Page 1       TOP OF DOC


U.S. House of Representatives,

Subcommittee on Railroads,

Committee on Transportation and Infrastructure,

Washington, DC.

    The subcommittee met, pursuant to notice at 2 p.m. in room 2167, Rayburn House Office Building, Hon. Susan Molinari (chairman of the subcommittee) presiding.

    Ms. MOLINARI. Good afternoon. The subcommittee is holding a hearing today on the various high speed rail programs administered by the Federal Rail Administration. The authorization for most of these programs expires this fall at the end of fiscal year 1997.

    Now, I approach this subject with mixed emotions. On the one hand, my State, New York, has been at the forefront of promoting high speed rail passenger service. The Empire Corridor, in which the State has invested large sums of improvement money, is one of the few places outside the northeast corridor with tracks good enough for train speeds over 100 miles per hour.
 Page 2       PREV PAGE       TOP OF DOC

    The State has also been involved all along the way in a continuing effort to develop turbine power passenger trains that offer high cruising speed without the tremendous infrastructure cost of electrifying the route. At the same time, I'm well aware from my service on the Budget Committee, with my colleagues—thank God we have somebody else here from Transportation and Budget, Bob Franks, that we have to deal with a very constrained Federal resources in an era where balancing the budget has become a top and agreed-upon priority.

    At a time when our existing conventional rail passenger service, Amtrak, seems to be on the brink of financial collapse, it's difficult to see any prospect for major Federal funding of high speed rail corridors. This is especially true in light of the much higher per mile cost of establishing high speed rail service as compared with conventional passenger trains. On the other hand, there is certainly a role to be played by the Department of Transportation and the Federal Rail Administration in establishing safety standards for the high speed future rail operations, and in helping to advance the application of high speed rail technologies.

    Chairman Shuster has indicated that the Transportation and Infrastructure Committee will probably mark up the successor legislation to ISTEA before the Memorial Day recess. This subcommittee also intends to comply with that schedule by marking up the rail component of the post-ISTEA legislation, probably next week.

    At the present, we do not have a legislative proposal from the Administration on the high speed rail program. And I hope that the Administrator can help us and assist us in that respect at today's hearing.
 Page 3       PREV PAGE       TOP OF DOC

    Ranking Member Wise.

    Mr. WISE. Madam Chairwoman, Chairwoman Molinari, I want to thank you as well for calling this High Speed Rail hearing. As you know, currently the programs are administered by the Federal Railroad Administration and originated in the 1991 ISTEA legislation and in the Swift Rail Development Act of 1994. I didn't realize Al had such a good name for high speed rail.

    The investments in high speed ground transportation can provide many benefits to this country. For example, in the northeast corridor, there's little room and even less money to build airports or highways. High speed rail helps improve the air quality and reduce traffic fatalities, as well as providing alternative transportation for elderly, handicapped, serving rural areas. And finally, it's a safe, efficient, reliable and enjoyable way to travel.

    Through the Swift Rail Development Act and ISTEA, we funded high speed ground transportation planning and research and development projects. The question is whether we as a Congress will continue to only fund preconstruction assistance, as has been the past practice, or will we choose to advance Federal involvement in high speed ground transportation.

    Currently, no high speed rail operations are underway in the United States except Amtrak's New York to Washington Metroliner service. However, as we all know, several projects are proposed in various regions through the country, most notably the Florida Overland Express project.

 Page 4       PREV PAGE       TOP OF DOC
    And finally, I guess a question is, are we going to continue to reauthorize programs like the Swift Rail Development Act, authorized for maximum potential benefit of $184 million over the past 3 years, and then allow only one-third of the money to be appropriated. No, this is not my mantra for capital budgeting, but well it could be.

    Now is the time to seize the opportunity to fully utilize our authority to further the success of these cost effective programs and improve the mobility of our citizens.

    Madam Chair, you made a reference to the Budget Committee, and I'm delighted that we have such able representatives. Because I had a chance, I'm off the Budget Committee now, but served on there 6 years. Somehow, folks need to understand a little more about transportation. And I know you've been advancing this, and Bob Franks as well, and others.

    But people need to understand that the dollar we put into it now is a dollar that's going to come back many times over. It's another example of capital budgeting and indeed, the justification for overall transportation infrastructure. This isn't about Amtrak, but the reality is that we could be headed, if we do not recognize the need for transportation funding, adequate transportation funding, whether it's in the case of high speed rail or Amtrak, overall, we could be headed for a true bipartisan derailment.

    And so I think the need is, we've got to keep driving that message. And this hearing, I hope, is part of that process.

    Thank you.

 Page 5       PREV PAGE       TOP OF DOC
    Ms. MOLINARI. Thank you, Mr. Wise.

    Mr. Blumenauer.

    Mr. BLUMENAUER. Thank you, Madam Chair.

    I appreciate both the hearing and your admonition framing it. Because we're very concerned about the resources, but I think as is coming forward, we'll have before us a different game in terms of some of the new technological developments. We have opportunities for high speed rail that are less capital intensive than in the past.

    Second, I think the just-in-time economy in my district and in other communnities is dependent upon the ability to have trade access. And high speed rail is an essential key to do that; it allows the economic expansion that we will need to create $45 billion a year in increased revenue upon which the budget deal is based.

    And last but not least, something that I hope this committee will aggressively bring forward to the Congress and to the public is that high speed rail is the single most cost-effective way to buy additional highway capacity and airport capacity. And as long as we do that, I think there should be no conflict with the appropriate admonitions you gave us. And I hope that we can carry that message forward to the American people.

    Thank you.

    Ms. MOLINARI. Thank you.
 Page 6       PREV PAGE       TOP OF DOC

    Let me just add, Mr. Blumenauer, that when you talk about the on-time delivery, I'm very well aware that when I was pregnant, about a year ago now, I was riding Amtrak's Metroliner service, and really counted on that on-time service from Washington to New York. I know personally from whence you speak.


