[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
A REVIEW OF AMTRAK OPERATIONS, PART II:
THE HIGH COST OF AMTRAK'S MONOPOLY
MENTALITY IN COMMUTER RAIL COMPETITIONS
=======================================================================
(112-102)
HEARING
BEFORE THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 11, 2012
__________
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
U.S. GOVERNMENT PRINTING OFFICE
75-849 WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected].
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
ANDY HARRIS, Maryland MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania GRACE F. NAPOLITANO, California
CHIP CRAVAACK, Minnesota DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas MAZIE K. HIRONO, Hawaii
LARRY BUCSHON, Indiana JASON ALTMIRE, Pennsylvania
BILLY LONG, Missouri TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio HEATH SHULER, North Carolina
PATRICK MEEHAN, Pennsylvania STEVE COHEN, Tennessee
RICHARD L. HANNA, New York LAURA RICHARDSON, California
JEFFREY M. LANDRY, Louisiana ALBIO SIRES, New Jersey
STEVE SOUTHERLAND II, Florida DONNA F. EDWARDS, Maryland
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
VACANCY
CONTENTS
Page
Summary of Subject Matter and ``Amtrak Commuter Rail Service: The
High Cost of Amtrak's Operations,'' by Oversight and
Investigations staff, September 11, 2012....................... v
TESTIMONY
Joseph H. Boardman, President and Chief Executive Officer, Amtrak 22
Joseph J. Giulietti, Executive Director, South Florida Regional
Transportation Authority....................................... 22
C.H. ``Chuck'' Harvey, Deputy CEO, Operations Administration,
Peninsula Corridor Joint Powers Board--Caltrain................ 22
Ray B. Chambers, Executive Director, Association of Independent
Passenger Rail Operators (AIPRO)............................... 22
Edward Wytkind, President, Transportation Trades Department, AFL-
CIO............................................................ 22
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Hon. Corrine Brown, of Florida................................... 50
Hon. Eddie Bernice Johnson, of Texas............................. 52
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Joseph H. Boardman............................................... 53
Joseph J. Giulietti.............................................. 68
C.H. ``Chuck'' Harvey............................................ 90
Ray B. Chambers.................................................. 104
Edward Wytkind................................................... 122
SUBMISSIONS FOR THE RECORD
Slides referenced during the hearing by Hon. John L. Mica, a
Representative in Congress from the State of Florida and
Chairman, Committee on Transportation and Infrastructure....... 4
Hon. Corrine Brown, a Representative in Congress from the State
of Florida and Ranking Member, Subcommittee on Railroads,
Pipelines, and Hazardous Materials, request to submit:
Letter from Joe McHugh, Vice President, Government
Affairs and Corporate Communications, Amtrak, to Hon.
John L. Mica, August 28, 2012.......................... 11
National R.R. Passenger Corp. v. Veolia Transp. Servs.,
Inc., 791 F. Supp. 2d 33 (D.D.C. 2011), verdict form,
filed May 10, 2012..................................... 13
Joseph H. Boardman, President and Chief Executive Officer,
Amtrak:
Responses to questions from Republican members of the
Committee on Transportation and Infrastructure......... 57
Responses to questions from Hon. Corrine Brown........... 61
Joseph J. Giulietti, Executive Director, South Florida Regional
Transportation Authority, responses to questions from Hon.
Corrine Brown.................................................. 85
C.H. ``Chuck'' Harvey, Deputy CEO, Operations Administration,
Peninsula Corridor Joint Powers Board--Caltrain:
Responses to questions from Republican members of the
Committee on Transportation and Infrastructure......... 100
Responses to questions from Hon. Corrine Brown........... 102
Ray B. Chambers, Executive Director, Association of Independent
Passenger Rail Operators (AIPRO):
Responses to questions from Republican members of the
Committee on Transportation and Infrastructure......... 110
Responses to questions from Hon. Corrine Brown........... 112
Edward Wytkind, President, Transportation Trades Department, AFL-
CIO, responses to questions from Hon. Corrine Brown............ 127
[GRAPHIC] [TIFF OMITTED] T5849.001
[GRAPHIC] [TIFF OMITTED] T5849.002
[GRAPHIC] [TIFF OMITTED] T5849.003
[GRAPHIC] [TIFF OMITTED] T5849.004
[GRAPHIC] [TIFF OMITTED] T5849.005
[GRAPHIC] [TIFF OMITTED] T5849.006
[GRAPHIC] [TIFF OMITTED] T5849.007
[GRAPHIC] [TIFF OMITTED] T5849.008
[GRAPHIC] [TIFF OMITTED] T5849.009
[GRAPHIC] [TIFF OMITTED] T5849.010
[GRAPHIC] [TIFF OMITTED] T5849.011
[GRAPHIC] [TIFF OMITTED] T5849.012
[GRAPHIC] [TIFF OMITTED] T5849.013
[GRAPHIC] [TIFF OMITTED] T5849.014
[GRAPHIC] [TIFF OMITTED] T5849.015
[GRAPHIC] [TIFF OMITTED] T5849.016
[GRAPHIC] [TIFF OMITTED] T5849.017
[GRAPHIC] [TIFF OMITTED] T5849.018
[GRAPHIC] [TIFF OMITTED] T5849.019
[GRAPHIC] [TIFF OMITTED] T5849.020
[GRAPHIC] [TIFF OMITTED] T5849.021
[GRAPHIC] [TIFF OMITTED] T5849.022
[GRAPHIC] [TIFF OMITTED] T5849.023
[GRAPHIC] [TIFF OMITTED] T5849.024
[GRAPHIC] [TIFF OMITTED] T5849.025
[GRAPHIC] [TIFF OMITTED] T5849.026
[GRAPHIC] [TIFF OMITTED] T5849.027
[GRAPHIC] [TIFF OMITTED] T5849.028
[GRAPHIC] [TIFF OMITTED] T5849.029
[GRAPHIC] [TIFF OMITTED] T5849.030
[GRAPHIC] [TIFF OMITTED] T5849.031
[GRAPHIC] [TIFF OMITTED] T5849.032
A REVIEW OF AMTRAK OPERATIONS, PART II:
THE HIGH COST OF AMTRAK'S MONOPOLY
MENTALITY IN COMMUTER RAIL COMPETITIONS
----------
TUESDAY, SEPTEMBER 11, 2012
House of Representatives,
Committee on Transportation and Infrastructure,
Washington, DC.
The committee met, pursuant to notice, at 10:11 a.m. in
Room 2167, Rayburn House Office Building, Hon. John Mica
(Chairman of the committee) presiding.
Mr. Mica. I would like to call this meeting of the House
Transportation and Infrastructure Committee to order. Welcome,
everyone, this morning. Somber day of the 11th anniversary of
9/11, but we appreciate everyone's attendance this morning.
We will recess this hearing at approximately 10:45, and
then return. There is a ceremony on the Capitol steps for
Members until approximately 11:30. It is my intention to try to
reconvene at 11:30, sharp as possible, in getting Members back.
So maybe we can get through opening statements and the opening
comments from our witnesses.
So, again, welcome, everyone. The order of business will be
opening statements by Members, and then we will turn to our
witnesses. And how many panels do we have today, folks? One?
One panel. OK. So, welcome to witnesses, and we will hear from
you. We will defer questions until we return, so everyone will
have a chance to make their presentation and then begin
questions after that memorial service recess.
This morning the title of the hearing is ``Amtrak Commuter
Rail Operations: The High Cost of Amtrak's Monopoly.'' That is
the title of the hearing, and this is the second in a series of
at least three hearings that we will be conducting. And
appreciate Mr. Shuster's cooperation, Ms. Brown's cooperation,
Mr. Rahall, holding these committees at the--holding these
hearings at the committee full level. I think it is a--these
are very important issues. And I think that Amtrak deserves the
full attention of the full committee.
First of all, I preface my remarks by saying I am a strong
supporter. In fact, I have been called one of the cheerleaders
for not only transportation, but also for rail, passenger rail
service, in the United States of America. I believe that where
the systems can meet the needs and make sense and have good
routes and service, they are an excellent investment of
taxpayer funds. I have said before if we didn't have an Amtrak
we would need an Amtrak to decide routing and to--also to
ensure that we have national service, which I also support.
I might say I am also a strong supporter of the fine men
and women that work at Amtrak. We have thousands of employees
who go to work every day, do a great job. I am also fully
committed to making certain that their labor agreements are
adhered to, and that they receive full compensation and
benefits according to the agreements they have received.
I preface those remarks, because sometimes people say that
I don't favor passenger rail service or a national system or
have it in, in some way, for Amtrak. And it is quite the
opposite. We should make Amtrak a success story. But we have
got a ways to go.
And I appreciate the service of Mr. Boardman and some of
his predecessors in trying to do the best they can. Some of the
constraints they have were imposed by Congress. Congress does
set the terms by which the contract operates, and by which we
subsidize some of their operations. So that being said, I will
address some of the issues that, again, I think are important.
Our last hearing we focused on food service, and some folks
said I was getting into the weeds. But when you spend $833
million, nearly $1 billion on subsidizing food service over a
decade, that is the kind of weeds that have got in the
country's finance--financial weeds, and I believe that we can
do a better job in getting us out of a high subsidization. What
particularly concerned me during that hearing is the last 3
years we have actually lost ground from $79 million, I think,
to $83 billion or $84 billion losses. So, at a time, again,
when every Federal dollar is--should be carefully managed, we
need to do better.
Today we are going to focus on one of Amtrak's 10 general
businesses, and that is operating local commuter rail systems
under contract to--primarily to public transit agencies. I have
asked the investigative staff of the Transportation and
Infrastructure Committee and the rail subcommittee staff to
investigate and review all of the rail operating contract
competitions over the last decade, and how Amtrak has performed
in the competitive environment.
I think this morning, as we release this report--the report
is entitled, ``Amtrak Commuter Rail Service: The High Cost of
Amtrak's Operations''--we will see pretty good documentation
that, in fact, Amtrak is attempting to be in a business that
they are not succeeding in. And also, that it does have
significant costs to the taxpayers to compete in. And, again,
in a time with limited resources, we have got to look at
everything that we can to make Amtrak's bottom line as positive
as possible.
The result of this investigation, again, are in this
report. And the committee--some of the major committee findings
are as follows.
First of all, despite every ticket being subsidized by an
average of nearly $50 by taxpayer, Amtrak has consistently
failed to successfully compete against the private sector
passenger rail operators, and some of those who provide
services for commuter rail contracts. This is particularly
disturbing, when Amtrak is underwritten by a subsidy of, I
guess, last year, close to $1.4 billion, and it has been in
excess of $1 billion almost consistently over the past years.
There is cost to putting these proposals together. There is
cost to competition. And even when they lose in competition and
they are competing against an unsubsidized private sector
vendor, the taxpayers lose. So there is a double loss in even
competing against the private sector. And we have pretty good
documentation that they compete, they win, and actually do the
work for less. In fact, commuter rail agencies, we found, will
save $107 million--that is an average of 11.5 percent--by
awarding contracts to private operators.
Unfortunately, also we found that Amtrak has tried to
stifle competition with frivolous litigation and also instances
of interfering with the transition of commuter rail operations
to private operations. That is particularly disturbing, because
whether they are using Amtrak dollars of revenue, or funds that
are provided through subsidization. They are using those monies
to file suits against private contractors who, in fact, I think
the courts have found legitimately participated in the
competition and won the competition with lower prices than
subsidized Amtrak.
So, unfortunately, I am left to conclude that Amtrak should
not be in the commuter rail business at all, that--and there
are plenty of private sector providers who can provide this
service and, again, provide it at lower cost. And I believe
that Amtrak should not be allowed to use taxpayer funds to sue
private entities for competition-related lawsuits.
We have got a couple of slides here I will go through.
[The slides follow.]
[GRAPHIC] [TIFF OMITTED] T5849.033
[GRAPHIC] [TIFF OMITTED] T5849.034
[GRAPHIC] [TIFF OMITTED] T5849.035
[GRAPHIC] [TIFF OMITTED] T5849.036
Mr. Mica. And it shows, first of all--I don't know if we
passed this out, but the slide lists every commuter rail
operating contract competition held in the last 10 years in
which Amtrak competed. In every case, Amtrak either lost the
competition to a private operator, or--who scored better and
was able to provide the service at a lower cost, or Amtrak
withdrew during the course of the competition.
Second slide we will put up there, again, is of great
concern. In January 2007, South Florida Tri-Rail awarded its
rail competitions to a private vendor. And that vendor had a
national--an international reputation of providing
transportation services with some 200 contracts in the U.S. and
Canada for rail/bus transit, on-demand transit, airport
shuttle, and charter service operations. Unfortunately, Amtrak
lost the competition to this private contractor, in a full and
open competition bidding in which they bid 67 percent higher
cost, and scoring significantly lower in the RFP evaluation.
Unfortunately, Amtrak retaliated by filing a suit in
Federal district court alleging that the private contractor
wrongfully recruited and enticed members of Amtrak staff to
work for the private contractor if they won the contract.
After some 5 years of very costly litigation to both
parties, the case went to trial. Amtrak spent a total of $2.1
million and either it was their revenues that could have put
them in a more positive financial light and situation, or
Federal subsidization dollars, to try to take the contract from
the private vendor. Unfortunately, the private vendor had to
spend nearly $3 million defending itself in the case. I think
that is cause to look at legislation that would make the loser
pay on this instance. In some of those lawsuits I think it is
grossly unfair, particularly the private sector, to have to
defend itself against the publicly subsidized entity, and then
bear the burden, as they had to, to defend themselves in court.
