mr. WYTKIND. I supported what the President did. The $8 billion probably should have been $80 billion. But Congress wasn’t going 

to give that kind of money to high-speed rail. My point is, you get 

what you pay for in this country. If you underinvest in transportation, then you get a lousy transportation system. That is to me 

what the problem is. 

Mr. SHUSTER. Unfortunately, it is not always ‘‘you get what you 

pay for.’’ Sometimes you pay for things and you get lousy service. 

You get lousy management. You get things that you paid for but 

don’t get a return on. That is what I think we have got—— 

Mr. WYTKIND. Well, poll the Acela riders. They will tell you they 

are not getting lousy service. They are getting really good service. 

Mr. SHUSTER. Well, they could get better service. 

Mr. WYTKIND. I couldn’t agree with you more, and I would like 

to work with you to get that done. 

Mr. SHUSTER. And we have to focus. We just can’t keep spending 

money and spending money or we will end up going down the 

tubes. The Chinese are—— 

Mr. WYTKIND. I think we are going to go down the tubes if we 

don’t spend money. That is the problem. 

Mr. SHUSTER. We have got to spend it the right way. That is 

what we need to do. 

With that, we still haven’t got votes called. 

Ms. BROWN. Yes. And I would like—— 

Mr. SHUSTER. You may have 2 minutes. 

Ms. BROWN. Thank you. I know it is just 2 minutes. 

But let’s be clear, Mr. Wytkind. One of the reasons why Amtrak 

could not pay the management is because Congress didn’t fund it. 

Remember, we got a Democratic Congress, and we gave the money 

so that Amtrak could negotiate those prior agreements. It did not 

just happen. 

Amtrak did not have the money. Let’s be clear. Over the years, 

as you said, we have not given Amtrak the money that they needed. Someone asked about the Northeast Corridor. Let’s just be 

clear, Mr. Hart. There are 10 different services that run on Amtrak. And you have got all of those different communities. You have 

got all of those different mayors, different Governors. So they have 

to work together. 

Mr. HART. Absolutely. 

Ms. BROWN. And it is not anything we can just come in and take 

over the services. And let’s be clear. What the President did, the 

Department of Transportation, was based on what we pass in Congress. Let’s be clear. They didn’t just come up with it. We gave 

them the law and they implemented the law. 

And I do know certain people want just the Northeast Corridor. 

Well, I just want Northeast Corridor/Florida/Washington. We need 

149 

a comprehensive transportation system. And when someone sits up 

here and says the rest of the world is going over the cliff, I need 

to know what kind of research you are doing. Where did you go to 

school? Because everybody else feels it is important to invest in infrastructure transportation. 

You have people coming up here and saying, well, we don’t want the Government. But yet you are coming up here asking for $25 

billion for the RRIF loan. That is a Government program, for your 

information. You need to know it is a partnership between the Federal and the State and local and private. And that is what we need 

to do to get infrastructure moving in this country. And keep in 

mind, one model is the airports. The airports, we invest in the 

major infrastructure, and then different operators run the airports. 

So there is no form of transportation in this country that just 

runs on its own. We are in the business in Congress of picking winners and losers, and we had better make sure it is fair, or what 

happened in Wall Street will happen throughout the system. 

Mr. HART. We proposed models of nine countries that have successful public/private partnerships in operation right now. We did 

not highlight the Chinese system. So China is an example, but not 

the only example of profitable public/private partnerships in operation right now throughout the world. 

And we can do a similar type of public/private partnership that 

preserves Amtrak’s integrity, that preserves the labor, but also increases competition and provides a better service than we have 

right now. 

Mr. SHUSTER. Thank you, Mr. Hart. 

Mr. BONILLA. Mr. Shuster, if I might for a second? 

Mr. SHUSTER. Yes, sir. 

Mr. BONILLA. Department of Transportation a couple of years 

back put out a study talking about subsidies in different modes of 

transportation, and reported that road transportation has essentially no subsidy because we charge users a fee to build and maintain those roads. Air transportation has some subsidy, not as much 

as it looks because we collect passenger facility charges, fuel tax on 

aviation gasoline, and the highest subsidy was on rail. 