    Ms. MOLINARI. Go ahead, Mr. Wise.

    Mr. WISE. I was going to say, thankfully there were no labor problems.


    Ms. MOLINARI. On that note, I think what we'll do is adjourn for a few minutes to go vote, so that we don't have to interrupt your testimony nor our thoughts when we start to question you. So if you will just allow us a 10 minute break, we'll be back as quickly as possible.

    Thank you, and we're sorry for this interruption.

    [The prepared statement of Mr. Lipinski follows:]

 Page 7       PREV PAGE       TOP OF DOC
    [Insert here.]

    Ms. MOLINARI. Thank you, Administrator, for the interruption, and we'd be happy to hear your testimony.


    Ms. MOLITORIS. Thank you, Madam Chairwoman. And to all the members of the committee, it is a pleasure for us to be invited here to talk about high speed rail. We want to thank you and the members of the committee for your continued interest and support, and counsel and advice, about high-speed rail.

    As you know, Madam Chairwoman, the first bill that was introduced in the first 100 days of the Clinton Administration was indeed the High Speed Rail Development bill. It went to Congress, and went with a much larger package than came out in the Swift Rail Development Act.

    We had in fact, I know there are questions about corridor development, we had indeed proposed that, but for a variety of reasons that could not be agreed upon and worked out with Congress. So we ended up with the Swift Rail Development Act. I think we can show some real value in moving high speed rail forward.

    As we looked at high speed rail in this country, we see that the genesis of high speed rail initiatives have come from the States. It's really very timely, Madam Chairwoman, that you would be having this hearing today, because many of us have just returned from the High-Speed Ground Transportation annual meeting. So I can give you some fairly timely observations about what is going on around the country.
 Page 8       PREV PAGE       TOP OF DOC

    What we know is that the Clinton Administration and the FRA looked at the resources provided in Swift, and decided to focus on the kinds of results that would benefit corridors around the country. Those three areas are; advanced train control systems, non-electric locomotives, and grade crossing safety.

    As you well noted, the State of New York has been in the forefront of working together with us. They have a very popular and well ridden service from Albany to New York. It was one of the areas that we worked closely with them on.

    We are investing in the recapitalization of the turbo trains, along with Amtrak. They are very popular, they are working well. And New York State has made high speed trains on that corridor a priority of their transportation program.

    In addition, the non-electric locomotives have a project, working with the University of Texas, on a flywheel project which will enable higher speeds and greater acceleration, where States around the country want to have high-speed rail but do not have the resources to electrify the corridor, as we have done on the northeast corridor.

    With advanced train control systems, I was pleased to go to Michigan last year, where we ran at speeds of 100 miles an hour with an overlay system of train control. We have seen a partnership with rail labor, with the State of Michigan and the FRA in promoting this development, and with Harmon Industries, I should mention.

    In addition, how do we protect all passenger trains from hazards at grade crossings? This has been an area of development that has been underway, and we have worked together with States, Illinois, Florida, California and the midwest, around Chicago.
 Page 9       PREV PAGE       TOP OF DOC

    I think it's interesting to note that over this 4-year period, the Federal dollar investment is approximately $75 million. And it has leveraged 40 percent more from the private sector, from States, so that we really have invested over $100 million in moving these technologies forward. Because these are technologies that no one State could develop on their own.

    High-speed rail is important to this committee and to the country, because it is a cost beneficial investment. I was at a hearing this morning, Madam Chairwoman, at 10 o'clock, and the GAO was there, and testified that the very best investment Amtrak could make was in high-speed rail, because the return on that investment will be so great.

    I think if you saw the almost 400 registrants at the High-Speed Ground Transportation annual meeting, you would see the depth and the breadth of interest in this country in high-speed rail. For example, in the State of Oregon, the Talgo train operating on that north west corridor from Oregon, the State of Washington, into Vancouver, has been extremely popular, even though it has not gone at very high speeds, because they are upgrading the track.

    In fact, when we were there, the headlines in the newspaper said, slower than a speeding bullet. And in fact it was. But the people have reacted strongly. That train is making money on its food, because they have introduced an entrepreneurial regional cuisine. High-speed rail can be the nugget, the focus of entrepreneurial activity, and a profitable rail passenger service. It truly can be a link to the 21st century.

    We see in the future a reauthorization bill from the Administration. We expect that that will be forthcoming. We are looking at opportunities within NEXTEA to support high-speed rail. NEXTEA provides flexibility for States and regions to cooperate in developing high-speed rail corridors. I know that there is a question among the committee members about new corridors to be identified. We think that NEXTEA provides States an opportunity to develop a program on a corridor that they could come and work with us on.
 Page 10       PREV PAGE       TOP OF DOC

    So in the beginning of the Administration and now with NEXTEA, along with our budget proposals, and the Congress' investment, we think we have netted movement of high speed rail in corridors beyond the northeast corridor, although we know that that's the only corridor today going at 125 miles an hour. It is attracting many customers.

    The Metroliners, for the first time in Amtrak's history, are making a profit. And that's what we all want. We think the new high speed trains, the American Flyers, which will be on-line in 1999, will spin off in a few years up to $150 million worth of profit for the corporation.

    So we are pleased at the progress. We need to make more progress. We think the State initiatives and partnerships in cooperation with FRA, as well as each other, are very promising. We want to move these projects so that in the 21st century, high-speed rail will become real, not only on the northeast corridor but elsewhere.

    Thank you, Madam Chairwoman.

    Ms. MOLINARI. Thank you very much, Administrator.

    If you could just clarify for me what the status is of the Administration's high speed rail proposal.

    Ms. MOLITORIS. It's under consideration, Madam Chairwoman.

 Page 11       PREV PAGE       TOP OF DOC
    Ms. MOLINARI. When do you think we can anticipate getting that? Do you have any idea?

