Mr. LUKEN. We will now proceed with accepting another unanimous consent request. Mr. MCMILLAN. Mr. Chairman? Mr. LUKEN. Mr. McMillan-oh, I'm in trouble. The gentleman from North Carolina, Mr. McMillan. Mr. MCMILLAN. Since you cut me off, I'll go ahead and read my statement. I was prepared to insert it in the record. Mr. LUKEN. I knew I was in trouble. Mr. MCMILLAN. Thank you, Mr. Chairman. I appreciate the opportunity this afternoon to hear from our witnesses on the question of reauthorizing Amtrak. Historically I've supported Amtrak because it serves a potentially low-cost alternative to other modes of transportation. In contrast to its major competition-air, automobile-the subsidies are probably mild by comparison, if we take into account total Federal, State, and local subsidies, plus the tax benefits that are afforded other modes. I believe that we will see a resurgence of rail travel in the remaining years of this century. We are already beginning to see it in Amtrak, resulting from congestion and rapidly escalating cost of competitive modes of transportation. The 1971 charter calls for Amtrak to become totally self-funding. It is to that end that I supported an amendment to freeze funding last year. But I realize that the challenge of total self-sufficiency is more complex than that, and success depends on what flexibility Congress is prepared to provide. In considering Amtrak reauthorization levels for this Congress, a number of important considerations need to be reviewed. Its current operating costs need to be lean, consistent with providing a competitive and safe alternative. That would include striving for modified statutes governing workmen's compensation, unemployment insurance, and liability claims. I am also concerned that Amtrak be enabled to innovate to build ridership and increase operating revenues, reduce operating costs per passenger, and maintain safety and provide competitive alternatives while reducing, over time, the level of subsidy. To achieve this growth and expansion with relatively less Federal subsidy will require consideration of financing alternatives, such as taxfree bond authority, or State-supported revenue diversion to fund specific rail alternatives to other transportation modes, or power to lease right-of-way for other uses. I look forward to hearing the testimony of our witnesses today. I yield back the balance of my time, Mr. Chairman. Mr. LUKEN. I am particularly abject in my apology, since the gentleman is always here, and I should have looked for him. I thank the gentleman from North Carolina. Mr. Claytor, we welcome you, as soon as we accept by unanimous consent a statement for the record from Mr. Lent, also of New York. [The prepared statement of Mr. Lent follows:] PREPARED STATEMENT OF HON. NORMAN F. LENT Thank you, Mr. Chairman. When Amtrak was created in the early 1970's, it was a risky experiment, and was greeted with a certain amount of skepticism. After all, it was inheriting rail passenger service that had been virtually orphaned by the railroad industry. Over the intervening years, though, we have seen Amtrak progress from a tentative experiment to a major link in our national transportation system. Amtrak is the preeminent carrier of passengers on the Northeast Corridor. The people of the New York area can appreciate first-hand how vital Amtrak is to travel in their region and indeed along the entire east coast. But Amtrak's very success has bred new requirements. Its service on the Northeast Corridor, and on some of its cross-country routes as well, is now so popular that all seats are frequently sold out. This is tangible evidence that, over the next few years, Amtrak must have the wherewithal to replace aging equipment and to improve and expand its fleet. The authorization measure that this subcommittee will approve in this Congress is a key step toward Amtrak's achieving the kind of orderly and comprehensive capital program that it needs. We must also make sure that Amtrak continues with its program of capital investment and facilities improvements. In the New York area, for example, Amtrak has a key interchange with the Nation's largest commuter rail carrier, the Long Island Railroad. The continued improvement and modernization of facilities in New York greatly increases productivity for both carriers. Finally, we need to do all that we can to support the comprehensive and highly successful program of cost reduction and revenue enhancement begun by Graham Claytor and his superb managers. There are very few Federal programs, if any, where the cost to the taxpayer has been cut in half, in real terms, in 7 years, while output has steadily increased. Yet that is exactly what Amtrak achieved from fiscal year 1981 through fiscal year 1988. I am confident that Amtrak will continue to build on this superb record if we provide it with the necessary resources. Thank you, Mr. Chairman. Mr. LUKEN. Mr. Claytor, you're on. STATEMENT OF W. GRAHAM CLAYTOR, JR., PRESIDENT, NATIONAL RAILROAD PASSENGER CORPORATION, ACCOMPANIED BY TIM GILLESPIE, ASSISTANT VICE PRESIDENT, GOVERNMENT AND PUBLIC AFFAIRS; WILLIAM S. NORMAN, EXECUTIVE VICE PRESIDENT; AND D.F. SULLIVAN, EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER Mr. CLAYTOR. Thank you, sir. I want to thank the chairman and members of the committee for holding this hearing and for their most helpful statements. With me on my right, executive vice presidents, William S. Norman, who handles marketing, planning, and a number of other department; Mr. Dennis Sullivan, who is our chief operating officer; assistant vice president, government and public affairs, Mr. Tom Gillespie, on my left, and behind me is John Lang, assistant vice president of labor relations. Mr. Chairman, I'd like to ask that my prepared statement and attached legislative report be included in the record. Mr. LUKEN. Unanimous consent; without objection, so ordered. Mr. CLAYTOR. 