The slide three shows Amtrak's effort to stifle
competition. If you look out the window, you can see the VRE,
Virginia Railway Express operations. And in 2009, Amtrak lost
its operating contract with VRE to a private contractor. And
Amtrak's bid was some $24 million higher than the private
contractor, and its evaluation scores were lower than the
private operators. The transition from Amtrak to the private
operator was just tortuous and, unfortunately, Amtrak made it
difficult, tried to make it impossible.
Some of you may have read about this. In fact, it was
reported by the Washington Post that VRE was so dismayed by
Amtrak's interference, that the agency explored taking legal
action against Amtrak. And some of the examples of
interference, Amtrak changed the certification requirement for
train crews coming into Union Station, and refused to allow
private vendor engineers to train with Amtrak crews in order to
learn the routes. And, unfortunately, it is also alleged that
Amtrak labor representatives told its workers they would be
blacklisted if they accepted jobs with the private contractor.
The fourth slide is potential savings for State-sponsored
routes. Nineteen States contract with Amtrak to operate
intercity passenger rail service on State-supported routes,
less than 750 miles. But not all operating costs are covered by
the fair box and State support. We do underwrite that. PRIIA
provisions require States to cover 100 percent of their--all
their capital and operating costs, beginning next year, the
first of October a year from now. And this will increase the
States' costs by $120 million a year.
As I noted earlier, commuter rail agencies have saved 11.5
percent average by contracting out operations to private versus
Amtrak providers--Amtrak serving as a provider.
Let me say I am a strong supporter of these State-supported
routes. And this is one of the areas in which we have had
significant increases in passenger rail service. In fact, if I
am correct, a large portion of Amtrak's increase in ridership
is in that area. And it is a good partnership. It needs to be
continued.
But again, we need to look in tough financial times, or
just to make Amtrak as efficient as possible, of having that
service again be competed fairly and squarely. And if the
private sector can do it, honoring labor and other commitments,
then they should, in fact, have at it.
So, that is some of the findings from this report that we
are releasing today from the Majority side. Welcome the
Minority adding anything in the record they like to supplement
the Majority report.
Our intent, again, is to try to make Amtrak a positive
operation, to increase ridership, to do it at the lowest
possible subsidization or the lowest cost, and in some
instances, God forbid, we should actually turn positive
revenue, and that can--there are plenty of examples around the
world, and even in the United States, where that does occur. In
fact, we have private vendor operators that operate passenger
rail service and do make a profit. So that can, in fact, be
achieved.
So, those are my comments. Again, I think we have got folks
here now. I am pleased to yield to the ranking member of the
rail subcommittee, Ms. Brown from Florida.
Ms. Brown. Thank you, Mr. Chairman. And here we go again.
Mr. Chairman, I want to state for the hearing's record that
we never were consulted on this oversight report. We never saw
it or heard about it this time. When we were in the Majority,
we always gave you advance copies of oversight reports so we
could best prepare for the discussion. It is very sad that we
are wasting the committee's time micromanaging Amtrak while
totally ignoring critical issues in our transportation system
that truly need to be addressed by this Congress.
Does any Member of Congress really think that this issue is
more important than the critical mission of preparing our
waterways for port--ships, addressing the glaring problems of
our aviation system, or planning how we will address
transportation funding in the all-too-near future? Recent
headlines have warned that Al Qaeda is considering targeting
U.S. rail lines. So, naturally, on the anniversary of 9/11, the
chairman is holding a hearing on Amtrak limited commuter
contracts.
I want to talk about what this hearing is about and what it
is not about. This hearing is not about Amtrak's monopoly or
commuter rail competition, as the title would seem to suggest.
It can't be. Amtrak doesn't actually have a monopoly on
commuter rail in the United States. A monopoly is defined as a
situation in which a single company or group owns all or nearly
all of the market for a given type of product or service.
According to the American Public Transportation Association,
there are 29 commuter rail operations in the U.S. Twenty-one of
those are outsourced to private companies. Of the 21, Amtrak
has 6 contracts, or 28.6 percent of the market. That is not a
monopoly.
This hearing is not about Amtrak's loss of commuter rail.
It can't be. Amtrak made more than $15 million in profits on
its commuter rail service. We continually hear how Amtrak isn't
doing enough. In this situation, Amtrak's profit helped reduce
its operational costs, and its reliance on increased Federal
funds.
I hope this hearing is not about a Republican attempt to
punish Amtrak for pursing legal actions against Veolia, or to
justify a legislative earmark contained in H.R. 7 to prohibit
Amtrak from pursuing legal actions or defending itself in
court. I suspect, however, this is done for Veolia, since,
according to the letter from Amtrak to Chairman Mica on August
the 28th of 2012, Amtrak has never pursued legal action against
any other private commuter rail operations. I ask unanimous
consent to include the letter in the record.
Mr. Mica. Without objection, so ordered.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T5849.037
Ms. Brown. The chairman wants to include this provision in
future legislation. But it is worth noting that Amtrak won the
legal action. And by the way, Mr. Chairman, if the loser had to
pay, then they would have received the reimbursement from the
lawsuit, since they won.
The U.S. District Court for the District of Columbia found
wrongful conduct by Veolia in its bid against Amtrak for the
contract with Tri-Rail. Wrongful conduct. In fact, I'd like to
ask unanimous consent to include the verdict in today's hearing
record.
Mr. Mica. Without objection, so ordered.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T5849.038
Ms. Brown. This is what this hearing is about. Good, old-
fashioned politics and a nod to the Republican Party job-
killing platform which endorses the dismantling of Amtrak in
favor of outsourcing service to low-wage, low-benefit, private
operations. The best evidence for this is the chairman's press
statement leading up to this hearing, one which said he would
put an end to Amtrak and others, while referring to the holy
jihad against Amtrak.
And, by the way, Amtrak is an American company. It appears
he meant war, when he used the term, although this is not what
it means. Regardless, it is insulting on this day of
remembrance. It is insulting to me, it is insulting to Amtrak,
and its employees, and it is insulting to Amtrak riders. And I
am sure it is insulting to Muslims that live in this country,
particularly on the anniversary of 9/11.
What this hearing should be about on September the 11th is
the security of our Nation's transportation system. This
committee should be taking the time to reflect on the lives
that were lost on these tragic attacks and what we can do to
secure that this Nation's mass transportation system now and in
the future is always safe.
But we are not holding a hearing on rail security, or even
aviation security, for that matter. Nor are we holding a
hearing on pipeline security or hazardous material security. We
are having a hearing, once again, criticizing Amtrak, all while
Members of Congress are gathering on the east front steps of
the Capitol at 10:45 this morning in remembrance of 9/11.
The fact is on this very day 11 years ago, Amtrak and its
employees worked around the clock to provide one of the only
traveling options for many in this country. Within minutes of
the incident, Amtrak jumped into action. It mobilized and
established a command center, evacuating a number of stations
for inspections of trains and infrastructure and dispatching
police officers and staff throughout Amtrak facilities to
patrol and conduct on-site inspections. On the Northeast
Corridor, Amtrak added about 300 percent more seating capacity
to fill the traveling gap. Over 1,600 daily seats were added to
long-distance trains and another 300 to the west coast train.
Amtrak also provided transportation to New York City for
families and friends of victims, firefighters, police, medical
teams, military, and other public office, and even airline crew
members. In partnership with the American Red Cross, Amtrak
transported thousands of emergency relief kits to New York
City. In fact, with the airline grounded, the U.S. Postal
Service turned to Amtrak to carry the mail.
These are the things we should be discussing today. In
fact, I would like to close with asking the chairman unanimous
consent to hold a moment of silence right now to reflect on 9/
11.
Mr. Chairman.
Mr. Mica. I am most pleased to grant the lady's request for
a moment of silence in the committee. If we would observe that,
thank you.
[A moment of silence was observed.]
Ms. Brown. I yield back the balance of my time.
Mr. Mica. Thank the gentlelady. Thank her for her opening
statement. And let me just say, too, that I had received at the
end of the last week the draft of the staff report, and the
draft did say ``monopoly.'' I share the gentlelady's concern,
and I have read that title. This is the draft report, and I
felt the same way. And the complete report does not cite
``monopoly.'' The gentlelady is correct, and the correction was
made in what has been submitted today.
So that item is corrected, and I want to make certain the
record reflects that. I did not have the actual final copy
after my edits were made over the weekend.
I will say, too, that I said in my opening statement that I
would welcome the Minority to add to this report. And normally
we leave the record open for 10 days, or something like that.
But I would be glad to leave it open for 30 days for the
Minority to submit the--a Minority section to the report.
Ms. Brown. A question for the chairman. Mr. Chairman, I
understand, and we appreciate you extending the 30 days. But is
there any reason why we could not have had the information
prior to? Because you are releasing this information to the
public as if it is 100 percent correct, or there is no Minority
report. I mean it seems to me that this Committee on
Transportation in the past used to work together. We used to
have a bipartisan committee. We used to be the most bipartisan
committee in this Congress. This does not exist any more.
Mr. Mica. Well, sorry the gentlelady has that feeling and
perception. But again, I got the report, I believe, on Friday,
edited--made my edits over the weekend. You have it today. And
you are also welcome to fully participate in the hearing and
also add any commentary that you like, as the Minority. And I
will keep the record open for 30 days to allow that.
Let me now yield to the chairman of the rail subcommittee,
the gentleman from Pennsylvania, Mr. Shuster.
Mr. Shuster. Thank you, Mr. Chairman. I appreciate you
holding this hearing today. And I welcome our witnesses. I see
some of them are back again for a number of visits here, so I
appreciate to hear from you today.
Also like to welcome some of my constituents that are here
today, some of the hard-working guys that make Norfolk Southern
keep--continue to run on time up in Altoona, Pennsylvania. So
welcome to you fellows for making the trip down here today.
I also want to thank the gentlelady from Florida for taking
that--or making that motion to have a moment of silence. Today
is 9/11, and we certainly should be--every day should be, but
especially today in our thoughts and our prayers, the people
who perished at the World Trade Center, the Pentagon, and then,
in my district, Shanksville, Pennsylvania, where those brave 40
people had the first counterattack on the war on terror. And
they live in our memories forever.
I am pleased that the chairman has put forth his focus on
these important issues. And I disagree with the gentlelady from
Florida. This is one of the issues that we need to focus on:
passenger rail service in this country, making it better,
stronger, safer. And the only way we can do that is by
examining what has gone on and what hasn't gone on. And it is
good, old-fashioned take-a-look, let's find out the things that
work, let's find out the things that don't work, and let's
change them. Let's make some changes for the positive.
The committee staff has completed this extensive
investigation that Chairman Mica is releasing. It is looking at
the competitive rail contracts over the past decade. And there
are, as the chairman mentioned, 26 commuter rail systems around
this country, over 450 million people ride on them. And out of
those, as the chairman mentioned, 19 are--have contracted out
some element of their services. And 11 commuter rail services
have contracted out service in a competitive bid for operations
contracts.
The past 10 years we have seen a significant increase in
the level of competition between major private rail operators.
And, as Chairman Mica has noted, Amtrak has been unsuccessful
to secure a single commuter rail operation contract over the
past 10 years. And with the rising demand for service, it is
critically important for commuter rail agencies to continue to
work to look for ways to improve service while reducing costs.
And commuter rail agencies have saved $107 million, or 11
percent--over 11 percent--by awarding such contracts.
I think it is important, also, to point out that some of my
colleagues and some of the stakeholders in passenger rail and
rail service in this country like to look to Europe and use
them as an example of how there is no commuter rail service or
passenger rail service that doesn't have Government
involvement, which is true. But the Europeans today are at
breakneck speed, moving fast and furiously, towards
implementing competition in their system.
So, on the one hand, we look to Europe and say, ``Well,
look what the Europeans are doing.'' While, on the other hand,
when they do something we don't agree with, then we disregard
it. I think it is important, and I hope to, in the future,
bring those folks over. Chairman Mica and I were--I forget
where we were, but we were somewhere at a meeting with many of
these European rail companies that are doing just that. And by
2014, I think the entire European Union has to have competitive
bids going on within the passenger rail, because they see the
benefits of competition.
State-supported routes, such as the keystone corridor in
Pennsylvania, which is a sector of Amtrak's passenger rail
service, has seen the greatest growth over the past two
decades, up almost 50 percent in the past 4 or 5 years. These
routes have carried 5 million passengers in fiscal year 1990.
And in 2011, ridership is up to 14.7 million passengers.
Currently, 19 States contract with Amtrak for the operation
of 27 State-supported routes. States and regional agencies pay
most of their operating costs of services not covered by fare
book revenues. But section 209 of the Passenger Rail Investment
and Improvement Act requires Amtrak, in consultation with the
FRA and each relevant State, to develop and implement a single,
nationwide, standardized methodology for establishing and
allocating the operating and capital costs--Amtrak and the
States concerning the State-supported routes.
The methodology for allocating costs is scheduled to take
effect in October 2013, meaning that States will be responsible
for covering a majority of their costs, their State's cost--
supported routes. According to Amtrak, 16 States will see an
increase in the amount of support they must provide. Totally,
more than $120 million. And this methodology was developed as a
menu approach, such that States can better control costs by
picking and choosing among Amtrak's services.
Upon implementation, we believe that the estimates are
about--over $90 million that they will be able to compete for
in operational services in these State-supported routes. And
potential savings could cover the $120 million increase that
these States will see in the coming months and years.
The competition for Intercity Passenger Rail in America Act
outlined by this committee last year offered States greater
control and authority over the passenger rail services,
including incentives to competitively bid passenger rail
services. And although this proposal has not moved forward, we
believe that it is a good framework for us to use next year to
move forward and try to improve.
And that's the bottom line: improve passenger rail in this
country. Because I believe, with the--when you look at the
population growth over the next 30 years in this country, we're
going to go from about 300 million to 400 million people. And
the congested corridors, the Northeast Corridor and others
around this country, need to have passenger rail that is
efficient, that is safe, and that helps us to reduce that
congestion that's on our highways around this Nation.