    Ms. MOLITORIS. It would be hard to give you an actual date. But I would say it will be forthcoming. That would be the best I could do today.

    Ms. MOLINARI. That's very good. I'll have to remember that.

    Mr. Wise?

    Mr. WISE. I'm nonplussed by that myself. I just stand in awe of that response.

    But Madam Administrator, I want you to know there are a bunch of us up here that are going to be using that shamelessly in our own remarks at different times.

    Ms. MOLITORIS. We try to learn from Congress, Mr. Wise?

    Mr. WISE. Did you come from the State Department?


    Mr. WISE. Section 1010 of ISTEA set aside $25 million specifically for grade crossing improvements along designated high speed rail corridors. Does the Administration favor continuing those explicit setasides for high speed rail corridors?
 Page 12       PREV PAGE       TOP OF DOC

    Ms. MOLITORIS. Well, again, until the bill is finally produced, I couldn't comment certainly. But I could comment on the success of those investments. Those were five high speed corridors with $5 million a year. It has produced increased safety at grade crossings throughout those corridors.

    As a matter of fact, in 1996, we found an increase in grade crossing safety of 20 percent nationally, and in some States, 50 percent or more in terms of increased safety. It wasn't all from that money, but that money was part of it, part of a large national program to increase safety, where the greatest number of deaths in the rail industry actually occurs, with trespassing incidents and at grade crossings.

    Mr. WISE. Also, the Administration has proposed as part of its NEXTEA bill an infrastructure credit enhancement program, sort of a Federal level infrastructure bank for projects of national importance. The State of Florida has requested $300 million over 6 years to help support their FOX high speed rail program. Without commenting on the specifics of their proposal, is this, but generally commenting, is this the sort of program that might appropriately be financed under the Administration's proposal as infrastructure credit enhancement program?

    Ms. MOLITORIS. Mr. Wise, I think that the State of Florida would have the opportunity to make the case that this is a project of national significance. You can look at the Alameda corridor as an example. That was a corridor which implicated the movement of freight throughout the country.

 Page 13       PREV PAGE       TOP OF DOC
    And I think the State of Florida certainly has a success story to tell. They have as a State led the Nation in their identification of a commitment, $70 million a year for 40 years, indexed for inflation. A very firm commitment by the State, which really makes this FOX project possible, 200 miles an hour on a dedicated right of way, to move the people of Florida fast, efficiently and safely. I think they have a very good story to tell, and it would be incumbent upon them to present their case for its applicability.

    Mr. WISE. So then the decision on the applicability would be forthcoming?

    Ms. MOLITORIS. I think that's correct, Mr. Wise.

    Mr. WISE. Thank you. If the recently announced budget agreement, which we try to determine what's available in different segments, or sectors of it, provides only $2 billion more per year for surface transportation spending than what is currently being spent, will the funding flexibility proposals made by the Administration really increase the amount being spent for high-speed rail?

    Ms. MOLITORIS. Well, what we have seen, Mr. Wise, is that even with ISTEA as it is today, and that doesn't have as much flexibility as the President's NEXTEA proposal, that States throughout the country want high-speed rail, need high-speed rail, and are investing funds. Some of them are flexing existing Federal transportation dollars.

    I think that tells us, and I could give you many examples of innovative financing projects that have done the same. But I think what it tells us is that States want to have a partnership with us, want to invest dollars where they are most needed. If you look at the northeast and their issues with commuters, if you look at California and their gridlock, if you look at the opportunities the Northwest sees to enhance the movement of people and freight along their corridors, I think you see reasons for investment, and I think it will continue. And we want to enhance the flexibility and opportunity for them to do it.
 Page 14       PREV PAGE       TOP OF DOC

    Mr. WISE. And a final question. The Swift Rail Development Act defines high speed rail to include only steel wheel technology, excluding maglev. FRA's recent commercial feasibility study found that maglev is a feasible technology in several corridors, and is among those with the highest cost benefit ratios in, for example, the California corridors. Is there any reason why this program should still exclude maglev technology?

    Ms. MOLITORIS. Mr. Wise, actually, at the convention, a fifth meeting of the Maglev Commission, which will be advising Secretary Slater on magnetic levitation, met and they will be revising and updating a final report of recommendations to him for his evaluation.

    And I think from that partnership, and this commission represents financers and experts around the country, with expertise relative to magnetic levitation, we will see some very positive kinds of ideas coming forward. And then I think we will begin to see ways that this may be incorporated into a future look at the 21st century transportation system.

    Mr. WISE. Thank you.

    Ms. MOLINARI. Let me just ask one quick New York question. You had stated in your testimony and previously that you're working with New York on some of the enhanced acceleration capabilities for the turbine. I know New York is looking at remanufacturing the locomotives to the state of the art. Does FRA support that?

    Ms. MOLITORIS. We have been working with them for almost 5 years now, Chairwoman Molinari, and we are enthusiastic about that. In fact, we've agreed with them that two additional locomotives will be upgraded. I know that the Department and the Governor would like to do all seven. I think they haven't quite identified the total resource package.
 Page 15       PREV PAGE       TOP OF DOC

    But I want to commend Amtrak and George Warrington for working closely with New York. Because that partnership and their agreement really made it happen. So we're very pleased about that.

    Ms. MOLINARI. All right, great. So you're with them, you're just not moving as quickly as New York wants?

    Ms. MOLITORIS. Well, they'd like to do more. We're moving quickly on the two. They would like to do the seven.

    Ms. MOLINARI. Thank you.

    Ms. Granger.

    Ms. GRANGER. On page three of your testimony, you mention that the FRA has administratively defined high speed rail as service for a maximum speed of 110 miles an hour, but the Swift Act's statutory standard of 125 miles per hour defines high speed rail. How do you square that?

    Ms. MOLITORIS. Since I just got back late last night, please forgive me. I'm looking at this. Oh, no, it says above, above 110.