1988 and 1989 have been Amtrak's best year in its almost 18-year life. We had record revenues of over a billion dollars in 1988, which will be substantially exceeded in this year. Record passengers and passenger miles in each year have also been noted. As the chairman said, our bottom line, our revenue-to-cost ratio, has risen from 48 percent in 1981 to 69 percent in 1988. This year, right now, it's 70 percent; for the end of this year we hope to make 71 or 72 percent. Our operating grant-a portion of our grant dedicated to operations, has been reduced in constant dollars about 40 percent in the last 8 years. We have got to remember that we are still losing on operations about half a billion dollars, or more, each year. The only way we can continue the progress we've been making toward self-sufficiency and expansion of service in routes is the combination of more revenue and less costs through better efficiency. Now, how do we do that? A principal requirement for continued progress is more capital for, first, new equipment, which will bring us increased revenue, and; second, improved maintenance facilities to enable us to hold down expenses and to improve our maintenance and our ontime performance and other operating characteristics, as has been already noted. We are currently the victims of our own success. We had over 200,000 standees on our unreserved trains last year. Even before the summer peak season, as Mr. Whittaker has already pointed out, long distance accommodations are being sold out. Now, sold out trains means lost revenues, and lost revenues means a lost opportunity to improve further our financial results. Our recent performance has enabled us in fact to establish a good credit rating in the financial community for the first time. As long as we were being told that we were to be put out of business at the end of the year, our credit rating didn't stand so well. But now we have established, and have been able to borrow money, and I am satisfied that we can match any appropriation for capital for new equipment with an equal amount from the private sector. We urge this committee to adopt your bill, Mr. Chairman, as well as S. 462, reported favorably by the Senate Commerce Committee on April 18, 1989. Both bills have the same authorization— $656 million for 1990, with the following years increased by inflation. Now, Mr. Chairman, $656 million in 1990 will enable us to keep moving toward self-sufficiency. One hundred million dollars in capital for equipment and improvements would be made available by that appropriation. Of this, I would allocate $50 million for new sleepers. If we can put $50 million in new sleepers, we will match this with another $50 million we will raise in the private marketmaking $100 million for new sleepers. These sleepers are what we call Viewliners. They have been designed and tested by Amtrak; in fact, they are being tested in service right now. They have 50 percent more berths than the old Pullman Heritage sleepers 40 or 50 years ago that we must use here in the East. With a 50 percent added capacity without adding any operating cost, this should make our eastern long distance trains much closer to break even, and it's very important. But we can't move into that program without the capital that we've been talking about. That's absolutely critical. Of course, other parts of this capital that we would be able to use if we get this authorized amount would give us better and more efficient maintenance facilities, which would enable us, of course, to improve our liability and on-time performance. In that connection, I might say that our on-time performance on the Northeast Corridor is quite high, it's in the high 80's. Metroliner performance has been better than 90 percent. Ontime performance in the off-corridor areas, on which we have to operate over the other railroads, has been quite poor. Much of that is due to freight train interference and to problems of signals and that sort of thing, over which we have no control. But we are working closely with our contract railroads to try to do the best we can in that area. That's where our problem is. We also, of course, have a problem that we are overutilizing our present equipment. That makes the maintenance failures higher than they ought to be. If we can get the additional equipment and the additional facilities, I think we can fix that. That's why I'm very optimistic that this year, for the first time in many years, we hope to be able to come through with a real capital improvement. Now, Mr. Chairman, there