So, with that, I am looking forward to the testimony today.
And thank you, Mr. Chairman.
Mr. Mica. Thank the gentleman. Now recognize the gentleman
from Maryland, Mr. Cummings.
Mr. Cummings. Thank you very much, Mr. Chairman. Let me be
clear that I agree with Ms. Brown and with my other colleagues
on this side of the aisle. On this day, when we pause to mark
the anniversary of the terrorist attacks on September 11, 2001,
that forever changed our Nation, including its transportation
industry, our hearing should be focused on assessing whether
our transportation system networks are fully secure. In fact,
the Coast Guard Subcommittee, upon which I sit, held a hearing
this morning entitled, ``Tenth Anniversary of the Maritime
Transportation Security Act: Are We Safer?''
This hearing is focused specifically on examining the
implementation of the maritime security legislation passed in
the wake of 9/11 attacks in order to answer the question we
should be asking here: Are we safer?
However, the hearings here in the full committee is not
focused on any topic related to security in any mode. Instead,
the Majority is continuing its senseless attack--and I do
consider it an attack--on Amtrak. In this case, by claiming
that Amtrak has a monopoly mentality in commuter rail
operations. And I am glad you clarified that, Mr. Chairman.
This claim, of course, is unfounded, and seems particularly
bizarre, given that Amtrak is engaged by contract with only a
few of the more than 25 commuter rail systems in operation in
the United States. For example, Amtrak operates only one of the
three lines that comprise the MARC system in my district. The
other two lines are operated by CSX. Yesterday, Amtrak issued a
statement indicating that its ridership is surging this year
with 11 consecutive monthly ridership records.
In each month of the current fiscal year, Amtrak has posted
the highest ridership total ever for that particular month,
with the final month of September also expected to be a new
record. In addition, July was the single best ridership month
in the history of Amtrak. Further, from fiscal year 2002 to
fiscal year 2011, Amtrak ridership increased 44 percent and set
a new annual record--excuse me, set new annual records in 8 of
those 9 years. Rather than celebrating this success and seek
ways to build on it, to expand transportation options in this
Nation, and to create jobs, the Republicans are seeking only to
destroy Amtrak.
The platform adopted by the Republicans during their
convention explicitly calls for the elimination of Amtrak,
stating--and I quote--``It is long past time for the Federal
Government to get out of way''--presuming they meant ``get out
of the way''--``and allow private ventures to provide passenger
service to the Northeast Corridor. The same holds true with
regard to high-speed and intercity rail across the country.''
That is from the platform.
Unmoved by the Republicans' ideological obsessions, the
traveling public is clear. It supports Amtrak. And it has made
Amtrak a vital part of our Nation's transportation networks.
I note that in the days after 9/11, when the airlines could
not operate, as Ms. Brown said, Amtrak did. And the system
surged capacity to meet expanded demand after the terror
attacks. Given that millions of Americans ride Amtrak, on today
of all days our committee should be focused on examining
whether the system is as safe as it can be.
Rather than seeking to derail Amtrak, we should also be
focused on understanding the factors contributing to the
success and identifying the steps that we can take to
strengthen this critical system to make it more effective and
more efficient. And with that, Mr. Chairman, I yield back.
Mr. Mica. Thank the gentleman. Mr. Duncan?
Mr. Duncan. Thank you very much, Mr. Chairman. Thank you
for calling this hearing and continuing to exercise oversight
over the operations of Amtrak. There is nobody on this side
that has anything against Amtrak. We just are concerned about
the megabillions, the many, many, many billions of losses that
have been incurred by Amtrak over the years, and they continue
at the rate of hundreds of millions, even to this day.
But this hearing touches in part--or at least coincides
nicely--with a bill that Senator Thune and I have introduced
called the Freedom from Government Competition Act, and it is
an issue that I've been interested in for a number of years. In
fact, we passed in an earlier Congress a very limited form of
that bill. And we have that bill introduced again in this
Congress because it is been, usually the number one concern,
but always one of the top three concerns of all the White House
Conferences on Small Business, competition from Government
agencies that don't pay taxes and receive huge subsidies.
In fact, at a White House Conference on Small Business in
1955, this statement was issued. It says, ``The Federal
Government will not start or carry on any commercial activity
to provide a service or product for its own use if such product
or service can be procured from private enterprise through
ordinary business channels.'' And that problem has been raised
by groups as diverse as hearing aid operators, alarm system
operators, school bus operators. It is tough enough to survive
in small business or even medium-sized business in this day and
age against ordinary competition. But to have to compete with
the Government agencies makes it even tough.
And so, I appreciate your calling attention, Mr. Chairman,
to all of the problems that Amtrak is having. Because if this
agency is to continue, it certainly needs to do a much better
job than it has done thus far. Thank you.
Mr. Mica. Thank the gentleman. Mr. DeFazio. And I don't see
any other requests for speakers. Do we have some--Mr. DeFazio--
because we will--OK, we will go--if other Members want to go
ahead and go over to the Capitol, the----
Mr. DeFazio. Very quickly, Mr. Chairman, so we can----
Mr. Mica. Well, you will get your full time.
Mr. DeFazio. Oh.
Mr. Mica. If other Members want to go, you may want to
proceed to the Capitol for the memorial service. But we're
going to--I'm going to stay, and then scoot over.
Mr. DeFazio, you are recognized.
Mr. DeFazio. Thank you, Mr. Chairman. Obviously, it is a
somber day. And you and I worked on aviation security issues,
in particular, or transportation security issues at great
length after the tragedy of 9/11. And you know, it is a somber
day to be here.
I do share the views some have expressed on this side that
perhaps today would have been more appropriate to focus on
transportation security in general, because I believe it is a
task that is yet undone in America. We are still vulnerable in
many ways, even in the areas where we have made the greatest
investment, which is aviation. But that is not to be.
So, to the issue at hand, it is 1 day before another
incredibly somber anniversary, a bit more recent, which was the
horrendous rail crash in California at Chatsworth. And 25
people died. One of the entities here, the one particularly in
regards to litigation, Veolia, was the responsible operator.
And as I believe was determined ultimately, their engineer was
very engaged in texting at the time. And that's why 25 people
died. And, as I understand it, subsequently they were removed
as the operator.
And now there are questions being raised whether we should
have--you know, Amtrak is required to carry what I think
probably in this day and age is inadequate liability insurance,
which is $200 million for a crash. It was exceeded in the case
of Chatsworth. And so I find it incredible that anybody would
be recommending that we not have more robust caps for
liability, whether it is Amtrak or a private provider or a
State provider on rail service. So that's one issue.
The other is, as was pointed out by Ms. Brown, it would be
ironic to say that we should have loser pays on these contract
disputes. I mean I actually am intrigued by the loser pays
concept in certain areas of law. But in this case, since most
of the decision, with the exception of damages, was in favor of
Amtrak, I guess Veolia would have had to pay. So I don't see
how that follows, exactly.
And finally, you know, these contract disputes, I--you
know, if we're going to say that a public entity can't dispute
egregious conduct or improper conduct in competitive bidding
process, then maybe we should just say that nobody can litigate
in these issues. And so someone cheated to get a contract? Hey,
they cheated and got it fair and square; it is their contract.
Let's save the money on litigation and let them go ahead and--
with the contract.
So I would find it really odd to tie the hands of one
entity who might provide competitive bids, while others are
free to litigate and, in fact, do frequently litigate the award
of Government contracts between private operators across a
multitude of Government contracts.
And I make one further observation. I am not as versed in
all of what underlays the economics of the operation of these
lines. But my understanding, having spent some time on rail
issues, and in Europe, is that there is no entity which is
responsible for both the rail, the rail bed, the crossings, and
the operating who makes--it was private, and makes money. You
know, in the case that's widely touted in Britain, I met with
those people too, it is a very impressive operation. But the
Government was responsible for the rail and the rail bed and
the rail crossings. They operated the trains. And I further
understand that, you know, that contract is lapsing at this
point, or being rescinded.
So, you know, to say that, you know, we can do these things
without any sort of public subsidies, in the case of all these
private contracts on all these commuter rails, there is a
public subsidy. And, you know, that's the question we have to
decide here. Do we want to provide more efficient, safer rail
service across America? Do we want to compete with the rest of
the world in rail, or do we want to be the only great Nation on
earth without adequate rail service? And that is what we should
be focusing on, not these minutia that don't make much sense.
Thank you, Mr. Chairman.
Mr. Mica. I thank the Members. What we're going to do is
recess now until 11:30. And then we--I thought we might get to
you all first, but we will start with hearing your opening
testimony.
The committee stands in recess until 11:30.
[Recess.]
Mr. Mica. Call the committee back to order, and welcome
everyone back. It is fitting on this day that we do take a few
minutes and reflect on those that were lost on September 11th,
and the service did just that on the steps of the Capitol.
I can't help but remember--and was reminded--standing next
to Roger Wicker the now-Senator from Mississippi, that he and
I, with several other Members in the Pentagon the morning of
September 11th with Secretary Rumsfeld for a breakfast, and
actually were there as the planes hit the World Trade Center.
And I remember that morning with Secretary Rumsfeld leaving. I
got delayed getting the information from staff about the planes
hitting the World Trade Center, as the new chairman of the
aviation subcommittee, and, actually, I think I informed
Secretary Rumsfeld.
As the first plane hit, we were standing at the end of the
breakfast conference table where we had met the previous hour,
and then the second plane--Sharon Pinkerton, our staff
director, had advised me. I remember arguing with her that a
second plane could not hit the World Trade Center, because it
was impossible. That's why we had set up the air traffic
control system. A plane had hit, I guess, the Empire State
Building, and they put that in place.
But on--the irony of that is the committee went up about a
month before to New York City and at the request of Neil Levin,
who was the New York Port Authority director overseeing the
airports. Bill DeCota was the airport director. And in August
we went up to look at the congestion at JFK Laguardia and
Newark. And Neil took me to all three airports and then on the
Monday after spending time at each airport, we met and had an
Aviation Subcommittee hearing in the World Trade Center. I
think it was on the 60-something floor about a month before 9/
11.
And after the hearing, Neil had invited the Members of
Congress to the Windows on the World. They had a little
conference dining room that was next to the restaurant that
they--actually, the New York Port Authority owned the World
Trade Center and had developed it. Neil had told me the story
of that.
Unfortunately, on September 11th, Neil Levin and everyone
who helped us at the hearing were all at a meeting, a breakfast
meeting, the morning of September 11th and all of them were
killed, except for one individual, Bill DeCota, the airport
director, who had gone to a conference in Montreal, survived,
only to die several years later on an operating table on
September 11th, the great irony in his life.
The plane that flew in the Pentagon--again, I left at about
9:20 to come back here to this building--and as I arrived I saw
the smoke coming up. But on the plane was Barbara Olson, who
worked for our committee across the hall, the Government Reform
Committee. I remember seeing her at a reception not too long
before that, and sort of saying goodbye to her there. But she
was one of the passengers on the flight that crashed into
Shanksville. Telephoned her husband, Ted Olson. Many of you may
know him.
And then, Terry Lynch, who worked with me in the U.S.
Senate, was an aid to Senator Shelby. He was in the Pentagon
and actually killed that day. So can't help but remember those
people today and every day and this day. So all of us have our
memories. Now I've got Ms. Brown back, and maybe joined by some
other Members.
So we will return to our regular order of business, and
we'll hear from--we have Mr. Boardman, the Amtrak president;
Joe Giulietti, who is Tri-Rail executive director; Chuck
Harvey, deputy CEO, Peninsula Corridor Joint Powers Board; Mr.
Ray Chambers, Association of Independent Passenger Rail
Operators. And welcome back to Ed Wytkind, who is the president
of the Transportation Trades Department for AFL-CIO.
So, most of you have been here or know the procedure. If
you have anything you'd like submitted for the record, we'd be
glad to do that.
Welcome, Mr. Boardman, you are recognized.
TESTIMONY OF JOSEPH H. BOARDMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMTRAK; JOSEPH J. GIULIETTI, EXECUTIVE DIRECTOR, SOUTH
FLORIDA REGIONAL TRANSPORTATION AUTHORITY; C.H. ``CHUCK''
HARVEY, DEPUTY CEO, OPERATIONS ADMINISTRATION, PENINSULA
CORRIDOR JOINT POWERS BOARD--CALTRAIN; RAY B. CHAMBERS,
EXECUTIVE DIRECTOR, ASSOCIATION OF INDEPENDENT PASSENGER RAIL
OPERATORS (AIPRO); AND EDWARD WYTKIND, PRESIDENT,
TRANSPORTATION TRADES DEPARTMENT, AFL-CIO
Mr. Boardman. Thank you, Mr. Chairman. Good morning, Ms.
Brown.
Mr. Mica. Can you pull that up as close to you as possible?
Mr. Boardman. Thank you. As you said, everybody has their
story about 9/11. And 11 years ago, on a day just about like
today, our Nation was attacked. And I was the commissioner of
transportation for Governor George Pataki of New York.
One of my department offices was the North Tower of the
World Trade Center. And while most of my employees were able to
escape, without physical injuries at least, I lost three
decent, hard-working public employees: See-Wong Shum, Charles
A. Lesperance, and Ignatius Adanga.
During the aftermath I promised their families I would not
forget them. So please join me one more time for a moment of
silence for those three, and for all the families that lost
loved ones that day.
[A moment of silence was observed.]
Mr. Boardman. Thank you. At 1:00 eastern today, Amtrak will
blow all its train whistles in memory of all the victims of 9/
11. For each of our business lines--and commuters are one of
them--our number one goal is safety. And in our strategic plan
we state that we offer commuter partners, passengers, and
employees safe and secure service wherever risks are
minimized--where risks are minimized on every train and at
every station every day.