    Ms. GRANGER. Above 110, 125. Okay, thank you.

 Page 16       PREV PAGE       TOP OF DOC
    Ms. MOLITORIS. Right. New York has high-speed service of 110 miles per hour right now. We're working with them to increase that. But the high speed services that are in our commercial feasibility study, we look at three different types, ''accelerail,'' which is the term we use for upgrading traditional service on existing lines to 150 miles an hour, which some of these new non-electric locomotives can attain. And then the high speed service, more like the Florida project, which can go up to 200 miles an hour, and then evaluating the maglev, which goes up to 300 miles an hour.

    Ms. MOLINARI. Mr. Mica.

    Mr. MICA. Thank you, Madam Chairman.

    A couple of things. I notice in the testimony of the next witness a recommendation that one cent of the 4.3 cents go toward rail. Have you all taken any position on that 4.3 cents? I know in the budget there's pretty much an agreement that the 4.3 cents I think is going to come back into transportation. But what mix you're recommending?

    Ms. MOLITORIS. Our recommendation before the budget agreement was of course contained in NEXTEA, Mr. Mica, which spelled out a 6-year path for investment. I, as I said, just returned last night, and I don't think that the details of available monies that were agreed on in the budget agreement have been fleshed out yet. So I don't know.

    Mr. MICA. Have you seen this testimony? It's Mr. Nevel, who's Vice Chairman of the High Speed Ground Transportation Association. And he's, I guess they're recommending dedicating one penny from the 4.3 cents. So you're not——
 Page 17       PREV PAGE       TOP OF DOC

    Ms. MOLITORIS. I know about their proposal. I haven't seen his particular testimony. But as we point out, with regard to the group that is supporting, say, for example, the half cent for Amtrak, we believe that the glide path in NEXTEA provides 96 percent of operating and 90 percent of the capital that Amtrak is requesting. We see that as sort of a design for rail in the next 6 years. Obviously, we couldn't have everything in there that we wanted, because we have to operate within a context of reducing the deficit.

    So what will come out of the budget negotiations, I don't know, Mr. Mica, in terms of who gets what.

    Mr. MICA. Really, the key to any advances in high speed rail depend on financing. And I'm wondering if you have any new ideas up your sleeve or anything you're willing to speak about today, about changes in ISTEA for future eligibility, for financing, anything dealing with loan guarantees.

    Last year, I included the Infrastructure Banking proposal primarily for surface transportation, but for projects, it was limited to 10 demos. Is there anything you can relay to us today on new approaches to financing that will make any of this a reality?

    Ms. MOLITORIS. Well, I think the elements of NEXTEA really in some ways incorporate your idea of last year. First of all, the Secretary has included rail as eligible in publicly owned projects from the Highway Trust Fund. They would be eligible under surface transportation program, and also as parallel facilities of the national highway system.

 Page 18       PREV PAGE       TOP OF DOC
    So there are two eligibilities there. They would be eligible for monies from State infrastructure banks. And I think only two State infrastructure banks are fully up and running right now. But they present opportunities for investment in big projects. The credit enhancement that——

    Mr. MICA. Do you favor a continuation and expansion of these financial incentives, I take it?

    Ms. MOLITORIS. That's what is in NEXTEA, an expansion of those opportunities from ISTEA. More definition, more clear eligibility for rail.

    Mr. MICA. The other area that concerns me, as you know, is maglev. We sort of studied it to death, and we're about to get a report, I guess. But it has a very cash intensive R&D effort. If we don't get in that parade, we're going to be relying on German or Japanese technology or some foreign technology. Anything new as far as administration? Are you just going to wait until this proposal is——

    Ms. MOLITORIS. Well, Mr. Mica, the commission met at the High Speed Ground Transportation meeting. I have been meeting with them myself, as much as possible. I think one thing of interest, of course, this commission recommends to the Secretary, the Secretary actually has the report for you. But I think there is truly a focus on how to reduce the per mile cost of maglev. I think that is one of the focus points of the commission. And I think that is going to be an important element, as well as the financing.

    Mr. MICA. Actually, the only viable, I guess as you pointed out in your testimony, high speed rail line is the northeast corridor. What's the status of, and I think you had some questions about the Empire Corridor and all that, but in reality, that's about the only game we have going. Florida, we've hit a few bumps, usually not finding enough cash is the main problem. But where are we on our little project up there as far as time table? Did I see in your testimony 1999?
 Page 19       PREV PAGE       TOP OF DOC

    Ms. MOLITORIS. Are you talking about the new high speed train sets?

    Mr. MICA. Yes, the new train sets.

    Ms. MOLITORIS. Yes, on the northeast corridor, 1999, the American Flyer. As you know, the Vice President unveiled that last April. They are actually bending steel right now, and we will be testing those car bodies at the end of the summer.

    The electrification project began, was kicked off on July 3. And that is moving along. It has had a few delays at the beginning, but they've reconstituted and will be on schedule. So we're working very closely with Amtrak on that. It's really the biggest project in the world of its type.

    But I think we ought to mention that what is exciting to us is these investments that we've made in non-electric locomotives, advanced train control and grade crossing safety that have benefitted other parts of the country. We think it's important that corridors that would be viable as high-speed rail, wherever they are in the country, have an opportunity to thrive.

    Mr. MICA. Thank you. I've taken more than my time. I appreciate it.

    Ms. MOLINARI. Thank you very much, Mr. Mica.
 Page 20       PREV PAGE       TOP OF DOC

    Mr. Pitts.

    Mr. PITTS. Thank you, Madam Chairman.

    Just one question. One of the themes today with transportation policy is the emphasis on intermodal coordination. Does the Swift Act contain or should the Congress require specific coordination of high speed corridors with other modes of transport, airplanes, bus service?