are other savings that could be made through legislation. I would like to note that the legislative report, which we filed last February, is attached to my prepared statement. The proposal in that report, in fact, if all enacted, would save us $40 to $50 million a year and enable us to cut our costs and operating subsidy accordingly. Now, the chairman has suggested the possibility of a separate hearing on the important issue of providing a 3-year trial period in which Amtrak's employee injuries are compensated under State worker's compensation law like every other industry, except railroads, instead of the Federal Employees Liability Act. I would like to urge that we do that. I think it's an important, complicated, and difficult problem-a very important problemand, accordingly, I do not propose to discuss that issue any further in this hearing. What I do want to talk about, though, are a couple of other things that were approved by the Senate committee. The Railroad Unemployment Act has a provision in it at the present time that says that after 1990 all payments into that fund by railroads shall be based on the individual company's experience, not on industry averages-which has been the rule in the past. That means that both Amtrak and the various commuter agencies would have a much smaller payment; the results to the employees will be the same because the other payment's going to come from the freight railroads that have a bad experience. That's a great improvement and will save us millions of dollars in the years ahead. But last year, the commuter agencies obtained a provision that said that that-basing the experience on your own experience and not on the averages-should take effect in 1988 and 1989 for them. We think that same provision should now be applied to Amtrak, because it would save us $80 million a year, or $16 million right out, without any adverse effect on anybody. The railroad industry has not opposed it. They would be the ones who would have to pay the difference. It seems to me that this is a provision-it was unanimously approved by the Senate committee. I don't know that there's any basis for opposing it. In fact, it's rather unique in that it's the only provision I can remember since I've been here that the OMB has supported that we also supported. So I would like to urge the committee to include that figure in this operation. Now, a second item that the Senate committee did approve and that we strongly support also is supported by us, by all the commuter agencies, and by the railroads over which Amtrak or commuters operate. Punitive damages from passenger train accidents. Now, the Federal Tort Claims Act already has such a provision for claims against the government. Of course, claims against Amtrak and the publicly funded commuter agencies are going to be paid in the end by the government so it's the same thing. But we must keep in mind that the freight railroads, over which both Amtrak and most commuter trains operate, are reluctant to expand or even to continue passenger train operations because of the enormous potential liability of punitive damages from a passenger train accident. The proposed northern Virginia commuter operation has been stalled by this problem and I don't think it will ever get off the ground unless we are able to solve it. Accordingly, Amtrak itself has been threatened with litigation by some of the contract railroads, and another railroad has threatened to reduce the speeds of our trains over their lines because of the danger of punitive damages in an accident. Our proposal would provide that no punitive damages may be awarded against Amtrak, against a publicly funded commuter agency, or against a railroad over which we or the commuter agency operate if arising out of the train operations that we or the commuter agencies conduct-it's very limited. But it would clear the deck for expanding commuters all over the country as well as our hope that if we get the capital we want, we hope to expand our service. Every time we talk to a railroad about expanding our service, we are met with the argument, it's too dangerous because we are afraid of punitive damages. This will fix that. I don't think it will make much difference in anything but the perception, but it will certainly make a difference in our ability to expand our railroad, and it immediately will make a difference for the northern Virginia commuter service. I think we could put that into effect within a year if we can get this problem solved. Incidentally, in northern Virginia, we have already contracted with the northern Virginia commuter agency to run that service for them under contract. So it would go right forward. Mr. Chairman, in conclusion, I would like to mention two other matters that are not now before the committee but they will seriously affect our future. Mr. LUKEN. Can you do it in about 60 seconds, Mr. Claytor? Mr. LUKEN. Good. We are called to the floor. We can wait 60 seconds. Mr. CLAYTOR. All right, I'll finish. To ensure our ability to continue to get the capital we need in the long pull ahead, we think the only real solution would be to provide a transportation trust fund that would provide funds for both Amtrak and for the commuter |