Today we are conducting the 27th RAILSAFE--Regional
Alliance Including Local, State, and Federal Efforts is what
RAILSAFE stands for--in cooperation with hundreds of police
throughout the Nation, and in close cooperation with TSA. We
have conducted RAILSAFE 26 times. And the last RAILSAFE
involved 260 law enforcement agencies across the Nation with
1,493 officers, 192 Amtrak stations, 271 commuter stations, 44
States, the District of Columbia, and Vancouver, Canada.
Amtrak is the leader in the use of vapor wake and explosive
dog use throughout our system, and is being studied by the
Federal agencies, local police, and even other railroads for
the techniques we employ to keep our customers safe. Amtrak has
a total police force of 492 officers and members with both
special operations unit and K-9 teams.
We are proud of our relationship with the TSA, recently
winning their highest rating of the gold standard under their
base program, where they look at system security programs,
identifying vulnerabilities that should be addressed. And the
program is voluntary, but fits well in Amtrak's desire for
safety and security for our customers.
Amtrak--and it is already been stated--really has a paltry
12 percent of the commuter market, in terms of value. Other
private sector competitors have the remaining 88 percent. Mr.
Chambers's members alone have greater than 50 percent of the
market. And the Union Pacific Railroad, a freight railroad, has
17 percent of the market. Amtrak has no monopoly on commuter
contract value, mentally or materially.
Amtrak was formed to rescue private railroads from the
losing proposition of providing passenger service in 1971.
System ridership growth of 44 percent since 2000. State
corridor ridership is up 63 percent, nearly double since 1998.
Our expectation is that in 2012 we will set another record,
making nine records in the past 10 years.
Today, for every passenger who flies between New York and
the District of Columbia, three take the train. We've cut our
debt in half in the past 10 years, from nearly $4 billion down
now to $1.6 billion. Systemwide, on-time performance is over 80
percent, up from 70 percent 4 years ago. Our cost recovery is
the best of any passenger railroad or agency in the United
States, at 85 percent.
Mr. Chairman, if you compare us to what you call us, a
Soviet-style railroad, you would see that while we grew our
ridership 37 percent between 2000 and 2010, the Russian
railways fell 33 percent.
The Nixon administration's rescue of the passenger rail
service in the United States is a success. I think Herzog,
Keolis, First America, RATP Development, and Veolia
Transportation are much more interested in the State corridor
services that we provide than they are with the 12 percent of
the commuter business that Amtrak has. And I think that's why
we--they--may have wanted this hearing, as well.
To me, having the hearing for the commuter service really
makes no sense. In 1997, Congress took away many of what are
now considered State-supported trains. But at the time they
were considered national network trains. And then, in 2008,
Congress took the next step and required the States to become
responsible for the nearly $200 million of Federal subsidy
provided to Amtrak for those State corridors.
Amtrak was required to work out the reimbursement levels
from those States. And that will start in 2013. That task has
been completed by Amtrak. And, in essence, it provides the
opportunity for our competitors here today to engage in
provision of State corridor service.
Now, the States always had the ability to use other
operators, but it wasn't until Congress acted to strip away the
State subsidies through the section 209 that the States had the
incentive to compete their service. I do not believe that
Congress needs to provide any additional advantages to Keolis,
Veolia, RATP Development, Herzog, First America, or any other
competitor to Amtrak than they already have. They have proven
ability to compete with and secure business that Amtrak has
operated.
Commuter service is different from the State corridor
services, some of which operate for several hours. So the
existing model of competition needs to do a few things such as
protecting the public through proper and consistent levels of
insurance and indemnity provisions. I spelled those out to the
committee in a February 26, 2010, letter. Ensuring that labor
protections and retirement issues are secure. Safety
certifications are complete for any operator of service.
Ensuring that scheduling is coordinated on a national basis to
provide the only remaining national intercity, coast-to-coast,
border-to-border, public transportation system in the United
States.
The interstate highway system would not work if it wasn't
connected. Nor will a broken-up, uncoordinated puzzle of
passenger rail services. I find it wrong that Amtrak, America's
railroad, seems to be constantly berated by some Republican
Members, while foreign-owned management companies are extolled
for their experience. One of them is a subsidiary of the French
national railroad, SNCF, France's railroad. I wonder how Amtrak
would be received in France? Thank you.
Mr. Mica. I thank the witness.
And we will turn now to Mr. Joe Giulietti from Tri-Rail in
south Florida.
Mr. Giulietti. Good morning, Chairman Mica and Ranking
Member Brown, and members of the Transportation and
Infrastructure Committee. My name is Joe Giulietti. I am
appearing before you today on behalf of the South Florida
Regional Transportation Authority, where I serve as the
executive director, and oversee the Tri-Rail commuter railroad.
I thank you for the opportunity to testify today, and to
discuss issues relating to competitive contracting in the
commuter rail industry. A copy of my full testimony has been
submitted to the committee. I will summarize my testimony, and
would be pleased to answer any questions you may have.
First, let me take a brief moment to tell you about my
background and that of SFRTA. Then I plan to summarize our
experience with competitive contracting on our system. I am in
my 41st year in this industry, and have had a wide range of
experience in both passenger and freight railroad operations. I
started as a brakeman and have worked as a locomotive engineer,
transportation manager, superintendent. I have worked for Penn
Central, Amtrak, Conrail, Metro-North Commuter Railroad in New
York, and now Tri-Rail. I have worked in New Haven, Boston, New
York, New Jersey, Philadelphia, and Florida, and I have worked
closely during my career with the Federal Railroad
Administration and the Federal Transit Administration, as well
as the National Transportation Safety Board.
As you may already know, Tri-Rail service commenced in
1989, following the purchase of the right-of-way by the State
of Florida from CSX Railway. And Tri-Rail has been operated
under agreement with private contractors since its inception.
Mr. Chairman, let me summarize several key points about
contracted services and the issue for concern for systems such
as Tri-Rail that rely on contracted services. One, competitive
contracting for train operations and maintenance services has
served us well since we commenced passenger service in 1989.
Two, there is no need or justification for adding new
certification and/or liability coverage requirements, as was
proposed in Senate bill earlier this year. And, three, while we
welcome Amtrak's participation in the commuter rail industry on
a level playing field with other private contractors, we fear
that their recent lawsuit over whether one contractor can
approach employees of another for submission in competitive
procurement will chill the marketplace and only make the job of
evaluating competing proposals more difficult.
Passenger safety is the number one priority on our Nation's
commuter railroads. Contractors know they need to share this
priority, or they can be replaced through the competitive
process. SFRTA has used private contractors and their
operations since inception. The first operation was UTDC, now a
division of Bombardier. Subsequent contracts were awarded to
Veolia, Herzog Transit Services. Current contract is awarded to
Veolia for operations and Bombardier for maintenance. Splitting
the contract encouraged more competitors to bid.
Amtrak was awarded our contract to dispatch the New River
Bridge, and the SFRTA has had the great success with contracted
services. And I believe it will work for the States, as well.
Under the proposed increase of liability coverage for
commuter railroads, while Congress has not previously
intervened in the State and local review of various contracting
options offered by Amtrak and other private operators in the
railroad industry, CEOs in the commuter rail industry were very
concerned earlier this summer with provisions contained in the
Senate Commerce Committee's rail title of S. 1813 during the
consideration and development of MAP-21.
Major concerns include liability insurance is a significant
cost item for commuter rail industries. Merely establishing new
minimum coverage requirements for non-Amtrak commuter rail
operations without explicitly clarifying the status of
limitation of liability for such operations would not only fail
to address the uncertainty, but would exacerbate current
difficulties in negotiating necessary liability agreements and
securing affordable insurance. And proposed 35601 would make
liability difficulties worse than under the current law.
Amtrak recently sued Veolia in Federal court in Washington,
DC, on the grounds that Veolia had, by including the names of
Amtrak employees in its proposal, aided those employees in a
breach of their fiduciary responsibility to their employer.
And, as such, should pay damages in the amount of lost profits
to Amtrak. Although no monetary damages were awarded, there are
several major concerns raised.
In my opinion, this lawsuit will create significant
challenges for agencies such as Tri-Rail. It will limit the
ability to include potential employees in proposals in an
already limited talent pool. And it will create a chill in the
marketplace and lead to greater hesitancy by contractors and
reduce competition.
Mr. Chairman, I have submitted my report, and I thank you
for this opportunity.
Mr. Mica. Thank you. And we will make that part of the
record.
Let me now introduce and recognize Chuck Harvey with
Peninsula Corridor Joint Powers Board.
Mr. Harvey. Thank you, Mr. Chairman and members of the
committee. My remarks this morning will cover the recent
procurement process followed by Caltrain to secure an operating
contractor for our rail service.
To place this recent procurement into context, the
Peninsula Corridor Joint Powers Board, known as Caltrain,
assumed operation of the system in 1992, when it was acquired
from the Southern Pacific Transportation Corporation. The Joint
Power Board consists of three public partners from San
Francisco, San Mateo, and Santa Clara Counties, who share the
ownership of Caltrain, including the entire 50-mile right-of-
way which runs from San Jose to San Francisco, all rolling
stock stations, and an equipment maintenance facility. Since
1992, the system has grown significantly, with ridership
recently surpassing 50,000 per day.
Amtrak was selected as Caltrain's operator in 1992, and was
again selected in 2001, after a competitive solicitation.
Caltrain's partnership with Amtrak over the past 20 years has
contributed to the growth and success of the system. The
decision to solicit competitive proposals for this contract was
based on good procurement practice, the expiration of the
current contract, and the presence of potential new proposers
in the marketplace. The specific objectives of Caltrain
included improving operating performance and customer service,
realizing efficiencies, and ensuring the continuity and
enhancement of a robust safety culture.
In order to achieve these objectives, Caltrain adopted a
unique new compensation methodology that would have the effect
of providing the contractors profit for performance in areas
that were identified as important to Caltrain. This performance
fee program provides for no minimum or no guarantee level of
profit, and establishes amounts that will be paid for meeting
and exceeding certain performance targets. In this manner,
alignment with Caltrain's objectives would be ensured. This is
in contrast to the guaranteed fixed fee that had been paid as
part of previous contracts.
The procurement process took over 2 years to complete. The
requirements for the new contract were identified, including
scope of services, evaluation criteria, and other
methodologies. The proposals were--the request for proposal was
issued, which generated a great deal of interest among
qualified firms.
Caltrain received proposals from five firms: Keolis; PCRS,
a joint venture of Amtrak and Bombardier; PRS, a joint venture
of RailAmerica and RATP Dev; TASI, a subsidiary of Herzog; and
Veolia. A committee was formed for evaluating the proposals,
which included more than 30 individuals from Caltrain and our
partners, who offered expertise on all key technical areas,
with a scoring team comprised of five senior team members.
In order to ensure that a fair and objective mechanism was
used to evaluate the proposals, weighted criteria were
established to score the proposals. Qualifications and
experience of the firm and key personnel was worth up to 20
points, management operations and maintenance plans worth up to
55 points, and the cost proposal worth up to 25 points, for a
total of 100.
After initial scoring of the proposals, Caltrain determined
that four firms were in the competitive range and invited them
for interviews. These interviews were rigorous, all-day
sessions which were followed by committee representatives
making site visits to rail properties to solicit feedback from
each firm's--of each firm's performance.
The next step in the process was to request best and final
offers from the firms. These final offers were evaluated and
scored, and a consensus ranking was established. The highest
ranked proposer was TASI, with the Amtrak joint venture ranked
second. While the TASI cost proposal was not the lowest, it was
a realistic proposal that provides cost efficiencies over the
term of the contract. It was also 5 to 10 percent lower on an
annualized basis than the second-ranked proposal from the
Amtrak joint venture.
It is important to note that none of the firms
participating in this process filed a formal protest of the
award, as allowed in the process. And the contract was awarded
to TASI.
The transition from Amtrak to TASI operation was complex,
and took many months to complete. At the onset of this
transition, it was important for Caltrain and TASI to work
closely with organized labor to ensure their questions and
concerns were addressed. Federal labor law required all
existing employees be protected in various aspects of their
jobs, requiring TASI to negotiate 11 different implementing
agreements with the unions.
Approximately 90 percent of the existing workforce agreed
to become TASI employees and continue to provide Caltrain
service. A close collaboration with the regulatory agencies,
including the Federal Railroad Administration, was also ensured
that those charged with the safety oversight of Caltrain
understood and supported our transition plan.
Finally, the close-out of the Amtrak contract and a nearly
20-year relationship has required a lot of due diligence.
Amtrak has been fully cooperative during this process. TASI
assumed operation of the Caltrain service on May 26, 2012, and
the service is operating as expected.
Mr. Chairman, I have included for the committee an appendix
to my testimony that provides many more details of the
procurement process followed by Caltrain that I could not cover
in the time allotted. I thank you for the opportunity to appear
today, and I look forward to answering your questions.
Mr. Mica. Thank you for your testimony. And we will include
the appendix to your testimony as part of the record, without
objection.
Mr. Ray Chambers, and he is the executive director of the
Association of Independent Passenger Rail Operators. Welcome.
You are recognized. Pull that up real close, Ray.
Mr. Chambers. OK. Thank you, Mr. Chairman, Ms. Brown, and
members of the committee. I very much appreciate this
invitation to testify on behalf of AIPRO today, which is one of
the newer rail organizations in Washington, DC. We are an
organization of five independent rail operators. We compete
against each other and Amtrak to provide passenger rail
operations under contract to commuter authorities.
AIPRO was established to actively encourage the expansion
of passenger rail service in the United States. Our mission is
to promote the public benefits of our current passenger rail
system, while working with partners in the industry to increase
passenger rail opportunities through a competitive marketplace
wherever possible.