    Ms. MOLITORIS. We don't have specific language, Mr. Pitts. However, I will tell you that throughout these 4 years, the Department has focused on intermodal opportunities, and working with States and local planning agencies to make sure that this is given a high priority. That's what ISTEA really was all about.

    Also with our innovative financing projects and with the SIBs that we authorized early, there were 10 SIBs that were authorized early, state infrastructure banks, the intent of that State to use the SIB for projects of intermodal significance really was one of the reasons that they were selected.

    I think that States that I talked to, such as the ones that attended the high-speed ground transportation meeting, they know they get a bigger bang for their investment dollar if they do that. If they can connect to an airport, if they can have an opportunity to have some high value freight on the back of that car, just as Amtrak is developing. All of those things help make it more profitable, the opportunity to have a profit-making venture.
 Page 21       PREV PAGE       TOP OF DOC

    Mr. PITTS. Thank you.

    Ms. MOLINARI. Well, it looks like we have a high speed question and answer session for you, Administrator. We thank you very much for your time. We appreciate your being here today and we look forward to realization of this project. Thank you very much for your input.

    Ms. MOLITORIS. Thank you very much. We look forward to working with you and the committee.

    Ms. MOLINARI. Our next and final witness will be the Vice Chairman of the High Speed Ground Transportation Association, Mr. William Nevel. And I believe he is accompanied by Daniel Steen, General Counsel.


    Mr. NEVEL. Thank you, Chairwoman Molinari.

    Ms. MOLINARI. Good afternoon.

    Mr. NEVEL. We're especially pleased that we have been invited to testify before your subcommittee. I am Bill Nevel, representing one of the member organizations of the High Speed Ground Transportation. We have 300 corporate members and 1,500 total members. Dan Steen is counsel to the Association.
 Page 22       PREV PAGE       TOP OF DOC

    Our detailed testimony has previously been submitted, prior. Today I would like to work with a paper that I hope everybody has in front of you, and briefly Highlight our testimony and key concerns.

    The document indicates a variety of projects that are now under consideration and/or underway. There are three entities within the Association; the incrementalist, or what the FRA calls the accelerail. These are incremental projects within existing rail corridors. Typical speeds are from 79 miles to 110 or 125. Many of our members programs fall within that definition.

    Then there's the next group, the very high-speed rail, up to 200 miles, like Florida FOX project. And then of course, the maglev projects. The map shows an illustration of where the projects are under consideration, either in planning or in preliminary engineering. The thin lines indicate planning studies. The thicker lines indicate preliminary engineering, with financial commitments from the States.

    The needs are explained on the following table. There are 11 corridors in the Untied States focused around the northwest, the midwest, California, the Texas area, Florida, the southeast, and of course, the northeast. Funding needs are indicated on the table. They are in excess of $12 billion. That also includes research and development and initial maglev development.

    The benefits of high-speed rail are many. In benefits the paper under the transportation category, $600 million annual in savings in reduced airport delays for passengers and operators of the air system. Jobs and economic development, that's what high-speed rail is all about.
 Page 23       PREV PAGE       TOP OF DOC

    Eighty percent of the cost is related to traditional construction and procurement. There is a misconception that most of the cost goes for new equipment. But that is not the case. Most is spent for what traditionally would be done in the highway area; by contractors, by engineers, by laborers and so forth. And that approximates 80 percent of the cost of building a new system.

    High-speed rail is a proven reliable and safe alternative to driving. The accident rate of high speed ground transportation with grade separations, and failsafe train stopping is near zero.

    Another argument for high-speed rail is a recently released study that indicates the level of congestion, for Washingtonians. In this area, the data indicates that every work day, 530,000 hours are spent idling in traffic in the Washington metropolitan area.

    On the financial side, there are significant opportunities for private financing of portions of a high-speed system. And that's what the Association is primarily concerned about. Private sector members, want to get involved in high speed rail, but they need a stable source of funding to make that work.

    Our proposal, which is on the second page of the handout that you have, return 4.3 cents of the fuel tax now diverted to general revenue, to be used for increased spending on transportation. We advocate a full cent of the motor fuel tax for inter-city rail and high speed ground transportation. And that breaks down to two categories. One-half cent to Amtrak to complete the northeast corridor projects, including electrification, track work and purchase of 150 mile an hour tilting train sets, paying down the accumulated debt, and to cover other investments to help in this drive for Amtrak's self sufficiency.
 Page 24       PREV PAGE       TOP OF DOC

    And the other half-cent, which is absolutely critical, is for a $2.1 billion program over the life of the next ISTEA to fund two new rail corridors, or at least to provide a catalyst for creating two new corridors in the United States for high speed rail. In addition to provide a credit enhancement of $300 million in capital grants for the Florida high speed rail project, and to provide funds for steel wheel research, development, maglev development and worker retraining.

    To expand Trust Fund revenues we are recommending a transportation ticket tax once the high speed rail programs become operational. That will provide on national transportation funding source for the Federal Government.

    Finally, we advocate a program to provide flexibility to the States for inter-city rail projects. That would include expanding the State infrastructure banks and Federal credit enhancements. Also high speed ground transportation should be fully incorporated in State planning requirements.

    With that, I'll conclude my testimony and we'll be pleased to respond to your questions.

    Mr. MICA [assuming Chair]. Thank you for your testimony. As you heard, I'll start out with a couple of questions here.

    You heard me ask the Administrator about your proposal on the one cent. How did you calculate that, and what do you think it would do with the distribution that you've proposed?
 Page 25       PREV PAGE       TOP OF DOC

    Mr. NEVEL. The calculation is derived from the one half cent for Amtrak, which would generate about $750 million a year. And a like amount for the rest of the high speed ground transportation program in America, to incorporate a number of things. One, to get the Fox program off the ground, to look at one or two other corridors throughout the United States, so that there would be a catalyst for starting say, a program in the northwest, or a program in the southeast. Also to provide continuing research and development funds for maglev, and hopefully, to take maglev to the next step by funding at least one corridor for development in the period of the NEXTEA or ISTEA reauthorization program.