We are here because we don’t know how to pay for it and we 

don’t believe that the users are willing to use it enough if they 

have to pay the full cost of it. 

Mr. SHUSTER. All right. Understand. Thank you. It is my time 

now, and we are getting ready to finish up. They called a vote. 

A couple things, though. First of all, I have heard Wall Street get 

beat up a little bit here. Wall Street deserves to get beat up for 

what happened. But we should also remember a big, big player in 

our collapse were quasi-government institutions, Fannie and 

Freddie, that were encouraged by Congress and Presidents from 

both parties to loan money to people that couldn’t afford housing. 

And so beating up Wall Street is a thing we do in public a lot 

to folks. But we also have to remember, again, the history of it is 

that it is not just all Wall Street. We had a fair hand in it ourselves. 

And as we move forward, we need to look at different modes. 

There are Members on my side of the aisle that say, sell off all of 

Amtrak. Get rid of it. It has failed. There are those on this side 

150 

of the aisle and those on the panel that say, oh, you can’t. It is everywhere in the world. There is no possible way. 

Yet I believe it is possible. We have a freight rail system that 

works that way. We, I believe, could have a passenger rail system 

if we size it the right way, if we focus on the right areas of this 

country, that will use the system significantly. 

And I think we need to find a solution because of the increased 

population that we are going to experience and the increased competition we are going to experience in the world because we are 

seeing our transportation system begin to crumble and falter. 

We need to make significant investments. We have made investments in this country, spending taxpayers’ dollars that weren’t investments; they were poorly spent dollars on the stimulus spending. We should have spent most of that money on transportation 

and infrastructure. But we were not heard. Our voice was not 

heard on that. 

The other thing I want to point out is we keep getting reports 

from British newspapers, and if you know the British newspapers, 

most of them tell you right up front, they are liberal-leaning, conservative-leaning, because they basically editorialize; they don’t report in Great Britain. 

In the British Rail system, the West Coast line is being rebid, 

and they are going through the normal bidding process. There have 

been some delays and push-backs. But the West Coast line is successful over there. It is giving the Government money back. And 

I think that is a testament to what the private sector can do. 

And I think we ought to take a chance with that. We don’t have 

the money in this country to spend as Amtrak wants, $117 billion. 

We also don’t have the time to wait 30 years for that investment, 

their plan, to take hold. We can do it in a shorter period of time, 

and I think with robust involvement of the private sector—again, 

the public sector is going to be there; we are not going to stop contributing, I am certain of that. But having a new model to use, I 

think, is important. 

And we have to have a successful corridor, higher speed, highspeed corridor in this country or the American people are never 

going to buy it. We can all sit here and talk abut it and try to get 

labor to agree with me, and they won’t, that let’s get one thing 

right. 

We are not going to get it all right, all at the same time. Let’s 

get one-quarter correct. Let’s get high-speed rail in the Northeast 

Corridor. Then we can show the other corridors in this country, 

these are the problems we have faced, these are the ways we overcame them, these are the successes. Then we can roll it out 

through the country and let it spread organically into our rail system, compared to something that we try to impose on the American 

people. 

Again, I appreciate all the witnesses being here today. We do 

have votes. We have 9 minutes to get over there. Again, the chairman has said he will do a roundtable and we can continue this. 

And a roundtable, I have found, gets even more livelier than it has 

been here today. 

151 

But we are going to have to say that the gentlelady from Florida 

can’t talk about the Governor of Florida because she just gets too 

upset about it. I am concerned about her. 

Ms. BROWN. Keep in mind, I must have more partners at the 

table. 

Mr. SHUSTER. Well, you need to talk to the chairman about that. 

But again, appreciate everybody being here, and sorry that we 

didn’t have more time. Thank you very much. 

[Whereupon, at 12:32 p.m., the committee hearing was adjourned.] 

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