We believe that there should be a bipartisan, national
commitment to establish a viable, intercity, and urban high-
performance passenger rail network in America over the coming
decades. This network should be built on the existing framework
of commuter and intercity passenger service, and it should be
implemented through public-private partnerships and the
competitive process, wherever possible.
An expanded passenger rail network in the United States
made possible by additional quality operators offering
competitive pricing and innovation will expand America's
mobility options, will reduce urban congestion, and most
importantly, will create jobs that would not otherwise be
available.
Now, today, Amtrak maintains a de facto monopoly on
intercity rail passenger service. However, as Ms. Brown and Mr.
Boardman and many others have pointed out, there is vigorous
competition in the commuter passenger arena. And that, of
course, is the focus of this hearing. We believe the reason
there is vigorous competition in the commuter arena is because
it works. It works.
Another purpose of this testimony is to shoot down a myth
that independent operators are not safe; that they're fly-by-
night; that they're relatively small; that they're anti-union.
Most don't want a patchwork of these kinds of operators running
throughout the country. So this, then, leads to the feeling
that, at least for intercity, Amtrak is the only realistic
option as a provider of rail passenger service.
Well, the myth is patently not true, in terms of the reach
and the breadth of the scope of these operators. Our members
have a wide global reach. We've got vast American experience.
We operate thousands of trains every year. We carry an excess
of a billion passengers every year in the international
marketplace.
In fact, some of our members--I think three or four of them
are themselves the size or larger than Amtrak. In the United
States, three of the AIPRO members are operating some 252,000
passenger trains per year, and are carrying 72 million people
each year. In 2011, Amtrak claimed about 110,000 annual trains,
I believe, about 30.2 million passengers. And, of course,
Amtrak has been growing, as has passenger service, generally.
However, my point here in making these comparisons is not
to ``dis'' Amtrak in any fashion. I've got a lot of respect for
Joe Boardman and for Amtrak and for what they've tried to do
under incredibly difficult circumstances, particularly with the
charge of operating the long-distance trains. The point that
I'm trying to make here is that competition works, that our
members, our AIPRO members, and others out are a major
competitive force today in American rail passenger operations.
Further, every AIPRO member works with the railroad
operating unions. Coast to coast, our operations, from the MBTA
in Massachusetts, to the Virginia Railway Express, to Caltrain,
are fully unionized. We are not anti-union in any respect, and
I think I can boast personally of some good relationships with
some of the legislative representatives here that I've worked
with over the years. We don't always agree. In fact, Ed and I
have frequently disagreed. But we are not an anti-union group.
The commuter agencies around the country have increasingly
turned to competition. Of the 25 commuter railroads reporting
to the national database, 17 purchase transportation service
under contract. Some 11 have gone to competitive bid for
operations. Several have gone to bid for maintenance. Amtrak
has been involved in nine properties where there has been
bidding in the last few years, and, as has been pointed out,
has not succeeded in any of those.
It is clear a growing number of agencies in the commuter
world recognize that competition provides the very best service
at the lowest cost.
So now let's look to the future. What is this all about?
Where are we going from here? Well, one, I hope we will
preserve and protect the ability to provide competition and to
move to competition. Frankly, a bill that came out of the
Senate would have been harmful to competition. I thank the
committee leadership here for resisting those provisions in the
conference. We need to promote and preserve competition
wherever possible.
Looking to the future, as far as our members are concerned,
Mr. Boardman is correct. Our members are interested in
expanding beyond commuter-style competition to intercity
operations through whatever mechanisms are appropriate. We
submit that this commuter model does point the way to States
for introducing competition into our national intercity
passenger rail network. As has already been pointed out,
section 209 of PRIIA is going to require the States by the end
of this next year to pay the full subsidy cost of all corridor
passenger service, under 750 miles. I believe there are about
27 corridors in some 19 States that are going to see their cost
greatly increased if they are going to preserve existing levels
of service.
So, as PRIIA is reauthorized, I think a good reform is
something we should work on together: management, organized
labor, the freight railroads, the States. A good reform would
be to incentivize the States, to apply the commuter model where
possible, to intercity corridor service. And I can assure you
that our members will be active participants in that process.
We look for a new vision and a bipartisan program. Thank
you.
Mr. Mica. Thank you, Mr. Chambers. And now I'm pleased to
recognize Mr. Ed Wytkind, who is the president of the
Transportation Trades Department of the AFL-CIO.
Welcome back. You are recognized.
Mr. Wytkind. Thank you, Mr. Chairman--glad to be back--and
Ms. Brown and other members of the committee, for allowing
transportation labor the chance to present our views on this
important issue.
Let me first also join my colleagues in marking the moment
of today, of September 11th, as a day when America was attacked
and our transportation system faced challenges it never had
faced before. And the members that we represent dealt with that
day by performing quiet acts of heroism, helping to transport
thousands of Americans left stranded.
It is--the irony is not lost on me, and I'm sure most
others, that we're here on 9/11 discussing proposals that
would, unfortunately, dismantle Amtrak on the very day when, 11
years ago, Amtrak workers, among other transportation workers,
helped with emergency transportation operations to deal with
the wake of the terrorist attacks.
This is the fourth time I've been before this committee in
18 months. And I am again here talking about privatization
measures to dismantle or, at a minimum, weaken Amtrak. And we
wish we were here discussing a number of other important
challenges. I can't help but note that, as we're in a
Presidential election year, that some of the proposals coming
out of this committee remind me of the Mitt Romney view of the
world, which is we dismantle Amtrak, which he would do by
zeroing it out, we cost thousands of Amtrak workers their jobs,
we subject Amtrak riders to chaos and uncertainty on the very
corridor that he was Governor once, and tragically undermining
the Railroad Retirement system.
I know the facts can be stubborn things, but let me offer a
few about Amtrak and its performance. As we all know, ridership
is soaring, on-time performance is the best ever,
infrastructure upgrades are paying off, and long-term debt is
clearly improving. But these facts can be a nuisance when there
is another agenda here. We are puzzled by the odd rhetoric
coming from the committee about Amtrak's role in the commuter
business. We know that commuter rail authorities do turn to
other entities other than Amtrak to perform those services. And
it is a fact that, while we want to see Amtrak grow its
commuter portfolio, that this is a competitive marketplace, as
evidenced by the hearing today and the folks on this hearing
panel.
But let's be clear. Fair, open, and balanced competition
isn't what Mr. Chambers and his clients are looking for here.
The motives here are really about going after Amtrak and,
unfortunately, its employees. They have paraded all sorts of
ideas on Capitol Hill designed to create a legal and regulatory
framework that disadvantages Amtrak when it dares to compete in
the marketplace. Imagine that. Failing that, they would like to
see Amtrak exit from the business all together, so they can
have it all for themselves.
Their aim is consistent with their broader agenda, which is
to eliminate Amtrak and let private corporations--by the way,
many of them foreign--to cherry pick those parts of the Amtrak
system that can yield them the highest profits. I'm certain
these corporate entities would love to seize every potentially
lucrative business segment of Amtrak, and would love Congress
to rig the laws to ensure their success, sort of like H.R. 7,
when they basically said that private contractors--which, by
the way, they claim can do it better than everybody else--would
be held harmless by the taxpayer if they lost money.
What's obvious is that elements of the private sector wish
to seize the growing passenger rail market, while avoiding
basic rail and labor laws that cover Amtrak and its workforce.
Under their vision for the future, collective bargaining would
be undermined, Railroad Retirement coverage would be evaded,
and other laws would be avoided entirely. We reject that vision
for our members, and we're not going to apologize for their
right to have good middle-class jobs with good benefits. And
those are the kind of jobs that Members of Congress up here
spend all day talking about they want to create.
The Association of Independent Passenger Rail Operators
even opposed efforts in MAP-21, as Mr. Chambers said, to hold
all providers of passenger rail service to reasonable and
common standards.
So, what does that mean? Let's get it down to basic
English. They're against having the financial fitness to prove
that they're worthy of these contracts and able to operate
safely. They're against demonstrating liability insurance
coverage. No one is for that, except Mr. Chambers's clients.
And in full compliance with safety and security requirements,
which, by the way, every other railroad in America led by
Amtrak has to do.
Meanwhile, they want to be leaders in the passenger rail
business, but don't want to be covered by railroad laws like
Railroad Retirement. It is no wonder that the freight railroads
have been less than enthusiastic about dealing with a
hodgepodge of operators who are not indemnified, like Amtrak
is. And it really, to me, is a sort of a moment of time for
this committee to ask a question. Do you really want the
Federal Government to seize the private property rights of
freight railroads on behalf of the private rail operators in
this country that want to provide rail service? I hope the
answer is no.
We support expansion of commuter rail. We support more
money going to passenger and freight transportation needs in
this country. But we oppose measures designed to disadvantage
Amtrak and bar it from participating in any segment of the
evolving business of rail transportation. I suspect the 30
million riders at Amtrak would love Congress to focus more on
giving the company long-term financial stability so it can
expand into other rail areas and provide better and faster
service. Our future will be one focus on one thing, which is to
promote more passenger rail service in America.
But we're not going to support an agenda which is clear. It
is to get rid of Amtrak and enrich corporations with special
treatment under our laws. And along the way we're going to harm
way too many workers, including harming the Railroad
Retirement. Thank you, and--for giving us this opportunity.
Mr. Mica. Thank you again for your testimony, and all of
our witnesses. Pleased to have your input before the committee
on this important issue. And we will have an opportunity for
questions now. So I will recognize myself first for some
questions.
I might turn to--well, Mr. Boardman, I think you had cited
my comments calling Amtrak a Soviet-style train operation,
which I commonly do, because it still relies too much on
Government and not privatization. So I think that you're
correct in that. However, your reference to Russia and their
loss of passenger service, actually, in the one line that I
recently had some familiarity with, recently they held a high-
speed rail conference in--international--in Philadelphia. And
around the table were all the nations: Spain and UK and Sweden
and Germany.
At the end was--and everyone had their little name tag at
the conference. I noticed that name tag. His name was Vladimir.
So everyone was giving an update. And then we got to Vladimir,
the Russian representative. And he described the private--that
Russia has now engaged the private sector, and they are
actually--put in service high-speed service between Leningrad
and Moscow. So were you aware of that?
Mr. Boardman. Yes.
Mr. Mica. Yes. So I'm hoping that we can get to a different
model, and a model that does have the least amount of
subsidization. Sometimes you do have to subsidize the service.
And I have cited on several occasions at least one of the
Virgin Rail routes which originally had 14 million passengers,
it grew in a decade to 28 million passengers, increased the
employment, also a very substantial private sector investment.
And I think you're aware of Virgin Rail's success, at least on
one of those routes. Is that correct, Mr. Boardman?
Mr. Boardman. I see in some of the commercials he did a
great job delivering newspapers, yes.
Mr. Mica. Well, again----
Mr. Boardman. Yes, I did.
Mr. Mica. I mean that's just factual. It started out with a
$300 million a year subsidy 10 years ago. And it is paid
dividends, and now paying approximately $100 million a year,
increasing employment for jobs on the new service, and also
doubling the passenger count in a little over a decade. So
there are examples. They are not all applicable.
Are you aware, too, that--Mr. Boardman--in 2015 that you
will be able to compete in the European Union, any of those
countries, for service?
Mr. Boardman. Through what application?
Mr. Mica. Well, the European Union has----
Mr. Boardman. I mean----
Mr. Mica [continuing]. Which is a little bit more socially
oriented than the United States, but by 2015, any of the member
States must allow open----
Mr. Boardman. Oh, yes. But Amtrak? Do you think Amtrak can
compete?
Mr. Mica. Well, I'm hoping not.
Mr. Boardman. The committee would like us to do that?
Mr. Mica. I'm hoping not, but I just wanted to make you
aware of the opportunity----
Mr. Boardman. Yes.
Mr. Mica [continuing]. Since you--I think you closed with
what about Amtrak competing in France, I think, was your
commentary.
And it is quite interesting. In that same symposium for
providing high-speed rail, I was quite surprised to learn--and
I didn't know this, and I have family from Italy, but--and have
been there almost every year since I was 20 years old, but
Italy also has private sector competition to the existing rail
line. Were you aware of that, Mr. Boardman?
Mr. Boardman. I am aware of the fact that Europe is trying
to propose competition----
Mr. Mica. No, but this is Italy. Italy.
Mr. Boardman. No.
Mr. Mica. And actually, it is operational. And their plans
to expand are dramatic and----
Mr. Boardman. Are you recommending that Amtrak go to Italy
and----
Mr. Mica. No, I'm not.
Mr. Boardman. OK.
Mr. Mica. I Just--you brought up France and some--and
competing----
Mr. Boardman. I think that the French wouldn't like us to
be there competing with them.
Mr. Mica. Well, again, the European Union has changed the
rules. And I guarantee you, whether I'm here or not, Congress
will change the rules and there will be----
Mr. Boardman. I guarantee you whether you're----
Mr. Mica [continuing]. And there will be----
Mr. Boardman [continuing]. If you're here or not, you
wouldn't want Amtrak competing in Europe.
Mr. Mica. No, I'm not advocating that. In fact, I'm not
advocating that they compete for commuter rail service.
Mr. Boardman. I understand that.
Mr. Mica. And I would also like to get them out of
providing any of the State-supported intercity passenger rail
service. And I would like to get them back to their core
mission.
And I think you were here, too, sir, when I opened my
comments and I said if there wasn't an Amtrak you would create
one to make certain that we had a national rail passenger
service, quite contrary to some other comments that I heard
that I am in some way opposed to providing that service. But
what you do want--it was provided as economically, efficiently
as possible. And I know that's your goal--at least I hope it
is.