    Mr. MICA. So some of that would be for R&D, you said about half for Amtrak, and then the balance for other high speed projects. What percentage of that, of the half, would be for R&D?

    Mr. NEVEL. I would think it's probably in the 15 to 20 percent range.

    Mr. MICA. Something in that range. Do you think it is important enough to specifically dedicate a set amount or just to keep it flexible?

    Mr. NEVEL. I think it would be helpful to—well, with regard to the creation of the new corridors, it would be helpful to dedicate a set amount. Because that has been one of the problems with regard to the private sector. Programs have been started, stopped, and we've lost a lot of interest and a lot of dollars from the private sector. If funding that was dedicated to high speed rail, the Association is convinced that the private sector would maintain its interest.
 Page 26       PREV PAGE       TOP OF DOC

    With regard to research and development, it would be best if we had a dedicated source and a dedicated amount, so that we know where we're going with the program.

    Mr. MICA. Well, as you heard me also mention today, Administrator, there is no problem in high speed rail that couldn't be solved with financing or hard cash. You also recognize that, advocate authorization of innovative financing programs in your testimony. On page 11, I believe it is, you said that we believe that the $1 billion cap on obligations now available under Section 511 loan program and proposed to be transferred to this new program, are insufficient to meet the increasing investment opportunities afforded by high speed passenger rail and regional railroads, and urges higher levels of funding.

    Now, would this be outside of what you have recommended here, and what amounts are we talking about that you think would be sufficient?

    Mr. NEVEL. I'm going to ask Dan Steen to respond to that.

    Mr. STEEN. Specifically, we were attempting to respond to the regional railroads' proposal to update the Section 511 loan guarantee program. Our view is that we don't have a specific number but we felt that the potential, as it was spelled out by the RRA, to have $200 million per year available over the 5-year program may be insufficient to meet the needs of both high speed rail and the regional railroads.

    Specifically, the Florida project loan in our view would consume a good chunk of those dollars. If our understanding is correct, it would be about $300 million in loan guarantees there. So we believe it's something more than $1 billion, we don't have a specific number for you.
 Page 27       PREV PAGE       TOP OF DOC

    Mr. MICA. I think we'd like to see that, and some justification or at least some calculation that would give us a better handle on where we should be.

    I noticed also in your testimony on that same page, it says, both public and private partnerships would be eligible for program participation. We recommend the Administration's limitation on the program to multi-State high speed rail projects be eliminated. Could you elaborate on that?

    Having been involved in a couple of projects, maybe not high speed rail, but other transit, when you do create public-private partnerships, it does in many cases positively dramatically impact the project in a positive fashion. At least the experience I've seen on some of these projects, it has that potential. So you're recommending the limitation to multi-State rail projects be eliminated. Can you elaborate?

    Mr. STEEN. Yes, sir, I'd be happy to. Specifically what we're attempting to respond to is our concern that the projects, say for instance, in Florida, might be excluded from this program, depending on how it was defined, if it was defined to be a multi-State project, for instance, Florida, which has a proposed high speed system that at this point is within just the State of Florida would apparently be ineligible for that program. And this is specifically the Infrastructure Credit Enhancement Program of the Administration.

    And in this case, there would certainly be benefits outside the State of Florida and potentially the system could link up with, for instance, the proposed Georgia program that's being studied and is now underway. But the concern is that Florida might be excluded, specifically Florida is what we're attempting to respond to. It's the one corridor in the country that I'm aware of that's within one State. And we're attempting to make sure that is not excluded by virtue of the fact that it doesn't go across state lines.
 Page 28       PREV PAGE       TOP OF DOC

    Mr. MICA. So if it has potential for the future, or that's not the only criteria you would advocate, but you're just saying eligibility for——

    Mr. STEEN. Right now that's an exclusion that the Administration has proposed. And we think that should be eliminated.

    Mr. MICA. Okay. Mr. Nevel, you stated on page 11, also, of your testimony, that a benefit of an updated Section 511 program would be that high speed rail project sponsors would be eligible for tax exempt financing. Could you expand on that, and also, I was interested in the rail loans and their falling under some of these State caps as far as eligibility for a tax exempt status. Could you elaborate on your statement?

    Mr. NEVEL. Sure. I'm going to ask Dan, and Congressman, I'm going to apologize, we put this testimony just within the last few days, and we were involved in this conference in Las Vegas.

    Mr. MICA. No problem, we have sort of a work in progress, we've got plenty of time to get the meat on the bones. But as you can tell, I'm very interested in the financing. You raised a number of things that maybe informally you can talk about what you had in mind on these changes in tax exempt financing.

    Mr. STEEN. Mr. Mica, specifically, the regional railroad proposal that was presented to this subcommittee at perhaps one of your recent hearings, specifically that proposal which we've endorsed would make loan guarantees, would clarify that loan guarantees under this updated Section 511 program would be treated as a guaranteed loan, private sector, whereby now the Section 511 program is treated as a direct loan from the Government, when you put up a loan guarantee.
 Page 29       PREV PAGE       TOP OF DOC

    So as I understand the program, this would then allow simultaneous use by these public-private partnerships of both tax-exempt bond financing, which high speed rail is exempt from the State caps on tax-exempt bond financing, as you know. And it would also allow them to use for portions of their infrastructure development the updated Section 511 program, which we think is a good improvement on the old Section 511 program.

    Mr. MICA. Mr. Nevel, you recommended in page three of your testimony that the definition of high speed rail that's currently included in Section 511 programs of systems that can, as you said, reasonably be expected to reach sustained speeds of more than 125 miles an hour be amended. What would you think would be appropriate there, and what threshold for the definition of high speed rail system should we incorporate as standard definition?