A couple of other questions were raised. And Mr. Wytkind
talked about liability and possibly some advantage, either for
the private sector. And I don't think that that is our goal. I
think that we have got to be responsible, as far as liability
for both Amtrak, as a provider, and also for the private
sector. And they should have equal responsibility. Would you
agree or disagree with----
Mr. Wytkind. Well, first of all, what I referred to, I
wasn't referring to your goal. I am hopeful that this committee
wouldn't support reducing the liability protections that these
private carriers carry.
Mr. Mica. Well, no one has advocated----
Mr. Wytkind. It is their----
Mr. Mica [continuing]. That. In fact----
Mr. Wytkind. It is their position that they should not be
held to the same standard that Amtrak is. And that's why the
freight railroads like to deal with Amtrak, because they're
appropriately indemnified against liability.
Mr. Mica. Is that your position, Mr.----
Mr. Wytkind. That's clearly the position I heard by Mr.
Chambers.
Mr. Mica. Mr. Chambers?
Mr. Chambers. Unless I am missing what you're saying, it is
not our position. We believe----
Mr. Wytkind. Just roll back the tape.
Mr. Mica. Well again, Mr. Chambers, would you respond?
Mr. Chambers. Yes, we----
Mr. Mica. Is that your position?
Mr. Chambers. There are some major issues out there in
terms of can we introduce competition. And that's what this
hearing is about. Can we introduce competition?
Mr. Mica. On the question of liability, though, which I was
addressing to Mr. Wytkind, would you support, you know, what's
good for the goose is good for the gander? Labor has advocated
that position, I believe. And I advocate it.
Mr. Chambers. Yes. We would support that.
Mr. Mica. OK. But I think we do need liability reform. And
Mr. DeFazio has pointed out we do need adequate protection. The
last incident we had, it wasn't adequate, and we should make
certain that that's in place.
Also, this thing that somehow we advocate something that
would diminish labor's role, first, I think is not accurate. I
think if you could dramatically increase the number of routes
and use of passenger service, whether it is transit, intercity,
or long-distance, or actually high-speed rail, there would be
countless opportunities for increasing employment. And all of
those would be union memberships. Now, they may be different
unions, granted, but I think there would be substantial
opportunities.
What do you think, Mr. Chambers? I will throw you a
softball.
Mr. Chambers. Yes. The----
Mr. Mica. That's all you need to say.
Mr. Chambers. OK.
Mr. Wytkind. Could I--since I represent the labor movement,
could I answer that question?
Mr. Mica. And we'll give you an opportunity.
Mr. Wytkind. OK, thank you. That's sort of addition by
subtraction, Mr. Chairman. When you just said you want to
downsize Amtrak's role in very important business segments of
that company, and yet we're supposed to see job growth at
Amtrak, I don't think the math adds up.
Mr. Mica. Yes. Well, again, my position is, first of all,
if you could provide it more efficiently and economically,
which it is proven, at least in competition in the commuter
rail arena, that Amtrak cannot compete.
Amtrak--also I would say, Mr. Boardman, those proposals
aren't put together for free, are they? I mean there is cost
involved----
Mr. Boardman. Oh, yes, there is cost. But if I could
respond to that----
Mr. Mica. But they are spending millions of dollars to
compete and, in fact, not winning. So, first, we could save
that money.
Mr. Boardman. Well, I didn't say millions. But it is
costly.
Mr. Mica. I say millions.
Mr. Boardman. Yes.
Mr. Mica. From what we have done.
Mr. Wytkind. But the whole premise is that you're trying to
disarm the company. You're asking it to operate more like a
business. And when it tries to compete, you don't want them to
use a resource to compete.
Mr. Mica. But I think there are certain things----
Mr. Wytkind. You can't have it both ways in this committee.
Mr. Mica. Well----
Mr. Wytkind. It is one or the other.
Mr. Mica. Again, this isn't a discussion between two of the
panelists; I will ask the questions. But what we have----
Mr. Boardman. But I have to be----
Mr. Mica. Let me finish with him, then I will come back to
you. He made a comment, again, saying that somehow we are
looking at lessening the employment. I think you could
dramatically increase the employment in Amtrak and you could
also dramatically increase the private sector employment.
Again, if the service can be provided at the most reasonable
cost and maximize efficiencies, customer service--and it is
been proven in countless cases where there has been
privatization around the world, or even in our own competition,
where Amtrak competes.
Mr. Boardman, on--well, and just let me say one thing
about--one more thing for Mr. Wytkind. Was it 2008 when you all
had the labor dispute with Amtrak over wages and benefits?
Remember when we had the meeting with Mr. Oberstar?
Mr. Wytkind. Yes, I do remember.
Mr. Mica. It was 2008. But I would venture to say, too,
that labor has had a difficult situation with Amtrak. In fact,
I think those suits involved there had to go to the
Presidential board and--to secure rights. And actually, I
defended the position of labor in that instance for resolution,
where the brothers and sisters who were in the freight rails
have consistently been able to resolve their issues working
with the private sector and also maintaining, what, 22,000
miles of track over which Amtrak--or 20,000 miles, I'm not sure
of the exact figure--over which Amtrak runs its passenger
service, and all being paid a union wage and getting
substantial benefits.
Mr. Boardman, you had one other point that you made
relating to cost recovery. Eighty-five percent?
Mr. Boardman. Operating--yes.
Mr. Mica. Operating----
Mr. Boardman. Operating cost.
Mr. Mica. OK. If you calculate in the total subsidy, $1.4
billion, we come out to about $49 per ticket cost, not counting
how much money was given to Amtrak under stimulus. What was the
total given?
Mr. Boardman. I don't see the capital investment as a
subsidy. I see the capital investment the same way I see the
capital investment in highways, in airports, and in ports. It
is about the growth of this economy. It is not a subsidy to
Amtrak.
Mr. Mica. Well, the last----
Mr. Boardman. That corridor, the Northeast----
Mr. Mica. Well, the last I checked, if you had given $49
per ticket, per ride subsidy to any of those modes, you would
totally bankrupt the United States of America.
Mr. Boardman. We don't have a need for any operating
subsidy above the rail on the Northeast Corridor. And the
investment in that corridor, whether it is run by us or another
private company--and we are a private company----
Mr. Mica. Well, again, I would differ. I think you're
holding the Northeast Corridor hostage. I think we should have
four or five times the passengers, two or three times the
number of employees in that corridor. And we would also relieve
the air traffic congestion not only for the Northeast Corridor,
from which 70 percent of our chronically delayed flights
emanate, but we would also be a better steward of our
environment, and we would also move a lot more people by rail
than we are at this time.
And I hope that we can have at least the private sector
competition we have seen in other parts of the world, whether
it is Russia or Italy or Romania, in the United States of
America.
With that I will yield now for questions to Ms. Brown.
Ms. Brown. Thank you, Mr. Chairman. Thank you, Mr.
Chairman. Can you hear me?
First of all, Mr. Boardman, thank you for coming. You look
really good. You lost weight.
Mr. Boardman. Thank you.
Ms. Brown. And personally, I just want to acknowledge that
your father passed away just a few days ago. And thank you for
being here. And I--you know, the stakeholders in this room, we
all from time to time have different agreements, but we are one
family.
And I really have to say I'm--I keep saying it. I'm really
disappointed with this committee. You know, we get in the weeds
of how competition should operate. And I don't think that is
the role of the United States Congress Transportation
Committee.
We talk about--you know, one of the things that I've
constantly have heard, don't confuse these Republicans with any
facts. I mean it is no place for it in this room. I mean they
think that they can say things over and over again, and that's
the way it should be. Well, that's the way it is supposed to
be. You don't want competition? My friends here, you don't want
us to file lawsuits when someone does something wrong? Come on.
This is America. And there are recourses when you don't behave
a certain way.
Republicans are all about states' rights and the States are
free to choose the operators, whether it is Amtrak or someone
else. But I want to go back to 9/11, because to me that is the
most--that is what we need to be talking about. When--first of
all, what did Amtrak do after 9/11 to protect the public? And
what are the additional securities have we put in place?
When we went and took out the Osama bin Laden compound in
Pakistan, one of the things they indicated was that they were
going to attack our rail system. What have we done, and has the
Federal Government been the kind of partner you need in this
process?
Mr. Boardman. I think the short answer is the Federal
Government has been a very good partner with TSA. Every once in
a while we have to push back on TSA a little bit as they push
forward, trying to get their job done, and we've done that. But
Amtrak has become the leader, I think.
And what was so surprising to me in the same conference
that the chairman talked about up in Philadelphia is that the
Japanese railroads have been watching Amtrak's security. And
their indication is that they believe they're using some of
what we're doing as a model to--for the future, and think that
we're really on the right track.
And that track, really, is in two areas that we really are
looking at. One is, obviously, explosive and detection and
protection. We are using relatively new technology with the
dogs that we use, which are vapor wake, which is basically
they--you can explain that by if you smell popcorn popping in a
microwave, you're going to be able to see where that popcorn
went. And where you see us squeezing up a crowd and you see a
dog there, they're looking for that vapor wake as the crowds go
through, because you can't do it the same as they do in the
airports.
The second thing is the active shooter situation, that
we're training how do we get people out of the way quickly, and
how do we deal with something that occurs. And is what's
occurring really going to be a diversion, and there is
something else going somewhere else? When I talked in my
testimony about RAILSAFE and about how we're working with all
the local law enforcement agencies, and the numbers of officers
that we will have out today, over 1,400 of them across the
country, it is that relationship, that building of those
community relationships, where people own their Amtrak station
as a part of their community, that they are really interested
in what is really happening there.
We see a real change. We have our own people within the
Joint Terrorism Task Force are in there all the time.
Communication has improved. We follow the lead a lot of
Commissioner Kelly out of New York City, and what he has tried
to do to improve the Northeast Corridor, where we think there
is a greater vulnerability. We are a part of RAILPOL, which is
a global European effort to identify early any kinds of
difficulties across the world that we should be aware of and
knowledgeable about. I get a briefing almost every day on what
is going on in the world about Amtrak. And it is sometimes a
secure briefing.
We have done our best to train our maintenance of way and
other workers to look for and become part of see-something-say-
something. Hopefully it is nothing, because we know a lot of
times people don't want to be embarrassed and come forward and
say that they see something and it turns out to be nothing.
That is what we hope for, that it is nothing. And we are
involved in many, many ways to improve and harden our
infrastructure with cameras and fences and working with the
freight railroads, as well.
Ms. Brown. Has the Federal Government been a partner, as
far as providing additional monies or grants for security?
Mr. Boardman. Yes. We have a good working relationship with
that. We know they are going to be under stress, which will put
us under stress. We have grown, we think, fairly responsibly.
Our dog team program, we have 57 teams of dog teams out there
that, as an extra cost, almost 500 officers at Amtrak, which
most other railroads don't have, but it was absolutely
necessary to secure our customers, and that is what we have
done.
Ms. Brown. Thank you. And I have additional questions as we
move on.
Mrs. Schmidt. [presiding.] Thank you. And no, I am not
Chairman Mica, I am Congresswoman Schmidt. And I would like to
ask you two questions, sir.
How do you explain Amtrak's failure to successfully win a
single commuter rail operations competitive contract over the
last 10 years, Mr. Boardman?
Mr. Boardman. Actually, we have Metrolink, which we
received about 3 years ago, after the Veolia accident. So we do
have an additional commuter contract. But primarily because we
have----
Mrs. Schmidt. Was it competitive?
Mr. Boardman. No, it was because----
Mrs. Schmidt. The question was competitive contracts.
Mr. Boardman. OK, I know. But the fact is that when people
go through that competitive process, and then later they are
really looking for somebody that has the experience and ability
to bring back a safe environment, Amtrak is selected.
In terms of not being able to compete necessarily with--and
we have an entirely new group of competitors--the Keolis folks
were not in the environment until they came to compete on the
VRE contract. They--RATP Development, which is part of this
group, have not gotten a contract in this country. And I think
the first one they proposed on was the Caltrain contract.
Veolia, of course, has been around for a while. Under the
circumstances of what we are dealing with, we were not chosen.
But we were competitive. Even in the Caltrain project, we were
the second identified proposer. And so we believe we were
competitive. We believe we did a good job with that. We were
not selected.
Mrs. Schmidt. Well, you know, sometimes second is good and
sometimes it is not, sir. And I won't belabor this right now.
But could you please provide the committee with a detailed--and
I mean detailed--cost breakout for every commuter rail
competition Amtrak has participated in over the last 10 years?
So over the last 10 years, every contract, competitive contract
that you participated in, I would like a detailed cost
breakout. Could you provide that for us in a timely fashion?
Mr. Boardman. Sure.
Mrs. Schmidt. Thank you. I would like to turn my attention
to some other folks.
Mr. Giulietti, in your opinion, despite the fact that
Amtrak was not awarded any damages in its 5-year litigation
with Veolia after losing a competition for the Tri-Rail
commuter railroad operating contract, this lawsuit will have
the effect of stifling competition in the passenger rail
market. Why do you believe this court case will stifle future
passenger rail competition?
Mr. Giulietti. And my answer to that is that what has
happened in the commuter rail industry--Tri-Rail was the first
startup in 25 years of a commuter rail operation. It was an
industry that has been in tremendous decline. So, as we have
looked at the bids that have come forward, those bids have
included the same personnel on multiple bidders coming forward.
If you take a look at this trial--and I participated in the
trial--the basis was that Amtrak went after Veolia for using
some of their personnel in the bid document. Now, I want to
point out that the difference between the two costs--Amtrak
came in at $162 million over the 10 years of the contract,
Veolia came in at $97 million. But Amtrak took them to court
for the fact that some of Amtrak's personnel were listed on the
Veolia bid, two key personnel that were listed on the bid. And
I may be corrected on that. It could be a couple more than two,
but that's what we were focusing the trial on.
So, from a commuter rail standpoint, the fact that what
came down as a decision on this was the fact that they did not
want personnel listed from a company, that Amtrak's main
argument here--and excuse me for simplifying--was basically
that employees should not be allowed to bid or enter into a bid
against their own company. And that was the basis of the
lawsuit. So, Amtrak was looking for the total loss of their
profits and everything else, and not getting this contract.
If indeed this is held true and goes forward the way that
it is right now, the only way the commuter agencies are going
to be able to evaluate bids is that you won't be able to list
the personnel that are going to be there, because you could be
subject to a lawsuit, based on the fact that you have listed
personnel from another company. That dampens the ability for an
agency to be able to determine who the best qualified are going
to be.
The other end of it is that ultimately, when there is cost
to these lawsuits, whether it is on this or anything else, the
public agencies that are putting these competitive contracts
out, these bidders that are going to bid are going to have to
build into their cost the cost of the lawsuits and defending
the lawsuits. So that is why I say it puts a chill in, and it
causes a dampening effect in the industry.
Mrs. Schmidt. And a followup for you, sir. Do you believe
it is appropriate for Amtrak to bring a lawsuit of this nature,
particularly given the corporation status as a federally funded
subsidy?
Mr. Giulietti. You know, I have--understand I am doing this
from a personal nature, OK? And from a personal nature I was
very disappointed to see the lawsuit come forward because it,
again, entered into where the agency had to get involved, OK,
and there was a lot of expense associated with this.
I know that that has been the position of the private
sector, is that Amtrak is able to use public funds to go and
initiate these lawsuits. And I don't think it is appropriate
for me to respond as to whether or not that is right or wrong,
OK, but I will say this. The fact that this led to the decision
that it did, and the fact that this has been common practice
was very disappointing, and put us in a position that I ended
up in a courtroom discussing this. And I do feel that that part
was wrong.
Mrs. Schmidt. Thank you. Mr. DeFazio, do you have any
questions, sir?
Mr. DeFazio. Yes, thank you, Madam Chair. You directed a
question to Mr. Boardman regarding bids that were undertaken
for commuter rail. And apparently--answered in the affirmative,
provided that information.
Mr. Chambers, would your members be willing--is that
information public for the private bidders?
Mr. Chambers. I don't know.
Mr. DeFazio. Yes. I don't think it is. I mean, and I think
we are talking about proprietary information normally in a
contract bidding process.
Mr. Chambers. We would not provide proprietary information.
Mr. DeFazio. Right.
Mr. Chambers. Of that I am sure.
Mr. DeFazio. Right. And I would assume that Amtrak would
not provide proprietary information, either.
Mr. Boardman. We will only provide what we are allowed to
provide.
Mr. DeFazio. OK. All right. I just wanted to get that--
because I was a little puzzled by that, knowing a little about
the contracting process.
To Mr. Giulietti, I am just a bit puzzled on two things.
One is you were just addressing the issue of contesting
contracts. If two private companies wanted to sue one another
over a contract, over a bid, would that be OK?
Mr. Giulietti. Obviously, the answer is that it is OK, but
it is extremely disappointing, and it has been a turn in the
industry. No matter what we are putting out, whether it is----
Mr. DeFazio. Right. I mean the Federal Government--I mean I
am trying to build a new VA clinic in my home town, and I now
have--you know, we got litigation over that between private
contractors. I mean at some point everybody gets frustrated by
this. But I guess the question is why would we just tie one
entity's hands and say Amtrak, you know, couldn't pursue court
relief when anybody else could. I mean I agree with you that it
gets very frustrating, so----
Mr. Giulietti. Should I respond?
Mr. DeFazio. Sure.
Mr. Giulietti. From the standpoint, again, all right,
obviously, the court is the relief system for finding things
that are egregious. But I would go back to what was the core
here. And the core was that we put out a competitive bid. And I
am very grateful that Amtrak bid. We only had two bidders on
it. We had separated it out to ensure that there was going to
be competition. The difference between the two bids was $162
million and $97 million over the 10 years, all right?
So there is a difference between what I would consider a
true lawsuit because you are egregiously hurt, OK, versus a
lawsuit to make a point. And in my opinion, this was a lawsuit
to make a point, and that is why I have taken the position I
have.
Mr. DeFazio. Well, I understand that. But a private company
would have probably different recourse if some of their execs
signed up for a competitor who was bidding against them; they
would be instantly out of a job. And, unfortunately, I believe
probably his people had some protection where they couldn't be
instantly out of a job. So, one way or--yes, Mr. Boardman?
Mr. Boardman. Well, you are exactly right. And I think
that, yes, the point was made, and it is an important point to
make. From 1988 to 1995 I was a chief operating officer of
Progressive Transportation Services, which was purchased after
I left it and joined the Pataki administration as commissioner
of transportation. And my job there was to do exactly the kinds
of things that we are talking about here. And I had 11
different contracts that I did proposals on. In not one of
those cases did I take and approach and hire an employee of
another company prior to me presenting the proposal or the bid.
And there was sometimes in the practice of buses--this
involved buses--a practice of going and hiring the manager of
the system prior to actually getting the bid. That was not
something that I thought was ethical.
And so, for me, this is very important. I believe--and I
try to put myself forward in regard to this--that employees are
our most important and valuable assets.
Mr. DeFazio. Sure.
Mr. Boardman. Whether it is VRE----
Mr. DeFazio. Right. I get it. No--but I'm going to run out
of time.
Mr. Boardman. OK, OK.
Mr. DeFazio. But anyway, I appreciate that.
Mr. Boardman. Thank you.
Mr. DeFazio. Mr. Giulietti and Mr. Chambers, quickly. As I
understand it, you objected to provisions in the Senate-passed
bill. And I would just like to know, in particular, which
provisions. I mean because one is financial capacity, operating
experience. I assume you wouldn't object to that. Three was
applicable safety security requirements. Wouldn't object to
that. There was a part about the right-of-way, which would get
somewhat technical, dealing with the railroads, obviously.
But number four seems to be the key, which is minimum
liability coverage. And I guess I am concerned if that is the
issue, since we have already had one commuter accident which
exceeded what would be, you know, the $200 million that Amtrak
is required to carry. Are we carrying adequate liability, and
is that the principal objection?
Mr. Chambers. The principal objection to the Senate-passed
rail title was the mechanism that it set up in the Surface
Transportation Board, where the Surface Transportation Board
would have the ability to essentially engage in as much
regulation as they wanted to throughout the whole passenger
industry, including commuter. On the specific----
Mr. DeFazio. Beyond these principles we are talking about
here?
Mr. Chambers. Beyond the principles----
Mr. DeFazio. OK. Well, then, the--OK. So that's not----
Mr. Chambers. It was very broad. It was very dangerous,
from our perspective----
Mr. DeFazio. All right. OK, all right. And Mr. Giulietti?
Mr. Giulietti. Yes. On the passenger commuter rail side, we
have been wrestling constantly. For example, Tri-Rail, when it
was formed, CSX made it a requirement, even though the State
bought the corridor, that Tri-Rail had to carry a minimum of
$100 million worth of liability insurance. There is a lot of
States in the commuter rail industry that the State feels that
they handle that liability. CSX has used that numerous times--
and, in fact, part of the whole Central Florida negotiation was
that they wanted the Tri-Rail system to have to carry $200
million worth of liability coverage now. And they have actually
used Amtrak as an example, saying Amtrak is buying over $500
million worth of insurance, so therefore we should be buying
$200 million worth of insurance.
The issue for the commuter rail properties is the cost of
this insurance, and the fact that it can only be procured in
overseas markets. Everything above $75 million you have got to
go over--and I am there with CSX and everybody else, trying to
buy insurance coverages that are extremely expensive, and we
can't afford the increase. And in several cases, even down in
Florida----
Mr. DeFazio. But--OK. But if claims--I mean, you know, I
got to tell you, $75 million for a bad commuter train crash,
where is the money over $75 million going to come from?
Mr. Giulietti. Well, and that is--again, comes down to
public policy. And that is why I was--I truly--my main
objection was I felt that we really needed to talk this thing
out. In other words, there were some rules coming out that we
hadn't even had an opportunity to go----
Mr. DeFazio. Well maybe--I mean you would probably agree--
and thank you, Madam Chair, for the indulgence--but maybe we
ought to be--have to look at something like what we have done
historically with flood insurance or something, where the Feds
mandate and set up a pool or something, where people could get
into a pool. Because I am just thinking these numbers are
pretty low, given the current environment.
Mr. Giulietti. And, Congressman, that is exactly where the
commuter rail industry was. And, in fact, I even joined in with
the AAR so that we could talk with the freight railroads as
well, and approach Congress about this. It is a very serious
issue, and I agree with you.
Mr. DeFazio. I would like to hear about it anyway,
sometime----
Mr. Giulietti. Sure.
Mr. DeFazio [continuing]. If you have the opportunity.
Thank you.
Mrs. Schmidt. Thank you. I would like to go back to Mr.
Boardman first.
Sir, I wasn't asking for everybody's competitive bid over
the last 10 years. I was asking only for yours. And so there is
no proprietary issue there. And isn't it true----
Mr. Boardman. Well, I wouldn't want to give out--my
competitors my information----
Mrs. Schmidt. Isn't it--excuse me. Isn't it true that
Amtrak used an employee of Herzog in its bid for the Tri-Rail
competition?
Mr. Boardman. I don't know. I wasn't here.
Mrs. Schmidt. OK. Well, I would like to go to----
Mr. Boardman. But we don't object to using----
Mrs. Schmidt. So--that is OK. I would like to now focus----
Mr. Boardman [continuing]. Any of the other employees of
any----
Mrs. Schmidt [continuing]. My attention to Mr. Harvey. Mr.
Harvey, isn't it fair to say that because of existing labor
protections in U.S. transit law, contracting out computer rail
operations to a private operator does not have a negative
impact on existing employees----
Ms. Brown. Excuse me. Excuse me.
Mrs. Schmidt. Excuse me. I am sorry, I am asking Mr.
Harvey----
Ms. Brown. I know, but I----
Mrs. Schmidt. Ma'am, ma'am, I didn't interrupt----
Ms. Brown. But you should give him the opportunity to
answer the question.
Mrs. Schmidt. Ma'am, ma'am----
Ms. Brown. No, ma'am. You should have given him the
opportunity to answer the question.
Mrs. Schmidt. Mr. Harvey----
Ms. Brown. Just as rude as you can be.
Mrs. Schmidt. I am asking you the question, sir. Isn't it
fair to say that because of existing labor protections of U.S.
transit law, contracting out commuter rail operations to a
private operator does not have a negative impact on existing
employees?
Mr. Harvey. That depends on the operation. At Caltrain, we
were signatories to a 13C agreement, and that was developed as
a course of how Caltrain became a publicly owned railroad
before it was operated by a private railroad. So it would
depend on the 13C agreements that were signed. In our case, it
did not have a negative impact. All the employees were
protected, and their job classifications, their pays, and their
benefits. But they still had to transition and negotiate
implementing agreements with all of the unions to transition to
a new operator. That was very complex.
Mrs. Schmidt. And I know that there was some carryover
staff from Amtrak who are now employed by Transit America
Services. What--about how many percent? I mean I have heard up
to 90 percent. Is that a fair and accurate statement, sir?
Mr. Harvey. Yes. The entire existing Caltrain team, for the
most part, came over. There were a few operating engineers who
decided to stay and drive Amtrak trains elsewhere. There were a
couple of managers that went back in the Amtrak system. But
over 90 percent of all the employees in all crafts decided to
stay and operate the Caltrain service.
Mrs. Schmidt. OK, thank you. Mr. Chambers, in your
testimony you spoke to the widely held opinion that Amtrak is
the only realistic option as a provider of passenger rail
service. Do you think there would be interest from the
independent passenger rail operators in competing to
participate in the operations of State-supported intercity
passenger rail services?
Mr. Chambers. Absolutely there would be interest.
Mrs. Schmidt. And Amtrak, sir, has asserted to us in a
recent briefing that some independent operators do not carry
sufficient liability coverage. What advantages and
disadvantages do private rail operators have when competing
with Amtrak for commuter rail service contracts?
Mr. Chambers. I don't believe that the private operators,
or these operators that I represent, have any particular
advantage.
Now, admittedly, the whole arena of liability is a very
complex area. And I do think that something--such as was being
suggested by Mr. DeFazio--that we create some sort of a board
or panel of stakeholders to really thrash through that area for
both Amtrak and for the independent operators.
Mrs. Schmidt. Thank you. And Mr. Wytkind?
Mr. Wytkind. Wytkind.
Mrs. Schmidt. Wytkind, sorry.
Mr. Wytkind. Quite all right.
Mrs. Schmidt. In your testimony you mentioned your concerns
with certain railroad labor related to status the Railroad
Labor Act, Unemployment Insurance Act, the Federal Employees
Liability Act, and the Railroad Retirement Act. Are you
advocating that all commuter rail agencies and providers of
services should be subject to those rail labor statutes?
Mr. Wytkind. What I am advocating and that which Mr.
Chambers does not admit in this hearing today is that the cost
differentials that occur in the railroad industry, are often--
they come out of the hides of employees who don't get Railroad
Retirement from many of these employers. And so, this idea, it
is preposterous that they would say that there isn't a cost
structure difference between their members and Amtrak. When
Amtrak participates in commuter rail and any other rail segment
in our transportation system, they provide a pension system for
their employees, who are our members. And we should not have to
pay the price in so-called competition, that the competition be
taken out of the hide of the employees. And that is exactly
what their goal is.
Mrs. Schmidt. One followup for you, sir. Do each of those
rail labor statutes increase costs for the provision of the
service? And, if so, do you know, on average, about how much it
elevates the cost of doing business?