    Mr. NEVEL. There is no absolute answer to your question, sir. But the general consensus is, from 110 to 150 miles an hour, would fall within that range. Then the kicker for the very high speed rail, from that point to the 200 miles an hour would be a definition to meet that requirement. There are some in the industry that are absolutely fixed on the high-speed rail categories defined by speed. It depends upon the situation and it depends upon the circumstances within each State and within each corridor and the technology that's going to be used.

    Again, as I indicated in the opening part of the testimony, we have the groups that include what we call the incrementalists, which go up to, say, 79 to 110, then the very high speed rail. These categories tend to overlap from 110 to 200 miles an hour; and maglev is clearly in the very, very high speed of 300 miles an hour.
 Page 30       PREV PAGE       TOP OF DOC

    Mr. MICA. Then maybe we should have some flexibility in the definition?

    Mr. NEVEL. Yes, sir.

    Mr. STEEN. Mr. Mica, if I may, the key I think for us, for our Association, is our view that, maglev was unnecessarily excluded from the definition of what was covered for planning purposes under the Swift bill. At this point, the Swift bill only addresses steel wheel and there's really just no good policy reason to say that States should not be able to use planning dollars for whatever technology they choose to use, for the high speed ground transportation corridor.

    Mr. MICA. So changes in the definition should not preclude maglev?

    Mr. NEVEL. Absolutely.

    Mr. MICA. And possibly give some flexibility for lower speeds.

    I've taken more than my time, let me yield to the ranking member. Mr. Wise, you're recognized.

    Mr. WISE. I thank the Chair.

 Page 31       PREV PAGE       TOP OF DOC
    Mr. Nevel, I agree pretty much completely with your statement, and particularly about the need for financing. But you know the problem as well as everybody else in this room. If we don't get that 4.3 cents, nobody goes anywhere. And right now, as I understand it, we don't have it.

    We've got talk about 4.3 cents will continue to be used for deficit reduction, although additional monies coming in can later be used for transportation. What we don't have is 4.3 cents, and that's what's vital for Amtrak, which I think is an immediate crisis in the making, or actually already made, just waiting to happen now. And then your situation as well.

    I want to ask just a quick question on the loan guarantee.

    Mr. NEVEL. I wonder if I could respond briefly to that comment.

    Mr. WISE. Yes, sure.

    Mr. NEVEL. There are many of us within the Association that hope that the proposals that are on both sides, both the Senate and House, of taking the Transportation Trust Funds off of budget would be forthcoming. Because then we see that the pot for transportation improvements would expand.

    Mr. WISE. There are almost 70 chairs here that agree with you entirely on that. Unfortunately, we're not the full House. But actually, if they expand this committee much more, we're going to have a quorum, I think, of the full House.
 Page 32       PREV PAGE       TOP OF DOC

    But the good news, we all agree with you. But the problem of selling that to the budgeteers, and let me say that that has always been a bipartisan or nonpartisan dilemma. The bean counters at OMB, particularly whether under the Republican or Democratic administration have always resisted that. And indeed, some within the Congress. But it's got to happen, because what we're going to do is we're going to keep eating our investment seed corn. And whether it's building highways or water and sewer systems or high speed rail, we're not going to be able to continue to move ahead.

    Somewhat on that subject, I did just want to ask you. You were talking about Section 511 and loan guarantees. And the cap of $1 billion on that, present cap of $1 billion on the program. Really, that's a bit academic, isn't it? Am I correct, the Appropriation Committee has never funded that anyhow.

    Mr. NEVEL. That's correct, Mr. Wise.

    Mr. WISE. So whether it's, so we can raise the cap all we want, but if we can't get them to come up with the dollars, then——

    Mr. STEEN. Yes, sir, that's why I think the other part of the proposal is important, which is the infrastructure credit partners proposal from the RRA, was that you would allow State or private funds to substitute for that appropriation process. I mean, as Bill Nevel spoke earlier, the appropriation process has been the killer for high speed rail. We've had wonderful authorizations over the years, but it's a matter of getting past the Appropriations Committee.
 Page 33       PREV PAGE       TOP OF DOC

    Mr. WISE. Oh, everybody loves the authorization process. You can do great things. Unfortunately, it's writing the check each year that can cause the dilemma.

    Mr. NEVEL. But sir, we do have to start, from the sake of the Association, we do have to start with the authorization process. If we don't have appropriate authorization, our members will look for opportunities outside this country. And we don't want that to happen.

    Mr. WISE. And as those of us who sit on the authorizing committee, we agree wholeheartedly with that attitude of yours.

    Is it worthwhile, though, on that subject, is it worthwhile to designate new high speed rail corridors when we have so little funding for the five corridors designated so far?

    Mr. NEVEL. I think it is. Because it provides a status and an emphasis for the States. There are 29 States that are very interested in either the incremental, the high speed, or the maglev type of situation. It gets the whole issue of high speed ground transportation on the table with regard to that State.

    It also brings a whole series of issues to the table which the State can't deal with. And that is one of our major recommendations of why we're suggesting the Federal Government has to maintain a steady course with high speed ground transportation. There are areas of interstate concerns, there are areas of technology, there are areas of research and development, there are areas of labor concerns and worker retraining and safety that the States can't deal with by themselves. The private sector and the Federal Government need to work together with the States.
 Page 34       PREV PAGE       TOP OF DOC

    I think it's best to keep those corridors and where a State is interested in developing it, where the States are interested in developing additional corridors, to designate them and to continue working on them. It also interests the private sector, because it gets them involved. It says, to the private sector we've got a high-speed rail program going in the United States.

    To do away with those, it tells the private sector, we're not interested.

    Mr. STEEN. Mr. Wise, if I may, one other comment about that, if I could.

    Really we're speaking of two or three different parts of the country that would be interested in being added as 1010 corridors. That's the Atlanta, Georgia, Macon corridor, more than likely, the New Orleans Southern Crest and Gulf Crest corridor, which has applied, which has sought, several members of the House submitted a letter to the FRA seeking designation.