Mr. Wytkind. I couldn't give you--the employers that are
involved in the rail industry could tell you what different
things cost.
The statutes we are talking about--the Railway Labor Act is
basically a bargaining statute that provides for the ability of
employees and management to collectively bargain over wages,
benefits, and working conditions. The Railroad Unemployment
Insurance Act is a statutory provision that gives them
unemployment benefits for seasonal employees and other
employees.
The Railroad Retirement system is one of the premier
pension systems in the country. And there are people in this
room who are going to be beneficiaries of it, and perhaps are
others in the room that are maybe already beneficiaries of it.
And this committee's agenda, through the leadership of the
chairman, Mr. Mica, their proposals would have a significant--
to use the words of some of my colleagues on the panel--
chilling effect on the ability of workers in the rail industry
to expect to have retirement when they reach that age. Because
if you take away Railroad Retirement, you have taken away their
pension system.
Mrs. Schmidt. I will let Mr. Chambers follow, and then I
will turn my questions over----
Mr. Chambers. I believe that Mr. Wytkind has misrepresented
my position, at least as far as I am concerned.
It is not the decision of my members or Amtrak or anybody
as to whether a transit or a commuter rail passenger operation
is under the Railway Labor Act, Railroad Retirement, or the
traditional railroad laws, which, admittedly, are more--much
more--expensive. As to that decision the law dictates. Within
the law the authorities themselves make determinations as to
the level of labor protection or labor arrangements.
We are not opposed to the Railway Labor Act or to the
railroad laws, by any stretch of the imagination. And every one
of my members has all of the unions on board on three different
properties, operating under those laws. They are completely
happy to be doing so. That is not our issue. And so I don't
like to be mischaracterized, that we have some opposition to
the railway labor laws. My dad was a locomotive engineer for
his whole career and a BLE official. I grew up under that, and
I love the railway labor laws.
Mrs. Schmidt. Thank you. Ms.----
Ms. Norton. Mr. Giulietti, I just want to make sure I
understand for the record your position. Your position is that
it is appropriate and ethical for one competitor to list the
other's personnel in his bid for a contract. That is an
appropriate practice, you believe.
Mr. Giulietti. I am going to tell you that that practice
has gone on for the--almost the last 20 years----
Ms. Norton. Do you believe it is--if there are----
Mr. Giulietti. Yes, I----
Ms. Norton [continuing]. Two competitors, you are
competing--I think in this case there were only two.
Mr. Giulietti. That is correct.
Ms. Norton. To appropriate the names, through contract with
them, of course, of your competitor's employees, unbeknownst to
the competitor, in bidding against that competitor for a
contract, whatever is happening--it also happens that people
steal and rob banks for more than 20 years. My question is, is
it ethical and is it appropriate?
Mr. Giulietti. And again, I am going to respond that, first
off, all the public agencies sign on to the 13C agreements and
everything else that protect the employees, as you have heard
Caltrain talking about. The second----
Ms. Norton. Is it ethical or is it appropriate?
Mr. Giulietti. I believe it is both ethical and
appropriate, since there is such a limited pool of available
candidates. The only way an agency can make its determination
is to know who the candidates are that are being proposed. I
think that for Amtrak and for anybody else to require their
employees to tell them what they are doing is another
discussion. But in terms of whether or not my name would show
up on multiple contracts, that has been done in this industry,
and continues----
Ms. Norton. Because it has been done, it is appropriate.
Now, the fact that you would appropriate your competitor's
employees in order to get a contract that he is competing for
seems to imply that you do not have qualified personnel on
board to, in fact, carry out this contract. Is that not a
reasonable assumption?
Mr. Giulietti. I am going to say that is a reasonable
assumption. But what you also need to hear is that 90 percent
of the employees are going to move with the contract. So, as we
have seen each one of these change, the employees that are
working there continue to go to work for the next person that
is coming in.
So, in effect, that is what is going on every single time
in every one of these contracts, because there are laws to
protect those employees' rights, so they are working with
multiple contracts----
Ms. Norton. I mean I am assuming these were management
employees.
Mr. Giulietti. No.
Ms. Norton. What level of employee----
Mr. Giulietti. Oh, no, no. You are talking about in the
bid.
Ms. Norton. Yes.
Mr. Giulietti. In the bid it is predominantly management
employees----
Ms. Norton. Well, all I can tell you is you must work in--
--
Mr. Giulietti [continuing]. That were listed, yes. No, I
apologize, I misunderstood.
Ms. Norton. You work in an altered universe of ethics, if
you believe that these are ethical practices, or that somebody
ought to sit by and take it, and just assume that since it is
done in the industry, we ought to understand that, even though
we don't--apparently under Mr. Boardman it has not been done--
even though we don't do it, we ought to allow our competitors
to do it at will.
Mr. Chambers, you indicate that--in your testimony I am
looking--in your submitted testimony--that there are 27
corridors that will be, you say, nearly fully subsidized by 15
States. That is in intercity commuter operations.
Mr. Chambers. Intercity passenger, yes. Under----
Ms. Norton. Now, you would like to apply the commuter
model--I am looking through your testimony--to intercity
corridor surfaces. Are you saying that you believe there are 15
States that would be prepared to--and I am using your language
here--``nearly fully subsidize intercity corridor services''?
Mr. Chambers. Yes. I am saying there are 15 and maybe 19
States--I think that number was used--that are going to be
required by a provision of PRIIA to fully subsidize intercity
rail passenger service on all corridors under 750 miles. And
what we are suggesting here is that if the States have the
ability to put those corridors into competition, it would be a
good idea.
Ms. Norton. Mr. Boardman, what is your view of that?
Mr. Boardman. Well, I think that certainly the door has
been opened by the 2008 PRIIA legislation for the States to be
looking at competition. They could do that now. But because
there is the 209 requirement, where they have to reimburse at
least a large portion of what the cost is back to Amtrak so
that the Federal subsidy is reduced, there is a greater
incentive at this point in time for something like that to
occur.
I think what has been missed here--and he stayed quiet, and
I can appreciate; I probably would at the same time--is Mr.
Harvey, when he did his presentation, really identified the
kinds of things that you have to look at. It is not just price.
It was 25 percent price, it was 20 percent the management team,
and it was 55 percent the plans and what would be done for the
future.
I think what the States--we have good partnerships with the
States, and we really provide a connection to the national
network that would not exist unless somebody above this whole
fray exerts the policy that that has to occur. And that is one
critical piece, and I included it in my testimony.
We are not afraid to compete on a level playing field. We
are just not. We can compete. But when it is not level--and
often times we are accused of the ones that--of not keeping it
level, and yet the chairman admitted in part that it often
times is the laws that we have to follow that keep it from
being not quite so level. That needs to be leveled out, not
just for us, but for all, if there is going to be competition.
Ms. Norton. Well, the point of this hearing seems to be
that Amtrak should not compete at all.
And you say, indeed, in your testimony, looking at page
two, that there are costs and there are benefits to competing
for this commuter traffic. You say, unlike the private sector,
you cannot cross-subsidize. Therefore, it costs you more to
bid. But then you conclude, whatever the cost, private--profit
margins have decreased significantly in recent years. Yet you
say you want to continue to compete.
Mr. Boardman. Well, we----
Ms. Norton. For commuter traffic.
Mr. Boardman. Good point. We believe, in our strategic
plan, there are certain commuter operations that fit very well
with Amtrak, and we should compete for, strategically. For
example, the MARC Penn Line service would be exactly one,
because it is on our tracks. Just like that is why the Union
Pacific freight railroad and the BNSF freight railroad have one
of the largest pieces of this, more than what Amtrak has, in
the Chicago area. Right now, CSX has the other two lines going
into Maryland, as Mr. Cummings pointed out. And you also have
the--one other freight railroad--I can't think right this
minute--that provides additional commuter services, as well.
So, there are those areas that we really could compete well
with. There are other places that we are not. And I think Mr.
Giulietti--I always pronounce it wrong; I am sorry Joe--also
identified the fact that Amtrak has provided to many
communities a competitive environment by actually bidding. As a
request, many times, for us to bid, knowing that we might not
be able to really compete to it, but understanding the
necessity that they have to have that competition. And that is
exactly what happened with Tri-Rail. You know, no good deed
never ever goes unpunished in that process.
Mrs. Schmidt. Thank you. Ms. Brown, do you have any other
questions before we wrap up?
Ms. Brown. Yes, I do. Thank you. First of all, let me just
say that I get very emotional when--I don't care who is
chairing--that someone would ask the question, and we don't
give them a opportunity to complete their statement.
I have a question for you, Mr. Boardman, because Mrs.
Schmidt asked a question what would be the advantage to the
competition to provide the information that she requested. If I
could get that same information from Mr. Chambers for--on those
same contracts. I mean I know that we are--what are we doing?
Letting the competition know exactly what we are bidding? Is
this public record? I mean what is--why would we want to do
that?
Mr. Boardman. Well----
Ms. Brown. Because I can't trust that any information that
you give this committee is a confidence of this committee.
Mr. Boardman. I understand. Most of the time--and Mr.
Harvey had on the back of his presentation the--basically, the
cost structure of all the bidders. So, in that public
environment, we certainly can provide that. If it was outside
the public environment, we wouldn't provide it.
Ms. Brown. OK. And the question that was asked about has my
bid--Herzog bid on the Tri-Rail, they did not. The answer was
no. I don't think you knew the answer.
Mr. Boardman. The--I am sorry, I didn't quite catch that.
What----
Ms. Brown. The question was did Herzog bid on the Tri-Rail
contract. And they did not.
Mr. Boardman. They did not.
Ms. Brown. They did not.
Mr. Boardman. They did not. We don't have any objection to
our employees being approached. We don't. It is not that. It is
listing them in a contract without us knowing it.
Ms. Brown. Well now, I am very familiar with Tri-Rail. I
drove it, I rode it. I mean I was very instrumental in making
sure that you all got the dedicated source of revenue. But I
guess here I am just a little confused. Because if--let's just
take it to--if one of my staffers decided that if I had
opposition and that they would say, well, if, you know, you
lose, we would go to work for you, I would fire them on the
spot. And so I understand that you took them to court, and I
would have. And I am glad you took it to court. I mean let's
not be confused. You took it to court and you won.
But let me just ask Tri-Rail. What are some of the
additional safety factors that you put in place because of
the--your location and, you know, 9/11?
Mr. Giulietti. Oh, in terms of that, first off, again, we
have a great relationship with TSA. We also have a great
relationship with our partners on the corridor, which include
CSX and Amtrak. And not only did we work together with this,
but we also provide onboard security, armed security, on board
our trains, which gets us among the highest ratings in terms of
safety. It also enables us to reallocate our forces, as is
necessary when we perceive that there might be some issues on
the corridor.
The State has been a tremendous supporter on this, and we
have also had the benefit of having three airports that connect
with us. And TSA has actually brought personnel over to our
stations and assisted with security testing. And long before it
was even required, we went through emergency simulations, and
continue to do that with all of our partners on the corridor.
Ms. Brown. Did you figure out the fare box? Fare box? How
to get that money?
Mr. Giulietti. The--are we doing the fare box? We are right
in the middle--we have put the fare boxes in right now. We are
working with our partners in Miami. We are trying to get the
other two counties to come on board with us. But it has been
through the tremendous support of Congress that we are able to
be able to put those out there. Yes. Thank you again.
Ms. Brown. One last question for Mr. Wytkind. Mr. Mica said
contracts should go to the lowest cost bidder. What does that
mean for the workers?
Mr. Wytkind. Pretty simple stuff. We have a history in this
country where privatization in any industry, particularly
transportation, is used to undermine basic benefits and wages
of workers. And if you are looking for the lowest cost, then
you are talking about eliminating a legitimate pension system
from railroads.
And Mr. Chambers's comments earlier are just not accurate.
He has got members who do not pay into the Railroad Retirement
system, including Tri-Rail, which does not. I am not going to
get into the details about why they should, shouldn't, or
whether they do, it is a fact. There is a segment of the
railroad industry that does not participate under the various
railroad laws.
And it is the position of the association that Mr. Chambers
represents to advocate for the so-called commuter model across
the entire Amtrak system--which is code. This committee is
famous for code. For workers, the code is you are not going to
get a pension system because we are going to use the same model
we are seeing elsewhere, and we are going to apply it more
vastly to the entire Amtrak system. That is a loser for
employees.
Ms. Brown. Well, I want to thank you all for your service,
and thank you for your coming here. And tell those Amtrak
employees to keep it up, that they got a team that appreciates
them, at least on the D side.
Mrs. Schmidt. I would like to----
[Applause.]
Mrs. Schmidt. I would like to go back to Mr. Boardman,
because I think there has been some confusion on the question
that I asked you originally. And what I really am trying to get
at, sir, is how much it costs Amtrak to prepare all of those
bids over the last 10 years.
So, what I would like you to provide for this committee is
a detailed cost breakout of every commuter rail Amtrak
participated in--competition Amtrak participated in over the
last 10 years. And I think you should be able to come up with
that.
I would like to thank each and every one of you for coming
here today. In the era that we are in, where every dollar is
precious, we have to learn how to make dollars work. And we
also have to have a transportation system that is workable for
this country. I am not against Amtrak, but I have seen some of
the flaws in Amtrak, especially when it cost so much for a
simple Coca Cola for Amtrak to provide. And with food costs
going up in this country, the fact that we are losing so much
with Amtrak on food cost is only going to get wider. There are
other cost problems that are going to continue to occur with
Amtrak. There may be other problems with private industries, as
well.
And so, I think it is incumbent on all of us to find ways
to use those precious dollars in a very wise and judicious
manner. Thank you all. And this hearing is adjourned.
[Whereupon, at 1:10 p.m., the committee was adjourned.]