    And we're also talking about extension of corridors in the midwest, north in Milwaukee to Minnesota. And also I believe it's being treated informally now as extension of the Pacific Northwest corridor, but extension of Vancouver down to Portland down to Eugene, that corridor.

    So really it's the expansion of these corridors, it's important to treat them as a system. But there really aren't that many additional corridors. But there are a couple key corridors that would like to be added.
 Page 35       PREV PAGE       TOP OF DOC

    Mr. WISE. A final question. You emphasize in your testimony the need for worker retraining to prepare for the coming of high speed rail. Can you talk just a little bit about what kind of training is needed by employees of high speed rail systems?

    Mr. NEVEL. I believe it's a whole series of activities. In the construction industry, it starts with, more emphasis on the systems and the systems engineering aspects in developing high speed rail, high speed ground transportation. There will be concerns within the operation of the system, because they will be very different, some systems will be very different than what we have today, with regard to administration, with regard to maintenance of the vehicles, with regard to maintenance of the way, that whole spectrum of activities that's required to keep a system operating on a day to day basis.

    Mr. WISE. Thank you. Thank you, Mr. Chairman.

    Mr. MICA. Thank you. I had just one little wrap up question. I asked the Administrator about the progress of the northeast corridor. Are you all keeping an eye on that?

    Mr. NEVEL. Yes, sir.

    Mr. MICA. In your estimation, is it on track? Because I notice in your testimony it says northeast corridor is nearing completion, Amtrak has estimated it will generate $150 million in operating profit that will allow it to sustain and improve rail service throughout the country. However, if the northeast corridor is not completed as scheduled, Amtrak will be unable to meet payment schedule for its new train sets. And that will pose a problem.
 Page 36       PREV PAGE       TOP OF DOC

    What's your estimation? You guys been looking at it? On track? I've heard of some delays, and the Administrator said they're getting it back on track.

    Mr. NEVEL. The things that are ongoing, electrification from New Haven to Boston has to be completed. The re-engineering and re-grading and so forth from Washington to New York has to be completed to make all of this happen.

    Is it on track? I don't think it's on track. I don't have a definite critical schedule, though, as to what those days are or how far behind——

    Mr. MICA. Your Association isn't paying that much attention, they're just, that's just your—Mr. Steen, did you——

    Mr. STEEN. Yes, sir, actually we are. Mr. Nevel and I had to leave, Amtrak was doing an extensive presentation as we were leaving our conference in Las Vegas yesterday. We work very closely with Amtrak, and our concern is that, we understand from Amtrak they're contending that they're on schedule, and we accept that assurance that that's going to happen on time. We're concerned about that train set purchases proceed as planned. But we'd be happy to get back to you with some additional information on that, our views on that.

    Mr. MICA. If you see problems in that area, I'm sure the subcommittee would like to know it. We've got a lot of eggs in that basket.

    Did you have any other questions, Mr. Wise? No further questions.
 Page 37       PREV PAGE       TOP OF DOC

    I ask unanimous consent that the record remain open for 30 days to allow members to seek answers to additional questions of our witnesses today.

    There being no further questions or business before the subcommittee, this meeting is adjourned. Thank you.

    [Whereupon, at 3:31 p.m., the subcommittee was adjourned, to reconvene at the call of the Chair.]

    [Insert here.]







 Page 38       PREV PAGE       TOP OF DOC








MAY 7, 1997

Printed for the use of the

Committee on Transportation and Infrastructure


 Page 39       PREV PAGE       TOP OF DOC
BUD SHUSTER, Pennsylvania, Chairman

THOMAS E. PETRI, Wisconsin
HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
JOHN L. MICA, Florida
SUE W. KELLY, New York
RAY LaHOOD, Illinois
FRANK RIGGS, California
CHARLES F. BASS, New Hampshire
 Page 40       PREV PAGE       TOP OF DOC
JACK METCALF, Washington
ROY BLUNT, Missouri
JOSEPH R. PITTS, Pennsylvania
JOHN R. THUNE, South Dakota
CHARLES W. ''CHIP'' PICKERING, Jr., Mississippi
JON D. FOX, Pennsylvania
J.C. WATTS, Jr., Oklahoma

NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
ROBERT E. WISE, Jr., West Virginia
BOB CLEMENT, Tennessee
 Page 41       PREV PAGE       TOP OF DOC
ROBERT E. (BUD) CRAMER, Jr., Alabama
ELEANOR HOLMES NORTON, District of Columbia
PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
BOB FILNER, California
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi
BILL PASCRELL, Jr., New Jersey
JAY W. JOHNSON, Wisconsin
JAMES P. McGOVERN, Massachusetts
TIM HOLDEN, Pennsylvania
 Page 42       PREV PAGE       TOP OF DOC

Subcommittee on Railroads

SUSAN MOLINARI, New York, Chairwoman
KAY GRANGER, Texas, Vice Chairwoman
BOB FRANKS, New Jersey
JOHN L. MICA, Florida
JOSEPH R. PITTS, Pennsylvania
JON D. FOX, Pennsylvania
BUD SHUSTER, Pennsylvania
(Ex Officio)

ROBERT E. WISE, Jr., West Virginia
ROBERT A. BORSKI, Pennsylvania
BOB CLEMENT, Tennessee
BOB FILNER, California
 Page 43       PREV PAGE       TOP OF DOC
(Ex Officio)


    Molitoris, Hon. Jolene M., Administrator, Federal Railroad Administration, U.S. Department of Transportation

    Nevel, William, Vice Chairman, High-Speed Ground Transportation Association, accompanied by Daniel Steen, General Counsel


    Lipinski, Hon. William O., of Illinois


    Molitoris, Hon. Jolene M

    Nevel, William